NOTE 3 – ACQUISITION

Acquisition

2023

Effective January 31, 2023, TLSS-STI acquired all of the outstanding stock of each of Severance Trucking, Severance Warehouse and McGrath, which together offered less-than-truckload (LTL) trucking services throughout New England. The total purchase price was $2,250,000 plus closing expenses of $36,525, as adjusted. In exchange for the outstanding stock of the Severance entities, TLSS-STI (i) paid $713,586 in cash, and (ii) issued a $1,572,939 secured promissory note, with interest accruing at the rate of 12% per annum (See Note 10 – Discontinued Operations). The entire unpaid principal under the note, was 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 interest thereunder, unless paid sooner. On November 8, 2023, the Company and the sellers agreed to, among other things, (a) reduce the principal amount of the secured promissory note by $171,887, (b) extend the maturity date of the secured promissory note from August 1, 2024 to February 1, 2025, and (c) adjust the payment schedule of the secured promissory note. The promissory note was secured solely by the assets of the Severance entities and a corporate guaranty from TLSS.

In February 2024, due to the lack of working capital to conduct its business, the Severance entities ceased operations and no longer conducts any business, and all fixed assets of the Severance entities were voluntarily surrendered to the prior owners. For the years ended December 31, 2024 and 2023, all activities and balances of the Severance entities are included as part of discontinued operations on the consolidated financial statements (See Note 10 – Discontinued Operations). As of the date of this filing, neither Severance Trucking, Severance Warehouse nor McGrath have filed bankruptcy.

The assets acquired and liabilities assumed were recorded at their estimated fair values on the acquisition date and were subject to adjustment during the measurement period with subsequent changes recognized in earnings or loss. These estimates were inherently uncertain and were subject to refinement. Management developed estimates based on assumptions as a part of the purchase price allocation process to value the assets acquired and liabilities assumed as of the business acquisition date. As a result, during the purchase price measurement period, which may be up to one year from the business acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed based on completion of valuations, with the corresponding offset to intangible assets. Based upon the preliminary purchase price allocation, the following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the date of the acquisition:

SCHEDULE OF FAIR VALUE OF ASSETS ACQUIRED AND LIABILITIES ASSUMED 

TRANSPORTATION AND LOGISTICS SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 AND 2023