NXXT 10-Q
Nextnrg, Inc. (NXXT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission
File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s
telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||
Indicate
by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. ☒
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and ‘‘emerging growth company’’ in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| ☒ | Smaller reporting company filer | |||
| Emerging growth company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
As of October 31, 2022, the registrant had shares of common stock, par value $0.0001 per share, outstanding.
EZFILL HOLDINGS, INC.
TABLE OF CONTENTS
| Page No. | ||
| PART I | FINANCIAL INFORMATION | 3 |
| ITEM 1. | FINANCIAL STATEMENTS | 3 |
| Condensed Consolidated Balance Sheets | 3 | |
| Condensed Consolidated Statements of Operations | 4 | |
| Condensed Consolidated Statements of Stockholders’ Equity (Deficit) | 5 | |
| Condensed Consolidated Statements of Cash Flows | 6 | |
| Notes to Condensed Consolidated Financial Statements | 7 | |
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 17 |
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 20 |
| ITEM 4. | CONTROLS AND PROCEDURES | 21 |
| PART II | OTHER INFORMATION | 21 |
| ITEM 1. | LEGAL PROCEEDINGS | 21 |
| ITEM 1A. | RISK FACTORS | 21 |
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 21 |
| ITEM 6. | EXHIBITS | 22 |
| SIGNATURES | 24 | |
| 2 |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
EzFill Holdings, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
| September 30, 2022 | December 31, 2021 | |||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Investment in debt securities | ||||||||
| Accounts receivable, net of allowance for doubtful accounts of $ | ||||||||
| Prepaid expenses and other | ||||||||
| Inventory | ||||||||
| Total Current Assets | ||||||||
| Fixed assets, net of accumulated depreciation of $ | ||||||||
| Goodwill and other indefinite lived intangibles | ||||||||
| Other intangible assets, net of accumulated amortization of $ | ||||||||
| Operating lease right of use asset | ||||||||
| Other assets | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity (Deficit) | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Borrowings under revolving line of credit | ||||||||
| Loans payable | ||||||||
| Operating lease liabilities | ||||||||
| Total Current Liabilities | ||||||||
| Loans payable, net of current portion | ||||||||
| Operating lease liabilities, net of current portion | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ Equity | ||||||||
| Preferred stock, $ par value; shares authorized; shares issued and outstanding | ||||||||
| Common stock, $ par value; shares authorized; and shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
The accompanying notes are an integral part of the consolidated financial statements.
| 3 |
EzFill Holdings, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| REVENUES | ||||||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| TOTAL REVENUES | ||||||||||||||||
| COSTS & EXPENSES | ||||||||||||||||
| Cost of sales | ||||||||||||||||
| Operating expenses | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| TOTAL COSTS AND EXPENSES | ||||||||||||||||
| OPERATING LOSS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| OTHER INCOME AND EXPENSES | ||||||||||||||||
| Interest income | ||||||||||||||||
| Other income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| LOSS BEFORE INCOME TAXES | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| PROVISION FOR INCOME TAXES | ||||||||||||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| NET LOSS PER SHARE | ||||||||||||||||
| Basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic and diluted weighted average number of common shares outstanding | ||||||||||||||||
| Comprehensive Loss: | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Other comprehensive loss: | ||||||||||||||||
| Change in fair value of debt securities | ( | ) | ||||||||||||||
| Total comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
The accompanying notes are an integral part of the consolidated financial statements.
| 4 |
EzFill Holdings, Inc.
Condensed Consolidated Statements of Stockholders’ Equity (Deficit)
(Unaudited)
| Accumulated | Total | |||||||||||||||||||||||||||||||
| Preferred stock | Common stock | Additional Paid-in | Accumulated | Other Comprehensive | Stockholder’s Equity | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Loss | (Deficit) | |||||||||||||||||||||||||
| Balance December 31, 2021 | $ | $ | $ | $ | ( | ) | ( | ) | ||||||||||||||||||||||||
| Stock based compensation | — | |||||||||||||||||||||||||||||||
| Consideration for acquisition | — | |||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance March 31, 2022 | $ | $ | $ | $ | ( | ) | ( | ) | $ | |||||||||||||||||||||||
| Stock based compensation | — | |||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance June 30, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Stock based compensation | - | |||||||||||||||||||||||||||||||
| Other comprehensive loss | - | - | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance September 30, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Preferred stock | Common stock | Additional Paid-in | Accumulated | Accumulated Other Comprehensive | Total Stockholder’s Equity | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Loss | (Deficit) | |||||||||||||||||||||||||
| Balance December 31, 2020 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||
| Stock based compensation | — | |||||||||||||||||||||||||||||||
| Options granted | — | — | ||||||||||||||||||||||||||||||
| Debt discount | — | |||||||||||||||||||||||||||||||
| Issuance of acquisition shares | — | |||||||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance March 31, 2021 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||
| Stock based compensation | — | |||||||||||||||||||||||||||||||
| Options granted | — | — | ||||||||||||||||||||||||||||||
| Sale of shares | — | |||||||||||||||||||||||||||||||
| Issuance of shares for technology | — | |||||||||||||||||||||||||||||||
| Issuance of bonus shares | — | |||||||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance June 30, 2021 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||
| Initial public offering, net of expenses | ||||||||||||||||||||||||||||||||
| Stock based compensation | — | |||||||||||||||||||||||||||||||
| Options granted | — | — | ||||||||||||||||||||||||||||||
| Issuance of acquisition shares | — | |||||||||||||||||||||||||||||||
| Issuance of bonus and settlement shares | — | |||||||||||||||||||||||||||||||
| Warrants and shares to lender | — | |||||||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance September 30, 2021 | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
| 5 |
EzFill Holding, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock based compensation | ||||||||
| Warrant and shares to lender | ||||||||
| Depreciation and amortization | ||||||||
| Amortization of bond premium and realized loss on investments | ||||||||
| Amortization of debt discount | ||||||||
| Bad debt expense | ||||||||
| PPP loan forgiveness | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventory | ( | ) | ||||||
| Prepaid expenses and other | ( | ) | ||||||
| Prepaid expenses and deferred offering costs | ||||||||
| Operating lease assets and liabilities | ||||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Accounts payable and accrued expenses - related party | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Maturity of debt securities | ||||||||
| Acquisition of business | ( | ) | ||||||
| Acquisition of fixed assets | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from Initial Public Offering | ||||||||
| Initial Public Offering expenses | ( | ) | ||||||
| Borrowings under line of credit | ||||||||
| Proceeds from issuance of debt and loans | ||||||||
| Proceeds from issuance of related party debt | ||||||||
| Proceeds from issuance of common stock | ||||||||
| Repayment of debt | ( | ) | ( | ) | ||||
| Repayment of related party debt | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Net change in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents cash at end of period | $ | $ | ||||||
| Noncash investing and financing activity: | ||||||||
| Debt discount | $ | $ | ||||||
| Issuance of acquisition, bonus and settlement shares | $ | $ | ||||||
| Shares issued for technology | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | $ | $ | ||||||
The accompanying notes are an integral part of the consolidated financial statements.
| 6 |
EzFill Holdings, Inc.
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2022 and 2021
(unaudited)
(1) Nature of Organization and Summary of Significant Accounting Policies
Nature of Organization
EzFill Holdings, Inc. (the Company) was incorporated on March 28, 2019, in the State of Delaware and operates in South Florida providing an on-demand mobile gas delivery service. Its wholly owned subsidiary Neighborhood Fuel Holdings, LLC is inactive.
Unaudited Interim Financial Statements
The Company has prepared these financial statements in accordance with GAAP for interim financial statements. Accordingly, these statements do not include all information and footnote disclosures required for annual statements. While management believes the disclosures presented are adequate for interim reporting, these interim financial statements should be read in conjunction with the consolidated audited financial statements and notes thereto as of and for the year ended December 31, 2021, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the Securities and Exchange Commission on March 9, 2022. In the opinion of management, all adjustments and eliminations, consisting of normal recurring adjustments, necessary for a fair representation of the Company’s financial statements for the interim period reported, have been included. The results for the nine months ended September 30, 2022, are not necessarily indicative of results to be expected for the year ending December 31, 2022, or for any other interim period or for any future year.
Use of Estimates
The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. The significant estimates and assumptions made by management include allowance for doubtful accounts, valuation allowance for deferred tax assets, depreciation lives of property and equipment, recoverability of long-lived assets, fair value of equity instruments and the assumptions used in Black-Scholes valuation models related to stock options and warrants. Actual results could differ from those estimates as the current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions.
Cash and Cash Equivalents
The
Company considers all highly liquid securities with original maturities of three months or less when acquired, to be cash equivalents.
