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, 2023 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. Results of Operations The following table sets forth our results of operations for the three and six months ended September 30, 2024 and 2023: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Revenues $ 6,985,962 $ 6,163,682 $ 20,977,860 $ 17,525,677 Cost of sales 6,379,137 5,813,957 19,361,923 16,529,030 Operating expenses 1,950,288 1,684,340 5,245,052 6,250,013 Depreciation and amortization 269,561 278,442 810,451 829,137 Operating loss (1,613,024 ) (1,613,057 ) (4,439,566 ) (6,082,503 ) Other income (expense) (6,462,485 ) (613,681 ) (8,899,797 ) (961,817 ) Net loss $ (8,075,509 ) $ (2,226,738 ) $ (13,339,363 ) $ (7,044,320 ) 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. 3 The following is a reconciliation of net loss to the non-GAAP financial measure referred to as Adjusted EBITDA for the three and nine months ended September 30, 2024 and 2023: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Net loss $ (8,075,509 ) $ (2,226,738 ) $ (13,339,363 ) $ (7,044,320 ) Interest expense 5,601,813 622,777 8,163,375 966,374 Depreciation and amortization 269,561 278,442 810,451 829,137 Loss on debt extinguishment – related party 907,500 - 907,500 - Stock compensation 205,301 38,629 456,635 569,539 Adjusted EBITDA $ (1,091,334 ) $ (1,286,890 ) $ (3,001,402 ) $ (4,679,270 ) Gallons delivered 1,872,524 1,486,199 5,371,264 4,384,211 Average fuel margin per gallon $ 0.60 $ 0.57 $ 0.60 $ 0.57 Three months ended September 30, 2024, compared to the three months ended September 30, 2023 Revenues We generated revenues of $6,985,962 for the three months ended September 30, 2024, compared to $6,163,682 for the prior year, an increase of $822,280 or 13%. This increase is primarily due to a 26% increase in gallons delivered and an increase in related fees. The additional gallons were in existing as well as newly developed markets. Cost of sales was $6,379,137 for the three months ended September 30, 2024, compared to $5,813,957 for the prior year. The $565,180 or 10% increase in cost of sales is due to the increase in fuel sales as well as the hiring of additional drivers, primarily in new markets. Our gross profit improved year over year due to higher fuel revenues as well as increased delivery fees and driver efficiency. Operating Expenses We incurred operating expenses of $1,950,288 during the three months ended September 30, 2024, compared to $1,684,340 during the prior year, an increase of $265,948 or 16%. This increase was primarily due to increases in payroll, stock based compensation, marketing and public company expenses. Depreciation and Amortization Depreciation decreased from $278,442 to $269,561, ($8,881), in the current three months ended September 30, 2024 as compared to September 30, 2023. Other Income (Expense) Interest expense increased from $622,777 to $5,601,813 ($4,979,036) in the current three months ended September 30, 2024 as compared to September 30, 2024 due to increased borrowing from related parties during the three months ending September 30, 2024. Loss on debt extinguishment – related party increased from $0 to $907,500 in the current three months ended September 30, 2024 Nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 Revenues We generated revenues of $20,977,860 for the nine months ended September 30, 2024, compared to $17,525,677 for the prior year, an increase of 3,452,183 or 20%. This increase is primarily due to a 23% increase in gallons delivered and an increase in related fees. The additional gallons were in existing as well as newly developed markets. Cost of sales was $19,361,923 for the nine months ended September 30, 2024, compared to $16,529,030 for the prior year. The $2,832,893 or 17% increase in cost of sales is mainly due to the increase in fuel sales as well as the hiring of additional drivers, primarily in new markets. Our gross profit improved year over year due to higher fuel revenues as well as increased delivery fees and driver efficiency. 4 Operating Expenses We incurred operating expenses of $5,245,052 during the nine months ended September 30, 2024, as compared to $6,250,013 during the prior year, a decrease of $1,004,961 or 16%. This decrease was primarily due to decreases in payroll, stock based compensation, marketing and public company expenses. Depreciation and Amortization Depreciation decreased from $829,137 to $810,451, ($18,686), in the current nine months ended September 30, 2024 as compared to September 30, 2023. Other Income (Expense) Interest expense increased from $966,374 to $8,163,375 ($7,197,001) in the current nine months ended September 30, 2024 as compared to September 30, 2023 due to increased borrowing from related parties during the nine months