NEXTNRG, INC. 10-K

Item 8. Financial Statements EzFill Holdings, Inc. Consolidated Balance Sheets December 31, 2021 December 31, 2020 Assets Current Assets: Cash and cash equivalents $ 13,561,266 $ 882,870 Investment in debt securities 3,362,880 Accounts receivable, net of allowance for doubtful accounts of $ 5,665 and $ 0 , respectively 100,194 193,640 Prepaid expenses and deferred offering costs 186,349 160,078 Inventory 46,343 41,055 Total Current Assets 17,257,032 1,277,643 Fixed assets, net of accumulated depreciation of $ 284,216 and $ 143,818 , respectively 2,286,320 428,567 Goodwill and other indefinite lived intangibles 129,983 109,983 Other intangible assets, net of accumulated amortization of $ 1,205,379 and $ 472,944 , respectively 3,207,327 990,559 Other assets 43,456 - Total Assets $ 22,924,118 $ 2,806,752 Liabilities and Stockholders’ Equity (Deficit) Current Liabilities: Accounts payable and accrued liabilities $ 579,365 $ 488,405 Accounts payable and accrued liabilities, related parties - 2,250,000 Notes payable, net of discount of $ 0 and $ 75,000 , respectively 178,871 958,422 Notes payable - related party - 40,645 Total Current Liabilities 758,236 3,737,472 Notes payable - net of current portion 297,436 321,024 Notes payable - net of current portion - related party - 230,000 Total Liabilities 1,055,672 4,288,496 Commitments and Contingencies - Stockholders’ Equity (Deficit) Preferred stock, $ .0001 par value; 50,000,000 shares authorized; - 0 - shares issued and outstanding - - Common stock, $ .0001 par value; 500,000,000 shares authorized; 26,243,474 and 17,199,912 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively 2,624 1,720 Additional paid in capital 39,210,291 6,472,536 Accumulated deficit ( 17,339,396 ) ( 7,956,000 ) Accumulated other comprehensive loss ( 5,073 ) - Total Stockholders’ Equity (Deficit) 21,868,446 ( 1,481,744 ) Total Liabilities and Stockholders’ Equity (Deficit) $ 22,924,118 $ 2,806,752 The accompanying notes are an integral part of the consolidated financial statements. 25 EzFill Holdings, Inc. Consolidated Statements Of Operations 2021 2020 Year ended December 31, 2021 2020 REVENUES Revenues $ 7,233,957 $ 3,586,244 TOTAL REVENUES 7,233,957 3,586,244 COSTS & EXPENSES Cost of sales 7,027,274 3,544,072 Operating expenses 8,102,934 6,523,307 Depreciation and amortization 872,834 451,533 TOTAL COSTS AND EXPENSES 16,003,042 10,518,912 OPERATING LOSS ( 8,769,085 ) ( 6,932,668 ) OTHER INCOME AND EXPENSES Other income 161,572 - Interest expense ( 775,884 ) ( 321,338 ) LOSS BEFORE INCOME TAXES ( 9,383,397 ) ( 7,254,006 ) PROVISION FOR INCOME TAXES - - NET LOSS $ ( 9,383,397 ) $ ( 7,254,006 ) NET LOSS PER SHARE Basic and diluted $ ( 0.46 ) $ ( 0.72 ) Basic and diluted weighted average number of common shares outstanding 20,199,444 10,126,485 The accompanying notes are an integral part of the consolidated financial statements. 26 EzFill Holdings, Inc. Consolidated Statements of Comprehensive Loss 2021 2020 Year ended December 31, 2021 2020 Net loss $ ( 9,383,397 ) $ ( 7,254,006 ) Other comprehensive loss: Change in fair value of debt securities ( 5,073 ) - Total comprehensive loss $ ( 9,388,470 ) $ ( 7,254,006 ) The accompanying notes are an integral part of the consolidated financial statements. 27 EzFill Holdings, Inc. Condensed Consolidated Statements of Stockholders’ Equity (Deficit) Shares Amount Shares Amount Capital Deficit Loss (Deficit) Preferred stock Common stock Additional Paid-in Accumulated Accumulated Other Comprehensive Stockholder’s Equity Shares Amount Shares Amount Capital Deficit Loss (Deficit) Balance December 31, 2019 - $ - 8,361,236 $ 836 $ 1,138,620 $ ( 701,994 ) $ - $ 437,462 Beneficial issuance feature of shares on debt instrument - - 26,573 3 105,523 - 105,526 Initial public offering, net of expenses Initial public offering, net of expenses, Shares Stock based compensation - - 843,820 84 3,234,497 - 3,234,581 Options granted - - - - 190,127 - 190,127 Conversion of debt to equity, related parties - - 6,752,033 675 253,891 - - 254,566 Debt discount, related parties Debt discount, related parties, shares Issuance of acquisition shares Issuance of acquisition shares, Shares Issuance of bonus and settlement shares Issuance of bonus and settlement shares, Shares Warrants and shares to lender Warrants and shares to lender, Shares Issuance of shares for technology Issuance of shares for technology, Shares Sale of shares - - 1,216,250 122 1,549,878 - - 1,550,000 Other comprehensive loss Net loss - - - - - ( 7,254,006 ) ( 7,254,006 ) Balance December 31, 2020 - $ - 17,199,912 $ 1,720 $ 6,472,536 $ ( 7,956,000 ) $ - $ ( 1,481,744 ) Initial public offering, net of expenses - - 7,187,500 719 25,248,855 - 25,249,574 Stock based compensation - - 442,511 44 1,821,297 - 1,821,341 Options granted - - - - 74,733 - 74,733 Debt discount, related parties - - 7,972 1 29,999 - - 30,000 Issuance of acquisition shares - - 193,398 19 749,981 - 750,000 Issuance of bonus and settlement shares - - 384,437 38 1,499,962 - 1,500,000 Warrants and shares to lender - - 13,286 1 248,010 - 248,011 Issuance of shares for technology - - 783,899 79 2,949,921 - - 2,950,000 Sale of shares - - 30,559 3 114,997 - 115,000 Other comprehensive loss - - - - - - ( 5,073 ) (5,073 ) Net loss - - - - - ( 9,383,397 ) ( 5,073 ) ( 9,383,397 ) Balance December 31, 2021 - $ - 26,243,474 $ 2,624 $ 39,210,291 $ ( 17,339,396 ) $ ( 5,073 ) $ 21,868,446 The accompanying notes are an integral part of the consolidated financial statements. 