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, 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 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 six months ended June 30, 2022 and 2021: Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Revenues $ 3,754,431 $ 1,850,598 $ 6,094,499 $ 3,372,417 Cost of sales 3,755,861 1,836,161 6,080,021 3,231,889 Operating expenses 3,406,262 1,666,042 6,354,262 2,910,533 Depreciation and amortization 458,811 233,130 796,476 351,874 Operating loss (3,866,503 ) (1,884,735 ) (7,136,260 ) (3,121,879 ) Other income (expense) (6,167 ) (121,867 ) (2,920 ) (234,211 ) Net loss $ (3,872,670 ) $ (2,006,602 ) $ (7,139,180 ) $ (3,356,090 ) 17 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 six months ended June 30, 2022 and 2021: Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Net loss $ (3,872,670 ) $ (2,006,602 ) $ (7,139,180 ) $ (3,356,090 ) Interest expense 6,167 121,867 1,196 234,211 Depreciation and amortization 458,812 233,130 796,476 351,874 Stock compensation 402,061 409,051 872,746 826,513 Adjusted EBITDA $ (3,005,630 ) $ (1,242,554 ) $ (5,468,762 ) $ (1,943,492 ) Gallons delivered 789,970 607,765 1,381,475 1,152,827 Average fuel margin per gallon $ 0.49 $ 0.37 $ 0.49 $ 0.36 Three months ended June 30, 2022, compared to the three months ended June 30, 2021 Revenues We generated revenues of $3,754,431 for the three months ended June 30, 2022, compared to $1,850,598 for the prior year, an increase of $1,903,833 or 103%. This increase is primarily due to a 30% 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 significantly higher average margins. Cost of sales was $3,755,861 for the three months ended June 30, 2022, compared to $1,836,161 for the prior year. The $1,919,700 or 105% increase in cost of sales is 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 $3,406,263 during the three months ended June 30, 2022, compared to $1,666,042 during the prior year, an increase of $1,740,221 or 104%. 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. 18 Other Income (Expense) Interest expense decreased in the current year due to the early repayment in September 2021 of pre-IPO debt. Six months ended June 30, 2022 compared to the six months ended June 30, 2021 Revenues We generated revenues of $6,094,499 for the six months ended June 30, 2022, compared to $3,372,417 for the prior year, an increase of 2,722,082 or 81%. This increase is due to a 19% 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 significantly higher average margins. Cost of sales was $6,080,021 for the six months ended June 30, 2022, compared to $3,231,889 for the prior year. The $2,848,132 or 88% 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 $6,354,262 during the six months ended June 30, 2022, as compared to $2,910,533 during the prior year, an increase of $3,443,729 or 118%. 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 June 30, 2022, we had approximately $10.2 million in cash and investments compared to approximately $16.9 million at December 31, 2021. Operating Activities Net cash used in operating activities was $6,028,287 for the six months ended June 30, 2022, which was made up primarily by the net loss of $7,139,180 and offset by non-cash adjustments for a net amount of $1,110,893. Net cash used in operating activities was $2,149,473 during the prior year, which was made up primarily by the net loss of $3,356,090 and offset by non-cash adjustments for a net amount of $1,206,617. Investing Activities During the six months ended June 30, 2022 and 2021, we used $3,020,706 and $67,315, respectively, for the acquisition of fixed assets, primarily trucks used for delivery of fuel to our customers. During the six months ended June 30, 2022, we acquired the mobile fueling assets of Full Service Fueling. Financing Activities We generated $2,702,152 of cash flows from financing activities during the six months ended June 30, 2022, including $850,000 borrowings under our bank line of credit and $2,118,840 in new loans for truck purchases, less principal repayments of $266,688. We generated $1,964,995 of cash flows from financing activities during the six months ended June 30, 2021, including $115,000 from sale of shares and $1,900,000 in loans, less principal repayments of $24,174. 19 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 June 30, 2022, the Company had a net loss of $3,872,670. At June 30, 2022, the Company had an accumulated deficit of $24,478,576. 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 4-6 months 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 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.