NEXTNRG, INC. 10-Q

Item 1. Financial Statements EzFill Holdings, Inc. Condensed Consolidated Balance Sheets (Unaudited) September 30, 2022 December 31, 2021 September 30, 2022 December 31, 2021 Assets Current Assets: Cash and cash equivalents $ 4,577,597 $ 13,561,266 Investment in debt securities 2,429,976 3,362,880 Accounts receivable, net of allowance for doubtful accounts of $ 0 and $ 5,665 , respectively 658,375 100,194 Prepaid expenses and other 254,557 186,349 Inventory 137,548 46,343 Total Current Assets 8,058,053 17,257,032 Fixed assets, net of accumulated depreciation of $ 868,890 and $ 284,216 , respectively 5,096,808 2,286,320 Goodwill and other indefinite lived intangibles 166,838 129,983 Other intangible assets, net of accumulated amortization of $ 1,897,813 and $ 1,205,379 , respectively 2,696,288 3,207,327 Operating lease right of use asset 576,120 - Other assets 54,195 43,456 Total Assets $ 16,648,302 $ 22,924,118 Liabilities and Stockholders’ Equity (Deficit) Current Liabilities: Accounts payable and accrued liabilities $ 1,051,946 $ 579,365 Borrowings under revolving line of credit 1,000,000 - Loans payable 797,407 178,871 Operating lease liabilities 225,817 - Total Current Liabilities 3,075,170 758,236 Loans payable, net of current portion 1,410,813 297,436 Operating lease liabilities, net of current portion 378,418 - Total Liabilities 4,864,401 1,055,672 Commitments and Contingencies - - Stockholders’ Equity 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; 26,490,424 and 26,243,474 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively 2,649 2,624 Additional paid in capital 40,405,738 39,210,291 Accumulated deficit ( 28,554,985 ) ( 17,339,396 ) Accumulated other comprehensive loss ( 69,501 ) ( 5,073 ) Total Stockholders’ Equity 11,783,901 21,868,446 Total Liabilities and Stockholders’ Equity $ 16,648,302 $ 22,924,118 The accompanying notes are an integral part of the consolidated financial statements. 3 EzFill Holdings, Inc. Condensed Consolidated Statements of Operations (Unaudited) 2022 2021 2022 2021 Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 REVENUES Revenues $ 4,091,403 $ 1,863,599 $ 10,185,902 $ 5,236,016 TOTAL REVENUES 4,091,403 1,863,599 10,185,902 5,236,016 COSTS & EXPENSES 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 TOTAL COSTS AND EXPENSES 8,165,048 3,858,102 21,395,807 10,352,398 OPERATING LOSS ( 4,073,645 ) ( 1,994,503 ) ( 11,209,905 ) ( 5,116,382 ) OTHER INCOME AND EXPENSES Interest income 26,957 - 58,982 - Other income - 154,673 - 154,673 Interest expense ( 29,721 ) ( 533,773 ) ( 64,666 ) ( 767,984 ) LOSS BEFORE INCOME TAXES ( 4,076,409 ) ( 2,373,603 ) ( 11,215,589 ) ( 5,729,693 ) PROVISION FOR INCOME TAXES - - - - NET LOSS $ ( 4,076,409 ) $ ( 2,373,603 ) $ ( 11,215,589 ) $ ( 5,729,693 ) NET LOSS PER SHARE Basic and diluted $ ( 0.15 ) $ ( 0.13 ) $ ( 0.43 ) $ ( 0.33 ) Basic and diluted weighted average number of common shares outstanding 26,481,080 18,555,343 26,367,621 17,586,747 Comprehensive Loss: Net loss $ ( 4,076,409 ) $ ( 2,373,603 ) $ ( 11,215,589 ) $ ( 5,729,693 ) Other comprehensive loss: Change in fair value of debt securities 66 - ( 69,501 ) - Total comprehensive loss $ ( 4,076,343 ) $ ( 2,373,603 ) $ ( 11,285,090 ) $ ( 5,729,693 ) The accompanying notes are an integral part of the consolidated financial statements. 4 EzFill Holdings, Inc. Condensed Consolidated Statements of Stockholders’ Equity (Deficit) (Unaudited) Shares Amount Shares Amount Capital Deficit Loss (Deficit) 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 — $ — 26,243,474 $ 2,624 $ 39,210,291 $ ( 17,339,396 ) ( 5,073 ) 21,868,446 Stock based compensation — — 28,334 3 470,682 — — 470,685 Consideration for acquisition — — 40,323 4 49,996 — — 50,000 Other comprehensive loss — — — — — — ( 47,286 ) ( 47,286 ) Net loss — — — — — ( 3,266,510 ) — ( 3,266,510 ) Balance March 31, 2022 — $ — 26,312,131 $ 2,631 $ 39,730,969 $ ( 20,605,906 ) ( 52,359 ) $ 19,075,335 Stock based compensation — — 167,664 16 402,045 — — 402,061 Other comprehensive loss — — — — — — ( 17,208 ) ( 17,208 ) Net loss — — — — — ( 3,872,670 ) — ( 3,872,670 ) Balance June 30, 2022 — $ — 26,479,795 $ 2,647 $ 40,133,014 $ ( 24,478,576 ) $ ( 69,567 ) $ 15,587,518 Stock based compensation - - 10,629 2 272,724 - - 272,726 Other comprehensive loss - - - - - - 66 66 Net loss - - - - - ( 4,076,409 ) - ( 4,076,409 ) Balance September 30, 2022 - $ - 26,490,424 $ 2,649 $ 40,405,738 $ ( 28,554,985 ) $ ( 69,501 ) $ 11,783,901 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 — $ — 17,199,912 $ 1,720 $ 6,472,536 $ ( 7,956,000 ) $ — $ ( 1,481,744 ) Stock based compensation — — 97,854 9 368,240 — — 368,249 Options granted — — — — 49,213 — — 49,213 Debt discount — — 7,972 1 29,999 — — 30,000 Issuance of acquisition shares — — 159,437 16 599,984 — — 600,000 Net loss — — — — — ( 1,349,487 ) — ( 1,349,487 ) Balance March 31, 2021 — $ — 17,465,175 $ 1,746 $ 7,519,972 $ ( 9,305,488 ) $ — $ ( 1,783,770 ) Stock based compensation — — 95,197 10 396,281 — — 396,291 Options granted — — — — 12,760 — — 12,760 Sale of shares — — 30,559 3 114,997 — — 115,000 Issuance of shares for technology — — 597,889 60 2,249,940 — — 2,250,000 Issuance of bonus shares — — 99,648 10 374,990 — — 375,000 Net loss — — — — — ( 2,006,602 ) — ( 2,006,602 ) Balance June 30, 2021 — $ — 18,288,468 $ 1,829 $ 10,668,940 $ ( 11,312,090 ) $ — $ ( 641,321 ) Initial public offering, net of expenses - 7,187,500 719 25,248,855 — — 25,249,574 Stock based compensation — — 193,919 19 372,251 — — 372,270 Options granted — — — — 12,760 — — 12,760 Issuance of acquisition shares — — 93,750 9 374,991 — — 375,000 Issuance of bonus and settlement shares — — 150,000 15 899,985 — — 900,000 Warrants and shares to lender — — 13,286 1 248,010 — — 248,011 Net loss — — — — — ( 2,373,603 ) — ( 2,373,603 ) Balance September 30, 2021 — $ — 25,926,923 $ 2,592 37,825,792 ( 13,685,693 ) — $ 24,142,691 The accompanying notes are an integral part of the consolidated financial statements. 5 EzFill Holding, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) 2022 2021 Nine Months Ended September 30, 2022 2021 Cash flows from operating activities: Net loss $ ( 11,215,589 ) $ ( 5,729,693 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock based compensation 1,145,472 1,211,543 Warrant and shares to lender - 248,011 Depreciation and amortization 1,277,108 589,663 Amortization of bond premium and realized loss on investments 36,760 - Amortization of debt discount - 170,910 Bad debt expense 16,938 16,959 PPP loan forgiveness - ( 154,673 ) Changes in operating assets and liabilities: Accounts receivable ( 575,119 ) 44,200 Inventory ( 91,205 ) 5,793 Prepaid expenses and other ( 78,947 ) - Prepaid expenses and deferred offering costs - 17,594 Operating lease assets and liabilities 28,115 - Accounts payable and accrued expenses 472,581 ( 161,130 ) Accounts payable and accrued expenses - related party - 328,060 Net cash used in operating activities ( 8,983,886 ) ( 3,412,763 )   Cash flows from investing activities: Maturity of debt securities 831,716 - Acquisition of business ( 321,250 ) - Acquisition of fixed assets ( 3,242,162 ) ( 813,283 ) Net cash used in investing activities ( 2,731,696 ) ( 813,283 )   Cash flows from financing activities: Proceeds from Initial Public Offering - 28,750,000 Initial Public Offering expenses - ( 3,500,426 ) Borrowings under line of credit 1,000,000 - Proceeds from issuance of debt and loans 2,187,122 1,100,000 Proceeds from issuance of related party debt - 1,550,000 Proceeds from issuance of common stock - 115,000 Repayment of debt ( 455,209 ) ( 2,172,010 ) Repayment of related party debt - ( 1,848,399 ) Net cash provided by financing activities 2,731,913 23,994,165   Net change in cash and cash equivalents ( 8,983,669 ) 19,768,119   Cash and cash equivalents at beginning of period 13,561,266 882,870   Cash and cash equivalents cash at end of period $ 4,577,597 $ 20,650,989   Noncash investing and financing activity: Debt discount $ - $ 170,910 Issuance of acquisition, bonus and settlement shares $ - $ 2,250,000 Shares issued for technology $ - $ 2,950,000 Supplemental disclosure of cash flow information: Cash paid for interest $ 64,666 $ 448,071 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 $ 4,577,597 and $ 13,561,266 in cash and cash equivalents, respectively. 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: Schedule of Unrealized Gains, Losses, and Fair Value Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Corporate bonds $ 2,499,477 $ - $ 69,501 $ 2,429,976 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 $ 0 and $ 5,665 respectively in the consolidated financial statements. 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 $ 0 in the consolidated financial statements. Cost of sales includes the cost of fuel sold and wages paid to drivers. Concentrations Major Customers For the three months ended September 30, 2022, and 2021, the Company had one customer that made up approximately 29 % and 60 % of revenue, respectively and another customer that made up approximately 14 % and 0 % respectively. For the nine months ended September 30, 2022, and 2021, the Company had one customer that made up approximately 37 % and 58 % of revenue, respectively. The Company had two customers that made up 40 % and 11 % of accounts receivable as of September 30, 2022, and two customers that made up 37 % and 23 % of accounts receivable as of December 31, 2021. 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 $ 488,288 and $ 10,694 , respectively, and for the nine months ended September 30, 2022, and 2021 of $ 1,072,089 and $ 86,775 , 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. 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 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: Schedule of Shares Excluded from Computations of Diluted Loss Per Share 2022 2021 2022 2021 Three months ended September 30, Nine months ended September 30, Description 2022 2021 2022 2021 Stock options - 95,019 - 93,849 (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 $ 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, or at all. If the Company is unable to raise additional funding to meet its working capital needs in the future, it will be forced to delay, reduce, or cease its operations. 9 (3) Related Party Transactions During the nine months ended September 30, 2021, Company issued notes payable to related parties totaling $ 1,550,000 . The notes were repaid in the third quarter of 2021. During the nine months ended September 30, 2021, the Company issued 26,573 shares to an executive as a signing bonus and recorded related stock compensation expense of $ 100,000 and issued 53,144 signing shares to directors and recorded related stock compensation expense of $ 200,000 . During the nine months ended September 30, 2022, the Company issued 182,540 shares of restricted stock and 522,462 stock options to executives. Included in these amounts are 75,893 shares of stock and 125,951 stock options granted to two former executives for which vesting was accelerated upon their termination. The Company also granted a total of 649,074 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 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 decreased 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 26 % of the Company’s common stock as of September 30, 2022. 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. (4) Fixed Assets Fixed assets consisted of the following: Schedule of Fixed Assets Description September 30, 2022 December 31, 2021 Fixed assets: Equipment $ 254,666 $ 175,068 Leasehold improvements 29,422 16,265 Vehicles 4,807,657 975,377 Office furniture 129,475 - Office equipment 9,471 9,471 Vehicle construction in process 735,007 1,394,355 Total fixed assets 5,965,698 2,570,536 Accumulated depreciation ( 868,890 ) ( 284,216 ) Fixed assets, net $ 5,096,808 $ 2,286,320 Depreciation expense totaled $ 253,908 and $ 35,504 for the three months ended September 30, 2022, and 2021, respectively and $ 584,674 and $ 94,710 for the nine months ended September 30, 2022, and 2021, respectively. 10 (5) Intangible Assets Intangible assets consisted of the following: Schedule of Intangible Assets Description September 30, 2022 December 31, 2021 Indefinite lived intangible assets: Domain name $ 20,000 $ 20,000 Goodwill $ 146,838 $ 109,983 Total indefinite lived intangible assets $ 166,838 $ 129,983 Other intangible assets: Trademarks $ 123,024 $ 103,258 Software 539,036 503,517 Customer list 921,485 855,073 Non-compete 1,698 858 Loading rack license 58,857 - Technology license 2,950,000 2,950,000 Total other intangible assets $ 4,594,100 $ 4,412,706 Accumulated amortization ( 1,897,813 ) ( 1,205,379 ) Total other intangible assets, net $ 2,696,288 $ 3,207,327 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 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 issued to the Licensor. 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. See Note 11 for details of intangibles from an acquisition during the nine months ended September 30, 2022. Amortization expense on intangible assets totaled $ 226,724 and $ 202,484 for the three months ended September 30, 2022, and 2021, respectively, and $ 692,434 and $ 494,953 for the nine months ended September 30, 2022, and 2021, respectively. Future amortization schedule for intangible assets as of September 30, 2022, is as follows: Schedule of Future Amortization Expense for Intangible Assets 2022 (October to December) 226,724 2023 834,204 2024 747,660 2025 633,941 2026 246,507 2027 7,252 TOTAL $ 2,696,288 11 (6) Accounts Payable and Accrued Liabilities The Company had accounts payable and accrued liabilities as follows: Schedule of Accounts Payable and Accrued Liabilities September 30, 2022 December 31, 2021 Accounts Payable and Accrued Liabilities: Accounts payable $ 827,395 $ 491,598 Accrued payroll 194,592 82,080 Accrued expenses 29,959 5,687 Total Accounts Payable and Accrued Liabilities $ 1,051,946 $ 579,365 (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 $ 5.7 million and $ 16.2 million at September 30, 2022, and December 31, 2021, respectively. Outstanding borrowings were $ 1,000,000 and $ 0 as of September 30, 2022, and December 31, 2021, respectively. 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. Interest is due and payable monthly in arrears. The interest rate on the Line of Credit was 4.50 % at September 30, 2022, and 1.50 % at December 31, 2021. The Bank may, at any time, without notice, and at its sole discretion, demand the repayment of the outstanding. 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 $ 4.0 million, under which approximately $ 2.3 million remained available as of September 30, 2022, for the financing of vehicles under retail installment contracts through December 31, 2022. The vehicle loans under the commercial line of credit and from other sources have interest rates that range from 3.5 % to 9.0 % (primarily 3.5 % ). Other Debt 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. 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: Schedule of Maturities of Long-Term Debt 2022 (October to December) 197,756 2023 811,515 2024 820,845 2025 307,365 2026 55,852 2027 14,887 Total $ 2,208,220 (8) Shareholders Equity Authorized shares include 500 million common shares and 50 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 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 (2020 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 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 2,600,000 of its outstanding shares of common stock for issuance under the 2022 Plan. Common stock During the nine months ended September 30, 2021, 30,559 shares of common stock were sold for cash proceeds of $ 115,000 During the nine months ended September 30, 2021, the Company issued 26,573 shares to an executive as a signing bonus and recorded related stock compensation expense of $ 100,000 and issued 53,144 signing shares to directors and recorded related stock compensation expense of $ 200,000 . During the nine months ended September 30, 2021, the Company recorded stock-based compensation expense of $ 345,000 related to shares granted for sponsorships and $ 110,000 related to shares granted to consultants. During the nine months ended September 30, 2021, the Company issued 600,000 shares related to accrued bonuses, and 375,000 shares related to an acquisition that had previously been accrued in 2020. During the nine months ended September 30, 2022, the Company issued 20,000 shares to a consultant for services rendered over the preceding nine months and recorded stock compensation of $ 68,500 During the nine months ended September 30, 2022, the Company issued 40,323 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 182,540 shares of restricted stock and 522,462 stock options to executives. Total stock compensation expense of $ 587,500 is being recorded over the vesting period. Included in these amounts are 75,893 shares of stock and 125,951 stock options granted to two former executives for which vesting was accelerated upon their termination. The Company also granted a total of 649,074 restricted shares to directors during the nine months ended September 30, 2022, for which stock compensation expense of $ 305,000 is being recorded over the vesting period. The aforementioned grants were made pursuant to the Company’s 2020 Incentive Compensation Plan. 13 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, 2021 317,586 3.27 Granted 839,114 0.65 Vested ( 210,615 ) 2.29 Forfeited ( 27,500 ) 2.29 September 30, 2022 918,585 1.12 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 $ 1,221 for the nine months ended September 30, 2022. Unrecognized stock compensation expense related to restricted stock was approximately $ 349,000 as of September 30, 2022, which will be recognized over a weighted-average period of 0.7 years. Stock Options and Warrants The following table represents stock option activity during the nine months ended September 30, 2022: Schedule of Stock Option Activity Number of Weighted Average Weighted Average Remaining Contractual Term Options Exercise Price (years) Outstanding at December 31, 2021 175,384 $ 1.78 3.3 Options granted 522,462 1.26 7.3 Outstanding at September 30, 2022 697,846 $ 1.39 6.1 Exercisable at September 30, 2022 301,335 1.56 4.5 The fair value of the stock options was determined using the Black-Scholes option pricing model with the following assumptions: Schedule of Fair Value Assumptions Nine Months Ended September 30, 2022 Valuation assumptions: Risk-free rate 1.64 % Expected volatility 62 % Expected term (years) 5 Dividend yield - Unrecognized stock compensation expense related to stock options was approximately $ 199,000 as of September 30, 2022, which will be recognized over a weighted-average period of 2.3 years. 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. In April 2021, the Company issued 106,291 warrants to a lender in connection with a loan that has been repaid. The warrants are exercisable until September 14, 2024 , at $ 5.00 per share. The intrinsic value of options and warrants outstanding at September 30, 2022, and December 31, 2021 was $ 0 and $ 0 , 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 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, estimated 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 and is subject to a 3% annual increase. An initial Right of Use (“ROU”) asset of $ 735,197 was recognized as a non-cash asset addition with the adoption of the lease accounting standard. Cash paid for amounts included in the present value of operating lease liabilities was $ 65,320 and $ 181,218 for the three and nine months ended September 30, 2022, respectively, and is included in cash flows from operating activities in the accompanying consolidated statement of cash flows. The operating lease expense for this lease was $ 61,444 and $ 184,333 for the three and nine months ended September 30, 2022, respectively, and is included in operating expenses in the consolidated statements of operations. Future minimum payments under non-cancellable leases as of September 30, 2022, were as follows: Schedule of Future Minimum Payments Under Non-Cancellable Leases Future Minimum Payments 2022 (October 1 to December 31) $ 65,320 2023 251,403 2024 256,414 2025 69,421 Total undiscounted operating leases payments 642,558 Less: Imputed interest 38,232 Present Value of Operating Lease Liabilities 604,326 Other Information Weighted-average remaining lease term 2.50 years Weighted-average discount rate 5.0 % 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 $ 92,000 and $ 39,000 for the nine months ended September 30, 2022, and 2021, respectively. (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 $ 0 and $ 0 . 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 $ 321,250 cash after a credit of $ 3,750 , and (b) 40,323 common shares, with a value of $ 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 Seller’s affiliate 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 the Company with access to vehicle parking at their locations throughout the state in order to support the expansion of the Company’s mobile fueling business. This acquisition was considered an acquisition of a business under ASC 805. A summary of the purchase price allocation at fair value is below. Schedule of Purchase Price Allocation at Fair Value Purchase Allocation Vehicles $ 153,000 Customer list 66,413 Loading rack license 58,857 Other identifiable intangibles 56,124 Goodwill 36,856 Purchase Allocation $ 371,250 The purchase price was paid as follows: Schedule of Business Acquisitions by Acquisition Issued or Issuable Cash $ 321,250 Common stock 50,000 Purchase Allocation $ 371,250 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 $ 72,000 of revenue and $ 5,000 net loss related to the acquired business since the March 11, 2022 , acquisition date. 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. Schedule of Unaudited Pro Forma Combined Statement of Operations Year Ended December 31, 2021 Summary Statement of Operations EzFill Holdings Full Service Fueling Combined Revenue $ 7,233,957 $ 242,271 $ 7,476,228 Net Loss $ ( 9,383,397 ) $ ( 122,507 ) $ ( 9,505,904 ) Net Loss per common share – basic and diluted $ ( 0.46 ) $ ( 0.47 ) Weighted average common shares – basic and diluted 20,199,444 20,199,444 (12) Subsequent Events The Company evaluates subsequent events that occur after the balance sheet date through the date the financial statements were issued. 16