ending September 30, 2024. Loss on debt extinguishment – related party increased from $0 to $907,500 in the current nine months ended September 30, 2024. Liquidity and Capital Resources Cash Flow Activities As of September 30, 2024, we had approximately $828,185 in cash compared to approximately $226,985 at December 31, 2023. Operating Activities Net cash used in operating activities was $3,448,667 for the nine months ended September 30, 2024, which was made up primarily by the net loss of $13,339,363 and offset by non-cash adjustments for a net amount of $9,890,696. Net cash used in operating activities was $5,439,667 during the nine months ended September 30, 2023, which was made up primarily by the net loss of $7,044,320 and offset by non-cash adjustments for a net amount of $1,604,653. Investing Activities During the nine months ended September 30, 2024 net cash used by investing activities was $55,704. The cash used was to purchase equipment of $38,554 and advances to related party of $17,150. Net cash provided by investing activities during the prior year was $2,130,116 resulting from the proceeds as part of the sale of marketable debt securities, net of $19,498 in purchases of equipment. Financing Activities We generated $4,105,571 of cash flows from financing activities during the nine months ended September 30, 2024, including a $3,300,000 loan from a related party (an approximate 20% shareholder of the Company), proceeds from issuance of Series B – convertible preferred stock from a related party (an approximate 20% shareholder of the Company) of $1,400,000 and proceeds from notes payable of $250,000 less principal repayments of $844,429. We generated $1,628,490 of cash flows from financing activities during the nine months ended September 30, 2023, including a $3,321,000 loan from a related party (an approximate 20% shareholder of the Company) and proceeds from notes payable of $250,000, net of the repayments of loans payable from a related party of $262,500 and repayments of notes payable of $680,110 and repayments on line of credit of $1,000,000, we also received $25,308 of proceeds for the issuance of stock from the ATM and recorded related expenses of $25,308. Sources of Capital The Company has sustained net losses since inception and does not have sufficient revenues and income to fully fund its operations. As a result, the Company has relied on equity and debt financings to fund its activities to date. For the nine months ended September 30, 2024, the Company had a net loss of $13,339,363. At September 30, 2024, the Company had an accumulated deficit of $58,741,247. The Company anticipates that it will continue to generate operating losses and use cash in operations through the foreseeable future. 5 The Company has limited capital and is currently relying on a related party 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. Going Concern As reflected in the accompanying consolidated financial statements, for the nine months ended September 30, 2024, the Company had: ● Net loss available to common stockholders of $13,424,197; and ● Net cash used in operations was $3,448,667 Additionally, at September 30, 2024, the Company had: ● Accumulated deficit of $58,741,247 ● Stockholders’ equity of $3,558,365; and ● Working capital of $1,302,925 The Company anticipates that it will need to raise additional capital immediately in order to continue to fund its operations. The Company has relied on related parties for the debt based funding of 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. We manage liquidity risk by reviewing, on an ongoing basis, our sources of liquidity and capital requirements. The Company had cash on hand of $828,185 at September 30, 2024. The Company has historically incurred significant losses since inception and has not demonstrated an ability to generate sufficient revenues from the sales of its products and services to achieve profitable operations. In making this assessment we performed a comprehensive analysis of our current circumstances including: our financial position, our cash flows and cash usage forecasts for the twelve months ended December 31, 2025, and our current capital structure including equity-based instruments and our obligations and debts. These factors create substantial doubt about the Company’s ability to continue as a going concern within the twelve-month period subsequent to the date that these financial statements are issued. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Accordingly, the financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business. Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements as defined in Regulation S-K Item 303(a)(4). 6 Item 3. Quantitative and Qualitative Disclosures About Market Risk Not required for smaller reporting companies.