NEXTNRG, INC. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Private Securities Litigation Reform Act of 1995 and Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), provide a safe harbor for forward-looking statements made by or on behalf of NextNRG, Inc. (“NextNRG,” “we,” “us,” “our,” or the “Company”). The Company and its representatives may from time to time make written or oral statements that are “forward-looking,” including statements contained in this report and other filings with the Securities and Exchange Commission (“SEC”) and in our reports and presentations to stockholders or potential stockholders. In some cases, forward-looking statements can be identified by words such as “believe,” “expect,” “anticipate,” “plan,” “potential,” “continue” or similar expressions. Such forward-looking statements include risks and uncertainties and there are important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors, risks and uncertainties can be found in Part I, Item 1A, “Risk Factors,” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as the same may be updated from time to time, including in Part II, Item 1A, “Risk Factors,” of this Quarterly Report on Form 10-Q. Although we believe the expectations reflected in our forward-looking statements are based upon reasonable assumptions, it is not possible to foresee or identify all factors that could have a material effect on the future financial performance of the Company. The forward-looking statements in this report are made on the basis of management’s assumptions and analyses, as of the time the statements are made, in light of their experience and perception of historical conditions, expected future developments and other factors believed to be appropriate under the circumstances. Except as otherwise required by the federal securities laws, we disclaim any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained in this Quarterly Report on Form 10-Q and the information incorporated by reference in this report to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based. The following discussion and analysis provides information we believe is relevant to an assessment and understanding of our unaudited condensed consolidated operating results and financial condition. The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements for the three months ended March 31, 2026 and the notes thereto included in this Quarterly Report on Form 10-Q, as well as our other reports filed with the SEC from time to time, including, but not limited to, our Annual Report on Form 10-K for the year ended December 31, 2025. Overview NextNRG is Powering What’s Next by implementing artificial intelligence (“AI”) and machine learning (“ML”) into renewable energy, next-generation energy infrastructure, battery storage, wireless electric vehicle (“EV”) charging and on-demand mobile fuel delivery to create an integrated ecosystem. At the core of NextNRG’s strategy is its utility operating system, which leverages AI and ML to help make existing utilities’ energy management as efficient as possible, and the deployment of NextNRG smart microgrids, which utilize AI-driven energy management alongside solar power and battery storage to enhance energy efficiency, reduce costs and improve grid resiliency. These microgrids are designed to serve commercial properties, schools, hospitals, nursing homes, parking garages, rural and tribal lands, recreational facilities and government properties, expanding energy accessibility. NextNRG continues to expand its growing fleet of fuel delivery trucks and national footprint. NextNRG is also integrating sustainable energy solutions into its mobile fueling operations. The company hopes to be an integral part of assisting its fleet customers in their transition to EV, supporting more efficient fuel delivery while advancing clean energy adoption. The transition process is expected to include the deployment of NextNRG’s innovative wireless EV charging solutions. Revenue Sources Sale of Electricity Solar Electricity NextNRG plans to derive its operating revenues principally from power purchase agreements, net metering credit agreements, solar renewable energy credits, and performance-based incentives. A portion of NextNRG’s power sales revenues is expected to be earned through the sale of energy (based on kilowatt hours) pursuant to the terms of Power Purchase Agreements (“PPAs”). NextNRG’s PPAs will typically have fixed or floating rates and are expected to be generally invoiced monthly. Wireless EV Charging NextNRG plans to sell energy to its wireless EV charging customers. NextNRG also plans to sell its innovative solutions to property owners, parking facilities, municipalities, and government agencies, as well as charge point operators, empowering the growth of sustainable transportation infrastructure. NextNRG plans to generate revenue from the deployment of solar and battery storage solutions where applicable to further take advantage of the renewable energy industry. Energy pricing is based on peak/off-peak rates at any given charging location. NextNRG plans to negotiate our own PPA accordingly. NextNRG is also planning to sell energy to electric vehicle owners via wireless EV charging. 3 SaaS & Licensing Software as a Service (“SaaS”) Agreements NextNRG plans to generate revenue from the sale of its energy management software under SaaS agreements with utility companies; microgrid companies; and renewable energy generation companies. Additionally, any traditional customers which would like to own their own energy generation systems will have the option of entering a SaaS agreement to purchase rights to the technology. Hardware Licensing NextNRG plans to generate licensing revenues from competitors or ancillary business participants who desire to utilize or integrate NextNRG’s intellectual property, hardware, or software solutions within their proprietary product. Sale of Hardware NextNRG plans to generate revenues from the sale of hardware, e.g. solar panels, battery storage solution equipment, wireless charging pad or bumper and vehicle receiver technology. Potential Customers Potential customers include property owners, electrical supply companies, management companies, all levels of government, original equipment manufacturers, tribal land, car manufacturers, EV charging companies, wholesale electricity providers, utilities, and fleet owners. Mobile Fueling Mobile Fuel Delivery NextNRG’s mobile fueling solution is an on-demand and subscription fuel delivery service that brings fuel directly to consumers, commercial fleets, and specialty vehicles at homes, workplaces, and job sites. Leveraging digital technology and GPS-based systems, this service responds to the increasing preference for home and workplace product deliveries. Particularly, our fleet services are experiencing significant growth, providing a streamlined, efficient fueling option that allows commercial operators to optimize operations and reduce downtime. For the three months ended March 31, 2026 and the year ended December 31, 2025, we derived all of our revenues from mobile fuel deliveries. Recent Developments Promissory Note, dated as of December 26, 2024 On December 26, 2024, the Company and Gad International Ltd. (the “Lender”) entered into a promissory note (the “Gad Note”) for the sum of $2,500,000 (the “Loan”) to be used for the Company’s working capital needs, including without limitation the purchase of equipment. Unless the Gad Note is otherwise accelerated or extended in accordance with the terms and conditions therein, the balance of the Gad Note, along with accrued interest, will be due and payable in full on February 23, 2025. Further, the Company agreed among other things to pay the Lender a commitment fee of $400,000 in consideration of the Loan, and an optional extension fee of $200,000 for any month or part thereof in which the Company requests an additional 30-day extension to the Loan, upon the Lender’s written consent. If any amount payable under the Loan is not paid when due, whether at stated maturity, by acceleration, or otherwise, such overdue amount will bear interest at a rate of 21%. Additionally, the Company agreed to execute an irrevocable transfer instruction with its transfer agent to issue $5,000,000 worth of shares of Company common stock to the Lender if the Gad Note is not repaid on or before February 23, 2025. However, pursuant to an amendment to the Gad Note, dated January 15, 2025, between the Company and the Lender, no shares of the Company can be issued without the Company first receiving shareholder approval. The Company has commenced the process of obtaining shareholder approval and once the shareholder approval process is completed and the Company is authorized to issue the shares, the Company will issue the shares. The Company shall take no action to impair, hinder or impede either the approval process or the issuance of the shares in the event they become owed to Lender. Such shares of common stock will be valued based on the Nasdaq official closing price for the Company’s common stock as of date of the issuance of the Gad Note. The note was extended to March 23, 2025, and in exchange for the extension of the maturity date, the Company paid a fee of $200,000. The note was paid in full on March 26, 2025. Promissory Note, dated as of January 15, 2025 On January 