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” 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, 2024, 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. 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. 3 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 will sell energy to its wireless EV charging customers. NextNRG plans to sell its innovative solutions to property owners, parking facilities, municipalities, and government agencies, as well as charge point operators (CPOs), 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 Power Purchase Agreements (PPA) accordingly. NextNRG is also planning to sell energy to electric vehicle owners via wireless EV charging. SaaS & Licensing Software as a Service 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. Recent Developments Share Exchange with Next Holding On February 13, 2025, the Company effectuated a share exchange (the “Exchange”) with NextNRG Holding Corp. (“Next Holding”), an entity controlled by Michael Farkas. The Exchange was accounted for as a common control merger. 4 The Company, the members of Next Charging LLC (the “Members”), and Mr. Farkas, as the representative of the Members entered into an Exchange Agreement dated August 10, 2023, as amended by the Amended and Restated Exchange Agreement, dated November 2, 2023 (as so amended the “Original Exchange Agreement”), pursuant to which the Company agreed to acquire from the Members 100% of the membership interests of Next Charging LLC in exchange for the issuance by the Company to the Members of shares of the Company’s common stock. Subsequently, Next Charging LLC converted to a corporation organized in the State of Nevada named NextNRG Holding Corp. effective as of March 1, 2024 (the “Conversion”), which Conversion continued the existence of the prior entity in the new corporate form and the prior members of Next Charging LLC remained as shareholders of Next Holding. On June 11, 2024, in order to reflect the Conversion, the Company, all of the shareholders of Next Holding (the “Next Holding Shareholders”) and Michael Farkas as the representative of the Next Holding Shareholders (the “Shareholders’ Representative”) executed a second amended and restated agreement to replace the Original Exchange Agreement in its entirety (the “Second Amended and Restated Exchange Agreement”). Pursuant to the Second Amended and Restated Exchange Agreement, the Company agreed to acquire from the Next Holding Shareholders 100% of the shares of Next Holding in exchange for the issuance of common stock by the Company to the Next Holding Shareholders. On July 22, 2024, the Company and the Shareholders’ Representative entered into the first amendment to the Second Amended and Restated Exchange Agreement (“First Amendment”) to add a new section 2.10 to the Second Amended and Restated Exchange Agreement providing that, in the event that the Company at any time prior to the closing undertakes any forward split or reverse split of its common stock, the number of shares of common stock to be issued to the Next Holding Shareholders as set forth in the Second Amended and Restated Exchange Agreement shall be deemed automatically updated and adjusted to the extent still applicable. The Company and the Shareholders’ Representative entered into the second amendment to the Second Amended and Restated Exchange Agreement (“Second Amendment”). Under the Second Amendment, the consideration to be paid to the Next Holding Shareholders was revised from 40,000,000 to 100,000,000 shares of common stock (“Exchange Shares”), of which 25,000,000 or 50,000,000 shares of the Exchange Shares would be vested on the closing date, and the remaining 75,000,000 or 50,000,000 shares of the Exchange Shares would be subject to vesting or forfeiture. The Second Amendment also provides that in the event that the acquisition of an acquisition target (as defined under the Second Amended and Restated Exchange Agreement) by Next Holding (the “Target”), directly or indirectly through Next Holding or a subsidiary of Next Holding, had been completed prior to the closing, then 50,000,000 of the Exchange Shares would be the “Vested Shares” and 50,000,000 of the Exchange Shares would be the “Restricted Shares” subject to vesting. In the event that the acquisition of the Target by Next Holding, directly or indirectly through Next Holding or a subsidiary of Next Holding, had not been completed prior to the closing, then 25,000,000 of the Exchange Shares shall be the “Vested Shares” and 75,000,000 of the Exchange Shares shall be the “Restricted Shares” subject to vesting. The Second Amendment also amends and restates the vesting schedule for the Restricted Shares and includes amendments to omit and amend certain provisions of the Second Amended and Restated Exchange Agreement in light of the amendment to the Company’s amended and restated certificate of incorporation. On February 13, 2025, the closing (the “Next Closing”) of the transactions contemplated by the Second Amended and Restated Exchange Agreement, as amended by the First Amendment and Second Amendment, was completed, and in connection therewith, Next Holding became a wholly owned subsidiary of the Company. Officer and Director Changes On February 14, 2025, in connection with the Next Closing, (i) Mr. Farkas was appointed Chief Executive Officer and Executive Chairman of the Company; (ii) Yehuda Levy ceased to be the Company’s Interim Chief Executive Officer; and (iii) Joel Kleiner was appointed Chief Financial Officer of the Company. 5 Corporate Name Change In connection with the Next Closing, the Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment to the Certificate of Incorporation of the Company (the “Certificate of Amendment”) to change the name of the Company from EzFill Holdings, Inc. to NextNRG, Inc., effective as of February 14, 2025. Firm Commitment Underwritten Public Offering On February 18, 2025, the Company closed a public offering of 5,000,000 shares of common stock at a price to the public of $3.00 per share (the “Offering Price”), for gross proceeds of $15,000,000, before deducting underwriting discounts and offering expenses. In addition, the Company granted the underwriters a 45-day option to purchase up to an additional 750,000 shares of common stock to cover over-allotments, if any. On February 13, 2025, the Company entered into an Underwriting Agreement (the “Underwriting Agreement”) with ThinkEquity LLC (“Representative”), as representative of the underwriters (“Underwriters”) named on Schedule I thereto, relating to the Company’s firm commitment underwritten public offering (the “Offering”) of common stock. Pursuant to the Underwriting Agreement, the Company agreed to sell 5,000,000 shares of common stock to the Underwriters at the Offering Price, and granted the Representative a 45-day over-allotment option to purchase up to 750,000 additional shares of common stock, equivalent to 15% of the shares of common stock sold in the Offering (the “Option”), pursuant to the Company’s registration statement on Form S-1, as amended (File No. 333-261984) (the “Registration Statement”), under the Securities Act. The closing of the Offering occurred on February 18, 2025. The net proceeds to the Company from the sale of the shares, after deducting the underwriting discounts and commissions and other estimated offering expenses payable by the Company, was approximately $13.3 million. The Company used the net proceeds from the Offering to expand its business, repay outstanding indebtedness, and general corporate purposes, including working capital. Upon closing of the Offering, the Company issued the Representative warrants (the “Representative’s Warrants”) as compensation to purchase up to 250,000 shares of common stock, representing 5% of the aggregate number of shares sold in the Offering. The Representative’s Warrants are exercisable at a per share exercise price of $3.75, which represents 125% of the Offering Price. The Representative’s Warrants are exercisable, in whole or in part, during the 4.5-year period commencing 180 days from the commencement of sales of the shares in the Offering. The Underwriting Agreement contains customary representations, warranties and covenants made by the Company. It also provides for customary indemnification by each of the Company and the Underwriters, severally and not jointly, for losses or damages arising out of or in connection with the Offering, including for liabilities under the Securities Act, other obligations of the parties and termination provisions. In addition, pursuant to the terms of the Underwriting Agreement, each of the Company’s directors, executive officers and holders of 5% or more of the shares have entered into “lock-up” agreements with the Representative that generally prohibit, without the prior written consent of the Representative and subject to certain exceptions, the sale, transfer or other disposition of securities of the Company for a period of six months (with respect to the Company’s directors and executive officers) and three months (with respect to the holders of 5% or more of the issued and outstanding shares of Common Stock who are not directors and executive officers) from February 13, 2025. Further, pursuant to the terms of the Underwriting Agreement, the Company has agreed for a period of three months from February 13, 2025, subject to certain exceptions, not to (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of capital stock of the Company or any securities convertible into or exercisable or exchangeable for shares of capital stock of the Company; (ii) file or cause the filing of any registration statement under the Securities Act with respect to any shares of common stock or other capital stock or any securities convertible into or exercisable or exchangeable for common stock or other capital stock of the Company, other than a customary universal “shelf” registration statement, which the Company will file within 30 days following the earlier of the expiration of such three month period or the date the Company becomes initially eligible to file such registration statement; (iii) complete any offering of debt securities of the Company, other than entering into a line of credit, term loan arrangement or other debt instrument with a traditional bank, or (iv) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of capital stock of the Company. In addition, for a period of 24 months after February 13, 2025, the Company will not directly or indirectly enter into an agreement to engage in any “at-the-market”, continuous equity or variable rate transaction without the prior written consent of the Representative. 6 For a period of 36 months following February 18, 2025, the Representative will have an irrevocable right of first refusal to act as sole investment banker, sole book-runner and/or sole placement agent, at the Representative’s sole discretion, for each and every future public and private equity and debt offerings for the Company, or any successor to or any subsidiary of the Company, including all equity linked financings, on terms customary to the Representative. The Representative will have the sole right to determine whether or not any other broker-dealer will have the right to participate in any such offering and the economic terms of any such participation. The Representative will not have more than one opportunity to waive or terminate the right of first refusal in consideration of any payment or fee. Redstone Agreement On March 24, 2025, the Company entered into a Sale of Future Receipts Agreement (the “Redstone Agreement”) by and between the Company and Redstone Advance Inc. (“Redstone”). Pursuant to the terms of the Redstone Agreement, the Company agreed to (i) sell to Redstone proceeds of future sales made by the Company (collectively, the “Future Receipts”) in the amount of $3,217,700 (the “Purchased Amount”); and (ii) deliver 20% of the Future Receipts to Redstone in accordance with the terms of the Redstone Agreement. As payment for the Purchased Amount, Redstone agreed to pay to the Company $2,300,000, minus $784,000 (representing fees and amounts to satisfy prior balances), resulting in a net payment to the Company of $1,516,000. Pursuant to the terms of the Redstone Agreement, the Company authorized Redstone to debit $125,000 (the “Initial Periodic Amount”), intended to represent 20% of the Company’s Future Receipts, or any updated periodic amount (the “Periodic Amount”) from the Company’s specified account each business day. At any time, the Company or Redstone may obtain a reconciliation of the Company’s actual revenue to adjust the Periodic Amount to more closely reflect the Company’s actual Future Receipts times 20%. Michael D. Farkas, the Company’s Chief Executive Officer, Chairman of the Board of Directors and beneficial holder of a majority of the Company’s outstanding common stock, personally guaranteed the Company’s obligations under the Redstone Agreement. Mr. Advance Agreement On March 25, 2025, the Company entered into a Future Receivables Sale and Purchase Agreement (the “Mr. Advance Agreement”) by and between the Company and Funderzgroup LLC DBA Mr. Advance (“Mr. Advance”). Pursuant to the terms of the Mr. Advance Agreement, the Company agreed to sell to Mr. Advance its right, title and interest in 7.54% of proceeds of Future Receipts until the Purchased Amount has been delivered to Mr. Advance. As consideration, Mr. Advance agreed to pay to the Company $2,300,000, minus $784,035 representing fees and amounts to satisfy prior balances, resulting in a net payment to the Company of $1,515,965. Pursuant to the terms of the Mr. Advance Agreement, the Company authorized Mr. Advance to debit $125,000 on a weekly basis (subject to modification as set forth in the Mr. Advance Agreement), intended to represent 7.54% of the Company’s Future Receipts. Mr. Farkas, the Company’s Chief Executive Officer, Chairman of the Board of Directors and beneficial holder of a majority of the Company’s outstanding common stock, personally guaranteed the Company’s obligations under the Mr. Advance Agreement. Fee Agreement Also on March 25, 2025, the Company entered into a Fee Agreement (the “Fee Agreement”) with Mr. Farkas, the Company’s Chief Executive Officer, Chairman of the Board of Directors and beneficial holder of a majority of the Company’s outstanding shares of common stock. Pursuant to the terms of the Fee Agreement, in consideration of Mr. Farkas personally guaranteeing certain loans entered into by the Company, the Company agreed to pay to Mr. Farkas a fee in the aggregate amount of 3% of the funds personally guaranteed by Mr. Farkas on behalf of the Company. The Company agreed to pay such fee upon receipt of the loan funds by the Company. WCG Agreement On March 31, 2025, the Company entered into a Standard Merchant Cash Advance Agreement (the “WCG Agreement”) with Wynwood Capital Group LLC (“WCG”). Pursuant to the terms of the WCG Agreement, the Company agreed to (i) sell to WCG all of its future accounts, contract rights, and other obligations arising from or relating to the payment of monies from each of the Company’s customers and/or other third party payors (collectively, the “Receivables”) in the amount of $699,500 (the “Receivables Purchased Amount”); and (ii) deliver 9.72% of the Receivables to WCG in accordance with the terms of the WCG Agreement. As payment for the Receivables Purchased Amount, WCG agreed to pay to the Company $500,000, minus a $15,000 origination fee. Pursuant to the terms of the WCG Agreement, the Company authorized WCG to debit $27,980 (the “Initial Estimated Payment”), intended to approximate 9.72% of the Company’s Receivables on a weekly basis. The Company may request a reconciliation to ensure that the amount collected by WCG equals 9.72% of the Receivables. Michael D. Farkas, the Company’s Chief Executive Officer, Chairman of the Board of Directors and beneficial holder of a majority of the Company’s outstanding common stock, personally guaranteed the Company’s obligations under the WCG Agreement. 7 Alcourt Promissory Note On March 31, 2025, the Company issued a promissory note, in the principal sum of 1,000,000 (the “Alcourt Note”), in favor of Alcourt LLC (“Alcourt”). The Alcourt Note bears interest at a rate of 15% per annum and has an original issue discount of $150,000. The Alcourt Note matures on April 30, 2025; provided, however, if the Alcourt Note is not paid on April 30, 2025, the Company will pay $150,000 to Alcourt and upon payment, the maturity date of the Alcourt Note will be extended to May 31, 2025. There is no prepayment penalty. Promissory Note, dated as of May 5, 2025 On May 5, 2025, the Company and Michael D. Farkas entered into a promissory note (the “May 5 Note”) for the principal sum of $600,000 to be used for the Company’s working capital needs. The unpaid principal balance of the May 5 Note has a fixed interest rate of 12% per annum and matures on the earlier of (1) May 5, 2026 or (ii) the date the Company completes a cumulative capital raise of at least $4 million following the date of the May 5 Note. Further, the Note was issued with an original issue discount of $72,000. Promissory Note, dated May 9, 2025 On May 9, 2025, the Company and Mr. Farkas entered into a promissory note (the “May 9 Note”) or the principal sum of $112,000 to be used for the Company’s working capital needs. The unpaid principal balance of the May 9 Note has a fixed interest rate of 12% per annum and matures on the earlier of (1) May 9, 2026 or (ii) the date the Company completes a cumulative capital raise of at least $4 million following the date of the May 9 Note. Further, the May 9 Note was issued with an original issue discount of $12,000. Mr. Farkas is the Company’s Chief Executive Officer, Chairman of the Board of Directors and beneficial holder of a majority of the Company’s outstanding common stock. Our Financial Position For the three months ended March 31, 2025 and 2024, we generated revenues of $16,272,673 and $6,597,119 respectively, and reported net loss of $8,937,999 and $2,675,252, respectively, and cash used in operating activities of $5,771,840 and $1,378,444, respectively. As noted in our unaudited consolidated financial statements, as of March 31, 2025, we had an accumulated deficit of $76,496,673. Results of Operations The following table sets forth our results of operations for the three months ended March 31, 2025 and 2024. Three Months Ended March 31, 2025 2024 Revenues $ 16,272,673 $ 6,597,119 Cost of sales 15,754,704 6,135,333 Operating expenses 5,538,505 1,928,955 Depreciation and amortization 733,336 392,987 Operating loss (5,753,872 ) (1,860,156 ) Other income (expense) (3,184,127 ) (815,096 ) Net loss including non-controlling interest $ (8,937,999 ) $ (2,675,252 ) For the three months ended March 31, 2025 compared to the three months ended March 31, 2024 Revenues Revenues for the three months ended March 31, 2025 increased significantly compared to the three months ended March 31, 2024. 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. 8 Cost of Sales Cost of sales rose in the three months ended March 31, 2025, compared to the three months ended March 31, 2024, 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. Depreciation and Amortization Depreciation and amortization expense saw a slight increase in the three months ended March 31, 2025, compared to the same period in 2024. This increase was primarily driven added depreciation related to the 99 trucks acquired in late 2024. Other Income (Expense) Other income and (expense) consisted of the following: For the Three Months Ended March 31, Period over Period Changes Increase (Decrease) 2025 2024 $ Amount % Change Interest income $ - $ 69,285 $ (69,285 ) -100.00 % Other income 139,270 63,800 75,470 118.29 % Interest expense (including amortization of debt discount) (3,323,397 ) (948,181 ) (2,375,216 ) 250.50 % Total other income (expense) - net $ (3,184,127 ) $ (815,096 ) $ (2,369,031 ) 290.64 % The Company’s other income (expense), net, deteriorated significantly in the three months ended March 31, 2025, compared to the three months ended March 31, 2024. 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 There was no interest income in the three months ended March 31, 2025, compared to $69,285 in the three months ended March 31, 2024, reflecting a shift in the Company’s cash management strategy. 9 Other income Other income rose significantly in the three months ended March 31, 2025, compared to the three months ended March 31, 2024, 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 2025, primarily due to: 1. Amortization of Debt Discount: The amortization of debt discount increased to $2,320,970 in the three months ended March 31, 2025 compared to $611,326 in the three months ended March 31, 2024. 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. 2. Existing and New Borrowings: Interest expense was recognized on outstanding debt instruments. Net Loss Three Months Ended March 31, Period-over-Period Changes Increase (Decrease) 2025 2024 $ Amount % Change Net Loss including non-controlling interest $ (8,937,999 ) $ (2,675,252 ) $ (6,262,747 ) 234.10 % 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. 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, 2025 and 2024: Three Months Ended March 31, Period-over-Period Changes Increase (Decrease) 2025 2024 $ Amount % Change Net loss including non-controlling interest $ 8,937,999 $ 2,675,252 $ 6,262,747 234.10 % Interest expense, net 3,323,397 948,181 2,375,216 250.50 % Depreciation and amortization 733,336 392,987 340,349 86.61 % Stock compensation 1,485,724 147,334 1,338,390 -908.41 % Adjusted EBITDA $ 3,395,542 $ 1,186,750 $ 2,208,792 -186.12 % Gallons delivered 4,688,045 1,658,272 3,029,773 183 % Average fuel margin per gallon $ 0.71 $ 0.65 $ 0.06 9 % 10 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 $ $2,116,932 and $1,612,117 as of March 31, 2025 and 2024, respectively. Cash Flow Activities Our cash balances at March 31, 2025 and 2024 were as follows: March 31, Period-over-Period Changes Increase (Decrease) 2025 2024 $ Amount % Change Cash and cash equivalents $ 2,116,932 $ 1,612,117 $ 504,815 31.31 % Cash and cash equivalents increased year over year. The primary drivers of this increase were: 1. Debt Financing Received 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. 2. Timing of Expenses Certain operating expenses were either deferred or settled after year-end, resulting in higher cash on hand as of March 31, 2025. 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: Three Months Ended March 31, 2025 2024 Year over Year Changes Increase (Decrease) Net Cash Provided by (Used in) Amount Amount $ Amount % Change Operating activities $ (5,771,840 ) $ (1,378,444 ) $ (4,393,396 ) 318.72 % Investing activities - (1,811,668 ) $ 1,811,668 -100.00 % Financing activities 6,276,655 2,257,190 $ 4,019,465 178.07 % Net change in cash and cash equivalents $ 504,815 $ (932,922 ) $ 1,437,737 -154.11 % For the three months ended March 31, 2025 compared to the three months ended March 31, 2024 Operating Activities Net cash used in operating activities increased by $4,393,396 year over year, from $1,378,444 in 2024 to $5,771,840 in 2025. This change primarily reflects the significant increase in cash used, driven by higher operational costs, despite improvements in working capital management. The Company experienced higher revenues, but this was offset by an increase in expenses, leading to a larger cash burn in 2025 . 11 Investing Activities There was no activity in investing activities for the three months ended March 31, 2025, as the Company made significant capital expenditures, including truck purchases, at the end of the previous year. In contrast, $1,811,668 was spent in the three months ended March 31, 2024, to purchase Stat EI assets for the Company’s smart microgrid and wireless charging technology. Financing Activities Net cash provided by financing activities rose significantly, reflecting successful capital-raising efforts. This increase could be attributable to debt financing. Proceeds from the issuance of notes payable and notes payable – related parties. The Company secured additional debt contributing to higher inflows. Net Change in Cash and Cash Equivalents Overall, the Company’s cash position improved by approximately $500,000, 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. 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 Operational Investments: The higher cash outflows for operational activities underscore the Company’s commitment to scaling its operations, as it expanded into new markets in the three months ended March 31, 2025. Overall, the Company’s cash flow trends reflect a deliberate effort to fund growth initiatives while managing day-to-day operational needs 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. 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: Three Months Ended March 31, 2025 2024 Net Change Operating activities Net loss including non-controlling interest $ (8,937,999 ) $ (2,675,252 ) $ (6,262,747 ) Adjustments to reconcile net loss to net cash used in operations - - Depreciation and amortization 588,172 281,320 306,852 Amortization of intangible assets 111,667 111,667 - Amortization of operating lease - right-of-use asset 97,377 57,852 39,525 Amortization of operating lease - right-of-use asset - related party 25,964 18,388 7,576 Amortization of debt discount 2,320,970 611,326 1,709,644 Bad debt expense 11,164 34,480 (23,316 ) Stock issued in connection with loan extension fee 150,000 - 150,000 Stock issued for services 1,468,391 - 1,468,391 Stock issued for services - related parties 17,333 147,334 (130,001 ) Loan forgiveness - other income (40,000 ) - (40,000 ) Accounts Receivable (2,300,443 ) (381,639 ) (1,918,804 ) Inventory (94,713 ) (19,906 ) (74,807 ) Prepaids and other (675,717 ) (281,715 ) Deposits (213,000 ) - (213,000 ) Increase (decrease) in Accounts payable and accrued expenses 1,141,710 548,242 593,468 Accounts payable and accrued expenses - related party 691,216 235,669 455,547 Operating lease liability (108,902 ) (48,780 ) (60,122 ) Operating lease liability - related party (25,028 ) (17,430 ) (7,598 ) Net cash used in operating activities $ (5,771,840 ) $ (1,378,444 ) $ (3,999,394 ) Three Months Ended March 31, 2025 2024 Net Change Investing activities Purchase of equipment $ - $ (11,668 ) $ 11,668 Cash paid in connection with acquisition of Stat-EI assets - (1,800,000 ) 1,800,000 Net cash used in investing activities $ - $ (1,811,668 ) $ 1,811,668 Three Months Ended March 31, 2025 2024 Net Change Financing activities Proceeds from notes payable $ 6,721,535 $ 2,500,000 $ 4,221,535 Proceeds from advances payable - related parties 361,594 1,365,000 3,996,594 Proceeds from common stock issued for cash 15,226,134 - 15,226,134 Cash paid for direct offering costs - common stock (1,557,005 ) - (1,557,005 ) Repayments on notes payable (14,275,603 ) (1,607,810 ) (12,667,793 ) Repayments on advances payable - related party (200,000 ) - (200,000 ) Net cash provided by financing activities $ 6,276,655 $ 2,257,190 $ 4,019,465 12 Conclusion 1. Liquidity and Capital Resources : The significant increase in cash from financing activities during the three months ended March 31, 2025, has improved the Company’s liquidity. However, higher interest expenses and ongoing operational requirements underscore the importance of prudent cash management and careful monitoring of debt covenants. 2. Investment in Operational Growth : The Company’s heavier investment in vehicles late in 2024 for assets reflects a strategic push toward expanding into new markets. Operational costs increased in the three months ended, 2025 as we stood up these new markets, but these initiatives are expected to yield high revenues as we establish operational density through our anchor customers in these markets. 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. By maintaining a disciplined approach to both spending and financing, NextNRG 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. 13 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. 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 three months ended March 31, 2025, the Company had: ● Net loss available to common stockholders of $8,787,535; and ● Net cash used in operations was $5,771,840. Additionally, at March 31, 2025, the Company had: ● Accumulated deficit of $ 76,496,673; ● Stockholders’ equity of $5,561,668; and ● Working capital deficit of $24,046,131. 14 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 $2,116,932 at March 31, 2025. The Company has historically incurred significant losses since inception and has not demonstrated an ability to generate sufficient revenues from the sales of its products and services to achieve profitable operations. In making this assessment, we performed a comprehensive analysis of our current circumstances including our financial position, our cash flows and cash usage forecasts for the twelve months ended December 31, 2025, and our current capital structure including equity-based instruments and our obligations and debts. These factors create substantial doubt about the Company’s ability to continue as a going concern within the twelve-month period subsequent to the date that these financial statements are issued. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Accordingly, the financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business. 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. 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. 15 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 Unaudited 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 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. 16 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). ● 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. 17 For SEC registrants, a reverse merger with a public shell company may also trigger “Super 8-K” reporting requirements under Item 2.01 of Form 8-K, 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). ● 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. 18 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). 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). 19 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). 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. 20 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. 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. The Company’s fuel sales and memberships each have a distinct standalone selling price, eliminating the need for allocation adjustments. 21 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 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). 22 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). 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. 23 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. 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. ● 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: 24 ○ 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). 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. 25 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 Next and EZFL, 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 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. In November 2024, the FASB issued Accounting Standard Update 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 consolidated financial position, results of operations, or cash flows. 26 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable.