Exhibit 99.1
TITAN TRUCKING, LLC, AND SUBSIDIARY
A LIMITED LIABILTY COMPANY
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
C O N T E N T S
Report of Independent Registered Public Accounting Firm
To the Members of Titan Trucking, LLC and Subsidiary (A Limited Liability Company):
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Titan Trucking, LLC and Subsidiary (A Limited Liability Company) (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, changes in members’ equity (deficiency), and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021 and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Emphasis of Matter – Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and its total current liabilities exceed its total current assets. This raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters also are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provides a reasonable basis for our opinion.
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Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Critical Audit Matter Description
As described in Notes 5 and 6 to the financial statements, on June 10, 2022 and December 9, 2022, the Company completed acquisitions of Century Waste Management and WTI Global, Inc., respectively. The transactions were accounted for as asset acquisitions (the “Acquisitions”). The net assets acquired were recorded at fair value and included vehicles and equipment from Century Waste Management and a customer list intangible from WTI Global, Inc.
Auditing the Company’s accounting for these Acquisitions was complex due to the judgement involved in evaluating whether the Acquisitions met the criteria of a business combination or an asset acquisition among other accounting considerations. The subjective considerations included whether substantially all the fair value of the gross assets acquired was concentrated in a single identifiable asset or group of similar identifiable assets.
How the Critical Matter Was Addressed in the Audits
To test the Company’s accounting for the Acquisitions, we performed the following audit procedures:
| ● | We evaluated the Company’s application of the relevant accounting guidance under ASC Topic 805 – Business Combinations. | |
| ● | We obtained and read the relevant asset purchase agreements and assessed the completeness and accuracy of the net assets acquired. | |
| ● | We recalculated the fair value of the consideration paid in the Acquisitions. | |
| ● | We evaluated the reasonableness of the valuation methodologies used to arrive at the fair value of the acquired assets. | |
| ● | We assessed the appropriateness of the related disclosures in the financial statements. |
/s/ Freed Maxick CPAs, P.C.
We have served as the Company’s auditor since 2023.
Buffalo, New York
September 28, 2023
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TITAN TRUCKING, LLC AND SUBSIDIARY
A LIMITED LIABILITY COMPANY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2022 AND 2021
| DECEMBER 31, 2022 | DECEMBER 31, 2021 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Subscriptions receivable | ||||||||
| Other receivables | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total Current Assets | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Other assets | ||||||||
| Operating lease right-of-use asset, net | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND MEMBERS’ EQUITY (DEFICIENCY) | ||||||||
| LIABILITIES | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Accrued payroll and related taxes | ||||||||
| Notes payable, net of deferred financing costs | ||||||||
| Notes payable, net – related parties | ||||||||
| Operating lease liability | ||||||||
| Total Current Liabilities | ||||||||
| Long-term notes, net of deferred financing costs | ||||||||
| Operating lease liability, net of current portion | ||||||||
| Total Liabilities | ||||||||
| MEMBERS’ EQUITY (DEFICIENCY) | ||||||||
| Members’ equity (deficiency) | ( | ) | ||||||
| Total Members’ Equity (Deficiency) | ( | ) | ||||||
| TOTAL LIABILITIES AND MEMBERS’ EQUITY (DEFICIENCY) | $ | $ | ||||||
The accompanying notes to the financial statements are an integral part of these statements.
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TITAN TRUCKING, LLC AND SUBSIDIARY
A LIMITED LIABILITY COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
| For the Years Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| REVENUE | $ | $ | ||||||
| COST OF REVENUES | ||||||||
| GROSS LOSS | ( | ) | ( | ) | ||||
| OPERATING EXPENSES: | ||||||||
| Salaries and salary related costs | ||||||||
| Professional fees | ||||||||
| General and administrative expenses | ||||||||
| Total Operating Expenses | ||||||||
| OPERATING LOSS | ( | ) | ( | ) | ||||
| OTHER INCOME (EXPENSE): | ||||||||
| Interest expense, net of interest income | ( | ) | ( | ) | ||||
| Loss on sale of assets | ( | ) | ( | ) | ||||
| Employee Retention Credits | ||||||||
| Forgiveness of Paycheck Protection Program loans | ||||||||
| Other income | ||||||||
| Total other income (expense) | ||||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | ||
| LOSS PER UNIT (BASIC AND DILUTED) | ||||||||
| Weighted-average units outstanding | ||||||||
| Net loss per unit | $ | ) | $ | ) | ||||
The accompanying notes to the financial statements are an integral part of these statements.