15, 2025, the Company and Alcourt LLC (“Alcourt”) entered into a promissory note (the “Alcourt Note”) for the sum of $1,000,000 to be used for the Company’s working capital needs, including without limitation, the purchase of equipment. The Alcourt Note was issued with an original issue discount of $50,000. The unpaid principal balance of the Alcourt Note has a fixed rate of interest of 15% per annum. Unless the Alcourt Note is otherwise accelerated or extended in accordance with the terms and conditions therein, the balance of the Alcourt Note, along with accrued interest, will be due and payable in full on April 15, 2025 (“Maturity Date”). If the Alcourt Note is not repaid by the Maturity Date, for any reason whatsoever, the Company will issue shares of the Company’s common stock with a then current value of $500,000 to Alcourt (the “Extension Fee”). The shares will be valued based on the greater of: (i) the closing price of the Company’s common stock on the Maturity Date; or (ii) $1.00 per share; if the Company’s common stock is trading below $1.00 per share, Alcourt can elect to receive the Extension Fee of $500,000 in cash. The Company agreed to execute an irrevocable transfer instruction with its transfer agent to issue $500,000 worth of shares of Company common stock to Alcourt if the Alcourt Note is not repaid on or before April 15, 2025. Upon payment of the Extension Fee, the Maturity Date shall be extended until July 15, 2025. Additionally, if the Alcourt Note is paid at any time after the initial Maturity Date, the Company shall pay a $50,000 termination fee together with the repayment of the principal, accrued unpaid interest, and any other charges due to Alcourt. No shares of the Company shall be issued without the Company first receiving shareholder approval. The Company has commenced the process of obtaining shareholder approval as soon as reasonably practicable after execution of the Alcourt Note. The note was repaid in full in February 2025. 4 Shareholder Approval On January 15, 2025, the holders of a majority of the Company’s voting capital stock approved the following corporate actions via written consent (the “Authorizations”): (i) the possible issuance of shares of the Company common stock with a then current value of $500,000 under that certain promissory note, dated as of January 15, 2025, by and between the Company and Alcourt, in the event that such note is not repaid by April 15, 2025 (this note was repaid in full in February 2025); (ii) the possible issuance of $5,000,000 worth of shares of Company common stock under that certain promissory note, dated as of December 26, 2024, by and between the Company and Gad, as amended by that certain amendment to promissory note, dated as of January 15, 2025, in the event that such promissory note is not repaid on or before February 23, 2025 (the note was extended to March 23, 2025); and (iii) the possible issuance of shares of Company common stock under those certain promissory notes by and between the Company and NextNRG Holding Corp., dated as of November 14, 2024, December 2, 2024, December 3, 2024, December 17, 2024 and December 30, 2024, respectively. Such consents were obtained in compliance with Nasdaq Listing Rules 5635(a) and 5635(d), as applicable, which require, in relevant part, that the Company may not issue shares of its common stock (or securities convertible into or exercisable for common stock) in other than public offerings or in connection an acquisition without stockholder approval if the aggregate number of shares of common stock issued would be equal to or greater than 20% of the Company’s issued and outstanding shares of common stock as of the date of issuance. The Company filed with the Commission, and disseminated to its stockholders, a definitive information statement in respect of the Authorizations. Financial Overview For the three months ended March 31, 2026 and 2025, we generated revenues of $21,059,130 and $16,272,673, respectively, and reported a net loss of $5,111,370 and $8,937,999, respectively, and cash flows used in operating activities of $[15,168,347] and $5,771,840, respectively. As noted in our unaudited condensed consolidated financial statements, as of March 31, 2026, we had an accumulated deficit of $159,080,034. Results of Operations The following table sets forth our results of operations for the three months ended March 31, 2026 and 2025: Three Months Ended March 31, 2026 2025 Revenues $ 21,059,130 $ 16,272,673 Cost of sales 19,347,420 15,754,704 Operating expenses 10,734,480 5,538,505 Depreciation and amortization 1,071,073 733,336 Operating loss (11,805,553 ) (5,753,872 ) Other income (expense) (672,649 ) (3,184,127 ) Net loss including non-controlling interest $ (10,766,492 ) $ (8,937,999 ) For the three months ended March 31, 2026 compared to the three months ended March 31, 2025 Revenues Revenues for the three months ended March 31, 2026 increased significantly compared to the three months ended March 31, 2025. This growth was primarily attributable to a rise in gallons delivered as well as an uptick in the average price per gallon. Several factors contributed to this performance: 1. Expanded Customer Base. The Company successfully grew its presence in existing markets while entering new regions, resulting in a higher total volume of fuel delivered. This expansion was supported by focused sales efforts and brand-building initiatives that attracted both new commercial and residential customers. 5 2. Fleet Partnerships. Strategic partnerships with commercial fleet operators continued to drive fueling volumes. These partnerships often involve recurring, contracted deliveries that provide a stable, predictable revenue stream. As more fleet operators adopt on-demand fueling to reduce downtime and optimize logistics, EzFill benefits from increased, repeat business. 3. Enhanced Technology & Marketing. Ongoing enhancements to the EzFill mobile application—including user interface improvements and expanded scheduling features—improved the customer experience and streamlined order placement. Coupled with targeted marketing campaigns, these tech and branding initiatives boosted visibility and encouraged higher consumer adoption rates, further lifting revenues. Cost of Sales Cost of sales rose in the three months ended March 31, 2026, compared to the three months ended March 31, 2025, in line with the higher sales volumes and expanded market coverage. Despite the increase in absolute costs, gross profit improved, reflecting disciplined pricing, higher-margin sales, and operational efficiencies. Key factors influencing cost of sales included: 1. Higher Fuel Volume. As overall demand increased, the Company purchased and delivered a greater volume of fuel. Although this drove up the total cost of sales, it remained proportionate to revenue growth, preserving gross margins. 2. Fuel Price Fluctuations. Commodity price swings can significantly affect fuel costs. However, the Company’s dynamic pricing strategies and supplier relationships helped ensure that these fluctuations did not adversely impact overall profitability. 3. Logistics & Delivery Costs. Expansion into new geographic areas required additional delivery routes and staffing. While these investments raised labor and transportation costs, they were essential for meeting growing customer demand. Improved driver efficiency and delivery scheduling helped partially offset the impact of these higher costs, contributing to the year-over-year improvement in gross profit. Operating Expenses We incurred operating expenses of $10,734,480 during the three months ended March 31, 2026, compared to $5,538,505 during the prior year, representing an increase of $5,195,975. This increase was primarily due to a stock based compensation expense of $7,859,677, partially offset by cost cutting measures by the Company, resulting in the ability to maintain steady operating expenses while scaling revenue. Depreciation and Amortization Depreciation and amortization expense saw an increase in the three months ended March 31, 2026, compared to the same period in 2025. This increase was primarily due to the purchase of additional trucks during the year ended December 31, 2025. 6 Other Expense Other expense consisted of the following: For the Three Months Ended Period over Period Changes March 31, Increase (Decrease) 2026 2025 $ Amount % Change Interest income $ 2 $ - $ 2 100 % Other income 7,945 139,270 (131,325 ) (94.30 )% Interest expense (including amortization of debt discount)_ (680,596 ) (3,323,397 ) 2,642,801 (79.52 )% Total other expense - net (672,649 ) (3,184,127 ) 2,511,478 (78.87 )% The Company’s other expense, net, decreased in the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The primary drivers were a decrease in interest expense, partially offset by a decrease in other income. Below is a detailed breakdown of the major components. Interest Expense (including amortization of debt discount) There was a decrease of $2,642,801 in interest expense from $3,323,397 in the three months ended March 31, 2025 to only $680,596 in the three months ended March 31, 2026. Interest expense in both periods was primarily due to: 1. Amortization of Debt Discount: The amortization of debt discount increased due to additional debt arrangements with original issue discounts. Additionally, in connection with the conversion of debt converted to equity, related unamortized discounts were expensed at that time. 2. Existing and New Borrowings: The interest expense recognized on outstanding debt instruments was lower than the three months ended March 31, 2025. Net Loss Three Months Ended Period-over-Period Changes March 31, Increase (Decrease) 2026 2025 $ Amount % Change Net loss including non-controlling interest $ (10,766,492 ) $ (8,937,999 ) $ (4,339,971 ) (75.43 )% Our net loss decreased in the three months ended March 31, 2026, as a result of the categories discussed above. Overall, the increase in revenues, driven by both volume and pricing, showcased the Company’s successful market expansion and deepening fleet partnerships. While costs of sales naturally rose with higher delivery volumes, disciplined operational execution and strategic pricing helped improve gross profit and maintain steady operating costs to improve net loss. Ongoing cost-optimization initiatives further reduced operating expenses, though the Company continues to invest in talent and technology to fuel long-term growth. 