NXXT 10-Q
Nextnrg, Inc. (NXXT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
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Indicate
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As of August 14, 2025, there were shares of common stock, par value $ per share, of the registrant issued and outstanding.
NextNRG, Inc.
Table of Contents
| Page | ||
| PART I - FINANCIAL INFORMATION | ||
| Item 1. | Financial Statements | |
| Unaudited Consolidated Balance Sheets | F-1 | |
| Unaudited Consolidated Statements of Operations | F-2 | |
| Unaudited Consolidated Statements of Changes in Stockholders’ Deficit | F-3 - F-4 | |
| Unaudited Consolidated Statements of Cash Flows | F-5 | |
| Notes to Unaudited Consolidated Financial Statements | F-6 | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 3 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 31 |
| Item 4. | Controls and Procedures | 31 |
| PART II - OTHER INFORMATION | 32 | |
| Item 1. | Legal Proceedings | 32 |
| Item 1A. | Risk Factors | 32 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 32 |
| Item 3. | Defaults Upon Senior Securities | 33 |
| Item 4. | Mine Safety Disclosures | 33 |
| Item 5. | Other Information | 33 |
| Item 6. | Exhibits | 33 |
| Signatures | 34 | |
| 2 |
Item 1. Financial Statements.
NextNRG, Inc. and Subsidiaries
(f/k/a EZFill Holdings, Inc.)
Consolidated Balance Sheets
June 30, 2025 (Unaudited) | December 31, 2024 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable - net | ||||||||
| Inventory | ||||||||
| Prepaids and other | ||||||||
| Total Current Assets | ||||||||
| Property and equipment - net | ||||||||
| Intangible assets - net | ||||||||
| Deposit on future asset purchase | ||||||||
| Project Deposit | ||||||||
| Operating lease - right-of-use asset | ||||||||
| Operating lease - right-of-use asset - related party | ||||||||
| Deposits | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ Deficit | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Accounts payable and accrued expenses - related parties | ||||||||
| Notes payable - net | ||||||||
| Notes payable - related parties - net | ||||||||
| Operating lease liability | ||||||||
| Operating lease liability - related party | ||||||||
| Dividends payable (common stock) - related parties | ||||||||
| Total Current Liabilities | ||||||||
| Long-Term Liabilities | ||||||||
| Notes payable - net | ||||||||
| Operating lease liability | ||||||||
| Operating lease liability - related party | ||||||||
| Total Long-Term Liabilities | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ Equity (Deficit) | ||||||||
| Convertible preferred stock - Series A, $ par value; shares designated; issued and outstanding | ||||||||
| Convertible preferred stock - Series B, $ par value; shares designated; issued and outstanding | ||||||||
| Common stock - $ par value; shares authorized; shares issued and outstanding | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Stockholders’ Deficit | ( | ) | ( | ) | ||||
| Non-controlling interest | ( | ) | ||||||
| Total Stockholders’ Deficit | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders’ Deficit | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-1 |
NextNRG, Inc. and Subsidiaries
(f/k/a EzFill Holdings, Inc.)
Consolidated Statements of Operations
(Unaudited)
For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Sales - net | $ | $ | $ | $ | ||||||||||||
| Costs and Expenses | ||||||||||||||||
| Cost of sales | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Total costs and expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Interest income | ||||||||||||||||
| Gain (loss) on settlement | ( |
( |
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| Other income (expense) | ||||||||||||||||
| Interest expense (including amortization of debt discount) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other expense - net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Non-controlling interest | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Non-controlling interest before preferred stock dividends | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Preferred stock dividend - payable on Series A convertible preferred stock - to be issued in common stock | |
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| Preferred stock dividend - payable on Series B convertible preferred stock - to be issued in common stock | |
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| Net loss available to common stockholders - basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Per-Share Data | ||||||||||||||||
| Basic and diluted loss per share | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average number of shares - basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-2 |
NextNRG, Inc. and Subsidiaries
(f/k/a EzFill Holdings, Inc.)
Consolidated Statements of Changes in Stockholders’ Deficit
For the Six Months Ended June 30, 2025
(Unaudited)
| Series A - Convertible Preferred Stock | Series B - Convertible Preferred Stock | Common Stock | Additional Paid-in | Accumulated | Non- Controlling | Total Stockholders’ | ||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Interest | Deficit | |||||||||||||||||||||||||||||||
| December 31, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||||||||
| Contributed capital | - | - | - | |||||||||||||||||||||||||||||||||||||
| Stock based compensation - related parties | - | - | - | |||||||||||||||||||||||||||||||||||||
| Stock issued for cash | - | - | ||||||||||||||||||||||||||||||||||||||
| Cash paid as direct offering cost | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Stock issued for services | - | - | ||||||||||||||||||||||||||||||||||||||
| Stock issued as loan extension fee | - | - | ||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for Series A convertible preferred stock dividend shares payable | - | - | ||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for Series B convertible preferred stock dividend shares payable | - | - | ||||||||||||||||||||||||||||||||||||||
| Series A - convertible preferred stock dividends - payable in common stock | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Series B - convertible preferred stock dividends - payable in common stock | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Par value true up adjustment | - | - | - | ( | ) | |||||||||||||||||||||||||||||||||||
| Non-controlling interest | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| - | ||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| March 31, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||
| Stock issued for services | - | - | ||||||||||||||||||||||||||||||||||||||
| Stock issued as loan extension fee | - | - | ||||||||||||||||||||||||||||||||||||||
| Stock issued for conversion of accounts payable | - | - | ||||||||||||||||||||||||||||||||||||||
| Stock issued for conversion of notes payable | - | - | ||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for Series A convertible preferred stock dividend shares payable | - | - | ||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for Series B convertible preferred stock dividend shares payable | - | - | ||||||||||||||||||||||||||||||||||||||
| Series A - convertible preferred stock dividends - payable in common stock | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Series B - convertible preferred stock dividends - payable in common stock | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Non-controlling interest | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| - | ||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| June 30, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-3 |
NextNRG, Inc. and Subsidiaries
(f/k/a EzFill Holdings, Inc.)
Consolidated Statements of Changes in Stockholders’ Deficit
For the Six Months Ended June 30, 2024
(Unaudited)
Series A - Convertible Preferred Stock | Series B - Convertible Preferred Stock | Common Stock | Additional Paid-in | Accumulated | Non- Controlling | Total Stockholders’ | ||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Interest | Deficit | |||||||||||||||||||||||||||||||
| December 31, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||||||||
| Contributed capital | - | - | - | |||||||||||||||||||||||||||||||||||||
| Stock based compensation - related parties | - | - | - | |||||||||||||||||||||||||||||||||||||
| Stock issued for services | - | - | ||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| March 31, 2024 | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||||||||||
| Stock based compensation - related parties | - | - | ||||||||||||||||||||||||||||||||||||||
| Stock issued as debt issue costs - related party | - | - | ||||||||||||||||||||||||||||||||||||||
| Stock issued for prepaid services | ||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| June 30, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-4 |
NextNRG, Inc. and Subsidiaries
(f/k/a EzFill Holdings, Inc.)
Consolidated Statements of Cash Flows
(Unaudited)
| For the Six Months Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Contributed capital | ||||||||
| Adjustments to reconcile net loss to net cash used in operations: | ||||||||
| Depreciation and amortization | ||||||||
| Amortization of operating lease - right-of-use asset | ||||||||
| Amortization of operating lease - right-of-use asset - related party | ||||||||
| Amortization of debt discount | ||||||||
| Bad debt expense | ||||||||
| Stock issued in connection with loan interest expense | ||||||||
| Stock issued for services | ||||||||
| Stock issued for services - related parties | ||||||||
| Default penalty interest expense | ||||||||
| (Gain) loss on settlement | ||||||||
| (Gain) loss on settlement of sale of vehicles | ( |
|||||||
| Changes in operating assets and liabilities | ||||||||
| (Increase) decrease in: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Inventory | ( | ) | ||||||
| Prepaids and other | ( | ) | ||||||
| Deposits | ( | ) | ||||||
| Increase (decrease) in: | ||||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Accounts payable and accrued expenses - related party | ( | ) | ||||||
| Operating lease liability | ( | ) | ||||||
| Operating lease liability - related party | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Investing activities | ||||||||
| Cash proceeds from sale of vehicles | ||||||||
| Purchase of fixed assets - net of refunds on prior purchases | ||||||||
| Net cash (used in) provided by investing activities | ||||||||
| Financing activities | ||||||||
| Proceeds from notes payable | ||||||||
| Proceeds from notes payable - related party | ||||||||
| Proceeds from common stock issued for cash | ||||||||
| Cash paid for direct offering costs - common stock | ( | ) | ||||||
| Repayments on notes payable | ( | ) | ||||||
| Repayments on loan payable - related party | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| Net increase (decrease) in cash | ( | ) | ||||||
| Cash - beginning of period | ||||||||
| Cash - end of period | ||||||||
| Supplemental disclosure of cash flow information | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income tax | $ | $ | ||||||
| Supplemental disclosure of non-cash investing and financing activities | ||||||||
| Contributed capital | $ | $ | ||||||
| Reclassification of prior period deposit to purchase of vehicles (Yoshi) | $ | $ | ||||||
| Right-of-use asset obtained in exchange for new operating lease liability – related party | $ | $ | ||||||
| Right-of-use asset obtained in exchange for new operating lease liability | $ | $ | ||||||
| Debt discount (OID) in connection with the issuance of notes payable | $ | |||||||
| Debt discount (OID) in connection with the issuance of notes payable - related party | $ | $ | ||||||
| Series A and B - preferred stock dividends - payable in common stock | $ | $ | ||||||
| Series B - convertible preferred stock distribution - prior investment - related party | $ | $ | ||||||
| Issuance of common stock for Series A dividend shares payable | $ | $ | ||||||
| Issuance of common stock for Series B dividend shares payable – related party | $ | $ | ||||||
| Stock issued to settle accounts payable | $ | $ | ||||||
| Stock issued for conversion of notes payable | $ | $ |
$ | |||||
| Acquisition of Stat-EI assets | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-5 |
NEXTNRG, INC. AND SUBSIDIARIES
(FORMERLY KNOWN AS EZFILL HOLDINGS, INC.)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2025
Note 1 - Organization and Nature of Operations
Organization and Nature of Operations
NextNRG, Inc. (formerly known as EzFill Holdings, Inc.) and its subsidiaries (“Next,” “NextNRG,” “we,” “our” or “the Company”), operates an on-demand mobile gas delivery service as well as beginning to provide services as a renewable energy company focused on developing and deploying wireless electric vehicle charging technology integrated with battery storage and solar energy solutions.
Organizational Structure
| Company Name | Incorporation Date | State of Incorporation | ||
| Inactive | Inactive |
| * |
Common Control Merger (Related Party)
Transaction Overview
On
August 10, 2023, the Company, the members (the “Members”) of Next Charging LLC (“Next Charging”) and Michael
Farkas, as the representative of the Members, entered into an Exchange Agreement (the “Exchange Agreement”), pursuant to
which the Company agreed to acquire from the Members
On June 11, 2024, in order to reflect the Conversion, the Company, all of the shareholders of Next Holding and Mr. Farkas as the representative of the Next Holding executed a second amended and restated agreement to replace the Exchange Agreement in its entirety (the “Second Amended and Restated Exchange Agreement”). Pursuant to the Second Amended and Restated Exchange Agreement, the Company agreed to acquire from the Next Holding 100% of the shares of Next Holding in exchange for the issuance by the Company to the Next Holding shareholders of Company common stock.
On
September 25, 2024, the Company and Mr. Farkas entered into the second amendment to the Second Amended and
Restated Exchange Agreement (“Second Amendment”) to change the number of the Company’s common stock shares
to be issued to the Next Holding shareholders by the Company in exchange for
The
Second Amendment also provided that in the event Next Holding completes the acquisition of STAT-EI, Inc. (“SEI” or “STAT”),
prior to the closing, then shares will vest on the closing date, and the remaining shares will be subject to vesting
or forfeiture (such shares subject to vesting or forfeiture, the “Restricted Shares”). Next Holding completed the acquisition
of SEI on January 19, 2024, and thus vested on that closing date. The remaining restricted shares are subject to
vesting or forfeiture. of the restricted shares will vest, if at all, upon the Company commercially deploying the
third solar, wireless electric vehicle charging, microgrid, and/or battery storage system (such systems as more specifically defined
under the Second Amended and Restated Exchange Agreement, as amended) and of the Restricted Shares will vest, if
at all, upon the Company either reaching annual revenues exceeding $
Prior to closing, the Company (i) increased the number of its authorized shares of common stock from to , (ii) received stockholder approval, (iii) received third-party consents, and (iv) ensured compliance with the rules and regulations of The Nasdaq Stock Market.
Transaction Closing
On February 13, 2025, the closing of the transactions contemplated by the Second Amended and Restated Exchange Agreement, as amended, was completed. Pursuant to the terms of the Second Amended and Restated Exchange Agreement, as amended, the Company issued an aggregate of shares of common stock in exchange for all of the issued and outstanding common stock of Next Holding, and Next Holding became a wholly owned subsidiary of the Company.
Corporate Name Change
On February 13, 2025, the Company changed its name from EzFill Holdings, Inc. to NextNRG, Inc.
Next NRG Business Overview of NextNRG
NextNRG is Powering What’s Next by implementing artificial intelligence (“AI”) and machine learning (“ML”) into renewable energy, next-generation energy infrastructure, battery storage, wireless electric vehicle (“EV”) charging and on-demand mobile fuel delivery to create an integrated ecosystem.
At the core of NextNRG’s strategy is its utility operating system, which leverages AI and ML to help make existing utilities’ energy management as efficient as possible, and the deployment of NextNRG smart microgrids, which utilize AI-driven energy management alongside solar power and battery storage to enhance energy efficiency, reduce costs and improve grid resiliency. These microgrids are designed to serve commercial properties, schools, hospitals, nursing homes, parking garages, rural and tribal lands, recreational facilities and government properties, expanding energy accessibility.
NextNRG continues to expand its growing fleet of fuel delivery trucks and national footprint. NextNRG is also integrating sustainable
energy solutions into its mobile fueling operations. The company hopes to be an integral part of assisting its fleet customers in their
transition to EV, supporting more efficient fuel delivery while advancing clean energy adoption. The transition process is expected to
include the deployment of NextNRG’s innovative wireless EV charging solutions.
Common Control Determination
The Company has determined that the Company’s acquisition of Next Holding qualifies as a common control merger under the Financial Accounting Standards Board’s (the “FASB”) Accounting Standards Codification (“ASC”) 805-50-15-6, which defines control as the ability to direct management and policies by ownership, contractual arrangements, or other means.
| F-6 |
Key factors included in our assessment of common control are as follows:
| ● | Company Control: |
| ○ | Mr. Farkas controlled more than 20% of the Company prior to December 31, 2023, as the largest individual shareholder; | |
| ○ | As the primary debt lender prior to and at the time of the merger, Mr. Farkas had the ability to influence critical financial decisions; | |
| ○ | The Company’s liquidity was significantly supported by Next Holding funding prior to and at the time of the merger, reflecting decisions and activities controlled by Mr. Farkas; and | |
| ○ | On the date of merger, Mr. Farkas controlled approximately
|
| ● | Next Holding Control: |
| ○ | Mr. Farkas concurrently exercised control over Next Holding prior to December 31, 2023. |
For further details, refer to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on February 18, 2025.
Accounting Treatment
As both the Company and Next Holding shared common ownership at all times prior to, at the time of and subsequent to the merger date, this transaction is classified as a common control merger.
At the date of acquisition, Mr. Farkas owned approximately
For the following discussion, see authoritative guidance throughout ASC 805-50, 260-10 and ASC 280:
1. Retention of Historical Carrying Amounts
The acquired entity’s assets and liabilities are recorded at their historical carrying amounts.
2. Pooling-of-Interests Approach
The pooling-of-interests approach identifies that transfers between entities under common control do not represent a change in ownership. In these transactions, the entity receiving net assets or exchanging shares is required to measure the assets and liabilities at their carrying amounts as recorded in the transferring entity’s separate financial statements (which reflect the historical cost basis established by the ultimate parent). Essentially, this guidance results in an accounting treatment similar to the pooling-of-interests method.
3. Retrospective Application to Financial Statements
The historical financial statements are adjusted as if the merger had occurred at the beginning of the earliest period presented. By doing so, all periods in the financial statements are made comparable, reflecting the merger’s effects consistently.
4. Equity Adjustments
Adjustments to additional paid-in capital (“APIC”) and retained earnings are made to reconcile historical balances. Historical retained earnings (deficit) are combined and consolidated.
5. Earnings per Share (“EPS”)
| ● | Retroactive adjustments are required when a change in the capital structure occurs through a stock dividend, stock split, or reverse split. Common control transactions are typically accounted for on a carryover basis, the historical EPS is not retroactively adjusted for such stock issuances unless the transaction’s structure meets the criteria for a capital structure change (i.e. a stock dividend or split). |
| ● | Only vested shares are included in diluted EPS. |
6. Goodwill and Intangible Assets
In a common control merger, the Company will not recognize goodwill or intangible assets.
| F-7 |
7. Segment Reporting
The Company will assess its business operations and determine the requisite segments to recognize. All current and historical periods will be adjusted to reflect these allocations. The Company presents its consolidated financial statements with segments for mobile fuel delivery and energy infrastructure.
Common Control Transactions and Equity Adjustments
As noted above, on February 13, 2025, the Company executed a common control transaction as defined under ASC 805-50-15-6 through 15-9, Business Combinations – Related Issues. In accordance with ASC 805-50-30-5, the transaction was accounted for using the carryover basis of accounting, whereby the assets and liabilities of the transferred entity were recognized at their historical book values with no new goodwill or gain recognized.
Although the common control transaction was effective as of February 13, 2025, certain historical intercompany capital transactions and equity issuances—such as investments in affiliates—were not fully eliminated or reclassified at the transaction date. These amounts continued to reside on the individual ledgers of the respective legal entities as equity instruments or investment balances. In accordance with ASC 805-50-45-2, transactions between entities under common control that are recognized at book value may result in adjustments to equity, typically reflected in APIC.
In the future, the Company expects to record permanent equity reclassifications at the individual entity level to eliminate these historical intercompany equity balances. These adjustments will not be processed as temporary consolidation-level eliminations but will instead be reflected directly in APIC to present the economic substance of the transaction consistent with the principles of common control accounting. This approach ensures that the consolidated financial statements do not reflect duplicative equity or investment balances and avoids the continued need for recurring consolidation-level elimination entries.
These equity adjustments had no impact on the Company’s consolidated net income, cash flows, or total stockholders’ deficit. The Company may continue to evaluate and adjust legacy intercompany equity positions in future periods as part of its ongoing consolidation process.
The line item “Common Control Adjustments” presented within the consolidated statement of changes in stockholders’ deficit represents reclassifications of historical intercompany equity balances resulting from prior transactions among entities under common control. These are adjustments recorded directly to APIC and do not reflect third-party capital transactions.
Chief Executive Officer Transition
On February 14, 2025, in connection with the closing of the Next Holding acquisition, the Company accepted the resignation of Yehuda Levy as Interim Chief Executive Officer. The Board of Directors subsequently appointed Michael D. Farkas as Chief Executive Officer, Director, and Executive Chairman. Mr. Farkas, previously the Chief Executive Officer of Next Holding, is also the significant controlling stockholder of the Company’s issued and outstanding common stock.
Chief Financial Officer Transition
On February 14, 2025, in connection with the closing of the Next Holding acquisition, the Company accepted the resignation of Michael Handleman as Chief Financial Officer and appointed Joel Kleiner as his successor.
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements (“U.S. GAAP”) and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Accordingly, they do not contain all information and footnotes required by U.S. GAAP for annual financial statements.
| F-8 |
In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements contain all of the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of June 30, 2025 and the results of operations and cash flows for the periods presented. The results of operations for the six months ended June 30, 2025 are not necessarily indicative of the operating results for the full fiscal year or any future period.
These unaudited consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 27, 2025.
The December 31, 2024 consolidated balance sheet and the consolidated statements of operations, changes in stockholders’ equity, and cash flows for the three months ended June 30, 2024 have been retrospectively adjusted to reflect the impact of a common control merger completed on February 13, 2025.
Management acknowledges its responsibility for the preparation of the accompanying unaudited consolidated financial statements which reflect all adjustments, consisting of normal recurring adjustments, considered necessary in its opinion for a fair statement of its consolidated financial position and the consolidated results of its operations for the periods presented.
Liquidity and Going Concern
As reflected in the accompanying unaudited consolidated financial statements, for the six months ended June 30, 2025, the Company had:
| ● | Net
loss available to common stockholders of $ |
| ● | Net
cash used in operations was $ |
Additionally, at June 30, 2025, the Company had:
| ● | Accumulated
deficit of $ |
| ● | Stockholders’
deficit of $ |
| ● | Working
capital deficit of $ |
The Company anticipates that it will need to raise additional capital immediately in order to continue to fund its operations. The Company has relied on related parties for the debt-based funding of its operations. There is no assurance that the Company will be able to obtain funds on commercially acceptable terms, if at all. There is also no assurance that the amount of funds the Company might raise will enable the Company to complete its initiatives or attain profitable operations.
The Company’s operating needs include the planned costs to operate its business, including amounts required to fund working capital and capital expenditures. The Company’s future capital requirements and the adequacy of its available funds will depend on many factors, including the Company’s ability to successfully expand to new markets, competition, and the need to enter into collaborations with other companies or acquire other companies to enhance or complement its product and service offerings.
There can be no assurances that financing will be available on terms which are favorable, or at all. If the Company is unable to raise additional funding to meet its working capital needs in the future, it will be forced to delay, reduce, or cease its operations.
We
manage liquidity risk by reviewing, on an ongoing basis, our sources of liquidity and capital requirements. The Company had cash on hand
of $
| F-9 |
The Company has historically incurred significant losses since inception and has not demonstrated an ability to generate sufficient revenues from the sales of its products and services to achieve profitable operations. In making this assessment we performed a comprehensive analysis of our current circumstances including: our financial position, our cash flows and cash usage forecasts for the twelve months ending June 30, 2026, and our current capital structure including equity-based instruments and our obligations and debts.
These factors create substantial doubt about the Company’s ability to continue as a going concern within the twelve-month period subsequent to the date that these unaudited consolidated financial statements are issued.
The unaudited consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Accordingly, the financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.
Management’s strategic plans include the following:
| ● | Expand into new and existing markets (commercial and residential); |
| ● | Obtain additional debt and/or equity-based financing for growth; |
| ● | Collaborations with other operating businesses for strategic opportunities; and |
| ● | Acquire other businesses to enhance or complement our current business model while accelerating our growth. |
Note 2 - Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements have been prepared in accordance with U.S. GAAP and include the accounts of the Company and its wholly owned subsidiaries. The Company consolidates entities where it has a controlling financial interest, as defined by ASC 810, “Consolidation”.
In accordance with ASC 810-10, consolidation applies to:
| ● | Entities with more than 50% voting interest, unless control is not with the Company; and | |
| ● | Variable interest entities, where the Company is the primary beneficiary, possessing both (i) power over significant activities and (ii) the obligation to absorb losses or receive benefits. |
All intercompany transactions and balances are eliminated in consolidation per ASC 810-10-45. The Company continuously evaluates its investments and relationships to assess consolidation requirements.
Business Combinations, Asset Acquisitions, and Reverse Acquisitions
The Company accounts for acquisitions in accordance with ASC 805, “Business Combinations,” and applicable SEC reporting requirements under Regulation S-X, Rule 3-05 and Regulation S-K, Items 101 and 303. Transactions qualifying as business combinations are accounted for under the acquisition method, while those classified as asset acquisitions follow the guidance in ASC 805-50. Additionally, the Company evaluates whether a transaction qualifies as a reverse acquisition under ASC 805-40 and applies the appropriate accounting and disclosure requirements.
Business Combinations
For transactions classified as business combinations, the Company:
| ● | Recognizes and measures identifiable assets acquired, liabilities assumed, and noncontrolling interests at their fair values at the acquisition date (ASC 805-20-25-1). | |
| ● | Records goodwill as the excess of the fair value of consideration transferred over the fair value of net assets acquired, including any previously held equity interests (ASC 805-30-30-1). | |
| ● | Expenses acquisition-related costs as incurred, per ASC 805-10-25-23. | |
| ● | Uses preliminary purchase price allocations, with adjustments permitted within the measurement period (not exceeding one year) per ASC 805-10-25-13. Adjustments beyond the measurement period are recorded in earnings. |
| F-10 |
Significant judgments in fair value determinations include:
| ● | Intangible asset valuations, based on estimates of future cash flows and discount rates. | |
| ● | Useful life assessments, impacting amortization and financial results. | |
| ● | Contingent consideration, which is remeasured at fair value through earnings per ASC 805-30-35-1. |
For SEC registrants, Regulation S-X, Rule 3-05 may require audited financial statements of the acquired business if the acquisition is significant. The determination of significance follows Rule 1-02(w) of Regulation S-X, which considers investment, asset, and income tests.
