Quarterly report pursuant to Section 13 or 15(d)

Shareholders Equity

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Shareholders Equity
9 Months Ended
Sep. 30, 2021
Equity [Abstract]  
Shareholders Equity

(9) Shareholders Equity

 

Authorized shares include 500 million common shares and 50 million preferred shares. Immediately prior to the Company’s IPO in September 2021, all shares of common 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.

 

On August 1, 2020, the Company’s board of directors approved the EzFill Holdings, Inc. 2020 Equity Incentive Plan (Plan), which plan has also been approved by the Company’s shareholders. The Company has reserved 1,913,243 of its outstanding shares of common stock for issuance under the Plan. Participation in the Plan will continue until the benefits to which the participants are entitled have been paid in full.

 

Common stock

 

During the nine months ended September 30, 2021, 30,559 shares of common stock were sold for cash proceeds of $115,000.

 

During the nine months ended September 30, 2021 and 2020, Company issued 26,573 and 106,291 shares of common stock to executives as a signing bonus, respectively, and recorded related stock-based compensation expense of $100,000 and $400,000, respectively.

 

During the nine months ended September 30, 2021 and 2020, the Company recorded stock-based compensation expense of $345,000 and $582,000, respectively related to shares granted for sponsorships and $310,000 and $0, respectively related to shares granted to Board members and consultants.

 

On April 11, 2019, the Company entered into an employment agreement with a former owner of a business sold to the Company. Stock compensation of $57,063 was recognized for the nine months ended September 30, 2021 and 2020, respectively, based on the fair value of shares at April 11, 2019.

 

During the nine months ended September 30, 2021, the Company issued 502,835 shares related to accrued bonuses, acquisitions and settlements that had previously been accrued in 2020.

 

Stock Options and Warrants

 

The following table represents option activity during the nine months ended September 30, 2021:

    Number of     Weighted Average     Weighted Average
Remaining Contractual Term
 
    Options     Exercise Price     (years)  
Vested and Exercisable at December 31, 2020     148,145     $ 1.69       3.9  
Options granted     27,239       2.26       4.5  
Vested and Exercisable at September 30, 2021     175,384     $ 1.77       3.6  

 

Pursuant to certain sponsorship agreements, during the nine months ended September 30, 2021, 27,239 stock options were granted. As of September 30, 2021, there was a total of 175,384 stock options outstanding, all vested, of which 74,404 were granted to founders in connection with promissory notes issued by the Company and 100,980 granted in connection with sponsorship agreements. The options are exercisable for five years from the dates of grant, which were from July 2019 to September 2021. The options all vested immediately upon grant and have exercise prices ranging from $0.64 to $2.26. The options with sponsors could terminate earlier than five years if certain conditions occur. One of the sponsorship agreements was terminated effective February 2021. The remaining sponsor received 1,550 options per month until the Company completed its IPO, after which the sponsor will be granted fully vested shares for $3,500 per month based on the closing share price on the date of each grant.

 

The fair value of the stock options granted during the nine months ended September 30, 2021, of $74,733 was determined using the Black-Scholes option pricing model with the following assumptions: i) risk free interest rate of approximately 2%, ii) expected life of 5 years, iii) dividend yield of 0%, iv) expected volatility of approximately 79%.

 

The intrinsic value of options outstanding at September 30, 2021 and December 31, 2020 was approximately $350,000 and $307,000, respectively.

 

The underwriter’s representatives for the Company’s IPO received warrants to purchase up to 359,375 shares. The warrants are exercisable from March 14, 2022 until September 14, 2026 at an exercise price of $5.00 per share.

 

The amount of approximately $198,000 was included in interest expense for the third quarter of 2021 for 106,291 warrants issued to a lender that became exercisable upon the Company’s IPO. The warrants are exercisable until September 14, 2024, at $5.00 per share.