7 Non-GAAP Financial Measures Adjusted EBITDA and average fuel margin per gallon are non-GAAP financial measures which we use in our financial performance analyses. These measures should not be considered a substitute for GAAP-basis measures, nor should they 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, impairment of goodwill, other intangibles and fixed assets, and stock compensation expense, provides useful supplemental information that is essential to a proper understanding of our financial results. We also believe that the presentation of average fuel margin per gallon, a non-GAAP financial measure calculated by subtracting cost of sales specific to fuel purchases and merchant fees from net sales and dividing it by the number of gallons delivered in the reporting period. 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 months ended March 31, 2026 and 2025: Three Months Ended Period-over-Period Changes March 31, Increase (Decrease) 2026 2025 $ Amount % Change Net loss including non-controlling interest $ 10,766,492 $ 8,937,999 $ (1,966,179 ) (42.81 )% Interest expense, net 680,596 3,323,397 (2,642,801 ) (79.52 )% Depreciation and amortization 1,071,073 733,336 337,737 46.05 % Stock compensation 7,859,677 1,485,724 6,373,953 429.01 % Adjusted EBITDA $ 1,155,136 $ 3,395,542 $ 2,227,241 (64.85 )% Liquidity and Capital Resources Liquidity is the ability of an enterprise to generate adequate amounts of cash to meet its needs for cash requirements. We had cash of $208,048 and $2,116,932 as of March 31, 2026 and 2025, respectively. Cash Flow Activities Our cash balances at March 31, 2026 were as follows: Period-over-Period Changes March 31, Increase (Decrease) 2026 2025 $ Amount % Change Cash and cash equivalents $ 208,048 $ 2,116,932 $ (1,908,884 ) 90.17 % Cash and cash equivalents decreased year over year. The primary drivers of this increase were the Company’s net loss from operations and repayment of outstanding debt positions throughout the period. 8 Operating Activities Net cash used in operating activities was $2,148,891 for the three months ended March 31, 2026, which was made up primarily by the net loss of $6,971,820 and offset by non-cash adjustments for a net amount of $8,617,601, most notably including an expense of $7.9 million related to stock issued for services. Net cash used in operating activities was $5,771,840 during the three months ended March 31, 2025, which was made up primarily by the net loss of $8,937,999 and offset by non-cash adjustments for a net amount of $3,166,159. Investing Activities During the three months ended March 31, 2026 and 2025 net cash used by investing activities was $0. Financing Activities Net cash provided by financing activities decreased significantly from $6,276,655 in the three months ended March 31, 2025 to $1,972,799 in 2026. This decrease reflects a decrease in proceeds from notes payable and from common stock issued for cash, partially offset by a decrease in repayments of notes payable. 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 three months ended March 31, 2026, the Company had a net loss of $10,766,492. At March 31, 2026, the Company had an accumulated deficit of $164,735,156. The Company anticipates that it will continue to generate operating losses and use cash in operations through the foreseeable future. Historical Operating Performance and Financing Since inception, the Company has incurred net losses and has not generated sufficient revenues or positive operating income to independently fund our operations. Consequently, we have depended on equity and debt financings—including those from related parties—to finance our activities and support our growth initiatives. This reliance on external funding has been critical for maintaining day-to-day operations, expanding our service capacity, and investing in technology and assets. However, it has also introduced risks related to interest expense, equity dilution, and dependency on the availability of future financing. Current Liquidity Position Our liquidity position primarily reflects a combination of cash on hand and available debt arrangements. Despite recent improvements in cash balances due to targeted financing activities, we continue to face challenges in achieving sustainable cash flow from operations. The timing of expenditures and capital outlays, coupled with the inherent volatility in revenue generation in our industry, adds to the uncertainty of our liquidity profile. Debt Obligations and Capital Expenditures A significant portion of our near-term cash outflows is attributable to scheduled debt repayments and interest expense, including higher financing costs incurred from default penalty interest and increased debt discount amortization. Additionally, as we invest in capital expenditures—such as the purchase of new delivery vehicles and technology enhancements—to support expansion into new markets, our cash requirements remain elevated. These commitments, while essential for long-term growth, further strain our liquidity in the short term. 9 Reliance on External Financing Given the current financial dynamics, we have continually relied on external sources of capital. Our funding strategies have included: ● Equity Issuances: Raising capital through the sale of common or preferred shares, including convertible securities from related parties. ● Debt Financings: Securing loans and other debt instruments, often under terms that include default penalty interest or other onerous conditions, which have contributed to higher financing costs. ● Related-Party Transactions: Engaging with supportive investors and related parties who have provided additional funds, albeit at terms that may affect our overall capital structure. Outlook and Mitigating Actions In light of these challenges, we continue to closely monitor our liquidity position and are exploring multiple avenues to secure additional funding. These include: ● Negotiating more favorable terms on existing and future debt. ● Identifying new equity partners or investors. ● Optimizing working capital through tighter control of receivables, payables, and inventory management. While these efforts are underway, our ability to meet operational and financial obligations over the next 12 months remains subject to significant uncertainty. Investors and stakeholders should be aware of the risks associated with our current liquidity and capital structure, and the potential need for additional financing that could result in further dilution or increased debt service obligations. Going Concern Qualification As reflected in the accompanying unaudited condensed consolidated financial statements, for the three months ended March 31, 2026, the Company had: ● Net loss available to common stockholders of $10,880,521; and ● Net cash used in operations was $2,148,891. Additionally, at March 31, 2026, the Company had: ● Accumulated deficit of 164,735,156; ● Stockholders’ deficit of $22,048,064; and ● Working capital deficit of $25,004,379. 10 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 $208,048 at March 31, 2026. 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 condensed 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. Management is actively pursuing strategies to enhance revenue generation, improve operational efficiencies, and secure additional financing on more sustainable terms. We are evaluating various initiatives, including cost-containment measures, operational improvements, and strategic partnerships, with the aim of transitioning to positive cash flow from operations. However, there remains a risk that these strategies may not yield the desired outcomes in the near term. Management’s strategic plans include the following: ● Expand into new and existing markets (commercial and residential); ● Obtain additional debt and/or equity based financing for growth; ● Closed our transaction with Next Holding (occurred February 13, 2025); ● Collaborations with other operating businesses for strategic opportunities; and ● Acquire other businesses to enhance or complement our current business model while accelerating our growth. Off-Balance Sheet Financing Arrangements We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets. Critical Accounting Policies and Estimates Management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which were prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions for the reported amounts of assets, liabilities, revenue, and expenses. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, and those differences may be material. 11 While our significant accounting policies are more fully described in Note 2 — Summary of Significant Accounting Policies of the Notes to Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q, we believe the following discussion addresses our most critical accounting policies, which are those that are most important to our financial condition and results of operations and which require our most difficult, subjective and complex judgments. Principles of Consolidation The condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and include the accounts of the Company and its wholly owned subsidiaries. The Company consolidates entities where it has a controlling financial interest, as defined by the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 810, “Consolidation”. In accordance with ASC 810-10, consolidation applies to: ● Entities with more than 50% voting interest, unless control is not with the Company; and ● Variable Interest Entities (VIEs), where the Company is the primary beneficiary, possessing both (i) power over significant activities and (ii) the obligation to absorb losses or receive benefits. All intercompany transactions and balances are eliminated in consolidation per ASC 810-10-45. The Company continuously evaluates its investments and relationships to assess consolidation requirements. Business Combinations, Asset Acquisitions, and Reverse Acquisitions The Company accounts for acquisitions in accordance with ASC 805, “Business Combinations,” and applicable SEC reporting requirements under Regulation S-X, Rule 3-05 and Regulation S-K, Items 101 and 303. Transactions qualifying as business combinations are accounted for under the acquisition method, while those classified as asset acquisitions follow the guidance in ASC 805-50. Additionally, the Company evaluates whether a transaction qualifies as a reverse acquisition under ASC 805-40 and applies the appropriate accounting and disclosure requirements. Business Combinations For transactions classified as business combinations, the Company: ● Recognizes and measures identifiable assets acquired, liabilities assumed, and noncontrolling interests at their fair values at the acquisition date (ASC 805-20-25-1). ● Records goodwill as the excess of the fair value of consideration transferred over the fair value of net assets acquired, including any previously held equity interests (ASC 805-30-30-1). ● Expenses acquisition-related costs as incurred, per ASC 805-10-25-23. ● Uses preliminary purchase price allocations, with adjustments permitted within the measurement period (not exceeding one year) per ASC 805-10-25-13. Adjustments beyond the measurement period are recorded in earnings. Significant judgments in fair value determinations include: ● Intangible asset valuations, based on estimates of future cash flows and discount rates. ● Useful life assessments, impacting amortization and financial results. ● Contingent consideration, which is remeasured at fair value through earnings per ASC 805-30-35-1. For SEC registrants, Regulation S-X, Rule 3-05 may require audited financial statements of the acquired business if the acquisition is significant. The determination of significance follows Rule 1-02(w) of Regulation S-X, which considers investment, asset, and income tests. 12 Asset Acquisitions For transactions classified as asset acquisitions under ASC 805-50, the Company: ● Applies the “screen test” to determine whether substantially all of the fair value of gross assets acquired is concentrated in a single identifiable asset or group of similar assets (ASC 805-10-55-3A). ● Allocates the purchase price using a cost accumulation model, assigning costs to acquired assets based on their relative fair values (ASC 805-50-30-3); And ● Capitalizes direct acquisition costs as part of the asset’s cost, unlike business combinations where such costs are expensed (ASC 805-50-25-1). The classification between business combinations and asset acquisitions requires significant judgment, particularly when applying the screen test. Incorrect classification can materially impact: ● The recognition of goodwill (only in business combinations). ● The measurement and presentation of acquired assets and assumed liabilities; and ● The Company’s financial position and results of operations. Regulatory and Financial Reporting Considerations For SEC registrants, acquisitions may trigger additional disclosure and reporting requirements: ● Regulation S-X, Rule 3-05: Requires separate financial statements of the acquired business if it meets significance thresholds under Rule 1-02(w). ● Regulation S-K, Item 101: Requires disclosure of the impact of material acquisitions on the Company’s business operations. ● Regulation S-K, Item 303: Mandates discussion of the impact of acquisitions on the Company’s financial condition and results of operations in Management’s Discussion and Analysis. ● Regulation S-X, Article 11: Requires pro forma financial statements if the acquisition is significant. ● Form 8-K, Item 2.01: Immediate reporting requirements for material acquisitions, including reverse mergers. The Company continuously evaluates acquisitions, including reverse acquisitions, to ensure proper classification and compliance with ASC 805, SEC reporting requirements, and regulatory guidance. Segment Reporting The Company follows ASC 280, Segment Reporting, which requires public entities to report financial and descriptive information about their reportable operating segments. ASC 280-10-50-1 states that an operating segment is a component of a public entity that: ● Engages in business activities from which it may earn revenues and incur expenses; ● Has operating results that are regularly reviewed by the Company’s chief operating decision maker (“CODM”), which is our Chief Executive Officer to make decisions about resource allocation and performance assessment; and ● Has discrete financial information available. 13 Under ASC 280-10-50-5, a public entity is required to report separately only those operating segments that meet certain quantitative thresholds. However, as specified in ASC 280-10-50-11, if a company’s business activities are managed as a single operating segment and reviewed on a consolidated basis, the company may report as a single segment. The Company has determined that it operates as two reportable segments, as its CODM reviews the business as a whole rather than by distinct business components. Application of ASU 2023-07 – Segment Reporting In October 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , which enhances segment disclosures by requiring public entities to disclose significant segment expenses that are regularly provided to the CODM and used in assessing segment performance and resource allocation. The adoption of ASU 2023-07 did not have a material impact on the Company’s condensed consolidated financial statements. Use of Estimates and Assumptions The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the recognition of revenues and expenses during the reporting period. Actual results may differ from these estimates, and such differences could be material. In accordance with ASC 250-10-50-4, changes in estimates are recorded in the period in which they become known and are accounted for prospectively. The Company bases its estimates on historical experience, industry trends, and other relevant factors, incorporating both quantitative and qualitative assessments that it believes are reasonable under the circumstances. Significant estimates for the three months ended March 31, 2026, and 2025, respectively, include: ● Allowance for doubtful accounts and other receivables ● Inventory reserves and classifications ● Valuation of loss contingencies ● Valuation of stock-based compensation ● Estimated useful lives of property and equipment ● Impairment of intangible assets ● Implicit interest rate in right-of-use operating leases ● Uncertain tax positions ● Valuation allowance on deferred tax assets Risks and Uncertainties The Company operates in a highly competitive industry that is subject to intense market dynamics, shifting consumer demand, and economic fluctuations. The Company’s operations are exposed to significant financial, operational, and strategic risks, including potential business disruptions, supply chain constraints, and liquidity challenges. In accordance with ASC 275, “Risks and Uncertainties,” the Company evaluates and discloses risks that could materially affect its financial condition, results of operations, and business outlook. Key factors contributing to variability in sales and earnings include: 1. Industry Cyclicality (ASC 275-10-50-6) – The Company’s financial performance is affected by industry trends, seasonality, and shifts in market demand. 2. Macroeconomic Conditions (ASC 275-10-50-8) – Economic downturns, inflationary pressures, interest rate changes, and geopolitical risks may impact consumer purchasing behavior and the Company’s revenue streams. 3. Pricing Volatility (ASC 275-10-50-4) – The cost and availability of raw materials, supply chain disruptions, and competitive pricing pressures can lead to fluctuations in gross margins and profitability. Given these uncertainties, the Company faces challenges in accurately forecasting financial performance and may experience material risks affecting liquidity, business continuity, and long-term strategic growth. The Company continuously assesses these risks and implements measures to mitigate their potential impact. 14 Fair Value of Financial Instruments The Company accounts for financial instruments in accordance with ASC 820, Fair Value Measurements, which establishes a framework for measuring fair value and requires related disclosures. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the Company’s principal market or, if none exists, the most advantageous market for the asset or liability. Fair Value Hierarchy ASC 820 requires the use of observable inputs whenever available and establishes a three-tier hierarchy for measuring fair value: ● Level 1 – Quoted market prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2 – Observable inputs other than quoted prices in active markets, such as quoted prices for similar assets and liabilities or inputs that are directly or indirectly observable. ● Level 3 – Unobservable inputs that require significant judgment, including management assumptions and estimates based on available market data. The classification of an asset or liability within the hierarchy is based on the lowest level of input that is significant to the fair value measurement. Level 3 valuations generally require more judgment and complexity, often involving a combination of cost, market, or income approaches, as well as assumptions about market conditions, pricing, and other factors. Fair Value Determination and Use of External Advisors The Company assesses the fair value of its financial instruments and, where appropriate, may engage external valuation specialists to assist in determining fair value. While management believes that recorded fair values are reasonable, they may not necessarily reflect net realizable values or future fair values. Financial Instruments Carried at Historical Cost The Company’s financial instruments—including cash, accounts receivable, accounts payable, and accrued expenses (including related party balances)— are recorded at historical cost. As of March 31, 2025 and December 31, 2025, respectively, the carrying amounts of these instruments approximated their fair values due to their short-term maturities. Fair Value Option Under ASC 825 ASC 825-10, Financial Instruments, permits entities to elect the fair value option for certain financial assets and liabilities. This election is made on an instrument-by-instrument basis and is irrevocable unless a new election date occurs. If elected, unrealized gains and losses are recognized in earnings at each reporting date. The Company has not elected the fair value option for any of its outstanding financial instruments. Cash and Cash Equivalents and Concentration of Credit Risk For purposes of the condensed consolidated statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the purchase date and money market accounts to be cash equivalents. Investments The Company accounts for available-for-sale (“AFS”) debt securities in accordance with FASB ASC 320, Investments—Debt and Equity Securities. These securities are recorded at fair value, with unrealized gains and losses recognized as a component of other comprehensive income (OCI) unless deemed other-than-temporary, per ASC 320-10-35-1. Recognition of Gains, Losses, and Amortization ● Realized gains and losses, including impairments, are recorded in net income in accordance with ASC 320-10-35-25. ● Cost basis for sales is determined using the first-in, first-out (“FIFO”) method, per ASC 320-10-35-4. ● Premiums and discounts on AFS debt securities are amortized using the straight-line method over the security’s life, in accordance with ASC 320-10-35-10. 15 Impairment Assessment The Company evaluates AFS debt securities for other-than-temporary impairment (“OTTI”) in accordance with ASC 320-10-35-33 to 35. The assessment considers: ● The extent and duration of declines in fair value below amortized cost, ● The financial condition and creditworthiness of the issuer, and ● The Company’s intent and ability to hold the security until recovery. If an OTTI is identified, the impairment loss is recognized in earnings as the difference between the amortized cost and the fair value of the security, per ASC 320-10-35-34. The new fair value becomes the adjusted cost basis, and subsequent recoveries are not recognized in earnings (ASC 320-10-35-35). Accounts Receivable The Company accounts for accounts receivable in accordance with FASB ASC 310, Receivables. Receivables are recorded at their net realizable value, which represents the amount management expects to collect from outstanding customer balances (ASC 310-10-35-7). The Company extends credit to customers based on an evaluation of their financial condition and other factors. The Company does not require collateral, and interest is not accrued on overdue accounts receivable (ASC 310-10-45-4). Allowance for Doubtful Accounts Management periodically assesses the collectability of accounts receivable and establishes an allowance for doubtful accounts as needed. The allowance is determined based on: ● A review of outstanding accounts; ● Historical collection experience; and ● Current economic conditions (ASC 310-10-35-9). Accounts deemed uncollectible are written off against the allowance when determined to be uncollectible (ASC 310-10-35-10). Applicability of ASC 326 The Company has assessed the applicability of ASC 326, Financial Instruments—Credit Losses, which requires an expected credit loss model for financial assets measured at amortized cost. However, ASC 326 primarily applies to financial institutions and entities with long-term financing receivables. Since the Company’s accounts receivable are short-term trade receivables that do not meet the scope requirements of ASC 326-20-15-2, it continues to apply the incurred loss model under ASC 310 for estimating credit losses. Inventory The Company accounts for inventory in accordance with FASB ASC 330, Inventory. Inventory consists solely of fuel and is stated at the lower of cost or net realizable value (“LCNRV”) using the FIFO method, as required by ASC 330-10-35-1. Inventory Valuation and Reserve Assessment Management assesses the recoverability of inventory each reporting period and establishes reserves for potential inventory write-downs when necessary. The Company evaluates factors such as: ● Market conditions affecting fuel prices, ● Net realizable value based on estimated selling price, and ● Inventory turnover trends (ASC 330-10-35-2). Concentrations The Company evaluates and discloses significant concentrations of risk in accordance with FASB ASC 275-10, Risks and Uncertainties. These risks may arise from customer concentrations, vendor reliance, geographic dependence, or other economic factors that could materially impact the Company’s financial position, results of operations, and cash flows. 16 A concentration exists when a single customer, supplier, or market accounts for a significant portion (typically greater than 10%) of the Company’s total revenues, accounts receivable, or vendor purchases (ASC 275-10-50-16). Customer and Sales Concentrations The Company’s revenue stream may be dependent on a limited number of key customers. A loss of any significant customer, a decline in demand from such customers, or a deterioration in their financial condition could negatively impact the Company’s future revenues and profitability. Accounts Receivable Concentrations The Company extends credit to customers based on their financial strength, payment history, and other relevant factors. A significant concentration of accounts receivable from a limited number of customers could expose the Company to credit risk and potential collection issues. The Company regularly evaluates the creditworthiness of its customers and may require advance payments, letters of credit, or other credit enhancements to mitigate risks. Vendor and Supplier Concentrations The Company relies on a limited number of vendors for certain key materials or services. A disruption in supply, changes in pricing, or financial instability of a major supplier could materially impact the Company’s ability to procure necessary materials, leading to increased costs, delays in production, or operational disruptions. The Company continuously assesses vendor relationships and explores alternative suppliers when necessary to mitigate supply chain risks. Property and Equipment Property and equipment are recorded at cost, net of accumulated depreciation, in accordance with ASC 360, “Property, Plant, and Equipment.” Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Repairs and maintenance expenditures that do not materially extend the useful life of an asset are expensed as incurred. Significant improvements or upgrades that increase the asset’s productivity, efficiency, or useful life are capitalized. Upon disposal or sale of property and equipment, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in the statement of operations, in accordance with ASC 360-10-40-5. The Company evaluates the carrying value of property and equipment whenever events or changes in circumstances indicate that the asset may be impaired. If impairment indicators exist, the Company assesses recoverability based on the undiscounted future cash flows expected from the use and disposition of the asset. If the carrying amount exceeds the estimated recoverable amount, an impairment loss is recognized in accordance with ASC 360-10-35-17. Impairment of Long-lived Assets including Internal Use Capitalized Software Costs The Company evaluates the recoverability of long-lived assets, including identifiable intangible assets and internal-use capitalized software costs, in accordance with FASB ASC 360-10-35-15, Impairment or Disposal of Long-Lived Assets. An impairment review is triggered when events or circumstances indicate that the carrying value of an asset group may not be recoverable. Factors considered include, but are not limited to: ● Significant changes in expected performance compared to prior forecasts; ● Changes in asset utilization, including discontinued or modified use; ● Negative industry or economic trends that impact asset value; and ● Strategic shifts in the Company’s business operations (ASC 360-10-35-21). 17 Impairment Assessment Process When impairment indicators exist, the Company performs a recoverability test by comparing the undiscounted future cash flows expected to be generated from the use and ultimate disposition of the asset group to its carrying amount (ASC 360-10-35-17). ● If the undiscounted cash flows exceed the carrying amount, no impairment is recognized. ● If the undiscounted cash flows are less than the carrying amount, an impairment loss is recognized, measured as the excess of the carrying amount over the fair value of the asset (ASC 360-10-35-18). Internal-Use Software Considerations For internal-use capitalized software, impairment is assessed under ASC 350-40-35, which requires evaluation when: Impairment Results For the three months ended March 31, 2026 and 2025, the Company did not record any impairment losses. Original Issue Discounts (“OIDs”) and Other Debt Discounts The Company accounts for OIDs and other debt discounts in accordance with FASB ASC 835-30, Interest—Imputation of Interest. These discounts are recorded as a reduction of the carrying amount of the related debt and are amortized to interest expense over the term of the debt using the effective interest method, unless the straight-line method is materially similar (ASC 835-30-35-2). OIDs For certain notes issued, the Company may provide the debt holder with an OID, which is recorded as a debt discount, reducing the face value of the note. The discount is amortized to interest expense over the term of the debt in the unaudited condensed consolidated statements of operations. Stock and Other Equity Issued with Debt The Company may issue common stock or other equity instruments in connection with debt issuance. When stock is issued, it is recorded at fair value and treated as a debt discount, reducing the carrying amount of the note. These discounts are amortized to interest expense over the life of the debt (ASC 470-20-25-2). The combined debt discounts, including OID and stock-related discounts, cannot exceed the face amount of the debt (ASU 2020-06). Debt Issuance Costs Debt issuance costs, including fees paid to lenders or third parties, are capitalized as a debt discount and amortized to interest expense over the life of the debt in accordance with ASC 835-30-45-1. These costs are presented as a direct deduction from the carrying amount of the debt liability rather than as a separate asset (ASC 835-30-45-3). Right of Use Assets and Lease Obligations The Company accounts for ROU assets and lease liabilities in accordance with FASB ASC 842, Leases. These amounts reflect the present value of the Company’s estimated future minimum lease payments over the lease term, including any reasonably certain renewal options, discounted using a collateralized incremental borrowing rate (ASC 842-20-30-1). The Company classifies its leases as either operating or finance leases based on the criteria outlined in ASC 842-10-25-2. The Company’s leases primarily consist of operating leases, which are included as ROU assets and operating lease liabilities on the condensed consolidated balance sheet. Short-Term Leases The Company has elected the short-term lease exemption allowed under ASC 842-20-25-2, whereby leases with a term of 12 months or less are not recorded on the balance sheet. Instead, lease payments are expensed on a straight-line basis over the lease term. 18 Lease Term and Renewal Options In determining the lease term, the Company evaluates whether renewal options are reasonably certain to be exercised, as required by ASC 842-10-30-1. Factors considered include: ● The useful life of leasehold improvements relative to the lease term; ● The economic performance of the business at the leased location; ● The comparative cost of renewal rates versus market rates; and ● The presence of any significant economic penalties for non-renewal (ASC 842-10-55-26). If a renewal option is deemed reasonably certain to be exercised, the ROU asset and lease liability reflect those additional future lease payments. The Company’s operating leases contain renewal options with no residual value guarantees. Currently, management does not expect to exercise any renewal options, which are therefore excluded in the measurement of lease obligations. Discount Rate and Lease Liability Measurement Since the implicit rate in the leases is not readily determinable, the Company applies an incremental borrowing rate that represents the rate it would incur to borrow on a collateralized basis over a similar term and currency environment (ASC 842-20-30-3). Lease Impairment In accordance with ASC 360-10-35, the Company evaluates ROU assets for impairment indicators whenever events or changes in circumstances suggest the carrying amount may not be recoverable. No impairments of ROU assets were recognized for the three months ended March 31, 2026, and 2025. See Note 7 for details on third-party and related-party operating leases. The Company recognizes revenue in accordance with FASB ASC 606, Revenue from Contracts with Customers, as amended by ASU 2014-09. Under ASC 606, revenue is recognized when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. The Company generates revenue from mobile fuel sales, which can be purchased as a one-time transaction or through a monthly membership. Revenue from fuel sales is recognized at the time of delivery, and membership revenue is recognized at the end of each month, reflecting the satisfaction of the performance obligation over time within a one-month membership cycle. The Company follows the five-step revenue recognition model outlined in ASC 606-10-05-4: 1. Identify the Contract with a Customer A contract exists when the following criteria are met, per ASC 606-10-25-1: ● The contract creates enforceable rights and obligations between the Company and the customer. ● The contract has commercial substance (i.e., it affects the Company’s cash flows). ● The payment terms are identified, and the consideration is determinable. ● It is probable that the Company will collect the consideration in exchange for the goods or services transferred. Contracts for mobile fuel sales and memberships meet these criteria. Collectability is assessed based on historical customer payment trends and credit risk in accordance with ASC 606-10-25-5. 2. Identify the Performance Obligations in the Contract A performance obligation is a distinct good or service promised in the contract that is both capable of being distinct and distinct in the context of the contract, per ASC 606-10-25-19. 19 The Company has determined that its contracts, based on sales type, contain two distinct performance obligations: ● Fuel Sales – The delivery of fuel to a customer, with revenue recognized at the point of delivery. ● Membership Fees – Monthly membership services, with revenue recognized over time within a one-month membership cycle, as the customer benefits from access to services throughout the period. These performance obligations are not bundled or combined, as each service is separately identifiable, in accordance with ASC 606-10-25-22. 3. Determine the Transaction Price The transaction price is the amount of consideration the Company expects to receive in exchange for transferring goods or services to the customer, per ASC 606-10-32-2. The Company’s transaction price considerations include: ● Fixed consideration – Prices are clearly stated and do not vary based on performance. ● No variable consideration – The Company does not formally offer refunds, rebates, or pricing incentives. During the three months ended March 31, 2026 and 2025, respectively, the Company granted insignificant discounts of less than 1% of total revenues. ● No financing component – Payments are made upon fuel delivery or at the end of the monthly membership cycle, per ASC 606-10-32-15. 4. Allocate the Transaction Price to Performance Obligations For contracts with a single performance obligation, the entire transaction price is allocated to that obligation, per ASC 606-10-32-40. If a contract included multiple performance obligations, the transaction price would be allocated based on relative standalone selling prices (“SSP”) as required by ASC 606-10-32-28. The standalone selling price is determined based on observable sales data. The Company’s fuel sales and memberships each have a distinct standalone selling price, eliminating the need for allocation adjustments. 