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TITAN TRUCKING, LLC AND SUBSIDIARY
A LIMITED LIABILITY COMPANY
CONSOLIDATED STATEMENT OF CHANGES IN MEMBERS’ EQUITY (DEFICIENCY)
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
| Members’ Equity (Deficiency) | ||||
| Balance – January 1, 2021 | $ | ( | ) | |
| Net loss | ( | ) | ||
| Balance – December 31, 2021 | ( | ) | ||
| Contributions | ||||
| Net loss | ( | ) | ||
| Balance – December 31, 2022 | $ | |||
The accompanying notes to the financial statements are an integral part of these statements.
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TITAN TRUCKING, LLC AND SUBSIDIARY
A LIMITED LIABILITY COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
| FOR THE YEARS ENDED DECEMBER 31, | ||||||||
| 2022 | 2021 | |||||||
| CASH FLOW FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash (used in) operating activities: | ||||||||
| Employee Retention Credits | ( | ) | ||||||
| Forgiveness of PPP loans | ( | ) | ||||||
| Bad debt expense | ||||||||
| Depreciation and amortization | ||||||||
| Loss on sale of property and equipment | ||||||||
| Amortization of loan origination fees | ||||||||
| Change in assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Other receivables | ||||||||
| Other assets | ||||||||
| Operating lease right-of-use asset | ||||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Accrued payroll and payroll taxes | ||||||||
| Operating lease liability | ( | ) | ( | ) | ||||
| Total adjustments | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Acquisition of property and equipment | ( | ) | ( | ) | ||||
| Disposal of property and equipment | ||||||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Loan origination fees | ( | ) | ||||||
| Proceeds from notes payable | ||||||||
| Repayments of notes payable | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| NET DECREASE IN CASH | ( | ) | ( | ) | ||||
| CASH – BEGINNING OF YEAR | ||||||||
| CASH – END OF YEAR | $ | $ | ||||||
| CASH PAID DURING THE YEAR FOR: | ||||||||
| Interest expense | $ | $ | ||||||
| SUPPLEMENTAL NON-CASH DISCLOSURES OF CASH FLOW: | ||||||||
| Member contributions in exchange for loans payable | $ | $ | ||||||
| Subscription receivable in exchange for equity | $ | $ | ||||||
| Member contributions in exchange for intangible asset purchase | $ | $ | ||||||
| Note payable in exchange for intangible asset purchase | $ | $ | ||||||
The accompanying notes to the financial statements are an integral part of these statements.
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TITAN TRUCKING, LLC AND SUBSIDIARY
A LIMITED LIABILITY COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
NOTE 1 – ORGANIZATION AND NATURE OF OPERATIONS
Business Operations
Titan
Trucking, LLC (the “Company”) was incorporated in the State of Michigan on
The Company is engaged in the full-service solution of waste management. The Company offers a comprehensive package of waste reduction, collection, recycling, and technology-enabled solutions to support customer demand.
Senior
Trucking, LLC (“Senior’) was established on March 14, 2017 with
Going Concern
The Company’s consolidated financial statements as of December 31, 2022 and 2021, are prepared using accounting principles generally accepted in the United States of America (“U.S. GAAP”), which contemplates continuation of the Company as a going concern. This contemplates the realization of assets and liquidation of liabilities in the ordinary course of business.
For
the year ended December 31, 2022, the Company had a net loss of $
Management’s
plans include raising capital through issuances of equity and debt securities and minimizing operating expenses of the business to improve
the Company’s cash burn rate, in conjunction with the TraqIQ reverse-merger (Note 13). The combined companies, subsequent to the
reverse merger, have been successful in attracting substantial capital from investors interested in the current public status of the
Company, which has been used to support its ongoing cash outlays. In the second half of the year ended 2023, TraqIQ, its new legal parent
company, obtained approximately $
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TITAN TRUCKING, LLC AND SUBSIDIARY
A LIMITED LIABILITY COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
NOTE 2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with U.S. GAAP and the regulations of the United States Securities and Exchange Commission. The Company adopted a December 31 fiscal year-end for financial statement reporting purposes.
The consolidated financial statements and accompanying notes are the representations of the Company’s management, who are responsible for their integrity and objectivity. In their opinion, such financial information is presented fairly and for all periods represented.
Principles of Consolidation
The consolidated financial statements include the accounts of Titan Trucking LLC and Senior Trucking LLC, its wholly owned affiliate. All material inter-company accounts and transactions have been eliminated.
Basis of Accounting
The Company’s policy is to prepare its combined financial statements on the accrual basis of accounting, whereby revenue is recognized when earned and expenses are recognized when incurred.
Accounting Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP in the United States of America requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosures 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.
