NEXTNRG, INC. 10-Q

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, 2020 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 Miami, 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 has 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. Results of Operations The following table sets forth our results of operations for the three and nine months ended September 30, 2021 and 2020: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Revenues $ 1,863,599 $ 1,121,133 $ 5,236,016 $ 2,460,174 Cost of sales 1,825,739 1,064,362 5,057,628 2,417,456 Operating expenses 1,794,575 641,945 4,705,108 2,719,394 Depreciation and amortization 237,788 127,298 589,662 324,234 Operating loss (1,994,504 ) (712,472 ) (5,116,382 ) (3,000,910 ) Other income (expense) (379,100 ) (11,712 ) (613,311 ) (70,931 ) Net loss $ (2,373,603 ) $ (724,184 ) $ (5,729,693 ) $ (3,071,841 ) 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. 14 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, 2021 and 2020: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Net loss $ (2,373,604 ) $ (724,184 ) $ (5,729,693 ) $ (3,071,841 ) Interest expense 533,773 11,712 767,984 70,931 Depreciation and amortization 237,788 127,298 589,662 324,234 Stock compensation 385,030 268,949 1,211,543 1,471,508 Adjusted EBITDA $ (1,217,013 ) $ (316,225 ) $ (3,160,504 ) $ (1,205,168 ) Gallons delivered 580,462 481,587 1,731,289 1,032,932 Three months ended September 30, 2021, compared to the three months ended September 30, 2020 Revenues We generated revenues of $1,863,599 for the three months ended September 30, 2021, compared to $1,121,133 for the three months ended September 30, 2020, an increase of $742,466 or 66%. This increase is primarily due to a 21% increase in gallons delivered as well as an increase in the average price per gallon. Cost of sales was $1,825,739 for the three months ended September 30, 2021, resulting in a gross profit of $37,859, compared to $1,064,362 for the prior year. The $761,378 or 72% increase in cost of sales is due to the increase in sales. Operating Expenses We incurred operating expenses of $1,794,575 during the three months ended September 30, 2021, as compared to $641,945 during the prior year, an increase of $1,152,630 or 180%. This increase was primarily due to increases in payroll, technology spending and insurance. Depreciation and Amortization Amortization increased in the current year as a result of the acquisition of a technology license. Other Income (Expense) Other income in the current year resulted from the forgiveness of a loan under the Paycheck Protection Program. Interest expense increased due to warrants and shares issued in connection with new debt as well as the early repayment of debt and the resulting write-off of unamortized debt discounts. Net Losses We sustained a net loss of $2,373,603 for the three months ended September 30, 2021, as compared to $724,184 for the prior year, an increase of $1,649,420 or 228% as a result of the above. Nine months ended September 30, 2021 compared to the Nine months ended September 30, 2020 Revenues We generated revenues of $5,236,016 for the nine months ended September 30, 2021, compared to $2,460,174 for the nine months ended September 30, 2020, an increase of $2,775,842 or 113%. This increase is due to a 68% increase in gallons delivered as well as an increase in the average price per gallon. Cost of sales was $5,057,628 for the nine months ended September 30, 2021, compared to $2,417,456 for the prior year. The $2,640,173 or 109% increase in cost of sales is due to the increase in sales. 15 Operating Expenses We incurred operating expenses of $4,705,108 during the nine months ended September 30, 2021, as compared to $2,719,394 during the prior year, an increase of $1,985,714 or 73%. This increase was primarily due to increases in payroll, technology spending, insurance, truck maintenance and marketing. Depreciation and Amortization Amortization increased in the current year as a result of the acquisition of a technology license. Other Income (Expense) Other income in the current year resulted from the forgiveness of a loan under the Paycheck Protection Program. Interest expense increased due to warrants and shares issued in connection with new debt as well as the early repayment of debt and the resulting write-off of unamortized debt discounts. Net Losses We sustained a net loss of $5,729,693 for the nine months ended September 30, 2021, as compared to $3,071,841 for the prior year, an increase of $2,657,853 or 87% as a result of the above. Liquidity and Capital Resources Cash Flow Activities As of September 30, 2021, we had an accumulated deficit of $(13,685,693). We have incurred net losses since inception and have funded operations primarily through sales of our common stock and issuance of notes payable, including to related parties. As of September 30, 2021, we had $20,650,989 in cash as compared to December 31, 2020, when we had $882,870 in cash. Operating Activities Net cash used in operating activities was $(3,412,763) for the nine months ended September 30, 2021, which was made up primarily by the net loss and partially offset by an increase in stock-based compensation of $1,211,543, warrants and shares to lenders of $248,011, and depreciation and amortization of $589,663. Net cash used in operating activities was $(816,057) during the prior year, which was made up primarily by the net loss and partially offset by depreciation and amortization of $324,235, stock-based compensation of $1,471,508, and loss on settlement of $300,000. Investing Activities During the nine months ended September 30, 2021 and 2020, we used $813,283 and $87,661, respectively, for the acquisition of fixed assets. The amount for 2021 includes deposits on 33 fuel trucks purchased during the quarter. Financing Activities We generated $23,994,165 of cash flows from financing activities during the nine months ended September 30, 2021, including $28,750,000 less related expense of $(3,500,426) from the Initial Public Offering, $2,650,000 from new debt borrowings and $115,000 from issuance of stock, less $4,020,409 for the repayment of debt. During the same period of the prior year, we generated $1,260,812 from financing activities, $174,673 from new debt and $1,307,209 from the sale of shares, less $221,070 for the repayment of debt. Sources of Capital From inception to September 30, 2021, we have funded our activities through capital contributions from issuances of notes payable and the sale of securities pursuant to the exemption provided by Regulation D, by sale of securities to accredited investors. The Company has sustained a net loss since inception and does not have sufficient revenues and income to fully fund the operations. As a result, the Company has relied on loans from stockholders and others as well as stock sales to fund its activities to date. For the nine months ended September 30, 2021, the Company had a net loss of $5,729,693. At September 30, 2021, the Company had an accumulated deficit of $13,685,693 and a working capital surplus of $19,513,450. The Company anticipates that it will continue to incur losses in future periods until the Company is successful in significantly increasing its revenues, if ever. However, the Company has mitigated the previously reported going concern issue by raising approximately $25,250,000 in net proceeds from its Initial Public Offering. 16 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.