Asset Acquisitions
For transactions classified as asset acquisitions under ASC 805-50, the Company:
| ● | Applies the “screen test” to determine whether substantially all of the fair value of gross assets acquired is concentrated in a single identifiable asset or group of similar assets (ASC 805-10-55-3A); |
| ● | Allocates the purchase price using a cost accumulation model, assigning costs to acquired assets based on their relative fair values (ASC 805-50-30-3); And |
| ● | Capitalizes direct acquisition costs as part of the asset’s cost, unlike business combinations where such costs are expensed (ASC 805-50-25-1). |
The classification between business combinations and asset acquisitions requires significant judgment, particularly when applying the screen test. Incorrect classification can materially impact:
| ● | The recognition of goodwill (only in business combinations); |
| ● | The measurement and presentation of acquired assets and assumed liabilities; and |
| ● | The Company’s financial position and results of operations. |
| F-11 |
Regulatory and Financial Reporting Considerations
For SEC registrants, acquisitions may trigger additional disclosure and reporting requirements:
| ● | Regulation S-X, Rule 3-05: Requires separate financial statements of the acquired business if it meets significance thresholds under Rule 1-02(w). |
| ● | Regulation S-K, Item 101: Requires disclosure of the impact of material acquisitions on the Company’s business operations. |
| ● | Regulation S-K, Item 303: Mandates discussion of the impact of acquisitions on the Company’s financial condition and results of operations in Management’s Discussion and Analysis. |
| ● | Regulation S-X, Article 11: Requires pro forma financial statements if the acquisition is significant. |
| ● | Form 8-K, Item 2.01: Immediate reporting requirements for material acquisitions, including reverse mergers. |
The Company continuously evaluates acquisitions, including reverse acquisitions, to ensure proper classification and compliance with ASC 805, SEC reporting requirements, and regulatory guidance.
Segment Reporting
The Company follows ASC 280, Segment Reporting, which requires public entities to report financial and descriptive information about their reportable operating segments.
ASC 280-10-50-1 states that an operating segment is a component of a public entity that:
| ● | Engages in business activities from which it may earn revenues and incur expenses; |
| ● | Has operating results that are regularly reviewed by the Company’s chief operating decision maker (“CODM”), which is our Chief Executive Officer to make decisions about resource allocation and performance assessment; and |
| ● | Has discrete financial information available. |
Under ASC 280-10-50-5, a public entity is required to report separately only those operating segments that meet certain quantitative thresholds. However, as specified in ASC 280-10-50-11, if a company’s business activities are managed as a single operating segment and reviewed on a consolidated basis, the company may report as a single segment. The Company has determined that it operates as one reportable segment, as its CODM reviews the business as a whole rather than by distinct business components.
| F-12 |
Application of ASU 2023-07 – Segment Reporting
In October 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which enhances segment disclosures by requiring public entities to disclose significant segment expenses that are regularly provided to the CODM and used in assessing segment performance and resource allocation.
The adoption of ASU 2023-07 did not have a material impact on the Company’s consolidated financial statements.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the recognition of revenues and expenses during the reporting period. Actual results may differ from these estimates, and such differences could be material.
In accordance with ASC 250-10-50-4, changes in estimates are recorded in the period in which they become known and are accounted for prospectively. The Company bases its estimates on historical experience, industry trends, and other relevant factors, incorporating both quantitative and qualitative assessments that it believes are reasonable under the circumstances.
Significant estimates for the six months ended June 30, 2025 and the year ended December 31, 2024, respectively, include:
| ● | Allowance for doubtful accounts and other receivables |
| ● | Inventory reserves and classifications |
| ● | Valuation of loss contingencies |
| ● | Valuation of stock-based compensation |
| ● | Estimated useful lives of property and equipment |
| ● | Impairment of intangible assets |
| ● | Implicit interest rate in right-of-use operating leases |
| ● | Uncertain tax positions |
| ● | Valuation allowance on deferred tax assets |
Risks and Uncertainties
The Company operates in a highly competitive industry that is subject to intense market dynamics, shifting consumer demand, and economic fluctuations. The Company’s operations are exposed to significant financial, operational, and strategic risks, including potential business disruptions, supply chain constraints, and liquidity challenges.
| F-13 |
In accordance with ASC 275, “Risks and Uncertainties,” the Company evaluates and discloses risks that could materially affect its financial condition, results of operations, and business outlook. Key factors contributing to variability in sales and earnings include:
| 1. | Industry Cyclicality (ASC 275-10-50-6) – The Company’s financial performance is affected by industry trends, seasonality, and shifts in market demand. | |
| 2. | Macroeconomic Conditions (ASC 275-10-50-8) – Economic downturns, inflationary pressures, interest rate changes, and geopolitical risks may impact consumer purchasing behavior and the Company’s revenue streams. | |
| 3. | Pricing Volatility (ASC 275-10-50-4) – The cost and availability of raw materials, supply chain disruptions, and competitive pricing pressures can lead to fluctuations in gross margins and profitability. |
Given these uncertainties, the Company faces challenges in accurately forecasting financial performance and may experience material risks affecting liquidity, business continuity, and long-term strategic growth. The Company continuously assesses these risks and implements measures to mitigate their potential impact.
Fair Value of Financial Instruments
The Company accounts for financial instruments in accordance with ASC 820, Fair Value Measurements, which establishes a framework for measuring fair value and requires related disclosures. Fair value is defined 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. The fair value measurement is based on the Company’s principal market or, if none exists, the most advantageous market for the asset or liability.
Fair Value Hierarchy
ASC 820 requires the use of observable inputs whenever available and establishes a three-tier hierarchy for measuring fair value:
| ● | Level 1 – Quoted market prices (unadjusted) for identical assets or liabilities in active markets. | |
| ● | Level 2 – Observable inputs other than quoted prices in active markets, such as quoted prices for similar assets and liabilities or inputs that are directly or indirectly observable. | |
| ● | Level 3 – Unobservable inputs that require significant judgment, including management assumptions and estimates based on available market data. |
The classification of an asset or liability within the hierarchy is based on the lowest level of input that is significant to the fair value measurement. Level 3 valuations generally require more judgment and complexity, often involving a combination of cost, market, or income approaches, as well as assumptions about market conditions, pricing, and other factors.
Fair Value Determination and Use of External Advisors
The Company assesses the fair value of its financial instruments and, where appropriate, may engage external valuation specialists to assist in determining fair value. While management believes that recorded fair values are reasonable, they may not necessarily reflect net realizable values or future fair values.
Financial Instruments Carried at Historical Cost
The Company’s financial instruments—including cash, accounts receivable, accounts payable, and accrued expenses (including related party balances)—are recorded at historical cost. As of June 30, 2025 and December 31, 2024, respectively, the carrying amounts of these instruments approximated their fair values due to their short-term maturities.
Fair Value Option Under ASC 825
ASC 825-10, Financial Instruments, permits entities to elect the fair value option for certain financial assets and liabilities. This election is made on an instrument-by-instrument basis and is irrevocable unless a new election date occurs. If elected, unrealized gains and losses are recognized in earnings at each reporting date. The Company has not elected the fair value option for any of its outstanding financial instruments.
| F-14 |
Cash and Cash Equivalents and Concentration of Credit Risk
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.
At June 30, 2025 and December 31, 2024, respectively, the Company did not have any cash equivalents.
The
Company is exposed to credit risk on its cash and cash equivalents in the event of default by the financial institutions to the extent
account balances exceed the amount insured by the FDIC, which is $
At June 30, 2025 and December 31, 2024, respectively, the Company did not experience any losses on cash balances in excess of FDIC insured limits.
Investments
The Company accounts for available-for-sale (“AFS”) debt securities in accordance with FASB ASC 320, Investments—Debt and Equity Securities. These securities are recorded at fair value, with unrealized gains and losses recognized as a component of other comprehensive income unless deemed other-than-temporary, per ASC 320-10-35-1.
Recognition of Gains, Losses, and Amortization
| ● | Realized gains and losses, including impairments, are recorded in net income in accordance with ASC 320-10-35-25. |
| ● | Cost basis for sales is determined using the first-in, first-out (“FIFO”) method, per ASC 320-10-35-4. |
| ● | Premiums and discounts on AFS debt securities are amortized using the straight-line method over the security’s life, in accordance with ASC 320-10-35-10. |
Impairment Assessment
The Company evaluates AFS debt securities for other-than-temporary impairment (“OTTI”) in accordance with ASC 320-10-35-33 to 35. The assessment considers:
| ● | The extent and duration of declines in fair value below amortized cost, |
| ● | The financial condition and creditworthiness of the issuer, and |
| ● | The Company’s intent and ability to hold the security until recovery. |
If an OTTI is identified, the impairment loss is recognized in earnings as the difference between the amortized cost and the fair value of the security, per ASC 320-10-35-34. The new fair value becomes the adjusted cost basis, and subsequent recoveries are not recognized in earnings (ASC 320-10-35-35).
During
the six months ended June 30, 2025 and 2024, respectively, there were
Accounts Receivable
The Company accounts for accounts receivable in accordance with FASB ASC 310, Receivables. Receivables are recorded at their net realizable value, which represents the amount management expects to collect from outstanding customer balances (ASC 310-10-35-7).
| F-15 |
The Company extends credit to customers based on an evaluation of their financial condition and other factors. The Company does not require collateral, and interest is not accrued on overdue accounts receivable (ASC 310-10-45-4).
Allowance for Doubtful Accounts
Management periodically assesses the collectability of accounts receivable and establishes an allowance for doubtful accounts as needed. The allowance is determined based on:
| ● | A review of outstanding accounts; |
| ● | Historical collection experience; and |
| ● | Current economic conditions (ASC 310-10-35-9). |
Accounts deemed uncollectible are written off against the allowance when determined to be uncollectible (ASC 310-10-35-10).
Applicability of ASC 326
The Company has assessed the applicability of ASC 326, Financial Instruments—Credit Losses, which requires an expected credit loss model for financial assets measured at amortized cost. However, ASC 326 primarily applies to financial institutions and entities with long-term financing receivables.
Since the Company’s accounts receivable are short-term trade receivables that do not meet the scope requirements of ASC 326-20-15-2, it continues to apply the incurred loss model under ASC 310 for estimating credit losses.
The following is a summary of the Company’s accounts receivable at June 30, 2025 and December 31, 2024:
| June 30, 2025 | December 31, 2024 | |||||||
| Accounts receivable | $ | $ | ||||||
| Less: allowance for doubtful accounts | ||||||||
| Accounts receivable - net | $ | $ | ||||||
For the six months ended June 30, 2025 and 2024, bad debt was as follows:
| June 30, 2025 | June 30, 2024 | |||||||
| Bad debt expense | $ | $ | ||||||
Bad debt expense is recorded as a component of general and administrative expenses in the accompanying unaudited consolidated statements of operations.
Inventory
The Company accounts for inventory in accordance with FASB ASC 330, Inventory. Inventory consists solely of fuel and is stated at the lower of cost or net realizable value (“LCNRV”) using the FIFO method, as required by ASC 330-10-35-1.
| F-16 |
Inventory Valuation and Reserve Assessment
Management assesses the recoverability of inventory each reporting period and establishes reserves for potential inventory write-downs when necessary. The Company evaluates factors such as:
| ● | Market conditions affecting fuel prices; | |
| ● | Net realizable value based on estimated selling price; and | |
| ● | Inventory turnover trends (ASC 330-10-35-2). |
For
the six months ended June 30, 2025 and 2024, respectively, the Company did
At
June 30, 2025 and December 31, 2024, the Company had inventory of $
Concentrations
The Company evaluates and discloses significant concentrations of risk in accordance with FASB ASC 275-10, Risks and Uncertainties. These risks may arise from customer concentrations, vendor reliance, geographic dependence, or other economic factors that could materially impact the Company’s financial position, results of operations, and cash flows.
A concentration exists when a single customer, supplier, or market accounts for a significant portion (typically greater than 10%) of the Company’s total revenues, accounts receivable, or vendor purchases (ASC 275-10-50-16).
Customer and Sales Concentrations
The Company’s revenue stream may be dependent on a limited number of key customers. A loss of any significant customer, a decline in demand from such customers, or a deterioration in their financial condition could negatively impact the Company’s future revenues and profitability.
Accounts Receivable Concentrations
The Company extends credit to customers based on their financial strength, payment history, and other relevant factors. A significant concentration of accounts receivable from a limited number of customers could expose the Company to credit risk and potential collection issues. The Company regularly evaluates the creditworthiness of its customers and may require advance payments, letters of credit, or other credit enhancements to mitigate risks.
Vendor and Supplier Concentrations
The Company relies on a limited number of vendors for certain key materials or services. A disruption in supply, changes in pricing, or financial instability of a major supplier could materially impact the Company’s ability to procure necessary materials, leading to increased costs, delays in production, or operational disruptions. The Company continuously assesses vendor relationships and explores alternative suppliers when necessary to mitigate supply chain risks.
Concentration Summary
The following table presents customers and vendors that individually accounted for more than 10% of total sales, accounts receivable, or vendor purchases in the comparative periods presented:
Sales
| Six Months Ended June 30, | ||||||||
| Customer | 2025 | 2024 | ||||||
| A | % | % | ||||||
| B | % | % | ||||||
| C | % | % | ||||||
| Total | % | % | ||||||
| F-17 |
Accounts Receivable
| Six Months Ended June 30, | Year Ended December 31, | |||||||
| Customer | 2025 | 2024 | ||||||
| A | % | % | ||||||
| B | % | % | ||||||
| C | % | % | ||||||
| Total | % | % | ||||||
Vendor Purchases
| Six Months Ended June 30, | ||||||||
| Vendor | 2025 | 2024 | ||||||
| A | % | % | ||||||
| B | % | % | ||||||
| C | % | % | ||||||
| D | % | % | ||||||
| Total | % | % | ||||||
Management’s Risk Mitigation Strategies
To address these risks, the Company implements the following strategies:
| ● | Diversification of Customer Base – Actively seeking new customers to reduce reliance on a small number of key accounts. | |
| ● | Credit Risk Management – Regularly reviewing customer creditworthiness and adjusting credit terms as necessary. | |
| ● | Supplier Contingency Planning – Identifying alternative vendors to mitigate the impact of potential supply chain disruptions. |
The Company continuously monitors these risks and adjusts its business strategies to reduce its exposure to customer, credit, and supplier risks, ensuring financial stability and operational continuity.
Property and Equipment
Property and equipment are recorded at cost, net of accumulated depreciation, in accordance with ASC 360, “Property, Plant, and Equipment.” Depreciation is calculated using the straight-line method over the estimated useful lives of the assets.
Repairs and maintenance expenditures that do not materially extend the useful life of an asset are expensed as incurred. Significant improvements or upgrades that increase the asset’s productivity, efficiency, or useful life are capitalized.
Upon disposal or sale of property and equipment, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in the statement of operations, in accordance with ASC 360-10-40-5.
The Company evaluates the carrying value of property and equipment whenever events or changes in circumstances indicate that the asset may be impaired. If impairment indicators exist, the Company assesses recoverability based on the undiscounted future cash flows expected from the use and disposition of the asset. If the carrying amount exceeds the estimated recoverable amount, an impairment loss is recognized in accordance with ASC 360-10-35-17.
| F-18 |
Impairment of Long-lived Assets including Internal Use Capitalized Software Costs
The Company evaluates the recoverability of long-lived assets, including identifiable intangible assets and internal-use capitalized software costs, in accordance with FASB ASC 360-10-35-15, Impairment or Disposal of Long-Lived Assets.
An impairment review is triggered when events or circumstances indicate that the carrying value of an asset group may not be recoverable. Factors considered include, but are not limited to:
| ● | Significant changes in expected performance compared to prior forecasts; | |
| ● | Changes in asset utilization, including discontinued or modified use; | |
| ● | Negative industry or economic trends that impact asset value; and | |
| ● | Strategic shifts in the Company’s business operations (ASC 360-10-35-21). |
Impairment Assessment Process
When impairment indicators exist, the Company performs a recoverability test by comparing the undiscounted future cash flows expected to be generated from the use and ultimate disposition of the asset group to its carrying amount (ASC 360-10-35-17).
| ● | If the undiscounted cash flows exceed the carrying amount, no impairment is recognized. | |
| ● | If the undiscounted cash flows are less than the carrying amount, an impairment loss is recognized, measured as the excess of the carrying amount over the fair value of the asset (ASC 360-10-35-18). |
Internal-Use Software Considerations
For internal-use capitalized software, impairment is assessed under ASC 350-40-35, which requires evaluation when:
| ● | A software project is abandoned or significantly modified, | |
| ● | The software is no longer expected to provide substantive economic benefit, or | |
| ● | The software is expected to be replaced by newer technology. |
Impairment Results
For
the six months ended June 30, 2025 and 2024, the Company did
Original Issue Discounts (“OIDs”) and Other Debt Discounts
The Company accounts for OIDs and other debt discounts in accordance with FASB ASC 835-30, Interest—Imputation of Interest. These discounts are recorded as a reduction of the carrying amount of the related debt and are amortized to interest expense over the term of the debt using the effective interest method, unless the straight-line method is materially similar (ASC 835-30-35-2).
OIDs
For certain notes issued, the Company may provide the debt holder with an OID, which is recorded as a debt discount, reducing the face value of the note. The discount is amortized to interest expense over the term of the debt in the unaudited consolidated statements of operations.
Stock and Other Equity Issued with Debt
The Company may issue common stock or other equity instruments in connection with debt issuance. When stock is issued, it is recorded at fair value and treated as a debt discount, reducing the carrying amount of the note. These discounts are amortized to interest expense over the life of the debt (ASC 470-20-25-2).
The combined debt discounts, including OID and stock-related discounts, cannot exceed the face amount of the debt (ASU 2020-06).
| F-19 |
Debt Issuance Costs
Debt issuance costs, including fees paid to lenders or third parties, are capitalized as a debt discount and amortized to interest expense over the life of the debt in accordance with ASC 835-30-45-1. These costs are presented as a direct deduction from the carrying amount of the debt liability rather than as a separate asset (ASC 835-30-45-3).
Right of Use (“ROU”) Assets and Lease Obligations
The Company accounts for ROU assets and lease liabilities in accordance with FASB ASC 842, Leases. These amounts reflect the present value of the Company’s estimated future minimum lease payments over the lease term, including any reasonably certain renewal options, discounted using a collateralized incremental borrowing rate (ASC 842-20-30-1).
The Company classifies its leases as either operating or finance leases based on the criteria outlined in ASC 842-10-25-2. The Company’s leases primarily consist of operating leases, which are included as ROU assets and operating lease liabilities on the unaudited consolidated balance sheet.
Short-Term Leases
The Company has elected the short-term lease exemption allowed under ASC 842-20-25-2, whereby leases with a term of 12 months or less are not recorded on the balance sheet. Instead, lease payments are expensed on a straight-line basis over the lease term.
Lease Term and Renewal Options
In determining the lease term, the Company evaluates whether renewal options are reasonably certain to be exercised, as required by ASC 842-10-30-1. Factors considered include:
| ● | The useful life of leasehold improvements relative to the lease term; | |
| ● | The economic performance of the business at the leased location; | |
| ● | The comparative cost of renewal rates versus market rates; and | |
| ● | The presence of any significant economic penalties for non-renewal (ASC 842-10-55-26). |
If a renewal option is deemed reasonably certain to be exercised, the ROU asset and lease liability reflect those additional future lease payments. The Company’s operating leases contain renewal options with no residual value guarantees. Currently, management does not expect to exercise any renewal options, which are therefore excluded in the measurement of lease obligations.
Discount Rate and Lease Liability Measurement
Since the implicit rate in the leases is not readily determinable, the Company applies an incremental borrowing rate that represents the rate it would incur to borrow on a collateralized basis over a similar term and currency environment (ASC 842-20-30-3).
Lease Impairment
In accordance with ASC 360-10-35, the Company evaluates ROU assets for impairment indicators whenever events or changes in circumstances suggest the carrying amount may not be recoverable. No impairments of ROU assets were recognized for the six months ended June 30, 2025 and 2024, respectively.
See Note 7 for details on third-party and related-party operating leases.
Revenue Recognition
The Company recognizes revenue in accordance with FASB ASC 606, Revenue from Contracts with Customers, as amended by ASU 2014-09. Under ASC 606, revenue is recognized when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services.
| F-20 |
The Company generates revenue from mobile fuel sales, which can be purchased as a one-time transaction or through a monthly membership. Revenue from fuel sales is recognized at the time of delivery, and membership revenue is recognized at the end of each month, reflecting the satisfaction of the performance obligation over time within a one-month membership cycle.
The Company follows the five-step revenue recognition model outlined in ASC 606-10-05-4:
1. Identify the Contract with a Customer
A contract exists when the following criteria are met, per ASC 606-10-25-1:
| ● | The contract creates enforceable rights and obligations between the Company and the customer. |
| ● | The contract has commercial substance (i.e., it affects the Company’s cash flows). |
| ● | The payment terms are identified, and the consideration is determinable. |
| ● | It is probable that the Company will collect the consideration in exchange for the goods or services transferred. |
Contracts for mobile fuel sales and memberships meet these criteria. Collectability is assessed based on historical customer payment trends and credit risk in accordance with ASC 606-10-25-5.
2. Identify the Performance Obligations in the Contract
A performance obligation is a distinct good or service promised in the contract that is both capable of being distinct and distinct in the context of the contract, per ASC 606-10-25-19.
The Company has determined that its contracts, based on sales type, contain two distinct performance obligations:
| ● | Fuel Sales – The delivery of fuel to a customer, with revenue recognized at the point of delivery. |
| ● | Membership Fees – Monthly membership services, with revenue recognized over time within a one-month membership cycle, as the customer benefits from access to services throughout the period. |
These performance obligations are not bundled or combined, as each service is separately identifiable, in accordance with ASC 606-10-25-22.
3. Determine the Transaction Price
The transaction price is the amount of consideration the Company expects to receive in exchange for transferring goods or services to the customer, per ASC 606-10-32-2.
The Company’s transaction price considerations include:
| ● | Fixed consideration – Prices are clearly stated and do not vary based on performance. |
| ● | No variable consideration – The Company does not formally offer refunds, rebates, or pricing incentives. During the six months ended June 30, 2025 and 2024, respectively, the Company granted insignificant discounts of less than 1% of total revenues. |
| ● | No financing component – Payments are made upon fuel delivery or at the end of the monthly membership cycle, per ASC 606-10-32-15. |
| F-21 |
4. Allocate the Transaction Price to Performance Obligations
For contracts with a single performance obligation, the entire transaction price is allocated to that obligation, per ASC 606-10-32-40.
If a contract included multiple performance obligations, the transaction price would be allocated based on relative standalone selling prices (“SSP”) as required by ASC 606-10-32-28. The standalone selling price is determined based on observable sales data.
The Company’s fuel sales and memberships each have a distinct standalone selling price, eliminating the need for allocation adjustments.
5. Recognize Revenue When (or As) Performance Obligations Are Satisfied
Revenue is recognized at the point in time when control over a product or service is transferred to the customer, in accordance with ASC 606-10-25-30.
| ● | Fuel Sales: Control transfers at the time of fuel delivery, at which point revenue is recognized. |
| ● | Membership Fees: Revenue is recognized over time within a one-month cycle, as customers receive continuous access to fuel delivery services throughout the month. |
The Company does not recognize revenue based on customer invoicing dates; instead, it ensures revenue recognition aligns with the actual satisfaction of performance obligations per ASC 606-10-25-31.
Principal vs. Agent Considerations
In evaluating whether the Company acts as a principal or an agent in its fuel sales transactions, the Company applies the guidance in ASC 606-10-55-36 through 55-40. The Company has determined that it is the principal in these transactions based on the following factors:
| ● | The Company controls the fuel before it is transferred to the customer. |
| ● | The Company has discretion in pricing, as it sets the selling price of fuel. |
| ● | The Company is responsible for fulfilling the obligation of delivering fuel to the customer. |
| ● | The Company is exposed to inventory risk, as it procures and holds fuel before sale. |
Based on these factors, the Company recognizes revenue on a gross basis, as it is the principal in fuel sales transactions in accordance with ASC 606-10-55-37A.
Summary of Compliance with ASC 606 and ASU Updates
| Revenue Stream | Performance Obligation | Recognition Timing | Consideration Type | |||
| Fuel Sales | Fuel Delivery | At time of delivery | Fixed price per gallon | |||
| Membership Fees | Monthly access to fuel services | Over time (one-month cycle) | Fixed monthly subscription |
| F-22 |
Contract Liabilities (Deferred Revenue)
Contract liabilities represent amounts received from customers before the satisfaction of performance obligations, which are subsequently recognized as revenue upon fulfillment.
Under ASC 606-10-45-2, the Company discloses contract balances related to deferred revenue when applicable. Any prepayments received for fuel deliveries or memberships are classified as contract liabilities until revenue recognition criteria are met.
As
of June 30, 2025 and December 31, 2024, the Company had $
The following represents the Company’s disaggregation of revenues for the six months ended June, 2025 and 2024:
| Six Months Ended June 30, | ||||||||||||||||
| 2025 | 2024 | |||||||||||||||
| Revenue | % of Revenues | Revenue | % of Revenues | |||||||||||||
| Fuel sales | $ | % | $ | % | ||||||||||||
| Other | % | % | ||||||||||||||
| Total Sales | $ | % | $ | % | ||||||||||||
Cost of Sales
Cost of sales consists of direct expenses incurred in the delivery of the Company’s products and services. These costs primarily include:
| ● | Fuel Costs – The cost of procuring fuel for resale, including fluctuations in market pricing, supplier agreements, and transportation expenses. |
| ● | Driver Wages and Benefits – Compensation, payroll taxes, and employee benefits associated with the Company’s delivery personnel. |
Cost of sales is recognized in the same period as the related revenue in accordance with FASB ASC 705, Cost of Sales and Services. The Company regularly evaluates its cost structure to ensure efficient fuel procurement and operational cost management.
Fuel costs include all costs incurred to acquire fuel, including supporting transportation costs prior to delivery to customers. Fuel costs do not include any depreciation of property and equipment as there are no significant amounts that could be attributed to fuel costs. Accordingly, depreciation and amortization are separately classified in the consolidated statements of operations and are not recorded in cost of sales.
JUNE 30, 2025
Income Taxes
The Company accounts for income taxes using the asset and liability method prescribed by FASB ASC 740, Income Taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences of differences between the financial reporting and tax bases of assets and liabilities. These amounts are measured using enacted tax rates expected to apply in the periods when temporary differences reverse (ASC 740-10-30-8).
The effect of a change in tax rates on deferred tax balances is recognized as income or expense in the period that includes the enactment date (ASC 740-10-45-4).
Uncertain Tax Positions
The Company evaluates uncertain tax positions in accordance with ASC 740-10-25, which requires that a tax position be recognized in the financial statements only if it is more likely than not (greater than 50% likelihood) to be sustained upon examination by tax authorities.
| F-23 |
As
of June 30, 2025 and December 31, 2024, respectively, the Company had
The
Company also recognizes interest and penalties related to uncertain tax positions in other expense in the consolidated statement of operations
(ASC 740-10-45-25).
Valuation of Deferred Tax Assets
The Company’s deferred tax assets include certain future tax benefits, such as net operating losses (NOLs), tax credits, and deductible temporary differences. Under ASC 740-10-30-5, a valuation allowance is required if it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.
The Company reviews the realizability of deferred tax assets on a quarterly basis, or more frequently if circumstances warrant, considering both positive and negative evidence (ASC 740-10-30-16).
Factors Considered in Valuation Allowance Assessment
The Company evaluates multiple factors in determining whether a valuation allowance is necessary, including:
| ● | Historical earnings trends (cumulative pre-tax income or losses in the most recent three-year period) |
| ● | Future financial projections, including expected taxable income based on long-term estimates of business performance and market conditions |
| ● | Statutory carryforward periods for net operating losses and other deferred tax assets |
| ● | Prudent and feasible tax planning strategies that could impact the realization of deferred tax assets |
| ● | Nature and predictability of temporary differences and the timing of their reversal |
| ● | Sensitivity of financial forecasts to external factors such as commodity prices, market demand, and operational risks |
While cumulative three-year losses are a strong indicator that a valuation allowance may be needed, ASC 740-10-30-23 states that a valuation allowance determination is not solely based on past losses—all available positive and negative evidence must be considered.
Valuation Allowance Determination
At June 30, 2025 and December 31, 2024, respectively, the Company recorded a full valuation allowance against its deferred tax assets, resulting in a net carrying amount of $. This determination was based on cumulative losses in recent years and the lack of sufficient positive evidence to support the realization of deferred tax assets in the near term (ASC 740-10-30-24).
The Company will continue to evaluate its valuation allowance each reporting period and will recognize deferred tax assets in the future if sufficient positive evidence emerges to support their realization.
Advertising Costs
Advertising costs are expensed as incurred, in accordance with ASC 720-35, “Advertising Costs.” These costs are recognized as operating expenses in the period in which they are incurred and are classified within general and administrative expenses in the consolidated statements of operations.
| F-24 |
The Company does not capitalize direct-response advertising costs, as they do not meet the criteria for deferral under ASC 720-35-25-1.
The Company recognized marketing and advertising costs during the six months ended June 30, 2025 and 2024, respectively as follows:
| 6 months | 6 months | |||||||
| June 30, 2025 | June 30, 2024 | |||||||
| Total Sales and Marketing | $ | $ | ||||||
The Company accounts for stock-based compensation in accordance with ASC 718, “Compensation – Stock Compensation,” using the fair value-based method. Under this guidance, compensation cost is measured at the grant date based on the fair value of the award and is recognized over the requisite service period, typically the vesting period.
ASC 718 establishes accounting standards for transactions in which an entity exchanges its equity instruments for goods or services. It also applies to transactions where an entity incurs liabilities based on the fair value of its equity instruments or liabilities that may be settled using equity instruments.
In compliance with ASU 2018-07, the Company applies the fair value method for equity instruments granted to both employees and non-employees, aligning non-employee share-based payment accounting with that of employees. The fair value of stock-based compensation is determined as of the grant date or the measurement date (i.e., when the performance obligation is completed) and is recognized over the vesting period in accordance with ASC 718.
The Company determines the fair value of stock options using the Black-Scholes option pricing model, considering the following key assumptions:
| ● | Exercise price – The agreed-upon price at which the option can be exercised. |
| ● | Expected dividends – The anticipated dividend yield over the expected life of the option. |
| ● | Expected volatility – Based on historical stock price fluctuations. |
| ● | Risk-free interest rate – Derived from U.S. Treasury securities with similar maturities. |
| ● | Expected life of the option – Estimated based on historical exercise patterns and contractual terms. |
Additionally, the Company follows the guidance under ASU 2016-09, which introduced amendments to simplify certain accounting aspects of share-based compensation, including:
| ● | The treatment of tax benefits and tax deficiencies in income tax reporting. | |
| ● | The option to recognize forfeitures as they occur rather than estimating them upfront. | |
| ● | Cash flow classification for certain tax-related transactions. |
The Company continues to evaluate and apply the latest Accounting Standards Updates (ASUs) and interpretive releases related to stock-based compensation to ensure compliance with evolving financial reporting requirements.
| F-25 |
Stock Warrants
In connection with certain financing transactions (debt or equity), consulting arrangements, or strategic partnerships, the Company may issue warrants to purchase shares of its common stock. These standalone warrants are not puttable or mandatorily redeemable by the holder and are classified as equity instruments in accordance with ASC 480, “Distinguishing Liabilities from Equity.”
The fair value of warrants issued for compensation purposes is measured using the Black-Scholes option pricing model, consistent with the guidance in ASC 718-10-30. However, if warrants meet the definition of derivative liabilities under ASC 815, “Derivatives and Hedging,” fair value is determined using a binomial pricing model or other appropriate valuation techniques, as required by ASC 815-40-15.
Accounting Treatment of Warrants
| ● | Warrants issued in conjunction with common stock issuance are initially recorded at fair value as a reduction in Additional Paid-In Capital (APIC), in accordance with ASC 815-40-25. |
| ● | Warrants issued for services are recorded at fair value and expensed over the requisite service period or immediately upon issuance if no service period exists, as per ASC 718-10-25. |
| ● | Warrants classified as liabilities due to settlement features or pricing adjustments are remeasured at fair value each reporting period, with changes recognized in earnings, following ASC 815-40-35. |
The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings Per Share.” The calculation of basic EPS follows the two-class method and is determined by dividing net earnings available to common shareholders by the weighted average number of common shares outstanding, including certain other shares committed to be issued.
Basic Earnings Per Share (EPS)
Basic EPS is calculated using the two-class method, as prescribed by ASC 260-10-45-60, and is computed as follows:
| ● | Net earnings available to common shareholders represent net earnings to common shareholders, adjusted for the allocation of earnings to participating securities. | |
| ● | Losses are not allocated to participating securities in accordance with ASC 260-10-45-61. | |
| ● | The denominator includes common shares outstanding and certain other shares committed to be issued, such as restricted stock and restricted stock units (“RSUs”), for which no future service is required. |
Diluted Earnings Per Share (EPS)
Diluted EPS is calculated under both the two-class method and the treasury stock method, and the more dilutive result is reported, as required by ASC 260-10-45-45.
| ● | Diluted EPS is computed by taking the sum of: |
| ○ | Net earnings available to common shareholders |
| ○ | Dividends on preferred shares |
| ○ | Dividends on dilutive mandatorily redeemable convertible preferred shares |
| ○ | Divided by the weighted average number of common shares outstanding and certain other shares committed to be issued, plus all dilutive common stock equivalents during the period, such as: |
| ■ | Stock options |
| ■ | Warrants |
| F-26 |
| ■ | Convertible preferred stock |
| ■ | Convertible debt |
| ● | Preferred shares and unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) qualify as participating securities under the two-class method, per ASC 260-10-45-62. |
Net Loss Per Share Considerations
In computing net loss per share, unvested shares of common stock are excluded from the denominator, as required by ASC 260-10-45-48.
Participating Securities & Share-Based Compensation
Restricted stock and RSUs granted as part of share-based compensation contain nonforfeitable rights to dividends and dividend equivalents, respectively. Therefore:
| ● | Before the requisite service is rendered for the right to retain the award, these instruments meet the definition of a participating security under ASC 260-10-45-59. | |
| ● | RSUs granted under an executive compensation plan, however, are not considered participating securities because the rights to dividend equivalents are forfeitable (ASC 718-10-25). |
| June 30, 2025 | June 30, 2024 | |||||||
| Series A, preferred stock | ||||||||
| Series B, preferred stock | ||||||||
| Series A, preferred stock - dividends | ||||||||
| Series B, preferred stock - dividends | ||||||||
| Warrants (vested) | ||||||||
| Total common stock equivalents | ||||||||
Series A and B, preferred shares as well as the related dividends on each class of Series A and B, preferred shares are convertible into common stock. See Note 8.
Warrants included as common stock equivalents represent those that are fully vested and exercisable. See Note 8.
Based on the potential common stock equivalents noted above at June 30, 2025, the Company has sufficient authorized shares of common stock () to settle any potential exercises of common stock equivalents.
On
July 25, 2024, the Company’s Board of Directors authorized a
Related Parties
The Company defines related parties in accordance with ASC 850, “Related Party Disclosures,” and SEC Regulation S-X, Rule 4-08(k). Related parties include entities and individuals that, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company.
| F-27 |
Related parties include, but are not limited to:
| ● | Principal owners of the Company. |
| ● | Members of management (including directors, executive officers, and key employees). |
| ● | Immediate family members of principal owners and members of management. |
| ● | Entities affiliated with principal owners or management through direct or indirect ownership. |
| ● | Entities with which the Company has significant transactions, where one party has the ability to exercise control or significant influence over the management or operating policies of the other. |
A party is considered related if it has the ability to control or significantly influence the management or operating policies of the Company in a manner that could prevent either party from fully pursuing its own separate economic interests.
The Company discloses all material related party transactions, including:
| ● | The nature of the relationship between the parties. |
| ● | A description of the transaction(s), including terms and amounts involved. |
| ● | Any amounts due to or from related parties as of the reporting date. |
| ● | Any other elements necessary for a clear understanding of the transactions’ effects on the financial statements. |
Disclosures are made in accordance with ASC 850-10-50-1 through 50-6 and SEC Regulation S-X, Rule 4-08(k), which requires registrants to disclose material related party transactions and their effects on the financial position and results of operations.
| ● | See Note 1, which discusses the common control merger between the Company and Next Holding, on February 13, 2025. |
| ● | See Note 4 for accrued liabilities – related parties. |
| ● | See Notes 5 and 12 for a discussion of related party debt. |
| ● | See Note 7 regarding right-of-use operating lease with the Company’s Chief Technology Officer. |
| ● | See Note 8 for a discussion of equity transactions with certain officers and directors. |
Related Party Agreement with Company owned by Avishai Vaknin
In
2023, the Company entered into a services agreement with an affiliate of Avishai Vaknin, the Company’s Chief Technology Officer.
Services include overseeing all matters relating to the Company’s technology. The Company agreed to pay $
In connection with this agreement, the Company issued shares of common stock. At June 30, 2025 and December 31, 2024, and shares have vested, respectively. The remaining shares will vest in April 2026. See Note 8 for related vesting of shares and corresponding expense recognition.
| F-28 |
Recent Accounting Standards
In November 2023, the FASB issued ASU 2023-07, which enhances disclosure requirements for reportable segments by:
| ● | Requiring enhanced disclosures of significant segment expenses. |
| ● | Aligning segment reporting requirements with information regularly reviewed by management. |
The Company adopted ASU 2023-07 on January 1, 2024. The adoption did not have a material impact on the Company’s consolidated financial statements.
Recently Issued Accounting Standards Not Yet Adopted
In December 2023, the FASB issued ASU 2023-09, which enhances income tax disclosure requirements by:
| ● | Standardizing and disaggregating rate reconciliation categories. |
| ● | Requiring disclosure of income taxes paid by jurisdiction. |
This ASU is effective for annual periods beginning after December 15, 2024, and may be applied on a prospective or retrospective basis. Early adoption is permitted.
The Company is currently assessing the impact of ASU 2023-09 on its income tax disclosures and reporting requirements.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). This standard requires additional disclosures of certain expenses, including purchases of inventory, employee compensation, depreciation, intangible asset amortization, and other specific expense categories. This standard also requires disclosure of the total amount of selling expenses and the Company’s definition of selling expenses. This update is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. We are evaluating the impact this update will have on our annual disclosures; however, it will not impact our financial condition, results of operations, or cash flows.
Other Accounting Standards Updates
The FASB has issued various technical corrections and industry-specific updates that are not expected to have a material impact on the Company’s consolidated financial position, results of operations, or cash flows.
Reclassifications
Certain amounts in the prior year’s financial statements have been reclassified to conform to the current year presentation, including the common control merger. These reclassifications had no impact on the Company’s consolidated results of operations, stockholders’ equity, or cash flows.
| F-29 |
Note 3 – Property and Equipment
Property and equipment consisted of the following:
| Estimated Useful | ||||||||||
| June 30, 2025 | December 31, 2024 | Lives (Years) | ||||||||
| Vehicles | $ | * | $ | |||||||
| Equipment | ||||||||||
| Office furniture | ||||||||||
| Office equipment | ||||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||||
| Total property and equipment - net | $ | $ | ||||||||
Asset Purchase – Vehicles - Shell
| * |
See Note 7 regarding related ROU operating leases which the Company also had access to office space and parking lots in January 2025.
Deposit on Future Asset Purchase - Yoshi
In
2024, the Company executed an asset purchase agreement with Yoshi, Inc. In connection with this transaction, in February 2025 the
Company acquired various vehicles as part of a growth and expansion plan. The Company has access to and utilizes these vehicles for
mobile fueling as part of its ongoing operations. Since the transaction did not close until February 2025, the payments made/due as
of December 31, 2024, have been classified as a component of deposit on future asset purchase totaling $
Depreciation
and amortization expense for the six months ended June 30, 2025 and 2024, was $
Depreciation and amortization are included as a component of general and administrative expenses in the accompanying unaudited consolidated statements of operations.
Impairment losses of property and equipment are included as a component of general and administrative expenses in the accompanying unaudited consolidated statements of operations.
During
the six months ended June 30, 2025, the Company sold
| F-30 |
Note 4 – Accounts Payable and Accrued Liabilities including Related Parties
Accounts payable and accrued liabilities were as follows at June 30, 2025 and December 31, 2024, respectively:
| Accounts payable and accrued liabilities | June 30, 2025 | December 31, 2024 | ||||||
| Accounts payable | $ | $ | ||||||
| Accrued salaries | ||||||||
| Accrued expenses - other | ||||||||
| Total accounts payable and accrued liabilities | $ | $ | ||||||
| June 30, 2025 | December 31, 2024 | |||||||
| Accounts payable and accrued liabilities - related parties | $ | $ | ||||||
| Accrued guarantee fee - Chief Executive Officer | ||||||||
| Accrued interest payable - related parties | ||||||||
| Total accounts payable and accrued liabilities - related parties | $ | $ | ||||||
Guarantee Arrangement – Chief Executive Officer
On
March 25, 2025, the Company entered into an agreement with its Chief Executive Officer. Under this agreement, in exchange for personally
guaranteeing certain Company debt transactions, the Chief Executive Officer will receive a fee equal to
Note 5 – Debt
The following represents a summary of the Company’s debt (notes payable – related parties and third party debt for notes payable) including those owed on vehicles, including key terms, and outstanding balances at June 30, 2025 and December 31, 2024, respectively.
Notes Payable – Related Parties
The following is a summary of the Company’s notes payable – related parties at June 30, 2025 and December 31, 2024:
| Balance - December 31, 2023 | ||||
| Advances | ||||
| Repayments | ( | ) | ||
| Balance - December 31, 2024 | ||||
| Advances | ||||
| Debt Discount | ( | ) | ||
| Amortization of debt discount | ||||
| Repayments | ( | ) | ||
| Balance – June 30, 2025 | $ |
The following is a detail of the Company’s advances payable – related parties terms and history of each advance at June 30, 2025 and December 31, 2024:
| Debt Holder | Issue Date | Maturity Date | Interest Rate | Collateral | June 30, 2025 | December 31, 2024 | ||||||||||
| Chief Executive Officer/>50% control person | $ | $ | ||||||||||||||
| F-31 |
Notes Payable
The following represents the terms of the Company’s notes payable as of June 30, 2025 and December 31, 2024, respectively:
| Issue Date | Interest Rate | Collateral | Related Party | Refinance Date | Maturity Date | Conversion Date | Repayment Date | |||||||||
| Loan #1 | N/A | N/A | ||||||||||||||
| Loan #2 | N/A | N/A | N/A | |||||||||||||
| Loan #3 | N/A | N/A | N/A | |||||||||||||
| Loan #4 | N/A | N/A | N/A | |||||||||||||
| Loan #5 | N/A | N/A | ||||||||||||||
| Loan #6 | N/A | N/A | N/A | |||||||||||||
| Loan #7 | N/A | N/A | N/A | |||||||||||||
| Loan #8 | N/A | N/A | N/A | |||||||||||||
| Loan #9 | N/A | N/A | N/A | |||||||||||||
| Loan #10 | N/A | N/A | N/A | |||||||||||||
| Loan #11 | N/A | N/A | N/A | |||||||||||||
| Loan #12 | N/A | N/A | N/A | |||||||||||||
| Loan #13 | N/A | N/A | N/A | |||||||||||||
| Loan #14 | N/A | N/A | ||||||||||||||
| Loan #15 | N/A | N/A | ||||||||||||||
| Loan #16 | N/A | N/A | N/A | |||||||||||||
| Loan #17 | N/A | N/A | ||||||||||||||
| Loan #18 | N/A | N/A | ||||||||||||||
| Loan #19 | N/A | N/A | ||||||||||||||
| Loan #20 | N/A | N/A | N/A | |||||||||||||
| Loan #21 | N/A | N/A | ||||||||||||||
| Loan #22 | N/A | N/A | ||||||||||||||
| Loan #23 | N/A | N/A | ||||||||||||||
| Loan #24 | N/A | N/A | ||||||||||||||
| Loan #25 | N/A | N/A | ||||||||||||||
| Loan #26 | N/A | N/A | ||||||||||||||
| Loan #27 | N/A | N/A | ||||||||||||||
| Loan #28 | N/A | N/A | N/A | |||||||||||||
| Loan #29 | N/A | N/A | ||||||||||||||
| Loan #30 | N/A | N/A | ||||||||||||||
| Loan #31 | N/A | N/A |
| F-32 |
| Six Months Ended June 30, 2025 | ||||||||||||||||||||||||||||
| December 31, 2024 | Face amount of note | Debt discount | Amortization of debt discount | Conversion to common stock | Repayments | June 30, 2025 | ||||||||||||||||||||||
| Loan #2 | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||
| Loan #3 | ( | ) | ||||||||||||||||||||||||||
| Loan #4 | ( | ) | ||||||||||||||||||||||||||
| Loan #5 | ( | ) | ||||||||||||||||||||||||||
| Loan #6 | ( | ) | ||||||||||||||||||||||||||
| Loan #7 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Loan #8 | ( | ) | ||||||||||||||||||||||||||
| Loan #9 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Loan #10 | ( | ) | ||||||||||||||||||||||||||
| Loan #11 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Loan #12 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Loan #13 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Loan #16 | ( | ) | ||||||||||||||||||||||||||
| Loan #17 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Loan #20 | ( | ) | ||||||||||||||||||||||||||
| Loan #22 | ( | ) | ||||||||||||||||||||||||||
| Loan #23 | ( | ) | ||||||||||||||||||||||||||
| Loan #24 | ( | ) | ||||||||||||||||||||||||||
| Loan #25 | ( | ) | ||||||||||||||||||||||||||
| Loan #26 | ( | ) | ||||||||||||||||||||||||||
| Loan #28 | ||||||||||||||||||||||||||||
| Loan #29 | ( | ) | ||||||||||||||||||||||||||
| Loan #30 | ( | ) | ||||||||||||||||||||||||||
| Loan #31 | ( | ) | ||||||||||||||||||||||||||
| Total | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Year Ended December 31, 2024 | ||||||||||||||||||||||||||||
| December 31, 2023 | Face amount of note | Debt discount | Amortization of debt discount | Conversion to common stock | Repayments | December 31, 2024 | ||||||||||||||||||||||
| Loan #1 | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||
| Loan #2 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Loan #3 | ||||||||||||||||||||||||||||
| Loan #4 | ||||||||||||||||||||||||||||
| Loan #5 | ( | ) | ||||||||||||||||||||||||||
| Loan #6 | ( | ) | ||||||||||||||||||||||||||
| Loan #8 | ( | ) | ||||||||||||||||||||||||||
| Loan #10 | ( | ) | ||||||||||||||||||||||||||
| Loan #14 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Loan #15 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Loan #16 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Loan #17 | ( | ) | ||||||||||||||||||||||||||
| Loan #18 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Loan #19 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Loan #20 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Loan #21 | ( | ) | ||||||||||||||||||||||||||
| Loan #22 | ( | ) | ||||||||||||||||||||||||||
| Loan #23 | ( | ) | ||||||||||||||||||||||||||
| Loan #24 | ( | ) | ||||||||||||||||||||||||||
| Loan #25 | ( | ) | ||||||||||||||||||||||||||
| Loan #26 | ||||||||||||||||||||||||||||
| Loan #27 | ( | ) | ||||||||||||||||||||||||||
| Loan #28 | ||||||||||||||||||||||||||||
| Loan #29 | ( | ) | ||||||||||||||||||||||||||
| Total | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| F-33 |
Loans #1, #2, #6-#18, #20, and #30-31 represent merchant cash advance (“MCA”) agreements entered into by the Company. Under these arrangements, the Company receives a specified gross advance amount, net of origination fees, discounts, and other transaction costs, in exchange for a fixed repayment obligation that typically exceeds the net funds received.
Repayment terms generally range from 21 to 78 weeks and are structured as daily or weekly fixed remittances. The Company accounts for these arrangements as debt in accordance with ASC 470, recognizing the full repayment obligation as a liability, with related issuance costs amortized over the term of the loan.
To manage liquidity and meet near-term obligations, the Company has, in several instances, refinanced existing MCA loans by entering into new MCA agreements with the same or alternative lenders. These refinancing arrangements often involve:
| ● | Using the proceeds of a new advance to pay off the remaining balance of a prior loan, including any unpaid fees or penalties; |
| ● | Rolling multiple MCA balances into a single new obligation; or |
| ● | Structuring overlapping repayment terms, which may temporarily reduce daily outflows but increase aggregate repayment obligations. |
While refinancing may provide short-term liquidity relief, it often results in higher cumulative borrowing costs due to upfront fees and the compounding effect of new obligations. These refinancings are typically executed close to the maturity of the original MCA or earlier if cash flow pressures arise.
The Company utilizes MCA financing primarily to support working capital and general operations. Given the short-term nature, fee structure, and recurring refinancing activity, these MCA obligations are classified as short-term debt. The Company continuously evaluates its funding options to manage cash flow and covenant compliance under these agreements.