Business Combinations
Under the guidance enumerated in FASB Accounting Standards Codification (“ASC”) 805, if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asst or group of similar identifiable assets, the set is not considered a business and is accounted for as an asset acquisition at which point, the acquirer measures the assts acquired based on their cost, which is allocated on a relative fair value basis.
Business combinations are accounted for utilizing the fair value of consideration determined by the Company’s management and external specialists. The Company recognizes estimated fair values of the tangible and intangible assets acquired and liabilities assumed as of the acquisition date. Goodwill is recognized as any excess in fair value over the net value of assets acquired and liabilities assumed.
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TITAN TRUCKING, LLC AND SUBSIDIARY
A LIMITED LIABILITY COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
Cash and cash equivalents
The
Company considers all highly liquid money market funds and certificates of deposit with original maturities of less than three months
to be cash equivalents. The Company maintains its cash balances with various banks. The balances are insured by the Federal Deposit Insurance
Corporation (“FDIC”) up to $
Accounts Receivable, net
Accounts
receivables are recorded at the amount the Company expects to collect on the balance outstanding at year-end. Management closely monitors
outstanding balances during the year and allocates an allowance account if appropriate. The Company writes off bad debts as they occur
during the year. As of the year ended December 31, 2022, the Company allocated $
Subscriptions Receivable
Subscription
receivable consists of members’ equity that have been issued with subscriptions that have not yet been settled. As of December
31, 2022 and 2021, there were $
Property and Equipment, net
Property
and equipment are stated at cost. Depreciation is computed primarily using the straight-line method over the estimated useful lives of
the assets. Expenditures for repairs and maintenance are charged to expense as incurred. For assets sold or otherwise disposed of, the
cost and related accumulated depreciation are removed from the accounts, and any related gain or loss is reflected in the consolidated
statement of operations or the period in which the disposal occurred. The Company utilizes a useful life ranging from
Management regularly reviews property and equipment for possible impairment. This review occurs annually or more frequently if events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. Based on management’s assessment, there were no indicators of impairment of the Company’s property and equipment as of December 31, 2022.
Finite Intangible Assets, net
Finite
intangible assets are recorded at their estimated fair value at the date of acquisition. They are amortized on a straight-line basis
over their estimated useful lives. Management annually evaluates the estimated remaining useful lives of the intangible assets to determine
whether events or changes in circumstances warrant a revision to the remaining period of amortization. The Company acquired the finite
intangible asset, customer lists, as part of the asset acquisition of WTI Global, Inc. Customer lists are amortized over a remaining
useful life of
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TITAN TRUCKING, LLC AND SUBSIDIARY
A LIMITED LIABILITY COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
Finite-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be fully recoverable. An impairment loss is recognized if the sum of the expected long-term undiscounted cash flows the asset is expected to generate is less than its carrying amount. Any write-downs are treated as permanent reductions in the carrying amount of the respective asset. Management assessed and concluded that no impairment write-down would be necessary for the finite-lived intangible assets as of December 31, 2022.
Fair Value of Financial Instruments
The Company’s financial instruments primarily consist of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, and short-term notes payable. As of the consolidated balance sheet dates, the estimated fair values of the financial instruments were not materially different from their carrying values as presented due to the short maturities of these instruments.
Leases
The Company assesses whether a contract is or contains a lease at inception of the contract and recognizes right-of-use assets (“ROU”) and corresponding lease liabilities at the lease commencement date. The lease term is used to calculate the lease liability, which includes options to extend or terminate the lease when it is reasonably certain that the option will be exercised. The leases the Company currently holds do not have implicit borrowing rates, therefore the Company utilizes its incremental borrowing rate to measure the ROU assets and liabilities. Operating lease expense is generally recognized on a straight-line basis over the lease term. All leases that have lease terms of one year or less are considered short-term leases, and therefore are not recorded through a ROU or liability.
The Company has elected to apply the practical expedient to not separate the lease and non-lease components of a contract, which ultimately results in a higher amount of total lease payments being included within the present value calculation of the lease liability.
Loan Origination Fees
Loan
origination fees represent loan fees relating to notes granted to the Company and are amortized over the life of the note. Amortization
expense for the year ended December 31, 2022 was $
Revenue Recognition
The Company records revenue based on a five-step model in accordance with ASC 606, Revenue from Contracts with Customers, which requires the following:
1. Identify the contract with a customer.
2. Identify the performance obligations in the contract.
3. Determine the transaction price of the contract.
4. Allocate the transaction price to the performance obligations in the contract.
5. Recognize revenue when the performance obligations are met or delivered.
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TITAN TRUCKING, LLC AND SUBSIDIARY
A LIMITED LIABILITY COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
The Company’s operating revenues are primarily generated from fees charged for the collection and disposal of waste. Revenues are recognized at a point in time immediately after completion of disposal of waste at a landfill or transfer station and billed out to customers. Rates charged for services performed are usually based on pre-negotiated amounts via contractual obligations and are billed on a performance satisfaction basis via invoice. Invoices usually contain a payment term of net 30 days. There are no significant financing operations with customers in relation to revenues generated and collected.
Revenues from collection operations are influenced by factors such as collection frequency, type of collection furnished, type and volume or weight of the waste collected, distance to the disposal facility or material recovery facility and disposal costs. Fees charged at transfer stations are generally based on the weight or volume of waste deposited, including the cost of loading, transporting, and disposing of the solid waste at a disposal site. The fees charged for services generally include environmental, fuel charge and regulatory recovery fees, which are intended to pass through to customers direct and indirect costs incurred.
Concentration Risk
The Company performs a regular review of customer activity and associated credit risks.
During
the year ended December 31, 2022, one customer accounted for more than
During
the year ended December 31, 2022, three customers accounted for more than
The Company maintains positive customer relationships and continually expands its customer base, mitigating the impact of any potential concentration risks that exist.
The Company presents both basic and diluted earnings per unit for the periods presented in the consolidated financial statements. Basic and diluted loss per unit is calculated by dividing the net loss attributable to the Company by the weighted average number of units outstanding during the periods presented.
Income Taxes
The Company, with consent from its members, has elected under the Internal Revenue Code to be an “S” corporation. In lieu of corporation income taxes, the shareholders of an “S” corporation are taxed on their proportionate share of the Company’s taxable income.
Advertising and Marketing Costs
Costs
associated with advertising are charged to expense as occurred. For the years ended December 31, 2022 and 2021, the advertising and marketing
costs were $
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TITAN TRUCKING, LLC AND SUBSIDIARY
A LIMITED LIABILITY COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
Recently Issued Accounting Standards
In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments.” This amendment replaces the incurred methodology in current GAAP with a methodology that reflects expected credit losses on instruments within its scope, including trade receivables. This update is intended to provide financial statement users with more decision-useful information about the expected credit losses. In November 2019, the FASB issued No. 2019-10, Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842), which deferred the effective date of ASU 2016-13 for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company does not expect a material impact from the adoption of ASU 2016-13 on the consolidated financial statements.
NOTE 4 - OTHER RECEIVABLES
| December 31, 2022 | December 31, 2021 | |||||||
| Employee retention credit (1) | $ | $ | ||||||
| Other receivables | ||||||||
| $ | $ | |||||||
| (1) |
NOTE 5 – PROPERTY AND EQUIPMENT, NET
Property and equipment consists of the following as of December 31, 2022 and 2021:
| December 31, 2022 | December 31, 2021 | |||||||
| Containers | $ | $ | ||||||
| Trucks and tractors | ||||||||
| Trailers | ||||||||
| Shop equipment | ||||||||
| Leasehold improvements | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Net book value | $ | $ | ||||||
Depreciation
expenses for the year ended December 31, 2022 and 2021 were $
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TITAN TRUCKING, LLC AND SUBSIDIARY
A LIMITED LIABILITY COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
On
June 10, 2022, the Company entered into an asset purchase agreement with Century Waste Management for consideration of approximately
$
NOTE 6 – INTANGIBLES, NET
Intangible assets acquired consisted of the following as of December 31, 2022 and 2021:
| December 31, 2022 | December 31, 2021 | |||||||
| Customer lists | $ | $ | ||||||
| Less: accumulated amortization | ||||||||
| Net book value | $ | $ | ||||||
For
the years ended December 31, 2022 and 2021, there were no amortization expenses recorded. Amortization is expected to be $
On
December 9, 2022, the Company entered into a purchase agreement with WTI Global, Inc. (the “seller”) for consideration of
approximately $
NOTE 7 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Detail of accounts payable and accrued expenses as of December 31, 2022 and 2021 is as follows:
| December 31, 2022 | December 31, 2021 | |||||||
| Accounts payable | $ | $ | ||||||
| Credit card payable | ||||||||
| Accrued interest | ||||||||
| Accrued expenses and other | ||||||||
| $ | $ | |||||||
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TITAN TRUCKING, LLC AND SUBSIDIARY
A LIMITED LIABILITY COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
NOTE 8 – LEASE PAYABLE
The
Company leases both its headquarters office and operational warehouse in Troy, Michigan. Leases with an initial term of 12 months or
less or are immaterial are not included on the consolidated balance sheets. During the year ended December 31, 2019, the Company entered
into a 62-month lease which expires on
| As of December 31, | ||||||||
| 2022 | 2021 | |||||||
| Weighted average remaining lease term (in years) | ||||||||
| Weighted average discount rate | % | % | ||||||
Future minimum lease payments required under operating leases on an undiscounted cash flow basis as of December 31, 2022 are as follows:
| Fiscal Year | Operating Lease Payments | |||
| 2023 | $ | |||
| 2024 | ||||
| 2025 | ||||
| Total minimum lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Present value of future minimum lease payments | $ | |||
| Current operating lease liabilities | ||||
| Non-current operating lease liabilities | ||||
On
April 1, 2023, the Company entered into a 60-month lease in Detroit, Michigan with a related party, which terminates on
| 14 |
TITAN TRUCKING, LLC AND SUBSIDIARY
A LIMITED LIABILITY COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
NOTES 9 – NOTES PAYABLE
The Company borrows funds from various creditors to finance equipment and vehicles and acquisitions consisting of the following:
| December 31, 2022 | December 31, 2021 | |||||||||||||||||||||||||
| Lender | Maturity Date | Interest Rate | Monthly Payment | Short-Term | Long-Term | Short-Term | Long-Term | |||||||||||||||||||
| % | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Loans | ||||||||||||||||||||||||||
| Fifth Third Bank (PPP)** | ||||||||||||||||||||||||||
| WTI Global | ||||||||||||||||||||||||||
| Collateralized Loans | ||||||||||||||||||||||||||
| Peoples United | ||||||||||||||||||||||||||
| M&T Bank | ||||||||||||||||||||||||||
| Daimler Truck | ||||||||||||||||||||||||||
| Ascentium Capital | ||||||||||||||||||||||||||
| Balboa Capital | ||||||||||||||||||||||||||
| Blue Bridge Financial | ||||||||||||||||||||||||||
| Financial Pacific | ||||||||||||||||||||||||||
| M2 Equipment | ||||||||||||||||||||||||||
| Meridian Equipment | ||||||||||||||||||||||||||
| Navitas | ||||||||||||||||||||||||||
| Pawnee | ||||||||||||||||||||||||||
| Signature | ||||||||||||||||||||||||||
| Trans Lease | ||||||||||||||||||||||||||
| Verdant | ||||||||||||||||||||||||||
| Western Equipment | ||||||||||||||||||||||||||
| Related Parties | ||||||||||||||||||||||||||
| Titan Property | ||||||||||||||||||||||||||
| C. and M. Rizzo | ||||||||||||||||||||||||||
| M. Rizzo | ||||||||||||||||||||||||||
| J. Rizzo | ||||||||||||||||||||||||||
Principal maturities for the next five years and thereafter:
| 2023 | ||||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| Thereafter | ||||
| Total principal payments | ||||
| Less: debt issuance costs | ( | ) | ||
| Total notes payable |
| 15 |
TITAN TRUCKING, LLC AND SUBSIDIARY
A LIMITED LIABILITY COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
NOTES 10 – RELATED PARTY TRANSACTIONS
The
Company had various related party notes payable outstanding at December 31, 2021. The notes were payable to the owner, entities related
to the owner, and family members (Note 9). During the year ended December 31, 2022, the Company conducted several related party transactions
in exchange for equity ownership in Titan Trucking LLC. As a result of the transactions, a net balance of $
As
of December 31, 2022, there was $
NOTE 11 – BENEFIT PLAN
The
Company offers a 401(k) plan. Employees are eligible to participate in the plan on the first day of the month following the date of hire.
Employees may defer up to $
Employer
contributions for the year ended December 31, 2022 and 2021 was $
NOTE 12 - CONTINGENCIES
From time to time, the Company is involved in routine litigation that arises in the ordinary course of business. The Company is in an ongoing lawsuit with Wolverine Transfer Station over a contractual dispute and property damages. Wolverine is countersuing the Company for losses from the cancellation of contractual obligations. It is the position of the Company that net losses arising from Wolverine’s claims are not estimable nor probable at the time of this filing.
NOTE 13 – SUBSEQUENT EVENTS
Subsequent events were evaluated through September 28, 2023, which is the date the consolidated financial statements were issued.
In
April 30, 2023, the Company entered into a notes payable agreement with Titan Holdings 2 in the amount of $
On May 19, 2023, pursuant to the terms of the Titan Merger Agreement, the Company completed the Titan Merger. Under the terms of the Titan Merger Agreement, the Company agreed to pay the Titan owners shares of the Company’s Series C Preferred Stock as consideration. The Company accounted for the Titan Merger as a reverse acquisition using acquisition accounting.
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