28 EzFill Holding, Inc. Condensed Consolidated Statements of Cash Flows 2021 2020 Year ended December 31, 2021 2020 Cash flows from operating activities: Net loss $ ( 9,383,397 ) $ ( 7,254,006 ) Adjustments to reconcile net loss to net cash provided by/(used in) operating activities: Stock based compensation 1,896,074 4,624,708 Warrants and shares to lender 248,011 - Change in fair market value - 50,000 Loss on settlement - 300,000 Depreciation and amortization 872,834 451,533 Amortization of debt discount, related party 105,000 248,713 Bad debt expense 17,644 - PPP loan forgiveness ( 154,673 ) - Changes in operating assets and liabilities: Accounts receivable 75,802 ( 168,126 ) Inventory ( 5,288 ) ( 4,450 ) Prepaid expenses and other ( 69,727 ) ( 129,848 ) Accounts payable and accrued expenses 462,900 ( 81,574 ) Accounts payable and accrued expenses - related party ( 371,940 ) 355,381 Net cash used in operating activities ( 6,306,759 ) ( 1,607,669 )   Cash flows from investing activities: Acquisition of fixed assets ( 1,998,151 ) ( 24,075 ) Acquisition of intangible assets ( 19,204 ) - Purchase of debt securities ( 3,367,953 ) - Net cash used in investing activities ( 5,385,308 ) ( 24,075 )   Cash flows from financing activities: Proceeds from Initial Public Offering 28,750,000 - Initial Public Offering expenses ( 3,500,426 ) - Proceeds from issuance of common stock 115,000 1,550,000 Proceeds from issuance of debt 1,440,572 1,154,673 Proceeds from issuance of related party debt 1,550,000 20,000 Repayment of debt ( 2,136,283 ) ( 14,939 ) Repayment of related party debt ( 1,848,399 ) ( 227,211 ) Net cash provided by financing activities 24,370,464 2,482,523   Net change in cash and cash equivalents 12,678,397 850,779   Cash and cash equivalents at beginning of period 882,871 32,092   Cash and cash equivalents cash at end of period $ 13,561,267 $ 882,871   Noncash investing and financing activities: Debt discount $ 105,000 $ 105,526 Acquisition of Neighborhood Fuel $ - $ 700,000 Issuance of acquisition, bonus, and settlement shares $ 2,250,000 $ 220,000 Vehicles acquired with notes $ - $ 62,400 Shares issued for technology $ 2,950,000 $ - Supplemental disclosure of cash flow information: Cash paid for interest $ 455,791 $ 41,142 Cash paid for taxes $ - $ - The accompanying notes are an integral part of the consolidated financial statements. 29 EzFill Holdings, Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2021 and 2020 (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. Basis of Presentation The Company’s financial statements are presented on the accrual basis of accounting principles generally accepted in the United States of America (“GAAP”) and include the years ended December 31, 2021 and 2020. Initial Public Offering In September 2021, the Company issued 7,187,500 shares in its initial public offering (“IPO”) at a price of $ 4.00 per share, for net proceeds of approximately $ 25,250,000 after deducting underwriting discounts and commissions of $ 2,406,250 and expenses of $ 1,093,750 . Immediately prior to the IPO, all shares of stock then outstanding converted into an aggregate of 18,750,000 shares of common stock following a one for 3.763243 reverse stock split approved by the Company’s board of directors and its shareholders . 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 December 31, 2021 and 2020, the Company had $ 13,561,266 and $ 882,870 in cash and cash equivalents, respectively, of which $ 250,000 was federally insured. 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. The following is a summary of the unrealized gains, losses, and fair value by investment type as of December 31, 2021: Schedule of Unrealized Gains, Losses, and Fair Value Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Corporate bonds $ 3,367,953 $ - $ 5,073 $ 3,362,880 30 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 December 31, 2021 and December 31, 2020, the allowance was $ 5,665 and $ 0 respectively in the consolidated financial statements. Concentrations Major Customers For the years ended December 31, 2021 and 2020, the Company had one customer that made up approximately 58 % and 38 % of revenue, respectively. The Company had two customers that made up 37 % and 23 % of accounts receivable as of December 31, 2021, and 68 % and 7 % of accounts receivable as of December 31, 2020. Major Vendors The Company purchases substantially all of its fuel from one vendor. 