NXXT filing — read by section

Item 7. Management’s Discussion and Analysis

Item
7. 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 consolidated financial statements and
related notes included in this Annual Report on Form 10-K and the audited financial statements and notes thereto as of and for the year
ended December 31, 2024 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operation. Unless
the context requires otherwise, references in this Annual Report on Form 10-K to “we,” “us,” and “our”
refer to NextNRG, Inc. 

 Overview 

 We
were incorporated under the laws of Delaware in March 2019. We are in the business of operating mobile fueling trucks and are headquartered
in Miami, Florida. NextNRG provides its customers with the ability to have fuel delivered to their vehicles (cars, boats, trucks) without
leaving their home or office and to construction sites, generators and reserve tanks. 

 Our
mobile fueling solution gives our fleet, consumer and other customers the ability to fuel their vehicles with the touch of an app or
regularly scheduled service, and without the inconvenience of going to the gas station. 

 59 

 Critical
Accounting Policies and Estimates 

 Management’s
discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which
were prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). The preparation of these 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. 

 While
our significant accounting policies are more fully described in Note 2 — Summary of Significant Accounting Policies of
the Notes to Consolidated Financial Statements included in this annual report, 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
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 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. 

 60 

 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. 

 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). 

 ● 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). 

 61 

 ● The
 measurement and presentation of acquired assets and assumed liabilities. 

 ● The
 Company’s financial position and results of operations. 

 Reverse
Acquisitions 

 A
reverse acquisition occurs when the entity that issues securities (the legal acquirer) is identified as the accounting acquiree, and
the entity whose equity interests are acquired (the legal acquiree) is identified as the accounting acquirer under ASC 805-40, “Reverse
Acquisitions.” 

 Accounting
for Reverse Acquisitions 

 ● The
 legal acquiree (accounting acquirer) is treated as the continuing reporting entity, and its
 assets, liabilities, and operations are measured at historical cost. 

 ● The
 legal acquirer (accounting acquiree) is recognized at fair value, similar to a business combination. 

 ● No
 goodwill is recognized, as the transaction is considered a capital reorganization rather
 than an acquisition of a business per ASC 805-40-30-2. 

 ● The
 equity structure (common stock and additional paid-in capital) is adjusted to reflect that
 of the legal acquirer, but the retained earnings balance is that of the accounting acquirer. 

 Disclosure
Requirements for Reverse Acquisitions 

 Under
SEC Regulation S-X, Rule 3-05, and Regulation S-K, Items 101 and 303, the Company must disclose: 

 ● A
 detailed description of the transaction, including how control was obtained. 

 ● A
 comparative analysis of financial statements before and after the acquisition. 

 ● Pro
 forma financial information in accordance with Regulation S-X, Article 11, showing the impact
 of the transaction as if it had occurred at the beginning of the reporting period. 

 ● Changes
 in governance, management, and operations post-acquisition. 

 For
SEC registrants, a reverse merger with a public shell company may also trigger “Super 8-K” reporting requirements under SEC
Form 8-K, Item 2.01, requiring disclosure within four business days of the transaction closing. 

 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). 

 62 

 ● 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 (MD&A). 

 ● 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. 

 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 years ended December 31, 2024, and 2023, 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. 

 63 

 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. 

 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). 

 64 

 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 first-in, first-out (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). 

 Right
of Use Assets and Lease Obligations 

 The
Company accounts for right-of-use (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 Right-of-Use Assets and Operating Lease Liabilities on the 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. 

 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). 

 65 

 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 years ended December 31, 2024,
and 2023. 

 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 Accounting Standards
Update (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. 

 66 

 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. 

 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 years ended December 31, 2024 and 2023, 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. 

 67 

 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. 

 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 

 68 

 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. 

 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, 2024 and 2023, 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 consolidated statement of operations
(ASC 740-10-45-25). No interest and penalties were recorded for the years ended December 31, 2024 and 2023. 

 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). 

 69 

 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
December 31, 2024 and 2023, 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. 

 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. 

 70 

 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. 

 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. 

 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. 

 71 

 ● 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. 

 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). 

 72 

 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
 Notes 1, 10 and 12, which discusses a common control merger between Next and EZFL, after
 year end, on February 13, 2025 

 ● See Note 4 which
includes accrued interest payable – 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. 

 73 

 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 consolidated financial
statements. 

