# EDGAR Filing Document

**Accession Number:** 0001463208
**File Stem:** 0001493152-26-023215
**Filing Date:** 2026-5
**Character Count:** 255857
**Document Hash:** 2ac196c6bab483a993797589c1209cfc
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001493152-26-023215.hdr.sgml**: 20260514

**ACCESSION NUMBER**: 0001493152-26-023215

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 54

**CONFORMED PERIOD OF REPORT**: 20260331

**FILED AS OF DATE**: 20260514

**DATE AS OF CHANGE**: 20260514

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Transportation & Logistics Systems, Inc.
- **CENTRAL INDEX KEY:** 0001463208
- **STANDARD INDUSTRIAL CLASSIFICATION:** TRANSPORTATION SERVICES [4700]
- **ORGANIZATION NAME:** 01 Energy & Transportation
- **EIN:** 263106763
- **STATE OF INCORPORATION:** NV
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-34970
- **FILM NUMBER:** 26980686

**BUSINESS ADDRESS:**
- **STREET 1:** 5500 MILITARY TRAIL
- **STREET 2:** SUITE 22-357
- **CITY:** JUPITER
- **STATE:** FL
- **ZIP:** 33458
- **BUSINESS PHONE:** 1.833.764.1443

**MAIL ADDRESS:**
- **STREET 1:** 5500 MILITARY TRAIL
- **STREET 2:** SUITE 22-357
- **CITY:** JUPITER
- **STATE:** FL
- **ZIP:** 33458

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** PETROTERRA CORP.
- **DATE OF NAME CHANGE:** 20120215

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** LORAN CONNECTION CORP
- **DATE OF NAME CHANGE:** 20090430

?xml version='1.0' encoding='ASCII'?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 10-Q**

(Mark One)

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

**For the quarterly period ended March 31, 2026**

or

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

For the transition period from ___________ to ___________

**Commission File Number: 001-34970**

**<u>Transportation and Logistics Systems, Inc.</u>**

(Exact name of registrant as specified in its charter)

---

| | |
|:---|:---|
| **Nevada** | **26-3106763** |
| (State or other jurisdiction of<br> incorporation or organization) | (IRS Employer<br> Identification No.) |

---

---

| | |
|:---|:---|
| **110 Chestnut Ridge Road, Unit 444, Montvale, NJ** | **07645** |
| (Address of principal executive offices) | (Zip Code) |

---

**<u>(833) 764-1443</u>**

(Registrant's telephone number, including area code)

(Registrant's former name, former address and former fiscal year, if changed since last report)

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

---

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

---

Securities Registered Pursuant to Section 12(g) of the Act:

**<u>Common Stock, $0.001 Par Value</u>**

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

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

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

Large accelerated filer ☐ Accelerated filer ☐ <br> Non-accelerated filer ☒ Smaller reporting company ☒ <br> 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 check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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

As of May 14. 2026, the registrant had outstanding 5,889,437,474 shares of common stock .

**TRANSPORTATION AND LOGISTICS SYSTEMS, INC.**

**FORM 10-Q**

**MARCH 31, 2026**

**TABLE OF CONTENTS**

---

| | | |
|:---|:---|:---|
|  |  | **Page** |
| [**PART I - FINANCIAL INFORMATION**](#aq_001) | [**PART I - FINANCIAL INFORMATION**](#aq_001) |  |
| Item 1. | [Financial Statements](#aq_002) | 3 |
|  | [Consolidated Balance Sheets as of March 31, 2026 (Unaudited) and December 31, 2025](#aq_003) | 3 |
|  | [Consolidated Statements of Operations - For the Three Months Ended March 31, 2026 and 2025 (Unaudited)](#aq_004) | 4 |
|  | [Consolidated Statements of Changes in Shareholders' Deficit - For the Three Months Ended March 31, 2026 and 2025 (Unaudited)](#aq_005) | 5 |
|  | [Consolidated Statements of Cash Flows - For the Three Months Ended March 31, 2026 and 2025 (Unaudited)](#aq_006) | 6 |
|  | [Notes to Consolidated Financial Statements (Unaudited)](#aq_007) | 7 |
| Item 2. | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#aq_008) | 28 |
| Item 3. | [Quantitative and Qualitative Disclosures About Market Risk](#aq_009) | 32 |
| Item 4. | [Controls and Procedures](#aq_010) | 32 |
| [**PART II - OTHER INFORMATION**](#aq_011) | [**PART II - OTHER INFORMATION**](#aq_011) |  |
| Item 1. | [Legal Proceedings](#aq_012) | 33 |
| Item 1A. | [Risk Factors](#aq_013) | 34 |
| Item 2. | [Unregistered Sales of Equity Securities and Use of Proceeds](#aq_014) | 35 |
| Item 3. | [Defaults Upon Senior Securities](#aq_015) | 35 |
| Item 4. | [Mine Safety Disclosures](#aq_016) | 35 |
| Item 5. | [Other Information](#aq_017) | 35 |
| Item 6. | [Exhibits](#aq_018) | 35 |
| [SIGNATURE](#aq_019) | [SIGNATURE](#aq_019) | 37 |

---

i

For purposes of this Quarterly Report on Form 10-Q (this "Quarterly Report"), unless otherwise indicated or the context otherwise requires, all references herein to "Transportation and Logistics Systems, Inc.", the "Company", "we", "us", "TLSS" and "our", refer to Transportation and Logistics Systems, Inc., a Nevada corporation, and its wholly-owned subsidiaries: TLSS Acquisition, Inc. ("TLSSA"), TLSS Operations Holding Company, Inc. ("TLSS Ops"), Shyp CX, Inc. ("Shyp CX"); those entities wholly-owned by TLSS Ops, TLSS-CE, Inc. ("TLSS-CE") and TLSS-STI, Inc. ("TLSS-STI"); JFK Cartage Co., Inc. (JFK Cartage"), a wholly-owned subsidiary of Cougar Express; Severance Trucking Co., Inc. ("Severance Trucking"), a wholly-owned subsidiary of TLSS-STI and Severance Warehousing, Inc. ("Severance Warehousing") and McGrath Trailer Leasing, Inc. ("McGrath"), both wholly-owned subsidiaries of Severance Trucking, (Severance Trucking, Severance Warehousing, and McGrath collectively, ("Severance").

TLSSA, TLSS Ops, Shyp CX, TLSS-CE, TLSS-STI, Cougar Express, JFK Cartage, and Severance, are hereinafter referred to as the "Subsidiaries". Other than the Company, the results of operations and all accounts of the Subsidiaries for the three months ended March 31, 2026 and 2025 are included as part of discontinued operations on the unaudited consolidated financial statements.

**Forward-Looking Statements**

Statements made in this Quarterly Report 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 and the risks set forth in Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025 (our "2025 Annual Report"), these risks and uncertainties include: our ability to meet our annual and quarterly periodic reporting obligations under Securities Exchange Act of 1934, as amended ("34 Act"), including obtaining sufficient financing to fund the necessary costs related to the preparation and filing of one or more of our future periodic reports; our ability to restructure our remaining existing debts and obligations and replace our discontinued businesses and/or enter into new line(s) of business, whether by acquisition or otherwise; our ability to attract and retain key personnel and skilled labor to meet the requirements of being a public company; our history of losses, deficiency in working capital and a stockholders' deficit and inability to achieve sustained profitability; our need to procure substantial additional financing to fund ongoing losses and the growth of our business; our ability to successfully execute our business strategies, including integration of acquisitions and the future acquisition of other businesses to grow our company; adverse or unanticipated events in the litigation to which we are currently a party (or as to which we may become a party in the future); our ability to pay expenses and liabilities as they become due; adverse or unanticipated decisions by courts construing third-party liability insurance policies to which the Company and/or its subsidiaries is a party; a failure to obtain adequate liability insurance coverage in the future; material weaknesses in our internal control over financial reporting and our ability to maintain effective controls over financial reporting in the future; 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 Quarterly Report 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 herein, and, among other places, in this Quarterly Report, as well as any amendments hereto or thereto, or other documents filed with the Securities and Exchange Commission (the "SEC").

ii

**PART I - FINANCIAL INFORMATION**

**ITEM 1. FINANCIAL STATEMENTS**

**TRANSPORTATION AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES** 

**CONSOLIDATED BALANCE SHEETS** 

---

| | | |
|:---|:---|:---|
|  | March 31, | December 31, |
|  | 2026 | 2025 |
|  | (Unaudited) |  |
| ASSETS |  |  |
| CURRENT ASSETS: |  |  |
| &nbsp;&nbsp;&nbsp;Cash | $11118 | $15835 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 3750 | 1500 |
| &nbsp;&nbsp;&nbsp;Total Current Assets | 14868 | 17335 |
| TOTAL ASSETS | $14868 | $17335 |
| LIABILITIES AND SHAREHOLDERS' DEFICIT |  |  |
| CURRENT LIABILITIES: |  |  |
| &nbsp;&nbsp;&nbsp;Notes payable | $75000 | $- |
| &nbsp;&nbsp;&nbsp;Accounts payable | 346631 | 335640 |
| &nbsp;&nbsp;&nbsp;Accrued expenses | 943798 | 666575 |
| &nbsp;&nbsp;&nbsp;Deferred compensation and related benefits | 144999 |  |
| &nbsp;&nbsp;&nbsp;Liabilities of discontinued operations | 7038957 | 6949215 |
| &nbsp;&nbsp;&nbsp;Total Current Liabilities | 8549385 | 7951430 |
| &nbsp;&nbsp;&nbsp;Total Liabilities | 8549385 | 7951430 |
| Series J convertible preferred stock, par value $0.001 per share; 1,000,000 shares designated; 110,424 shares issued and outstanding at March 31, 2026 and December 31, 2025 ($12,146,640 redemption value as of March 31, 2026) | 12146640 | 12146640 |
| Commitments and Contingencies (See Note 6) |  |  |
| SHAREHOLDERS' DEFICIT: |  |  |
| &nbsp;&nbsp;&nbsp;Preferred stock, par value $0.001; authorized 10,000,000 shares: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Series B convertible preferred stock, par value $0.001 per share; 1,700,000 shares designated; No shares issued and outstanding at March 31, 2026 and December 31, 2025 (No per share liquidation value) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Series D convertible preferred stock, par value $0.001 per share; 1,250,000 shares designated; No shares issued and outstanding at March 31, 2026 and December 31, 2025 (No per share liquidation value) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Series E convertible preferred stock, par value $0.001 per share; 562,250 shares designated; No shares issued and outstanding at March 31, 2026 and December 31, 2025 (No per share liquidation value) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Series G convertible preferred stock, par value $0.001 per share; 1,000,000 shares designated; No shares issued and outstanding at March 31, 2026 and December 31, 2025 (No per share liquidation value) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Series H convertible preferred stock, par value $0.001 per share; 35,000 shares designated; 32,374 shares issued and outstanding at March 31, 2026 and December 31, 2025 (No per share liquidation value) | 32 | 32 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common stock, par value $0.001 per share; 50,000,000,000 shares authorized; 5,889,437,474 shares issued and outstanding at March 31, 2026 and December 31, 2025 | 5889437 | 5889437 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 121194905 | 121194905 |
| &nbsp;&nbsp;&nbsp;Accumulated deficit | (147765531) | (147165109) |
| Total Shareholders' Deficit | (20681157) | (20080735) |
| Total Liabilities and Shareholders' Deficit | $14868 | $17335 |

---

See accompanying notes to unaudited consolidated financial statements.

**TRANSPORTATION AND LOGISTICS SYSTEMS INC. AND SUBSIDIARIES** 

**CONSOLIDATED STATEMENTS OF OPERATIONS** 

**(Unaudited)** 

---

| | | |
|:---|:---|:---|
|  | **For the Three Months Ended** | **For the Three Months Ended** |
|  | **March 31,** | **March 31,** |
|  | **2026** | **2025** |
| REVENUES | $- | $- |
| OPERATING EXPENSES: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Compensation and related benefits | 144999 | 160340 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Legal and professional fees | 87084 | 170960 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and administrative expenses | 1374 | 971 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Operating Expenses | 233457 | 332271 |
| LOSS FROM OPERATIONS | (233457) | (332271) |
| OTHER EXPENSES: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense | (1685) | (9103) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense - related parties | - | (62587) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Other Expenses | (1685) | (71690) |
| LOSS BEFORE INCOME TAXES | (235142) | (403961) |
| Provision for income taxes | - | - |
| LOSS FROM CONTINUING OPERATIONS | (235142) | (403961) |
| DISCONTINUED OPERATIONS: |  |  |
| &nbsp;&nbsp;&nbsp;Loss from discontinued operations, net of tax | (89742) | (94309) |
| LOSS FROM DISCONTINUED OPERATIONS | (89742) | (94309) |
| NET LOSS | (324884) | (498270) |
| Accrued dividends | (275538) | (76990) |
| NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | $(600422) | $(575260) |
| NET INCOME (LOSS) PER COMMON SHARE - BASIC AND DILUTED |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income (loss) per share from continuing operations - basic and diluted | $(0.00) | $(0.00) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net loss per share from discontinued operations – basic and diluted | (0.00) | (0.00) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income (loss) per share - basic and diluted | $(0.00) | $(0.00) |
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic and diluted | 5889437474 | 5889437474 |

---

See accompanying notes to unaudited consolidated financial statements.

**TRANSPORTATION AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES** 

**CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT**

**FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025**

**(Unaudited)**

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Preferred Stock Series E** | **Preferred Stock Series E** | **Preferred Stock<br> Series G** | **Preferred Stock<br> Series G** | **Preferred Stock Series H** | **Preferred Stock Series H** | **Common Stock** | **Common Stock** | | | |
|  | **Shares** | **Amount** | **Shares** | **Amount** | **Shares** | **Amount** | **Shares** | **Amount** | **Additional<br> Paid-in**<br>**Capital** | **Accumulated**<br>**Deficit** | **<br> Total<br> Shareholders'**<br>**Deficit** |
| Balance, December 31, 2025 |  | $&nbsp;&nbsp;&nbsp;&nbsp; - |  | $&nbsp;&nbsp;&nbsp;&nbsp; - | 32374 | $32 | 5889437474 | $5889437 | $121194905 | $(147165109) | $(20080735) |
| Dividends accrued |  |  |  |  |  |  |  |  |  | (275538) | (275538) |
| Net loss |  | - |  | - | - | - | - | - | - | (324884) | (324884) |
| Balance, March 31, 2026 |  | $- |  | $- | 32374 | $32 | 5889437474 | $5889437 | $121194905 | $(147765531) | $(20681157) |

---

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Preferred Stock Series E** | **Preferred Stock Series E** | **Preferred Stock<br> Series G** | **Preferred Stock<br> Series G** | **Preferred Stock Series H** | **Preferred Stock Series H** | **Common Stock** | **Common Stock** | | | |
|  | **Shares** | **Amount** | **Shares** | **Amount** | **Shares** | **Amount** | **Shares** | **Amount** | **Additional<br> Paid-in**<br>**Capital** | **Accumulated**<br>**Deficit** | **<br> Total<br> Shareholders'**<br>**Deficit** |
| Balance, December 31, 2024 | 21418 | $21 | 406500 | $407 | 32374 | $32 | 5889437474 | $5889437 | $128686122 | $(146468036) | $(11892017) |
| Dividends accrued |  |  |  |  |  |  |  |  |  | (76990) | (76990) |
| Net loss | - | - | - | - | - | - | - | - | - | (498270) | (498270) |
| Balance, March 31, 2025 | 21418 | $21 | 406500 | $407 | 32374 | $32 | 5889437474 | $5889437 | $128686122 | $(147043296) | $(12467277) |

---

See accompanying notes to unaudited consolidated financial statements.

**TRANSPORTATION AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES** 

**CONSOLIDATED STATEMENTS OF CASH FLOWS** 

**(Unaudited)** 

---

| | | |
|:---|:---|:---|
|  | **For the Three Months Ended** | **For the Three Months Ended** |
|  | **March 31,** | **March 31,** |
|  | **2026** | **2025** |
| CASH FLOWS FROM OPERATING ACTIVITIES: |  |  |
| &nbsp;&nbsp;&nbsp;Net loss | $(324884) | $(498270) |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net loss to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | (2250) | (2490) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and accrued expenses | 102418 | 133278 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses - related parties |  | 62587 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred compensation and related benefits | 144999 | 122840 |
| NET CASH USED IN OPERATING ACTIVITIES | (79717) | (182055) |
| CASH FLOWS FROM FINANCING ACTIVITIES: |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds from notes payable | 75000 | 225000 |
| NET CASH PROVIDED BY FINANCING ACTIVITIES | 75000 | 225000 |
| NET (DECREASE) INCREASE IN CASH | (4717) | 42945 |
| CASH, beginning of period | 15835 | 177257 |
| CASH, end of period | $11118 | $220202 |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION |  |  |
| Cash paid for: |  |  |
| &nbsp;&nbsp;&nbsp;Interest | $- | $- |
| &nbsp;&nbsp;&nbsp;Income taxes | $- | $- |
| SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: |  |  |
| &nbsp;&nbsp;&nbsp;Accrual of preferred stock dividends | $275538 | $76990 |

---

See accompanying notes to unaudited consolidated financial statements.

**TRANSPORTATION AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025**

**(Unaudited)**

**NOTE 1 – <u>ORGANIZATION AND BUSINESS OPERATIONS</u>**

Transportation and Logistics Systems, Inc. ("TLSS" or the "Company") is a publicly-traded holding company incorporated under the laws of the State of Nevada on July 25, 2008. Prior to mid-February 2024, when the Company ceased all remaining operations, its subsidiaries, provided a full suite of logistics and transportation services, specializing in ecommerce fulfillment, last mile deliveries, two-person home delivery, mid-mile, and long-haul services. The Company and its subsidiaries also operated several warehouse locations in New York, New Jersey, Connecticut, and Massachusetts. The subsidiaries of the Company during the three months ended March 31, 2026 and 2025 include: JFK Cartage, Inc. ("JFK Cartage"); Severance Trucking Co., Inc. ("Severance Trucking"); Severance Warehousing, Inc. ("Severance Warehouse"); McGrath Trailer Leasing, Inc. ("McGrath", and together with Severance Trucking and Severance Warehouse, hereinafter, "Severance"); TLSS Acquisition, Inc. ("TLSSA"); TLSS Operations Holding Company, Inc. ("TLSS Ops"); Shyp CX, Inc. ("Shyp CX"); Shyp FX, Inc. ("Shyp FX"); TLSS-CE, Inc. ("TLSS-CE"); and TLSS-STI, Inc. ("TLSS-STI").

Prior to ceasing operations, the Company's historical business growth was primarily through a growth by acquisition strategy, as described below.

On November 13, 2020, the Company formed a wholly-owned subsidiary, Shyp FX under the laws of the State of New Jersey. On January 15, 2021, through Shyp FX, the Company executed an agreement to acquire substantially all of the assets and certain liabilities of Double D Trucking, Inc., a northern New Jersey-based logistics provider specializing in servicing Federal Express over the past 25 years ("DDTI"), including last-mile delivery services using vans and box trucks. On April 28, 2022, the Company entered into an agreement with an unrelated third party to sell substantially all of Shyp FX's assets and specific liabilities in all-cash transactions that closed in June 2022. Shyp FX is inactive.

On November 16, 2020, the Company formed a wholly-owned subsidiary, TLSSA under the laws of the State of Delaware. On March 24, 2021, TLSSA acquired all of the issued and outstanding shares of capital stock of Cougar Express, a New York-based full-service logistics provider specializing in pickup, warehousing, and delivery services in the tri-state area. On February 27, 2024, Cougar Express filed a Chapter 7 bankruptcy petition in the State of New York under the United States Bankruptcy Code (the "Cougar Bankruptcy"), assigning all of the Cougar Express assets to Mr. Andrew M. Thaler, Esq., as Trustee (the "Cougar Express Trustee") for liquidation and unwinding of the business. The Cougar Express Trustee has been charged with liquidating the assets for the benefit of the Cougar Express creditors pursuant to the relevant provisions of the United States Bankruptcy Code. As a result of the Cougar Bankruptcy, the Cougar Express Trustee assumed all authority to manage Cougar Express. Additionally, as of February 27, 2024, Cougar Express no longer conducted any business and is not permitted by the Cougar Express Trustee to conduct any business. For these reasons, effective February 27, 2024, the Company relinquished control of Cougar Express. Therefore, the Company deconsolidated Cougar Express effective with the filing of the Cougar Bankruptcy on February 27, 2024.

On February 21, 2021, the Company formed a wholly-owned subsidiary, Shyp CX under the laws of the State of New York. Shyp CX does not engage in any revenue-generating operations and is inactive.

On August 4, 2022, Cougar Express closed on its acquisition of all outstanding stock of JFK Cartage, a New York-based full-service logistics provider. The effective date of the acquisition was July 31, 2022. In February 2024, due to lack of working capital to conduct its business, JFK Cartage ceased its operations and no longer conducts any business, and all of its assets of the Company were voluntarily conveyed to the Cougar Express Trustee. During the three months ended March 31, 2026 and 2025, all activities and balances of JFK Cartage are included as part of discontinued operations on the unaudited consolidated financial statements. As of the date of these unaudited consolidated financial statements, neither TLSS-CE, which owns 100% of the stock of Cougar Express, or JFK Cartage have filed for bankruptcy.

Effective February 3, 2023, the Company's wholly-owned subsidiary, TLSS-STI, closed on an acquisition of all outstanding stock of each of Severance Trucking, Severance Warehouse and McGrath, which together, offered less-than-truckload (LTL) trucking services throughout New England, with an effective date as of the close of business on January 31, 2023. The sellers of the stock of each entity were Kathryn Boyd, Clyde Severance, and Robert Severance, all individuals (the "Severance Sellers"). None of the Severance Sellers were affiliated with the Company or its affiliates. In February 2024, due to lack of working capital to conduct its business, Severance ceased its operations and no longer conducts any business, and all fixed assets of Severance were voluntarily surrendered to the Severance Sellers. For the three months ended March 31, 2026, and 2025, all activities and balances of Severance are included as part of discontinued operations on the unaudited consolidated financial statements. As of the date of these unaudited consolidated financial statements, the Severance entities have not filed for bankruptcy.

On May 31, 2023, the Company formed TLSS Ops and TLSS-CE, companies organized under the laws of Delaware. Simultaneous with the formation of these entities, Cougar Express became a wholly-owned subsidiary of TLSS-CE; Severance Warehousing and McGrath became wholly-owned subsidiaries of Severance Trucking; Severance Trucking became a wholly-owned subsidiary of TLSS-STI; and each of TLSS-CE, TLSS-STI and TLSS-FC became wholly-owned subsidiaries of TLSS Ops. Other than the TLSS parent company, all entities are included as part of discontinued operations on the unaudited consolidated financial statements for the three months ended March 31, 2026, and 2025. As of the date of these unaudited consolidated financial statements, TLSS Ops has not filed for bankruptcy.

On February 16, 2024, Severance Trucking, along with Cougar Express and JFK Cartage, ceased all operations and, as a result, all remaining employees of Cougar Express and Severance Trucking were laid off as of February 16, 2024. On February 29, 2024, all remaining support staff, employed by TLSS Ops, were laid off.

Subsequent to the cessation of all of the Company's revenue generating operations in February 2024 and through the date of the issuance of these unaudited consolidated financial statements, the Company continues to remain insolvent. The Company has obtained additional financing to fund the necessary costs related to the preparation and filing of one or more of the additional periodic reports due with respect to the 2026 calendar year, however, additional funding will be required (See Note 4).