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 December 31, 2021 and 2020, the allowance was $ 0 in the consolidated financial statements. Cost of sales includes the cost of fuel sold and wages paid to drivers. Deferred Offering Costs The Company includes offering costs directly associated with its IPO in prepaid expenses and deferred offering costs in the consolidated balance sheet. Deferred offering costs were offset against additional paid in capital upon completion of the offering. As of December 31, 2021 and 2020, the Company recorded $ 0 and $ 153,597 respectively, to deferred offering costs. Property, Equipment and Depreciation Property and equipment are stated at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets. Expenditures for additions and improvements are capitalized, while repairs and maintenance costs are expensed as incurred. The cost and related accumulated depreciation of property and equipment sold or otherwise disposed of are removed from the accounts and any gain or loss is recorded in the year of disposal. Schedule of Property and Equipment Useful Life Property and Equipment Useful Life Equipment 5 years Trucks and automobiles 5 years 31 Acquisitions and Intangible Assets The Company accounts for acquisitions in accordance with ASC 805, Business Combinations (“ASC 805”) and ASC 350, Intangibles- Goodwill and Other (“ASC 350”). The acquisition method of accounting requires that assets acquired and liabilities assumed be recorded at their fair values on the date of a business acquisition. The consolidated financial statements and results of operations reflect an acquired business from the completion date of an acquisition. The judgments that the Company makes in determining the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact net income in periods following an asset acquisition. The Company generally uses either the income, cost or market approach to aid in their conclusions of such fair values and asset lives. The income approach presumes that the value of an asset can be estimated by the net economic benefit to be received over the life of the asset, discounted to present value. The cost approach presumes that an investor would pay no more for an asset than its replacement or reproduction cost. The market approach estimates value based on what other participants in the market have paid for reasonably similar assets. Although each valuation approach is considered in valuing the assets acquired, the approach ultimately selected is based on the characteristics of the asset and the availability of information. The Company amortizes finite lived intangible assets over their estimated useful lives, which range between two and five years as follows: Schedule of Amortization Finite Lived Intangible Assets Useful Life Intangible Asset Useful Life Customer list 5 years Mobile app 3 years Non-compete 2 years Trade name 5 years Long-lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Determining whether an impairment has occurred typically requires various estimates and assumptions, including determining which cash flows are directly related to the potentially impaired asset, the useful life over which cash flows will occur, their amount and the asset’s residual value, if any. In turn, measurement of an impairment loss requires a determination of fair value, which is based on the best information available. The Company uses quoted market prices when available and independent appraisals and management estimates of future operating cash flows, as appropriate, to determine fair value. Fair Value of Financial Instruments The carrying amounts of cash, accounts receivable, and accounts payable approximate fair value because of the relative short-term maturity of these items and current payment expected. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment, and therefore cannot be determined with precision. Changes in assumptions could significantly affect these estimates. The Company does not hold or issue financial instruments for trading purposes, nor does it utilize derivative instruments. 32 ASC 825, Financial Instruments, clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. It also requires disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy for which these assets and liabilities must be grouped, based on significant levels of inputs as follows: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Quoted prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability. Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. The Company measures its available for sale securities on a recurring basis based on level 1 prices. Revenue Recognition The Company generates its revenue from mobile gas sales, either as a one-time purchase, or through a monthly membership. Revenue is recognized at the time of delivery and includes a delivery fee for each delivery or a subscription fee on a monthly basis for memberships. Under Accounting Standards Update (“ASU”) No. 2014-09 (Topic 606) “Revenue from Contracts with Customers”, revenue from contracts with customers is measured based on the consideration specified in the contract with the customer, and excludes any sales incentives and amounts collected on behalf of third parties. A performance obligation is a promise in a contract to transfer a distinct good or service to a customer and is the unit of account under Topic 606. The Company’s contracts with its customers do not include multiple performance obligations. The Company recognizes revenue when a performance obligation is satisfied by transferring control over a product or service to a customer. The amount of revenue recognized reflects the consideration the Company expects to be entitled to in exchange for such products or services. Advertising Costs Advertising costs are expensed as incurred. The Company incurred advertising costs for the year ended December 31, 2021 and 2020 of approximately $ 216,946 and $ 33,897 , respectively. 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. Stock-based compensation The Company accounts for employee stock awards for services based on the grant date fair value of the instrument issued and those issued to non-employees are recorded based on the grant date fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable. Compensation expense from stock awards is expensed over the service period. Forfeitures are recognized as they occur. Net loss per share 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 number of such shares excluded from the computations of diluted loss per share are as follows: Schedule of Shares Excluded from the Computations of Diluted Loss Per Share 2021 2020 Year ended December 31, Description 2021 2020 Stock options under treasury stock method 0 46,184 Recent accounting pronouncements In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . ASU 2016-02 requires lessees to recognize lease assets and lease liabilities on the balance sheet and requires expanded disclosures about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. ASU 2016-02 and additional ASUs are now codified as ASC 842, Leases . ASC 842 supersedes the lease accounting guidance in ASC 840 Leases , and requires lessees to recognize a lease liability and a corresponding lease asset for virtually all lease contracts. It also requires additional disclosures about leasing arrangements. Topic 842 was effective January 1, 2020. The Company’s office lease effective January 1, 2022 will be recorded in the first quarter of 2022. In June 2016, the FASB issued ASU No. 2016-13, “ Financial Instruments—Credit Losses (Topic 326).” The standard introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses and will apply to trade receivables. The new guidance will be effective for the Company’s annual and interim periods beginning after December 15, 2022. The Company is currently evaluating the impact of the adoption of the standard on the consolidated financial statements. All other newly issued accounting pronouncements not yet effective have been deemed either immaterial or not applicable. Reclassifications Certain reclassifications of prior year amounts have been made to be consistent with the current year presentation. 33 (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 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 year ended December 31, 2021, the Company had a net loss of $ 9,383,397 . At December 31, 2021, the Company had an accumulated deficit of $ 17,339,396 and a working capital surplus of $ 16,436,296 . 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 expects that its cash on hand will fund its operations for at least 12 months after the issuance date of these financial statements. However, since inception, the Company’s operations have primarily been funded through proceeds received in equity and debt financings. The Company anticipates that it will need to raise additional capital in order 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, in the event that we require additional financing, such 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 or reduce, limit or cease our operations. (3) Related Party Transactions During the year ended December 31, 2021 and 2020, Company issued 26,572 and 106,291 shares of common stock to executives as a signing bonus, respectively, and recorded related stock-based compensation expense of $ 100,000 and $ 400,000 respectively. The Company entered into a consulting agreement, dated November 18, 2020, with Balance Labs, Inc. Pursuant to the Consulting Agreement, Balance Labs provides 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 will also assist 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 265,728 shares of its common stock in November 2020. Upon the completion of the Company’s IPO, the Company made a one-time payment of $ 200,000 to Balance Labs. During the first year of the term of the Consulting Agreement, the Company paid Balance Labs $ 25,000 per month. In the second year of the agreement, the payment will decrease to $ 22,500 per month. On November 18, 2021 and each anniversary of the initial term and the renewal terms the Company will issue Balance Labs 132,905 shares of its common stock. The term of the Consulting Agreement is for two years. The President, CEO, CFO and Chairman of the Board of Balance Labs is also the former president of the Company and beneficially owns approximately 28 % of the Company’s common stock as of December 31, 2021. The Company is party to a technology license agreement with Fuel Butler LLC, which is owned 20 % by an executive of the Company. See Note 5. During the twelve months ending December 31, 2020, related parties converted principal to equity for $ 254,566 , including accrued unpaid interest. The Company issued 6,752,034 for conversion of related party convertible notes from debt to equity, during the twelve months ended December 31, 2020. including accrued unpaid interest at time of conversion. On March 10, 2021, the Company borrowed a total of $ 300,000 and issued promissory notes for $ 100,000 to each of three related parties. On June 25, 2021, the Company issued promissory notes to two related parties for $ 265,958 each, including an original issue discount of $ 15,958 . On July 26, 2021, the company issued promissory notes to two related parties for $ 132,979 each, including an original issue discount of $ 7,979 . On August 18, 2021, the Company issued a promissory note to a related party in the amount of $ 265,000 , including an original issue discount of $ 15,000 . See note 7. During the twelve months ended December 31, 2020, the Company issued notes payable to related parties totaling $ 20,000 , net of debt discount of $ 5,526 , along with 56,000 stock options. As of December 31 , 2020, the Company had accounts payable and accrued liabilities due to related parties of $ 2,250,000 . These liabilities are due to purchases of fuel, accrued interest on related party notes, and accrued executive payroll. All related party debt was repaid in September 2021. (4) Fixed Assets Fixed assets consisted of the following: Schedule of Fixed Assets Description Estimated Useful Lives December 31, 2021 December 31, 2020 Fixed assets: Equipment 5 years $ 175,068 $ 42,643 Leasehold improvements Lease term 16,265 - Vehicles 5 years 975,377 529,742 Office equipment 5 years 9,471 - Vehicle construction in process 1,394,355 - Total fixed assets 2,570,536 572,385 Accumulated depreciation ( 284,216 ) ( 143,818 ) Fixed assets, net $ 2,286,320 $ 428,567 Depreciation expense totaled $ 140,398 and $ 114,391 for the years ended December 31, 2021 and 2020, respectively. 34 (5) Intangible Assets Intangible assets consisted of the following: Schedule of Intangible Assets Description December 31, 2021 December 31, 2020 Indefinite lived intangible assets: Domain name 20,000 - Goodwill $ 109,983 $ 109,983 Total indefinite lived intangible assets $ 129,983 $ 109,983 Other intangible assets: Trademarks $ 103,258 $ 103,258 Software 503,517 504,314 Customer list 855,073 855,073 Non-compete 858 858 Technology license 2,950,000 - Total other intangible assets $ 4,412,706 $ 1,463,503 Accumulated amortization ( 1,205,379 ) ( 472,944 ) Total other intangible assets, net $ 3,207,327 $ 990,559 On April 7, 2021, the Company entered into a Technology License Agreement, under which the Company licensed certain proprietary technology. Under the terms of the license, the Company issued 265,728 shares of its common stock to the licensor upon signing. The Company also issued 332,160 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, 186,010 shares were due to the licensor and those shares were issued in October 2021. The Company will issue up to 730,752 additional shares to the licensor upon the achievement of certain milestones. In addition, the Company has granted stock options for 531,456 shares at an exercise price of $ 3.76 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 1,062,913 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. Amortization expense on intangible assets totaled $ 732,436 and $ 337,141 for the year ended December 31, 2021 and 2020, respectively. Future amortization schedule for intangible assets as of December 31, 2021 is as follows: Schedule of Future Amortization Expense for Intangible Assets 2022 $ 888,208 2022 $ 888,208 2023 792,937 2024 706,708 2025 601,974 2026 217,500 2027 - TOTAL $ 3,207,327 (6) Accounts Payable and Accrued Liabilities The Company had accounts payable and accrued liabilities as follows: Schedule of Accounts Payable and Accrued Liabilities December 31, 2021 December 31, 2020 Accounts Payable and Accrued Liabilities: Accounts payable $ 491,598 $ 215,599 Accrued payroll 82,080 160,417 Accrued expenses 5,687 68,290 Accrued interest - 44,099 Total Accounts Payable and Accrued Liabilities $ 579,365 $ 488,405 Accounts Payable and Accrued Liabilities – Related Parties: Settlement payable $ - $ 300,000 Acquisition consideration payable in shares - 750,000 Shares payable to technology licensor - - Signing and performance bonus payable in shares - 1,200,000 Total Accounts Payable and Accrued Liabilities, Related Parties $ - $ 2,250,000 35 (7) Notes Payable During the twelve months ending December 31, 2020, related parties converted principal to equity for $ 254,566 , including accrued unpaid interest. The Company issued 6,752,034 for conversion of related party convertible notes from debt to equity, during the twelve months ended December 31, 2020. On November 24, 2020, the Company issued a note payable in the amount of $ 1,000,000 ; the loan bore interest at a rate of 1 % per month; the maturity date on the loan was April 21, 2021 ; the Company had the option to extend the maturity date for seven one-month terms. As part of the terms of the loan, the note holder was issued 100,000 shares of common stock. The Company exercised the option to extend the loan from April 21, 2021, to August 21, 2021, and issued 10,000 shares to the note holder for each monthly extension. On March 10, 2021, the Company borrowed a total of $ 300,000 and issued promissory notes for $ 100,000 to each of three related parties. The notes bore interest at a rate of 1 % per month. The principal and interest thereon were payable on March 10, 2022 , or upon completion of the Company’s initial public offering if earlier. In connection with these loans, each lender was issued 10,000 shares of the Company’s common stock for a total of 30,000 shares. On April 16, 2021, the Company issued a promissory note to a lender for $ 1,166,000 , including $ 66,000 of interest at the rate of 8 % per annum. The loan maturity was the earlier of January 16, 2022 or two weeks after the Company’s initial public offering. In the event the loan matured earlier than January 16, 2022 , the full amount of interest for the nine-month term was due. As additional consideration for the loan, the Company granted the lender 400,000 shares in stock warrants, each of which may be exchanged for one share common stock of the stock offered to the public in the Company’s initial public offering, at a price of 125 % of the offering price of such initial public offering. Such warrants may, be need not, be exercised by the lender for a period of three years from their issuance. On June 25, 2021, the Company issued promissory notes to two related parties for $ 265,958 each, including an original issue discount of $ 15,958 . The notes each bore interest at 1 % per month on the unpaid principal balance. The notes matured on the earlier of December 25, 2021 , or the consummation of the Company’s initial public offering. On July 26, 2021, the company issued promissory notes to two related parties for $ 132,979 each, including an original issue discount of $ 7,979 . The notes bore interest at 1 % per month on the unpaid principal balance. The notes matured on the earlier of January 26, 2022 , or the consummation of the Company’s initial public offering. On August 18, 2021, the Company issued a promissory note to a related party in the amount of $ 265,000 , including an original issue discount of $ 15,000 . The note bore interest at 12 % per year and all interest accrued until the Maturity date. The maturity date of the note was August 18, 2022 , however if the Company completed a capital raise of at least $ 7,000,000 the entire outstanding principal and interest through August 18, 2022, was immediately due and payable within two business days of such occurrence . On August 19, 2021, the Company issued a promissory note to a lender in the amount of $ 265,000 , including an original issue discount of $ 15,000 . The note bore interest at 12 % per year and all interest accrued until the Maturity date. The maturity date of the note was August 19, 2022 , however if the Company completed a capital raise of at least $ 7,000,000 the entire outstanding principal and interest through August 19, 2022, was immediately due and payable within two business days of such occurrence . All debt except for vehicle loans was repaid in September 2021 after the consummation of the Company’s IPO. Amounts remaining in debt discount were included in interest expense. Maturities of debt as of December 31, 2021 are as follows: Schedule of Maturities of Long-Term Debt 2022 $ 178,871 2022 $ 178,871 2023 129,768 2024 112,545 2025 44,869 2026 10,254 Total $ 476,307 (8) SBA PPP Loan On April 20, 2020, the Company received loan proceeds in the amount of $ 154,673 under the Paycheck Protection Program (“PPP”). The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loans and accrued interest are forgivable after eight weeks provided the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the eight-week period. On September 17, 2021, 100 % of the PPP loan in the amount of $ 154,673 and accrued interest was forgiven by the SBA, and no repayment is required. 36 (9) Shareholders Equity Authorized shares include 500 million common shares and 50 million preferred shares. Immediately prior to the Company’s IPO in December 2021, all shares of common stock then outstanding converted into an aggregate of 18,750,000 shares of common stock following a one for 3.763243 reverse stock split approved by the Company’s board of directors and its shareholders . On August 1, 2020, the Company’s board of directors approved the EzFill Holdings, Inc. 2020 Equity Incentive Plan (Plan), which plan has also been approved by the Company’s shareholders. The Company has reserved 1,913,243 of its outstanding shares of common stock for issuance under the Plan. Participation in the Plan will continue until the benefits to which the participants are entitled have been paid in full. Common stock During the years ended December 31, 2021 and 2020, 30,559 and 1,216,250 shares of common stock were sold for cash proceeds of $ 115,000 and 1,550,000 , respectively. During the years ended December 31, 2021 and 2020, the Company recorded stock-based compensation expense of $ 406,667 and $ 500,000 , respectively for shares granted to executives and other employees. During the year ended December 31, 2021 and 2020, the Company recorded stock-based compensation expense of $ 378,947 and $ 658,498 , respectively related to shares granted for sponsorships and $ 959,643 and $ 2,000,000 , respectively related to shares granted to Board members and consultants. During the year ended December 31, 2021, the Company issued a total of 783,899 shares to a company that licensed certain proprietary technology. See note 5. On April 11, 2019, the Company entered into an employment agreement with a former owner of a business sold to the Company. Stock compensation of $ 76,084 and $ 89,100 was recognized for the year ended December 31, 2021 and 2020, respectively, based on the fair value of shares at April 11, 2019. During the year ended December 31, 2021, the Company issued a total of 577,835 shares related to accrued bonuses, acquisitions and settlements that had previously been accrued in 2020. In November 2020, the Company issued 6,752,033 shares of common stock upon conversion of previously issued convertible notes with related parties, including accrued interest. A total of 317,586 shares of restricted stock were issued to employees, board members and consultants during the year ended December 31, 2021. The restricted shares vest over periods from one to three years and are being recognized as expense on a straight-line basis over the vesting period of the awards. A total expense of $ 177,510 was recorded for the year ended December 31, 2021. A summary of the restricted stock activity is presented as follows: Schedule of Restricted Stock Activity Weighted Average Grant Date Shares Fair Value Outstanding at December 31, 2020 - - Granted 317,586 3.27 Vested - - Forfeited - - December 31, 2021 317,586 3.27 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 $ 0 for the year ended December 31, 2021. Unrecognized stock compensation expense was approximately $ 861,000 as of December 31, 2021, which will be recognized over a weighted-average period of 0.9 years. 37 Stock Options and Warrants The following table represents option activity during the year ended December 31, 2021: Schedule of Option Activity Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (years) Vested and Exercisable at December 31, 2020 148,145 $ 1.69 3.1 Options granted 27,239 2.26 4.2 Vested and Exercisable at December 31, 2021 175,384 $ 1.78 3.3 Pursuant to certain sponsorship agreements, during the year ended December 31, 2021, 27,239 stock options were granted. As of December 31, 2021, there was a total of 175,384 stock options outstanding, all vested, of which 74,404 were granted to founders in connection with promissory notes issued by the Company and 100,980 granted in connection with sponsorship agreements. The options are exercisable for five years from the dates of grant, which were from July 2019 to September 2021. The options all vested immediately upon grant and have exercise prices ranging from $ 0.64 to $ 2.26 . The options with sponsors could terminate earlier than five years if certain conditions occur. One of the sponsorship agreements was terminated effective February 2021. The remaining sponsor received 1,550 options per month until the Company completed its IPO, after which the sponsor is being granted fully vested shares for $ 3,500 per month based on the closing share price on the date of each grant. The fair value of the stock options granted during the year ended December 31, 2021, of $ 74,733 was determined using the Black-Scholes option pricing model with the following assumptions: i) risk free interest rate of approximately 2 %, ii) expected life of 5 years, iii) dividend yield of 0 %, iv) expected volatility of approximately 79 %. The intrinsic value of options outstanding at December 31, 2021 and 2020 was $ 0 and approximately $ 307,000 , respectively. The intrinsic value of warrants outstanding at December 31, 2021 and 2020 was $ 0 and $ 0 , respectively. The underwriter’s representatives for the Company’s IPO received warrants to purchase up to 359,375 shares. The warrants are exercisable from March 14, 2022 until September 14, 2026 at an exercise price of $ 5.00 per share. The amount of approximately $ 198,000 was included in interest expense in 2021 for 106,291 warrants issued to a lender that became exercisable upon the Company’s IPO. The warrants are exercisable until September 14, 2024 , at $ 5.00 per share. The lender also received 13,286 shares during 2021 that were valued at $ 50,000 . (10) 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 December 31, 2021, and 2020, the Company is not aware of any litigation, pending litigation, or other transactions that would require accrual or disclosure under GAAP. 38 Lease Commitment On December 3, 2021, the Company signed a lease for 5778 square feet of office space, for occupancy effective January 1, 2022. The lease term is 39 months and the total monthly payment is $ 21,773 , including base rent, operating expenses and sales tax. The base rent of $ 14,743 including sales tax was abated for months 1, 13 and 25 of the lease. (11) Income Taxes The components of the deferred tax assets at December 31, 2021 and 2020 were as follows: Schedule of Deferred Tax Assets 2021 2020 Deferred tax assets: Stock-based compensation $ 165,567 $ 478,922 Amortization of debt discount - 19,125 Loss on settlement and change in fair value - 76,500 Change in fair value - 12,750 Intangibles 219,369 79,029 Net operating loss 4,413,292 1,364,501 Other 1,612 - Total gross deferred tax asset $ 4,799,840 $ 2,030,827 Deferred tax liabilities: Depreciation ( 196,334 ) ( 3,622 ) Prepaid assets ( 32,057 ) - Less: Valuation allowances ( 4,571,449 ) ( 2,027,206 ) Net deferred tax asset $ - $ - The components of the income tax benefit and related valuation allowance for the years ended December 31, 2021 and 2020 are as follows: Schedule of Income Tax Benefit and Related Valuation Allowance 2021 2020 Current $ - $ - Deferred ( 2,544,004 ) ( 1,848,596 ) Valuation allowance 2,544,004 1,848,596 Total Tax Provision $ - $ - 39 A reconciliation of the provision for income taxes for the years ended December 31, 2021 and 2020 as compared to statutory rates is as follows: Schedule of Reconciliation of Provision for Income Taxes 2021 2020 Provision at federal statutory rate of 21 % $ ( 1,970,514 ) $ ( 1,523,341 ) Permanent differences, net ( 51,348 ) 1,176 State income tax benefit ( 407,709 ) ( 326,430 ) Rate change 12,562 $- Deferred adjustments ( 126,995 ) - Change in valuation allowance 2,544,004 1,848,596 Total income tax provision $ 0 $ 0 Federal net operating loss carryforwards at December 31, 2021 and December 31, 2020 totaled approximately $ 17.5 million and $ 5.4 million, respectively, for tax purposes, which will be available to offset 80% of future taxable income indefinitely . 