At September 30, 2022, and December 31, 2021, the Company had $
Investments
Available-for-sale debt securities are recorded at fair value with the net unrealized gains and losses (that are deemed to be temporary) reported as a component of other comprehensive income (loss). Realized gains and losses and charges for other-than-temporary impairments are included in determining net income, with related purchase costs based on the first-in, first-out method. The Company evaluates its available-for-sale-investments for possible other than-temporary impairments by reviewing factors such as the extent to which, and length of time, an investment’s fair value has been below the Company’s cost basis, the issuer’s financial condition, and the Company’s ability and intent to hold the investment for sufficient time for its market value to recover. For impairments that are other-than temporary, an impairment loss is recognized in earnings equal to the difference between the investment’s cost and its fair value at the balance sheet date of the reporting period for which the assessment is made. The fair value of the investment then becomes the new amortized cost basis of the investment, and it is not adjusted for subsequent recoveries in fair value.
| 7 |
The following is a summary of the unrealized gains, losses, and fair value by investment type as of September 30, 2022:
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
| Corporate bonds | $ | $ | $ | $ | ||||||||||||
Accounts Receivable
The
Company reviews accounts receivable periodically for collectability and establishes an allowance for doubtful accounts and records bad
debt expense when deemed necessary. The Company records an allowance for doubtful accounts that is based on historical trends, customer
knowledge, any known disputes, and considers the aging of the accounts receivable balances combined with management’s estimate
of future potential recoverability. Accounts are written off against the allowance after all attempts to collect a receivable have failed.
At September 30, 2022, and December 31, 2021, the allowance was $
Inventory
Inventory
is valued at the lower of the inventory’s cost or market using the first-in, first-out method. Management compares the cost of
inventory with its net realizable value and an allowance is made to write down inventory to net realizable value, if lower. Inventory
consists solely of fuel. At September 30, 2022, and December 31, 2021, the allowance was $
Concentrations
Major Customers
For
the three months ended September 30, 2022, and 2021, the Company had one customer that made up approximately
The
Company had two customers that made up
Major Vendors
The Company purchases substantially all of its fuel from two vendors.
Operating Leases
The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities in our consolidated balance sheets.
ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company uses an incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The lease payments used to determine the Company’s operating lease asset may include lease incentives and stated rent increases. Our lease term may include the option to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
| 8 |
Advertising Costs
Advertising
costs are expensed as incurred. The Company incurred advertising costs for the three months ended September 30, 2022, and 2021 of $
Income Taxes
The Company accounts for income taxes in accordance with ASC 740, Income Taxes, (“ASC 740”) which prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim period, disclosure and transition.
Basic loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur if stock options or other contracts to issue common stock were exercised or converted during the period. FASB ASC 260, Earnings per Share, requires a dual presentation of basic and diluted earnings per share. Any instruments that would have an anti-dilutive effect have been excluded from the computation of earnings per share. The following potential common shares were excluded from the calculation of diluted net loss per share for the periods indicated because including them would have had an anti-dilutive effect:
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| Description | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Stock options | ||||||||||||||||
(2) Liquidity
The
Company’s financial statements have been prepared in conformity with accounting principles generally accepted in the United States
of America, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company
has sustained net losses since inception and does not have sufficient revenues and income to fully fund the operations. As a result,
the Company has relied on equity and debt financings to fund its activities to date. For the quarter ended September 30, 2022, the Company
had a net loss of $
In
September 2021, the Company completed its Initial Public Offering and raised $
| 9 |
(3) Related Party Transactions
During
the nine months ended September 30, 2021, Company issued notes payable to related parties totaling $
During the nine months ended September 30, 2021, the Company issued shares to an executive as a signing bonus and recorded related stock compensation expense of $ and issued signing shares to directors and recorded related stock compensation expense of $.
During the nine months ended September 30, 2022, the Company issued shares of restricted stock and stock options to executives. Included in these amounts are shares of stock and stock options granted to two former executives for which vesting was accelerated upon their termination. The Company also granted a total of restricted shares to directors during the nine months ended September 30, 2022. The aforementioned grants were made pursuant to the Company’s 2020 Incentive Compensation Plan.
The
Company entered into a consulting agreement, dated November 18, 2020, with Balance Labs, Inc. Pursuant to the Consulting Agreement, Balance
Labs is providing consulting services including assisting with the Company’s IPO and assisting with introductions to, and assistance
with, negotiating and entering agreements with potential fleet, residential, marine, and corporate customers that Balance Labs has relationships
with. Balance Labs is also assisting with the Company’s expansion efforts. Under the Consulting Agreement, in payment of services
that Balance Labs had already provided, the Company issued Balance Labs shares of its common stock in November 2020. Upon the
completion of the Company’s IPO, the Company made a one-time payment of $
The
Company is party to a technology license agreement with Fuel Butler LLC, which is owned
(4) Fixed Assets
Fixed assets consisted of the following:
| Description | September 30, 2022 | December 31, 2021 | ||||||
| Fixed assets: | ||||||||
| Equipment | $ | $ | ||||||
| Leasehold improvements | ||||||||
| Vehicles | ||||||||
| Office furniture | ||||||||
| Office equipment | ||||||||
| Vehicle construction in process | ||||||||
| Total fixed assets | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Fixed assets, net | $ | $ | ||||||
Depreciation
expense totaled $
| 10 |
(5) Intangible Assets
Intangible assets consisted of the following:
| Description | September 30, 2022 | December 31, 2021 | ||||||
| Indefinite lived intangible assets: | ||||||||
| Domain name | $ | $ | ||||||
| Goodwill | $ | $ | ||||||
| Total indefinite lived intangible assets | $ | $ | ||||||
| Other intangible assets: | ||||||||
| Trademarks | $ | $ | ||||||
| Software | ||||||||
| Customer list | ||||||||
| Non-compete | ||||||||
| Loading rack license | ||||||||
| Technology license | ||||||||
| Total other intangible assets | $ | $ | ||||||
| Accumulated amortization | ( | ) | ( | ) | ||||
| Total other intangible assets, net | $ | $ | ||||||
On April 7, 2021, the Company entered into a Technology License Agreement with Fuel Butler LLC (“Licensor”), under which the Company licensed certain proprietary technology. Under the terms of the license, the Company issued shares of its common stock to the Licensor upon signing. The Company also issued shares to the Licensor in May 2021 upon the filing of a patent application related to the licensed technology. Upon completion of the Company’s IPO, shares were issued to the Licensor. The Company will issue up to additional shares to the Licensor upon the achievement of certain milestones. In addition, the Company has granted stock options for shares at an exercise price of $ per share that will become exercisable for three years after the end of the fiscal year in which certain sales levels are achieved using the licensed technology. The Company has the option for four years after the achievement of certain milestones to either acquire the technology or acquire the Licensor for the purchase price of of its common shares. Until the Company exercise one of these options, it will share with the Licensor 50% of pre-revenue costs and 50% of the net revenue, as defined, from the use of the technology.
See Note 11 for details of intangibles from an acquisition during the nine months ended September 30, 2022.
Amortization
expense on intangible assets totaled $
Future amortization schedule for intangible assets as of September 30, 2022, is as follows:
| 2022 (October to December) | |||||
| 2023 | |||||
| 2024 | |||||
| 2025 | |||||
| 2026 | |||||
| 2027 | |||||
| TOTAL | $ |
| 11 |
(6) Accounts Payable and Accrued Liabilities
The Company had accounts payable and accrued liabilities as follows:
| September 30, 2022 | December 31, 2021 | |||||||
| Accounts Payable and Accrued Liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued payroll | ||||||||
| Accrued expenses | ||||||||
| Total Accounts Payable and Accrued Liabilities | $ | $ | ||||||
(7) Debt
Bank Line of Credit
On
December 10, 2021, the Company entered into a Securities-Based Line of Credit, Promissory Note, Security, Pledge and Guaranty Agreement
(the “Line of Credit”) with City National Bank of Florida. Pursuant to the revolving Line of Credit, the Company may borrow
up to the Credit Limit, determined from time to time in the sole discretion of the Bank. The Credit Limit was approximately $
Vehicle Loans
The
Company has entered into various loans for the purchase of vehicles in the ordinary course of business. Each loan is secured by the vehicle
that is financed. One of the lenders has provided a commercial line of credit of $
Other Debt
On
November 24, 2020, the Company issued a note payable in the amount of $
On
March 10, 2021, the Company borrowed a total of $
All debt except for vehicle loans was repaid in September 2021 after the consummation of the Company’s IPO.