 ASU
2023-07 – Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures 

 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 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. 

 74 

 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
consolidated financial position, results of operations, or cash flows. 

 Results
of Operations 

 General 

 The
Company operates an on-demand mobile fueling service that allows customers—ranging from individual consumers to commercial fleets—to
schedule fuel deliveries directly to their vehicles or equipment via a proprietary technology platform. The Company’s revenue is
generated primarily from the sale and delivery of fuel. Cost of sales includes the cost of fuel, direct labor, and other delivery-related
expenses. Operating expenses consist of selling, general and administrative expenses, technology development, and other unallocated overhead. 

 The
following table sets forth our results of operations for the year ended December 31, 2024 and 2023: 

 Years Ended December 31, 
 Year over Year Changes 

 2024 
 2023 
 Increase (Decrease) 

 Operating Expenses 
 Amount 
 Amount 
 $ Amount 
 % Change 

 Revenues 
 $ 27,770,279 
 $ 23,216,423 
 $ 4,553,856 
 19.61 % 

 Cost of Sales 
 25,467,415 
 21,845,574 
 3,621,841 
 16.58 % 

 Operating Expenses 
 8,505,461 
 8,796,223 
 (290,762 ) 
 -3.31 % 

 Depreciation and amortization 
 1,079,522 
 1,108,186 
 (28,664 ) 
 -2.59 % 

 Operating Loss 
 (7,282,119 ) 
 (8,533,560 ) 
 (1,251,441 ) 
 -14.66 % 

 Other income (expense) 
 (8,906,889 ) 
 (1,938,329 ) 
 6,968,560 
 359.51 % 

 Net Loss 
 $ (16,189,008 ) 
 $ (10,471,889 ) 
 $ 5,717,119 
 54.59 % 

 75 

 Revenues 

 Revenues
for the year ended December 31, 2024, increased significantly compared to the prior year December 31, 2023. 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. 

 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 year over year, 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 include: 

 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. 

 76 

 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 

 Operating
expenses decreased compared to the prior year, primarily due to effective cost-management initiatives across multiple categories: 

 ● Payroll:
 Streamlined staffing and improved operational processes led to lower headcount-related
 expenses. 

 ● Sales
 & Marketing: After establishing brand awareness in key regions, the Company optimized
 its marketing spend, focusing on more targeted campaigns rather than broad-based advertising. 

 ● Insurance
 & Technology: Renegotiated insurance policies and a strategic re-evaluation of technology
 expenditures contributed to reduced overhead. 

 ● Public
 Company Expenses: Enhanced internal controls and better vendor management lowered certain
 fees and administrative costs associated with being a publicly traded company. 

 Notably,
these savings were partially offset by a small increase in stock-based compensation, underscoring the Company’s commitment to attracting
and retaining top talent through equity incentives. 

 Depreciation
and Amortization 

 Depreciation
and amortization declined marginally year over year. The primary driver of this decrease was an impairment of certain equipment totaling
$13,422. This reduction was partially offset by new asset additions of approximately $38,554, reflecting the Company’s ongoing
investments in delivery vehicles, fueling technology, and other capital expenditures necessary to support continued growth and maintain
operational efficiency. 

 77 

 Other
Income (Expense) 

 Other
income and (expense) consisted of the following 

 For the Years Ended December 31, 
 Year over Year Changes 

 2024 
 2023 
 Increase (Decrease) 

 Amount 
 Amount 
 $ Amount 
 % Change 

 Interest income 
 $ - 
 $ 34,327 
 $ (34,327 ) 
 -100.00 % 

 Other income 
 249,253 
 64,800 
 184,453 
 284.65 % 

 Interest expense (including amortization of debt discount) 
 (8,248,642 ) 
 (1,719,296 ) 
 (6,529,346 ) 
 379.77 % 

 Loss on sale of marketable debt securities - net 
 - 
 (27,160 ) 
 27,160 
 -100.00 % 

 Loss on debt extinguishment - related party 
 (907,500 ) 
 (291,000 ) 
 (616,500 ) 
 211.86 % 

 Total other income (expense) - net 
 $ (8,906,889 ) 
 $ (1,938,329 ) 
 $ (6,968,560 ) 
 359.51 % 

 The
Company’s other income (expense), net, deteriorated significantly for the year ended December 31, 2024, compared to the prior year.
The primary drivers were the increase in interest expense—particularly from default penalty interest—and the loss on debt
extinguishment associated with related-party debt transactions. Below is a detailed breakdown of the major components. 

 Interest
Income 

 Interest
income dropped to zero in 2024, reflecting a shift in the Company’s cash management strategy. In 2023, the Company had short-term
investments or interest-bearing accounts that generated interest, which did not recur in 2024. 

 Other
income 

 Other
income rose significantly, driven by one-time gains, settlements, or other ancillary revenue sources. The Company’s expansion and
increased commercial activities may have contributed to additional non-operating income streams. 

 Interest
Expense (including amortization of debt discount) 

 Interest
expense surged in 2024, primarily due to: 

 1. Default
 Penalty Interest : The Company incurred $4,475,565 in default penalty interest during
 2024, compared to none in the prior year. This penalty arose from contractual defaults. These
 defaults occurred in connection with conversion of debt to equity. 

 78 

 2. Amortization
 of Debt Discount : The amortization of debt discount increased to $2,645,291 in 2024 from
 $1,403,244 in 2023. This reflects 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. 

 3. Existing
 and New Borrowings : Interest expense was recognized on outstanding debt instruments. 

 Loss
on Sale of Marketable Debt Securities - Net 

 The
Company had no activity related to marketable securities in 2024. In 2023, there was an insignificant loss of $27,160. 

 Loss
on Debt Extinguishment – Related Party 

 The
Company recorded a loss on debt extinguishment of $907,500 in 2024 in connection with the conversion of related-party debt to Series
A Preferred Stock. By contrast, in 2023, the Company recorded a $291,000 loss tied to extending the maturity date on the same related-party
debt. 

 Net
Loss 

 Years Ended December 31, 
 Year over Year Changes 

 2023 
 2022 
 Increase (Decrease) 

 Amount 
 Amount 
 $ Amount 
 % Change 

 Net Loss 
 $ (16,189,008 ) 
 $ (10,471,889 ) 
 $ (5,717,119 ) 
 54.59 % 

 Our
net loss was the result of the categories discussed above. Overall, the increase in revenues, driven by both volume and pricing, showcases
the Company’s successful market expansion and deepening fleet partnerships. While costs naturally rose with higher delivery volumes,
disciplined operational execution and strategic pricing helped improve gross profit. Ongoing cost-optimization initiatives further reduced
operating expenses, though the Company continues to invest in talent and technology to fuel long-term growth. 

 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, 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. 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. 

 79 

 The
following is a reconciliation of net loss to the non-GAAP financial measure referred to as Adjusted EBITDA for the year ended December
31, 2024 and 2023: 

 Years Ended December 31, 
 Year over Year Changes 

 2024 
 2023 
 Increase (Decrease) 

 Amount 
 Amount 
 $ Amount 
 % Change 

 Net loss 
 $ 16,189,008 
 $ 10,471,889 
 $ 5,717,119 
 54.59 % 

 Interest expense, net 
 8,248,642 
 1,719,296 
 6,529,346 
 379.77 % 

 Depreciation and amortization 
 1,079,522 
 1,108,186 
 (28,664 ) 
 -2.59 % 

 Impairment of goodwill, other intangibles and fixed assets 
 13,422 
 105,506 
 (92,084 ) 
 -87.28 % 

 Stock compensation 
 1,531,640 
 1,525,146 
 6,494 
 -0.43 % 

 Adjusted EBITDA 
 $ 5,315,782 
 $ 6,013,755 
 $ (697,973 ) 
 11.61 % 

 Gallons delivered 
 7,231,618 
 5,853,167 
 1,378,451 
 24 % 

 Average fuel margin per gallon 
 $ 0.71 
 $ 0.65 
 $ 0.06 
 9 % 

 Liquidity
and Capital Resources 

 Cash
Flow Activities 

 Our
cash balances at December 31, 2024 and 2023, were as follows: 

 Year over Year Changes 

 December 31, 
 December 31, 
 Increase (Decrease) 

 2024 
 2023 
 $ Amount 
 % Change 

 Cash and cash equivalents 
 $ 438,299 
 $ 226,985 
 $ 211,314 
 93.10 % 

 Cash
and cash equivalents increased increase year over year. The primary drivers of this increase were: 

 1. Debt
 Financing Received Late in the Year 

 The
Company secured additional financing toward the end of the fiscal year, boosting its cash position. This infusion of funds was a key
component in supporting ongoing operational needs and future growth initiatives. 

 80 

 2. Timing
 of Expenses 

 Certain
operating expenses were either deferred or settled after year-end, resulting in higher cash on hand as of December 31, 2024. This timing
variance can create short-term fluctuations in the Company’s reported cash balances. 

 Overall,
the Company’s stronger cash position provides added liquidity to support daily operations, manage working capital requirements,
and pursue strategic opportunities. 

 Management
continues to monitor cash flows carefully to ensure that the Company maintains sufficient funding for near-term obligations and future
expansion. 

 The
following reflects our inflows (outflows) from our various operating, investing and financing activities: 

 For the Years Ended December 31, 
 
 2024 
 2023 
 Year over Year Changes 

 Increase (Decrease) 
 
 Net Cash Provided by (Used in) 
 Amount 
 Amount 
 $ Amount 
 % Change 

 Operating activities 
 $ (4,585,605 ) 
 $ (6,643,397 ) 
 $ 2,057,792 
 -30.97 % 

 Investing activities 
 (5,925,580 ) 
 2,170,732 
 $ (8,096,312 ) 
 -372.98 % 

 Financing activities 
 10,722,499 
 2,632,857 
 $ 8,089,642 
 307.26 % 

 Net change in cash and cash equivalents 
 $ 211,314 
 $ (1,839,808 ) 
 $ 2,051,122 
 -111.49 % 

 Year
Ended December 31, 2024 as compared to the Year Ended December 31, 2023 

 Operating
Activities 

 Net
cash used in operating activities decreased by approximately $2.1 million year over year. 

 This
improvement primarily reflects stronger operational performance, including higher revenues and improved working capital management, which
reduced the Company’s cash burn. 

 In
addition, more efficient cost controls and timing differences in payables/receivables contributed to a lower net outflow compared to
the prior year. 

 Investing
Activities 

 Cash
used in investing activities increased substantially, driven by higher capital expenditures (vehicles purchased, not yet placed in service
as well as a deposit paid on future asset purchase), offset by no proceeds in the current year from the sales of marketable securities. 

 81 

 While
this resulted in a larger net outflow, these investments are expected to enhance operational capacity and future growth potential. 

 Financing
Activities 

 Net
cash provided by financing activities rose significantly, reflecting successful capital-raising efforts. This increase could be attributable
to: 

 1. Debt
 Financing : Proceeds from the issuance of notes payable and notes payable – related
 parties. The Company secured additional debt contributing to higher inflows. 

 2. Equity
 Issuances : Proceeds from issuing preferred shares bolstered the cash balance, supporting
 ongoing operations and strategic initiatives. 

 Net
Change in Cash and Cash Equivalents 

 Overall,
the Company’s cash position improved by approximately $2.1 million, transitioning from a net outflow in the prior year to a net
inflow in 2024. This positive swing is primarily the result of substantial financing proceeds received late in the year, alongside more
favorable operating cash flows. The timing of major expenses and capital projects also influenced the Company’s cash balance at
year-end. 

 Cash
Flow Summary 

 1. Strengthened
 Liquidity : The significant uptick in financing inflows helped offset operating and investing
 outflows, resulting in a positive net change in cash and cash equivalents. 

 2. Growth-Focused
 Investments : The higher cash outflows for investing activities underscore the Company’s
 commitment to scaling its operations, although this increases near-term cash usage. 

 3. Improving
 Operational Cash Use : A reduction in net cash used in operating activities highlights
 improving efficiencies and stronger sales, but continued focus on cost management remains
 critical to achieving positive operating cash flows in the future. 

 Overall,
the Company’s cash flow trends reflect a deliberate effort to fund growth initiatives while managing day-to-day operational needs.
Management believes that recent financing activities, coupled with ongoing improvements in operational efficiency, will position the
Company for future stability and expansion. 

 82 

 In
connection with our prior discussion, the following provides a line by line detail of the items affecting our changes in cash flow activities
in the tables below: 

 Operating
Activities 

 For the Years Ended December 31, 
 
 2024 
 2023 
 Net Change 

 Operating activities 
 
 Net loss 
 $ (16,189,008 ) 
 $ (10,471,889 ) 
 $ (5,717,119 ) 

 Adjustments to reconcile net income to net cash used in operations 
 
 Depreciation and amortization 
 1,079,522 
 1,108,186 
 (28,664 ) 

 Impairment of fixed assets 
 13,422 
 105,506 
 (92,084 ) 

 Amortization of bond premium and realized loss on investments in debt securities 
 - 
 34,556 
 (34,556 ) 

 Amortization of operating lease - right-of-use asset 
 236,243 
 224,388 
 11,855 

 Amortization of operating lease - right-of-use asset - related party 
 81,203 
 30,160 
 51,043 

 Amortization of debt discount 
 2,645,291 
 1,403,244 
 1,242,047 

 Bad debt expense 
 41,836 
 83,564 
 (41,728 ) 

 Stock issued in connection with loan interest expense - related party 
 677,550 
 - 
 677,550 

 Stock issued for services 
 725,640 
 309,781 
 415,859 

 Stock issued for services - related parties 
 806,000 
 1,215,365 
 (409,365 ) 

 Default penalty interest expense 
 4,475,565 
 - 
 4,475,565 

 Loss on debt extinguishment - related party 
 907,500 
 291,000 
 616,500 

 Accounts Receivable 
 (464,160 ) 
 (509,212 ) 
 45,052 

 Inventory 
 7,657 
 17,191 
 (9,534 ) 

 Prepaids and other 
 174,382 
 108,442 
 65,940 

 Deposits 
 22 
 3,674 
 (3,652 ) 

 Increase (decrease) in 
 
 Accounts payable and accrued expenses 
 193,513 
 (411,204 ) 
 604,717 

 Accounts payable and accrued expenses - related party 
 326,907 
 72,428 
 254,479 

 Operating lease liability 
 (246,880 ) 
 (230,014 ) 
 (16,866 ) 

 Operating lease liability - related party 
 (77,810 ) 
 (28,563 ) 
 (49,247 ) 

 Net cash used in operating activities 
 $ (4,585,605 ) 
 $ (6,643,397 ) 
 $ 2,057,792 

 83 

 For the Years Ended December 31, 
 
 2024 
 2023 
 Net Change 

 Investing activities 
 
 Purchase of vehicles not yet placed into service 
 $ (5,219,876 ) 
 $ - 
 $ (5,219,876 ) 

 Deposit paid on future asset purchase 
 (650,000 ) 
 - 
 (650,000 ) 

 Proceeds from sale of marketable debt securities 
 - 
 2,130,116 
 (2,130,116 ) 

 Advances - related party 
 (17,150 ) 
 - 
 (17,150 ) 

 Purchase of fixed assets - net of refunds on prior purchases 
 (38,554 ) 
 40,616 
 (79,170 ) 

 Net cash provided by (used in) investing activities 
 $ (5,925,580 ) 
 $ 2,170,732 
 $ (8,096,312 ) 

 For the Years Ended December 31, 
 
 2024 
 2023 
 Net Change 

 Financing activities 
 
 Proceeds from issuance of Series B - convertible preferred stock - related party 
 $ 1,400,000 
 $ - 
 $ 1,400,000 

 Proceeds from notes payable 
 5,174,930 
 250,000 
 4,924,930 

 Proceeds from notes payable - related party 
 5,245,000 
 4,590,600 
 654,400 

 Proceeds from common stock issued for cash 
 - 
 25,308 
 (25,308 ) 

 Cash paid for direct offering costs - common stock 
 - 
 (25,308 ) 
 
 Repayments on line of credit 
 - 
 (1,000,000 ) 
 
 Repayments on notes payable 
 (1,097,431 ) 
 (945,243 ) 
 
 Repayments on loan payable - related party 
 - 
 (262,500 ) 
 
 Net cash provided by financing activities 
 $ 10,722,499 
 $ 2,632,857 
 $ 8,089,642 

 Conclusion 

 1. Liquidity
 and Capital Resources : The significant increase in cash from financing activities late
 in the year has improved the Company’s liquidity. However, higher interest expense
 and ongoing operational requirements underscore the importance of prudent cash management
 and careful monitoring of debt covenants. 

 2. Investment
 in Growth : The Company’s heavier investment in vehicles and deposits for future
 assets highlights a strategic push toward market expansion and increased service capacity.
 While these initiatives may weigh on near-term free cash flow, they are expected to enhance
 revenue-generating potential in the long term. 

 3. Focus
 on Operational Efficiency : Management continues to prioritize cost controls, aiming to
 reduce the net cash used in operating activities. Improved working capital management, route
 optimization, and potential price adjustments are key levers for achieving positive cash
 flow from operations in future periods. 

 84 

 4. Related-Party
 Financing : The continued reliance on related-party notes and convertible preferred stock
 indicates a supportive investor base. Nonetheless, the Company must remain mindful of the
 terms and potential ramifications of such financing, including interest rates, default provisions,
 and equity dilution. 

 By
maintaining a disciplined approach to both spending and financing, EzFill aims to strengthen its balance sheet and sustain the growth
momentum of its on-demand fueling business. 

 Liquidity
and Sources of Capital 

 At
this time, we believe our existing funding sources may not be sufficient to meet our operational requirements and service our debt obligations
over the next 12 months from the issuance date of these consolidated financial statements. This assessment is based on our historical
operating performance, ongoing capital needs, and our current reliance on external financing. 

 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. 

 85 

 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. 

 Going
Concern Considerations 

 Our
independent registered public accounting firm has issued a going concern qualification, reflecting the material uncertainties surrounding
our ability to continue as a profitable entity. This qualification is primarily driven by: 

 ● The
 historical and recurring net losses. 

 ● Our
 dependence on external capital to finance operations. 

 ● The
 risk that current financing arrangements may not be renewed or may be available only under
 less favorable terms. 

 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. 

 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. 

 86 

 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 consolidated financial statements, for the year ended December 31, 2024, the Company had: 

 ● Net loss available
to common stockholders of $16,447,279; and 

 ● Net cash used in
operations was $4,585,641 

 Additionally,
at December 31, 2024, the Company had: 

 ● Accumulated deficit
of $61,764,329 

 ● Stockholders’
equity of $2,155,571; and 

 ● Working capital
deficit of $7,416,533 

 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 $438,299 at December 31, 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. 

 87 

 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. 

 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 NextNRG, Inc. (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. 

 Recent
Developments 

 Promissory
Note dated December 2, 2024 

 On
December 2, 2024, the Company and NextNRG entered into a promissory note (the “December 2 Note”) for the sum of $715,000
to be used for the Company’s working capital needs. The December 2 Note has an original issue discount (“OID”) equal
to $65,000. The unpaid principal balance of the December 2 Note has a fixed rate of interest of 8% per annum. Unless the December 2 Note
is otherwise accelerated, or extended in accordance with the terms and conditions therein, the balance of the December 2 Note, along
with accrued interest, will be due and payable in full on December 2, 2025. If the Company defaults on the December 2 Note, the unpaid
principal and interest sums, along with all other amounts payable, multiplied by 150% will be immediately due. Upon default, NextNRG
will have the right to convert all or any part of the outstanding and unpaid principal, interest, penalties, and all other amounts under
the December 2 Note into fully paid and non-assessable shares of the Company’s common stock. The conversion price shall equal the
greater of the average VWAP over the five (5) Trading Day period prior to the conversion date; or $0.70 (the “Floor Price”).
Notwithstanding the foregoing, the conversion price shall not exceed the closing price of the Company’s Common Stock on the Nasdaq
Capital Market on the date of the December 2 Note. The Company and NextNRG have agreed that the total cumulative number of common stock
issued to NextNRG under the December 2 Note, together with all other transaction documents may not exceed the requirements of Nasdaq
Listing Rule 5635(d) (“Nasdaq 19.99% Cap”), except that such limitation will not apply following shareholder approval. If
the Company is unable to obtain shareholder approval to issue common stock to Next in excess of the Nasdaq 19.99% Cap, then any remaining
outstanding balance of this December 2 Note must be repaid in cash at the request of NextNRG. The December 2 Note contains a protection
for NextNRG in the event the Company effectuates a split of its common stock. In the event of a stock split, if the December 2 Note is
issued and outstanding and has not been converted, then the number of shares and the price for any conversion under the December 2 Note
will be adjusted by the same ratios or multipliers of, any such subdivision, split, reverse split. 

 88 

 Promissory
Note dated December 3, 2024 

 On
December 3, 2024, the Company and NextNRG entered into a promissory note (the “December 3 Note”) for the sum of $275,000
to be used for the Company’s working capital needs. The December 3 Note has an original issue discount (“OID”) equal
to $25,000. The unpaid principal balance of the December 3 Note has a fixed rate of interest of 8% per annum. Unless the December 3 Note
is otherwise accelerated, or extended in accordance with the terms and conditions therein, the balance of the December 3 Note, along
with accrued interest, will be due and payable in full on December 3, 2025. If the Company defaults on the December 3 Note, the unpaid
principal and interest sums, along with all other amounts payable, multiplied by 150% will be immediately due. Upon default, NextNRG
will have the right to convert all or any part of the outstanding and unpaid principal, interest, penalties, and all other amounts under
the December 3 Note into fully paid and non-assessable shares of the Company’s common stock. The conversion price shall equal the
greater of the average VWAP over the five (5) Trading Day period prior to the conversion date; or $0.70 (the “Floor Price”).
Notwithstanding the foregoing, the conversion price shall not exceed the closing price of the Company’s Common Stock on the Nasdaq
Capital Market on the date of the December 3 Note. The Company and Next have agreed that the total cumulative number of common stock
issued to Next under this Note, together with all other transaction documents may not exceed the requirements of Nasdaq Listing Rule
5635(d) (“Nasdaq 19.99% Cap”), except that such limitation will not apply following shareholder approval. If the Company
is unable to obtain shareholder approval to issue common stock to Next in excess of the Nasdaq 19.99% Cap, then any remaining outstanding
balance of this December 3 Note must be repaid in cash at the request of Next. The December 3 Note contains a protection for Next in
the event the Company effectuates a split of its common stock. In the event of a stock split, if the December 3 Note is issued and outstanding
and has not been converted, then the number of shares and the price for any conversion under the December 3 Note will be adjusted by
the same ratios or multipliers of, any such subdivision, split, reverse split. 

 Promissory
Note dated December 17, 2024 

 On
December 17, 2024, the Company and NextNRG entered into a promissory note (the “December 17 Note”) for the sum of $580,000
to be used for the Company’s working capital needs. The unpaid principal balance of the December 17 Note has a fixed rate of interest
of 8% per annum. Unless the December 17 Note is otherwise accelerated, or extended in accordance with the terms and conditions therein,
the balance of the December 17 Note, along with accrued interest, will be due and payable in full on December 17, 2025. As part of the
promissory note, the parties acknowledged that $379,755.39 of the Loan was sent directly to a third party as a down payment for the purchase
of equipment. If the Company defaults on the December 17 Note, the unpaid principal and interest sums, along with all other amounts payable,
multiplied by 150% will be immediately due. Upon default, NextNRG will have the right to convert all or any part of the outstanding and
unpaid principal, interest, penalties, and all other amounts under the December 17 Note into fully paid and non-assessable shares of
the Company’s common stock. The conversion price shall equal the greater of the average VWAP over the five (5) Trading Day period
prior to the conversion date; or $0.70 (the “Floor Price”). Notwithstanding the foregoing, the conversion price shall not
exceed the closing price of the Company’s Common Stock on the Nasdaq Capital Market on the date of the December 17 Note. The Company
and NextNRG have agreed that the total cumulative number of common stock issued to Next under this Note, together with all other transaction
documents may not exceed the requirements of Nasdaq Listing Rule 5635(d) (“Nasdaq 19.99% Cap”), except that such limitation
will not apply following shareholder approval. If the Company is unable to obtain shareholder approval to issue common stock to Next
in excess of the Nasdaq 19.99% Cap, then any remaining outstanding balance of this December 17 Note must be repaid in cash at the request
of Next. The December 17 Note contains a protection for NextNRG in the event the Company effectuates a split of its common stock. In
the event of a stock split, if the December 17 Note is issued and outstanding and has not been converted, then the number of shares and
the price for any conversion under the December 17 Note will be adjusted by the same ratios or multipliers of, any such subdivision,
split, reverse split. 

 Michael
Farkas is the chief executive officer of NextNRG and is the beneficial holder of approximately 68.14% of the Company’s outstanding
shares of common stock. 

 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 twenty-one percent (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. 

 89 

 Promissory
Note, dated as of December 30, 2024 

 On
December 30, 2024, the Company and NextNRG entered into a promissory note (the “December 30 Note”) for the sum of $330,000
to be used for the Company’s working capital needs, including without limitation the purchase of equipment. The unpaid principal
balance of the December 30 Note has a fixed rate of interest of 8% per annum. Unless the December 30 Note is otherwise accelerated, or
extended in accordance with the terms and conditions therein, the balance of the December 30 Note, along with accrued interest, will
be due and payable in full on December 30, 2025. If the Company defaults on the December 30 Note, the unpaid principal and interest sums,
along with all other amounts payable, multiplied by 150% will be immediately due. Upon default, NextNRG will have the right to convert
all or any part of the outstanding and unpaid principal, interest, penalties, and all other amounts under the December 30 Note into fully
paid and non-assessable shares of the Company’s common stock. The conversion price shall equal the greater of the average VWAP
over the five (5) Trading Day period prior to the conversion date; or $0.70 (the “Floor Price”). Notwithstanding the foregoing,
the conversion price shall not exceed the closing price of the Company’s Common Stock on the Nasdaq Capital Market on the date
of the December 30 Note. The Company and NextNRG have agreed that the total cumulative number of common stock issued to Next under the
December 30 Note, together with all other transaction documents may not exceed the requirements of Nasdaq Listing Rule 5635(d) (“Nasdaq
19.99% Cap”), except that such limitation will not apply following shareholder approval. If the Company is unable to obtain shareholder
approval to issue common stock to NextNRG in excess of the Nasdaq 19.99% Cap, then any remaining outstanding balance of the December
30 Note must be repaid in cash at the request of NextNRG. The December 30 Note contains a protection for NextNRG in the event the Company
effectuates a split of its common stock. In the event of a stock split, if the December 30 Note is issued and outstanding and has not
been converted, then the number of shares and the price for any conversion under the December 30 Note will be adjusted by the same ratios
or multipliers of, any such subdivision, split, reverse split. 

 Michael
Farkas is the chief executive officer of NextNRG and is the beneficial holder of approximately 68.14% of the Company’s outstanding
shares of common stock. 

 90 

 Promissory
Note, dated as of January 15, 2025 

 On
January 15, 2025, the Company and Alcourt LLC (the “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 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. This note was repaid
in February 2025. 

 Shareholder
Approval 

 The
holders of a majority of the Company’s voting capital stock, by written consents in lieu of meetings delivered on January 15, 2025,
pursuant to Section 228 of the Delaware General Corporation Law and Section 9 of Article II of our bylaws, provided approval for the
following corporate actions (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 LLC, in the event that such note is not repaid by April 15,
 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 International Ltd., 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; 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. 

 91 

 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 has filed with the Commission a definitive information statement under cover of Schedule 14C in respect of the Authorizations
and expects to disseminate such information statement as soon as reasonably practicable. 

 Certain
Receivable Financing Arrangements, dated as of December 27, 2024 

 On
December 27, 2024, the Company entered certain receivable financing arrangements with the following parties: (i) Revenue Purchase Agreement
and Guaranty of Performance with GALT FUNDING Co. (the “Galt Agreement”); (ii) Sales of Future Receipts Agreement with Redstone
Advance Inc. (the “Redstone Agreement”); and (iii) Future Receivables Sale and Purchase Agreement with Funderzgroup LLC dba
Mr. Advance (the “Funderzgroup Agreement”, and together with the Galt Agreement and the Redstone Agreement, the “Receivable
Financing Agreements”). Each of the Receivable Financing Agreements shall expire when the amounts financed thereunder are paid
in full to the respective lenders, which the Company expects to be approximately six (6) months from the date of their signing. The Galt
Agreement provides the Company with $500,000 in receivables financing subject to an origination fee of $15,000 and a payment schedule
of $27,500 per week. The Redstone Agreement provides the Company with $1,000,000 in receivables financing subject to an origination fee
of $30,035 and a payment schedule of $55,000 per week. The Funderzgroup Agreement provides the Company with $1,000,000 in receivables
financing subject to fees of $30,035 and a payment schedule of $55,000 per week. Each of the Receivable Financing Agreements provide
for certain representations and covenants that are customary for these types of transactions. 

 Off-Balance
Sheet Arrangements 

 We
do not have any off-balance sheet arrangements as defined in Regulation S-K Item 303(a)(4). 

 Item
7A. Quantitative and Qualitative Disclosures About Market Risk 

 Smaller
reporting companies are not required to provide the information required by this item. 

 92
NEXTNRG, INC. 10-K

Item 7. Management’s Discussion and Analysis
