Quarterly report pursuant to Section 13 or 15(d)

Nature of Organization and Summary of Significant Accounting Policies

v3.21.2
Nature of Organization and Summary of Significant Accounting Policies
9 Months Ended
Sep. 30, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Nature of Organization and Summary of Significant Accounting Policies

(1) Nature of Organization and Summary of Significant Accounting Policies

 

Nature of Organization

 

EzFill Holdings, Inc. (the Company) was incorporated on March 28, 2019, in the State of Delaware and operates in South Florida providing an on-demand mobile gas delivery service. Its wholly-owned subsidiary Neighborhood Fuel Holdings, LLC is inactive.

 

Initial Public Offering

 

In September 2021, the Company issued 7,187,500 shares in its initial public offering (“IPO”) at a price of $4.00 per share, for net proceeds of approximately $25,250,000 after deducting underwriting discounts and commissions of $2,406,250 and expenses of $1,093,750. Immediately prior to the IPO, all shares of stock then outstanding converted into an aggregate of 18,750,000 shares of common stock following a one for 3.763243 reverse stock split approved by the Company’s board of directors and its shareholders.

 

Unaudited Interim Financial Statements

 

The Company has prepared these financial statements in accordance with GAAP for interim financial statements. Accordingly, these statements do not include all information and footnote disclosures required for annual statements. While management believes the disclosures presented are adequate for interim reporting, these interim financial statements should be read in conjunction with the consolidated audited financial statements and notes thereto as of and for the year ended December 31, 2020 included in the Company’s final prospectus dated September 14, 2021, filed pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended, relating to the Company’s Registration Statement on Form S-1 (File No. 333-256691), filed with the SEC. In the opinion of management, all adjustments and eliminations, consisting of normal recurring adjustments, necessary for a fair representation of the Company’s financial statements for the interim period reported, have been included. The results for the three and nine months ended September 30, 2021, are not necessarily indicative of results to be expected for the year ending December 31, 2021, or for any other interim period or for any future year.

 

Use of Estimates

 

The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. The significant estimates and assumptions made by management include allowance for doubtful accounts, valuation allowance for deferred tax assets, depreciation lives of property and equipment, recoverability of long-lived assets, fair value of equity instruments and the assumptions used in Black-Scholes valuation models related to stock options and warrants. Actual results could differ from those estimates as the current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid securities with original maturities of three months or less when acquired, to be cash equivalents. At September 30, 2021 and December 31, 2020, the Company had $20,650,989 and $882,870 in cash and cash equivalents, respectively, of which $250,000 was federally insured.

 

Accounts Receivable

 

The Company reviews accounts receivable periodically for collectability and establishes an allowance for doubtful accounts and records bad debt expense when deemed necessary. The Company records an allowance for doubtful accounts that is based on historical trends, customer knowledge, any known disputes, and considers the aging of the accounts receivable balances combined with management’s estimate of future potential recoverability. Accounts are written off against the allowance after all attempts to collect a receivable have failed. At September 30, 2021 and December 31, 2020, the allowance was $4,980 and $0 respectively in the consolidated financial statements.

 

 

Inventory

 

Inventory is valued at the lower of the inventory’s cost or market using the first-in, first-out method. Management compares the cost of inventory with its net realizable value and an allowance is made to write down inventory to net realizable value, if lower. Inventory consists solely of fuel. At September 30, 2021 and December 31, 2020, the allowance was $0 in the consolidated financial statements. Cost of sales includes the cost of fuel sold and wages paid to drivers.

 

Concentrations

 

Major Customers

 

For the nine months ended September 30, 2021 and 2020, the Company had one customer that made up approximately 58% and 31% of revenue, respectively. For the three months ended September 30, 2021 and 2020, the Company had one customer that made up approximately 60% and 49% of revenue, respectively.

 

The Company had one customer that made up 39% of accounts receivable as of September 30, 2021, and 68% accounts receivable as of December 31, 2020.

 

Major Vendors

 

The Company purchases substantially all of its fuel from one vendor.

 

Deferred Offering Costs

 

The Company includes offering costs directly associated with its IPO in prepaid expenses and deferred offering costs in the consolidated balance sheet. Deferred offering costs were offset against additional paid in capital upon completion of the offering. As of September 30, 2021 and December 31, 2020, the Company recorded $0 and $153,597 respectively, to deferred offering costs.

 

Advertising Costs

 

Advertising costs are expensed as incurred. The Company incurred advertising costs for the nine months ended September 30, 2021 and 2020 of approximately $86,775 and $24,136, respectively. The Company incurred advertising costs for the three months ended September 30, 2021 and 2020 of approximately $10,694 and $7,079, respectively.

 

Income Taxes

 

The Company accounts for income taxes in accordance with ASC 740, Income Taxes, (“ASC 740”) which prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim period, disclosure and transition.

 

Net loss per share

 

Basic loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur if stock options or other contracts to issue common stock were exercised or converted during the period. FASB ASC 260, Earnings per Share, requires a dual presentation of basic and diluted earnings per share. Any instruments that would have an anti-dilutive effect have been excluded from the computation of earnings per share. The number of such shares excluded from the computations of diluted loss per share are as follows:

Schedule of Shares Excluded from the Computations of Diluted Loss Per Share

                         
   

Three months ended

September 30,

   

Nine months ended

September 30,

 
Description  

2021

   

2020

   

2021

   

2020

 
Stock options under treasury stock method     95,019       68,290       93,849       55,982  
Acquisition and bonus shares issuable     -       187,500       -       187,500  

 

Reclassifications

 

Certain reclassifications of prior year amounts have been made to be consistent with the current year presentation.