In addition, the Company has restructured certain of its debt and obligations and is continuing to negotiate the restructuring of its remaining existing debts and obligations, as well as assessing the possibility of replacing its discontinued businesses and/or entering into new line(s) of business, whether by acquisition or otherwise. However, there can be no assurance that the Company will, in fact, be able to replace the Company's former business and/or enter into new line(s) of business, or to do so profitably.

**TRANSPORTATION AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025**

**(Unaudited)**

The Company announced that, on April 1, 2026, the Company, TLSS Acquisition, Inc., (the "Acquisition Sub"), and TLSS Reverse PGS, LLC, a Texas limited liability company and a wholly-owned subsidiary of the Acquisition Sub ("TLSS Reverse"), entered into a Member Interest and Asset Exchange Agreement (the "Agreement") with Badcer Ops, Inc., a Nevada corporation (the "Seller"), Jeff Badders and Mercer Street Global Opportunity Fund, LLC, a Delaware limited liability company ("Mercer"), as the shareholders of the Seller (the "Seller Shareholders"), Patriot Glass Solutions, LLC, a Texas limited liability company ("PGS"), and Michael Wanke ("Wanke"), the sole Manager and twenty percent (20%) owner of PGS. The Agreement provides for a reverse triangular merger of TLSS Reverse with and into PGS, with PGS as the surviving entity, pursuant to which the Seller's eighty percent (80%) membership interest in PGS and four (4) nanotechnology patents (the "Patents") will be exchanged, transferred and assigned to the Acquisition Sub in exchange for the Merger Consideration described below.

The Seller is Badcer Ops, Inc., a Nevada corporation, whose shareholders are Mercer and Mr. Jeff Badders, an individual (together, the "Seller Shareholders"). Mercer is an existing preferred stockholder of the Company.

The Agreement provides for merger consideration (the "Merger Consideration") equal to $4,750,000, payable in 47,500 shares of TLSS Series J Senior Convertible Preferred Stock (the Series J Preferred"), with a stated value of $100 per share, to be issued to the Seller at the closing of the transaction.

The closing of the transaction is expected to occur no later than June 1, 2026, ten (10) days after audited financials for PGS for year-end 2025 and 2024 and unaudited financial statements for PGS for the first quarter of 2026 are completed and provided to the Company, subject to the satisfaction or waiver of certain closing conditions, including, among others: (i) the completion of satisfactory due diligence by the Company; (ii) the accuracy of the representations and warranties of the parties; (iii) the procurement of acceptable landlord consent to the assignment of and amendments to PGS's lease for its operating facilities; (iv) delivery of certain financial statements; and (v) other customary closing conditions as set forth in the Agreement.

The remaining 20% membership interest in PGS is currently held by and will be retained by Mr. Michael Wanke, the sole Manager of PGS. It is a condition of closing that Mr. Wanke will enter into an employment agreement with PGS, the terms of which are to be agreed upon prior to the expiration of the due diligence period.

The Company's primary go-forward strategy is to become a leader in the safety and security technology industry. The Company expects to accomplish this goal, in part, by pursuing strategic acquisitions as a means of securing technologies and adding new markets in the United States, expanding its safety and security service offerings, adding talented management and operational employees, expanding and upgrading its technology platform and developing operational best practices. Moreover, one factor in assessing acquisition opportunities is the potential for subsequent organic growth post-acquisition.

PGS provides quality window tint solutions for auto, home, and business owners across Texas, specializing in automotive window tinting, residential window film, and commercial window film that stop harmful UV rays from passing through its window films for reduced glare, comfortable temperatures, and lower energy bills. PGS protects personal, school, government and commercial/business property across the United States using PGS's proprietary glass strengthening technology to protect property from looting, rioting, break-ins, and gunfire, including its PGS BRS a ballistic-resistant film system; and PGS multi-purpose glass strengthening primer and window film mounting solution that deters forced entry products with through a growing nationwide network of more than 50 dealers.

The Patents relate to the proprietary nanotechnology applications and processes to enhance properties of strength, functionality, and sustainability of brittle material systems used by PGS.

As such, the Company believes that the acquisition of PGS is an excellent fit with its current business given its demographic location, services offered, and diversified customer base, and given that it would provide the Company with a long-standing, well-run profitable operation.

**NOTE 2 – <u>SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION</u>**

Basis of presentation and principles of consolidation

The unaudited 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 ("SEC") 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 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 consolidated financial statements be read in conjunction with the consolidated financial statements of the Company for the year ended December 31, 2025 and notes thereto included in the Company's annual report on SEC Form 10-K, filed on March 30, 2026. The Company follows the same accounting policies in the preparation of its annual and interim reports. The results of operations for the interim periods are not necessarily an indication of operating results to be expected for the full year.

The summary of significant account policies of the Company is presented to assist in understanding the Company's consolidated financial statements. The unaudited consolidated financial statements and the notes are the representation of the Company's management, who are responsible for their integrity and objectivity. These accounting policies conform to U.S. generally accepted accounting principles ("US GAAP") and have been consistently applied in the preparation of the unaudited consolidated financial statements.

The consolidated financial statements of the Company include the accounts of TLSS and its wholly-owned subsidiaries, TLSSA, TLSS Ops, Shyp FX, Shyp CX, TLSS-CE, JFK Cartage since its acquisition on July 31, 2022, TLSS-STI, and Severance since its acquisition on January 31, 2023. All intercompany accounts and transactions have been eliminated in consolidation. References below to a "Company liability" may be to a liability which is owed solely by a subsidiary and not by TLSS.

**TRANSPORTATION AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025**

**(Unaudited)**

Discontinued Operations

The Company has classified the related assets and liabilities associated with its logistics and transportation services business as discontinued operations in its consolidated balance sheets and the results of its logistics and transportation services business has been presented as discontinued operations in its consolidated statements of operations for all periods presented as the discontinuation of its business had a major effect on its operations and financial results. Unless otherwise noted, discussion in the notes to consolidated financial statements refers to the Company's continuing operations. See Note 8 — Discontinued Operations for additional information.

Going concern

These unaudited consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in these unaudited consolidated financial statements, the Company had a net loss of $324,884 and $498,270 for the three months ended March 31, 2026 and 2025, respectively. The net cash used in operations was $79,717 and $182,055 for the three months ended March 31, 2026 and 2025, respectively. Additionally, the Company had an accumulated deficit and working capital deficit of $147,765,531 and $8,534,517, respectively, on March 31, 2026. Furthermore, the Company currently has no operating business. 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 Quarterly Report. The Company has previously restructured certain of its debt and obligations and is continuing to negotiate the restructuring of its remaining debts and obligations, as well as assessing the possibility of replacing its discontinued businesses and/or enter into new line(s) of business, whether by acquisition or otherwise. However, there can be no assurance that it will, in fact, be able to replace its former business and/or enter into new line(s) of business, or to do so profitably. Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive or raise additional debt and/or equity capital. 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 preferred shares, from the issuance of promissory notes and convertible promissory notes, and from the exercise of warrants, there is no assurance that it will be able to continue to do so. If the Company is unable to raise additional capital or secure additional lending in the near future, management expects that the Company will need to further curtail its operations. These unaudited 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.

Risks and uncertainties

The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits. On March 31, 2026, the Company had no cash in the bank in excess of FDIC insured levels.

Use of estimates

The preparation of the 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 consolidated financial statements and footnotes include the valuation of assets and liabilities of discontinued operations, estimates of current and deferred income taxes and deferred tax valuation allowances, the fair value of non-cash equity transactions, estimates of valuation of preferred stock, 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 March 31, 2026. Accordingly, the estimates presented in these unaudited consolidated 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. As of March 31, 2026 and December 31, 2025, the Company had no assets and liabilities measured at fair value on a recurring basis.

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.

**TRANSPORTATION AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025**

**(Unaudited)**

The carrying amounts reported in the consolidated balance sheets for cash, prepaid expenses and other current assets, assets of discontinued operations, accounts payable, accrued expenses, liabilities of discontinued operations, and other payables approximate their fair values based on the short-term maturity of these instruments. The carrying amount of the Company's promissory note obligations approximate fair value, as the terms of these instruments are consistent with terms available in the market for instruments with similar risks.

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. On March 31, 2026 and December 31, 2025, the Company did not have any cash equivalents.

Accounts receivable

Accounts receivable was presented net of an allowance for credit losses. The Company maintains allowances for credit 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 along with general reserves for current accounts receivable that are projected to become uncollectable. 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 and equipment are stated at cost and are depreciated using the straight-line method over their estimated useful lives. 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.

Leases

The Company uses Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842). The guidance requires lessees to recognize lease assets and lease liabilities for most operating leases. In addition, the guidance requires that lessors separate lease and non-lease components in a contract in accordance with the new revenue guidance in ASC 606. The Company applied 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 represented the right to use the leased asset for the lease term and operating lease liabilities were 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 used 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 was amortized on a straight-line basis over the lease term. In connection with the discontinuation of the Company's logistic and transportation business, all ROU assets were either impaired or deconsolidated, and any such impairment was previously included in discontinued operations(see Note 8). Currently, all leased premises have been abandoned.

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 ASU 2023-07, *Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,* which requires entities to report incremental information about significant segment expenses included in a segment's profit or loss measure as well as the title and position of the chief operating decision maker ("CODM"). The standard also requires interim disclosures related to reportable segment profit or loss and assets that had previously only been disclosed annually.

Operating segments are defined as components of a business for which separate discrete financial information is available for evaluation by the chief operating decision maker in deciding how to allocate resources and assess performance. The Company operates as a single operating and reporting segment, reflecting our sole focus of seeking new business opportunities. Our Chief Executive Officer serves as the Chief Operating Decision Maker (CODM), responsible for assessing the Company's performance and making resource allocation decisions. The CODM evaluates financial information on a consolidated basis, focusing on key metrics such as general and administrative expenses, and other income/expenses. The CODM allocates resources based on the Company's available cash resources, forecasted cash flow, and expenditures on a consolidated basis, as well as an assessment of the probability of success of its business activities. Resource allocation decisions are informed by budgeted and forecasted expense information, along with actual expenses incurred to date. The measure of segment assets is reported on the balance sheet as total assets. Disaggregated profit or loss information at the program or functional level is *not* regularly provided to or relied upon by the CODM, as our integrated operating model emphasizes shared resources and centralized decision-making.

**TRANSPORTATION AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025**

**(Unaudited)**

Series J preferred stock subject to possible redemption

The Company accounts for its Series J Senior Convertible Preferred Stock ("Series J Preferred") subject to possible redemption in accordance with the guidance in ASC Topic 480 "Distinguishing Liabilities from Equity." Conditionally redeemable Series J Preferred stock that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company's control is classified as temporary equity. The Company's Series J Preferred stock features certain redemption rights that are considered to be outside of the Company's control and subject to occurrence of uncertain future events. Accordingly, Series J preferred stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders' deficit section of the Company's consolidated balance sheets.

Revenue recognition and cost of revenue

The Company adopted Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers. 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.

No revenue was generated during the three months ended March 31, 2026 and 2025.

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.

Basic and diluted income (loss) per share

Pursuant to ASC 260-10-45, basic loss per common share is computed by dividing net loss attributable to common stockholders 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 stockholders by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. Potentially dilutive shares of common stock consist of common stock issuable for stock warrants (using the treasury stock method) and shares issuable for Series E Convertible Preferred Stock (the "Series E Preferred"), Series G Convertible Preferred Stock (the "Series G Preferred"), Series H Convertible Preferred Stock (the "Series H Preferred") and Series J Senior Convertible Preferred Stock (the "Series J Preferred") (using the as-if converted method). Effective as of June 1, 2025, all of our outstanding shares of Series E Preferred and Series G Preferred were exchanged for shares of our Series J Preferred. These common stock equivalents may be dilutive in the future.

Potentially dilutive shares of common stock were excluded from the computation of diluted shares outstanding for the three months ended March 31, 2026 and 2025 as they would have an anti-dilutive impact on the Company's net loss in that period and consisted of the following:

---

| | | |
|:---|:---|:---|
|  | March 31, 2026 | March 31, 2025 |
| Stock warrants | 52857143 | 945353089 |
| Series E convertible preferred stock |  | 95238667 |
| Series G convertible preferred stock |  | 2032500000 |
| Series H convertible preferred stock | 323740000 | 323740000 |
| Series J convertible preferred stock | 11042400000 | - |
|  | 11418997143 | 3399831756 |

---

Income taxes

Deferred income taxes are provided using the liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment.

When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceed the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Applicable interest and penalties associated with unrecognized tax benefits are classified as additional income taxes in the unaudited consolidated statements of operations.

**TRANSPORTATION AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025**

**(Unaudited)**

Recent accounting pronouncements

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), which requires entities to provide more detailed disaggregation of expenses in the income statement, focusing on the nature of the expenses rather than their function. The new disclosures will require entities to separately present expenses for significant line items, including but not limited to, depreciation, amortization, and employee compensation. Entities will also be required to provide a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, disclose the total amount of selling expenses and, in annual reporting periods, provide a definition of what constitutes selling expenses. This pronouncement is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company does not expect the adoption of this new guidance to have a material impact on the unaudited consolidated financial statements.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270), Narrow-Scope Improvements, to provide clarity about the current requirements, rather than evaluate whether to expand or reduce interim disclosure requirements. The amendments in ASU 2025-11 result in a comprehensive list of interim disclosures that are required by GAAP. The amendments in ASU 2025-11 also include a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The amendments in ASU 2025-11 are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027 and early adoption is permitted. The amendments in ASU 2025-11 can be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the disclosure impact that ASU 2025-11 may have on its consolidated financial statement presentation and disclosures.

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 – <u>NOTES PAYABLE – RELATED PARTIES</u>**

On April 14, 2023, the Company's Board of Directors ("Board") approved a credit facility (the "Credit Facility") under which the Company would obtain unsecured senior debt financing of up to $1,000,000. The terms of the Credit Facility provided for interest at 12% per annum. However, upon default, the interest rate shall be 17% per annum. The maturity date of the financing was December 31, 2023, provided, however, the Company may prepay a loan at any time without premium or penalty. Each loan under the Credit Facility was made on promissory notes. During April 2023, the Company received initial loans under the Credit Facility, in the following amounts: (a) $500,000 from John Mercadante ("Mr. Mercadante") on April 17, 2023; Mr. Mercadante is the Company's Secretary and a Director of the Company; and (b) $100,000 from Sebastian Giordano on April 21, 2023; Mr. Giordano is the Company's Chief Executive Officer, Chief Financial Officer and Chairman of the Board. On May 21, 2024, the Company received default notices for its failure to pay outstanding principal and interest due on unsecured promissory notes that were issued on April 17, 2023, to Mr. Mercadante and on April 21, 2023, to Mr. Giordano with respect to $542,575 and $108,708, respectively, in aggregate principal and interest due on December 31, 2023. As such, the interest rate on both notes increased to 17% per annum calculated as of January 1, 2024.

On October 3, 2023, and November 28, 2023, the Company issued unsecured promissory notes to Mr. Mercadante and from an individual, who is affiliated to Mr. Mercadante in the principal amount of $500,000 and $60,000, respectively. Each unsecured promissory note matured nine months and one year from the date of issuance and accrues interest at a rate per annum of 12%, respectively. On July 1, 2024, the Company received a default notice for its failure to pay outstanding principal and interest due on the October 3, 2023, unsecured promissory note to Mr. Mercadante in the principal amount of $500,000 and was due on June 30, 2024. As such, the interest rate on such note increased to 17% per annum as of July 1, 2024. Additionally, on December 9, 2024, the Company received a default notice for its failure to pay outstanding principal and interest due on the November 28, 2024, unsecured promissory note to an individual, who is affiliated to Mr. Mercadante in the principal amount of $60,000 and was due on November 28, 2024. As such, the interest rate on such note increased to 17% per annum as of November 29, 2024.

On February 6, 2024, and February 15, 2024, the Company issued unsecured promissory notes to Mr. Mercadante, a Director of the Company, in the principal amounts of $64,534 and $319,195, respectively. Each unsecured promissory note will mature one year from the date of issuance and accrues interest at a rate per annum of 12%. On February 7, 2025, and February 21, 2025, the Company received default notices for its failure to pay outstanding principal and interest due on unsecured promissory notes that were issued on February 6, 2024 and February 15, 2024 to John Mercadante in the principal amount of $64,534 and $319,195, respectively, and were due on February 6, 2025 and February 15, 2025, respectively. As such, the interest rate on such notes increased to 17% per annum as of February 7, 2025 and February 15, 2025, respectively.

On February 21, 2024, and February 23, 2024, the Company issued unsecured promissory notes to Norman Newton ("Mr. Newton") and Charles Benton ("Mr. Benton"), both members of the Company's Board of Directors, in the principal amounts of $1,000 and $3,109, respectively. Each unsecured promissory note matured on September 30, 2024, and accrued interest at the rate per annum of 12%. On October 1, 2024, the Company received default notices for its failure to pay outstanding principal and interest due on unsecured promissory notes that were issued on February 21, 2024, and February 23, 2024 to Mr. Newton and Mr. Benton in the principal amounts of $1,000 and $3,109, respectively and that were both due on September 30, 2024. As such, the interest rate on such notes increased to 17% per annum as of October 1, 2024.

On May 30, 2025, the Company entered into settlement agreements (the "Series J Settlement Agreements") with certain holders of the Company's liabilities (the "2025 Creditors"), including certain related party note holders (the "Related Party Creditors"). Pursuant to the Series J Settlement Agreements, the Related Party Creditors settled an aggregate of $1,547,838 in outstanding notes and accrued interest payable of $396,695 in exchange for the issuance of an aggregate of 19,446 shares of the Company's Series J Preferred, effective as of June 1, 2025. Among the debt settled with Related Party Creditors were all outstanding notes issued to Mr. Newton, Mr. Mercadante, Mr. Giordano and Mr. Benton. In connection with the exchange of the outstanding notes and related accrued interest payable for shares of Series J Preferred, the Company calculated a gain on debt extinguishment of $1,750,080, which was netted against additional paid-in capital due to the related party relationship and accordingly, no gain or loss was recognized on these settlements.

**TRANSPORTATION AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025**

**(Unaudited)**

As of March 31, 2026 and December 31, 2025, aggregate notes payable to related parties in the principal amounts of $0 were outstanding. As of March 31, 2026 and December 31, 2025, the aggregate accrued interest payable to related parties amounted to $0. For the three months ended March 31, 2026 and 2025, interest expense – related parties amounted to $0 and $62,587, respectively.

**NOTE 4 – <u>NOTE PAYABLE</u>**

On August 12, 2024, the Company issued two (2) promissory notes (the "August 2024 Notes") in the aggregate principal amount of $150,000, with an interest rate of 10% per annum that mature six (6) months from the date of issuance, to Mercer Street Global Opportunity Fund and Cavalry Fund I LP (each a "2024 Lender" and together the "2024 Lenders"). If the Company defaults on the August 2024 Notes, the 2024 Lenders have the right to demand repayment of the August 2024 Notes in full upon five (5) business days' notice to the Company. In the event that full payment is not made upon the expiry of a thirty (30) day period, a default penalty equal to 5.0% per month during the period of default in addition to the 10% interest rate will apply to the entire amount of the August 2024 Notes outstanding, including any accrued but unpaid interest. Concurrently with the issuance of the August 2024 Notes, the Company also entered into a letter agreement of even date (the "August 2024 Letter Agreement") with the August 2024 Lenders setting forth, among other items, the intended use of proceeds of the August 2024 Notes which include: (i) the completion of the Company's 2023 audit and reviews for the subsequent 2024 quarters; (ii) preparation and submission of any requisite filings with the SEC and OTC Expert Market; and (iii) maintaining good standing with requisite taxing authorities. On February 10, 2025, the August 2024 Notes were amended whereby the due date for the outstanding principal and interest of the August 2024 Notes to be due and paid in full was extended from February 12, 2025 to August 12, 2025.

On October 9, 2024, the Company issued two (2) unsecured non-convertible promissory notes (the "October 2024 Notes") in the aggregate principal amount of $100,000, with an interest rate of 10% per annum that mature six (6) months from the date of issuance to the 2024 Lenders. If the Company defaults on the October 2024 Notes, the 2024 Lenders have the right to demand repayment of the October 2024 Notes in full upon five (5) business days' notice to the Company. In the event that full payment is not made upon the expiry of a thirty (30) day period, a default penalty equal to 5.0% per month during the period of default in addition to the 10% interest rate will apply to the entire amount of the October 2024 Notes outstanding, including any accrued but unpaid interest. Concurrently with the issuance of the October 2024 Notes, the Company also entered into a letter agreement of even date (the "October 2024 Letter Agreement") with the 2024 Lenders setting forth, among other items, the intended use of proceeds of the October 2024 Notes which include: (i) the completion of the Company's 2023 audit and reviews for the subsequent 2024 quarters; (ii) preparation and submission of any requisite filings with the SEC and OTC Expert Market; (iii) maintaining good standing with requisite taxing authorities; and (iv) fees for routine litigation matters in the ordinary course of business. On April 9, 2025, the October 2024 Notes were amended to extend the due date for the outstanding principal and interest of the October 2024 Notes from April 9, 2025 to August 12, 2025.

On November 22, 2024, Company issued an unsecured non-convertible promissory note (the "November 2024 Note") in the aggregate principal amount of $50,000, with an interest rate of 10% per annum that mature six (6) months from the date of issuance to a 2024 Lender. If the Company defaults on the November 2024 Note, the 2024 Lender has the right to demand repayment of the November 2024 Note in full upon five (5) business days' notice to the Company. In the event that full payment is not made upon the expiry of a thirty (30) day period, a default penalty equal to 5.0% per month during the period of default in addition to the 10% interest rate will apply to the entire amount of the November 2024 Note outstanding, including any accrued but unpaid interest. Concurrently with the issuance of the November 2024 Note, the Company also entered into a letter agreement of even date (the "November 2024 Letter Agreement") with the 2024 Lender setting forth, among other items, the intended use of proceeds of the November 2024 Note which include: (i) the completion of the Company's 2023 audit and reviews for the subsequent 2024 quarters; (ii) preparation and submission of any requisite filings with the SEC and OTC Expert Market; (iii) maintaining good standing with requisite taxing authorities; and (iv) fees for routine litigation matters in the ordinary course of business.

On January 21, 2025, the Company issued an unsecured non-convertible promissory note (the "January 2025 Note") in the aggregate principal amount of $50,000, with an interest rate of 10% per annum that mature six (6) months from the date of issuance to one of the 2024 Lenders. If the Company defaults on the January 2025 Note, the 2024 Lender has the right to demand repayment of the January 2025 Note in full upon five (5) business days' notice to the Company. In the event that full payment is not made upon the expiry of a thirty (30) day period, a default penalty equal to 5.0% per month during the period of default in addition to the 10% interest rate will apply to the entire amount of the January 2025 Note outstanding, including any accrued but unpaid interest. Concurrently with the issuance of the January 2025 Note, the Company also entered into a letter agreement of even date (the "January 2025 Letter Agreement") with the 2024 Lenders setting forth, among other items, the intended use of proceeds of the January 2025 Notes which include: (i) the completion of the Company's 2024 second and third quarter reviews; (ii) preparation and submission of any requisite filings with the SEC and OTC Expert Market; (iii) maintaining good standing with requisite taxing authorities; and (iv) fees for routine litigation matters in the ordinary course of business.

On March 10, 2025, the Company issued an unsecured non-convertible promissory note in the principal amount of $100,000, with interest at the rate of 10% per annum accruing and due at maturity in six months, to C/M Capital Master Fund, LP (the "2025 Lender") and on March 25, 2025, the Company issued a second unsecured non-convertible promissory note in the principal amount of $75,000, with interest at the rate of 10% per annum accruing and due at maturity in six months to the 2025 Lender. These notes and herein referred to as the "March 2025 Notes". The March 2025 Notes was for the primary purpose of funding a portion of the costs related to: (i) the completion of the Company's 2024 annual financial statements and audit by the Company's independent auditor and 2025 first quarter financial statements and independent auditor review; (ii) preparation and submission of any requisite filings with the Securities and Exchange Commission and the OTC Expert Market; (iii) such tax-related and other activities as may be necessary or legally required from time to time to restore the Company to good standing with requisite taxing authorities; and (iv) fees for routine litigation matters in the ordinary course of business. The Company may repay the March 2025 Notes upon maturity or prior to maturity with the mutual agreement of the 2025 Lender.

Concurrently with the issuance of the March 2025 Notes, the Company also entered into letter agreements of even date (the "March Letter Agreements") with the 2025 Lender setting forth, among other items, the intended use of proceeds of the March 2025 Notes as described above. The March 2025 Notes and the March Letter Agreements are on the same form as those entered in on August 12, 2024, October 9, 2024, and November 22, 2024, January 21, 2025.

On April 9, 2025, we entered into amendment agreements with the 2024 Lenders, pursuant to which the maturity date of the October 2024 Notes was amended from April 9, 2025 to August 12, 2025. All other terms and conditions of the October 2024 Notes remain unchanged.

On May 5, 2025, we entered into an amendment agreement with the 2024 Lender pursuant to which the maturity date of the November 2024 Note was amended from May 22, 2025, to August 12, 2025. All other terms and conditions of the November 2024 Note remain unchanged.

**TRANSPORTATION AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025**

**(Unaudited)**

On May 1, 2025, the Company issued an unsecured non-convertible promissory note in the principal amount of $50,000, with interest at the rate of 10% per annum accruing and due at maturity in six months, to the 2025 Lender (the "May 2025 Note"). The May 2025 Note was for the primary purpose of funding a portion of the costs related to: (i) the preparation and filing of the Company's prepare the Company's Certificate of Designation of Preferences, Rights, and Limitations of Series J Senior Convertible Preferred Stock (the "Series J Certificate"); (ii) preparation and submission of any requisite filings with the Securities and Exchange Commission and the OTC Expert Market; (iii) such tax-related and other activities as may be necessary or legally required from time to time to restore the Company to good standing with requisite taxing authorities; and (iv) fees for routine litigation matters in the ordinary course of business. The Company may repay the May 2025 Note upon maturity or prior to maturity with the mutual agreement of the 2025 Lender.

On August 27, 2025, the Company issued an unsecured non-convertible promissory note in the principal amount of $50,000, with interest at the rate of 10% per annum accruing and due at maturity in six months, to the 2025 Lender (the "August 2025 Note"). The August 2025 Note was for the primary purpose of funding a portion of the costs related to (i) preparation and submission of any requisite filings with the Securities and Exchange Commission and the OTC Expert Market; (ii) such tax-related and other activities as may be necessary or legally required from time to time to restore the Company to good standing with requisite taxing authorities; and (iii) fees for routine litigation matters in the ordinary course of business. The Company may repay the August 2025 Note upon maturity or prior to maturity with the mutual agreement of the 2025 Lender.

Between May 30, 2025 and December 31, 2025, the Company entered into Series J Settlement Agreements with the 2024 and 2025 Creditors, pursuant to which, the 2024 and 2025 Creditors, not including Related Party Creditors, settled an aggregate of $625,000 in outstanding notes and accrued interest payable of $27,260 in exchange for the issuance of an aggregate of 6,522 shares of Series J Preferred. In connection with the exchange of the outstanding notes and interest payable for shares of Series J Preferred, during the year ended December 31, 2025, the Company recorded a gain on debt extinguishment of $587,095, which is included in gain on debt extinguishment on the accompanying unaudited consolidated statement of operations.

On January 9, 2026, the Company entered into an unsecured non-convertible promissory note (the "January 2026 Note") in the principal amount of $75,000, with interest at the rate of 10% per annum accruing and due at maturity six months following the issuance date, with the 2025 Lender for the primary purpose of funding a portion of the costs related to: (i) the preparation and filing of the Company's Registration Statement on Form S-1 to register the resale of shares of common stock, issuable upon conversion of certain shares of the Company's Series J Preferred Stock; (ii) preparation and submission of any requisite filings with the Securities and Exchange Commission and the OTC Expert Market; (iii) such tax-related and other activities as may be necessary or legally required from time to time to restore the Company to good standing with requisite taxing authorities; (iv) transfer agent costs, and (v) fees for routine litigation matters and other legal fees in the ordinary course of business. The Company may repay the January 2026 Note upon maturity or prior to maturity with the mutual agreement of the 2025 Lender. The January 2026 Note also contains customary events of default, which include, without limitation, failure to pay principal, interest or other charges in respect of the January 2026 Note when due at maturity or otherwise, failure to satisfy any covenant in the Note or other agreements between the Company and the 2025 Lender or any other creditor, breach of representations and warranties set forth in the January 2026 Note or any transaction document executed contemporaneously with the January 2026 Note, and certain judgment defaults, events of bankruptcy or insolvency of the Company. Upon the occurrence of such an event of default under the January 2026 Note, the 2025 Lender has the right to demand repayment of the January 2026 Note in full upon five (5) business days' notice to the Company. In the event that full payment is not made upon the expiry of a thirty (30) day period, a default penalty equal to 5.0% per month during the period of default in excess of the 10% interest rate will apply to the entire amount of the January 2026 Note outstanding, including any accrued but unpaid interest. The 2025 Lender may then, at its sole discretion, declare the entire then-outstanding principal amount of the January 2026 Note and any accrued but unpaid interest due thereunder immediately due and payable, in which event the 2025 Lender may, at its sole discretion, take any action it deems necessary to recover amounts due under the Note. Concurrently with the issuance of the January 2026 Note, the Company also entered into a letter agreement of even date (the "<u>Letter Agreement</u>") with the Lender setting forth, among other items, the intended use of proceeds of the Note as described above. The January 2026 Note and the Letter Agreement are on the same form as those previously entered into with the 2025 Lender.

As of March 31, 2026 and December 31, 2025, aggregate notes payable in the aggregate principal amounts of $75,000 and $0, respectively, were outstanding. As of March 31, 2026 and December 31, 2025, aggregate accrued interest payable on notes payable of $1,685 and $0, respectively, were outstanding, which is included in accrued expenses on the accompanying consolidated balance sheets.

**NOTE 5– <u>STOCKHOLDERS' EQUITY (DEFICIT)</u>**

Preferred stock

The Company has 10,000,000 authorized shares of preferred stock, $0.001 par value per share. The Company's Amended and Restated Articles of Incorporation explicitly authorize the Board to issue any or all of such shares of preferred stock in one (1) or more classes or series and to fix the designations, powers, preferences and rights, the qualifications, limitations or restrictions thereof, including dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares constituting any class or series, without further vote or action by the stockholders.

***Series B preferred stock***

On August 16, 2019, the Company filed the Certificate of Designation, Preferences, and Rights of Series B Convertible Preferred Shares with the Secretary of State of the State of Nevada (the "Series B Preferred COD") designating 1,700,000 shares of Series B Convertible Preferred Stock with a par value of $0.001 and a stated value of $0.001 (the "Series B Preferred"). The Series B Preferred have no voting rights and are not redeemable. Each share of Series B Preferred stock is convertible into one share of common stock at the option of the holder subject to beneficial ownership limitation. A holder of Series B Preferred may not convert any shares of Series B Preferred into common stock if the holder (together with the holder's affiliates and any persons acting as a group together with the holder or any of the holder's affiliates) would beneficially own in excess of 4.99% of the number of shares of common stock outstanding immediately after giving effect to the conversion, as such percentage ownership is determined in accordance with the terms of the Series B Preferred COD. However, upon notice from the holder to the Company, the holder may decrease or increase the beneficial ownership limitation, which may not exceed 9.99% of the number of shares of common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Series B Preferred COD, provided that any such increase or decrease in the beneficial ownership limitation will not take effect until 61 days following notice to the Company.

**TRANSPORTATION AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025**

**(Unaudited)**

As of March 31, 2026 and December 31, 2025, there were no Series B preferred stock issued or outstanding.

***Series D preferred stock***

On July 20, 2020, the Board filed the Certificate of Designation of Preferences ("COD"), Rights and Limitations of Series D Preferred Stock (the "Series D COD") with the Secretary of State of the State of Nevada designating 1,250,000 shares of preferred stock as Series D. The Series D preferred stock ("Series D Preferred") does not have the right to vote. The Series D Preferred has a stated value of $6.00 per share (the "Series D Stated Value"). Subject only to the liquidation rights of the holders of Series B Preferred that is currently issued and outstanding, upon the liquidation, dissolution or winding up of the business of the Company, whether voluntary or involuntary, the Series D Preferred holders are entitled to receive an amount per share equal to the Series D Stated Value and then receive a pro-rata portion of the remaining assets available for distribution to the holders of common stock on an as-converted to common stock basis.

Subject to a beneficial ownership limitation and customary adjustments for stock dividends and stock splits, each share of Series D Preferred is convertible into 1,000 shares of common stock. A holder of Series D Preferred may not convert any shares of Series D Preferred into common stock if the holder (together with the holder's affiliates and any persons acting as a group together with the holder or any of the holder's affiliates) would beneficially own in excess of 4.99% of the number of shares of common stock outstanding immediately after giving effect to the conversion, as such percentage ownership is determined in accordance with the terms of the Series D COD. However, upon notice from the holder to the Company, the holder may decrease or increase the beneficial ownership limitation, which may not exceed 9.99% of the number of shares of common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Series D COD, provided that any such increase or decrease in the beneficial ownership limitation will not take effect until 61 days following notice to the Company.

Approval of at least a majority of the outstanding Series D Preferred is required to: (a) amend or repeal any provision of, or add any provision to, the Company's Articles of Incorporation or bylaws, or file any Certificate of Designation (however such document is named) or articles of amendment to create any class or any series of preferred stock, if such action would adversely alter or change in any respect the preferences, rights, privileges or powers, or restrictions provided for the benefit, of the Series D Preferred, regardless of whether any such action shall be by means of amendment to the Articles of Incorporation or bylaws or by merger, consolidation or otherwise or filing any Certificate of Designation, it being understood that the creation of a new security having rights, preferences or privileges senior to or on parity with the Series D Preferred in a future financing will not constitute an amendment, addition, alteration, filing, waiver or repeal for these purposes; (b) increase or decrease (other than by conversion) the authorized number of Series D Preferred; (c) issue any Series D Preferred, other than to the Investors; or (d) without limiting any provision hereunder, whether or not prohibited by the terms of the Series D Preferred, circumvent a right of the Series D Preferred.

As of March 31, 2026 and December 31, 2025, no shares of Series D Preferred were outstanding.

***Series E preferred stock***

On October 6, 2020, the Board filed the Certificate of Designation of Preferences, Rights and Limitations of Series E Convertible Preferred Stock (the "Series E COD") with the Secretary of State of the State of Nevada designating 562,250 shares of preferred stock as Series E Preferred.

On December 28, 2020, the Board filed an Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series E Convertible Preferred Stock (the "Amended Series E COD") with the Secretary of State of the State of Nevada. The Series E Preferred has a stated value of $13.34 per share (the "Series E Stated Value"). Pursuant with the Amended Series E COD:

● Each holder of Series E Preferred has the right to cast the number of votes equal to the number of whole shares of common stock into which the shares of Series E Preferred held by such holder are convertible as of the applicable record date.

● Unless prohibited by Nevada law governing distributions to stockholders, for a period of one-year beginning with the Original Issuance Date, as defined, the Corporation shall have the right but not the obligation to redeem all outstanding Series E Preferred (and not any part of the Series E Preferred) at a price equal to 115 % of (i) the Series E Stated Value per share plus (ii) all unpaid dividends thereon. If the Company fails to redeem all outstanding Series E on the redemption date, it shall be deemed to have waived its redemption right.

Subject to a beneficial ownership limitation and customary adjustments for stock dividends and stock splits, each share of Series E Preferred shall be convertible into that number of shares of common stock calculated by dividing the Series E Stated Value of each share of Series E Preferred being converted by the conversion price. The initial conversion price was $0.01, subject to certain adjustments as provided below. In addition, the Company shall issue any holder of Series E Preferred converting all or any portion of their Series E Preferred an additional sum (the "Make Good Amount") equal to $210 for each $1,000 of Series E Stated Value of the Series E Preferred converted pro-rated for amounts more or less than $1,000, increasing to $310 for each $1,000 of Series E Stated Value during the Triggering Event Period (the "Extra Amount"). Subject a beneficial ownership limitation of 4.99% or 9.99%, the Make Good Amount shall be paid in shares of common stock, as follows: The number of shares of common stock issuable as the Make Good Amount shall be calculated by dividing the Extra Amount by the product of 80% times the average VWAP for the five trading days prior to the date a holder delivered a notice of conversion to the Company (the "Conversion Date"). During the Triggering Event Period, the number of shares of common stock issuable as the Make Good Amount shall be calculated by dividing the Extra Amount by the product of 70% times the average VWAP for the five trading days prior to the Conversion Date.

Subject to a beneficial ownership limitation of 4.99% or 9.99%, at any time during the period commencing on the date of the occurrence of a Triggering Event and ending on the date of the cure of such Triggering Event (the "Triggering Event Period"), a holder may, at such holder's option, by delivery of a conversion notice to the Company to convert all, or any number of Series E Preferred (such conversion amount of the Series E Preferred to be converted pursuant to this Section 6(b) (the "Triggering Event Conversion Amount"), into shares of common stock at the Triggering Event Conversion Price. The "Triggering Event Conversion Amount" means 125% of the Series E Stated Value and the "Triggering Event Conversion Price" means $0.006.

**TRANSPORTATION AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025**

**(Unaudited)**

If and whenever on or after the initial issuance date but not after two years from the original issuance date, the Company issues or sells, or is deemed to have issued or sold, additional shares of common stock, options, warrants of convertible instruments, other than an exempt issuance, for a consideration per share (the "Base Share Price") less than a price equal to the conversion price in effect immediately prior to such issuance or sale or deemed issuance or sale (such conversion price then in effect is reflected to herein as the "Applicable Price") (the foregoing a "Dilutive Issuance"), then immediately after such Dilutive Issuance, the conversion price then in effect shall be reduced to an amount equal to the base share price.

From and after the Original Issuance Date, cumulative dividends on each share of Series E Preferred shall accrue, whether or not declared by the Board and whether or not there are funds legally available for the payment of dividends, on a daily basis in arrears at the rate of 6% per annum based on a 360-day year on the Series E Stated Value plus all unpaid accrued and accumulated dividends thereon.

On a pari passu basis with the holders of Series D Preferred that was issued and outstanding, upon the liquidation, dissolution or winding up of the business of the Company, whether voluntary or involuntary, the Series E Preferred is entitled to receive an amount per share equal to the Series E Stated Value and then receive a pro-rata portion of the remaining assets available for distribution to the holders of common stock on an as-converted to common stock basis. Until the date that such Series E Preferred holder no longer owns at least 50% of the Series E Preferred, the holders of Series E Preferred have the right to participate, pro rata, in each subsequent financing in an amount up to 25% of the total proceeds of such financing on the same terms, conditions and price otherwise available in such subsequent financing.

Approval of at least a majority of the outstanding Series E Preferred is required to: (a) amend or repeal any provision of, or add any provision to, the Company's Articles of Incorporation or bylaws, or file any Certificate of Designation (however such document is named) or articles of amendment to create any class or any series of preferred stock, if such action would adversely alter or change in any respect the preferences, rights, privileges or powers, or restrictions provided for the benefit, of the Series E Preferred, regardless of whether any such action shall be by means of amendment to the Articles of Incorporation or bylaws or by merger, consolidation or otherwise or filing any Certificate of Designation, but the creation of a new security having rights, preferences or privileges senior to or on parity with the Series E Preferred in a future financing will not constitute an amendment, addition, alteration, filing, waiver or repeal for these purposes; (b) increase or decrease (other than by conversion) the authorized number of Series E Preferred; (c) issue any Series D Preferred, (d) issue any Series E Preferred in excess of 562,250 or (e) without limiting any provision under the Series E COD, whether or not prohibited by the terms of the Series E Preferred, circumvent a right of the Series E Preferred.

These Series E Preferred issuances with redemption provisions that permit the issuer to settle in either cash or common stock, at the option of the issuer, were evaluated to determine whether temporary or permanent equity classification on the consolidated balance sheet was appropriate. As per the terms of the Amended Series E COD, the Company shall have the right but not the obligation to redeem all outstanding Series E Preferred (and not any part of the Series E Preferred) at a price equal to 115% of (i) the Series E Stated Value per share plus (ii) all unpaid dividends thereon. As such, since the Series E is redeemable upon the occurrence of an event that is within the Company's control, the Series E Preferred is classified as permanent equity.

The Company concluded that the Series E Preferred represented an equity host and, therefore, the redemption feature of the Series E Preferred was considered to be clearly and closely related to the associated equity host instrument. The redemption features did not meet the net settlement criteria of a derivative and, therefore, were not considered embedded derivatives that required bifurcation. The Company also concluded that the conversion rights under the Series E Preferred were clearly and closely related to the equity host instrument. Accordingly, the conversion rights feature on the Series E Preferred were not considered an embedded derivative that required bifurcation.

On June 17, 2025 and in July 2025, the Company entered into exchange agreements with holders of the Company's securities (the "Exchange Agreements"), including holders of shares of Series E Preferred (the "Series E Preferred Shareholders") pursuant to which, the Series E Preferred Shareholders converted 21,418 Series E Preferred Shares and accrued dividends payable of $192,776 in exchange for the issuance of shares of Series J Preferred Stock, effective as of June 1, 2025 (See Series J preferred stock below***).***

As of March 31, 2026 and December 31, 2025, the Company has accrued dividends payable of $9,741 and $9,741, respectively, which has been included in accrued expenses on the accompanying unaudited consolidated balance sheets.

As of March 31, 2026 and December 31, 2025, no shares of Series E Preferred were issued and outstanding.

***Series G preferred stock***

On December 31, 2021, we entered into securities purchase agreements with investors pursuant to which the Company issued an aggregate of (i) 710,000 shares of a newly created series of preferred stock called the Series G Preferred and (ii) common stock purchase warrants to purchase up to 700,000,000 shares of the Company's common stock with an exercise price of $0.01 (the "Series G Offering"). In connection with the Series G Offering, on December 28, 2021, the Company filed the Certificate of Designation of Preferences, Rights and Limitations of Series G Convertible Preferred Stock (as amended, the "Series G COD") with the Secretary of State of the State of Nevada designating 1,000,000 shares of preferred stock as Series G Preferred. The Series G Preferred has a stated value of $10.00 per share (the "Series G Stated Value"). The gross proceeds to the Company from the Series G Offering were $7,100,000.

Pursuant to the Series G COD,

● Each holder of Series G Preferred has the right to cast the number of votes equal to the number of whole shares of common stock into which the shares of Series G Preferred held by such holder are convertible as of the applicable record date.

● Unless prohibited by Nevada law governing distributions to stockholders, for a period of one-year beginning with the original issuance date, as defined, the Company shall have the right but not the obligation to redeem all outstanding Series G Preferred (and not any part of the Series G Preferred) at a price equal to 115 % of (i) the Series G Stated Value per share plus (ii) all unpaid dividends thereon. If the Company fails to redeem all outstanding Series G Preferred on the redemption date, it shall be deemed to have waived its redemption right.

**TRANSPORTATION AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025**

**(Unaudited)**

Subject to a beneficial ownership limitation and customary adjustments for stock dividends and stock splits, each share of Series G Preferred shall be convertible into that number of shares of common stock calculated by dividing the Series G Stated Value of each share of Series G Preferred being converted by the applicable conversion price. The initial conversion price of the Series G Preferred is $0.01, subject to adjustment as provided below. In addition, the Company will issue a holder of Series G Preferred converting all or any portion of their Series G Preferred an additional sum (the "Series G Make Good Amount") equal to $210 for each $1,000 of Series G Stated Value converted pro-rated for amounts more or less than $1,000 (the "Series G Extra Amount"). Subject to a beneficial ownership limitation, the Make Good Amount shall be paid in shares of common stock, as follows: the number of shares of common stock issuable as the Make Good Amount shall be calculated by dividing the Series G Extra Amount by the product of 80% times the average VWAP for the five trading days prior to the date a holder of Series G Preferred delivered a notice of conversion to the Company (the "Conversion Date").

If and whenever on or after the initial issuance date but not after two years from the original issuance date, the Company issues or sells, or is deemed to have issued or sold, additional shares of common stock, options, warrants of convertible instruments, subject to certain exceptions, for a consideration per share (the "Base Share Price") less than a price equal to the applicable conversion price in effect immediately prior to such issuance or sale or deemed issuance or sale (such conversion price then in effect is reflected to herein as the "Applicable Price") (the foregoing a "Dilutive Issuance"), then immediately after such Dilutive Issuance, the conversion price then in effect shall be reduced to an amount equal to the Base Share Price.

From and after the original issuance date, cumulative dividends on each share of Series G Preferred shall accrue, whether or not declared by the Board and whether or not there are funds legally available for the payment of dividends, on a daily basis in arrears at the rate of 6% per annum based on a 360-day year on the Series G Stated Value plus all unpaid accrued and accumulated dividends thereon.

On a pari passu basis with the holders of Series E Preferred, upon the liquidation, dissolution or winding up of the business of the Company, whether voluntary or involuntary, the Series G Preferred is entitled to receive an amount per share equal to the Series G Stated Value and then receive a pro-rata portion of the remaining assets available for distribution to the holders of common stock on an as-converted to common stock basis. The holders of Series G Preferred have the right to participate, pro rata, in each subsequent financing in an amount up to 40% of the total proceeds of such financing on the same terms, conditions and price otherwise available in such subsequent financing.

Approval of at least two-thirds of the outstanding Series G Preferred is required to: (a) amend or repeal any provision of, or add any provision to, the Company's Articles of Incorporation or bylaws, or file any Certificate of Designation (however such document is named) or articles of amendment to create any class or any series of preferred stock, if such action would adversely alter or change in any respect the preferences, rights, privileges or powers, or restrictions provided for the benefit, of the Series G Preferred, regardless of whether any such action shall be by means of amendment to the Articles of Incorporation or bylaws or by merger, consolidation or otherwise or filing any Certificate of Designation, but the creation of a new security having rights, preferences or privileges senior to or on parity with the Series G Preferred in a future financing will not constitute an amendment, addition, alteration, filing, waiver or repeal for these purposes; (b) increase or decrease (other than by conversion) the authorized number of Series G Preferred; (c) issue any Series E Preferred or Series D Preferred, (d) issue any Series G Preferred in excess of 1,000,000 or (e) without limiting any provision under the Series G COD, whether or not prohibited by the terms of the Series G Preferred, circumvent a right of the Series G Preferred.

Under the terms of the Series G Preferred, if the Company issues or sells (or is deemed to have issued or sold) additional shares of common stock for a price-per-share that is less than the price equal to the conversion price of the Series G Preferred held by the holders of the Series G Preferred immediately prior to such issuance, then the conversion price of the Series G Preferred will be reduced to the price per share of such dilutive issuance. As a result of the issuance of common stock on the exercise of certain Eligible Warrants at an exercise price of $0.002 per share, the conversion price for all 406,500 remaining outstanding Series G Preferred shall henceforth be $0.002 per share.

The Series G Preferred share issuances with redemption provisions that permit the issuer to settle in either cash or common stock, at the option of the issuer, were evaluated to determine whether temporary or permanent equity classification on the consolidated balance sheet was appropriate. As per the terms of the Series G preferred stock agreements, the Company shall have the right but not the obligation to redeem all outstanding Series G Preferred (and not any part of the Series E Preferred) at a price equal to 115% of (i) the Series G Stated Value per share plus (ii) all unpaid dividends thereon. As such, since Series G Preferred is redeemable upon the occurrence of an event that is within the Company's control, the Series G Preferred is classified as permanent equity.

The Company concluded that the Series G Preferred represented an equity host and, therefore, the redemption feature of the Series G Preferred was considered to be clearly and closely related to the associated equity host instrument. The redemption features did not meet the net settlement criteria of a derivative and, therefore, were not considered embedded derivatives that required bifurcation. The Company also concluded that the conversion rights under the Series G Preferred were clearly and closely related to the equity host instrument. Accordingly, the conversion rights feature on the Series G Preferred were not considered an embedded derivative that required bifurcation.

During the year ended December 31, 2025, there were no conversions of Series G Preferred into common stock.

Effective June 1, 2025, the Company entered into the Exchange Agreements with holders of the Company's securities, including holders of shares of Series G Preferred (the "Series G Preferred Shareholders"), pursuant to which, the Series G Preferred Shareholders agreed to convert 406,500 shares of Series G Preferred and accrued dividends of $925,047 in exchange for the issuance of Series J Preferred (See Series J preferred stock below***).***

As of March 31, 2026 and December 31, 2025, the Company had accrued dividends payable of $0.

As of March 31, 2026 and December 31, 2025, no shares of Series G Preferred were issued and outstanding.

 ****

**TRANSPORTATION AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025**

**(Unaudited)**

 ****

***Series H preferred stock***

On September 20, 2022, the Company filed the Certificate of Designation of Preferences, Rights and Limitations of Series H Convertible Preferred Stock (the "Series H COD") with the Secretary of State of the State of Nevada designating 35,000 shares of preferred stock as Series H ("Series H Preferred"). The Series H Preferred has no stated value and pursuant to the Series H COD:

● Each share of Series H Preferred shall have no voting rights.

● Each share of Series H Preferred shall be convertible into 10,000 shares of the Company's common stock, subject to the beneficial ownership limitations. The "Beneficial Ownership Limitation" shall be 4.99% of the number of shares of the common stock outstanding immediately after giving effect to the issuance of shares of common stock issuable upon conversion of the Series H Preferred held by such holder. The holder of Series H Preferred and the Company, by mutual consent, may increase or decrease the Beneficial Ownership Limitation provisions of the Series H COD, provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the Series H Preferred held by the Holder.

● Upon the liquidation, dissolution or winding up of the business of the Company, whether voluntary or involuntary, each holder of Series H Preferred stock shall be entitled to receive out of assets of the Company legally available therefor the same amount that a holder of the Company's common stock would receive on an as-converted basis (without regard to the beneficial ownership limitation or any other conversion limitations hereunder). The right of a Series H Holder to receive such payment shall be preferential to the right of holders of common stock but shall be subordinate to the rights of the holder of any other series of preferred stock of the Company.

As of both March 31, 2026 and December 31, 2025, 32,374 shares of Series H Preferred were outstanding.

***Series J convertible preferred stock***

On May 5, 2025, we filed with the Secretary of State of the State of Nevada (the "Nevada Secretary of State") the Certificate of Designation of Preferences, Rights, and Limitations of Series J Senior Convertible Preferred Stock ("Series J Preferred") to designate 1,000,000 shares of the Company's authorized and unissued preferred stock as Series J Preferred (the "Series J Certificate"). The Series J Certificate became effective upon its filing with the Nevada Secretary of State. On September 5, 2025, the Company filed an Amendment (the "Series J Certificate Amendment") to the Series J Certificate with the Secretary of State of the State of Nevada. Each share of Series J Preferred has a stated value of $100. Beginning on June 1, 2025, and on each successive six-month anniversary, holders of the shares of the Series J Preferred are entitled to receive dividends, in either cash or stock at the option of the Company, equal to 10% of the aggregate stated value of each such holders Series J Preferred. Such dividends accrue and compound daily based on a 360-day year.

Holders of the Series J Preferred are entitled to vote on matters in which the holders of shares of the Company's common stock are entitled to vote on an as-converted basis, which assumes each holder of Series J Preferred have converted their shares of Series J Preferred into shares of common stock. In addition, so long as any shares of Series J Preferred are outstanding, the Company cannot, without the affirmative vote of the holders of a majority of the then-outstanding shares of Series J Preferred, which vote as a separate class, (a) alter or change adversely the powers, preferences or rights given to the Series J Preferred or alter or amend the Series J Certificate of Designation, (b) amend the articles of incorporation of the Company or any other charter documents of the Company in any manner that adversely affects any rights of the Series J Preferred or (c) enter into any agreement with respect to any of the foregoing.

The Series J Preferred, with respect to the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company, are senior in rank to all shares of capital stock of the Company that are outstanding on the date that shares of Series J Preferred are issued. At any time from and after the date of issuance of any Series J Preferred, a holder of Series J Preferred may convert all, or any part, of the outstanding Series J Preferred, at any time at such holder's option, into shares of common stock at an initial conversion price of $0.001, which is subject to proportional adjustment upon the occurrence of any stock split, stock dividend, stock combination and/or similar transactions. Subject to any applicable rules and regulations of the Nasdaq Capital Market, the Company has the right to, at any time, with the written consent of a majority of the holders of outstanding Series J Preferred, lower the conversion price to any amount.

Each holder of Series J Preferred is prohibited from converting their shares of Series J Preferred if, after giving effect to the issuance of such shares of common stock, such holder together with its affiliates would beneficially own more than 4.99% of the outstanding common stock. A holder of Series J Preferred may increase such beneficial ownership limitation to 9.99% upon notice to the Company, with such increase becoming effective on the 61st day after such notice is delivered to the Company. In addition, holders of Series J Preferred are prohibited from converting their shares of Series J Preferred if such conversion would result in an amount of common stock being issued to such holder that is equal to more than 10% of the trading volume of the common stock, however, if the conversion price at the time of conversion is greater than $0.40, then such prohibition will not apply.

During such time as any Series J Preferred are outstanding, if the Company declares or makes any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of common stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction), other than dividends or issuances of rights pursuant to the Company's existing rights agreement to holders of common stock, at any time after the issuance of the Series J Preferred, then, in each such case, the holder will be entitled to participate in such distribution to the same extent that the holder would have participated therein if the holder had held the number of shares of common stock acquirable upon complete conversion of the Series J Preferred (without regard to any limitations on conversion hereof, including without limitation, the beneficial ownership limitation) immediately before the date of which a record is taken for such distribution, or, if no such record is taken, the date as of which the record holders of shares of common stock are to be determined for the participation in such distribution.

The shares of Series J Preferred are redeemable upon the occurrence of certain triggering events, excluding events, facts or circumstances that occurred prior to or were in existence as of the date of the Series J Certificate. Upon such triggering events, holders of Series J Preferred have the option to cause the Company to redeem all or part of such holder's shares of Series J Preferred at a price per share equal to 110% of the stated value of such shares. The Company accounts for its Series J preferred stock subject to possible redemption in accordance with the guidance in ASC Topic 480 "Distinguishing Liabilities from Equity." Conditionally redeemable Series J Preferred stock that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company's control is classified as temporary equity. The Company's Series J Preferred stock features certain redemption rights that are considered to be outside of the Company's control and subject to occurrence of uncertain future events. Accordingly, Series J preferred stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders' deficit section of the Company's consolidated balance sheets as of December 31, 2025. In connection with the recording of the 10% redemption premium, the Company increased the redemption value of the Series J preferred stock by $964,230, which was reflected as an offset against additional paid-in capital.

**TRANSPORTATION AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025**

**(Unaudited)**

In the event of any liquidation, dissolution or winding up of the Company, each holder of Series J Preferred is entitled to an amount in cash equal to 120% of the aggregate stated value of Series J Preferred held by such holder. In addition, holders of Series J Preferred are entitled to any accrued and unpaid dividends upon an event of liquidation, dissolution or winding up of the Company.

On September 5, 2025, the Company filed an Amendment (the "Series J Certificate Amendment") to the Series J Certificate with the Secretary of State of the State of Nevada to, among other things, amend what constitutes a triggering event to exclude events, facts or circumstances that occurred prior to or were in existence as of the date of the Series J Certificate.

Between June 17, 2025 and June 30, 2025, the Company entered into Exchange Agreements with the holders of the Company's securities, pursuant to which (i) an aggregate of 21,418 shares of Series E Preferred and accrued dividends of $191,160 and 406,500 shares of Series G Preferred and accrued dividends of $925,047 were exchanged, and (ii) common stock purchase warrants to purchase up to 593,642,860 shares of common stock (the "Cancelled Warrants") were cancelled for an aggregate of 54,719 shares of Series J Preferred, effective as of June 1, 2025. During July 2025, the Company entered into Series J Settlement Agreements with former holders of shares of Series E Preferred and Series G Preferred, pursuant to which, such former shareholders converted accrued dividends of $1,616 and cancelled warrants to purchase up to 35,000,000 shares of common stock in exchange for the issuance of an aggregate of 47 shares of Series J Preferred. In connection with the exchange of Series E Preferred and Series G Preferred and outstanding accrued dividends to Series J Preferred, during the year ended December 31, 2025, the Company recorded a gain on debt extinguishment of $429,585, respectively, which is included in gain on debt extinguishment on the accompanying consolidated statement of operations. Additionally, on June 1, 2025, in connection with the exchange of shares of Series E Preferred and Series G Preferred and the cancellation of the Cancelled Warrants, the Company determined that all such securities were extinguished as a result of such exchange and cancellation. As a result, the difference between the carrying amount of the shares of Series E Preferred and Series G Preferred and the fair value of the shares of Series J Preferred, in an amount equal to $800,380 was recognized as a deemed contribution in the year ended December 31, 2025 that increased additional paid-in capital and income attributable to common shareholders in calculating net income (loss) per common share in accordance with ASC 260-10.

Between May 30, 2025 and September 30, 2025, the Company entered into Series J Settlement Agreements with the 2025 Creditors. Pursuant to the Series J Settlement Agreements, the 2025 Creditors, not including the Related Party Creditors, settled an aggregate of $625,000 in outstanding notes and accrued interest of $27,260 in exchange for the issuance of an aggregate of 6,522 shares of Series J Preferred, effective as of June 1, 2025. In connection with the exchange of such outstanding notes and related accrued interest to Series J Preferred, during the year ended December 31, 2025, the Company recorded a gain on debt extinguishment of $587,080, which is included in gain on debt extinguishment on the accompanying consolidated statement of operations.

On May 30, 2025, the Company entered into Series J Settlement Agreements with the Related Party Creditors. Pursuant to the Series J Settlement Agreements, the Related Party Creditors settled an aggregate of $1,547,838 in outstanding notes and accrued interest payable of $396,695 in exchange for the issuance of an aggregate of 19,446 shares of Series J Preferred, effective as of June 1, 2025. In connection with the exchange of the outstanding notes and related accrued interest payable for shares of Series J Preferred, the Company calculated a gain on debt extinguishment of $1,750,080, which was netted against additional paid-in capital and accordingly, no gain or loss was recognized on these settlements.

Between May 30, 2025 and July 21, 2025, the Company entered into Series J Settlement Agreements with certain vendors of the Company (the "Vendors"), pursuant to which the Vendors settled an aggregate of $550,395 in outstanding accounts payable and accrued expense payable in exchange for the issuance of an aggregate of 5,504 shares of Series J Preferred, effective as of June 1, 2025. Additionally, on July 21, 2025, the Company entered into the A&S Settlement Agreement in connection with the A&S Claim in which all claims aggregating $125,000 were resolved by the issuance of 1,250 shares of the Company's Series J Senior Convertible Preferred Stock. On July 21, 2025, the Company entered into a Series J Settlement Agreement with a vendor (the "July Vendor"), pursuant to which the July Vendor agreed to settle $379,961 in outstanding accounts payable and accrued expense payable in exchange for the issuance of an aggregate of 3,800 shares of Series J Preferred. On July 21, 2025, the Company entered into the Litigation Settlement Agreement with SCS, pursuant to which the Company settled $36,000 in money the Company owed to SCS in exchange for the issuance of 360 shares of Series J Preferred Stock, effective as of July 23, 2025. As of December 31, 2024, the settlement amount of $36,000 had been recorded and reflected in accounts payable on the accompanying consolidated balance sheet. In connection with the exchange of outstanding accounts payable and accrued expense to shares of Series J Preferred, during the year ended December 31, 2025, the Company recorded a gain on debt extinguishment of $982,210.

On August 28, 2025, the Company issued aggregate of 4,775 shares of Series J Preferred to the Company's chief executive officer and certain consultants as compensation for services rendered to the Company. The Series J Preferred was valued at the as if converted fair value of $47,750 using the quoted price of the common stock on the issuance date. In connection with these issuances, for the year ended December 31, 2025, the Company recorded stock-based compensation of $40,000 and stock-based professional fees of $7,750.

On October 15, 2025, the Company entered into settlement agreements (the "<u>Board Settlement Agreements</u>") with certain directors of the Company pursuant to which the directors settled an aggregate of $374,491 in outstanding liabilities, in exchange for the issuance of an aggregate of 3,785 shares of Series J Preferred. In connection with the exchange of the outstanding liabilities for shares of Series J Preferred, the Company calculated a loss on debt extinguishment of $4,000 related to the issuance of an additional 40 shares of Series J Preferred to one director. Additionally, the Company calculated a gain on debt extinguishment of $337,042, which was netted against additional paid-in capital and accordingly, no gain or loss was recognized on these settlements.

On November 12, 2025, the Company entered into exchange agreements (the "November Exchange Agreements") with certain holders (the "November Exchange Holders") of outstanding warrants to purchase up to an aggregate of 235,714,285 shares of common stock, pursuant to which the November Exchange Holders agreed to cancel, and we cancelled effective as of such date, their respective outstanding warrants in exchange for the issuance of an aggregate of 209 shares of Series J Preferred. In connection with the exchange of outstanding warrants to shares of Series J Preferred, during the year ended December 31, 2025, the Company recorded a loss on debt extinguishment of $20,900.

**TRANSPORTATION AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025**

**(Unaudited)**

On December 15, 2025, the Company entered into a settlement agreement (the "CEO <u>Settlement Agreement</u>") with Sebastian Giordano, with respect to certain outstanding liabilities (the "<u>Outstanding Liabilities</u>"). Pursuant to the CEO Settlement Agreement, Mr. Giordano agreed to settle an aggregate of $1,400,712 in Outstanding Liabilities in exchange for the issuance of an aggregate of 10,007 shares of the Company's Series J Preferred Stock. In connection with the exchange of the Outstanding Liabilities for shares of Series J Preferred, the Company calculated a gain on debt extinguishment of $400,012 related to the forgiveness of $400,000 of accrued severance pay due, which was included in additional paid-in capital and no gain or loss was recognized. Additionally, the Company calculated a gain on debt extinguishment of $100,070, which was netted against additional paid-in capital and accordingly, no gain or loss was recognized on these settlements.

As of both March 31, 2026 and December 31, 2025, 110,424 shares of Series J Preferred were outstanding.

Warrants

Warrant activities for the three months ended March 31, 2026 are summarized as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Number of Shares<br> Issuable Upon<br> Exercise of<br> Warrants | Weighted<br> Average Exercise<br> Price | Weighted Average<br> Remaining<br> Contractual Term<br> (Years) | Aggregate<br> Intrinsic Value |
| Balance Outstanding December 31, 2025 | 52857143 | $0.002 | 0.79 | $&nbsp;&nbsp;&nbsp;&nbsp; - |
| Expired | - | - | - | - |
| Balance Outstanding March 31, 2026 | 52857143 | $0.002 | 0.54 | $- |
| Exercisable, March 31, 2026 | 52857143 | $0.002 | 0.54 | $- |

---

**NOTE 6 – <u>COMMITMENTS AND CONTINGENCIES</u>**

Legal matters

From time to time, we may be involved in litigation or receive claims arising out of our operations in the normal course of business. Other than discussed below, we are not currently a party to any other legal proceeding or are aware of claims that we believe would, if decided adversely, have a material adverse effect on our business, financial condition, or operating results. We also disclose any recent settlements and accruals taken in connection therewith, as of March 31, 2026.

***SCS, LLC v. TLSS***

On November 17, 2020, a former financial consultant to the Company, SCS, LLC, filed an action against the Company in the Circuit Court of the 15th Judicial Circuit, Palm Beach County, Florida, captioned SCS, LLC v. Transportation and Logistics Systems, Inc. The case was assigned Case No. 50-2020-CA-012684.

In this action, SCS alleges that it entered into a renewable six-month consulting agreement with the Company dated September 5, 2019, and that the Company failed to make certain monthly payments due thereunder for the months of October 2019 through March 2020, summing to $42,000. The complaint alleges claims for breach of contract, quantum meruit, unjust enrichment and account stated.

In February 2025, the parties agreed to settle all claims in this matter and thereafter executed a Confidential Settlement Agreement and Mutual Release effective on February 13, 2025. On July 18, 2025, the court entered an Order which determined that the settlement of $36,000 in money the Company owed to SCS claimed in exchange for the issuance of 360 shares of Series J Preferred Stock was fair to SCS. On July 21, 2025, the court entered a final order which dismissed the action with prejudice. In July 2025, the Company issued 360 shares of Series J Preferred to SCS, LLC pursuant to the settlement of this action, which reduced accounts payable by $36,000.

***Shareholder Derivative Action***

On June 25, 2020, the Company was served with a putative stockholder derivative action filed in the Circuit Court of the 15th Judicial Circuit in and for Palm Beach County, Florida (the "Court") captioned SCS, LLC, derivatively on behalf of Transportation and Logistics Systems, Inc. v. John Mercadante, Jr., Douglas Cerny, Sebastian Giordano, Ascentaur LLC and Transportation and Logistics Systems, Inc. The action has been assigned Case No. 2020-CA-006581.

The plaintiff in this action, SCS, alleges it is a limited liability company formed by a former chief executive officer and director of the Company, Lawrence Sands. The complaint alleges that between April 2019 and June 2020, the immediately prior chairman and chief executive officer of the Company, Mercadante, the former chief development officer of the Company, Cerny, and, since February 2020, the Company's then restructuring consultant who is now chairman and chief executive officer of the Company, Giordano, breached fiduciary duties owed to the Company. Prior to becoming CEO, Giordano rendered his services to the Company through the final named defendant in the action, Ascentaur LLC.

The complaint alleges that Mercadante breached duties to the Company by, among other things, requesting, in mid-2019, that certain preferred equity holders, including SCS, convert their preferred shares into Company common stock in order to facilitate an equity offering by the Company and then not consummating that offering. The complaint also alleges that Mercadante and Cerny caused the Company to engage in purportedly wasteful and unnecessary transactions such as taking merchant cash advances (MCA) on disadvantageous terms. The complaint further alleges that Mercadante and Cerny "issued themselves over two million shares of common stock without consideration." The complaint seeks unspecified compensatory and punitive damages on behalf of the Company for breach of fiduciary duty, negligent breach of fiduciary duty, constructive fraud, civil conspiracy and the appointment of a receiver or custodian for the Company.

Company management tendered the complaint to the Company's directors' and officers' liability carrier for defense and indemnity purposes, which coverage is subject to a $250,000 self-insured retention. Each of the individual defendants and Ascentaur LLC has advised that they vigorously deny each and every allegation of wrongdoing alleged in the complaint. Among other things, Mercadante asserts that he made every effort to consummate an equity offering in late 2019 and early 2020 and could not do so solely because of the Company's precarious financial condition. Mercadante also asserts that he made clear to SCS and other preferred equity holders, before they converted their shares into common stock, that there was no guarantee the Company would be able to consummate an equity offering in late 2019 or early 2020. In addition, Mercadante and Cerny assert that they received equity in the Company on terms that were entirely fair to the Company and entered into MCA transactions solely because no other financing was available to the Company.

**TRANSPORTATION AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025**

**(Unaudited)**

By order dated September 15, 2022, the Circuit Judge assigned to this case dismissed the original Complaint in the matter, finding (a) that SCS had failed to adequately allege it has standing and (b) that the complaint fails to adequately allege a cognizable claim. The dismissal was without prejudice, meaning SCS could attempt to replead its claims.

On October 5, 2022, SCS filed an Amended Complaint in this action. By order dated December 19, 2022, the Circuit Judge assigned to this case once again dismissed the case, finding (a) that SCS still failed to adequately allege it has standing and (b) that the complaint still fails to adequately allege a cognizable claim. Once again, however, the dismissal was without prejudice.

On January 18, 2023, SCS filed a Second Amended Complaint in this action. All defendants once again moved to dismiss the pleading or in the alternative for summary judgment on it in their favor. The Court heard argument on that motion on March 9, 2023. On May 15, 2023, the Court issued a summary order denying the defendants' motion to dismiss. On June 1, 2023, all defendants moved for reconsideration of the May 15 order. On November 28, 2023, the Court denied the motion for reconsideration.

In February 2025, the parties agreed to settle all claims in this matter and thereafter executed a Confidential Settlement Agreement and Mutual Release effective on February 13, 2025. On February 20, 2025, pursuant to a Stipulation of Dismissal with Prejudice, the Court entered a final order of dismissal with prejudice and dismissed the action with prejudice.

***Josh Perez v. Cougar Express, Inc.***

An attorney for a former Cougar Express (CE) employee, Josh Perez ("Perez"), has advised CE that he has filed a charge of discrimination against CE with the U.S. Equal Employment Opportunity Commission (EEOC).

Perez allegedly is asserting claims against CE for: gender discrimination under Title VII and the New York State Human Rights Law ("NYSHRL"); pregnancy/childbirth discrimination under Title VII of the federal Civil Rights Act of 1964, as amended; retaliation under Title VII and NYSHRL; and familial status discrimination under NYSHRL.

However, CE has not received a copy, nor any notification, of the filing.

Perez was employed by CE as a dock worker beginning on March 8, 2022, and last worked September 27, 2022. He alleges that in or around July 2022, he informed CE that he was expecting a child. Perez has not provided any details regarding the individual(s) with CE he allegedly informed. On September 27, 2022, Perez requested that CE complete the employer section of his New York Paid Family Leave ("PFL") paperwork, which CE did. Thereafter, Perez ceased communicating with CE. Further, CE did not receive any confirmation that Perez had in fact filed for PFL or that his PFL was approved.

Because CE did not hear from Perez or receive any confirmation concerning his application for or approval of PFL, CE concluded that Perez had resigned. Another worker was hired to fill Perez's former position. Then, on or about December 27, 2022, Perez contacted CE attempting to return to work and was informed that there was no position for him.

CE categorically denies Perez's allegations and any purported wrongdoing. Because this matter is apparently pending with the EEOC and CE has neither received a copy of the filing nor any notification of the filing, the Company cannot evaluate the likelihood of an adverse outcome or estimate the Company's liability, if any, in connection with it.

***Emerson Swan v. Severance Trucking Co., Inc.***

On April 1, 2024, a judgment was entered against Severance Trucking on behalf of Emerson Swan, Inc. ("Emerson") in the amount of $96,226, including prejudgment interest, statutory costs and legal fees. Emerson, which was a customer of Severance Trucking, claimed that an employee of Severance Trucking stole $75,209 of Emerson's products while under Severance Trucking's control. We did not accrue this claim and believe it is not liable since the accusation was made prior to the Severance Trucking acquisition date in January 2023.

***Ryder Truck Rental, Inc. v. Severance Trucking Co., Inc.***

On April 30, 2024, Severance Trucking received a letter from Ryder Truck Rental, Inc. requesting payment in the amount of $581,507 comprised of outstanding unpaid Truck Lease and Service Agreement charges of $55,136 in open invoices, $399,177 in early termination charges and $134,194 in attorney's fees. As of March 31, 2026 and December 31, 2025, such amounts are recorded as a liability of Severance Trucking and included in liabilities of discontinued operations.

***Akabas & Sproule v. Transportation and Logistics Systems, Inc.***

On March 19, 2025, the Company's former law firm, Akabas & Sproule, filed a lawsuit against the Company in the Supreme Court of the State of New York, New York County, alleging three causes of action: (i) breach of contract; (ii) account stated, and (iii) unjust enrichment/quantum meruit. Akabas & Sproule seeks $86,571 in compensatory damages, $11,027 in interest through February 28, 2025, attorneys' fees and costs, taxable costs of suit, and pre-judgment and post-judgment interest. On July 21, 2025, the Company entered into a Settlement Agreement and Mutual Release (the "A&S Settlement Agreement") with Akabas & Sproule seeking $86,571 in compensatory damages, $14,274 in interest and not less than $24,155 in costs of collection, for a total of $125,000 (the "A&S Claim") in which all claims were resolved by the issuance of 1,250 shares of Series J Preferred and upon the satisfaction of certain obligations and conditions, the action will be dismissed with prejudice. The A&S Settlement Agreement was on substantially the same form as the Liability Settlement Agreements (see Note 5). In August 2025, the Company issued 1,250 shares of Series J Preferred to Akabas & Sproule and, on August 18, 2025, a Stipulation of Discontinuance with Prejudice was agreed to and filed by the parties with the Court, which reduced accounts payable by $125,000.

 ****

**TRANSPORTATION AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025**

**(Unaudited)**

 ****

***Diesel Direct, LLC v. Severance Trucking a/k/a Severance Trucking Co., Inc.***

On May 19, 2025, Diesel Direct. LLC filed a lawsuit against Severance Trucking in the Commonwealth of Massachusetts, Superior Court Department of the Trial Court, for Severance Trucking's alleged failure to pay for diesel fuel deliveries between October 23, 2023 and February 14, 2024. Diesel Direct alleges four counts against Severance Trucking for breach of contract, breach of implied covenant of good faith and fair dealing, quantum meruit/unjust enrichment, and violation of M.G.L. c. 93A, and seeks judgment for monetary damages in the amount of $58,020.30, plus interest, attorneys' fees, and cost of collection, as well as an award of punitive, exemplary, and/or multiple damages to the extent permitted by law. On June 23, 2025, Diesel Direct filed a request for entry of default which was entered on June 26, 2025. On July 15, 2025, Diesel Direct filed a motion for default judgment. As of December 31, 2025, the amount of $57,199 is recorded as a liability of Severance Trucking and included in liabilities of discontinued operations. On October 23, 2025, a damages assessment hearing was held by the Court via video conference, but no decision has been issued to date.

***RX Benefits v. TLSS Ops***

On October 1, 2025, a former vendor of TLSS Ops filed a complaint against the Company in the Superior Court of New Jersey Law Division, Bergen County, captioned RX Benefits v. TLSS Operations Holding Company, Inc. The case was assigned Case No. BER L-006620-25. In this action, RX Benefits demands payment of contractual amounts due plus legal fees and interest aggregating $149,627. As of March 31, 2026 and December 31, 2025, the amounts due of $149,618 and $149,618, respectively, have been accrued and are included liabilities of discontinued operations on the accompany consolidated balance sheets.

Employment agreements

On December 15, 2025 and as amended on April 23, 2026, we entered into a Retention Agreement (the "<u>Retention Agreement</u>") with Mr. Giordano, pursuant to which Mr. Giordano agreed to continue to act as the Chairman, Chief Executive Officer and Chief Financial Officer of the Company and the Company agreed to pay Mr. Giordano up to $500,000 in cash bonuses upon the occurrence of certain events and the satisfaction or waiver of certain conditions. Pursuant to the Retention Agreement, as amended, upon the closing of a qualified financing in which the Company raises at least $1,000,000 in gross proceeds by December 31, 2026, the Company will pay Mr. Giordano a $250,000 cash bonus, and upon the closing of a financing in which we raise at least $2,500,000 in gross proceeds by December 31, 2026, the Company will pay Mr. Giordano an additional $250,000 cash bonus (the "Retention Bonuses"). Further, pursuant to the Retention Agreement, as amended, if the Company has not raised aggregate gross proceeds of $3,500,000 by December 31, 2026, the deadline for payment of any remaining Retention Bonus amounts may be extended upon the written consent of Mr. Giordano, which consent may be granted or withheld in Mr. Giordano's sole discretion. The amendment to the Retention Agreement states that the Retention Bonuses shall be paid on a pro-rata basis relative to any capital raised, rather than only upon meeting the full financing thresholds. In addition, the Company and Mr. Giordano agreed to negotiate in good faith and enter into a new employment agreement with respect to services performed by Mr. Giordano for the Company no later than the closing of an acquisition.

In connection with the entry into the Retention Agreement, on December 15, 2025, we entered into the CEO Settlement Agreement with Sebastian Giordano, with respect to certain outstanding liabilities incurred through December 31, 2025 (the "<u>Outstanding Liabilities</u>"). Pursuant to the CEO Settlement Agreement, Mr. Giordano agreed to settle an aggregate of $1,400,712 in Outstanding Liabilities in exchange for the issuance of an aggregate of 10,007 shares of the Company's Series J Preferred Stock.

On April 23, 2026, the Company entered into a deferred compensation agreement (the "Deferred Compensation Agreement") with Mr. Giordano, whereby the Company and Mr. Giordano desire to defer payment of all such compensation earned from January 1, 2026 through the closing date of an acquisition or merger of the Company (the "Acquisition Closing") (See Note 9 - Subsequent Events). In connection with the Deferred Compensation Agreement, during the three months ended March 31, 2026, the Company recorded deferred compensation of $99,999, which is deferred and included in deferred compensation and related benefits on the accompanying unaudited consolidated balance sheet as of March 31, 2026.

As of March 31, 2026 and December 31, 2025, in connection with the extension of the term of the CEO Employment Agreement, the amount of compensation and benefit amounts due to Mr. Giordano amounts to the following, which is included in deferred compensation and related benefits on the accompanying unaudited consolidated balance sheet:

---

| | | |
|:---|:---|:---|
|  | March 31, 2026 | December 31, 2025 |
| Unpaid and deferred base salary | $99999 | $&nbsp;&nbsp;&nbsp;&nbsp; - |
| Total | $99999 | $- |

---

On April 23, 2026, the Company entered into deferred compensation agreements (the "Board Deferred Compensation Agreements") with the Company's three directors, whereby the Company and the Directors desire to defer payment of all such compensation earned from January 1, 2026 through the Acquisition Closing (See Note 9 - Subsequent Events). In connection with the Director Deferred Compensation Agreements, during the three months ended March 31, 2026, the Company recorded deferred compensation of $45,000, which is deferred and included in deferred compensation and related benefits on the accompanying unaudited consolidated balance sheet as of March 31, 2026.

**TRANSPORTATION AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025**

**(Unaudited)**

**NOTE 7– <u>RELATED PARTY TRANSACTIONS AND BALANCES</u>**

Notes payable – related parties

On May 31, 2025 and effective June 1, 2025, the Company entered into Series J Settlement Agreements with the Related Party Creditors. Pursuant to the Series J Settlement Agreements, the Related Party Creditors agreed to settle an aggregate of $1,547,838 in outstanding notes and accrued interest payable of $396,695 in exchange for the issuance of an aggregate of 19,446 shares of Series J Preferred. In connection with the exchange of the outstanding notes and related accrued interest payable for shares of Series J Preferred, the Company calculated a gain on debt extinguishment of $1,750,080, which was netted against additional paid-in capital and accordingly, no gain or loss was recognized on these settlements.

As of March 31, 2026 and December 31, 2025, aggregate notes payable to related parties in the principal amounts of $0 were outstanding. As of March 31, 2026 and December 31, 2025, the aggregate accrued interest payable to related parties amounted to $0. For the three months ended March 31, 2026, and 2025, interest expense – related parties amounted to $0 and $62,587, respectively.

**NOTE 8 – <u>DISCONTINUED OPERATIONS</u>**

On February 27, 2024, the Cougar Bankruptcy occurred (see Note 1). The Company and its other subsidiaries ceased all remaining logistic and transportation service operations in mid-February 2024. As a result, accordingly, the Company has classified the related assets and liabilities associated with its logistics and transportation services business as discontinued operations in its consolidated balance sheets and the results of its logistics and transportation services business has been presented as discontinued operations in its consolidated statements of operations for all periods presented as the discontinuation of its business had a major effect on its operations and financial results. Unless otherwise noted, discussion in the other notes to unaudited consolidated financial statements refers to the Company's continuing operations.

The following table presents the major classes of assets and liabilities of the discontinued operations related to the Subsidiaries:

---

| | | |
|:---|:---|:---|
|  | **March 31,**<br>**2026** | **December 31,**<br>**2025** |
| Assets of discontinued operations: |  |  |
| Cash | $- | $- |
| Assets of discontinued operations, current portion | - | - |
| &nbsp;&nbsp;&nbsp;Total assets of discontinued operations | $- | $- |
| Liabilities of discontinued operations: |  |  |
| Notes payable, current portion | $2467432 | $2467432 |
| Accounts payable | 1206575 | 1206575 |
| Accrued expenses | 842908 | 753166 |
| Lease liabilities, current portion | 2522042 | 2522042 |
| Liabilities of discontinued operations, current portion | 7038957 | 6949215 |
| &nbsp;&nbsp;&nbsp;Total liabilities of discontinued operations | $7038957 | $6949215 |

---

The following table summarizes the results of operations of discontinued operations:

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
|  | **2026** | **2025** |
| Revenues | $- | $- |
| Operating expenses |  | (4981) |
| Other expenses | (89742) | (89328) |
| Loss from discontinued operations | $(89742) | $(94309) |

---

Notes Payable

On March 31, 2026 and December 31, 2025, notes payable included in liabilities of discontinued operations consisted of the following:

---

| | | |
|:---|:---|:---|
|  | March 31, 2026 | December 31, 2025 |
| Principal amounts | $2467432 | $2467432 |
| Less: current portion of notes payable | (2467432) | (2467432) |
| Notes payable – long-term | $- | $- |

---

*<u>JFK Cartage acquisition promissory note</u>*

On July 31, 2022, in connection with the acquisition of JFK Cartage, JFK Cartage issued a promissory note in the amount of $696,935. Principal amount of $98,448 was paid prior to December 31, 2022. The remaining balance of $598,487 was payable in three annual installments of $199,496, with interest at 5% per annum, payable on July 31, 2023, July 31, 2024, and July 31, 2025, respectively. On August 28, 2023, and effective on July 31, 2023, the Company and the JFK Cartage Seller entered into a First Amendment to Secured Promissory Note (the "Amended Note") to extend the first annual installment due on July 31, 2023 which was treated as a note modification. Pursuant to the Amended Note, the Company paid or should have paid:

&nbsp;&nbsp;&nbsp;&nbsp;(i) An
 interest payment in the amount of $6,501 which was paid no later than July 28, 2023:

(ii) 23
 equal weekly payments of interest only, each in the amount of $1,571 (each a "Weekly Interest Payment") payable commencing
 on July 28, 2023, with the last Weekly Interest Payment due on or before December 29, 2023;

(iii) $199,495.67 was payable on December 31, 2023;

**TRANSPORTATION AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025**

**(Unaudited)**

&nbsp;&nbsp;&nbsp;&nbsp;(iv) $199,495.67 was payable on July 31, 2024, plus interest at 5 % per annum for the 7 months of January 2024 through July 2024, *in* the total
 amount of $11,637.25 and,

(v) $ l99,499.68 was payable on July 31, 2025, plus interest at 5 % per annum for the 12 months from August 2024 through July 2025 in the total amount
 of $9,975 .

On March 31, 2026 and December 31, 2025, the principal amount related to the Amended Note was $598,487, which is included in liabilities of discontinued operations on the accompanying unaudited consolidated balance sheets. This note is in default.

*<u>Severance Trucking acquisition promissory note</u>*

On January 31, 2023, in connection with the acquisition of the Severance entities, Severance Trucking issued a promissory note in the amount of $1,572,939 to the Severance Sellers ("Secured Severance Note"). The Secured Severance Note is a secured promissory note which accrues interest at the rate of 12% per annum. The entire unpaid principal under the Secured Severance Note was originally due and payable in three equal payments on August 1, 2023, February 1, 2024, and August 1, 2024, respectively, together with all accrued and unpaid. On March 31, 2026 and December 31, 2025, the principal amount related to this note was $1,395,768 and $1,395,768, respectively, which is included in liabilities of discontinued operations on the accompanying unaudited consolidated balance sheets. Subsequent to December 31, 2023, Severance Trucking ceased its operations, and all fixed assets of the Company were voluntarily surrendered to the Severance Sellers.

The Severance Trucking Lenders demanded that the Severance Trucking Debtors and the Guarantor make the immediate full payment of (i) the entire principal balance due under the Severance Trucking Note, together with all interest accrued thereon, and (ii) a late charge of five percent (5%) of the Severance Trucking January Payment. The Severance Trucking Lenders also noted that if the full payment due under the Severance Trucking Note was not made to the Severance Trucking Lenders, then the Severance Trucking Lenders could immediately thereafter pursue all their rights and remedies under the Severance Trucking Note, including, without limitation, liquidation of all of the collateral of the Severance Trucking Debtors. If the Severance Trucking Lenders took such action, then, the Severance Trucking Debtors would be responsible for all costs and expenses in connection with the collection and enforcement ("Expenses") of the payment due under the Default Notices, and that such Expenses shall accrue interest at a rate of 18% per annum. On February 26, 2024, the Company voluntarily surrendered the unencumbered owned fixed assets of Severance Trucking operations to the Severance Trucking Lenders.

Equipment and auto notes payable

On September 22, 2022, JFK Cartage entered into a promissory note for the purchase of a truck in the amount of $61,979. The note is due in forty-eight monthly installments of $1,645 which began in August 2022. The note was secured by the truck. On March 31, 2026 and December 31, 2025, the equipment note payable to this entity amounted to $41,624 and $41,624, respectively, which is included in liabilities of discontinued operations on the accompanying consolidated balance sheets. As of March 31, 2026, the trucks securing this loan were forfeited and returned to the lender.

In connection with the acquisition of the Severance entities, on January 31, 2023, the Company assumed an equipment note payable due to an entity amounting to $23,000. On March 31, 2026 and December 31, 2025, equipment note payable to this entity amounted to $16,511, which is included in liabilities of discontinued operations on the accompanying consolidated balance sheets. As of March 31, 2026, the trucks securing this loan were forfeited and returned to the lender.

On April 1, 2023, Severance Trucking entered into a promissory note for the purchase of a yard truck in the amount of $50,634. The note is due in 48 monthly installments of $1,254 which began in April 2023. The note was secured by the truck. On March 31, 2026 and December 31, 2025, the equipment note payable to this entity amounted to $40,537 and $40,537, respectively, which is included in liabilities of discontinued operations on the accompanying consolidated balance sheets. As of March 31, 2026, the trucks securing this loan were forfeited and returned to the lender.

On April 14, 2023, Severance Trucking entered into a promissory note for the purchase of a truck in the amount of $53,275. The note is due in 48 monthly installments of $1,379 which began in April 2023. The note was secured by the truck. On March 31, 2026 and December 31, 2025, the equipment note payable to this entity amounted to $45,079 and $45,079, respectively, which is included in liabilities of discontinued operations on the accompanying consolidated balance sheets. As of March 31, 2026, the trucks securing this loan were forfeited and returned to the lender.

On July 13, 2023, Severance Trucking entered into a promissory note for the purchase of three trucks in the amount of $278,085. The note is due in 60 monthly installments of $5,762 which began in August 2023. The note is secured by the trucks. On March 31, 2026 and December 31, 2025, the equipment note payable to this entity amounted to $253,277 and $253,277, respectively, which is included in liabilities of discontinued operations on the accompanying consolidated balance sheets. As of March 31, 2026, the trucks securing this loan were forfeited and returned to the lender.

On September 8, 2023, Severance Trucking entered into a promissory note for the purchase of two trucks in the amount of $83,398. The note is due in 48 monthly installments of $2,107 which began in October 2023. The note is secured by the trucks. On March 31, 2026 and December 31, 2025, the equipment note payable to this entity amounted to $76,149 and $76,149, respectively, which is included in liabilities of discontinued operations on the accompanying consolidated balance sheets. As of March 31, 2026, the trucks securing this loan were forfeited and returned to the lender.

*<u>Operating and Financing Lease Right-Of-Use ("Rou") Assets and Operating and Financing Lease Liabilities</u>*

In February 2024, the Company abandoned all remaining leased premises.

On March 31, 2026 and December 31, 2025, operating and financing lease liabilities related to the abandoned ROU assets are included in liabilities of discontinued operations and are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | March 31, 2026 | December 31, 2025 |
| Lease liabilities related to office leases and revenue equipment right of use assets | $2522042 | $2522042 |
| Less: current portion of lease liabilities | (2522042) | (2522042) |
| Lease liabilities – long-term | $- | $- |

---

**TRANSPORTATION AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025**

**(Unaudited)**

 

*<u>Other liabilities of discontinued operations</u>*

On April 30, 2024, Severance Trucking received a letter from Ryder Truck Rental, Inc. requesting payment in the amount of $581,507 comprised of outstanding unpaid Truck Lease and Service Agreement charges of $55,136 in open invoices, $399,177 in early termination charges and $134,194 in attorney's fees. As of March 31, 2026 and December 31, 2025, such amounts are recorded as a liability of Severance Trucking and included in liabilities of discontinued operations.

On August 24, 2024, TLSS Ops received a Notice of Default and Demand for Payment from RxBenefits, Inc. ("RxBenefits") due to the Company's failure to pay certain invoices, plus interest and late service charges due under the Administrative Services Agreement by and between RxBenefits and TLSS Operations Holding, in the amount of $111,618. On October 1, 2025, RxBenefits filed a complaint against the Company in the Superior Court of New Jersey Law Division, Bergen County, captioned RX Benefits v. TLSS Operations Holding Company, Inc. In this action, RX Benefits demands payment of contractual amounts due plus legal fees and interest aggregating $149,627. As of March 31, 2026 and December 31, 2025, the amounts due of $149,618 and $149,618, respectively, have been accrued and are included liabilities of discontinued operations on the accompany consolidated balance sheets.

**NOTE 9 – <u>SUBSEQUENT EVENTS</u>**

Acquisition

On April 1, 2026, the Company, TLSS Acquisition (the "Acquisition Sub"), and TLSS Reverse,a wholly-owned subsidiary of the Acquisition Sub, entered into a Member Interest and Asset Exchange Agreement (the "Agreement") with Badcer Ops, Inc., a Nevada corporation (the "Seller"), Jeff Badders and Mercer Street Global Opportunity Fund, LLC, a Delaware limited liability company ("Mercer"), as the shareholders of the Seller (the "Seller Shareholders"), Patriot Glass Solutions, LLC, a Texas limited liability company ("PGS"), and Michael Wanke ("Wanke"), the sole Manager and twenty percent (20%) owner of PGS. The Agreement provides for a reverse triangular merger of TLSS Reverse with and into PGS, with PGS as the surviving entity, pursuant to which the Seller's eighty percent (80%) membership interest in PGS and four (4) nanotechnology patents (the "Patents") will be exchanged, transferred and assigned to the Acquisition Sub in exchange for the Merger Consideration described below.

The Seller is Badcer Ops, Inc., a Nevada corporation, whose shareholders are Mercer and Mr. Jeff Badders, an individual (together, the "Seller Shareholders"). Mercer is an existing preferred stockholder of the Company.

The Agreement provides for merger consideration (the "Merger Consideration") equal to $4,750,000, payable in 47,500 shares of the Company's Series J Preferred Stock, with a stated value of $100 per share, to be issued to the Seller at the closing of the transaction.

The closing of the transaction is expected to occur ten (10) days after audited financials for PGS for year-end 2025 and 2024 and unaudited financials for PGS for the first quarter of 2026 are completed and provided to TLSS, subject to the satisfaction or waiver of certain closing conditions, including, among others: (i) the completion of satisfactory due diligence by TLSS; (ii) the accuracy of the representations and warranties of the parties; (iii) the procurement of acceptable landlord consent to the assignment of and amendments to PGS's lease for its operating facilities; (iv) delivery of certain financial statements; and (v) other customary closing conditions as set forth in the Agreement.

The remaining 20% membership interest in PGS is currently held by and will be retained by Mr. Michael Wanke, the sole Manager of PGS. It is a condition of closing that Mr. Wanke will enter into an employment agreement with PGS, the terms of which are to be agreed upon prior to the expiration of the due diligence period.

The Company's primary go-forward strategy is to become a leader in the safety and security technology industry. The Company expects to accomplish this goal, in part, by pursuing strategic acquisitions as a means of securing technologies and adding new markets in the United States, expanding its safety and security service offerings, adding talented management and operational employees, expanding and upgrading its technology platform and developing operational best practices. Moreover, one factor in assessing acquisition opportunities is the potential for subsequent organic growth post-acquisition.

PGS provides quality window tint solutions for auto, home, and business owners across Texas, specializing in automotive window tinting, residential window film, and commercial window film that stop harmful UV rays from passing through its window films for reduced glare, comfortable temperatures, and lower energy bills. PGS protects personal, school, government and commercial/business property across the United States using PGS's proprietary glass strengthening technology to protect property from looting, rioting, break-ins, and gunfire, including PGS's BRS a ballistic-resistant film system; and PGS Secure a multi-purpose glass strengthening primer and window film mounting solution that deters forced entry products with through a growing nationwide network of more than 50 dealers.

The Patents relate to the proprietary PGS nanotechnology applications and processes to enhance properties of strength, functionality, and sustainability of brittle material systems used by PGS.

As such, the Company believes that the acquisition of PGS is an excellent fit with its current business given its demographic location, services offered, and diversified customer base, and given that it would provide the Company with a long-standing, well-run profitable operation.

Deferred Compensation Agreements

On April 23, 2026, the Company entered into a Deferred Compensation Agreement with Mr. Giordano, whereby the Company and Mr. Giordano desire to defer payment of all such compensation earned from January 1, 2026 through the closing date of an Acquisition Closing (see Note 6). In connection with the Deferred Compensation Agreement. Based upon estimated annual compensation of $400,000, the estimated monthly deferral amount is $33,333.33 per month. Actual Deferred Amounts shall be determined based on compensation earned as updated from time to time in accordance with the Deferred Compensation Agreement. All salary, wages, bonuses, and any other cash compensation earned by Mr. Giordano from January 1, 2026 through the Acquisition Closing (collectively, the "Deferred Amounts") shall be deferred and shall not be paid, credited, or made available to Mr. Giordano until a Triggering Event as defined below.

**TRANSPORTATION AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025**

**(Unaudited)**

Deferred Amounts shall become payable to Mr. Giordano within thirty (30) days following the earliest to occur of the following (each, a "Triggering Event"):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the Acquisition Closing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) a Change in Control of the Company; "Change in Control" means (i) the consummation of a merger, consolidation, or reorganization of the Company with or into another entity in which the stockholders of the Company immediately prior to such transaction hold less than fifty percent (50%) of the voting power of the surviving entity immediately after such transaction, (ii) the sale or other disposition of all or substantially all of the Company's assets, or (iii) any transaction or series of related transactions resulting in any person or group (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934) acquiring beneficial ownership of more than fifty percent (50%) of the Company's outstanding voting securities. For purposes of this Agreement, the Acquisition Closing shall be deemed a Change in Control.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) a separation from service of Mr. Giordano by the Company without Cause (as defined in the Retention Agreement) or by Mr. Giordano for Good Reason (as defined in the December 2025 Retention Agreement);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Executive's death or Disability, which means Executive's inability to perform the essential functions of his position, with or without reasonable accommodation, for a period of one hundred twenty (120) consecutive days or one hundred eighty (180) days in any twelve (12)-month period, as determined by a physician mutually agreed upon by the Company and Executive (or Executive's legal representative); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) any other event that constitutes a permissible payment event under Section 409A.

If Mr. Giordano's employment is terminated by the Company for Cause or by Executive without Good Reason, the Deferred Amounts shall remain deferred and shall be paid upon the earliest to occur of the Triggering Events set forth in clauses (a), (b), (d), or (e) above.

On April 23, 2026, the Company entered into the Director Deferred Compensation Agreements with the Company's three directors, whereby the Company and each director desire to defer payment of all such compensation earned from January 1, 2026 through the closing date of an Acquisition Closing. Based upon Director's current board fee, the estimated monthly deferral amount is $5,000 per month each. Actual Deferred Amounts shall be determined based on compensation earned as updated from time to time in accordance with the Agreements. All salary, wages, bonuses, and any other cash compensation earned by the directors from January 1, 2026 through the Acquisition Closing (collectively, the "Deferred Amounts") shall be deferred and shall not be paid, credited, or made available to the directors until a Triggering Event as defined below.

Deferred Amounts shall become payable to Director within thirty (30) days following the earliest to occur of the following (each, a "Triggering Event"):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the
 Acquisition Closing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) a
 Change in Control of the Company; "Change in Control" means (i) the consummation
 of a merger, consolidation, or reorganization of the Company with or into another entity
 in which the stockholders of the Company immediately prior to such transaction hold less
 than fifty percent (50%) of the voting power of the surviving entity immediately after such
 transaction, (ii) the sale or other disposition of all or substantially all of the Company's
 assets, or (iii) any transaction or series of related transactions resulting in any person
 or group (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934)
 acquiring beneficial ownership of more than fifty percent (50%) of the Company's outstanding
 voting securities. For purposes of this Agreement, the Acquisition Closing shall be deemed
 a Change in Control;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) a
 removal of Director from the Board by the Company without Cause; "Cause" means
 the occurrence of any of the following: (i) Director's breach of fiduciary duty to
 the Company; (ii) Director's fraud, dishonesty, or willful misconduct with respect
 to the business or affairs of the Company; (iii) Director's conviction of, or plea
 of no contest to, any misdemeanor involving theft, fraud, dishonesty, or act of moral turpitude
 or to any felony; or (iv) Director's material violation of the Company's corporate
 governance policies or code of conduct; provided, that in the event of a breach or violation
 described in clauses (i) or (iv) that can be cured by Director, the Company shall provide
 Director with notice of the facts and circumstances which constitute such breach or violation
 and shall provide Director a ten (10)-day period in which to cure such breach or violation,
 and the Company shall not remove Director for Cause if Director cures such breach or violation
 within such ten (10)-day period;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Director's
 death or Disability; "Disability" means Director's inability to perform
 the essential functions of his or her position as a member of the Board for a period of one
 hundred twenty (120) consecutive days or one hundred eighty (180) days in any twelve (12)-month
 period, as determined by a physician mutually agreed upon by the Company and Director (or
 Director's legal representative); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) any
 other event that constitutes a permissible payment event under Section 409A.

If Director is removed from the Board for Cause or voluntarily resigns from the Board, the Deferred Amounts shall remain deferred and shall be paid upon the earliest to occur of the Triggering Events set forth in clauses (a), (b), (d), or (e) above .

**TRANSPORTATION AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025**

**(Unaudited)**

On April 23, 2026, we entered into an amended Retention Agreement (the "Amended <u>Retention Agreement</u>") with Mr. Giordano, pursuant to which the Company agreed to pay Mr. Giordano up to $500,000 in cash bonuses upon the occurrence of certain events and the satisfaction or waiver of certain conditions. Pursuant to the Amended Retention Agreement, upon the closing of a qualified financing in which the Company raises at least $1,000,000 in gross proceeds by December 31, 2026, the Company will pay Mr. Giordano Retention Bonuses. Further, pursuant to the Amended Retention Agreement, if the Company has not raised aggregate gross proceeds of $3,500,000 by December 31, 2026, the deadline for payment of any remaining Retention Bonus amounts may be extended upon the written consent of Mr. Giordano, which consent may be granted or withheld in Mr. Giordano's sole discretion. The Amended Retention Agreement states that the Retention Bonuses shall be paid on a pro-rata basis relative to any capital raised, rather than only upon meeting the full financing thresholds. In addition, the Company and Mr. Giordano agreed to negotiate in good faith and enter into a new employment agreement with respect to services performed by Mr. Giordano for the Company no later than the closing of an acquisition.

Note Payable

On April 24, 2026, the <u>Company</u> entered into an unsecured non-convertible promissory note (the "April 2026 Note") in the principal amount of $100,000, with interest at the rate of 10% per annum accruing and due at maturity six months following the issuance date, with C/M Capital Master Fund, LP (the "<u>Lender</u>"). The April 2026 Note was funded on April 24, 2026, with the Lender advancing $100,000 in gross proceeds to the Company. The proceeds of the Note are to be used for the primary purpose of funding: (i) the preparation and submission of any requisite Company SEC and OTC filings; (ii) such tax-related and other activities as may be necessary or legally required from time to time to restore the Company to good standing from applicable tax and compliance perspectives; (iii) transfer agent costs; and (iv) fees for routine litigation matters in the ordinary course of business. The April 2026 Note may be prepaid in whole or in part at any time and from time to time upon three (3) prior business days' written notice, without penalty. The Company may also repay the April 2026 Note upon maturity or at such time as the Company and the Lender may agree to effect repayment. The April 2026 Note also contains customary events of default, which include, without limitation, failure to pay principal, interest or other charges in respect of the April 2026 Note when due at maturity or otherwise, failure to satisfy any covenant in the April 2026 Note or other agreements between the Company and the Lender or any other creditor, breach of representations and warranties set forth in the Note or any transaction document executed contemporaneously with the April 2026 Note, and certain judgment defaults, events of bankruptcy or insolvency of the Company. Upon the occurrence of such an event of default under the April 2026 Note, the Lender has the right to demand repayment of the Note in full upon five (5) business days' notice to the Company. In the event that full payment is not made upon the expiry of a thirty (30) day period, a default penalty equal to 5.0% per month during the period of default in excess of the 10% interest rate will apply to the entire amount of the April 2026 Note outstanding, including any accrued but unpaid interest. The Lender may then, at its sole discretion, declare the entire then-outstanding principal amount of the April 2026 Note and any accrued but unpaid interest due thereunder immediately due and payable, in which event the Lender may, at its sole discretion, take any action it deems necessary to recover amounts due under the April 2026 Note. Concurrently with the issuance of the April 2026 Note, the Company also entered into a letter agreement of even date (the "Letter Agreement") with the Lender setting forth, among other items, the intended use of proceeds of the April 2026 Note as described above. The April 2026 Note and the Letter Agreement are on the same form as those previously entered into with the Lender.

**ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

*You should read the following discussion and analysis of our financial condition and plan of operations together with unaudited consolidated financial statements and the related notes appearing elsewhere in this Quarterly Report. In addition to historical information, this discussion and analysis contain forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled "Risk Factors" included in our 2025 Annual Report. All amounts in this report are in U.S. dollars, unless otherwise noted.*

**Overview**

TLSS is a publicly-traded holding company whose common stock had been quoted on the OTC PINK since August 21, 2022, but was removed from the OTC PINK and listed on the OTC Expert Market on July 17, 2024. As of May 14, 2026, our shares of common stock are trading on the OTCID basic markets.

The Company ceased all remaining operations as of mid-February 2024. Prior to that, the Company and its Subsidiaries provided a full suite of asset-based logistics and transportation services, specializing in ecommerce fulfillment, last mile deliveries, two-person home delivery, mid-mile, and long-haul services. An asset-based delivery company, as compared to a non-asset-based delivery company, owns the majority of its transportation equipment, and employs the majority of its drivers. The Company and its Subsidiaries operated several warehouse locations located in New York, New Jersey, Connecticut, and Massachusetts.

On February 27, 2024, Cougar Express, filed a Chapter 7 bankruptcy petition in the State of New York under the United States Bankruptcy Code. The Company's other subsidiaries have all ceased operations since mid-February 2024 and have not filed bankruptcy.

Subsequent to the cessation of all of the Company's revenue generating operations in February 2024 and through the date of this Quarterly Report, the Company continues to remain insolvent. The Company obtained financing to enable it to complete the preparation and review of the annual and interim financial statements through December 31, 2025 and file this Quarterly Report; however, the Company will require additional financing to fund the necessary costs related to the preparation and filing of one or more of the additional periodic reports due with respect to the 2026 calendar year.

Between May 2025 and November 12, 2025, we entered into exchange agreements (the "Series J Exchange Agreements") with certain then current and former holders (the "Exchange Holders") of our Series E Convertible Preferred Stock (the "Series E Preferred"), Series G Convertible Preferred Stock (the "Series G Preferred") and warrants to purchase shares of our Common Stock (the "Exchanged Warrants"). Pursuant to the Series J Exchange Agreements, (i) the Exchange Holders exchanged an aggregate of 21,418 shares of Series E Preferred and accrued dividends of $192,776, and exchanged an aggregate of 406,500 shares of Series G Preferred and accrued dividends of $925,047, and (ii) we cancelled warrants to purchase up to an aggregate of 864,357,146 shares of Common Stock all in exchange for the issuance of an aggregate of 54,975 shares of the Company's Series J Senior Convertible Preferred Stock, par value $0.001 per share (the "Series J Preferred").

Also, between May 2025 and September 30, 2025, we entered into settlement agreements (the "Series J Settlement Agreements") with holders of our outstanding liabilities (the "2025 Creditors"), pursuant to which, the 2025 Creditors agreed to settle an aggregate of $3,688,149 in outstanding liabilities and accrued interest in exchange for an aggregate of 36,882 shares of Series J Preferred.

On October 15, 2025, we entered into settlement agreements (the "<u>Board Settlement Agreements</u>") with certain directors of the Company pursuant to which the directors settled an aggregate of $374,491 in outstanding liabilities, in exchange for the issuance of an aggregate of 3,785 shares of Series J Preferred. $337,042, which was netted against additional paid-in capital and accordingly, no gain or loss was recognized on these settlements.

On December 15, 2025, we entered into a settlement agreement (the "CEO <u>Settlement Agreement</u>") with Sebastian Giordano, with respect to certain outstanding liabilities (the "<u>Outstanding Liabilities</u>"). Pursuant to the CEO Settlement Agreement, Mr. Giordano agreed to settle an aggregate of $1,400,712 in Outstanding Liabilities in exchange for the issuance of an aggregate of 10,007 shares of the Company's Series J Preferred Stock.

In addition, we are also negotiating possible further restructuring of our remaining existing debts and obligations, as well as assessing the possibility of replacing our discontinued businesses and/or entering into new line(s) of business, whether by acquisition or otherwise. However, there can be no assurance that we will, in fact, be able to replace our former business and/or enter into new line(s) of business, or to do so profitably. The following discussion highlights the results of our operations and the principal factors that have affected the Company's consolidated financial condition as well as its liquidity and capital resources for the periods described and provides information that management believes is relevant for an assessment and understanding of the consolidated financial condition and results of operations presented herein. The following discussion and analysis are based on the unaudited consolidated financial statements contained in this Quarterly Report, which have been prepared in accordance with GAAP. You should read the discussion and analysis together with such unaudited consolidated financial statements and the related notes thereto.

**Recent events**

On April 1, 2026, the Company, TLSS Acquisition, Inc., a wholly-owned subsidiary of the Company, (the "Acquisition Sub"), and TLSS Reverse PGS, LLC, a Texas limited liability company and a wholly-owned subsidiary of the Acquisition Sub ("TLSS Reverse"), entered into a Member Interest and Asset Exchange Agreement (the "Agreement") with Badcer Ops, Inc., a Nevada corporation (the "Seller"), Jeff Badders and Mercer Street Global Opportunity Fund, LLC, a Delaware limited liability company ("Mercer"), as the shareholders of the Seller (the "Seller Shareholders"), Patriot Glass Solutions, LLC, a Texas limited liability company ("PGS"), and Michael Wanke ("Wanke"), the sole Manager and twenty percent (20%) owner of PGS. The Agreement provides for a reverse triangular merger of TLSS Reverse with and into PGS, with PGS as the surviving entity, pursuant to which the Seller's eighty percent (80%) membership interest in PGS and four (4) nanotechnology patents (the "Patents") will be exchanged, transferred and assigned to the Acquisition Sub in exchange for the Merger Consideration described below.

The Seller is Badcer Ops, Inc., a Nevada corporation, whose shareholders are Mercer and Mr. Jeff Badders, an individual (together, the "Seller Shareholders"). Mercer is an existing preferred stockholder of the Company.

The Agreement provides for merger consideration (the "Merger Consideration") equal to $4,750,000, payable in 47,500 shares of TLSS Series J Senior Convertible Preferred Stock (the "TLSS Series J Preferred Shares"), with a stated value of $100 per share, to be issued to the Seller at the closing of the transaction.

The closing of the transaction is expected to occur ten (10) days after audited financials for PGS for year-end 2024 and year-end 2025 and unaudited financials for PGS for the first quarter of 2026 are completed and provided to TLSS, subject to the satisfaction or waiver of certain closing conditions, including, among others: (i) the completion of satisfactory due diligence by TLSS; (ii) the accuracy of the representations and warranties of the parties; (iii) the procurement of acceptable landlord consent to the assignment of and amendments to PGS's lease for its operating facilities; (iv) delivery of certain financial statements; and (v) other customary closing conditions as set forth in the Agreement.

The remaining 20% membership interest in PGS is currently held by and will be retained by Mr. Michael Wanke, the sole Manager of PGS. It is a condition of closing that Mr. Wanke will enter into an employment agreement with PGS, the terms of which are to be agreed upon prior to the expiration of the due diligence period.

The Company's primary go-forward strategy is to become a leader in the safety and security technology industry. The Company expects to accomplish this goal, in part, by pursuing strategic acquisitions as a means of securing technologies and adding new markets in the United States, expanding its safety and security service offerings, adding talented management and operational employees, expanding and upgrading its technology platform and developing operational best practices. Moreover, one factor in assessing acquisition opportunities is the potential for subsequent organic growth post-acquisition.

PGS provides quality window tint solutions for auto, home, and business owners across Texas, specializing in automotive window tinting, residential window film, and commercial window film that stop harmful UV rays from passing through its window films for reduced glare, comfortable temperatures, and lower energy bills. PGS protects personal, school, government and commercial/business property across the United States using C-Bond's proprietary glass strengthening technology to protect property from looting, rioting, break-ins, and gunfire, including our C-Bond BRS a ballistic-resistant film system; and C-Bond Secure a multi-purpose glass strengthening primer and window film mounting solution that deters forced entry products with through a growing nationwide network of more than 50 dealers.

The Patents relate to the proprietary C-Bond nanotechnology applications and processes to enhance properties of strength, functionality, and sustainability of brittle material systems used by PGS.

As such, the Company believes that the acquisition of PGS is an excellent fit with its current business given its demographic location, services offered, and diversified customer base, and given that it would provide the Company with a long-standing, well-run profitable operation.

**Critical Accounting Policies and Estimates**

The methods, estimates, and judgments that we use in applying our accounting policies have a significant impact on the results that we report in our consolidated financial statements. Some of our accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates regarding matters that are inherently uncertain. Significant estimates included in the accompanying 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 assets acquired and liabilities assumed in a business combination, 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 assets and liabilities of discontinued operations, and the value of claims against the Company. Of the above significant estimates, we do not consider any to be critical given the discontinued operations presentation.

Management believes the following critical accounting policies affect our more significant judgments and estimates used in the preparation of the consolidated financial statements.

**Discontinued Operations**

The Company has classified the related assets and liabilities associated with our logistics and transportation services business as discontinued operations in our consolidated balance sheets and the results of our logistics and transportation services business has been presented as discontinued operations in our consolidated statements of operations for all periods presented as the discontinuation of our business had a major effect on our operations and financial results.

***RESULTS OF OPERATIONS***

Our unaudited consolidated financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue our operation. Our results of operations reflect our continuing operations and reflect losses from discontinued operations related to the discontinuation of our logistics businesses. All financial information has been restated to reflect our discontinued operations for all periods presented.

***For the three months ended March 31, 2026 compared with the three months ended March 31, 2025***

The following table sets forth our revenues, expenses and net loss for the three months ended March 31, 2026 and 2025.

---

| | | |
|:---|:---|:---|
|  | **For the Three Months Ended**<br> **March 31,** | **For the Three Months Ended**<br> **March 31,** |
|  | 2026 | 2025 |
| Revenues | $- | $- |
| Operating expenses | 233457 | 332271 |
| Loss from operations | (233457) | (332271) |
| Other expenses, net | (1685) | (71690) |
| Loss from continuing operations | (235142) | (403961) |
| Loss from discontinued operations | (89742) | (94309) |
| Net loss | (324884) | (498270) |
| Accrued dividends | (275538) | (76990) |
| Net loss attributable to common stockholders | $(600422) | $(575260) |

---

**Results of Operations**

***Revenue***

For the three months ended March 31, 2026 and 2025, we generated no revenues.

***Operating Expenses***

For the three months ended March 31, 2026, total operating expenses amounted to $233,457 compared to $332,271 for the three months ended March 31, 2025, a decrease of $98,814, or 29.7%, as reflected in the accompanying chart and described more fully below.

For the three months ended March 31, 2026 and 2025, operating expenses consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **For the Three Months Ended**<br> **March 31,** | **For the Three Months Ended**<br> **March 31,** |
|  | **2026** | **2025** |
| Compensation and related benefits | $144999 | $160340 |
| Legal and professional fees | 87084 | 170960 |
| General and administrative expenses | 1374 | 971 |
| Total Operating Expenses | $233457 | $332271 |

---

***Compensation and related benefits***

For the three months ended March 31, 2026, compensation and related benefits amounted to $144,999 as compared to $160,340 for the three months ended March 31, 2025, a decrease of $15,341, or 9.6%. During the three months ended March 31, 2026, the overall decrease in compensation and related benefits as compared to the three months ended March 31, 2025 was primarily attributable to a decrease in compensation deferred to our chief executive officer.

***Legal and professional fees***

For the three months ended March 31, 2026, legal and professional fees were $87,084 as compared to $170,960 for the three months ended March 31, 2025, a decrease of $83,876, or 49.1%, which was primarily attributable to a decrease in legal fees of $35,231, a decrease in accounting and auditing fees of $44,705 and a net decrease in other professional fees of $3,940.

***General and administrative expenses***

General and administrative expenses include bank fees and other general and administrative expenses. For the three months ended March 31, 2026, general and administrative expenses were $1,374 as compared to $971 for the three months ended March 31, 2025, an increase of $403, or 41.5%.

***Loss from operations***

For the three months ended March 31, 2026, loss from operations amounted to $233,457 as compared to $332,271 for the three months ended March 31, 2025, a decrease of $98,814, or 29.7%, primarily due to: (i) decreases in compensation and other benefits of $15,341 and (ii) a decrease in legal and professional fees of $83,876, offset by an increase in general and administrative expenses of $403, as discussed above.

**Other expenses**

Total other expenses include interest expense. For the three months ended March 31, 2026 and 2025, other expenses consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **For the Three Months Ended<br> March 31,** | **For the Three Months Ended<br> March 31,** |
|  | **2026** | **2025** |
| Interest expense | $1685 | $9103 |
| Interest expense – related parties | - | 62587 |
| Total Other Expenses | $1685 | $71690 |

---

For the three months ended March 31, 2026 and 2025, aggregate interest expense was $1,685 and $71,690, respectively, a decrease of $70,005, or 97.6%. The decrease in interest expense was primarily attributable to an overall decrease in related party and third-party notes payable, as all 2024 and 2025 notes payable and related accrued interest were converted to Series J Preferred Stock.

**Loss from discontinued operations**

In February 2024, we ceased operations of all logistic and transportation services subsidiaries, and on February 27, 2024, Cougar Express filed a Chapter 7 bankruptcy petition in the State of New York under the United States Bankruptcy Code. Accordingly, the financial position and results of operations of all our Subsidiaries are reflected as discontinued operations for all periods presented.

The following table sets forth our revenues, expenses and net loss for the three months ended March 31, 2026 and 2025 related to discontinued operations.

---

| | | |
|:---|:---|:---|
|  | **For the Three Months Ended**<br> **March 31,**  | **For the Three Months Ended**<br> **March 31,**  |
|  | 2026 | 2025 |
| Revenues | $- | $- |
| Operating expenses |  | (4981) |
| Other expenses, net | (89742) | (89328) |
| Loss from discontinued operations | $(89742) | $(94309) |

---

***Net loss***

Due to factors discussed above, for the three months ended March 31, 2026, and 2025, net loss amounted to $324,884 and $498,270, respectively. For the three months ended March 31, 2026, net loss attributable to common stockholders, which included dividends accrued on shares of the Company's Series J Convertible Preferred Stock (the "Series J Preferred") amounted to $600,422, or $(0.00) per basic and diluted common share. For the three months ended March 31, 2025, net loss attributable to common stockholders, which included dividends accrued on shares of the Company's Series E Convertible Preferred Stock (the "Series E Preferred") and shares of the Company's Series G Convertible Preferred Stock (the "Series G Preferred) of $76,990, amounted to $575,260, or $(0.00) per basic and diluted common share.

**LIQUIDITY AND CAPITAL RESOURCES**

On March 31, 2026 and December 31, 2025, we had a cash balance of $11,118 and $15,835, respectively. Our working capital deficit was $8,534,517 and $7,934,095 on March 31, 2026 and December 31, 2025, respectively.

As of May 14, 2026, the Company had $43,040 in cash, consisting of: (i) $42,719 remaining from the issuance of unsecured promissory notes and (ii) $321 related to Severance Trucking .

Although we had historically raised capital from sales of shares of common stock, the sale of the Series E Preferred and the Series G Preferred, and from the issuance of convertible promissory notes and notes payable, the Company, in mid-February 2024, was unable to raise additional capital or secure additional lending to meet its debt and liability obligations and, as a result, the Company had to cease its remaining operations.

Our consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying unaudited consolidated financial statements, we had a net loss of $324,884 and $498,270 for the three months ended March 31, 2026 and 2025, respectively. The net cash used in operations was $79,717 and $182,055 for the three months ended March 31, 2026 and 2025, respectively. Additionally, we had an accumulated deficit and working capital deficit of $147,765,531 and $8,534,517 on March 31, 2026, respectively. These factors, in addition to the cessation of all operations, raise substantial doubt about our ability to continue as a going concern for a period of twelve months from the date of this Quarterly Report.

Management cannot provide assurance that we will remain current in our SEC filings, successfully restructure our debts and liabilities, find a new business opportunity, achieve profitable operations, become cash flow positive or raise additional debt and/or equity capital. We are seeking to raise capital through additional debt and/or equity financing to fund the Company in the future and to pay our debt obligations. Although we have historically raised capital from sales of preferred shares, and from the issuance of promissory notes and convertible promissory notes, there is no assurance that it will be able to continue to do so. If the Company is unable to raise additional capital or secure additional lending in the near future, management expects that the Company would need to file bankruptcy. Our 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 we be unable to continue as a going concern.

***Cash Flows***

*Operating activities*

Net cash flows used in operating activities for the three months ended March 31, 2026, amounted to $79,717. During the three months ended March 31, 2026, net cash used in operating activities was primarily attributable to a net loss of $324,884, adjusted for changes in operating assets and liabilities as a result of an increase in prepaid expenses and other current assets of $2,250, increases in accounts payable and accrued expenses of $102,418, and an increase in deferred compensation and related benefits of $144,999.

Net cash flows used in operating activities for the three months ended March 31, 2025, amounted to $182,055. During the three months ended March 31, 2025, net cash used in operating activities was primarily attributable to a net loss of $498,270, adjusted for changes in operating assets and liabilities as a result of increases in accounts payable and accrued expenses of $133,278, accrued compensation and related benefits of $122,840, and accrued expenses – related parties of $62,587.

*Investing activities*

Net cash used in investing activities for the three months ended March 31, 2026 and 2025, amounted to $0.

*Financing activities*

For the three months ended March 31, 2026, net cash provided by financing activities totaled $75,000. During the three months ended March 31, 2026, we received cash proceeds of $75,000 from notes payable from unrelated third parties.

For the three months ended March 31, 2025, net cash provided by financing activities totaled $225,000. During the three months ended March 31, 2025, we received cash proceeds of $225,000 from notes payable from unrelated third parties.

**Contractual Obligations**

We have certain fixed contractual obligations and commitments that include future estimated payments. Changes in our business needs, cancellation provisions, changing interest rates, and other factors may result in actual payments differing from the estimates. We cannot provide certainty regarding the timing and amounts of payments.

**Effects of Inflation**

We do not believe that inflation has had a material impact on our business, revenues, or operating results during the periods presented.

**Recently Enacted Accounting Standards**

For a description of accounting changes and recent accounting standards, including the expected dates of adoption and estimated effects, if any, on our consolidated financial statements, see "Note 2: Recent Accounting Pronouncements" in the unaudited consolidated financial statements filed with this Quarterly Report.

**ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

We are not required to provide the information required by this Item as we are a "smaller reporting company," as defined in Rule 12b-2 of the 34 Act.

**ITEM 4. CONTROLS AND PROCEDURES**

Evaluation of Disclosure Controls and Procedures

Based on their evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as amended) our management, with the participation of our Chief Executive Officer who also serves as our Chief Financial Officer, has concluded that our disclosure controls and procedures were ineffective as of the end of the period covered by this Quarterly Report for the purpose of ensuring that the information required to be disclosed by us in this Quarterly Report is made known to them by others on a timely basis, and that the information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, in order to allow timely decisions regarding required disclosure, and that such information is recorded, processed, summarized, and reported by us within the time periods specified in the SEC's rules and instructions for Form 10-Q.

The ineffectiveness of our internal control over financial reporting was due to the following material weaknesses which we identified in our internal control over financial reporting:

● We lack segregation of duties within accounting functions duties as a result of our limited financial resources to support hiring of personnel; and.

● We have not implemented adequate system and manual controls.

Management believes that these material weaknesses did not have an effect on our financial results. However, management believes that these material weaknesses resulted in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods. Management recognizes that its controls and procedures would be substantially improved if the Company had adequate staffing and an audit committee and as such is actively seeking to remediate this issue.

Our Chief Executive Officer who also serves as our Chief Financial Officer does not expect that our disclosure controls and procedures or our internal controls over financial reporting will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there is resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

Until such time as we expand our staff to include additional accounting personnel, it is likely we will continue to report material weaknesses in our internal control over financial reporting.

**Changes in Internal Control Over Financial Reporting**

There have been no changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

**PART II - OTHER INFORMATION**

**ITEM 1. LEGAL PROCEEDINGS**

From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. Other than discussed below, we are not currently a party to any other legal proceeding that we believe would have a material adverse effect on our business, financial condition, or operating results.

***SCS, LLC v. TLSS***

On November 17, 2020, a former financial consultant to the Company, SCS, LLC, filed an action against the Company in the Circuit Court of the 15th Judicial Circuit, Palm Beach County, Florida, captioned SCS, LLC v. Transportation and Logistics Systems, Inc. The case was assigned Case No. 50-2020-CA-012684.

In this action, SCS alleges that it entered into a renewable six-month consulting agreement with the Company dated September 5, 2019, and that the Company failed to make certain monthly payments due thereunder for the months of October 2019 through March 2020, summing to $42,000. The complaint alleges claims for breach of contract, quantum meruit, unjust enrichment and account stated.

In February 2025, the parties agreed to settle all claims in this matter and thereafter executed a Confidential Settlement Agreement and Mutual Release effective on February 13, 2025. On July 18, 2025, the court entered an Order which determined that the settlement of $36,000 in money the Company owed to SCS claimed in exchange for the issuance of 360 shares of Series J Preferred Stock was fair to SCS. On July 21, 2025, the court entered a final order which dismissed the action with prejudice. In July 2025, the Company issued 360 shares of Series J Preferred to SCS, LLC pursuant to the settlement of this action, which reduced accounts payable by $36,000.

***Shareholder Derivative Action***

On June 25, 2020, the Company was served with a putative stockholder derivative action filed in the Circuit Court of the 15th Judicial Circuit in and for Palm Beach County, Florida (the "Court") captioned SCS, LLC, derivatively on behalf of Transportation and Logistics Systems, Inc. v. John Mercadante, Jr., Douglas Cerny, Sebastian Giordano, Ascentaur LLC and Transportation and Logistics Systems, Inc. The action has been assigned Case No. 2020-CA-006581.

The plaintiff in this action, SCS, alleges it is a limited liability company formed by a former chief executive officer and director of the Company, Lawrence Sands. The complaint alleges that between April 2019 and June 2020, the immediately prior chairman and chief executive officer of the Company, Mercadante, the former chief development officer of the Company, Cerny, and, since February 2020, the Company's then restructuring consultant who is now chairman and chief executive officer of the Company, Giordano, breached fiduciary duties owed to the Company. Prior to becoming CEO, Giordano rendered his services to the Company through the final named defendant in the action, Ascentaur LLC.

The complaint alleges that Mercadante breached duties to the Company by, among other things, requesting, in mid-2019, that certain preferred equity holders, including SCS, convert their preferred shares into Company common stock in order to facilitate an equity offering by the Company and then not consummating that offering. The complaint also alleges that Mercadante and Cerny caused the Company to engage in purportedly wasteful and unnecessary transactions such as taking merchant cash advances (MCA) on disadvantageous terms. The complaint further alleges that Mercadante and Cerny "issued themselves over two million shares of common stock without consideration." The complaint seeks unspecified compensatory and punitive damages on behalf of the Company for breach of fiduciary duty, negligent breach of fiduciary duty, constructive fraud, civil conspiracy and the appointment of a receiver or custodian for the Company.

Company management tendered the complaint to the Company's directors' and officers' liability carrier for defense and indemnity purposes, which coverage is subject to a $250,000 self-insured retention. Each of the individual defendants and Ascentaur LLC has advised that they vigorously deny each and every allegation of wrongdoing alleged in the complaint. Among other things, Mercadante asserts that he made every effort to consummate an equity offering in late 2019 and early 2020 and could not do so solely because of the Company's precarious financial condition. Mercadante also asserts that he made clear to SCS and other preferred equity holders, before they converted their shares into common stock, that there was no guarantee the Company would be able to consummate an equity offering in late 2019 or early 2020. In addition, Mercadante and Cerny assert that they received equity in the Company on terms that were entirely fair to the Company and entered into MCA transactions solely because no other financing was available to the Company.

By order dated September 15, 2022, the Circuit Judge assigned to this case dismissed the original Complaint in the matter, finding (a) that SCS had failed to adequately allege it has standing and (b) that the complaint fails to adequately allege a cognizable claim. The dismissal was without prejudice, meaning SCS could attempt to replead its claims.

On October 5, 2022, SCS filed an Amended Complaint in this action. By order dated December 19, 2022, the Circuit Judge assigned to this case once again dismissed the case, finding (a) that SCS still failed to adequately allege it has standing and (b) that the complaint still fails to adequately allege a cognizable claim. Once again, however, the dismissal was without prejudice.

On January 18, 2023, SCS filed a Second Amended Complaint in this action. All defendants once again moved to dismiss the pleading or in the alternative for summary judgment on it in their favor. The Court heard argument on that motion on March 9, 2023. On May 15, 2023, the Court issued a summary order denying the defendants' motion to dismiss. On June 1, 2023, all defendants moved for reconsideration of the May 15 order. On November 28, 2023, the Court denied the motion for reconsideration.

In February 2025, the parties agreed to settle all claims in this matter and thereafter executed a Confidential Settlement Agreement and Mutual Release effective on February 13, 2025. On February 20, 2025, pursuant to a Stipulation of Dismissal with Prejudice, the Court entered a final order of dismissal with prejudice and dismissed the action with prejudice.

***Josh Perez v. Cougar Express, Inc.***

An attorney for a former Cougar Express (CE) employee, Josh Perez ("Perez"), has advised CE that he has filed a charge of discrimination against CE with the U.S. Equal Employment Opportunity Commission (EEOC).

Perez allegedly is asserting claims against CE for: gender discrimination under Title VII and the New York State Human Rights Law ("NYSHRL"); pregnancy/childbirth discrimination under Title VII of the federal Civil Rights Act of 1964, as amended; retaliation under Title VII and NYSHRL; and familial status discrimination under NYSHRL.

However, CE has not received a copy, nor any notification, of the filing.

Perez was employed by CE as a dock worker beginning on March 8, 2022, and last worked September 27, 2022. He alleges that in or around July 2022, he informed CE that he was expecting a child. Perez has not provided any details regarding the individual(s) with CE he allegedly informed. On September 27, 2022, Perez requested that CE complete the employer section of his New York Paid Family Leave ("PFL") paperwork, which CE did. Thereafter, Perez ceased communicating with CE. Further, CE did not receive any confirmation that Perez had in fact filed for PFL or that his PFL was approved.

Because CE did not hear from Perez or receive any confirmation concerning his application for or approval of PFL, CE concluded that Perez had resigned. Another worker was hired to fill Perez's former position. Then, on or about December 27, 2022, Perez contacted CE attempting to return to work and was informed that there was no position for him.

CE categorically denies Perez's allegations and any purported wrongdoing. Because this matter is apparently pending with the EEOC and CE has neither received a copy of the filing nor any notification of the filing, the Company cannot evaluate the likelihood of an adverse outcome or estimate the Company's liability, if any, in connection with it.

***Emerson Swan v. Severance Trucking Co., Inc.***

On April 1, 2024, a judgment was entered against Severance Trucking on behalf of Emerson Swan, Inc. ("Emerson") in the amount of $96,226, including prejudgment interest, statutory costs and legal fees. Emerson, which was a customer of Severance Trucking, claimed that an employee of Severance Trucking stole $75,209 of Emerson's products while under Severance Trucking's control. We did not accrue this claim and believe it is not liable since the accusation was made prior to the Severance Trucking acquisition date in January 2023.

***Ryder Truck Rental, Inc. v. Severance Trucking Co., Inc.***

On April 30, 2024, Severance Trucking received a letter from Ryder Truck Rental, Inc. requesting payment in the amount of $581,507 comprised of outstanding unpaid Truck Lease and Service Agreement charges of $55,136 in open invoices, $399,177 in early termination charges and $134,194 in attorney's fees. As of March 31, 2026 and December 31, 2025, such amounts are recorded as a liability of Severance Trucking and included in liabilities of discontinued operations.

***Akabas & Sproule v. Transportation and Logistics Systems, Inc.***

On March 19, 2025, the Company's former law firm, Akabas & Sproule, filed a lawsuit against the Company in the Supreme Court of the State of New York, New York County, alleging three causes of action: (i) breach of contract; (ii) account stated, and (iii) unjust enrichment/quantum meruit. Akabas & Sproule seeks $86,571 in compensatory damages, $11,027 in interest through February 28, 2025, attorneys' fees and costs, taxable costs of suit, and pre-judgment and post-judgment interest, all of which had been accrued as of September 30, 2025. Because the action was recently filed and no discovery has occurred in the case, it is not possible to evaluate the likelihood of a favorable or unfavorable outcome. On July 21, 2025, the Company entered into a Settlement Agreement and Mutual Release (the "A&S Settlement Agreement") with Akabas & Sproule seeking $86,571 in compensatory damages, $14,274 in interest and not less than $24,155 in costs of collection, for a total of $125,000 (the "A&S Claim") in which all claims were resolved by the issuance of 1,250 shares of Series J Preferred and upon the satisfaction of certain obligations and conditions, the action will be dismissed with prejudice. The A&S Settlement Agreement was on substantially the same form as the Liability Settlement Agreements (see Note 5). In August 2025, the Company issued 1,250 shares of Series J Preferred to Akabas & Sproule and, on August 18, 2025, a Stipulation of Discontinuance with Prejudice was agreed to and filed by the parties with the Court.

***Diesel Direct, LLC v. Severance Trucking a/k/a Severance Trucking Co., Inc.***

On May 19, 2025, Diesel Direct. LLC filed a lawsuit against Severance Trucking in the Commonwealth of Massachusetts, Superior Court Department of the Trial Court, for Severance Trucking's alleged failure to pay for diesel fuel deliveries between October 23, 2023 and February 14, 2024. Diesel Direct alleges four counts against Severance Trucking for breach of contract, breach of implied covenant of good faith and fair dealing, quantum meruit/unjust enrichment, and violation of M.G.L. c. 93A, and seeks judgment for monetary damages in the amount of $58,020.30, plus interest, attorneys' fees, and cost of collection, as well as an award of punitive, exemplary, and/or multiple damages to the extent permitted by law. On June 23, 2025, Diesel Direct filed a request for entry of default which was entered on June 26, 2025. On July 15, 2025, Diesel Direct filed a motion for default judgment. As of March 31, 2026 and December 31, 2025, the amount of $57,199 is recorded as a liability of Severance Trucking and included in liabilities of discontinued operations. On October 23, 2025, a damages assessment hearing was held by the Court via video conference, but no decision has been issued to date.

***RX Benefits v. TLSS Ops***

On October 1, 2025, a former vendor of TLSS Ops filed a complaint against the Company in the Superior Court of New Jersey Law Division, Bergen County, captioned RX Benefits v. TLSS Operations Holding Company, Inc. The case was assigned Case No. BER L-006620-25. In this action, RX Benefits demands payment of contractual amounts due plus legal fees and interest aggregating $149,627. As of March 31, 2026 and December 31, 2025, the amounts due of $149,618 and $149,618, respectively, have been accrued and are included liabilities of discontinued operations on the accompany consolidated balance sheets.

Other than discussed above, as of the date of this Quarterly Report, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations.

**ITEM 1A. RISK FACTORS**

Risk factors that affect our business and financial results are discussed in Part I, Item 1A "Risk Factors," in our 2025 Annual Report. In addition to the risk factors below, you should carefully consider the risks described in our 2025 Annual Report, which could materially affect our business, financial condition or future results. The risks described below and in our 2025 Annual Report are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results. If any of the risks actually occur, our business, financial condition, and/or results of operations could be negatively affected.

***Our stockholders will experience significant dilution as a result of the issuance of shares of our common stock upon conversion of shares of Series J Preferred.***

Our outstanding shares of Series J Preferred are each initially convertible for 100,000 shares of Common Stock. Furthermore, the Series J Preferred accrues dividends on a daily basis at a rate of 10% per annum, which may be paid in cash or shares of common stock, thereby increasing the number of shares of common stock issuable upon conversion. The conversion of some or all of the Series J Preferred Stock will result in the issuance of a substantial number of shares of common stock and, as a result, the percentage ownership and voting power held by our existing stockholders will be significantly reduced and our stockholders will experience significant dilution. As of March 31, 2026, an aggregate of approximately 11 billion shares of common stock were issuable upon conversion of the then-outstanding Series J Preferred, not including all dividends accrued as of such date.

**ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**

None.

**ITEM 3. DEFAULTS UPON SENIOR SECURITIES**

None.

**ITEM 4. MINE SAFETY DISCLOSURES**

Not applicable.

**ITEM 5. OTHER INFORMATION**

**Rule 10b5-1 Trading Arrangement**

During the three months ended March 31, 2026, no director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.

**ITEM 6. EXHIBITS**

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| | |
|:---|:---|
| **Exhibit No.** | **Description of Exhibits** |
| 3.1 | [Amended and Restated Articles of Incorporation of Loran Connection Corp. (now known as Transportation and Logistics Systems, Inc.), as filed with the Nevada Secretary of State, on January 25, 2012 (incorporated by reference to Exhibit 3.1 to our Annual Report on Form 10-K for the year ended March 31, 2015 as filed with the Securities and Exchange Commission on June 30, 2015).](https://www.sec.gov/Archives/edgar/data/1463208/000149315215002705/ex3-1.htm) |
| 3.2 | [Certificate of Change to the Amended and Restated Articles of Incorporation of PetroTerra Corp. (now known as Transportation and Logistics Systems, Inc.), as filed with the Nevada Secretary of State, dated December 18, 2013 (incorporated by reference to Exhibit 3.1 to our Form 8-K, as filed with the Securities and Exchange Commission on December 24, 2013).](https://www.sec.gov/Archives/edgar/data/1463208/000149315213002772/ex3-1.htm) |
| 3.3 | [Certificate of Change to the Amended and Restated Articles of Incorporation of PetroTerra Corp. (now known as Transportation and Logistics Systems, Inc.), as filed with the Nevada Secretary of State, dated February 14, 2017 (incorporated by reference to Exhibit 3.5 to our Form S-1, as filed with the Securities and Exchange Commission on July 26, 2017)](https://www.sec.gov/Archives/edgar/data/1463208/000149315217008180/ex3-5.htm) |
| 3.4 | [Certificate of Change to the Amended and Restated Articles of Incorporation of PetroTerra Corp. (now known as Transportation and Logistics Systems, Inc.), as filed with the Nevada Secretary of State, dated July 16, 2018 (incorporated by reference to Exhibit 3.1 to our Form 8-K as filed with the Securities and Exchange Commission on July 23, 2018).](https://www.sec.gov/Archives/edgar/data/1463208/000149315218010346/ex3-1.htm) |
| 3.5 | [Certificate of Change to the Amended and Restated Articles of Incorporation of Transportation and Logistics Systems, Inc., as filed with the Nevada Secretary of State, dated April 15, 2021 (incorporated by reference to Exhibit 3.5 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 as filed with the Securities and Exchange Commission on November 15, 2021).](https://www.sec.gov/Archives/edgar/data/1463208/000149315221019761/ex3-5.htm) |
| 3.6 | [Certificate of Amendment to the Amended and Restated Articles of Incorporation of Transportation and Logistics Systems, Inc., as filed with the Nevada Secretary of State on December 1, 2023 (incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K as filed with the Securities and Exchange Commission on January 3, 2024).](https://www.sec.gov/Archives/edgar/data/1463208/000149315224000208/ex3-2.htm) |
| 3.7 | [Certificate of Correction, as filed with the Nevada Secretary of State on November 25, 2024, to the Certificate of Change of the Company dated December 27, 2023 (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K as filed with the Securities and Exchange Commission on November 29, 2024).](https://www.sec.gov/Archives/edgar/data/1463208/000149315224048188/ex3-1.htm) |
| 3.8 | [Amended and Restated Bylaws of Transportation and Logistics Systems, Inc. (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on December 28, 2022).](https://www.sec.gov/Archives/edgar/data/1463208/000149315222036654/ex3-1.htm) |
| 4.1 | [Certificate of Designation, Preferences, Rights and Other Rights of Series B preferred Stock of the Company, dated October 7, 2019 (incorporated by reference to Exhibit 4.9 to our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission on May 29, 2020).](https://www.sec.gov/Archives/edgar/data/1463208/000149315220010171/ex4-9.htm) |
| 4.2 | [Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series E Preferred Stock of the Company, filed on December 28, 2020 (incorporated by reference to Exhibit 10.28 to our Form S-1/A dated February 10, 2021.](https://www.sec.gov/Archives/edgar/data/1463208/000149315221003119/ex10-28.htm) |
| 4.3 | [Certificate of Designation of Preferences, Rights and Limitations of Series G Preferred Stock of the Company, filed on December 28, 2021 (incorporated by reference to Exhibit 3.14 to our registration statement on Form S-1 dated January 28, 2022).](https://www.sec.gov/Archives/edgar/data/1463208/000149315222002570/ex3-14.htm) |
| 4.4 | [Form of Common Stock Purchase Warrant dated December 31, 2021 (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on January 3, 2022).](https://www.sec.gov/Archives/edgar/data/1463208/000149315222000044/ex10-2.htm) |
| 4.5 | [Form of Common Stock Purchase Warrant issued in Warrant Offering (incorporated by reference to Exhibit 4.1 to our registration statement on Form S-1 dated January 28, 2022).](https://www.sec.gov/Archives/edgar/data/1463208/000149315222002570/ex4-1.htm) |
| 4.6 | [Certificate of Designation of Preferences, Rights and Limitations of Series H Preferred Stock (incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on September 20, 2022).](https://www.sec.gov/Archives/edgar/data/1463208/000149315222026317/ex10-3.htm) |
| 4.7 | [Certificate of Designation of Preferences, Rights and Limitations of Series I Preferred Stock (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on July 19, 2023).](https://www.sec.gov/Archives/edgar/data/1463208/000149315223024887/ex4-1.htm) |

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| | |
|:---|:---|
| 4.8 | [Description of Securities (incorporated by reference to Exhibit 4.11 to our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 30, 2026).](https://www.sec.gov/Archives/edgar/data/1463208/000149315226013576/ex4-11.htm) |
| 4.9 | [Certificate of Designation of Preferences, Rights and Limitations of Series J Senior Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on May 7, 2025).](https://www.sec.gov/Archives/edgar/data/1463208/000164117225008979/ex3-1.htm) |
| 4.10 | [Certificate of Amendment to Certificate of Designation of Preferences, Rights and Limitations of Series J Senior Convertible Preferred Stock (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on September 9, 2025).](https://www.sec.gov/Archives/edgar/data/1463208/000149315225012902/ex4-1.htm) |
| 10.1+ | [Termination Notice, dated as of August 26, 2025 (incorporated by reference to Exhibit 10.4 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on September 2, 2025).](https://www.sec.gov/Archives/edgar/data/1463208/000149315225012569/ex10-4.htm) |
| 10.2 | [Letter Agreement, dated as of August 27, 2025, between Transportation Logistics Systems, Inc., and C/M Capital Master Fund, LP (incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K filed with the Securities and Exchange Commission on September 2, 2025).](https://www.sec.gov/Archives/edgar/data/1463208/000149315225012569/ex10-2.htm) |
| 10.3 | [Promissory Note, dated as of August 27, 2025 between Transportation Logistics Systems, Inc. and C/M Capital Master Fund, LP (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed with the Securities and Exchange Commission on September 2, 2025).](https://www.sec.gov/Archives/edgar/data/1463208/000149315225012569/ex10-1.htm) |
| 10.4 | [Form of Stock Award Agreement, dated as of August 28, 2025, between Transportation Logistics Systems, Inc. and certain former employees, consultants and Sebastian Giordano (incorporated by reference to Exhibit 10.3 of our Current Report on Form 8-K filed with the Securities and Exchange Commission on September 2, 2025).](https://www.sec.gov/Archives/edgar/data/1463208/000149315225012569/ex10-3.htm) |
| 10.5 | [Form of Settlement Agreement (Outstanding Liabilities) (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on October 17, 2025).](https://www.sec.gov/Archives/edgar/data/1463208/000149315225018453/ex10-1.htm) |
| 10.6 | [Form of Settlement Agreement (Outstanding Liabilities and Warrants) (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on July 23, 2025).](https://www.sec.gov/Archives/edgar/data/1463208/000149315225011354/ex10-2.htm) |
| 10.7 | [Form of Exchange Agreement (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on July 14, 2025).](https://www.sec.gov/Archives/edgar/data/1463208/000164117225019510/ex10-1.htm) |
| 10.8 | [Settlement Agreement, dated as of December 15, 2025 by and between Transportation Logistics Systems, Inc. and Sebastian Giordano (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed with the Securities and Exchange Commission on December 17, 2025).](https://www.sec.gov/Archives/edgar/data/1463208/000149315225028129/ex10-1.htm) |
| 10.9 | [Retention Agreement, dated as of December 15, 2025 by and between Transportation Logistics Systems, Inc. and Sebastian Giordano (incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K filed with the Securities and Exchange Commission on December 17, 2025).](https://www.sec.gov/Archives/edgar/data/1463208/000149315225028129/ex10-2.htm) |
| 10.10 | [Letter Agreement, dated as of January 9, 2026, between Transportation Logistics Systems, Inc., and C/M Capital Master Fund, LP (incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K filed with the Securities and Exchange Commission on January 13, 2026).](https://www.sec.gov/Archives/edgar/data/1463208/000149315226002029/ex10-2.htm) |
| 10.11 | [Form of Promissory Note, dated as of January 9, 2026 between Transportation Logistics Systems, Inc. and C/M Capital Master Fund, LP (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed with the Securities and Exchange Commission on January 13, 2026).](https://www.sec.gov/Archives/edgar/data/1463208/000149315226002029/ex10-1.htm) |
| 10.12 | [Membership Interest and Asset Purchase and Sale Agreement, dated as of April 1, 2026, by and among the Company, TLSS Acquisition, Inc., a Delaware corporation; TLSS Reverse PGS, LLC, a Texas limited liability company; Badcer Ops, Inc., a Nevada corporation; Jeff Badders; Mercer Street Global Opportunity Fund, LLC, a Delaware limited liability company; Patriot Glass Solutions, LLC, a Texas limited liability company; and Michael Wanke (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed with the Securities and Exchange Commission on April 7, 2026).](https://www.sec.gov/Archives/edgar/data/1463208/000149315226015436/ex10-1.htm) |
| 10.13 | [Form of Promissory Note, dated as of April 24, 2026, between the Company, as borrower, and C/M Capital Master Fund, LP., as lender (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed with the Securities and Exchange Commission on April 28, 2026).](https://www.sec.gov/Archives/edgar/data/1463208/000149315226019375/ex10-1.htm) |
| 10.14 | [Letter Agreement, dated as of April 24, 2026, between the Company and C/M Capital Master Fund, LP (incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K filed with the Securities and Exchange Commission on April 28, 2026).](https://www.sec.gov/Archives/edgar/data/1463208/000149315226019375/ex10-2.htm) |
| 10.15\*+ | [Deferred Compensation Agreement with Sebastian Giordano dated April 23, 2026.](ex10-15.htm) |
| 10.16\*+ | [Form of Deferred Compensation Agreement with Directors dated April 23, 2026.](ex10-16.htm) |
| 10.17\*+ | [Amendment No. 1 to the Retention Agreement dated April 23, 2026, by and between Transportation and Logistics Systems, Inc. and Sebastian Giordano.](ex10-17.htm) |
| 21 | [Subsidiaries of Registrant (incorporated by reference to Exhibit 21 of our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 30, 2026).](https://www.sec.gov/Archives/edgar/data/1463208/000149315224048930/ex21.htm) |
| 31.1# | [Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.](ex31-1.htm) |
| 32.1# | [Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.](ex32-1.htm) |
| 101.INS\* | Inline XBRL Instances Document |
| 101.SCH\* | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL\* | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF\* | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB\* | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE\* | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |

---

\* Filed herewith.

+ Indicates a management contract or any compensatory plan, contract, or arrangement.

# Furnished herewith. The certifications attached as Exhibit 31.1 and Exhibit 32.1 that accompany this Quarterly Report are not deemed filed with the Securities and Exchange Commission and are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Transportation and Logistics Systems, Inc. under the Securities Act or the Exchange Act, whether made before or after the date of this Form 10-Q, irrespective of any general incorporation language contained in such filing.

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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| | | |
|:---|:---|:---|
|  | **TRANSPORTATION AND LOGISTICS SYSTEMS, INC.** | **TRANSPORTATION AND LOGISTICS SYSTEMS, INC.** |
| Dated: May 14, 2026 | By: | */s/ Sebastian Giordano* |
|  | Name: | Sebastian Giordano |
|  | Title: | Chief Executive Officer and Chief Financial Officer<br> (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) |

---

## Exhibit 10.15

**Exhibit 10.15**

**DEFERRED COMPENSATION AGREEMENT**

This Deferred Compensation Agreement (this "Agreement") is entered into as of April 23, 2026 (the "Effective Date"), by and between Transportation and Logistics Systems, Inc., a Nevada corporation (the "Company"), and Sebastian Giordano ("Executive").

**RECITALS**

***WHEREAS***, Executive serves as the Company's Chairman, Chief Executive Officer, and Chief Financial Officer and has earned and will continue to earn salary, wages, bonuses, and other compensation from the Company;

***WHEREAS***, the Company and Executive desire to defer payment of all such compensation earned from January 1, 2026 through the closing date of an acquisition or merger of the Company (the "Acquisition Closing");

***WHEREAS***, the Company and Executive are parties to a Retention Agreement dated December 15, 2025, as amended by Amendment No. 1 thereto (collectively, the "Retention Agreement"), which governs the payment of a Retention Bonus to Executive, and this Agreement is not intended to modify or supersede the Retention Agreement;

***WHEREAS***, Executive is a member of the Board of Directors of the Company (the "Board") and has a material interest in this Agreement, and the disinterested members of the Board, being fully informed of Executive's interest, have approved the Company's entry into this Agreement in accordance with NRS 78.140;

***WHEREAS***, the parties intend that the compensation deferred hereunder shall comply with, or be exempt from, Section 409A of the Internal Revenue Code of 1986, as amended ("Section 409A"), and this Agreement shall be interpreted and administered accordingly;

***NOW, THEREFORE***, the parties agree as follows:

1. <u>Deferral of Compensation</u>. All salary, wages, bonuses, and any other cash compensation earned by
 Executive from January 1, 2026 through the Acquisition Closing (collectively, the "Deferred
 Amounts") shall be deferred and shall not be paid, credited, or made available to Executive
 until a Triggering Event (as defined in Section 2). For the avoidance of doubt, the Deferred
 Amounts do not include (i) any amounts payable under the Retention Agreement, which shall
 be governed solely by the terms thereof, or (ii) any equity-based compensation, which shall
 be governed by the applicable plan documents and award agreements.

2. <u>Triggering Events</u>. Deferred Amounts shall become payable to Executive within thirty (30) days following
 the earliest to occur of the following (each, a "Triggering Event"):

&nbsp;&nbsp;&nbsp;&nbsp;(a) the
 Acquisition Closing;

(b) a
 Change in Control of the Company; "Change in Control" means (i) the consummation
 of a merger, consolidation, or reorganization of the Company with or into another entity
 in which the stockholders of the Company immediately prior to such transaction hold less
 than fifty percent (50%) of the voting power of the surviving entity immediately after such
 transaction, (ii) the sale or other disposition of all or substantially all of the Company's
 assets, or (iii) any transaction or series of related transactions resulting in any person
 or group (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934)
 acquiring beneficial ownership of more than fifty percent (50%) of the Company's outstanding
 voting securities. For purposes of this Agreement, the Acquisition Closing shall be deemed
 a Change in Control.

&nbsp;&nbsp;&nbsp;&nbsp;(c) a
 separation from service of Executive by the Company without Cause (as defined in the Retention
 Agreement) or by Executive for Good Reason (as defined in the Retention Agreement);

&nbsp;&nbsp;&nbsp;&nbsp;(d) Executive's
 death or Disability, which means Executive's inability to perform the essential functions
 of his position, with or without reasonable accommodation, for a period of one hundred twenty
 (120) consecutive days or one hundred eighty (180) days in any twelve (12)-month period,
 as determined by a physician mutually agreed upon by the Company and Executive (or Executive's
 legal representative); or

(e) any
 other event that constitutes a permissible payment event under Section 409A.

If Executive's employment is terminated by the Company for Cause or by Executive without Good Reason, the Deferred Amounts shall remain deferred and shall be paid upon the earliest to occur of the Triggering Events set forth in clauses (a), (b), (d), or (e) above.

3. <u>Schedule of Deferred Amounts</u>. The Company shall maintain a schedule of Deferred Amounts (the "Schedule"),
 which shall be updated no less frequently than monthly to reflect compensation earned during
 the preceding period. The Schedule shall be incorporated by reference into this Agreement.
 The Company shall provide Executive with a copy of the current Schedule within ten (10) business
 days of Executive's written request. Executive shall have thirty (30) days following
 receipt of any updated Schedule to dispute any amount reflected therein, and the parties
 shall negotiate in good faith to resolve any such dispute. Schedule A, attached hereto, sets
 forth the estimated monthly deferral amount. This Agreement does not create a trust or any
 funded arrangement. All Deferred Amounts remain general unsecured obligations of the Company,
 payable from its general assets. Executive's rights under this Agreement are no greater
 than those of a general unsecured creditor of the Company.

4. <u>Governing Law</u>. This Agreement shall be governed by and construed in accordance with the laws of
 the State of New York, without regard to conflicts of law principles.

5. <u>Entire Agreement</u>. This Agreement constitutes the entire understanding of the parties with respect
 to the deferral of Executive's compensation as described herein. Nothing in this Agreement
 shall modify, amend, or supersede the Retention Agreement, which shall remain in full force
 and effect in accordance with its terms.

6. <u>Amendment</u>.
 This Agreement may be amended or modified only by a written instrument executed by both parties.

7. <u>Counterparts</u>.
 This Agreement may be executed in one or more counterparts, each of which shall be deemed
 an original but all of which together shall constitute one and the same instrument.

8. <u>Assignment</u>.
 The Company may assign its obligations under this Agreement to any successor entity in connection
 with a Change in Control or corporate reorganization, provided that such successor assumes
 all obligations hereunder. Executive may not assign his rights under this Agreement, except
 that amounts payable hereunder shall be payable to Executive's estate or designated
 beneficiary in the event of Executive's death.

IN WITNESS WHEREOF, the undersigned have executed this Agreement effective as of the date first written above.

TRANSPORTATION AND LOGISTICS SYSTEMS, INC.

By:   <br> Name: John Mercadante <br> Title: Director

EXECUTIVE:

  <br> Sebastian Giordano

<u>Schedule A</u>

Based upon estimated annual compensation of $400,000, the estimated monthly deferral amount is $33,333.33 per month. Actual Deferred Amounts shall be determined based on compensation earned and reflected in the Schedule as updated from time to time in accordance with Section 4 of this Agreement.

## Exhibit 10.16

**Exhibit 10.16**

**DEFERRED COMPENSATION AGREEMENT**

This Deferred Compensation Agreement (this "Agreement") is entered into as of April 23, 2026 (the "Effective Date"), by and between Transportation and Logistics Systems, Inc., a Nevada corporation (the "Company"), and ___________ ("Director").

**RECITALS**

WHEREAS, Director serves as a member of the Board of Directors of the Company (the "Board") and has earned and will continue to earn fees, bonuses, equity-based compensation, and other cash compensation from the Company;

WHEREAS, the Company and Director desire to defer payment of all such compensation earned from January 1, 2026 through the closing date of an acquisition or merger of the Company (the "Acquisition Closing");

WHEREAS, the Board of Directors has approved the Company's entry into this Agreement;

WHEREAS, the parties intend that the compensation deferred hereunder shall comply with, or be exempt from, Section 409A of the Internal Revenue Code of 1986, as amended ("Section 409A"), and this Agreement shall be interpreted and administered accordingly;

NOW, THEREFORE, the parties agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Deferral of Compensation</u>. All fees, bonuses, equity-based compensation, and any other cash compensation
 earned by Director from January 1, 2026 through the Acquisition Closing (collectively, the
 "Deferred Amounts") shall be deferred and shall not be paid, credited, or made
 available to Director until a Triggering Event (as defined in Section 2).

&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Triggering Events</u>. Deferred Amounts shall become payable to Director within thirty (30) days following
 the earliest to occur of the following (each, a "Triggering Event"):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the
 Acquisition Closing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) a
 Change in Control of the Company; "Change in Control" means (i) the consummation
 of a merger, consolidation, or reorganization of the Company with or into another entity
 in which the stockholders of the Company immediately prior to such transaction hold less
 than fifty percent (50%) of the voting power of the surviving entity immediately after such
 transaction, (ii) the sale or other disposition of all or substantially all of the Company's
 assets, or (iii) any transaction or series of related transactions resulting in any person
 or group (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934)
 acquiring beneficial ownership of more than fifty percent (50%) of the Company's outstanding
 voting securities. For purposes of this Agreement, the Acquisition Closing shall be deemed
 a Change in Control;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) a
 removal of Director from the Board by the Company without Cause; "Cause" means
 the occurrence of any of the following: (i) Director's breach of fiduciary duty to
 the Company; (ii) Director's fraud, dishonesty, or willful misconduct with respect
 to the business or affairs of the Company; (iii) Director's conviction of, or plea
 of no contest to, any misdemeanor involving theft, fraud, dishonesty, or act of moral turpitude
 or to any felony; or (iv) Director's material violation of the Company's corporate
 governance policies or code of conduct; provided, that in the event of a breach or violation
 described in clauses (i) or (iv) that can be cured by Director, the Company shall provide
 Director with notice of the facts and circumstances which constitute such breach or violation
 and shall provide Director a ten (10)-day period in which to cure such breach or violation,
 and the Company shall not remove Director for Cause if Director cures such breach or violation
 within such ten (10)-day period;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Director's
 death or Disability; "Disability" means Director's inability to perform
 the essential functions of his or her position as a member of the Board for a period of one
 hundred twenty (120) consecutive days or one hundred eighty (180) days in any twelve (12)-month
 period, as determined by a physician mutually agreed upon by the Company and Director (or
 Director's legal representative); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) any
 other event that constitutes a permissible payment event under Section 409A.

If Director is removed from the Board for Cause or voluntarily resigns from the Board, the Deferred Amounts shall remain deferred and shall be paid upon the earliest to occur of the Triggering Events set forth in clauses (a), (b), (d), or (e) above.

&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Schedule of Deferred Amounts</u>. The Company shall maintain a schedule of Deferred Amounts (the "Schedule"),
 which shall be updated no less frequently than monthly to reflect compensation earned during
 the preceding period. The Schedule shall be incorporated by reference into this Agreement.
 The Company shall provide Director with a copy of the current Schedule within ten (10) business
 days of Director's written request. Director shall have thirty (30) days following
 receipt of any updated Schedule to dispute any amount reflected therein, and the parties
 shall negotiate in good faith to resolve any such dispute. Schedule A, attached hereto, sets
 forth the estimated monthly deferral amount. This Agreement does not create a trust or any
 funded arrangement. All Deferred Amounts remain general unsecured obligations of the Company,
 payable from its general assets. Director's rights under this Agreement are no greater
 than those of a general unsecured creditor of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;4. <u>Governing Law</u>. This Agreement shall be governed by and construed in accordance with the laws of
 the State of New York, without regard to conflicts of law principles.

&nbsp;&nbsp;&nbsp;&nbsp;5. <u>Entire Agreement</u>. This Agreement constitutes the entire understanding of the parties with respect
 to the deferral of Director's compensation as described herein.

&nbsp;&nbsp;&nbsp;&nbsp;6. <u>Amendment</u>.
 This Agreement may be amended or modified only by a written instrument executed by both parties.

&nbsp;&nbsp;&nbsp;&nbsp;7. <u>Counterparts</u>.
 This Agreement may be executed in one or more counterparts, each of which shall be deemed
 an original but all of which together shall constitute one and the same instrument.

&nbsp;&nbsp;&nbsp;&nbsp;8. <u>Assignment</u>.
 The Company may assign its obligations under this Agreement to any successor entity in connection
 with a Change in Control or corporate reorganization, provided that such successor assumes
 all obligations hereunder. Director may not assign his or her rights under this Agreement,
 except that amounts payable hereunder shall be payable to Director's estate or designated
 beneficiary in the event of Director's death.

*[Signature Page Follows]*

 

**SIGNATURES**

TRANSPORTATION AND LOGISTICS SYSTEMS, INC.

By:   <br> Name: Sebastian Giordano <br> Title: Chief Executive Officer

DIRECTOR:

  <br> [Director Name]

**<u>Schedule A</u>**

Based upon Director's current board fee, the estimated monthly deferral amount is $5,000 per month. Actual Deferred Amounts shall be determined based on compensation earned and reflected in the Schedule as updated from time to time in accordance with Section 3 of this Agreement.

## Exhibit 10.17

**Exhibit 10.17**

**AMENDMENT NO. 1**

**TO RETENTION AGREEMENT**

This Amendment No. 1 to the Retention Agreement (this "Amendment") is entered into as of April 23, 2026, by and between Transportation and Logistics Systems, Inc. (the "Company") and Sebastian Giordano ("Executive").

This Amendment modifies that certain Retention Agreement dated on December 15, 2025 (the "Agreement"). Capitalized terms not defined in this Amendment shall have the meanings ascribed to them in the Agreement.

**RECITALS**

**WHEREAS**, the Agreement provides that the Company and Executive shall negotiate in good faith a new employment agreement within sixty (60) days of the Effective Date, and conditions payment of the Retention Bonus upon the execution of a Settlement Agreement and Mutual Release converting accrued compensation into Series J Preferred Shares;

**WHEREAS**, the Company and Executive now desire to extend the deadline for entering into a new Employment Agreement to no later than the closing of an acquisition, rather than within sixty (60) days of the Effective Date;

**WHEREAS**, the Agreement provides for two fixed Retention Bonus payments of $250,000 each upon the Company closing specified financing events of $1,000,000 and $2,500,000 by December 31, 2026;

**WHEREAS**, the parties now desire to amend the Agreement so that the Retention Bonus shall be paid on a pro-rata basis relative to any capital raised, rather than only upon meeting the full financing thresholds;

**WHEREAS**, the parties further desire to provide the Executive with the ability to extend the December 31, 2026 deadline for payment of any remaining Retention Bonus amounts if the Company has not raised aggregate gross proceeds of $3,500,000 by such date;

**NOW, THEREFORE**, in consideration of the mutual covenants contained herein, the Agreement is hereby amended as follows:

**1. Extension of Deadline to Enter Employment Agreement**

The second sentence of Section 6 of the Agreement is hereby deleted in its entirety and replaced with the following:

"The Company and Executive shall negotiate in good faith and enter into a new Employment Agreement no later than the closing of any acquisition or merger of a new business opportunity by the Company (the "Acquisition Closing")."

**2. Pro-Rata Retention Bonus Payments**

Section 1(a) and 1(b) of the Agreement are hereby deleted in their entirety and replaced with the following:

"(a) The Retention Bonus shall be paid on a pro-rata basis relative to capital raised by the Company, whether in one or more financings, until the full $500,000 Retention Bonus has been paid. If the Company raises less than the $1,000,000 and $2,500,000 financing thresholds set forth in the original Agreement, the Retention Bonus payment shall be calculated on a pro-rata basis (e.g., if $500,000 is raised in the first financing, the pro-rata payment shall equal $125,000). Payments shall be made within five (5) business days of each financing closing. The Company shall only be obligated to make such payments to the extent it has the resources to do so.

(b) The full $500,000 Retention Bonus shall be deemed earned and fully payable once aggregate gross proceeds from financings equal or exceed $3,500,000."

**3. Extension of December 31, 2026 Deadline**

The following provision is hereby added as Section 1(c) of the Agreement:

"(c) Notwithstanding anything in the Agreement to the contrary, if the Company has not raised aggregate gross proceeds of $3,500,000 by December 31, 2026, the deadline for payment of any remaining Retention Bonus amounts may be extended upon the written consent of the Executive, which consent may be granted or withheld in the Executive's sole discretion."

**4. Conforming Changes**

All references in the Agreement to the sixty (60) day deadline for negotiating a new employment agreement, "Initial Payment Date," and "Final Payment Date" are hereby deemed modified to reflect the amendments set forth herein.

**5. No Other Changes**

Except as expressly amended herein, all terms and conditions of the Agreement remain in full force and effect.

*[Signature Page Follows]*

 

TRANSPORTATION AND LOGISTICS SYSTEMS, INC.

By:   <br> Name: John Mercadante <br> Title: Director

EXECUTIVE:

  <br> Sebastian Giordano

## Exhibit 31.1

**Exhibit 31.1**

**<u>CERTIFICATION</u>**

**Pursuant to Rules 13a-14(a) and 15d-14(a)**

**Under the Securities Exchange Act of 1934**

**As adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**

I, Sebastian Giordano, certify that:

1. I
 have reviewed this Quarterly Report on Form 10-Q of Transportation and Logistics Systems, Inc. (the "registrant");

2. Based
 on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
 to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to
 the period covered by this report;

3. Based
 on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
 respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in
 this report;

4. I
 am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant
 and have:

&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed
 such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
 to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others
 within those entities, particularly during the period in which this report is being prepared;

(b) Designed
 such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
 supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
 for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated
 the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about
 the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation;
 and

(d) Disclosed
 in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's
 most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected,
 or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. I
 have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors
 and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;(a) All
 significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
 reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information;
 and

(b) Any
 fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's
 internal control over financial reporting.

---

| | | |
|:---|:---|:---|
| Dated: May 14, 2026 | Signature: | */s/ Sebastian Giordano* |
|  |  | Sebastian Giordano |
|  |  | Chief Executive Officer and Chief Financial Officer |
|  |  | (Principal Executive Officer and Principal Financial Officer) |

---

## Exhibit 32.1

**Exhibit 32.1**

**<u>CERTIFICATION</u>**

**Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**

**(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)**

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned principal executive officer and principal financial officer of Transportation and Logistics Systems, Inc. (the "Company") does hereby certify, to such officer's knowledge, that:

The Quarterly Report on Form 10-Q for the period ended March 31, 2026 (the "Form 10-Q") of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | | |
|:---|:---|:---|
| Dated: May 14, 2026 | By: | */s/ Sebastian Giordano* |
|  |  | Sebastian Giordano |
|  |  | Chief Executive Officer and Chief Financial Officer<br> (Principal Executive Officer and Principal Financial Officer) |

---

The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and is not being filed as part of Form 10-Q or as a separate disclosure document.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.