NEXTNRG, INC. 10-Q

ITEM 1. LEGAL PROCEEDINGS From time to time, we are involved in various claims and legal actions arising in the ordinary course of business. To the knowledge of our management, except as set forth below, there have been no material changes to the legal proceedings disclosed in Part I, Item 3 of Amendment No. 1 to our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2025 , as the same may be updated from time to time. NEXT/INGLE HOLDINGS, LLC, a Delaware limited liability company, and NEXT NRG OPS, LLC, f/k/a NEXTNRG, LLC, a Delaware limited liability company v. GSPP HOLDCO III, LLC, a New York limited liability company and GREEN STREET POWER PARTNERS, LLC, a New York limited liability company, currently pending in the United States District Court Southern District of New York, Case No. 1:25-cv-9836 This litigation was filed by the Company’s subsidiary NEXT/INGLE HOLDINGS, LLC (“Next/Ingle”)and NEXT NRG OPS, LLC, f/k/a NEXTNRG, LLC (together with Next/Ingle, the “Next Plaintiffs”), alleging that the Next Plaintiffs purchased 100% of a project company from Green Street Power Partners, LLC (“GSPP”) and its affiliate for approximately $4.1 million to acquire the development rights for a solar and battery energy storage project located in Ingle, Florida. The transaction was premised on the understanding that the project would support a viable power purchase agreement with JEA, the community-owned electric utility serving Jacksonville, Florida (“JEA”), at a rate of approximately $49/MW, and that the project could connect to JEA’s infrastructure through existing easements for a “gen-tie” line. The Next Plaintiffs allege that defendants made and repeated these representations in the parties’ Letter of Intent (“LOI”) and Membership Interest Purchase Agreement (“MIPA”), while contractually restricting the Next Plaintiffs from contacting JEA directly and agreeing to keep the Next Plaintiffs updated regarding communications with JEA. The Next Plaintiffs further allege that defendants failed to disclose that, prior to closing, JEA had informed defendants that the proposed $49/MW pricing would not be acceptable, that JEA would not permit the project to utilize its easements for the proposed gen-tie line, and that new resource planning was underway, all of which allegedly undermined the feasibility and value of the project. According to the Next Plaintiffs, these facts were discovered only after closing when the Next Plaintiffs contacted JEA directly. The Next Plaintiffs thereafter demanded indemnification and reimbursement, which defendants allegedly refused, and the Next Plaintiffs commenced this action asserting claims for breach of the LOI, breach of the MIPA, fraud in the inducement, breach of the implied covenant of good faith and fair dealing, negligent misrepresentation, unjust enrichment, breach of fiduciary duty, and rescission, seeking damages including the return of the approximately $4.1 million paid, together with attorneys’ fees, interest, and punitive damages. This matter is currently in its early stages and the pleadings have not yet closed. The Defendant’s Motion to Dismiss was granted and the Next Plaintiff’s filed an amended complaint. The Defendants have filed a motion to dismiss the amended complaint. The Next Plaintiff’s response to the motion to dismiss is due August 21, 2026. The Next Plaintiffs intend to vigorously prosecute the action and will also consider a negotiated resolution to the extent any settlement reasonably compensates the Next Plaintiffs for the losses alleged to have been caused by defendants’ conduct. In the Complaint, the Next Plaintiffs seek damages of approximately $4.1 million, although the amount of damages claimed may fluctuate depending upon the evidence developed during discovery and any expert analysis relating thereto. Discovery has not yet commenced, and expert analysis concerning the nature and extent of the damages alleged in the Complaint has not yet been undertaken. Any estimate of potential damages will be further developed during the discovery process and with the assistance of qualified experts. CHI SQUARED CAPITAL INC., Plaintiff, v. NEXTNRG, INC. and MICHAEL D. FARKAS personally, currently pending in the Supreme Court of the State of New York, County of New York. On July 24, 2026, Chi Squared Capital Inc. filed a complaint against the Company and its Chief Executive Officer, Michael D. Farkas, in the Supreme Court of the State of New York, County of New York (Index No. 654347/2026), asserting claims for breach of contract, breach of the implied covenant of good faith and fair dealing, breach of guaranty, unjust enrichment, constructive trust, and conversion. The claims arise out of a Securities Purchase Agreement dated September 8, 2025 and related convertible notes, warrants, and transaction documents, and are based principally on allegations that the Company failed to timely deliver shares of common stock in response to notices of conversion submitted by the Plaintiffs, conditioned share delivery on the execution of a lock-up and leak-out agreement, and refused to permit additional subsequent closings under the Securities Purchase Agreement. Plaintiff also asserts claims against Mr. Farkas personally a Personal Guaranty. The complaint seeks compensatory damages in excess of $2,000,000, together with additional damages in amounts to be determined at trial, liquidated damages as provided in the transaction documents, pre- and post-judgment interest, attorneys’ fees and costs, and equitable, injunctive, and declaratory relief, including the imposition of a constructive trust over shares of the Company’s common stock. The complaint also seeks punitive damages in connection with the conversion claim. The Company believes it has substantial defenses and has retained counsel. The Company has not filed any responsive pleadings in the case but intends to defend the action vigorously. ITEM 1A. RISK FACTORS As a smaller reporting company, the Company is not required to disclose material changes to the risk factors that were contained in Amendment No. 1 to the Company’s Annual Report on Form 10-K/ A for the year ended December 31, 2025, as the same may be updated from time to time. 37