Loans #3 and #4
In
November 2024, the Company executed an asset purchase agreement with Yoshi, Inc. In connection with this transaction, in February 2025,
the Company acquired various vehicles as part of a growth and expansion plan. The Company has access to and utilizes these vehicles for
mobile fueling as part of its ongoing operations. Since the transaction did not close until February 2025, the payments made/due as of
December 31, 2024, have been classified as a component of deposit on future asset purchase totaling $
| F-34 |
As
part of the consideration due to the seller, the Company was required to pay $
As
of December 31, 2024, the Company had paid $
In
February 2025, an additional $
Loan #5
In
December 2024, the Company executed a two-month loan for $
Loan #21
During
the years ended December 31, 2023 and 2024, the Company entered into and amended three unsecured promissory notes totaling $
Initial Issuance Terms
| ● | Note
#1: Issued in April 2023 with a face value of $ |
| ● | Note
#2: Issued in July 2023 with a face value of $ |
| ● | Note
#3: Issued in October 2023 with a face value of $ |
Global Amendment and Default Conversion Features
On January 17, 2024, the Company and the lender executed a global amendment to the terms of Notes #1, #2, and #3:
| ● | In
the event of default, the lender may convert the unpaid principal into shares of the Company’s common stock at the greater
of (i) $ |
| F-35 |
| ● | A cross-default clause was included such that default on any of the three notes would constitute a default across all related instruments. |
| ● | The Company evaluated the amended conversion feature and determined that in the event of default, the instruments may contain an embedded derivative requiring bifurcation and fair value recognition under ASC 815, Derivatives and Hedging. The Company determined that there was no event of default. Given the floor price, the Company determined no derivative liability would exist, and no derivative liabilities were required to be recorded. |
Extension-Related Stock Issuances
| ● | In
January 2024, the Company was obligated to issue common shares (valued at $ |
| ● | On
May 9, 2024, the Company further extended all three notes to July 17, 2024, resulting in an obligation to issue an additional
shares (valued at $ |
| ● | In
total, the Company had an obligation to issue shares of common stock with a fair value of $ |
| ● | Due to the % equity cap, these shares were not immediately issued and were recognized as additional interest expense. |
Conversion to Series A Convertible Preferred Stock
On
August 16, 2024, the Company and the lender agreed to convert all remaining obligations under Notes #1, #2, and #3 into equity. The
total principal converted was $
| Valuation inputs | ||||
| Market price per share of common stock - on date of issuance | $ | |||
| Discount to market price on date of issuance | % | |||
| Conversion price per share | $ | |||
| Series A convertible preferred stock - stated value per share | $ | |||
| Conversion price per share | $ | |||
| Number of shares of common stock - for each share of Series A convertible preferred stock held | ||||
| Series A preferred shares issued | ||||
| Number of shares of common stock - for each share of Series A convertible preferred stock held | ||||
| Equivalent common shares | ||||
| Market price per share of common stock - on date of issuance | $ | |||
| As converted valuation of Series A convertible preferred stock | $ | |||
| Debt converted in exchange for Series A convertible preferred stock | ||||
| Loss on debt extinguishment - related party | $ |
The Company accounted for the conversion as an extinguishment of debt under ASC 470-50, and the difference between the fair value of the equity issued and the carrying amount of the debt was recorded as a loss on debt extinguishment.
| F-36 |
Common Stock Issuable – 242,000 Shares
In connection with the initial debt issuances and amendments discussed above, the Company had previously classified common shares as common stock issuable due to the % ownership blocker. Upon conversion of all outstanding debt on August 16, 2024, these shares were formally issued to the lender. Since the shares had already been reflected in equity, there was no incremental impact to stockholders’ deficit upon issuance.
Loans #22-#26
In
October 2024, the Company entered into five unsecured, non-interest-bearing notes with an aggregate principal amount of $
Although
the notes had a stated maturity in
Loan #27
In
January 2024, the Company acquired
In
2023, the Company paid a deposit of $
In
October 2024, without any additional extension payments required, the Company repaid the note plus accrued interest totaling $
Loan #28
In
December 2024, the Company executed a loan for $
Notes Payable – Vehicles (Loan # 29)
The following is a summary of the Company’s notes payable for its vehicles at June 30, 2025 and December 31, 2024, respectively:
| Balance - December 31, 2023 | $ | |||
| Repayments | ( | ) | ||
| Balance - December 31, 2024 | ||||
| Repayments | ( | ) | ||
| Balance – June 30, 2025 | $ |
| F-37 |
The following is a detail of the Company’s notes payable for its vehicles at June 30, 2025 and December 31, 2024, respectively:
| Notes Payable - Vehicles | ||||||||||||||||||
| Issue Date | Maturity Date | Interest Rate | Default Interest Rate | Collateral | June 30, 2025 | December 31, 2024 | ||||||||||||
| % | N/A | $ | $ | |||||||||||||||
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| % | N/A | |||||||||||||||||
| Less: current portion | ||||||||||||||||||
| Long term portion | $ | $ | ||||||||||||||||
| F-38 |
Debt Maturities
The following represents future maturities of the Company’s various debt arrangements as follows:
| For the Year Ending December 31, | Vehicle Notes Payable | |||
| 2025 (6 months) | ||||
| 2026 | ||||
| 2027 | ||||
| Total | $ | |||
Note 6 – Fair Value of Financial Instruments
The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level in which to classify them for each reporting period. This determination requires significant judgments to be made.
The Company did not have any assets or liabilities measured at fair value on a recurring basis at June 30, 2025 and December 31, 2024, respectively.
Note 7 – Commitments and Contingencies
Operating Leases
The Company accounts for leases in accordance with ASC 842: Leases, which requires lessees to apply the ROU model by recognizing a right-of-use asset and a lease liability for all leases with terms exceeding 12 months. Lease classification determines the pattern of expense recognition in the consolidated statement of operations:
| ● | Operating leases: Recognized on a straight-line basis as lease expense over the lease term. | |
| ● | Finance leases: Recognized with amortization of the ROU asset and interest expense on the lease liability. |
Lessors classify leases as sales-type, direct financing, or operating leases based on whether they transfer risks, rewards, and control of the asset (ASC 842-10-25-2):
| ● | If all risks, rewards, and control transfer, the lease is treated as a sale (sales-type lease). | |
| ● | If risks and rewards transfer but control does not, the lease is classified as financing. | |
| ● | If neither risks, rewards, nor control transfer, it is classified as an operating lease. |
| F-39 |
Lease Recognition and Measurement
The Company evaluates whether an arrangement contains a lease at inception and recognizes the lease in the financial statements upon lease commencement (the date the underlying asset is available for use). ROU assets represent the Company’s right to use an asset over the lease term, while lease liabilities reflect the present value of future lease payments.
At lease commencement:
| ● | ROU assets and lease liabilities are initially measured at the present value of lease payments. | |
| ● | The Company primarily uses its incremental borrowing rate (“IBR”) to determine the present value of lease payments, except when an implicit rate is readily determinable (ASC 842-20-30-3). | |
| ● | The IBR is based on market data, adjusted for credit risk and lease term. |
Practical Expedients and Lease Components
The Company applies certain practical expedients to simplify lease accounting:
| ● | Lease and non-lease components are combined for classification and measurement, except for direct sales-type leases and production equipment embedded in supply agreements (ASC 842-10-15-37). | |
| ● | Short-term leases (12 months or less, without purchase or renewal options) are not recorded on the balance sheet (ASC 842-20-25-2). |
Lease Term and Expense Recognition
| ● | Lease liabilities include options to extend or terminate when reasonably certain of exercise (ASC 842-10-55-26). | |
| ● | Operating lease expense is recognized on a straight-line basis over the lease term and reported under general and administrative expenses. | |
| ● | Variable lease payments based on an index/rate are initially measured using the rate at lease commencement, with differences expensed as incurred (ASC 842-10-30-5). |
Company Lease Commitments
As
of June 30, 2025 and December 31, 2024, the Company had
On
December 3, 2021, the Company entered into a lease agreement for
| ● | Lease
term: | |
| ● | Total
monthly payment: $ | |
| ● | Base
rent: $ | |
| ● | Initial
ROU asset recognized: $ |
| F-40 |
In connection with the Shell asset purchase of trucks, and the commencement of related operations in January 2025, the Company executed an additional four operating leases greater than one year for office space and parking lots. These leases were as follows:
| ROU Asset/Liability | ||||||||||||
| Lease Location | Start Date | End Date | Recognized Day 1 | Monthly Payments (1) | ||||||||
| Houston | $ | $ | ||||||||||
| San Antonio | $ | |||||||||||
| Dallas | $ | |||||||||||
| Austin | $ | |||||||||||
| $ | ||||||||||||
| (1) |
On
May 29, 2025, the Company entered into a lease agreement for
| ● | Lease
term: | |
| ● | Total
monthly payment: $ | |
| ● | Initial
ROU asset recognized: $ |
The tables below present information regarding the Company’s operating lease assets and liabilities at June 30, 2025 and December 31, 2024, respectively:
| June 30, 2025 | December 31, 2024 | |||||||
| Assets | ||||||||
| Operating lease - ROU asset - non-current | $ | $ | ||||||
| Liabilities | ||||||||
| Operating lease liability | $ | $ | ||||||
| Weighted-average remaining lease term (years) | ||||||||
| Weighted-average discount rate | % | % | ||||||
The components of lease expense were as follows:
| June 30, 2025 | June 30, 2024 | |||||||
| Operating lease costs | ||||||||
| Amortization of ROU operating lease asset | $ | $ | ||||||
| Lease liability expense in connection with obligation repayment | ||||||||
| Total operating lease costs | $ | $ | ||||||
| Supplemental cash flow information related to operating leases was as follows: | ||||||||
| Operating cash outflows from operating lease (obligation payment) | $ | $ | ||||||
| ROU asset obtained in exchange for new operating lease liability | $ | $ | ||||||
| F-41 |
Future minimum lease payments under non-cancellable leases for the years ending December 31, were as follows:
| 2025 (6 Months) | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| Total undiscounted cash flows | ||||
| Less: amount representing interest | ( | ) | ||
| Present value of operating lease liability | ||||
| Less: current portion of operating lease liability | ||||
| Long-term operating lease liability | $ |
Operating Leases – Related Party
On
August 1, 2023, the Company entered into a 48-month lease agreement for
| ● | Total
Monthly Payment: $ |
| ● | Annual Increase: The lease is subject to a 3% annual escalation. |
| ● | Initial
ROU Asset: The Company recognized a non-cash ROU asset addition of $ |
ROU Asset - Lease Termination – Related Party
On October 1, 2024, the existing lease was terminated with no additional consideration paid for early termination. Additionally, no penalties were incurred. For financial accounting purposes, the transaction was insignificant.
New ROU Asset – Related Party
On
October 1, 2024, the Company signed a lease for
The
lease is subject to a
The tables below present information regarding the Company’s operating lease assets and liabilities at June 30, 2025 and December 31, 2024, respectively:
| June 30, 2025 | December 31, 2024 | |||||||
| Assets | ||||||||
| Operating lease - ROU asset - non-current | $ | $ | ||||||
| Liabilities | ||||||||
| Operating lease liability | $ | $ | ||||||
| Weighted-average remaining lease term (years) | ||||||||
| Weighted-average discount rate | % | % | ||||||
| F-42 |
The components of lease expense were as follows:
| June 30, 2025 | June 30, 2024 | |||||||
| Operating lease costs | ||||||||
| Amortization of ROU operating lease asset | $ | $ | ||||||
| Lease liability expense in connection with obligation repayment | ||||||||
| Total operating lease costs | $ | $ | ||||||
| Supplemental cash flow information related to operating leases was as follows: | ||||||||
| Operating cash outflows from operating lease (obligation payment) | $ | $ | ||||||
| ROU asset obtained in exchange for new operating lease liability | $ | $ | ||||||
Future minimum lease payments under non-cancellable leases for the years ending December 31, were as follows:
| 2025 (6 months) | $ | |||
| 2026 | ||||
| 2027 | ||||
| Total undiscounted cash flows | ||||
| Less: amount representing interest | ( | ) | ||
| Present value of operating lease liability | ||||
| Less: current portion of operating lease liability | ||||
| Long-term operating lease liability | $ |
Contingencies – Legal Matters
The Company is subject to litigation claims arising in the ordinary course of business. The Company records litigation accruals for legal matters which are both probable and estimable and for related legal costs as incurred. The Company does not reduce these liabilities for potential insurance or third-party recoveries.
As of June 30, 2025 and December 31, 2024, the Company is not aware of any litigation, pending litigation, or other transactions that require accrual or disclosure.
Note 8 – Stockholders’ Deficit
Change in Authorized Shares
On June 14, 2024, the Company’s Board of Directors approved an increase in authorized common stock from to shares. This increase was made to:
| ● | Support current and future equity financings, |
| ● | Facilitate conversions of preferred stock into common stock, |
| F-43 |
| ● | Enable future stock-based compensation plans, and |
| ● | Provide flexibility for potential mergers, acquisitions, and other corporate transactions. |
As of June 30, 2025, the Company had four classes of stock, detailed as follows:
Preferred Stock
The Company’s undesignated preferred stock provides flexibility for future corporate financing and strategic transactions.
| ● | Authorized Shares: |
| ● | Issued & Outstanding: |
| ● | Par Value: $ per share |
| ● | Voting
Rights: |
| ● | Ranking: Senior to all other classes of stock, including Series A and Series B convertible preferred stock, unless otherwise designated |
| ● | Dividends:
|
| ● | Liquidation
Preference: |
| ● | Redemption Rights: |
| ● | Conversion
Rights: |
The Board of Directors has the authority to issue preferred stock in one or more series and determine the rights, privileges, and restrictions of each series without further stockholder approval.
Convertible Preferred Stock – Series A
On August 16, 2024, the Company designated and issued Series A convertible preferred stock as part of a debt-to-equity conversion.
| ● | Authorized Shares: |
| ● | Issued & Outstanding: shares as of June 30, 2025 and December 31, 2024, respectively |
| ● | Par Value: $ per share |
| ● | Stated
Value: $ |
| ● | Conversion Terms: |
| ○ | Fixed
conversion rate: |
| ○ | Conversion price: |
| F-44 |
| ■ |
| ■ | Results in a fixed number of common shares per preferred share |
| ○ | Total equivalent common shares at June 30, 2025 and December 31, 2024 were , respectively |
| ○ | No variable number of shares are required for settlement |
| ● | Dividend Provisions: |
| ○ |
| ○ | Calculation: |
| ■ |
| ○ | No potential dilution beyond the fixed conversion amount |
| ● | Voting
Rights: |
| ● | Liquidation
Preference: |
| ● | Redemption Rights: |
| ● | Derivative Liability Assessment: |
| ○ | Evaluated under ASC 815 (“Derivatives and Hedging”) |
| ○ | The Series A convertible preferred stock does not meet the definition of a derivative liability since its conversion feature is fixed and does not require a variable number of settlement shares. |
Convertible Preferred Stock – Series B
On October 1, 2024, the Company designated and issued Series B convertible preferred stock as part of a structured financing transaction.
| ● | Authorized Shares: |
| ● | Issued & Outstanding: shares as of June 30, 2025 and December 31, 2024, respectively |
| ● | Par Value: $ per share |
| ● | Stated
Value: $ |
| ● | Conversion Terms: |
| ○ | Fixed
conversion rate: |
| ○ | Conversion price: |
| ■ |
| F-45 |
| ■ | Results in a fixed number of common shares per preferred share |
| ○ | Total equivalent common shares at June 30, 2025 and December 31, 2024 were , respectively |
| ○ | No variable number of shares are required for settlement |
| ● | Dividend Provisions: |
| ○ |
| ○ | Calculation: |
| ■ |
| ○ | No potential dilution beyond the fixed conversion amount |
| ● | Voting
Rights: |
| ● | Liquidation
Preference: |
| ● | Redemption Rights: |
| ● | Derivative Liability Assessment: |
| ○ | Evaluated under ASC 815 |
| ○ | The Series B convertible preferred stock does not meet the definition of a derivative liability due to its fixed conversion price. |
Common Stock
| ● | Authorized Shares: |
| ● | Issued & Outstanding*: |
| ○ | shares as of June 30, 2025 |
| ○ | shares as of December 31, 2024 |
| ● | Par Value: $per share |
| ● | Voting
Rights: |
| ● | Dividends:
|
*In connection with the common control merger, any shares issued to Next Holding, an entity under common control, are excluded from the total shares outstanding. This is because, under U.S. GAAP, a company cannot recognize an investment in itself. Accordingly, these shares are treated as constructively retired or held by the Company as treasury stock equivalent and are not considered outstanding for earnings per share or equity reporting purposes.
Under ASC 810-10-45-1 and ASC 505-10-45-2, equity interests held by a parent, subsidiary, or an entity under common control in the reporting entity must be eliminated in consolidation. Similarly, shares held by entities consolidated into or controlled by the Company are treated as not outstanding, since they represent an indirect investment in the Company’s own equity.
| F-46 |
Securities and Incentive Plans
The Company maintains stock-based compensation plans under which stock options, restricted stock, and other equity awards are granted to employees, directors, and consultants.
Equity Transactions for the Six Months Ended June 30, 2025
Stock Issued for Cash and Warrants – Public Offering
On
February 18, 2025, the Company sold
The proceeds from the offering are expected to be used for:
| ● | Expanding operations and infrastructure; |
| ● | Repaying outstanding debt; and |
| ● | Funding general corporate purposes, including working capital requirements |
Additionally,
the Company granted the underwriter the option to purchase up to additional over-allotment shares of common stock at $
The
underwriter was also issued warrants for services rendered in connection with the offering, which will be accounted for as a
direct offering cost. These warrants are exercisable at $
Stock Issued for Services
The
Company issued shares of common stock to consultants for services rendered, having a fair value of $
Additionally,
the Company issued shares of common stock to consultants for prepaid services, having a fair value of $
Stock Issued as Loan Extension Fee
In
connection with the extension of loan #5, the Company was required to pay a fee of $
In
connection with the extension of loan #12, the Company was required to pay a fee of
Stock Issued for Conversion of Accounts Payable
The
Company issued shares with a fair value of $ ($/share) to a vendor to settle accounts payable of $
| F-47 |
Stock Issued for Conversion of Notes Payable
The
Company issued
shares of common stock to convert the remaining balance of $
The
Company issued
shares of common stock to convert the flat-rate interest owed of $
Series B Convertible Preferred Stock – Distribution – Related Party
On February 13, 2025, immediately prior to the consummation of the common control merger, the Company effectuated a non-cash distribution of shares of Series B convertible preferred stock to its Chief Executive Officer, a related party. The transaction was executed in fulfillment of a previously established arrangement between the CEO and NextNRG LLC, a wholly owned subsidiary of the Company and former holder of the Series B convertible preferred stock. Under this arrangement, the CEO had advanced personal funds to NextNRG LLC to facilitate the original acquisition of the shares on behalf of the Company.
As the transfer settled an internal capital funding obligation and involved no exchange of cash or services at the time of distribution, the transaction was accounted for as a capital contribution by a related party in accordance with ASC 505-10, Equity – Overall, and ASC 850-10, Related Party Disclosures. No gain or loss was recognized, and the Series B shares were recorded at par value, with the offset credited to additional paid-in capital.
The CEO meets the definition of a related party under ASC 850-10-20, which includes executive officers and entities under their control. Furthermore, in accordance with SAB Topic 5.G and Regulation S-X Rule 4-08(k), the Company has disclosed this transaction due to the material nature of the capital stock transfer and its occurrence with a related party.
This distribution did not impact the determination of net income (loss) available to common stockholders and was excluded from the calculation of earnings per share in accordance with ASC 260-10-45-59, as the issuance represented a capital transaction rather than an income or expense-generating event.
Series A and B Convertible Preferred Stock – Preferred Stock Dividends Payable in Common Stock
In accordance with the terms of the Company’s Series A convertible preferred stock and the Series B convertible preferred stock, the Company is required to accrue dividends on a quarterly basis. Similar to the Series A and Series B convertible preferred stock, dividends are accrued using a fixed conversion price. There are no other provisions that could result in a variable number of shares required for settlement in the future.
Additionally, the Company has considered relevant accounting guidance, and has determined that there are no provisions related to its dividends that would require derivative liability treatment.
At
June 30, 2025 and December 31, 2024, the Company had accrued dividends totaling $
| F-48 |
The following is a summary of the Company’s dividends:
Series A Convertible Preferred Stock | Series B Convertible Preferred Stock | Total Dividends Payable | ||||||||||
| Shares issued and outstanding | ||||||||||||
| Stated value per share | $ | $ | ||||||||||
| Dividend rate (10%/12%) | % | % | ||||||||||
| Dividend shares due per year | ||||||||||||
| Market price - at issuance date | ||||||||||||
| Minimum price - 70%/80% discount to market price | % | % | ||||||||||
| Conversion price | ||||||||||||
| Dividend shares due per quarter | ||||||||||||
| Equivalent common shares - per year | ||||||||||||
The following represents the Company’s Series A and B convertible preferred stock quantity of shares due at June 30, 2025 and December 31, 2024:
Series A Convertible Preferred Stock | Series B Convertible Preferred Stock | Total Dividends Payable | ||||||||||
| December 31, 2024 | ||||||||||||
| Accrued dividends payable - Series A and Series B convertible preferred stock | ||||||||||||
| Payment of accrued dividends as common stock | ( | ) | ( | ) | ( | ) | ||||||
| June 30, 2025 | ||||||||||||
The following represents the Company’s Series A and B convertible preferred stock valuation due at June 30, 2025 and December 31, 2024:
Series A Convertible Preferred Stock |
Series B Convertible Preferred Stock |
Total Dividends Payable | ||||||||||
| December 31, 2024 | $ | $ | $ | |||||||||
| Accrued dividends payable - Series A and Series B convertible preferred stock | ||||||||||||
| Payment of accrued dividends as common stock | ( |
) | ( |
) | ( |
) | ||||||
| June 30, 2025 | $ | $ | $ | |||||||||
Equity Transactions for the Year Ended December 31, 2024 and the Six Months Ended June 30, 2025
Vesting of Board of Director Common Stock Grants – Related Parties
The Company issued shares of common stock (par value of $) in connection with the vesting of shares previously granted in 2023 to various board members. The issuance of these shares had no net effect of stockholders’ deficit as the share issuance was reflected at par value. The Company recorded $ of expense in 2024, related to the vesting of these shares in 2024.
The Company issued shares of common stock to various board members for services rendered in 2024, having a fair value of $ ($/share), based upon the quoted closing trading price.
| F-49 |
Total share-based payments to board members in 2024 were $771,334.
Also,
see Note 7 for the expense recorded in 2024 of $
Total share-based payments (including vesting of prior period awards) with board members and officers for the year ended December 31, 2024 totaled $.
Stock Issued for Services
The
Company issued shares of common stock to consultants for services rendered, having a fair value of $
Stock Issued to Settle Accounts Payable
The
Company issued shares of common stock to a vendor for services rendered, having a fair value of $
Series A Convertible Preferred Stock Issued in Debt Conversion
On
August 16, 2024, the Company converted all outstanding principal ($
See Note 5 regarding debt conversion and related loss on debt extinguishment.
Restricted Stock and Related Vesting
| Weighted Average | ||||||||
| Number of | Grant Date | |||||||
| Non-Vested Shares | Shares | Fair Value | ||||||
| Balance - December 31, 2023 | ||||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Cancelled/Forfeited | ||||||||
| Balance - December 31, 2024 | $ | |||||||
| Granted | ||||||||
| Vested | ||||||||
| Cancelled/Forfeited | ||||||||
| Balance - June 30, 2025 | $ | |||||||
The Company has issued various equity grants to directors, officers, consultants and employees. These grants typically contain a vesting period of one to three years and require services to be performed in order for the shares to vest.
The Company determines the fair value of the equity grant on the issuance date based upon the quoted closing trading price. These amounts are then recognized as compensation expense over the requisite service period and are recorded as a component of general and administrative expenses in the accompanying unaudited consolidated statements of operations.
| F-50 |
The Company recognizes forfeitures of restricted shares as they occur rather than estimating a forfeiture rate. Any unvested share-based compensation is reversed on the date of forfeiture, which is typically due to service termination.
At June 30, 2025, unrecognized stock compensation expense related to restricted stock was $, which will be recognized over a weighted-average period of one year.
During the six months ended June 30, 2025, and 2024, the Company recognized compensation expense of $ and $, respectively, related to the vesting of these shares.
Warrants
Warrant activity for the three months ended June 30, 2025 and December 31, 2024 are summarized as follows:
| Weighted | ||||||||||||||||
| Weighted | Average | |||||||||||||||
| Average | Remaining | Aggregate | ||||||||||||||
| Number of | Exercise | Contractual | Intrinsic | |||||||||||||
| Warrants | Warrants | Price | Term (Years) | Value | ||||||||||||
| Outstanding - December 31, 2023 | $ | $ | ||||||||||||||
| Vested and Exercisable - December 31, 2023 | $ | $ | ||||||||||||||
| Unvested and non-exercisable - December 31, 2023 | $ | - | $ | |||||||||||||
| Granted | - | - | - | |||||||||||||
| Exercised | - | - | - | |||||||||||||
| Cancelled/Forfeited | ( | ) | $ | - | - | |||||||||||
| Outstanding - December 31, 2024 | $ | $ | ||||||||||||||
| Vested and Exercisable - December 31, 2024 | $ | $ | ||||||||||||||
| Unvested and non-exercisable - December 31, 2024 | $ | - | $ | |||||||||||||
| Granted | $ | - | - | |||||||||||||
| Exercised | - | - | - | |||||||||||||
| Cancelled/Forfeited | ( | ) | $ | - | - | |||||||||||
| Outstanding - June 30, 2025 | $ | $ | ||||||||||||||
| Vested and Exercisable - June 30, 2025 | $ | $ | ||||||||||||||
| Unvested and non-exercisable - June 30, 2025 | $ | - | $ | |||||||||||||
Note 9 – Asset Purchase Agreement
Yoshi, Inc.
In
November 2024, the Company executed an asset purchase agreement with Yoshi, Inc. In connection with this transaction, in February
2025, the Company acquired various vehicles as part of a growth and expansion plan. The Company has access to and utilizes
these vehicles for mobile fueling as part of its ongoing operations. Since the transaction did not close until February 2025, the
payments made/due as of December 31, 2024, were classified as a component of deposit on future asset purchase totaling $
| F-51 |
Consideration for this asset purchase consisted of the following:
| 1 | Cash
- $ |
| 2 | Common
Stock – shares of common stock; having a fair value of $ |
| 3 | Note
Payable - $ |
| 4 | At
December 31, 2024, the Company had paid $ |
| 5 | All shares were issued as of December 31, 2024. |
| 6 | At
December 31, 2024, the $ |
Note 10 – Intangible Assets
Year Ended December 31, 2024
Acquisition of Stat-EI, Inc. (Business Combination)
In
January 2024, the Company acquired
In
2023, the Company paid a deposit of $
In
October 2024, without any additional extension payments required, the Company repaid the note plus accrued interest totaling $
The Company has accounted for this transaction as a business combination.
The table below summarizes the estimated fair value of the assets acquired and liabilities assumed:
| Consideration | ||||
| Cash | $ | |||
| Note payable | ||||
| Fair value of consideration transferred | $ | |||
| Recognized amounts of identifiable assets acquired and liabilities assumed: | ||||
| License agreements | $ | |||
| Trademarks/Tradenames | ||||
| Total assets acquired | ||||
| Total identifiable net assets | ||||
| Goodwill | $ |
| F-52 |
The valuation of the intangible assets acquired was based upon an independent third party valuation specialist.
At the time of acquisition, STAT had no revenues and historical losses from operations, it was deemed an immaterial acquisition and no additional financial reporting was required.
See Note 5 for discussion of these intangible assets acquired from STAT in exchange for debt.
Intangibles consisted of the following at June 30, 2025 and December 31, 2024, respectively:
| Type | June 30, 2025 | December 31, 2024 | Estimated Useful Lives (Years) | |||||||||
| License agreements | $ | $ | ||||||||||
| Tradenames/trademarks | ||||||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||||||
| Intangibles - net | $ | $ | ||||||||||
Amortization
expense for the six months ended June 30, 2025 and 2024 was $
There were no impairment losses for the three months ended June 30, 2025 and 2024, respectively.
Estimated amortization expense for each of the five succeeding years and thereafter is as follows:
| For the Years Ending December 31: | ||||
| 2025 (6 Months) | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| Total | $ | |||
Note 11 – Acquisition of Membership Interests in GSPP JEA Ingle FL, LLC – Accounted for as an Asset Acquisition – Solar Project Rights
In
December 2024, a disbursement of $
To facilitate the acquisition, Next Holding formed Next/Ingle Holdings LLC, in which it holds a 50% ownership interest, with the remaining 50% owned by Cohen Global Energy, LLC, an unrelated third party. Notwithstanding the split of ownership, the Company retains unilateral governing control over the entity, as outlined in the executed operating agreement. Next/Ingle Holdings LLC is a controlled holding company which has been consolidated into the Company, and shows a non-controlling interest for the 50% not owned.
| F-53 |
Next/Ingle
Holdings LLC obtained a $
Given the absence of a workforce, no substantive processes, and no outputs, GSPP JEA Ingle FL, LLC does not meet the definition of a business under ASC 805-10-20. Instead, the transaction qualifies as an asset acquisition, with the solar project representing a single identifiable asset under development.
Post-Acquisition Structure:
| ● | Next Holding |
Formed Next/Ingle Holdings LLC (
Retains unilateral control over Next/Ingle Holdings LLC via
operating agreement (this entity is consolidated with the Company and reflects a non-controlling interest for the
| ● | Next/Ingle Holdings LLC |
Acquired
Funded
acquisition via $
| ● | GSPP JEA Ingle FL, LLC |
Holds rights to the Bryceville, FL solar project
Note 12 – Segment Reporting
The Company operates in two reportable segments: Energy Infrastructure and Mobile Fuel Delivery. The Company’s segments were determined based on the economic characteristics of its products and services, its internal organizational structure, the manner in which operations are managed and the criteria used by the Company’s Chief Operating Decision Maker (CODM) to evaluate performance, which include revenue, gross margin, and operating profit.
Mobile Fueling
The Company’s mobile fueling segment provides on-demand fuel delivery services through a growing fleet of fuel trucks operating across a national footprint. These operations serve commercial fleets and other customers, offering a more efficient, time-saving alternative to traditional fueling stations. The Company is integrating sustainable energy solutions into its fueling operations, with the goal of assisting customers in transitioning to electric vehicles and incorporating advanced technologies such as wireless EV charging to enhance service efficiency and support the adoption of clean energy.
Energy Infrastructure
The Company’s energy infrastructure segment focuses on the development, deployment, and operation of AI/ML-powered smart microgrids, solar energy systems, battery storage, and wireless EV charging solutions. These systems are designed to improve grid resiliency, optimize energy use, reduce costs, and increase access to reliable, sustainable power for commercial, industrial, municipal, and tribal customers. Revenue is generated primarily through power purchase agreements, leases, and technology licensing, with projects spanning utility-scale installations, community energy systems, and integration of distributed energy resources.
| F-54 |
The following tables present certain financial information related to our reportable segments:
| As of June 30, 2025 | ||||||||||||
| Energy Infrastructure | Mobile Fuel Delivery | Total | ||||||||||
| Cash | $ | $ | $ | |||||||||
| Accounts receivable - net | ||||||||||||
| Inventory | ||||||||||||
| Prepaids and other | ||||||||||||
| Property and equipment - net | ||||||||||||
| Intangible assets - net | ||||||||||||
| Project Deposit | ||||||||||||
| Operating lease - right-of-use asset | ||||||||||||
| Operating lease - right-of-use asset - related party | ||||||||||||
| Deposits | ||||||||||||
| Total Assets | $ | $ | $ | |||||||||
| For the six months ended June 30, 2025 | ||||||||||||
| Energy Infrastructure | Mobile Fuel Delivery | Total | ||||||||||
| Sales - net | ||||||||||||
| Cost of sales | ||||||||||||
| General and administrative expenses | ||||||||||||
| Stock based compensation | ||||||||||||
| Depreciation and amortization | ||||||||||||
| Total costs and expenses | ||||||||||||
| Interest income | ||||||||||||
| Other income | ( | ) | ( | ) | ||||||||
| Gain (loss) on settlement | ( | ) | ( | ) | ||||||||
| Interest expense (including amortization of debt discount) | ( | ) | ( | ) | ( | ) | ||||||
| Total other income (expense) - net | ( | ) | ( | ) | ( | ) | ||||||
| Net loss | ( | ) | ( | ) | ( | ) | ||||||
| F-55 |
| As of June 30, 2024 | ||||||||||||
| Energy Infrastructure | Mobile Fuel Delivery | Total | ||||||||||
| Cash | $ | |||||||||||
| Accounts receivable - net | ||||||||||||
| Inventory | ||||||||||||
| Prepaids and other | ||||||||||||
| Property and equipment - net | ||||||||||||
| Intangible assets - net | ||||||||||||
| Deposit on future asset purchase | ||||||||||||
| Project Deposit | ||||||||||||
| Operating lease - right-of-use asset | ||||||||||||
| Operating lease - right-of-use asset - related party | ||||||||||||
| Deposits | ||||||||||||
| Total Assets | $ | |||||||||||
| For the six months ended June 30, 2024 | ||||||||||||
| Energy Infrastructure | Mobile Fuel Delivery | Total | ||||||||||
| Sales - net | ||||||||||||
| Cost of sales | ||||||||||||
| General and administrative expenses | ||||||||||||
| Stock based compensation | ||||||||||||
| Depreciation and amortization | ||||||||||||
| Total costs and expenses | ||||||||||||
| Interest income | ||||||||||||
| Other income | ||||||||||||
| Interest expense (including amortization of debt discount) | ( | ) | ( | ) | ( | ) | ||||||
| Total other income (expense) - net | ( | ) | ( | ) | ( | ) | ||||||
| Net loss | ( | ) | ( | ) | ( | ) | ||||||
Note 13 - Subsequent Events
Subsequent to the period ended June 30, 2025, the Company issued shares of its common stock to five consultants as compensation for services rendered.
On July 1, 2025, in relation to the “Alcourt Note,” the Company issued shares of its common stock to extend the note’s maturity date to September 30, 2025.
On July 11, 2025, NextNRG entered into a Stock Purchase
Agreement (SPA) with a lender, whereby the company issued restricted
shares of common stock at $ per share. This issuance fully extinguished a $
On
July 15, 2025, the company entered into a $
On
August 4, 2025, the Company entered into Equipment Lease Schedule No. 002 under its Master Lease Agreement with Equify Financial, LLC
to lease fuel trucks and related equipment totaling $
On
August 8th the Company entered into an agreement with Michael Weisz and his company Buckingham Consultants LLC whereby Mr. Weisz will
serve as a member of the Company’s advisory board. Under the Agreement Mr. Weisz will receive shares of the Company’s
common stock subject to time-based vesting requirements, and upon the sooner of 90 days from the execution of the agreement or the Company
completing a $
| F-56 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Private Securities Litigation Reform Act of 1995 and Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), provide a safe harbor for forward-looking statements made by or on behalf of NextNRG, Inc. (“NextNRG,” “we,” “us,” “our,” or the “Company”). The Company and its representatives may from time to time make written or oral statements that are “forward-looking,” including statements contained in this report and other filings with the Securities and Exchange Commission (“SEC”) and in our reports and presentations to stockholders or potential stockholders. In some cases, forward-looking statements can be identified by words such as “believe,” “expect,” “anticipate,” “plan,” “potential,” “continue” or similar expressions. Such forward-looking statements include risks and uncertainties and there are important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors, risks and uncertainties can be found in Part I, Item 1A, “Risk Factors,” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as the same may be updated from time to time, including in Part II, Item 1A, “Risk Factors,” of this Quarterly Report on Form 10-Q.
Although we believe the expectations reflected in our forward-looking statements are based upon reasonable assumptions, it is not possible to foresee or identify all factors that could have a material effect on the future financial performance of the Company. The forward-looking statements in this report are made on the basis of management’s assumptions and analyses, as of the time the statements are made, in light of their experience and perception of historical conditions, expected future developments and other factors believed to be appropriate under the circumstances.
Except as otherwise required by the federal securities laws, we disclaim any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained in this Quarterly Report on Form 10-Q and the information incorporated by reference in this report to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based.
The following discussion and analysis provides information we believe is relevant to an assessment and understanding of our unaudited consolidated operating results and financial condition. The following discussion should be read in conjunction with our unaudited consolidated financial statements for the three and six months ended June 30, 2025 and the notes thereto included in this Quarterly Report on Form 10-Q, as well as our other reports filed with the SEC from time to time, including, but not limited to, our Annual Report on Form 10-K for the year ended December 31, 2024.
Overview
NextNRG is Powering What’s Next by implementing artificial intelligence (“AI”) and machine learning (“ML”) into renewable energy, next-generation energy infrastructure, battery storage, wireless electric vehicle (“EV”) charging and on-demand mobile fuel delivery to create an integrated ecosystem.
At the core of NextNRG’s strategy is its utility operating system, which leverages AI and ML to help make existing utilities’ energy management as efficient as possible, and the deployment of NextNRG smart microgrids, which utilize AI-driven energy management alongside solar power and battery storage to enhance energy efficiency, reduce costs and improve grid resiliency. These microgrids are designed to serve commercial properties, schools, hospitals, nursing homes, parking garages, rural and tribal lands, recreational facilities and government properties, expanding energy accessibility.
NextNRG continues to expand its growing fleet of fuel delivery trucks and national footprint. NextNRG is also integrating sustainable energy solutions into its mobile fueling operations. The company hopes to be an integral part of assisting its fleet customers in their transition to EV, supporting more efficient fuel delivery while advancing clean energy adoption. The transition process is expected to include the deployment of NextNRG’s innovative wireless EV charging solutions.
Revenue Sources
Sale of Electricity
Solar Electricity
NextNRG plans to derive its operating revenues principally from power purchase agreements, net metering credit agreements, solar renewable energy credits, and performance-based incentives. A portion of NextNRG’s power sales revenues is expected to be earned through the sale of energy (based on kilowatt hours) pursuant to the terms of Power Purchase Agreements (“PPAs”). NextNRG’s PPAs will typically have fixed or floating rates and are expected to be generally invoiced monthly.
Wireless EV Charging
NextNRG plans to sell energy to its wireless EV charging customers.
NextNRG also plans to sell its innovative solutions to property owners, parking facilities, municipalities, and government agencies, as well as charge point operators, empowering the growth of sustainable transportation infrastructure.
NextNRG plans to generate revenue from the deployment of solar and battery storage solutions where applicable to further take advantage of the renewable energy industry. Energy pricing is based on peak/off-peak rates at any given charging location. NextNRG plans to negotiate our own PPA accordingly. NextNRG is also planning to sell energy to electric vehicle owners via wireless EV charging.
| 3 |
SaaS & Licensing
Software as a Service (“SaaS”) Agreements
NextNRG plans to generate revenue from the sale of its energy management software under SaaS agreements with utility companies; microgrid companies; and renewable energy generation companies. Additionally, any traditional customers which would like to own their own energy generation systems will have the option of entering a SaaS agreement to purchase rights to the technology.
Hardware Licensing
NextNRG plans to generate licensing revenues from competitors or ancillary business participants who desire to utilize or integrate NextNRG’s intellectual property, hardware, or software solutions within their proprietary product.
Sale of Hardware
NextNRG plans to generate revenues from the sale of hardware, e.g. solar panels, battery storage solution equipment, wireless charging pad or bumper and vehicle receiver technology.
Potential Customers
Potential customers include property owners, electrical supply companies, management companies, all levels of government, original equipment manufacturers, tribal land, car manufacturers, EV charging companies, wholesale electricity providers, utilities, and fleet owners.
Mobile Fueling
Mobile Fuel Delivery
NextNRG’s mobile fueling solution is an on-demand and subscription fuel delivery service that brings fuel directly to consumers, commercial fleets, and specialty vehicles at homes, workplaces, and job sites. Leveraging digital technology and GPS-based systems, this service responds to the increasing preference for home and workplace product deliveries. Particularly, our fleet services are experiencing significant growth, providing a streamlined, efficient fueling option that allows commercial operators to optimize operations and reduce downtime. For the six months ended June 30, 2025 and the year ended December 31, 2025, we derived all of our revenues from mobile fuel deliveries.
Recent Developments
Share Exchange with Next Holding
On August 10, 2023, the Company, the members (the “Members”) of Next Charging LLC (“Next Charging”) and Michael Farkas, as the representative of the Members, entered into an Exchange Agreement (the “Exchange Agreement”), pursuant to which the Company agreed to acquire from the Members 100% of the membership interests of Next Charging (the “Membership Interests”) in exchange for up to 40,000,00 shares of common stock. Subsequently, Next Charging converted to a corporation organized in the State of Nevada named NextNRG Holding Corp. (“Next Holding”) effective as of March 1, 2024 (the “Conversion”), which Conversion continued the existence of the prior entity in the new corporate form and the prior members of Next Charging remained as shareholders of Next Holding.
On June 11, 2024, in order to reflect the Conversion, the Company, all of the shareholders of Next Holding and Mr. Farkas as the representative of the Next Holding executed a second amended and restated agreement to replace the Exchange Agreement in its entirety (the “Second Amended and Restated Exchange Agreement”). Pursuant to the Second Amended and Restated Exchange Agreement, the Company agreed to acquire from the Next Holding 100% of the shares of Next Holding in exchange for the issuance by the Company to the Next Holding shareholders of Company common stock.
On September 25, 2024, the Company and Mr. Farkas entered into the second amendment to the Second Amended and Restated Exchange Agreement (“Second Amendment”) to change the number of the Company’s common stock shares to be issued to the Next Holding shareholders by the Company in exchange for 100% of the shares of Next Holding to 100,000,000 shares of the Company’s common stock.
The Second Amendment also provided that in the event Next Holding completes the acquisition of STAT-EI, Inc. (“SEI” or “STAT”), prior to the closing, then 50,000,000 shares will vest on the closing date, and the remaining 50,000,000 shares will be subject to vesting or forfeiture (such shares subject to vesting or forfeiture, the “Restricted Shares”). Next Holding completed the acquisition of SEI on January 19, 2024, and thus 50,000,000 vested on that closing date. The remaining 50,000,000 restricted shares are subject to vesting or forfeiture. 25,000,000 of the 50,000,000 restricted shares will vest, if at all, upon the Company commercially deploying the third solar, wireless electric vehicle charging, microgrid, and/or battery storage system (such systems as more specifically defined under the Second Amended and Restated Exchange Agreement, as amended) and 25,000,000 of the 50,000,000 Restricted Shares will vest, if at all, upon the Company either reaching annual revenues exceeding $100 million, the Company completing projects with deployment costs greater than $100 million, or the Company completing a capital raise greater than $25 million.
Prior to closing, the Company (i) increased the number of its authorized shares of common stock from 50,000,000 to 500,000,000, (ii) received stockholder approval, (iii) received third-party consents, and (iv) ensured compliance with the rules and regulations of The Nasdaq Stock Market.
On February 13, 2025, the closing of the transactions contemplated by the Second Amended and Restated Exchange Agreement, as amended, was completed. Pursuant to the terms of the Second Amended and Restated Exchange Agreement, as amended, the Company issued an aggregate of 100,000,000 shares of common stock in exchange for all of the issued and outstanding common stock of Next Holding, and Next Holding became a wholly owned subsidiary of the Company.
| 4 |
Officer and Director Changes
On February 14, 2025, in connection with the Next Closing, (i) Mr. Farkas was appointed Chief Executive Officer and Executive Chairman of the Company; (ii) Yehuda Levy ceased to be the Company’s Interim Chief Executive Officer; and (iii) Joel Kleiner was appointed Chief Financial Officer of the Company.
Firm Commitment Underwritten Public Offering
On February 18, 2025, the Company closed a public offering of 5,000,000 shares of common stock at a price to the public of $3.00 per share (the “Offering Price”), for gross proceeds of $15,000,000, before deducting underwriting discounts and offering expenses. In addition, the Company granted the underwriters a 45-day option to purchase up to an additional 750,000 shares of common stock to cover over-allotments, if any.
On February 13, 2025, the Company entered into an Underwriting Agreement (the “Underwriting Agreement”) with ThinkEquity LLC (“Representative”), as representative of the underwriters (“Underwriters”) named on Schedule I thereto, relating to the Company’s firm commitment underwritten public offering (the “Offering”) of common stock. Pursuant to the Underwriting Agreement, the Company agreed to sell 5,000,000 shares of common stock to the Underwriters at the Offering Price, and granted the Representative a 45-day over-allotment option to purchase up to 750,000 additional shares of common stock, equivalent to 15% of the shares of common stock sold in the Offering (the “Option”), pursuant to the Company’s registration statement on Form S-1, as amended (File No. 333-261984) (the “Registration Statement”), under the Securities Act of 1933, as amended (the “Securities Act”).
| 5 |
The closing of the Offering occurred on February 18, 2025. The net proceeds to the Company from the sale of the shares, after deducting the underwriting discounts and commissions and other estimated offering expenses payable by the Company, was approximately $13.3 million. The Company used the net proceeds from the Offering to expand its business, repay outstanding indebtedness, and general corporate purposes, including working capital.
Upon closing of the Offering, the Company issued the Representative warrants (the “Representative’s Warrants”) as compensation to purchase up to 250,000 shares of common stock, representing 5% of the aggregate number of shares sold in the Offering. The Representative’s Warrants are exercisable at a per share exercise price of $3.75, which represents 125% of the Offering Price. The Representative’s Warrants are exercisable, in whole or in part, during the 4.5-year period commencing 180 days from the commencement of sales of the shares in the Offering.
The Underwriting Agreement contains customary representations, warranties and covenants made by the Company. It also provides for customary indemnification by each of the Company and the Underwriters, severally and not jointly, for losses or damages arising out of or in connection with the Offering, including for liabilities under the Securities Act, other obligations of the parties and termination provisions. In addition, pursuant to the terms of the Underwriting Agreement, each of the Company’s directors, executive officers and holders of 5% or more of the shares have entered into “lock-up” agreements with the Representative that generally prohibit, without the prior written consent of the Representative and subject to certain exceptions, the sale, transfer or other disposition of securities of the Company for a period of six months (with respect to the Company’s directors and executive officers) and three months (with respect to the holders of 5% or more of the issued and outstanding shares of Common Stock who are not directors and executive officers) from February 13, 2025. Further, pursuant to the terms of the Underwriting Agreement, the Company has agreed for a period of three months from February 13, 2025, subject to certain exceptions, not to (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of capital stock of the Company or any securities convertible into or exercisable or exchangeable for shares of capital stock of the Company; (ii) file or cause the filing of any registration statement under the Securities Act with respect to any shares of common stock or other capital stock or any securities convertible into or exercisable or exchangeable for common stock or other capital stock of the Company, other than a customary universal “shelf” registration statement, which the Company will file within 30 days following the earlier of the expiration of such three month period or the date the Company becomes initially eligible to file such registration statement; (iii) complete any offering of debt securities of the Company, other than entering into a line of credit, term loan arrangement or other debt instrument with a traditional bank, or (iv) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of capital stock of the Company. In addition, for a period of 24 months after February 13, 2025, the Company will not directly or indirectly enter into an agreement to engage in any “at-the-market”, continuous equity or variable rate transaction without the prior written consent of the Representative.
For a period of 36 months following February 18, 2025, the Representative will have an irrevocable right of first refusal to act as sole investment banker, sole book-runner and/or sole placement agent, at the Representative’s sole discretion, for each and every future public and private equity and debt offerings for the Company, or any successor to or any subsidiary of the Company, including all equity linked financings, on terms customary to the Representative. The Representative will have the sole right to determine whether or not any other broker-dealer will have the right to participate in any such offering and the economic terms of any such participation. The Representative will not have more than one opportunity to waive or terminate the right of first refusal in consideration of any payment or fee.
Redstone Agreement
On March 24, 2025, the Company entered into a Sale of Future Receipts Agreement (the “Redstone Agreement”) by and between the Company and Redstone Advance Inc. (“Redstone”). Pursuant to the terms of the Redstone Agreement, the Company agreed to (i) sell to Redstone proceeds of future sales made by the Company (collectively, the “Future Receipts”) in the amount of $3,217,700 (the “Purchased Amount”); and (ii) deliver 20% of the Future Receipts to Redstone in accordance with the terms of the Redstone Agreement. As payment for the Purchased Amount, Redstone agreed to pay to the Company $2,300,000, minus $784,000 (representing fees and amounts to satisfy prior balances), resulting in a net payment to the Company of $1,516,000.
| 6 |
Pursuant to the terms of the Redstone Agreement, the Company authorized Redstone to debit $125,000 (the “Initial Periodic Amount”), intended to represent 20% of the Company’s Future Receipts, or any updated periodic amount (the “Periodic Amount”) from the Company’s specified account each business day. At any time, the Company or Redstone may obtain a reconciliation of the Company’s actual revenue to adjust the Periodic Amount to more closely reflect the Company’s actual Future Receipts times 20%.
Michael D. Farkas, the Company’s Chief Executive Officer, Chairman of the Board of Directors and beneficial holder of a majority of the Company’s outstanding common stock, personally guaranteed the Company’s obligations under the Redstone Agreement.
Mr. Advance Agreement
On March 25, 2025, the Company entered into a Future Receivables Sale and Purchase Agreement (the “Mr. Advance Agreement”) by and between the Company and Funderzgroup LLC DBA Mr. Advance (“Mr. Advance”). Pursuant to the terms of the Mr. Advance Agreement, the Company agreed to sell to Mr. Advance its right, title and interest in 7.54% of proceeds of Future Receipts until the Purchased Amount has been delivered to Mr. Advance. As consideration, Mr. Advance agreed to pay to the Company $2,300,000, minus $784,035 representing fees and amounts to satisfy prior balances, resulting in a net payment to the Company of $1,515,965.
Pursuant to the terms of the Mr. Advance Agreement, the Company authorized Mr. Advance to debit $125,000 on a weekly basis (subject to modification as set forth in the Mr. Advance Agreement), intended to represent 7.54% of the Company’s Future Receipts.