| 12 |
Maturities of debt as of September 30, 2022, are as follows:
| 2022 (October to December) | |||||
| 2023 | |||||
| 2024 | |||||
| 2025 | |||||
| 2026 | |||||
| 2027 | |||||
| Total | $ |
(8) Shareholders Equity
Authorized
shares include million common shares and million preferred shares. Immediately prior to the Company’s IPO in September 2021,
all shares of common stock then outstanding converted into an aggregate of shares of common stock following a one for
On August 1, 2020, the Company’s board of directors approved the EzFill Holdings, Inc. 2020 Equity Incentive Plan (2020 Plan), which plan has also been approved by the Company’s shareholders. The Company has reserved of its outstanding shares of common stock for issuance under the 2020 Plan. On June 3, 2022, the Company’s board of directors approved the EzFill Holdings, Inc. 2022 Equity Incentive Plan (2022 Plan), which plan has also been approved by the Company’s shareholders. The Company has reserved of its outstanding shares of common stock for issuance under the 2022 Plan.
Common stock
During
the nine months ended September 30, 2021, shares of common stock were sold for cash proceeds of $
During the nine months ended September 30, 2021, the Company issued shares to an executive as a signing bonus and recorded related stock compensation expense of $ and issued signing shares to directors and recorded related stock compensation expense of $.
During the nine months ended September 30, 2021, the Company recorded stock-based compensation expense of $ related to shares granted for sponsorships and $ related to shares granted to consultants.
During the nine months ended September 30, 2021, the Company issued shares related to accrued bonuses, and shares related to an acquisition that had previously been accrued in 2020.
During the nine months ended September 30, 2022, the Company issued shares to a consultant for services rendered over the preceding nine months and recorded stock compensation of $
During the nine months ended September 30, 2022, the Company issued shares to the sellers of the assets of Full Service Fueling. See note 11.
During the nine months ended September 30, 2022, the Company issued shares of restricted stock and stock options to executives. Total stock compensation expense of $ is being recorded over the vesting period. Included in these amounts are shares of stock and stock options granted to two former executives for which vesting was accelerated upon their termination. The Company also granted a total of restricted shares to directors during the nine months ended September 30, 2022, for which stock compensation expense of $is being recorded over the vesting period. The aforementioned grants were made pursuant to the Company’s 2020 Incentive Compensation Plan.
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Weighted Average | ||||||||
| Grant Date | ||||||||
| Shares | Fair Value | |||||||
| Outstanding at | ||||||||
| December 31, 2021 | ||||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Forfeited | ( | ) | ||||||
| September 30, 2022 | ||||||||
The Company recognizes forfeitures of restricted shares as they occur rather than estimating a forfeiture rate. The reduction of stock compensation expense related to the forfeitures was $ for the nine months ended September 30, 2022.
Unrecognized stock compensation expense related to restricted stock was approximately $ as of September 30, 2022, which will be recognized over a weighted-average period of years.
Stock Options and Warrants
| Number of | Weighted Average | Weighted Average Remaining Contractual Term | ||||||||||
| Options | Exercise Price | (years) | ||||||||||
| Outstanding at December 31, 2021 | $ | |||||||||||
| Options granted | ||||||||||||
| Outstanding at September 30, 2022 | $ | |||||||||||
| Exercisable at September 30, 2022 | ||||||||||||
The fair value of the stock options was determined using the Black-Scholes option pricing model with the following assumptions:
| Nine Months Ended September 30, 2022 | ||||
| Valuation assumptions: | ||||
| Risk-free rate | % | |||
| Expected volatility | % | |||
| Expected term (years) | ||||
| Dividend yield | ||||
Unrecognized stock compensation expense related to stock options was approximately $ as of September 30, 2022, which will be recognized over a weighted-average period of years.
The
underwriter’s representatives for the Company’s IPO received warrants to purchase up to
In
April 2021, the Company issued
The intrinsic value of options and warrants outstanding at September 30, 2022, and December 31, 2021 was $ and $, respectively.
| 14 |
(9) Commitments and Contingencies
Litigation
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 September 30, 2022, and December 31, 2021, the Company is not aware of any litigation, pending litigation, or other transactions that would require accrual or disclosure under GAAP.
Lease Commitment
On
December 3, 2021, the Company signed a lease for
Future minimum payments under non-cancellable leases as of September 30, 2022, were as follows:
| Future Minimum Payments | ||||
| 2022 (October 1 to December 31) | $ | |||
| 2023 | ||||
| 2024 | ||||
| 2025 | ||||
| Total undiscounted operating leases payments | ||||
| Less: Imputed interest | ||||
| Present Value of Operating Lease Liabilities | ||||
| Other Information | ||||
| Weighted-average remaining lease term | ||||
| Weighted-average discount rate | % | |||
As
a practical expedient, short-term leases with an initial term of 12 months or less are excluded from the consolidated balance sheets
and charges from these leases are expensed as incurred. The
Company has offices at several of its operating locations under leases that are cancellable upon short notice. Total rent expense for
these leases (including the prior headquarters office) was approximately $
(10) Income Taxes
Book income before taxes was negative for the nine months ended September 30, 2022. Tax expense for the nine months ended September 30, 2022, and 2021, was $ and $.
The Company reviews its filing positions for all open tax years in all U.S. federal and state jurisdictions where the Company is required to file. The tax years subject to examination include the years 2019 and forward.
There are no uncertain tax positions that would require recognition in the consolidated financial statements. If the Company incurs an income tax liability in the future, interest on any income tax liability would be reported as interest expense and penalties on any income tax liability would be reported as income taxes. The Company’s conclusions regarding uncertain tax positions may be subject to review and adjustment at a later date based upon ongoing analyses of tax laws, regulations and interpretations thereof as well as other factors.
| 15 |
(11) Acquisition
On
March 11, 2022, the Company acquired substantially all of the assets of Full Service Fueling (“Seller”), a mobile fueling
service provider, for (a) a net amount of $
A summary of the purchase price allocation at fair value is below.
Purchase Allocation | ||||
| Vehicles | $ | |||
| Customer list | ||||
| Loading rack license | ||||
| Other identifiable intangibles | ||||
| Goodwill | ||||
| $ | ||||
The purchase price was paid as follows:
| Cash | $ | |||
| Common stock | ||||
| $ |
The vehicles and the identifiable intangibles will be depreciated and amortized over their estimated useful lives. Transaction costs related to the acquisition were not material.
The
results of operations for the nine months ended September 30, 2022, include approximately $
The accompanying unaudited pro forma combined statements of operations present the accounts of EzFill Holdings, Inc. and Full Service Fueling for the year ended December 31, 2021, assuming the acquisition occurred on January 1, 2021.
| Year Ended December 31, 2021 Summary Statement of Operations | EzFill Holdings | Full Service Fueling | Combined | |||||||||
| Revenue | $ | $ | $ | |||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Net Loss per common share – basic and diluted | $ | ( | ) | $ | ( | ) | ||||||
| Weighted average common shares – basic and diluted | ||||||||||||
(12) Subsequent Events
The Company evaluates subsequent events that occur after the balance sheet date through the date the financial statements were issued.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity, and cash flows of our Company as of and for the periods presented below. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited financial statements and notes thereto as of and for the year ended December 31, 2021 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Registration Statement on Form S-1 filed with the Securities and Exchange Commission, or SEC, on June 1, 2021, as amended, and declared effective on September 14, 2021. Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to “we,” “us,” and “our” refer to EzFill Holdings, Inc.
Forward-Looking Statements
The information in this discussion contains forward-looking statements and information within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are subject to the “safe harbor” created by those sections. These forward-looking statements include, but are not limited to, statements concerning our strategy, future operations, future financial position, future revenues, projected costs, prospects and plans and objectives of management. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in our filings with the SEC. The forward-looking statements are applicable only as of the date on which they are made, and we do not assume any obligation to update any forward-looking statements.
Overview
We were incorporated under the laws of Delaware in March 2019. We are in the business of operating mobile fueling trucks and are headquartered in Aventura, Florida. EzFill provides its customers the ability to have fuel delivered to their vehicles (cars, boats, trucks) without leaving their home or office and to construction sites, generators, and reserve tanks.
Our mobile fueling solution gives our fleet, consumer, and other customers the ability to fuel their vehicles with the touch of an app or regularly scheduled service, and without the inconvenience of going to the gas station.
Our consumer business was impacted significantly in 2020 by the COVID-19 pandemic and largely returned in 2021 for residential fueling but is still in the process of recovering at office parks to pre-pandemic levels as employees gradually return to the office.