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. (12) Bank Credit Line 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 $ 16 million at December 31, 2021. To secure the repayment of the Credit Limit, the Bank will have a first priority lien and continuing security interest in the securities held in the Company’s investment portfolio with the Bank. The amount outstanding under the Line of Credit shall bear interest equal to the Reference Rate plus the Spread (as defined in the Line of Credit) in effect each day. The Interest is due and payable monthly in arrears. The interest rate on the Line of Credit was 1.5 % at December 31, 2021. The Bank may, at any time, without notice, and at its sole discretion, demand the repayment of the outstanding balance and accrued interest thereon, be immediately repaid in full, and the Bank may terminate the Line of Credit. (13) Business Combination On February 19, 2020, the Company entered into an Asset Purchase Agreement with Neighborhood Fuel, Inc. This acquisition was considered an acquisition of a business under ASC 805. As per the agreement, the Company purchased certain mobile fueling assets from Neighborhood Fuel, Inc. and assumed certain vehicle financing obligations. The Company purchased the assets with shares of the Company’s common stock equal to a purchase price of $ 750,000 , to be paid on the earlier of the completion of the Company’s IPO or March 1, 2022. The shares were issued to Neighborhood Fuel in September 2021 after the completion of its IPO. A summary of the purchase price allocation at fair value is below. Summary of Purchase Price Allocation Fair Value Purchase Allocation Customer list $ 395,416 Vehicles 198,087 Non-Compete 858 Mobile app 251,891 Trade name 50,559 Goodwill 1,276 $ 898,087 The purchase price was paid as follows: Schedule of Business Acquisitions by Acquisition Issued or Issuable 2021 Common stock issuable $ 700,000 Vehicle obligations 198,087 Total Purchase Price $ 898,087 Transaction costs related to the acquisitions were not material. The accompanying unaudited pro forma combined statement of operations presents the accounts of EzFill Holdings, Inc. and Neighborhood Fuel for the year ended December 31, 2020 assuming the acquisition occurred on January 1, 2020. Business Acquisition, Pro Forma Information December 31, 2020 Summary Statement of Operations EzFill Holdings Neighborhood Fuel Combined Revenue $ 3,586,244 $ 23,689 $ 3,609,933 Net Loss $ ( 7,254,006 ) $ ( 13,047 ) $ ( 7,267,053 ) Net Loss per common share – basic and diluted $ ( 0.72 ) $ ( 0.72 ) Weighted average common shares – basic and diluted 10,126,485 10,126,485 40 (14) Subsequent Events The Company evaluates subsequent events that occur after the balance sheet date through the date the financial statements were issued. On January 17, 2022, the Company executed a Separation Agreement and Release with an executive, pursuant to which it paid the executive a separation payment of $ 118,125 and issued 22,321 shares and 125,951 options that immediately vested. On February 22, 2022, the Company issued 10,000 vested shares to a consultant for services rendered over the preceding three months. On March 2, 2022, the Company and Full Service Fueling, Inc. (“Seller”), entered into an Asset Purchase and Fuel Supply Agreement (the “Purchase Agreement”) wherein the Company agreed to purchase substantially all of the assets of Seller for (a) $ 325,000 cash, and (b) such number of shares of common stock par value $ 0.0001 , of the Company that is valued at $ 50,000 based upon the Company’s closing stock price on the NASDAQ on the date immediately preceding the Closing Date. Further, the Purchase Agreement includes provisions wherein the Company agrees to utilize Palmdale Oil Company, Inc. (“Palmdale”) as one if its main fuel suppliers throughout the state of Florida, with preferred pricing on all fuel purchases. Palmdale will also provide EzFill with access to vehicle parking at their locations throughout the state. The Company issued a press release announcing its entry into the Purchase Agreement on March 3, 2022. The Purchase Agreement provides that the transaction will close on the business date after all of the conditions to closing are either satisfied or waived, or upon a mutually agreed upon time. The consummation of the transactions contemplated by the Purchase Agreement are subject to various customary closing conditions. In connection with the closing of the transaction contemplated by the Purchase Agreement, the Company and the Palmdale will enter into certain other agreements, including a Loading Rack License Agreement (the “License Agreement”) and a Mutual Non-Solicitation and Non Interference Agreement relating to the agreement to purchase fuel, coordinate customer deliveries and truck parking, as described in the Purchase Agreement and the exhibits thereto. Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure There were no disagreements related to accounting principles or practices, financial statement disclosure, internal controls or auditing scope or procedure during the two fiscal years and their respective interim periods.