Mr. Farkas, the Company’s Chief Executive Officer, Chairman of the Board of Directors and beneficial holder of a majority of the Company’s outstanding common stock, personally guaranteed the Company’s obligations under the Mr. Advance Agreement.
Fee Agreement
Also on March 25, 2025, the Company entered into a Fee Agreement (the “Fee Agreement”) with Mr. Farkas, the Company’s Chief Executive Officer, Chairman of the Board of Directors and beneficial holder of a majority of the Company’s outstanding shares of common stock. Pursuant to the terms of the Fee Agreement, in consideration of Mr. Farkas personally guaranteeing certain loans entered into by the Company, the Company agreed to pay to Mr. Farkas a fee in the aggregate amount of 3% of the funds personally guaranteed by Mr. Farkas on behalf of the Company. The Company agreed to pay such fee upon receipt of the loan funds by the Company.
WCG Agreement
On March 31, 2025, the Company entered into a Standard Merchant Cash Advance Agreement (the “WCG Agreement”) with Wynwood Capital Group LLC (“WCG”). Pursuant to the terms of the WCG Agreement, the Company agreed to (i) sell to WCG all of its future accounts, contract rights, and other obligations arising from or relating to the payment of monies from each of the Company’s customers and/or other third party payors (collectively, the “Receivables”) in the amount of $699,500 (the “Receivables Purchased Amount”); and (ii) deliver 9.72% of the Receivables to WCG in accordance with the terms of the WCG Agreement. As payment for the Receivables Purchased Amount, WCG agreed to pay to the Company $500,000, minus a $15,000 origination fee.
Pursuant to the terms of the WCG Agreement, the Company authorized WCG to debit $27,980 (the “Initial Estimated Payment”), intended to approximate 9.72% of the Company’s Receivables on a weekly basis. The Company may request a reconciliation to ensure that the amount collected by WCG equals 9.72% of the Receivables.
Michael D. Farkas, the Company’s Chief Executive Officer, Chairman of the Board of Directors and beneficial holder of a majority of the Company’s outstanding common stock, personally guaranteed the Company’s obligations under the WCG Agreement.
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Alcourt Promissory Note
On March 31, 2025, the Company issued a promissory note, in the principal sum of 1,000,000 (the “Alcourt Note”), in favor of Alcourt LLC (“Alcourt”). The Alcourt Note bears interest at a rate of 15% per annum and has an original issue discount of $150,000. The Alcourt Note matures on April 30, 2025; provided, however, if the Alcourt Note is not paid on April 30, 2025, the Company will pay $150,000 to Alcourt and upon payment, the maturity date of the Alcourt Note will be extended to May 31, 2025. There is no prepayment penalty.
During 2025, as part of the sale and leaseback of 34 vehicles to Equify, Inc., proceeds of $250,000 from the sale were paid to Alcourt as a partial payment towards this note.
Promissory Note, dated as of May 5, 2025
On May 5, 2025, the Company and Michael D. Farkas entered into a promissory note (the “May 5 Note”) for the principal sum of $600,000 to be used for the Company’s working capital needs. The unpaid principal balance of the May 5 Note has a fixed interest rate of 12% per annum and matures on the earlier of (i) May 5, 2026 or (ii) the date the Company completes a cumulative capital raise of at least $4,000,000 following the date of the May 5 Note. Further, the Note was issued with an original issue discount of $72,000.
Promissory Note, dated May 9, 2025
On May 9, 2025, the Company and Mr. Farkas entered into a promissory note (the “May 9 Note”) for the principal sum of $112,000 to be used for the Company’s working capital needs. The unpaid principal balance of the May 9 Note has a fixed interest rate of 12% per annum and matures on the earlier of (i) May 9, 2026 or (ii) the date the Company completes a cumulative capital raise of at least $4,000,000 following the date of the May 9 Note. Further, the May 9 Note was issued with an original issue discount of $12,000.
Promissory Note, dated as of May 19, 2025
On May 19, 2025, the Company and Mr. Farkas entered into a promissory note (the “May 19 Note”) or the principal sum of $224,000 to be used for the Company’s working capital needs. The unpaid principal balance of the May 19 Note has a fixed interest rate of 12% per annum and matures on May 13, 2026. Further, the May 19 Note was issued with an original issue discount of $24,000.
Promissory Note, dated as of May 20, 2025
On May 20, 2025, the Company and Mr. Farkas entered into a promissory note (the “May 20 Note”) or the principal sum of $196,000 to be used for the Company’s working capital needs. The unpaid principal balance of the May 20 Note has a fixed interest rate of 12% per annum and matures on May 20, 2026. Further, the May 20 Note was issued with an original issue discount of $21,000.
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Equify Master Lease Agreement
On June 9, 2025, the Company entered into a Master Lease Agreement (the “Master Lease”), dated as of May 29, 2025, with Equify Financial, LLC (“Equify”). Pursuant to the terms of the Master Lease, Equify agreed to lease to the Company certain equipment as set forth in lease schedules that may be entered into from time to time (each, a “Lease”). Each Lease will constitute a separate lease or financing as indicated on such Lease Schedule of the equipment described on each Lease. The Master Lease is not a commitment to enter into any Lease, or lease or finance any property unless expressly agreed in writing.
The term of each Lease will continue for the number of months set forth in the Lease.
Pursuant to the terms of the Master Lease, the Company agreed to pay to Equify all rent monthly in advance, and to pay all other amounts due under each Lease as and when required under the Master Lease, as indicated in the Lease. If any rent or other amount due under a Lease is not received when due, the Company will pay a late charge equal to 5% of the overdue amount, together with interest at the rate of 18% per annum, provided that no late charge will exceed the maximum amount permitted by applicable law.
Unless otherwise stated in the Lease, the Company will pay to Equify, on or before the first rent payment date, two full payments, one to be applied to the Company’s obligation to pay the first payment and the other to be applied to the last payment due under the Lease.
The Company agreed to indemnify, hold harmless and defend Equify and its officers, directors, employees, successors and/or assigns against any and all claims, demands, suits and legal proceedings, in any way arising out of or involving the equipment leased under the Master Lease, the Master Lease and/or any Lease or other document entered into in connection with the Master Lease.
The Master Lease contains representations, warranties and covenants that are customary for a transaction of this type.
Lease No. 001 under Master Lease
On June 9, 2025, the Company and Equify entered into Equipment Lease Schedule No. 001 under the Master Lease (“Lease No. 001”), dated as of May 29, 2025, pursuant to which Equify agreed to lease to the Company certain equipment as set forth in Lease No. 001 for a total equipment cost of $899,640 . Lease No. 001 has an initial term of 36 months. Pursuant to the terms of Lease No. 001, the Company agreed to pay an initial rent payment of $27,886, followed by 35 rent payments, each in the amount of $27,790 beginning on August 1, 2025.
So long as the Company is not in default or suffered an event that with notice or lapse of time could constitute an event of default under Lease No. 001 and Lease No. 001 has not been previously terminated or cancelled, the Company may purchase all (but not less than all) of Equify’s rights, title and interests with respect to the equipment leased thereunder upon expiration of the initial lease term upon not more than 120 calendar days nor less than 90 calendar days prior written notice to Equify for a purchase price equal to: (a) $179,928 (which amount is the parties’ true estimate of the fair market value of the equipment at the end of the initial lease term), plus (b) applicable sales taxes and other amounts due or payable with respect to such sale; plus (c) any and all other amounts due under Lease No. 001.
Promissory Note, dated as of June 10, 2025
On June 10, 2025, the Company and Mr. Farkas entered into a promissory note (the “June 10 Note”) or the principal sum of $436,000 to be used for the Company’s working capital needs. The unpaid principal balance of the June 10 Note has a fixed interest rate of 12% per annum and matures on June 9, 2026. Further, the June 10 Note was issued with an original issue discount of $46,000.
Mr. Farkas is the Company’s Chief Executive Officer, Chairman of the Board of Directors and beneficial holder of a majority of the Company’s outstanding common stock.
Venture Debt Agreement
On June 27, 2025, the Company entered into a Future Receivables Sale and Purchase Agreement (the “Venture Debt Agreement”) by and between the Company and Venture Debt, LLC (“Venture Debt”). Pursuant to the terms of the Venture Debt Agreement, the Company agreed to (i) sell to Venture Debt proceeds of future sales made by the Company (collectively, the “Future Receipts”) in the amount of $1,500,000 (the “Purchased Amount”); and (ii) deliver bi-weekly payments of the Future Receipts to Venture Debt in accordance with the terms of the Venture Debt Agreement. As consideration, Venture Debt agreed to pay to the Company $1,500,000, minus $75,000 representing fees, resulting in a net payment to the Company of $1,425,000.
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Pursuant to the terms of the Venture Debt Agreement, the Company authorized Venture Debt to debit $75,000 on a bi-weekly basis.
The Venture Debt Agreement also included a flat-rate interest fee of $675,000, which was paid in shares of the Company’s common stock at a price per share of $3.00.
Mr. Farkas, the Company’s Chief Executive Officer, Chairman of the Board of Directors and beneficial holder of a majority of the Company’s outstanding common stock, personally guaranteed the Company’s obligations under the Venture Debt Agreement.
Funders App Agreement
On June 27, 2025, the Company entered into a Future Receivables Sale and Purchase Agreement (the “Funders App Agreement”) by and between the Company and Funders App LLC (“Funders App”). Pursuant to the terms of the Funders App Agreement, the Company agreed to (i) sell to Funders App proceeds of future sales made by the Company (collectively, the “Future Receipts”) in the amount of $1,500,000 (the “Purchased Amount”); and (ii) deliver bi-weekly payments of the Future Receipts to Funders App in accordance with the terms of the Funders App Agreement. As consideration, Funders App agreed to pay to the Company $1,500,000, minus $75,000 representing fees, resulting in a net payment to the Company of $1,425,000.
Pursuant to the terms of the Funders App Agreement, the Company authorized Funders App to debit $75,000 on a bi-weekly basis.
The Funders App Agreement also included a flat-rate interest fee of $675,000, which was paid in shares of the Company’s common stock at a price per share of $3.00.
Mr. Farkas, the Company’s Chief Executive Officer, Chairman of the Board of Directors and beneficial holder of a majority of the Company’s outstanding common stock, personally guaranteed the Company’s obligations under the Venture Debt Agreement.
Financial Overview
For the three months ended June 30, 2025 and 2024, we generated revenues of $19,691,568 and $7,394,778, respectively, and reported a net loss of $36,133,274 and $5,616,385, respectively. For the six months ended June 30, 2025 and 2024, we generated revenues of $35,964,241 and $13,991,897, respectively, and reported a net loss of $45,071,275 and $8,291,637, respectively, and cash flows used in operating activities of $6,336,312 and $8,331,359, respectively. As noted in our unaudited consolidated financial statements, as of June 30, 2025, we had an accumulated deficit of $112,770,877.
Results of Operations
The following table sets forth our results of operations for the three and six months ended June 30, 2025 and 2024:
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenues | $ | 19,691,568 | $ | 7,394,778 | $ | 35,964,241 | $ | 13,991,897 | ||||||||
| Cost of sales | 18,121,752 | 6,847,452 | 33,876,456 | 12,982,785 | ||||||||||||
| Operating expenses | 31,779,768 | 2,766,945 | 37,318,273 | 4,695,900 | ||||||||||||
| Depreciation and amortization | 555,752 | 380,834 | 1,289,088 | 773,821 | ||||||||||||
| Operating loss | (30,765,704 | ) | (2,600,453 | ) | (36,519,576 | ) | (4,460,609 | ) | ||||||||
| Other expense | (5,367,570 | ) | (3,015,932 | ) | (8,551,698 | ) | (3,831,028 | ) | ||||||||
| Net loss | $ | (36,133,274 | ) | $ | (5,616,385 | ) | $ | (45,071,274 | ) | $ | (8,291,637 | ) | ||||
For the three months ended June 30, 2025 compared to the three months ended June 30, 2024
Revenues
Revenues for the three months ended June 30, 2025 increased significantly compared to the three months ended June 30, 2024. This growth was primarily attributable to a rise in gallons delivered as well as an uptick in the average price per gallon. Several factors contributed to this performance:
| 1. | Expanded Customer Base. The Company successfully grew its presence in existing markets while entering new regions, resulting in a higher total volume of fuel delivered. This expansion was supported by focused sales efforts and brand-building initiatives that attracted both new commercial and residential customers. |
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| 2. | Fleet Partnerships. Strategic partnerships with commercial fleet operators continued to drive fueling volumes. These partnerships often involve recurring, contracted deliveries that provide a stable, predictable revenue stream. As more fleet operators adopt on-demand fueling to reduce downtime and optimize logistics, EzFill benefits from increased, repeat business. | |
| 3. | Enhanced Technology & Marketing. Ongoing enhancements to the EzFill mobile application—including user interface improvements and expanded scheduling features—improved the customer experience and streamlined order placement. Coupled with targeted marketing campaigns, these tech and branding initiatives boosted visibility and encouraged higher consumer adoption rates, further lifting revenues. |
Cost of Sales
Cost of sales rose in the three months ended June 30, 2025, compared to the three months ended June 30, 2024, in line with the higher sales volumes and expanded market coverage. Despite the increase in absolute costs, gross profit improved, reflecting disciplined pricing, higher-margin sales, and operational efficiencies. Key factors influencing cost of sales included:
| 1. | Higher Fuel Volume. As overall demand increased, the Company purchased and delivered a greater volume of fuel. Although this drove up the total cost of sales, it remained proportionate to revenue growth, preserving gross margins. | |
| 2. | Fuel Price Fluctuations. Commodity price swings can significantly affect fuel costs. However, the Company’s dynamic pricing strategies and supplier relationships helped ensure that these fluctuations did not adversely impact overall profitability. | |
| 3. | Logistics & Delivery Costs. Expansion into new geographic areas required additional delivery routes and staffing. While these investments raised labor and transportation costs, they were essential for meeting growing customer demand. Improved driver efficiency and delivery scheduling helped partially offset the impact of these higher costs, contributing to the year-over-year improvement in gross profit. |
Operating Expenses
We incurred operating expenses of $31,779,768 during the three months ended June 30, 2025, compared to $2,766,945 during the prior year, representing an increase of $29,012,823. This increase was primarily due to a $25.5 million grant of stock-based compensation to employees and consultants during the three months ended June 30, 2025, as well as an increase in other general and administrative expenses.
Depreciation and Amortization
Depreciation and amortization expense saw an increase in the three months ended June 30, 2025, compared to the same period in 2024. This increase was primarily driven by added depreciation related to the 99 trucks acquired in late 2024.
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Other Expense
Other expense consisted of the following:
| For the Three Months Ended June 30, | Period over Period Changes Increase (Decrease) | |||||||||||||||
| 2025 | 2024 | $ Amount | % Change | |||||||||||||
| Interest income | $ | 41 | $ | - | $ | 41 | 100.00 | % | ||||||||
| Other (expense) income | 86,364 | ) | 60,451 | 25,913 | ) | 42.87 | % | |||||||||
| Gain (loss) on settlement | (1,134,944 | ) | - | (1,134,944 | ) | 100 | % | |||||||||
| Interest expense (including amortization of debt discount) | (4,319,031 | ) | (3,076,383 | ) | (1,242,648 | ) | 40.39 | % | ||||||||
| Total other expense - net | $ | (5,367,570 | ) | $ | (3,015,932 | ) | $ | (2,351,638 | ) | 77.97 | % | |||||
The Company’s other expense, net, increased significantly in the three months ended June 30, 2025, compared to the three months ended June 30, 2024. The primary drivers were the increase in interest expense—particularly from default penalty interest and the addition of new notes payable—and the loss on debt extinguishment associated with related-party debt transactions. Below is a detailed breakdown of the major components.
Interest Income
There was very little change in interest income between the three months ended June 30, 2025 and June 30, 2024.
Other (expense) income
Other expense, including loss on settlement, increased significantly in the three months ended June 30, 2025, compared to the three months ended June 30, 2024, driven primarily by the loss on settlement for the purchase of trucks from Yoshi, Inc. at a purchase price higher than fair value, and the loss on settlement of accounts payable.
Interest Expense (including amortization of debt discount)
Interest expense increased in 2025, primarily due to:
| 1. | Amortization of Debt Discount: The amortization of debt discount increased due to additional debt arrangements with original issue discounts. Additionally, in connection with the conversion of debt converted to equity, related unamortized discounts were expensed at that time. | |
| 2. | Existing and New Borrowings: Interest expense was recognized on outstanding debt instruments. |
Net Loss
Three Months Ended June 30, | Period-over-Period Changes Increase (Decrease) | |||||||||||||||
| 2025 | 2024 | $ Amount | % Change | |||||||||||||
| Net loss including non-controlling interest | $ | (36,133,274 | ) | $ | (5,616,385 | ) | $ | (30,516,889 | ) | (543.35 | )% | |||||
Our net loss increased significantly in the three months ended June 30, 2025, as a result of the categories discussed above, most materially by a large grant of stock based compensation to employees and consultants for $25.5 million. Overall, the increase in revenues, driven by both volume and pricing, showcased the Company’s successful market expansion and deepening fleet partnerships. While costs naturally rose with higher delivery volumes, disciplined operational execution and strategic pricing helped improve gross profit. Ongoing cost-optimization initiatives further reduced operating expenses, though the Company continues to invest in talent and technology to fuel long-term growth.
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For the six months ended June 30, 2025 compared to the six months ended June 30, 2024
Revenues
Revenues for the six months ended June 30, 2025 increased significantly compared to the six months ended June 30, 2024. This growth was primarily attributable to a rise in gallons delivered as well as an uptick in the average price per gallon. Several factors contributed to this performance:
| 1. | Expanded Customer Base. The Company successfully grew its presence in existing markets while entering new regions, resulting in a higher total volume of fuel delivered. This expansion was supported by focused sales efforts and brand-building initiatives that attracted both new commercial and residential customers. | |
| 2. | Fleet Partnerships. Strategic partnerships with commercial fleet operators continued to drive fueling volumes. These partnerships often involve recurring, contracted deliveries that provide a stable, predictable revenue stream. As more fleet operators adopt on-demand fueling to reduce downtime and optimize logistics, EzFill benefits from increased, repeat business. | |
| 3. | Enhanced Technology & Marketing. Ongoing enhancements to the EzFill mobile application—including user interface improvements and expanded scheduling features—improved the customer experience and streamlined order placement. Coupled with targeted marketing campaigns, these tech and branding initiatives boosted visibility and encouraged higher consumer adoption rates, further lifting revenues. |
Cost of Sales
Cost of sales rose in the six months ended June 30, 2025, compared to the six months ended June 30, 2024, in line with the higher sales volumes and expanded market coverage. Despite the increase in absolute costs, gross profit improved, reflecting disciplined pricing, higher-margin sales, and operational efficiencies. Key factors influencing cost of sales included:
| 1. | Higher Fuel Volume. As overall demand increased, the Company purchased and delivered a greater volume of fuel. Although this drove up the total cost of sales, it remained proportionate to revenue growth, preserving gross margins. | |
| 2. | Fuel Price Fluctuations. Commodity price swings can significantly affect fuel costs. However, the Company’s dynamic pricing strategies and supplier relationships helped ensure that these fluctuations did not adversely impact overall profitability. | |
| 3. | Logistics & Delivery Costs. Expansion into new geographic areas required additional delivery routes and staffing. While these investments raised labor and transportation costs, they were essential for meeting growing customer demand. Improved driver efficiency and delivery scheduling helped partially offset the impact of these higher costs, contributing to the year-over-year improvement in gross profit. |
Depreciation and Amortization
Depreciation and amortization expense saw an increase in the six months ended June 30, 2025, compared to the same period in 2024. This increase was primarily driven by added depreciation related to the 99 trucks acquired in late 2024.
Operating Expenses
We incurred operating expenses of $37,318,273 during the six months ended June 30, 2025, compared to $4,695,900 during the prior year, representing an increase of $32,622,373. This increase was primarily due to stock-based compensation to employees and consultants of $25.5 million during the six months ended June 30, 2025, as well as an increase in other general and administrative expenses.
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Other Income (Expense)
Other income (expense) consisted of the following:
| For the Six Months Ended June 30, | Period over Period Changes Increase (Decrease) | |||||||||||||||
| 2025 | 2024 | $ Amount | % Change | |||||||||||||
| Interest income | $ | 41 | $ | - | $ | 41 | 100.00 | % | ||||||||
| Gain (loss) on settlement | (1,134,944 | ) | - | (1,134,944 | ) | 100.00 | % | |||||||||
| Other (expense) income | 225,633 | 124,251 | 131,382 | 105.74 | % | |||||||||||
| Interest expense (including amortization of debt discount) | (7,642,428 | ) | (3,955,279 | ) | 3,191,031 | 80.68 | % | |||||||||
| Total other expense - net | $ | (8,551,698 | ) | $ | (3,831,028 | ) | $ | 4,720,669 | 123.22 | % | ||||||
The Company’s other expense, net, increased significantly in the six months ended June 30, 2025, compared to the six months ended June 30, 2024. The primary drivers were the increase in interest expense—particularly from default penalty interest—and the loss on debt extinguishment associated with related-party debt transactions. Below is a detailed breakdown of the major components.
Interest Income
There was very little change in interest income in the six months ended June 30, 2025, compared to the same period in 2024.
Other Expense
Other expense, including loss on settlement, increased significantly in the six months ended June 30, 2025, compared to the six months ended June 30, 2024, driven primarily by the loss on settlement for the purchase of trucks from Yoshi, Inc. at a purchase price higher than fair value, and the loss on settlement of accounts payable.
Interest Expense (including amortization of debt discount)
Interest expense surged in 2025, primarily due to:
| 1. | Amortization of Debt Discount: The amortization of debt discount increased in the six months ended June 30, 2025 compared to the same period in 2024. This reflects additional debt arrangements with original issue discounts. Additionally, in connection with the conversion of debt converted to equity, related unamortized discounts were expensed at that time. | |
| 2. | Existing and New Borrowings: Interest expense was recognized on outstanding debt instruments. |
Net Loss
Six Months Ended June 30, | Period-over-Period Changes Increase (Decrease) | |||||||||||||||
| 2025 | 2024 | $ Amount | % Change | |||||||||||||
| Net loss including non-controlling interest | $ | (45,071,275 | ) | $ | (8,291,637 | ) | $ | (36,779,638 | ) | (443.58 | )% | |||||
Our net loss was the result of the categories discussed above, most materially by a large stock based compensation expense during the six months ended June 30, 2025 of $25.5 million. Overall, the increase in revenues, driven by both volume and pricing, showcases the Company’s successful market expansion and deepening fleet partnerships. While costs naturally rose with higher delivery volumes, disciplined operational execution and strategic pricing helped improve gross profit. Ongoing cost-optimization initiatives further reduced operating expenses, though the Company continues to invest in talent and technology to fuel long-term growth.
Prepaids and other
Prepaids and other assets increased from $42,509 as of June 30, 2024 to $2,275,237 as of June 30, 2025. The primary driver of this increase was higher prepaid truck insurance costs, as the Company’s fleet expanded from 47 trucks to 146 during the period, resulting in significantly higher insurance premiums financed. These insurance premiums are financed, with the related liability recorded in “Accounts payable and accrued expenses.
Non-GAAP Financial Measures
Adjusted EBITDA is a non-GAAP financial measure which we use in our financial performance analyses. This measure should not be considered a substitute for GAAP-basis measures, nor should it be viewed as a substitute for operating results determined in accordance with GAAP. We believe that the presentation of Adjusted EBITDA, a non-GAAP financial measure that excludes the impact of net interest expense, taxes, depreciation, amortization, impairment of goodwill, other intangibles and fixed assets, and stock compensation expense, provides useful supplemental information that is essential to a proper understanding of our financial results. Non-GAAP measures are not formally defined by GAAP, and other entities may use calculation methods that differ from ours for the purposes of calculating Adjusted EBITDA. As a complement to GAAP financial measures, we believe that Adjusted EBITDA assists investors who follow the practice of some investment analysts who adjust GAAP financial measures to exclude items that may obscure underlying performance and distort comparability.
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The following is a reconciliation of net loss to the non-GAAP financial measure referred to as Adjusted EBITDA for the three and six months ended June 30, 2025 and 2024:
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net loss | $ | (36,133,274 | ) | $ | (5,616,385 | ) | $ | (45,071,274 | ) | $ | (8,291,637 | ) | ||||
| Interest expense | 4,319,031 | 3,076,383 | 7,642,428 | 3,955,279 | ||||||||||||
| Depreciation and amortization | 555,752 | 380,834 | 1,289,088 | 773,821 | ||||||||||||
| Stock-based compensation | 25,499,097 | 251,334 | 25,499,097 | 251,334 | ||||||||||||
| Adjusted EBITDA | $ | (5,759,394 | ) | $ | (1,907,834 | ) | $ | (10,640,661 | ) | $ | (3,311,203 | ) | ||||
Liquidity and Capital Resources
Liquidity is the ability of an enterprise to generate adequate amounts of cash to meet its needs for cash requirements. We had cash of $ $2,652,838 and $334,067 as of June 30, 2025 and 2024, respectively.
Cash Flow Activities
Our cash balances at June 30, 2025 and 2024 were as follows:
| June 30, | Period-over-Period Changes Increase (Decrease) | |||||||||||||||
| 2025 | 2024 | $ Amount | % Change | |||||||||||||
| Cash and cash equivalents | $ | 2,652,838 | $ | 334,067 | $ | 2,318,771 | 6,806.50 | % | ||||||||
Cash and cash equivalents increased year over year. The primary drivers of this increase were:
1. Debt Financing Received
The Company secured additional financing at the end of the fiscal year ended December 31, 2024, boosting its cash position. This infusion of funds was a key component in supporting ongoing operational needs and future growth initiatives.
2. Timing of Expenses
Certain operating expenses were either deferred or settled after year-end, resulting in higher cash on hand as of June 30, 2025. This timing variance can create short-term fluctuations in the Company’s reported cash balances. Overall, the Company’s stronger cash position provides added liquidity to support daily operations, manage working capital requirements, and pursue strategic opportunities. Management continues to monitor cash flows carefully to ensure that the Company maintains sufficient funding for near-term obligations and future expansion.
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Operating Activities
Net cash used in operating activities was $6,336,312 for the six months ended June 30, 2025, which was made up primarily by the net loss of $45,071,275 and offset by non-cash adjustments for a net amount of $38,734,963, most notably including an expense of $25.5 million related to stock-based compensation issued to employees and consultants. Net cash used in operating activities was $8,331,359 during the six months ended June 30, 2024, which was made up primarily by the net loss of $8,291,637 and offset by non-cash adjustments for a net amount of $(39,722).
Investing Activities
During the six months ended June 30, 2025 net cash used by investing activities was $531,850. The cash was received as part of the sale of vehicles. Net cash provided by investing activities during the prior year was $2,130,116 resulting from the proceeds as part of the sale of marketable debt securities, net of $19,498 in purchases of equipment.
Financing Activities
We generated $6,845,183 of cash flows from financing activities during the six months ended June 30, 2025, including net proceeds from offerings of $13,669,129 after cash paid for offering costs, as well as proceeds from notes of $11,468,849 offset by repayments of $19,549,80. We generated $5,514,049 of cash flows from financing activities during the six months ended June 30, 2024, including $8,575,924 in proceeds from notes payable offset by $3,061,875 in repayments.
Sources of Capital
The Company has sustained net losses since inception and does not have sufficient revenues and income to fully fund its operations. As a result, the Company has relied on equity and debt financings to fund its activities to date. For the six months ended June 30, 2025, the Company had a net loss of $45,071,275. At June 30, 2025, the Company had an accumulated deficit of $112,770,877. The Company anticipates that it will continue to generate operating losses and use cash in operations through the foreseeable future.
Historical Operating Performance and Financing
Since inception, the Company has incurred net losses and has not generated sufficient revenues or positive operating income to independently fund our operations. Consequently, we have depended on equity and debt financings—including those from related parties—to finance our activities and support our growth initiatives. This reliance on external funding has been critical for maintaining day-to-day operations, expanding our service capacity, and investing in technology and assets. However, it has also introduced risks related to interest expense, equity dilution, and dependency on the availability of future financing.
Current Liquidity Position
Our liquidity position primarily reflects a combination of cash on hand and available debt arrangements.
Despite recent improvements in cash balances due to targeted financing activities, we continue to face challenges in achieving sustainable cash flow from operations. The timing of expenditures and capital outlays, coupled with the inherent volatility in revenue generation in our industry, adds to the uncertainty of our liquidity profile.
Debt Obligations and Capital Expenditures
A significant portion of our near-term cash outflows is attributable to scheduled debt repayments and interest expense, including higher financing costs incurred from default penalty interest and increased debt discount amortization. Additionally, as we invest in capital expenditures—such as the purchase of new delivery vehicles and technology enhancements—to support expansion into new markets, our cash requirements remain elevated. These commitments, while essential for long-term growth, further strain our liquidity in the short term.
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Reliance on External Financing
Given the current financial dynamics, we have continually relied on external sources of capital. Our funding strategies have included:
| ● | Equity Issuances: Raising capital through the sale of common or preferred shares, including convertible securities from related parties. | |
| ● | Debt Financings: Securing loans and other debt instruments, often under terms that include default penalty interest or other onerous conditions, which have contributed to higher financing costs. | |
| ● | Related-Party Transactions: Engaging with supportive investors and related parties who have provided additional funds, albeit at terms that may affect our overall capital structure. |
Outlook and Mitigating Actions
In light of these challenges, we continue to closely monitor our liquidity position and are exploring multiple avenues to secure additional funding. These include:
| ● | Negotiating more favorable terms on existing and future debt. | |
| ● | Identifying new equity partners or investors. | |
| ● | Optimizing working capital through tighter control of receivables, payables, and inventory management. |
While these efforts are underway, our ability to meet operational and financial obligations over the next 12 months remains subject to significant uncertainty. Investors and stakeholders should be aware of the risks associated with our current liquidity and capital structure, and the potential need for additional financing that could result in further dilution or increased debt service obligations.
Going Concern Qualification
As reflected in the accompanying unaudited consolidated financial statements, for the six months ended June 30, 2025, the Company had:
| ● | Net loss available to common stockholders of $45,235,177; and | |
| ● | Net cash used in operations was $8,961,844. |
Additionally, at June 30, 2025, the Company had:
| ● | Accumulated deficit of 112,770,877; | |
| ● | Stockholders’ deficit of $13,644,028; and | |
| ● | Working capital deficit of $29,827,283. |
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The Company anticipates that it will need to raise additional capital immediately in order to continue to fund its operations. The Company has relied on related parties for the debt-based funding of its operations. There is no assurance that the Company will be able to obtain funds on commercially acceptable terms, if at all. There is also no assurance that the amount of funds the Company might raise will enable the Company to complete its initiatives or attain profitable operations.
The Company’s operating needs include the planned costs to operate its business, including amounts required to fund working capital and capital expenditures. The Company’s future capital requirements and the adequacy of its available funds will depend on many factors, including the Company’s ability to successfully expand to new markets, competition, and the need to enter into collaborations with other companies or acquire other companies to enhance or complement its product and service offerings.
There can be no assurances that financing will be available on terms which are favorable, or at all. If the Company is unable to raise additional funding to meet its working capital needs in the future, it will be forced to delay, reduce, or cease its operations.
We manage liquidity risk by reviewing, on an ongoing basis, our sources of liquidity and capital requirements. The Company had cash on hand of $2,652,838 at June 30, 2025.
The Company has historically incurred significant losses since inception and has not demonstrated an ability to generate sufficient revenues from the sales of its products and services to achieve profitable operations. In making this assessment, we performed a comprehensive analysis of our current circumstances including our financial position, our cash flows and cash usage forecasts for the twelve months ended December 31, 2025, and our current capital structure including equity-based instruments and our obligations and debts.
These factors create substantial doubt about the Company’s ability to continue as a going concern within the twelve-month period subsequent to the date that these financial statements are issued.
The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Accordingly, the financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.
Management is actively pursuing strategies to enhance revenue generation, improve operational efficiencies, and secure additional financing on more sustainable terms. We are evaluating various initiatives, including cost-containment measures, operational improvements, and strategic partnerships, with the aim of transitioning to positive cash flow from operations. However, there remains a risk that these strategies may not yield the desired outcomes in the near term. Management’s strategic plans include the following:
| ● | Expand into new and existing markets (commercial and residential); |
| ● | Obtain additional debt and/or equity based financing for growth; |
| ● | Closed our transaction with Next Holding (occurred February 13, 2025); |
| ● | Collaborations with other operating businesses for strategic opportunities; and |
| ● | Acquire other businesses to enhance or complement our current business model while accelerating our growth. |
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
Critical Accounting Policies and Estimates
Management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which were prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of these consolidated financial statements requires us to make estimates and assumptions for the reported amounts of assets, liabilities, revenue, and expenses. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, and those differences may be material.
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While our significant accounting policies are more fully described in Note 2—Summary of Significant Accounting Policies of the Notes to Unaudited Consolidated Financial Statements included in this Quarterly Report on Form 10-Q, we believe the following discussion addresses our most critical accounting policies, which are those that are most important to our financial condition and results of operations and which require our most difficult, subjective and complex judgments.
Principles of Consolidation
The consolidated financial statements have been prepared in accordance with U.S. GAAP and include the accounts of the Company and its wholly owned subsidiaries. The Company consolidates entities where it has a controlling financial interest, as defined by the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 810, “Consolidation”.
In accordance with ASC 810-10, consolidation applies to:
| ● | Entities with more than 50% voting interest, unless control is not with the Company; and | |
| ● | Variable Interest Entities (VIEs), where the Company is the primary beneficiary, possessing both (i) power over significant activities and (ii) the obligation to absorb losses or receive benefits. |
All intercompany transactions and balances are eliminated in consolidation per ASC 810-10-45. The Company continuously evaluates its investments and relationships to assess consolidation requirements.
Business Combinations, Asset Acquisitions, and Reverse Acquisitions
The Company accounts for acquisitions in accordance with ASC 805, “Business Combinations,” and applicable SEC reporting requirements under Regulation S-X, Rule 3-05 and Regulation S-K, Items 101 and 303. Transactions qualifying as business combinations are accounted for under the acquisition method, while those classified as asset acquisitions follow the guidance in ASC 805-50. Additionally, the Company evaluates whether a transaction qualifies as a reverse acquisition under ASC 805-40 and applies the appropriate accounting and disclosure requirements.
Business Combinations
For transactions classified as business combinations, the Company:
| ● | Recognizes and measures identifiable assets acquired, liabilities assumed, and noncontrolling interests at their fair values at the acquisition date (ASC 805-20-25-1). | |
| ● | Records goodwill as the excess of the fair value of consideration transferred over the fair value of net assets acquired, including any previously held equity interests (ASC 805-30-30-1). | |
| ● | Expenses acquisition-related costs as incurred, per ASC 805-10-25-23. | |
| ● | Uses preliminary purchase price allocations, with adjustments permitted within the measurement period (not exceeding one year) per ASC 805-10-25-13. Adjustments beyond the measurement period are recorded in earnings. |
Significant judgments in fair value determinations include:
| ● | Intangible asset valuations, based on estimates of future cash flows and discount rates. | |
| ● | Useful life assessments, impacting amortization and financial results. | |
| ● | Contingent consideration, which is remeasured at fair value through earnings per ASC 805-30-35-1. |
For SEC registrants, Regulation S-X, Rule 3-05 may require audited financial statements of the acquired business if the acquisition is significant. The determination of significance follows Rule 1-02(w) of Regulation S-X, which considers investment, asset, and income tests.
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Asset Acquisitions
For transactions classified as asset acquisitions under ASC 805-50, the Company:
| ● | Applies the “screen test” to determine whether substantially all of the fair value of gross assets acquired is concentrated in a single identifiable asset or group of similar assets (ASC 805-10-55-3A). | |
| ● | Allocates the purchase price using a cost accumulation model, assigning costs to acquired assets based on their relative fair values (ASC 805-50-30-3); And | |
| ● | Capitalizes direct acquisition costs as part of the asset’s cost, unlike business combinations where such costs are expensed (ASC 805-50-25-1). |
The classification between business combinations and asset acquisitions requires significant judgment, particularly when applying the screen test. Incorrect classification can materially impact:
| ● | The recognition of goodwill (only in business combinations). | |
| ● | The measurement and presentation of acquired assets and assumed liabilities; and | |
| ● | The Company’s financial position and results of operations. |
Regulatory and Financial Reporting Considerations
For SEC registrants, acquisitions may trigger additional disclosure and reporting requirements:
| ● | Regulation S-X, Rule 3-05: Requires separate financial statements of the acquired business if it meets significance thresholds under Rule 1-02(w). | |
| ● | Regulation S-K, Item 101: Requires disclosure of the impact of material acquisitions on the Company’s business operations. |
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| ● | Regulation S-K, Item 303: Mandates discussion of the impact of acquisitions on the Company’s financial condition and results of operations in Management’s Discussion and Analysis. | |
| ● | Regulation S-X, Article 11: Requires pro forma financial statements if the acquisition is significant. | |
| ● | Form 8-K, Item 2.01: Immediate reporting requirements for material acquisitions, including reverse mergers. |
The Company continuously evaluates acquisitions, including reverse acquisitions, to ensure proper classification and compliance with ASC 805, SEC reporting requirements, and regulatory guidance.
Segment Reporting
The Company follows ASC 280, Segment Reporting, which requires public entities to report financial and descriptive information about their reportable operating segments.
ASC 280-10-50-1 states that an operating segment is a component of a public entity that:
| ● | Engages in business activities from which it may earn revenues and incur expenses; |
| ● | Has operating results that are regularly reviewed by the Company’s chief operating decision maker (“CODM”), which is our Chief Executive Officer to make decisions about resource allocation and performance assessment; and |
| ● | Has discrete financial information available. |
Under ASC 280-10-50-5, a public entity is required to report separately only those operating segments that meet certain quantitative thresholds. However, as specified in ASC 280-10-50-11, if a company’s business activities are managed as a single operating segment and reviewed on a consolidated basis, the company may report as a single segment. The Company has determined that it operates as one reportable segment, as its CODM reviews the business as a whole rather than by distinct business components.
Application of ASU 2023-07 – Segment Reporting
In October 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which enhances segment disclosures by requiring public entities to disclose significant segment expenses that are regularly provided to the CODM and used in assessing segment performance and resource allocation.
The adoption of ASU 2023-07 did not have a material impact on the Company’s consolidated financial statements.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the recognition of revenues and expenses during the reporting period. Actual results may differ from these estimates, and such differences could be material.
In accordance with ASC 250-10-50-4, changes in estimates are recorded in the period in which they become known and are accounted for prospectively. The Company bases its estimates on historical experience, industry trends, and other relevant factors, incorporating both quantitative and qualitative assessments that it believes are reasonable under the circumstances.
Significant estimates for the years ended December 31, 2024, and 2023, respectively, include:
| ● | Allowance for doubtful accounts and other receivables | |
| ● | Inventory reserves and classifications | |
| ● | Valuation of loss contingencies | |
| ● | Valuation of stock-based compensation | |
| ● | Estimated useful lives of property and equipment | |
| ● | Impairment of intangible assets | |
| ● | Implicit interest rate in right-of-use operating leases | |
| ● | Uncertain tax positions | |
| ● | Valuation allowance on deferred tax assets |
Risks and Uncertainties
The Company operates in a highly competitive industry that is subject to intense market dynamics, shifting consumer demand, and economic fluctuations. The Company’s operations are exposed to significant financial, operational, and strategic risks, including potential business disruptions, supply chain constraints, and liquidity challenges.
In accordance with ASC 275, “Risks and Uncertainties,” the Company evaluates and discloses risks that could materially affect its financial condition, results of operations, and business outlook. Key factors contributing to variability in sales and earnings include:
| 1. | Industry Cyclicality (ASC 275-10-50-6) – The Company’s financial performance is affected by industry trends, seasonality, and shifts in market demand. | |
| 2. | Macroeconomic Conditions (ASC 275-10-50-8) – Economic downturns, inflationary pressures, interest rate changes, and geopolitical risks may impact consumer purchasing behavior and the Company’s revenue streams. | |
| 3. | Pricing Volatility (ASC 275-10-50-4) – The cost and availability of raw materials, supply chain disruptions, and competitive pricing pressures can lead to fluctuations in gross margins and profitability. |
Given these uncertainties, the Company faces challenges in accurately forecasting financial performance and may experience material risks affecting liquidity, business continuity, and long-term strategic growth. The Company continuously assesses these risks and implements measures to mitigate their potential impact.
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Fair Value of Financial Instruments
The Company accounts for financial instruments in accordance with ASC 820, Fair Value Measurements, which establishes a framework for measuring fair value and requires related disclosures. Fair value is defined 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. The fair value measurement is based on the Company’s principal market or, if none exists, the most advantageous market for the asset or liability.
Fair Value Hierarchy
ASC 820 requires the use of observable inputs whenever available and establishes a three-tier hierarchy for measuring fair value:
| ● | Level 1 – Quoted market prices (unadjusted) for identical assets or liabilities in active markets. | |
| ● | Level 2 – Observable inputs other than quoted prices in active markets, such as quoted prices for similar assets and liabilities or inputs that are directly or indirectly observable. | |
| ● | Level 3 – Unobservable inputs that require significant judgment, including management assumptions and estimates based on available market data. |
The classification of an asset or liability within the hierarchy is based on the lowest level of input that is significant to the fair value measurement. Level 3 valuations generally require more judgment and complexity, often involving a combination of cost, market, or income approaches, as well as assumptions about market conditions, pricing, and other factors.
Fair Value Determination and Use of External Advisors
The Company assesses the fair value of its financial instruments and, where appropriate, may engage external valuation specialists to assist in determining fair value. While management believes that recorded fair values are reasonable, they may not necessarily reflect net realizable values or future fair values.
Financial Instruments Carried at Historical Cost
The Company’s financial instruments—including cash, accounts receivable, accounts payable, and accrued expenses (including related party balances)—are recorded at historical cost. As of June 30, 2025 and December 31, 2024, respectively, the carrying amounts of these instruments approximated their fair values due to their short-term maturities.
Fair Value Option Under ASC 825
ASC 825-10, Financial Instruments, permits entities to elect the fair value option for certain financial assets and liabilities. This election is made on an instrument-by-instrument basis and is irrevocable unless a new election date occurs. If elected, unrealized gains and losses are recognized in earnings at each reporting date. The Company has not elected the fair value option for any of its outstanding financial instruments.
Cash and Cash Equivalents and Concentration of Credit Risk
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.
Investments
The Company accounts for available-for-sale (“AFS”) debt securities in accordance with FASB ASC 320, Investments—Debt and Equity Securities. These securities are recorded at fair value, with unrealized gains and losses recognized as a component of other comprehensive income (OCI) unless deemed other-than-temporary, per ASC 320-10-35-1.
Recognition of Gains, Losses, and Amortization
| ● | Realized gains and losses, including impairments, are recorded in net income in accordance with ASC 320-10-35-25. |
| ● | Cost basis for sales is determined using the first-in, first-out (“FIFO”) method, per ASC 320-10-35-4. |
| ● | Premiums and discounts on AFS debt securities are amortized using the straight-line method over the security’s life, in accordance with ASC 320-10-35-10. |
Impairment Assessment
The Company evaluates AFS debt securities for other-than-temporary impairment (“OTTI”) in accordance with ASC 320-10-35-33 to 35. The assessment considers:
| ● | The extent and duration of declines in fair value below amortized cost, |
| ● | The financial condition and creditworthiness of the issuer, and |
| ● | The Company’s intent and ability to hold the security until recovery. |
If an OTTI is identified, the impairment loss is recognized in earnings as the difference between the amortized cost and the fair value of the security, per ASC 320-10-35-34. The new fair value becomes the adjusted cost basis, and subsequent recoveries are not recognized in earnings (ASC 320-10-35-35).
Accounts Receivable
The Company accounts for accounts receivable in accordance with FASB ASC 310, Receivables. Receivables are recorded at their net realizable value, which represents the amount management expects to collect from outstanding customer balances (ASC 310-10-35-7).
The Company extends credit to customers based on an evaluation of their financial condition and other factors. The Company does not require collateral, and interest is not accrued on overdue accounts receivable (ASC 310-10-45-4).
Allowance for Doubtful Accounts
Management periodically assesses the collectability of accounts receivable and establishes an allowance for doubtful accounts as needed. The allowance is determined based on:
| ● | A review of outstanding accounts, | |
| ● | Historical collection experience, and | |
| ● | Current economic conditions (ASC 310-10-35-9). |
Accounts deemed uncollectible are written off against the allowance when determined to be uncollectible (ASC 310-10-35-10).
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Applicability of ASC 326
The Company has assessed the applicability of ASC 326, Financial Instruments—Credit Losses, which requires an expected credit loss model for financial assets measured at amortized cost. However, ASC 326 primarily applies to financial institutions and entities with long-term financing receivables.
Since the Company’s accounts receivable are short-term trade receivables that do not meet the scope requirements of ASC 326-20-15-2, it continues to apply the incurred loss model under ASC 310 for estimating credit losses.
Inventory
The Company accounts for inventory in accordance with FASB ASC 330, Inventory. Inventory consists solely of fuel and is stated at the lower of cost or net realizable value (“LCNRV”) using the FIFO method, as required by ASC 330-10-35-1.
Inventory Valuation and Reserve Assessment
Management assesses the recoverability of inventory each reporting period and establishes reserves for potential inventory write-downs when necessary. The Company evaluates factors such as:
| ● | Market conditions affecting fuel prices, | |
| ● | Net realizable value based on estimated selling price, and | |
| ● | Inventory turnover trends (ASC 330-10-35-2). |
Concentrations
The Company evaluates and discloses significant concentrations of risk in accordance with FASB ASC 275-10, Risks and Uncertainties. These risks may arise from customer concentrations, vendor reliance, geographic dependence, or other economic factors that could materially impact the Company’s financial position, results of operations, and cash flows.
A concentration exists when a single customer, supplier, or market accounts for a significant portion (typically greater than 10%) of the Company’s total revenues, accounts receivable, or vendor purchases (ASC 275-10-50-16).
Customer and Sales Concentrations
The Company’s revenue stream may be dependent on a limited number of key customers. A loss of any significant customer, a decline in demand from such customers, or a deterioration in their financial condition could negatively impact the Company’s future revenues and profitability.
Accounts Receivable Concentrations
The Company extends credit to customers based on their financial strength, payment history, and other relevant factors. A significant concentration of accounts receivable from a limited number of customers could expose the Company to credit risk and potential collection issues. The Company regularly evaluates the creditworthiness of its customers and may require advance payments, letters of credit, or other credit enhancements to mitigate risks.
Vendor and Supplier Concentrations
The Company relies on a limited number of vendors for certain key materials or services. A disruption in supply, changes in pricing, or financial instability of a major supplier could materially impact the Company’s ability to procure necessary materials, leading to increased costs, delays in production, or operational disruptions. The Company continuously assesses vendor relationships and explores alternative suppliers when necessary to mitigate supply chain risks.
Property and Equipment
Property and equipment are recorded at cost, net of accumulated depreciation, in accordance with ASC 360, “Property, Plant, and Equipment.” Depreciation is calculated using the straight-line method over the estimated useful lives of the assets.
Repairs and maintenance expenditures that do not materially extend the useful life of an asset are expensed as incurred. Significant improvements or upgrades that increase the asset’s productivity, efficiency, or useful life are capitalized.
Upon disposal or sale of property and equipment, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in the statement of operations, in accordance with ASC 360-10-40-5.
The Company evaluates the carrying value of property and equipment whenever events or changes in circumstances indicate that the asset may be impaired. If impairment indicators exist, the Company assesses recoverability based on the undiscounted future cash flows expected from the use and disposition of the asset. If the carrying amount exceeds the estimated recoverable amount, an impairment loss is recognized in accordance with ASC 360-10-35-17.
Impairment of Long-lived Assets including Internal Use Capitalized Software Costs
The Company evaluates the recoverability of long-lived assets, including identifiable intangible assets and internal-use capitalized software costs, in accordance with FASB ASC 360-10-35-15, Impairment or Disposal of Long-Lived Assets.
An impairment review is triggered when events or circumstances indicate that the carrying value of an asset group may not be recoverable. Factors considered include, but are not limited to:
| ● | Significant changes in expected performance compared to prior forecasts; | |
| ● | Changes in asset utilization, including discontinued or modified use; | |
| ● | Negative industry or economic trends that impact asset value; and | |
| ● | Strategic shifts in the Company’s business operations (ASC 360-10-35-21). |
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Impairment Assessment Process
When impairment indicators exist, the Company performs a recoverability test by comparing the undiscounted future cash flows expected to be generated from the use and ultimate disposition of the asset group to its carrying amount (ASC 360-10-35-17).
| ● | If the undiscounted cash flows exceed the carrying amount, no impairment is recognized. | |
| ● | If the undiscounted cash flows are less than the carrying amount, an impairment loss is recognized, measured as the excess of the carrying amount over the fair value of the asset (ASC 360-10-35-18). |
Internal-Use Software Considerations
For internal-use capitalized software, impairment is assessed under ASC 350-40-35, which requires evaluation when:
Impairment Results
For the six months ended June 30, 2025 and 2024, the Company did not record any impairment losses.
Original Issue Discounts (“OIDs”) and Other Debt Discounts
The Company accounts for OIDs and other debt discounts in accordance with FASB ASC 835-30, Interest—Imputation of Interest. These discounts are recorded as a reduction of the carrying amount of the related debt and are amortized to interest expense over the term of the debt using the effective interest method, unless the straight-line method is materially similar (ASC 835-30-35-2).
OIDs
For certain notes issued, the Company may provide the debt holder with an OID, which is recorded as a debt discount, reducing the face value of the note. The discount is amortized to interest expense over the term of the debt in the unaudited onsolidated statements of operations.
Stock and Other Equity Issued with Debt
The Company may issue common stock or other equity instruments in connection with debt issuance. When stock is issued, it is recorded at fair value and treated as a debt discount, reducing the carrying amount of the note. These discounts are amortized to interest expense over the life of the debt (ASC 470-20-25-2).
The combined debt discounts, including OID and stock-related discounts, cannot exceed the face amount of the debt (ASU 2020-06).
Debt Issuance Costs
Debt issuance costs, including fees paid to lenders or third parties, are capitalized as a debt discount and amortized to interest expense over the life of the debt in accordance with ASC 835-30-45-1. These costs are presented as a direct deduction from the carrying amount of the debt liability rather than as a separate asset (ASC 835-30-45-3).
Right of Use Assets and Lease Obligations
The Company accounts for ROU assets and lease liabilities in accordance with FASB ASC 842, Leases. These amounts reflect the present value of the Company’s estimated future minimum lease payments over the lease term, including any reasonably certain renewal options, discounted using a collateralized incremental borrowing rate (ASC 842-20-30-1).
The Company classifies its leases as either operating or finance leases based on the criteria outlined in ASC 842-10-25-2. The Company’s leases primarily consist of operating leases, which are included as ROU assets and operating lease liabilities on the consolidated balance sheet.
Short-Term Leases
The Company has elected the short-term lease exemption allowed under ASC 842-20-25-2, whereby leases with a term of 12 months or less are not recorded on the balance sheet. Instead, lease payments are expensed on a straight-line basis over the lease term.
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Lease Term and Renewal Options
In determining the lease term, the Company evaluates whether renewal options are reasonably certain to be exercised, as required by ASC 842-10-30-1. Factors considered include:
| ● | The useful life of leasehold improvements relative to the lease term; | |
| ● | The economic performance of the business at the leased location; | |
| ● | The comparative cost of renewal rates versus market rates; and | |
| ● | The presence of any significant economic penalties for non-renewal (ASC 842-10-55-26). |
If a renewal option is deemed reasonably certain to be exercised, the ROU asset and lease liability reflect those additional future lease payments. The Company’s operating leases contain renewal options with no residual value guarantees. Currently, management does not expect to exercise any renewal options, which are therefore excluded in the measurement of lease obligations.
Discount Rate and Lease Liability Measurement
Since the implicit rate in the leases is not readily determinable, the Company applies an incremental borrowing rate that represents the rate it would incur to borrow on a collateralized basis over a similar term and currency environment (ASC 842-20-30-3).
Lease Impairment
In accordance with ASC 360-10-35, the Company evaluates ROU assets for impairment indicators whenever events or changes in circumstances suggest the carrying amount may not be recoverable. No impairments of ROU assets were recognized for the years ended December 31, 2024, and 2023.
See Note 7 for details on third-party and related-party operating leases.
The Company recognizes revenue in accordance with FASB ASC 606, Revenue from Contracts with Customers, as amended by ASU 2014-09. Under ASC 606, revenue is recognized when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services.
The Company generates revenue from mobile fuel sales, which can be purchased as a one-time transaction or through a monthly membership. Revenue from fuel sales is recognized at the time of delivery, and membership revenue is recognized at the end of each month, reflecting the satisfaction of the performance obligation over time within a one-month membership cycle.
The Company follows the five-step revenue recognition model outlined in ASC 606-10-05-4:
| 1. | Identify the Contract with a Customer |
A contract exists when the following criteria are met, per ASC 606-10-25-1:
| ● | The contract creates enforceable rights and obligations between the Company and the customer. | |
| ● | The contract has commercial substance (i.e., it affects the Company’s cash flows). | |
| ● | The payment terms are identified, and the consideration is determinable. | |
| ● | It is probable that the Company will collect the consideration in exchange for the goods or services transferred. |
Contracts for mobile fuel sales and memberships meet these criteria. Collectability is assessed based on historical customer payment trends and credit risk in accordance with ASC 606-10-25-5.
| 2. | Identify the Performance Obligations in the Contract |
A performance obligation is a distinct good or service promised in the contract that is both capable of being distinct and distinct in the context of the contract, per ASC 606-10-25-19.
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The Company has determined that its contracts, based on sales type, contain two distinct performance obligations:
| ● | Fuel Sales – The delivery of fuel to a customer, with revenue recognized at the point of delivery. | |
| ● | Membership Fees – Monthly membership services, with revenue recognized over time within a one-month membership cycle, as the customer benefits from access to services throughout the period. |
These performance obligations are not bundled or combined, as each service is separately identifiable, in accordance with ASC 606-10-25-22.
| 3. | Determine the Transaction Price |
The transaction price is the amount of consideration the Company expects to receive in exchange for transferring goods or services to the customer, per ASC 606-10-32-2.
The Company’s transaction price considerations include:
| ● | Fixed consideration – Prices are clearly stated and do not vary based on performance. | |
| ● | No variable consideration – The Company does not formally offer refunds, rebates, or pricing incentives. During the years ended December 31, 2024 and 2023, respectively, the Company granted insignificant discounts of less than 1% of total revenues. | |
| ● | No financing component – Payments are made upon fuel delivery or at the end of the monthly membership cycle, per ASC 606-10-32-15. |
| 4. | Allocate the Transaction Price to Performance Obligations |
For contracts with a single performance obligation, the entire transaction price is allocated to that obligation, per ASC 606-10-32-40.
If a contract included multiple performance obligations, the transaction price would be allocated based on relative standalone selling prices (“SSP”) as required by ASC 606-10-32-28. The standalone selling price is determined based on observable sales data.
The Company’s fuel sales and memberships each have a distinct standalone selling price, eliminating the need for allocation adjustments.
| 5. | Recognize Revenue When (or As) Performance Obligations Are Satisfied |
Revenue is recognized at the point in time when control over a product or service is transferred to the customer, in accordance with ASC 606-10-25-30.
| ● | Fuel Sales: Control transfers at the time of fuel delivery, at which point revenue is recognized. | |
| ● | Membership Fees: Revenue is recognized over time within a one-month cycle, as customers receive continuous access to fuel delivery services throughout the month. |
The Company does not recognize revenue based on customer invoicing dates; instead, it ensures revenue recognition aligns with the actual satisfaction of performance obligations per ASC 606-10-25-31.
Principal vs. Agent Considerations
In evaluating whether the Company acts as a principal or an agent in its fuel sales transactions, the Company applies the guidance in ASC 606-10-55-36 through 55-40. The Company has determined that it is the principal in these transactions based on the following factors:
| ● | The Company controls the fuel before it is transferred to the customer. | |
| ● | The Company has discretion in pricing, as it sets the selling price of fuel. | |
| ● | The Company is responsible for fulfilling the obligation of delivering fuel to the customer. | |
| ● | The Company is exposed to inventory risk, as it procures and holds fuel before sale. |
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Based on these factors, the Company recognizes revenue on a gross basis, as it is the principal in fuel sales transactions in accordance with ASC 606-10-55-37A.
Summary of Compliance with ASC 606 and ASU Updates
| Revenue Stream | Performance Obligation | Recognition Timing | Consideration Type | |||
| Fuel Sales | Fuel Delivery | At time of delivery | Fixed price per gallon | |||
| Membership Fees | Monthly access to fuel services | Over time (one-month cycle) | Fixed monthly subscription |
Contract Liabilities (Deferred Revenue)
Contract liabilities represent amounts received from customers before the satisfaction of performance obligations, which are subsequently recognized as revenue upon fulfillment.
Under ASC 606-10-45-2, the Company discloses contract balances related to deferred revenue when applicable. Any prepayments received for fuel deliveries or memberships are classified as contract liabilities until revenue recognition criteria are met.
Cost of Sales
Cost of sales consists of direct expenses incurred in the delivery of the Company’s products and services. These costs primarily include:
| ● | Fuel Costs – The cost of procuring fuel for resale, including fluctuations in market pricing, supplier agreements, and transportation expenses. |
| ● | Driver Wages and Benefits – Compensation, payroll taxes, and employee benefits associated with the Company’s delivery personnel. |
Cost of sales is recognized in the same period as the related revenue in accordance with FASB ASC 705, Cost of Sales and Services. The Company regularly evaluates its cost structure to ensure efficient fuel procurement and operational cost management.
Fuel costs include all costs incurred to acquire fuel, including supporting transportation costs prior to delivery to customers. Fuel costs do not include any depreciation of property and equipment as there are no significant amounts that could be attributed to fuel costs. Accordingly, depreciation and amortization are separately classified in the consolidated statements of operations and are not recorded in cost of sales.
Income Taxes
The Company accounts for income taxes using the asset and liability method prescribed by FASB ASC 740, Income Taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences of differences between the financial reporting and tax bases of assets and liabilities. These amounts are measured using enacted tax rates expected to apply in the periods when temporary differences reverse (ASC 740-10-30-8).
The effect of a change in tax rates on deferred tax balances is recognized as income or expense in the period that includes the enactment date (ASC 740-10-45-4).
Uncertain Tax Positions
The Company evaluates uncertain tax positions in accordance with ASC 740-10-25, which requires that a tax position be recognized in the financial statements only if it is more likely than not (greater than 50% likelihood) to be sustained upon examination by tax authorities.
As of December 31, 2024 and 2023, respectively, the Company had no uncertain tax positions that qualified for recognition or disclosure in the financial statements (ASC 740-10-50-15).
The Company also recognizes interest and penalties related to uncertain tax positions in other expense in the consolidated statement of operations (ASC 740-10-45-25). No interest and penalties were recorded for the years ended December 31, 2024 and 2023.
Valuation of Deferred Tax Assets
The Company’s deferred tax assets include certain future tax benefits, such as net operating losses (NOLs), tax credits, and deductible temporary differences. Under ASC 740-10-30-5, a valuation allowance is required if it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.
The Company reviews the realizability of deferred tax assets on a quarterly basis, or more frequently if circumstances warrant, considering both positive and negative evidence (ASC 740-10-30-16).
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Factors Considered in Valuation Allowance Assessment
The Company evaluates multiple factors in determining whether a valuation allowance is necessary, including:
| ● | Historical earnings trends (cumulative pre-tax income or losses in the most recent three-year period) | |
| ● | Future financial projections, including expected taxable income based on long-term estimates of business performance and market conditions | |
| ● | Statutory carryforward periods for net operating losses and other deferred tax assets | |
| ● | Prudent and feasible tax planning strategies that could impact the realization of deferred tax assets | |
| ● | Nature and predictability of temporary differences and the timing of their reversal | |
| ● | Sensitivity of financial forecasts to external factors such as commodity prices, market demand, and operational risks |
While cumulative three-year losses are a strong indicator that a valuation allowance may be needed, ASC 740-10-30-23 states that a valuation allowance determination is not solely based on past losses—all available positive and negative evidence must be considered.
Valuation Allowance Determination
At December 31, 2024 and 2023, respectively, the Company recorded a full valuation allowance against its deferred tax assets, resulting in a net carrying amount of $0. This determination was based on cumulative losses in recent years and the lack of sufficient positive evidence to support the realization of deferred tax assets in the near term (ASC 740-10-30-24).
The Company will continue to evaluate its valuation allowance each reporting period and will recognize deferred tax assets in the future if sufficient positive evidence emerges to support their realization.
Advertising Costs
Advertising costs are expensed as incurred, in accordance with ASC 720-35, “Advertising Costs.” These costs are recognized as operating expenses in the period in which they are incurred and are classified within general and administrative expenses in the consolidated statements of operations.
The Company does not capitalize direct-response advertising costs, as they do not meet the criteria for deferral under ASC 720-35-25-1.
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with ASC 718, “Compensation – Stock Compensation,” using the fair value-based method. Under this guidance, compensation cost is measured at the grant date based on the fair value of the award and is recognized over the requisite service period, typically the vesting period.
ASC 718 establishes accounting standards for transactions in which an entity exchanges its equity instruments for goods or services. It also applies to transactions where an entity incurs liabilities based on the fair value of its equity instruments or liabilities that may be settled using equity instruments.
In compliance with ASU 2018-07, the Company applies the fair value method for equity instruments granted to both employees and non-employees, aligning non-employee share-based payment accounting with that of employees. The fair value of stock-based compensation is determined as of the grant date or the measurement date (i.e., when the performance obligation is completed) and is recognized over the vesting period in accordance with ASC 718.
The Company determines the fair value of stock options using the Black-Scholes option pricing model, considering the following key assumptions:
| ● | Exercise price – The agreed-upon price at which the option can be exercised. | |
| ● | Expected dividends – The anticipated dividend yield over the expected life of the option. | |
| ● | Expected volatility – Based on historical stock price fluctuations. | |
| ● | Risk-free interest rate – Derived from U.S. Treasury securities with similar maturities. | |
| ● | Expected life of the option – Estimated based on historical exercise patterns and contractual terms. |
Additionally, the Company follows the guidance under ASU 2016-09, which introduced amendments to simplify certain accounting aspects of share-based compensation, including:
| ● | The treatment of tax benefits and tax deficiencies in income tax reporting. | |
| ● | The option to recognize forfeitures as they occur rather than estimating them upfront. | |
| ● | Cash flow classification for certain tax-related transactions. |
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The Company continues to evaluate and apply the latest Accounting Standards Updates (ASUs) and interpretive releases related to stock-based compensation to ensure compliance with evolving financial reporting requirements.
Stock Warrants
In connection with certain financing transactions (debt or equity), consulting arrangements, or strategic partnerships, the Company may issue warrants to purchase shares of its common stock. These standalone warrants are not puttable or mandatorily redeemable by the holder and are classified as equity instruments in accordance with ASC 480, “Distinguishing Liabilities from Equity.”
The fair value of warrants issued for compensation purposes is measured using the Black-Scholes option pricing model, consistent with the guidance in ASC 718-10-30. However, if warrants meet the definition of derivative liabilities under ASC 815, “Derivatives and Hedging,” fair value is determined using a binomial pricing model or other appropriate valuation techniques, as required by ASC 815-40-15.
Accounting Treatment of Warrants
| ● | Warrants issued in conjunction with common stock issuance are initially recorded at fair value as a reduction in Additional Paid-In Capital (APIC), in accordance with ASC 815-40-25. |
| ● | Warrants issued for services are recorded at fair value and expensed over the requisite service period or immediately upon issuance if no service period exists, as per ASC 718-10-25. |
| ● | Warrants classified as liabilities due to settlement features or pricing adjustments are remeasured at fair value each reporting period, with changes recognized in earnings, following ASC 815-40-35. |
Basic and Diluted Earnings (Loss) per Share and Reverse Stock Split
The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings Per Share.” The calculation of basic EPS follows the two-class method and is determined by dividing net earnings available to common shareholders by the weighted average number of common shares outstanding, including certain other shares committed to be issued.
Basic Earnings Per Share (EPS)
Basic EPS is calculated using the two-class method, as prescribed by ASC 260-10-45-60, and is computed as follows:
| ● | Net earnings available to common shareholders represent net earnings to common shareholders, adjusted for the allocation of earnings to participating securities. | |
| ● | Losses are not allocated to participating securities in accordance with ASC 260-10-45-61. | |
| ● | The denominator includes common shares outstanding and certain other shares committed to be issued, such as restricted stock and restricted stock units (“RSUs”), for which no future service is required. |
Diluted Earnings Per Share (EPS)
Diluted EPS is calculated under both the two-class method and the treasury stock method, and the more dilutive result is reported, as required by ASC 260-10-45-45.
| ● | Diluted EPS is computed by taking the sum of: |
| ○ | Net earnings available to common shareholders | |
| ○ | Dividends on preferred shares | |
| ○ | Dividends on dilutive mandatorily redeemable convertible preferred shares | |
| ○ | Divided by the weighted average number of common shares outstanding and certain other shares committed to be issued, plus all dilutive common stock equivalents during the period, such as: |
| ■ | Stock options | |
| ■ | Warrants | |
| ■ | Convertible preferred stock | |
| ■ | Convertible debt |
| ● | Preferred shares and unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) qualify as participating securities under the two-class method, per ASC 260-10-45-62. |
Net Loss Per Share Considerations
In computing net loss per share, unvested shares of common stock are excluded from the denominator, as required by ASC 260-10-45-48.
Participating Securities & Share-Based Compensation
Restricted stock and RSUs granted as part of share-based compensation contain nonforfeitable rights to dividends and dividend equivalents, respectively. Therefore:
| ● | Before the requisite service is rendered for the right to retain the award, these instruments meet the definition of a participating security under ASC 260-10-45-59. | |
| ● | RSUs granted under an executive compensation plan, however, are not considered participating securities because the rights to dividend equivalents are forfeitable (ASC 718-10-25). |
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Related Parties
The Company defines related parties in accordance with ASC 850, “Related Party Disclosures,” and SEC Regulation S-X, Rule 4-08(k). Related parties include entities and individuals that, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company.
Related parties include, but are not limited to:
| ● | Principal owners of the Company. | |
| ● | Members of management (including directors, executive officers, and key employees). | |
| ● | Immediate family members of principal owners and members of management. | |
| ● | Entities affiliated with principal owners or management through direct or indirect ownership. | |
| ● | Entities with which the Company has significant transactions, where one party has the ability to exercise control or significant influence over the management or operating policies of the other. |
A party is considered related if it has the ability to control or significantly influence the management or operating policies of the Company in a manner that could prevent either party from fully pursuing its own separate economic interests.
The Company discloses all material related party transactions, including:
| ● | The nature of the relationship between the parties. | |
| ● | A description of the transaction(s), including terms and amounts involved. | |
| ● | Any amounts due to or from related parties as of the reporting date. | |
| ● | Any other elements necessary for a clear understanding of the transactions’ effects on the financial statements. |
Disclosures are made in accordance with ASC 850-10-50-1 through 50-6 and SEC Regulation S-X, Rule 4-08(k), which requires registrants to disclose material related party transactions and their effects on the financial position and results of operations.
| ● | See Note 1, which discusses the common control merger between the Company and Next Holding, on February 13, 2025. | |
| ● | See Note 4 which includes accrued liabilities – related parties. | |
| ● | See Notes 5 and 12 for a discussion of related party debt. | |
| ● | See Note 7 regarding right-of-use operating lease with the Company’s Chief Technology Officer. | |
| ● | See Note 8 for a discussion of equity transactions with certain officers and directors. |
Recent Accounting Standards
ASU 2022-02 – Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures
In March 2022, the FASB issued ASU 2022-02, which:
| ● | Eliminates the troubled debt restructuring (TDR) model for creditors under ASC 310, “Receivables.” | |
| ● | Requires enhanced vintage disclosures related to credit losses, including gross write-offs by year of origination. | |
| ● | Updates the accounting guidance under ASC 326, “Financial Instruments – Credit Losses,” to enhance disclosures regarding loan refinancings and restructurings for borrowers experiencing financial difficulty. |
The Company adopted ASU 2022-02 on January 1, 2023. The adoption did not have a material impact on the Company’s consolidated financial statements.
ASU 2023-07 – Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures
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In November 2023, the FASB issued ASU 2023-07, which enhances disclosure requirements for reportable segments by:
| ● | Requiring enhanced disclosures of significant segment expenses. | |
| ● | Aligning segment reporting requirements with information regularly reviewed by management. |
The Company adopted ASU 2023-07 on January 1, 2024. The adoption did not have a material impact on the Company’s consolidated financial statements.
Recently Issued Accounting Standards Not Yet Adopted
ASU 2023-09 – Income Taxes (Topic 740): Improvements to Income Tax Disclosures
In December 2023, the FASB issued ASU 2023-09, which enhances income tax disclosure requirements by:
| ● | Standardizing and disaggregating rate reconciliation categories. | |
| ● | Requiring disclosure of income taxes paid by jurisdiction. |
This ASU is effective for annual periods beginning after December 15, 2024, and may be applied on a prospective or retrospective basis. Early adoption is permitted.
The Company is currently assessing the impact of ASU 2023-09 on its income tax disclosures and reporting requirements.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). This standard requires additional disclosures of certain expenses, including purchases of inventory, employee compensation, depreciation, intangible asset amortization, and other specific expense categories. This standard also requires disclosure of the total amount of selling expenses and the Company’s definition of selling expenses. This update is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. We are evaluating the impact this update will have on our annual disclosures; however, it will not impact our financial condition, results of operations, or cash flows.
Other Accounting Standards Updates
The FASB has issued various technical corrections and industry-specific updates that are not expected to have a material impact on the Company’s consolidated financial position, results of operations, or cash flows. These reclassifications had no impact on the Company’s consolidated results of operations, stockholders’ equity, or cash flows.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2025. Based upon such evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2025, the Company’s disclosure controls and procedures are not effective to ensure that information required to be disclosed by us in report that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer, as appropriate to allow timely decisions regarding required disclosure.
Specifically, we lack a sufficient number of accounting personnel to adequately segregate duties, perform timely reviews, and maintain appropriate oversight over financial reporting. In order to remedy this situation, we would need to hire additional staff to provide greater segregation of duties.
Changes in Internal Control Over Financial Reporting
There were no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or 15d-15 of the Exchange Act that occurred during the quarter ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. Management’s conclusion regarding the effectiveness of disclosure controls and procedures was revised based on its reassessment of existing resource constraints.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we are involved in various claims and legal actions arising in the ordinary course of business. To the knowledge of our management, there are no legal proceedings currently pending against us which we believe would have a material effect on our business, financial position or results of operations and, to the best of our knowledge, there are no such legal proceedings contemplated or threatened.
ITEM 1A. RISK FACTORS
As a smaller reporting company, the Company is not required to disclose material changes to the risk factors that were contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, as updated from time to time.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuance of Exchange Shares
At the Next Closing, the Company issued 100,000,000 Exchange Shares, 50,000,000 of which vested as of February 13, 2025 (the date of the Next Closing), and 50,000,000 of which were subject to vesting or forfeiture, as consideration paid to the Next Holding Shareholders.
Series B Convertible Preferred Stock – Distribution – Related Party
On February 13, 2025, immediately prior to the consummation of the common control merger, the Company effectuated a non-cash distribution of 1,400,000 shares of Series B convertible preferred stock to its Chief Executive Officer, a related party. The transaction was executed in fulfillment of a previously established arrangement between the CEO and NextNRG LLC, a wholly owned subsidiary of the Company and former holder of the Series B shares. Under this arrangement, the CEO had advanced personal funds to NextNRG LLC to facilitate the original acquisition of the shares on behalf of the Company.
Stock Issued for Cash and Warrants – Public Offering
On February 18, 2025, the Company sold 5,000,000 shares of common stock for gross proceeds of $15,000,000 ($3/share). In connection with this offering, the Company paid direct offering costs of $1,538,914, resulting in net proceeds of $13,461,086.
Additionally, the Company granted the underwriter the option to purchase up to 750,000 additional over-allotment shares of common stock at $3/share, for a period of 45 days (through March 3, 2025). In connection with this option, the Company issued an additional 75,378 shares of common stock for gross proceeds of $226,134 ($3/share). In connection with this offering, the Company paid direct offering costs of $18,091, resulting in net proceeds of $208,043.
Stock Issued for Services
During the quarter ended June 30, 2025, the Company issued 410,774 shares of common stock to consultants for services rendered, having a fair value of $1,468,391 ($2.72 - $3.90/share), based upon the quoted closing trading price.
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Stock Issued as Loan Extension Fee
In connection with the extension of a loan, the Company was required to pay a fee of $150,000 in common stock. The Company issued 41,437 shares of common stock ($3.62/share).
Series A and B Convertible Preferred Stock – Preferred Stock Dividends Payable in Common Stock
In accordance with the terms of the Company’s Series A and B convertible preferred stock, the Company is required to accrue dividends on a quarterly basis. Similar to the Series A and B convertible preferred stock, dividends are accrued using a fixed conversion price. At December 31, 2024, the Company had accrued dividends totaling $258,271. In the six months ended June 30, 2025, the Company issued 93,576 shares of common stock to settle the outstanding dividends due.
The issuance of the above securities was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D promulgated thereunder.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
(a) None.
(b) There have been no material changes to the procedures by which security holders may recommend nominees to the Company’s Board of Directors since the Company last provided disclosure in response to the requirements of Item 407(c)(3) of Regulation S-K.
(c)
During the registrant’s last fiscal quarter, no director or officer
ITEM 6. EXHIBITS
| * | Filed herewith. |
| ** | Furnished herewith. |
| † | Management contracts and compensation plans and arrangements. |
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, thereto duly authorized.
| NEXTNRG, INC. | ||
| Dated: August 14, 2025 | By: | /s/ Michael D. Farkas |
| Michael D. Farkas | ||
| Chief Executive Officer (principal executive officer) | ||
| Dated: August 14, 2025 | By: | /s/ Joel Kleiner |
| Joel Kleiner | ||
| Chief Financial Officer (principal financial officer and principal accounting officer) | ||
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