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Results of Operations
The following table sets forth our results of operations for the three and nine months ended September 30, 2022, and 2021:
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenues | $ | 4,091,403 | $ | 1,863,599 | $ | 10,185,902 | $ | 5,236,016 | ||||||||
| Cost of sales | 4,208,155 | 1,825,739 | 10,288,176 | 5,057,628 | ||||||||||||
| Operating expenses | 3,476,261 | 1,794,575 | 9,830,523 | 4,705,108 | ||||||||||||
| Depreciation and amortization | 480,632 | 237,788 | 1,277,108 | 589,662 | ||||||||||||
| Operating loss | (4,073,645 | ) | (1,994,503 | ) | (11,209,905 | ) | (5,116,382 | ) | ||||||||
| Other income (expense) | (2,764 | ) | (379,100 | ) | (5,684 | ) | (613,311 | ) | ||||||||
| Net loss | $ | (4,076,409 | ) | $ | (2,373,603 | ) | $ | (11,215,589 | ) | $ | (5,729,693 | ) | ||||
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, 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.
The following is a reconciliation of net loss to the non-GAAP financial measure referred to as Adjusted EBITDA for the three and nine months ended September 30, 2022, and 2021:
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Net loss | $ | (4,076,409 | ) | $ | (2,373,603 | ) | $ | (11,215,589 | ) | $ | (5,729,693 | ) | ||||
| Interest expense, net | 2,764 | 533,773 | 5,684 | 767,984 | ||||||||||||
| Depreciation and amortization | 480,632 | 237,788 | 1,277,108 | 589,662 | ||||||||||||
| Stock compensation | 272,726 | 385,030 | 1,145,472 | 1,211,543 | ||||||||||||
| Adjusted EBITDA | $ | (3,320,287 | ) | $ | (1,217,012 | ) | $ | (8,787,325 | ) | $ | (3,160,504 | ) | ||||
| Gallons delivered | 994,447 | 580,462 | 2,375,921 | 1,731,289 | ||||||||||||
| Average fuel margin per gallon | $ | 0.43 | $ | 0.37 | $ | 0.47 | $ | 0.37 | ||||||||
Three months ended September 30, 2022, compared to the three months ended September 30, 2021
Revenues
We generated revenues of $4,091,403 for the three months ended September 30, 2022, compared to $ 1,863,599 for the prior year, an increase of $ 2,227,804 or 120%. This increase is primarily due to a 71% increase in gallons delivered as well as an increase in the average price per gallon. The additional gallons were in existing as well as new markets. The higher average fuel margin per gallon reflects the addition of new fleet customers at higher average margins.
Cost of sales was $4,208,155 for the three months ended September 30, 2022, compared to $ 1,825,739 for the prior year. The $2,382,413 or 130% increase in cost of sales is due to the increase in sales as well as the hiring of additional drivers, primarily in new markets.
| 18 |
Operating Expenses
We incurred operating expenses of $3,476,261 during the three months ended September 30, 2022, compared to $ 1,794,575 during the prior year, an increase of $1,681,686 or 94%. This increase was primarily due to increases in payroll, insurance, marketing, and public company expenses.
Depreciation and Amortization
Depreciation increased in the current year as a result of the increase in the fleet of delivery vehicles.
Other Income (Expense)
Interest expense decreased in the current year due to the early repayment in September 2021 of pre-IPO debt.
Nine months ended September 30, 2022, compared to the nine months ended September 30, 2021
Revenues
We generated revenues of $10,185,902 for the nine months ended September 30, 2022, compared to $5,236,016 for the prior year, an increase of $4,949,886 or 95%. This increase is due to a 37% increase in gallons delivered as well as an increase in the average price per gallon. The higher average fuel margin per gallon reflects the addition of new fleet customers at higher average margins.
Cost of sales was $10,288,176 for the nine months ended September 30, 2022, compared to $5,057,628 for the prior year. The $5,230,548 or 103% increase in cost of sales is mainly due to the increase in sales, as well as the hiring of additional drivers, primarily in new markets.
Operating Expenses
We incurred operating expenses of $9,830,523 during the nine months ended September 30, 2022, as compared to $4,705,108 during the prior year, an increase of $5,125,415 or 109%. This increase was primarily due to increases in payroll, insurance, marketing, technology, and public company expenses.
Depreciation and Amortization
Depreciation increased in the current year as a result of the increase in the fleet of delivery vehicles. Amortization increased in the current year as a result of the acquisition of a technology license.
Other Income (Expense)
Interest expense decreased in the current year due to the early repayment in September 2021 of pre-IPO debt.
Liquidity and Capital Resources
Cash Flow Activities
As of September 30, 2022, we had approximately $7.0 million in cash and investments compared to approximately $16.9 million at December 31, 2021.
| 19 |
Operating Activities
Net cash used in operating activities was $8,983,886 for the nine months ended September 30, 2022, which was made up primarily by the net loss of $11,215,589 and offset by non-cash adjustments for a net amount of $2,231,703. Net cash used in operating activities was $3,412,763 during the prior year, which was made up primarily by the net loss of $5,729,693 and offset by non-cash adjustments for a net amount of $2,316,932.
Investing Activities
During the nine months ended September 30, 2022, and 2021, we used $3,242,162 and $813,283, respectively, for the acquisition of fixed assets, primarily trucks used for delivery of fuel to our customers. During the nine months ended September 30, 2022, we acquired the mobile fueling assets of Full Service Fueling.
Financing Activities
We generated $2,731,913 of cash flows from financing activities during the nine months ended September 30, 2022, including $1,000,000 in borrowings under our bank line of credit and $2,187,122 in new loans for truck purchases, less principal repayments of $455,209. We generated $23,994,165 of cash flows from financing activities during the nine months ended September 30, 2021, including $25,250,000 net proceeds from our IPO, $115,000 from sale of shares and $2,650,000 in loans, less principal repayments of $4,020,409.
Sources of Capital
The Company has sustained net losses since inception and does not have sufficient revenues and income to fully fund the operations. As a result, the Company has relied on equity and debt financings to fund its activities to date. For the quarter ended September 30, 2022, the Company had a net loss of $4,076,409. At September 30, 2022, the Company had an accumulated deficit of $28,554,985. The Company anticipates that it will continue to generate operating losses and use cash in operations through the foreseeable future.
In September 2021, the Company completed its Initial Public Offering and raised $25,250,000 in net proceeds after deducting the underwriting discount and offering expenses. The Company anticipates that it will need to raise additional capital in the next 2-3 months in order to continue to fund 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 to us, or at all. If we are unable to raise additional funding to meet our working capital needs in the future, we will be forced to delay, reduce, or cease our operations.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements as defined in Regulation S-K Item 303(a)(4).
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not required for smaller reporting companies.
| 20 |
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic and current reports that we file with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives. In reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, the design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
As of September 30, 2022, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2022.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
Not required for smaller reporting companies.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the period covered by this report, we have not sold any equity securities in transactions that were not reported on a Current Report on Form 8-K. The Company did not repurchase any of its shares during the quarter ended September 30, 2022.
Use of Proceeds
(b) On September 14, 2021, our Registration Statement, as amended, and originally filed on Form S-1 (file No. 333-256691) was declared effective by the SEC for our initial public offering of 7,187,500 shares of common stock, including 937,500 shares of common stock purchased by the underwriters pursuant to the exercise of the over-allotment option each at an offering price of $4.00 per share, for aggregate gross proceeds of approximately $28.75 million. After deducting underwriting discounts, commissions and offering costs incurred by us of approximately $3.50 million, the net proceeds from the offering were approximately $25.3 million. ThinkEquity LLC acted as sole book-running manager of the initial public offering. No offering costs were paid or are payable, directly, or indirectly, to our directors or officers, to persons owning 10% or more of any class of our equity securities, or to any of our affiliates.
| 21 |
There has been no material change in the expected use of the net proceeds from our IPO as described in our final prospectus filed with the SEC on September 16, 2021. Upon receipt, the net proceeds from our IPO were held in cash, cash equivalents and short-term investments. As of September 30, 2022, we have used approximately $18.3 million of the net proceeds from the IPO. Pending such uses, we plan to continue investing the unused proceeds from the IPO in fixed, non-speculative income instruments and money market funds.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Mine Safety Disclosures.
Not Applicable.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits
The following exhibits are filed as part of this Quarterly Report on Form 10-Q.
| 22 |
| * | Filed herewith. |
| ** | Furnished herewith. |
| + | Indicates management contract or compensatory plan. |
| 23 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date: November 14, 2022 | EZFILL HOLDING, INC. | |
| By: | /s/ Michael McConnell | |
| Michael McConnell | ||
| Chief Executive Officer and Director | ||
| (Principal Executive Officer) | ||
| By: | /s/ Arthur Levine | |
| Arthur Levine | ||
| Chief Financial Officer | ||
| (Principal Financial Officer) | ||
| 24 |