5. Recognize Revenue When (or As) Performance Obligations Are Satisfied Revenue is recognized at the point in time when control over a product or service is transferred to the customer, in accordance with ASC 606-10-25-30. ● Fuel Sales: Control transfers at the time of fuel delivery, at which point revenue is recognized. ● Membership Fees: Revenue is recognized over time within a one-month cycle, as customers receive continuous access to fuel delivery services throughout the month. The Company does not recognize revenue based on customer invoicing dates; instead, it ensures revenue recognition aligns with the actual satisfaction of performance obligations per ASC 606-10-25-31. Principal vs. Agent Considerations In evaluating whether the Company acts as a principal or an agent in its fuel sales transactions, the Company applies the guidance in ASC 606-10-55-36 through 55-40. The Company has determined that it is the principal in these transactions based on the following factors: ● The Company controls the fuel before it is transferred to the customer. ● The Company has discretion in pricing, as it sets the selling price of fuel. ● The Company is responsible for fulfilling the obligation of delivering fuel to the customer. ● The Company is exposed to inventory risk, as it procures and holds fuel before sale. 20 Based on these factors, the Company recognizes revenue on a gross basis, as it is the principal in fuel sales transactions in accordance with ASC 606-10-55-37A. Summary of Compliance with ASC 606 and ASU Updates Revenue Stream Performance Obligation Recognition Timing Consideration Type Fuel Sales Fuel Delivery At time of delivery Fixed price per gallon Membership Fees Monthly access to fuel services Over time (one-month cycle) Fixed monthly subscription Contract Liabilities (Deferred Revenue) Contract liabilities represent amounts received from customers before the satisfaction of performance obligations, which are subsequently recognized as revenue upon fulfillment. Under ASC 606-10-45-2, the Company discloses contract balances related to deferred revenue when applicable. Any prepayments received for fuel deliveries or memberships are classified as contract liabilities until revenue recognition criteria are met. Cost of Sales Cost of sales consists of direct expenses incurred in the delivery of the Company’s products and services. These costs primarily include: ● Fuel Costs – The cost of procuring fuel for resale, including fluctuations in market pricing, supplier agreements, and transportation expenses. ● Driver Wages and Benefits – Compensation, payroll taxes, and employee benefits associated with the Company’s delivery personnel. Cost of sales is recognized in the same period as the related revenue in accordance with FASB ASC 705, Cost of Sales and Services. The Company regularly evaluates its cost structure to ensure efficient fuel procurement and operational cost management. Fuel costs include all costs incurred to acquire fuel, including supporting transportation costs prior to delivery to customers. Fuel costs do not include any depreciation of property and equipment as there are no significant amounts that could be attributed to fuel costs. Accordingly, depreciation and amortization are separately classified in the condensed consolidated statements of operations and are not recorded in cost of sales. Income Taxes The Company accounts for income taxes using the asset and liability method prescribed by FASB ASC 740, Income Taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences of differences between the financial reporting and tax bases of assets and liabilities. These amounts are measured using enacted tax rates expected to apply in the periods when temporary differences reverse (ASC 740-10-30-8). The effect of a change in tax rates on deferred tax balances is recognized as income or expense in the period that includes the enactment date (ASC 740-10-45-4). Uncertain Tax Positions The Company evaluates uncertain tax positions in accordance with ASC 740-10-25, which requires that a tax position be recognized in the financial statements only if it is more likely than not (greater than 50% likelihood) to be sustained upon examination by tax authorities. As of December 31, 2025 and 2024, respectively, the Company had no uncertain tax positions that qualified for recognition or disclosure in the financial statements (ASC 740-10-50-15). The Company also recognizes interest and penalties related to uncertain tax positions in other expense in the condensed consolidated statement of operations (ASC 740-10-45-25). No interest and penalties were recorded for the years ended December 31, 2025 and 2024. Valuation of Deferred Tax Assets The Company’s deferred tax assets include certain future tax benefits, such as net operating losses (NOLs), tax credits, and deductible temporary differences. Under ASC 740-10-30-5, a valuation allowance is required if it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. The Company reviews the realizability of deferred tax assets on a quarterly basis, or more frequently if circumstances warrant, considering both positive and negative evidence (ASC 740-10-30-16). 21 Factors Considered in Valuation Allowance Assessment The Company evaluates multiple factors in determining whether a valuation allowance is necessary, including: ● Historical earnings trends (cumulative pre-tax income or losses in the most recent three-year period) ● Future financial projections, including expected taxable income based on long-term estimates of business performance and market conditions ● Statutory carryforward periods for net operating losses and other deferred tax assets ● Prudent and feasible tax planning strategies that could impact the realization of deferred tax assets ● Nature and predictability of temporary differences and the timing of their reversal ● Sensitivity of financial forecasts to external factors such as commodity prices, market demand, and operational risks While cumulative three-year losses are a strong indicator that a valuation allowance may be needed, ASC 740-10-30-23 states that a valuation allowance determination is not solely based on past losses—all available positive and negative evidence must be considered. Valuation Allowance Determination At March 31, 2026 and December 31, 2025, respectively, the Company recorded a full valuation allowance against its deferred tax assets, resulting in a net carrying amount of $0. This determination was based on cumulative losses in recent years and the lack of sufficient positive evidence to support the realization of deferred tax assets in the near term (ASC 740-10-30-24). The Company will continue to evaluate its valuation allowance each reporting period and will recognize deferred tax assets in the future if sufficient positive evidence emerges to support their realization. Advertising Costs Advertising costs are expensed as incurred, in accordance with ASC 720-35, “Advertising Costs.” These costs are recognized as operating expenses in the period in which they are incurred and are classified within general and administrative expenses in the condensed consolidated statements of operations. The Company does not capitalize direct-response advertising costs, as they do not meet the criteria for deferral under ASC 720-35-25-1. Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC 718, “Compensation – Stock Compensation,” using the fair value-based method. Under this guidance, compensation cost is measured at the grant date based on the fair value of the award and is recognized over the requisite service period, typically the vesting period. ASC 718 establishes accounting standards for transactions in which an entity exchanges its equity instruments for goods or services. It also applies to transactions where an entity incurs liabilities based on the fair value of its equity instruments or liabilities that may be settled using equity instruments. In compliance with ASU 2018-07, the Company applies the fair value method for equity instruments granted to both employees and non-employees, aligning non-employee share-based payment accounting with that of employees. The fair value of stock-based compensation is determined as of the grant date or the measurement date (i.e., when the performance obligation is completed) and is recognized over the vesting period in accordance with ASC 718. The Company determines the fair value of stock options using the Black-Scholes option pricing model, considering the following key assumptions: ● Exercise price – The agreed-upon price at which the option can be exercised. ● Expected dividends – The anticipated dividend yield over the expected life of the option. ● Expected volatility – Based on historical stock price fluctuations. ● Risk-free interest rate – Derived from U.S. Treasury securities with similar maturities. ● Expected life of the option – Estimated based on historical exercise patterns and contractual terms. Additionally, the Company follows the guidance under ASU 2016-09, which introduced amendments to simplify certain accounting aspects of share-based compensation, including: ● The treatment of tax benefits and tax deficiencies in income tax reporting. ● The option to recognize forfeitures as they occur rather than estimating them upfront. ● Cash flow classification for certain tax-related transactions. 22 The Company continues to evaluate and apply the latest Accounting Standards Updates (ASUs) and interpretive releases related to stock-based compensation to ensure compliance with evolving financial reporting requirements. Stock Warrants In connection with certain financing transactions (debt or equity), consulting arrangements, or strategic partnerships, the Company may issue warrants to purchase shares of its common stock. These standalone warrants are not puttable or mandatorily redeemable by the holder and are classified as equity instruments in accordance with ASC 480, “Distinguishing Liabilities from Equity.” The fair value of warrants issued for compensation purposes is measured using the Black-Scholes option pricing model, consistent with the guidance in ASC 718-10-30. However, if warrants meet the definition of derivative liabilities under ASC 815, “Derivatives and Hedging,” fair value is determined using a binomial pricing model or other appropriate valuation techniques, as required by ASC 815-40-15. Accounting Treatment of Warrants ● Warrants issued in conjunction with common stock issuance are initially recorded at fair value as a reduction in Additional Paid-In Capital (APIC), in accordance with ASC 815-40-25. ● Warrants issued for services are recorded at fair value and expensed over the requisite service period or immediately upon issuance if no service period exists, as per ASC 718-10-25. ● Warrants classified as liabilities due to settlement features or pricing adjustments are remeasured at fair value each reporting period, with changes recognized in earnings, following ASC 815-40-35. Basic and Diluted Earnings (Loss) per Share and Reverse Stock Split The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings Per Share.” The calculation of basic EPS follows the two-class method and is determined by dividing net earnings available to common shareholders by the weighted average number of common shares outstanding, including certain other shares committed to be issued. Basic Earnings Per Share (EPS) Basic EPS is calculated using the two-class method, as prescribed by ASC 260-10-45-60, and is computed as follows: ● Net earnings available to common shareholders represent net earnings to common shareholders, adjusted for the allocation of earnings to participating securities. ● Losses are not allocated to participating securities in accordance with ASC 260-10-45-61. ● The denominator includes common shares outstanding and certain other shares committed to be issued, such as restricted stock and restricted stock units (“RSUs”), for which no future service is required. Diluted Earnings Per Share (EPS) Diluted EPS is calculated under both the two-class method and the treasury stock method, and the more dilutive result is reported, as required by ASC 260-10-45-45. ● Diluted EPS is computed by taking the sum of: ○ Net earnings available to common shareholders ○ Dividends on preferred shares ○ Dividends on dilutive mandatorily redeemable convertible preferred shares ○ Divided by the weighted average number of common shares outstanding and certain other shares committed to be issued, plus all dilutive common stock equivalents during the period, such as: ■ Stock options ■ Warrants ■ Convertible preferred stock ■ Convertible debt ● Preferred shares and unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) qualify as participating securities under the two-class method, per ASC 260-10-45-62. Net Loss Per Share Considerations In computing net loss per share, unvested shares of common stock are excluded from the denominator, as required by ASC 260-10-45-48. 23 Participating Securities & Share-Based Compensation Restricted stock and RSUs granted as part of share-based compensation contain nonforfeitable rights to dividends and dividend equivalents, respectively. Therefore: ● Before the requisite service is rendered for the right to retain the award, these instruments meet the definition of a participating security under ASC 260-10-45-59. ● RSUs granted under an executive compensation plan, however, are not considered participating securities because the rights to dividend equivalents are forfeitable (ASC 718-10-25). Related Parties The Company defines related parties in accordance with ASC 850, “Related Party Disclosures,” and SEC Regulation S-X, Rule 4-08(k). Related parties include entities and individuals that, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties include, but are not limited to: ● Principal owners of the Company. ● Members of management (including directors, executive officers, and key employees). ● Immediate family members of principal owners and members of management. ● Entities affiliated with principal owners or management through direct or indirect ownership. ● Entities with which the Company has significant transactions, where one party has the ability to exercise control or significant influence over the management or operating policies of the other. A party is considered related if it has the ability to control or significantly influence the management or operating policies of the Company in a manner that could prevent either party from fully pursuing its own separate economic interests. The Company discloses all material related party transactions, including: ● The nature of the relationship between the parties. ● A description of the transaction(s), including terms and amounts involved. ● Any amounts due to or from related parties as of the reporting date. ● Any other elements necessary for a clear understanding of the transactions’ effects on the financial statements. Disclosures are made in accordance with ASC 850-10-50-1 through 50-6 and SEC Regulation S-X, Rule 4-08(k), which requires registrants to disclose material related party transactions and their effects on the financial position and results of operations. ● See Note 1, which discusses the common control merger between the Company and Next Holding, on February 13, 2025. ● See Note 4 which includes accrued liabilities – related parties. ● See Notes 5 and 12 for a discussion of related party debt. ● See Note 7 regarding right-of-use operating lease with the Company’s Chief Technology Officer. ● See Note 8 for a discussion of equity transactions with certain officers and directors. Recent Accounting Standards ASU 2022-02 – Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures In March 2022, the FASB issued ASU 2022-02, which: ● Eliminates the troubled debt restructuring (TDR) model for creditors under ASC 310, “Receivables.” ● Requires enhanced vintage disclosures related to credit losses, including gross write-offs by year of origination. ● Updates the accounting guidance under ASC 326, “Financial Instruments – Credit Losses,” to enhance disclosures regarding loan refinancings and restructurings for borrowers experiencing financial difficulty. The Company adopted ASU 2022-02 on January 1, 2023. The adoption did not have a material impact on the Company’s condensed consolidated financial statements. ASU 2023-07 – Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures 24 In November 2023, the FASB issued ASU 2023-07, which enhances disclosure requirements for reportable segments by: ● Requiring enhanced disclosures of significant segment expenses. ● Aligning segment reporting requirements with information regularly reviewed by management. The Company adopted ASU 2023-07 on January 1, 2024. The adoption did not have a material impact on the Company’s condensed consolidated financial statements. Recently Issued Accounting Standards Not Yet Adopted ASU 2023-09 – Income Taxes (Topic 740): Improvements to Income Tax Disclosures In December 2023, the FASB issued ASU 2023-09, which enhances income tax disclosure requirements by: ● Standardizing and disaggregating rate reconciliation categories. ● Requiring disclosure of income taxes paid by jurisdiction. This ASU is effective for annual periods beginning after December 15, 2024, and may be applied on a prospective or retrospective basis. Early adoption is permitted. The Company is currently assessing the impact of ASU 2023-09 on its income tax disclosures and reporting requirements. In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). This standard requires additional disclosures of certain expenses, including purchases of inventory, employee compensation, depreciation, intangible asset amortization, and other specific expense categories. This standard also requires disclosure of the total amount of selling expenses and the Company’s definition of selling expenses. This update is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. We are evaluating the impact this update will have on our annual disclosures; however, it will not impact our financial condition, results of operations, or cash flows. Other Accounting Standards Updates The FASB has issued various technical corrections and industry-specific updates that are not expected to have a material impact on the Company’s condensed consolidated financial position, results of operations, or cash flows. These reclassifications had no impact on the Company’s condensed consolidated results of operations, stockholders’ equity, or cash flows. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable.