UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||
Indicate
by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
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| ☒ | Smaller reporting company filer | ||
| Emerging growth company |
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As of November 8, 2021, the registrant had shares of common stock, par value $0.0001 per share, outstanding.
EZFILL HOLDINGS, INC.
TABLE OF CONTENTS
| 2 |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
EzFill Holdings, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
| September 30, 2021 | December 31, 2020 | |||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net
of allowance for doubtful accounts of $ | ||||||||
| Prepaid expenses and deferred offering costs | ||||||||
| Inventory | ||||||||
| Total Current Assets | ||||||||
| Fixed assets, net of accumulated depreciation
of $ | ||||||||
| Goodwill | ||||||||
| Intangible assets, net
of accumulated amortization of $ | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity (Deficit) | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Accounts payable and accrued liabilities, related parties | ||||||||
| Notes payable, net of discount
of $ | ||||||||
| Notes payable - related party | ||||||||
| Total Current Liabilities | ||||||||
| Notes payable - net of current portion | ||||||||
| Notes payable - net of current portion - related party | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies (Note 10) | - | |||||||
| Stockholders’ Equity (Deficit) | ||||||||
| Preferred stock, $ par value; shares authorized; -- shares issued and outstanding | ||||||||
| Common stock, $ par value; shares authorized; and shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity (Deficit) | ( | ) | ||||||
| Total Liabilities and Stockholders’ Equity (Deficit) | $ | $ | ||||||
The accompanying notes are an integral part of the consolidated financial statements.
| 3 |
EzFill Holdings, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| REVENUES | ||||||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| TOTAL REVENUES | ||||||||||||||||
| COSTS & EXPENSES | ||||||||||||||||
| Cost of sales | ||||||||||||||||
| Operating expenses | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| TOTAL COSTS AND EXPENSES | ||||||||||||||||
| OPERATING LOSS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| OTHER INCOME AND EXPENSES | ||||||||||||||||
| Other income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| LOSS BEFORE INCOME TAXES | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| PROVISION FOR INCOME TAXES | ||||||||||||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
NET LOSS PER SHARE | ||||||||||||||||
| Basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic and diluted weighted average number of common shares outstanding | ||||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
| 4 |
EzFill Holdings, Inc.
Condensed Consolidated Statements of Stockholders’ Equity (Deficit)
(Unaudited)
| Total | ||||||||||||||||||||||||||||
| Preferred stock | Common stock | Additional Paid-in | Accumulated | Stockholder’s Equity | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||||||||
| Balance December 31, 2019 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Shares issued (net of subscription receivable) | - | |||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance March 31, 2020 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Stock based compensation | - | |||||||||||||||||||||||||||
| Options granted | - | |||||||||||||||||||||||||||
| Sale of shares | - | |||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance June 30, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Stock based compensation | - | |||||||||||||||||||||||||||
| Options granted | - | |||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance September 30, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Balance December 31, 2020 | $ | $ | $ | $ | ( | ) | ( | ) | ||||||||||||||||||||
| Stock based compensation | - | |||||||||||||||||||||||||||
| Options granted | - | |||||||||||||||||||||||||||
| Debt discount | - | |||||||||||||||||||||||||||
| Issuance of acquisition shares | - | |||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance March 31, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Stock based compensation | - | |||||||||||||||||||||||||||
| Options granted | - | |||||||||||||||||||||||||||
| Sale of shares | - | |||||||||||||||||||||||||||
| Issuance of shares for technology | - | |||||||||||||||||||||||||||
| Issuance of bonus shares | - | |||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance June 30, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Initial public offering, net of expenses | ||||||||||||||||||||||||||||
| Stock based compensation | - | |||||||||||||||||||||||||||
| Options granted | - | - | ||||||||||||||||||||||||||
| Issuance of acquisition shares | - | |||||||||||||||||||||||||||
| Issuance of bonus and settlement shares | - | |||||||||||||||||||||||||||
| Warrants and shares to lender | - | |||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance September 30, 2021 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
| 5 |
EzFill Holding, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Nine
Months Ended September 30, | ||||||||
| 2021 | 2020 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash provided by/(used in) operating activities: | ||||||||
| Stock based compensation | ||||||||
| Warrants and shares to lender | ||||||||
| Change in fair market value | ||||||||
| Loss on settlement | ||||||||
| Depreciation and amortization | ||||||||
| Amortization of debt discount | ||||||||
| Bad debt expense | ||||||||
| PPP loan forgiveness | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventory | ||||||||
| Prepaid expenses and deferred offering costs | ( | ) | ||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Accounts payable and accrued expenses - related party | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Acquisition of fixed assets | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from Initial Public Offering | ||||||||
| Initial Public Offering expenses | ( | ) | ||||||
| Proceeds from issuance of common stock | ||||||||
| Proceeds from issuance of debt | ||||||||
| Proceeds from issuance of related party debt | ||||||||
| Repayment of debt | ( | ) | ( | ) | ||||
| Repayment of related party debt | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| Net change in cash and cash equivalents | ||||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents cash at end of period | $ | $ | ||||||
| Noncash investing and financing activity: | ||||||||
| Debt discount | $ | $ | ||||||
| Acquisition of Neighborhood Fuel | $ | $ | ||||||
| Issuance of acquisition, bonus and settlement shares | $ | $ | ||||||
| Vehicles acquired with notes | $ | $ | ||||||
| Shares issued for technology | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | $ | $ | ||||||
The accompanying notes are an integral part of the consolidated financial statements.
| 6 |
EzFill Holdings, Inc.
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2021 and 2020
(unaudited)
(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 shares in its initial public offering (“IPO”) at a price of $ per share,
for net proceeds of approximately $
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 $
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 $
| 7 |
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 $
Concentrations
Major Customers
For
the nine months ended September 30, 2021 and 2020, the Company had one customer that made up approximately
The
Company had one customer that made up
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 $
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
$
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.
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| Description |
2021 |
2020 |
2021 | 2020 | ||||||||||||
| Stock options under treasury stock method | ||||||||||||||||
| Acquisition and bonus shares issuable | - | - | ||||||||||||||
Reclassifications
Certain reclassifications of prior year amounts have been made to be consistent with the current year presentation.
| 8 |
(2) Going concern
The
Company’s financial statements have been prepared in conformity with accounting principles generally accepted in the United States
of America, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company
has sustained a net loss since inception and does not have sufficient revenues and income to fully fund the operations. As a result,
the Company has relied on loans from stockholders and others as well as stock sales to fund its activities to date. For the nine months
ended September 30, 2021, the Company had a net loss of $
(3) Related Party Transactions
During the nine months ended September 30, 2021 and 2020, Company issued and shares of common stock to executives as a signing bonus, respectively, and recorded related stock-based compensation expense of $ and $, respectively.
The
Company entered into a consulting agreement, dated November 18, 2020, with Balance Labs, Inc. Pursuant to the Consulting Agreement, Balance
Labs will provide consulting services including assisting with the Company’s IPO and assisting with introductions to, and assistance
with, negotiating and entering agreements with potential fleet, residential, marine and corporate customers that Balance Labs has relationships
with. Balance Labs will also assist with the Company’s expansion efforts. Under the Consulting Agreement, in payment of
services that Balance Labs had already provided, the Company issued Balance Labs shares of its common stock in November
2020. Upon the completion of the Company’s IPO, the Company made a one-time payment of $
The Company is party to a technology license agreement with Fuel Butler LLC, which is owned 20% by an executive of the Company. See Note 5.
All related party debt was repaid in September 2021.
(4) Fixed Assets
Fixed assets consisted of the following:
| Description | Estimated Useful Lives | September 30, 2021 | December 31, 2020 | |||||||||
| Fixed assets: | ||||||||||||
| Equipment | $ | $ | ||||||||||
| Leasehold improvements | ||||||||||||
| Vehicles | ||||||||||||
| Deposits on trucks | ||||||||||||
| Total fixed assets | ||||||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||||||
| Fixed assets, net | $ | $ | ||||||||||
Depreciation
expense totaled $
| 9 |
(5) Intangible Assets
Intangible assets consisted of the following:
| Description | September 30, 2021 | December 31, 2020 | ||||||
| Indefinite lived intangible assets: | ||||||||
| Goodwill | $ | $ | ||||||
| Total indefinite lived intangible assets | $ | $ | ||||||
| Other intangible assets: | ||||||||
| Trademarks | $ | $ | ||||||
| Software | ||||||||
| Customer list | ||||||||
| Non-compete | ||||||||
| Technology license | - | |||||||
| Total other intangible assets | $ | $ | ||||||
| Accumulated amortization | ( | ) | ( | ) | ||||
| Total other intangible assets, net | $ | $ | ||||||
On
April 7, 2021, the Company entered into a Technology License Agreement, under which the Company licensed certain proprietary technology.
Under the terms of the license, the Company issued shares of its common stock to the licensor upon signing. The Company also
issued shares to the licensor in May 2021 upon the filing of a patent application related to the licensed technology. Upon completion
of the Company’s IPO, shares were due to the licensor and the related amount of $
Amortization
expense on intangible assets totaled $
Future amortization schedule for intangible assets as of September 30, 2021 is as follows:
| 2021 (October-December) | $ | |||
| 2022 | ||||
| 2023 | ||||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| TOTAL | $ |
(6) Accounts Payable and Accrued Liabilities
The Company had accounts payable and accrued liabilities as follows:
| September
30, 2021 | December
31, 2020 | |||||||
| Accounts Payable and Accrued Liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued payroll | ||||||||
| Accrued expenses | ||||||||
| Accrued interest | - | |||||||
| Total Accounts Payable and Accrued Liabilities | $ | $ | ||||||
| Accounts Payable and Accrued Liabilities – Related Parties: | ||||||||
| Settlement payable | $ | $ | ||||||
| Acquisition consideration payable in shares | - | |||||||
| Shares payable to technology licensor | - | |||||||
| Signing and performance bonus payable in shares | - | |||||||
| Total Accounts Payable and Accrued Liabilities, Related Parties | $ | $ | ||||||
| 10 |
(7) Notes Payable
On
November 24, 2020, the Company issued a note payable in the amount of $
On
March 10, 2021, the Company borrowed a total of $
On
April 16, 2021, the Company issued a promissory note to a lender for $
On
June 25, 2021, the Company issued promissory notes to two related parties for $
On
July 26, 2021, the company issued promissory notes to two related parties for $
On
August 18, 2021, the Company issued a promissory note to a related party in the amount of $
On
August 19, 2021, the Company issued a promissory note to a lender in the amount of $
All debt except for vehicle loans was repaid in September 2021 after the consummation of the Company’s IPO. Amounts remaining in debt discount were included in interest expense.
Maturities of debt as of September 30, 2021 are as follows:
| 2021 (September to December) | $ | |||
| 2022 | ||||
| 2023 | ||||
| 2024 | ||||
| 2025 | ||||
| Total | $ |
(8) SBA PPP Loan
On
April 20, 2020, the Company received loan proceeds in the amount of $
On
September 17, 2021,
| 11 |
(9) Shareholders Equity
Authorized
shares include million common shares and 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 shares of common stock following a
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 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, shares of common stock were sold for cash proceeds of $
During the nine months ended September 30, 2021 and 2020, Company issued and shares of common stock to executives as a signing bonus, respectively, and recorded related stock-based compensation expense of $ and $, respectively.
During the nine months ended September 30, 2021 and 2020, the Company recorded stock-based compensation expense of $ and $, respectively related to shares granted for sponsorships and $ and $, 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 $ 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 shares related to accrued bonuses, acquisitions and settlements that had previously been accrued in 2020.
Stock Options and Warrants
| Number of | Weighted Average | Weighted Average Remaining Contractual Term | ||||||||||
| Options | Exercise Price | (years) | ||||||||||
| Vested and Exercisable at December 31, 2020 | $ | |||||||||||
| Options granted | ||||||||||||
| Vested and Exercisable at September 30, 2021 | $ | |||||||||||
Pursuant to certain sponsorship agreements, during the nine months ended September 30, 2021, stock options were granted. As of September 30, 2021, there was a total of stock options outstanding, all vested, of which were granted to founders in connection with promissory notes issued by the Company and granted in connection with sponsorship agreements. The options are exercisable for 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 $ to $. 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 options per month until the Company completed its IPO, after which the sponsor will be granted fully vested shares for $ 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 $ was determined using the Black-Scholes option pricing model with the following assumptions: i) risk free interest rate of approximately %, ii) expected life of years, iii) dividend yield of %, iv) expected volatility of approximately %.
The intrinsic value of options outstanding at September 30, 2021 and December 31, 2020 was approximately $ and $, respectively.
The
underwriter’s representatives for the Company’s IPO received warrants to purchase up to
The
amount of approximately $
| 12 |
(10) Commitments and Contingencies
Litigation
The Company is subject to litigation claims arising in the ordinary course of business. The Company records litigation accruals for legal matters which are both probable and estimable and for related legal costs as incurred. The Company does not reduce these liabilities for potential insurance or third-party recoveries. As of September 30, 2021, and December 31, 2020, the Company is not aware of any litigation, pending litigation, or other transactions that would require accrual or disclosure under GAAP.
Lease Commitment
The Company is renting office space on a short-term arrangement and the related lease commitment is not material to the consolidated financial statements.
(11) Income Taxes
Book income before taxes was negative for the nine months ended September 30, 2021. Tax expense for the nine months ended September 30, 2021 and 2020 was $.
The Company reviews its filing positions for all open tax years in all U.S. federal and state jurisdictions where the Company is required to file. The tax years subject to examination include the years 2019 and forward.
There are no uncertain tax positions that would require recognition in the consolidated financial statements. If the Company incurs an income tax liability in the future, interest on any income tax liability would be reported as interest expense and penalties on any income tax liability would be reported as income taxes. The Company’s conclusions regarding uncertain tax positions may be subject to review and adjustment at a later date based upon ongoing analyses of tax laws, regulations and interpretations thereof as well as other factors.
(12) Subsequent Events
The Company evaluates subsequent events that occur after the balance sheet date through the date the financial statements were issued.
Upon completion of the Company’s IPO, shares were due to the licensor of technology to the Company. The shares were issued on October 15, 2021.
| 13 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity and cash flows of our Company as of and for the periods presented below. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited financial statements and notes thereto as of and for the year ended December 31, 2020 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Registration Statement on Form S-1 filed with the Securities and Exchange Commission, or SEC, on June 1, 2021, as amended, and declared effective on September 14, 2021. Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to “we,” “us,” and “our” refer to Ezfill Holdings, Inc.
Forward-Looking Statements
The information in this discussion contains forward-looking statements and information within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are subject to the “safe harbor” created by those sections. These forward-looking statements include, but are not limited to, statements concerning our strategy, future operations, future financial position, future revenues, projected costs, prospects and plans and objectives of management. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in our filings with the SEC. The forward-looking statements are applicable only as of the date on which they are made, and we do not assume any obligation to update any forward-looking statements.
Overview
We were incorporated under the laws of Delaware in March 2019. We are in the business of operating mobile fueling trucks and are headquartered in Miami, Florida. EzFill provides its customers the ability to have fuel delivered to their vehicles (cars, boats, trucks) without leaving their home or office and to construction sites, generators and reserve tanks.
Our mobile fueling solution gives our fleet, consumer and other customers the ability to fuel their vehicles with the touch of an app or regularly scheduled service, and without the inconvenience of going to the gas station.
Our consumer business was impacted significantly in 2020 by the COVID-19 pandemic and has largely returned in 2021 for residential fueling but is still in the process of recovering at office parks to pre-pandemic levels as employees gradually return to the office.
Results of Operations
The following table sets forth our results of operations for the three and nine months ended September 30, 2021 and 2020:
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenues | $ | 1,863,599 | $ | 1,121,133 | $ | 5,236,016 | $ | 2,460,174 | ||||||||
| Cost of sales | 1,825,739 | 1,064,362 | 5,057,628 | 2,417,456 | ||||||||||||
| Operating expenses | 1,794,575 | 641,945 | 4,705,108 | 2,719,394 | ||||||||||||
| Depreciation and amortization | 237,788 | 127,298 | 589,662 | 324,234 | ||||||||||||
| Operating loss | (1,994,504 | ) | (712,472 | ) | (5,116,382 | ) | (3,000,910 | ) | ||||||||
| Other income (expense) | (379,100 | ) | (11,712 | ) | (613,311 | ) | (70,931 | ) | ||||||||
| Net loss | $ | (2,373,603 | ) | $ | (724,184 | ) | $ | (5,729,693 | ) | $ | (3,071,841 | ) | ||||
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, 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.
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The following is a reconciliation of net loss to the non-GAAP financial measure referred to as Adjusted EBITDA for the three and nine months ended September 30, 2021 and 2020:
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Net loss | $ | (2,373,604 | ) | $ | (724,184 | ) | $ | (5,729,693 | ) | $ | (3,071,841 | ) | ||||
| Interest expense | 533,773 | 11,712 | 767,984 | 70,931 | ||||||||||||
| Depreciation and amortization | 237,788 | 127,298 | 589,662 | 324,234 | ||||||||||||
| Stock compensation | 385,030 | 268,949 | 1,211,543 | 1,471,508 | ||||||||||||
| Adjusted EBITDA | $ | (1,217,013 | ) | $ | (316,225 | ) | $ | (3,160,504 | ) | $ | (1,205,168 | ) | ||||
| Gallons delivered | 580,462 | 481,587 | 1,731,289 | 1,032,932 |
Three months ended September 30, 2021, compared to the three months ended September 30, 2020
Revenues
We generated revenues of $1,863,599 for the three months ended September 30, 2021, compared to $1,121,133 for the three months ended September 30, 2020, an increase of $742,466 or 66%. This increase is primarily due to a 21% increase in gallons delivered as well as an increase in the average price per gallon.
Cost of sales was $1,825,739 for the three months ended September 30, 2021, resulting in a gross profit of $37,859, compared to $1,064,362 for the prior year. The $761,378 or 72% increase in cost of sales is due to the increase in sales.
Operating Expenses
We incurred operating expenses of $1,794,575 during the three months ended September 30, 2021, as compared to $641,945 during the prior year, an increase of $1,152,630 or 180%. This increase was primarily due to increases in payroll, technology spending and insurance.
Depreciation and Amortization
Amortization increased in the current year as a result of the acquisition of a technology license.
Other Income (Expense)
Other income in the current year resulted from the forgiveness of a loan under the Paycheck Protection Program. Interest expense increased due to warrants and shares issued in connection with new debt as well as the early repayment of debt and the resulting write-off of unamortized debt discounts.
Net Losses
We sustained a net loss of $2,373,603 for the three months ended September 30, 2021, as compared to $724,184 for the prior year, an increase of $1,649,420 or 228% as a result of the above.
Nine months ended September 30, 2021 compared to the Nine months ended September 30, 2020
Revenues
We generated revenues of $5,236,016 for the nine months ended September 30, 2021, compared to $2,460,174 for the nine months ended September 30, 2020, an increase of $2,775,842 or 113%. This increase is due to a 68% increase in gallons delivered as well as an increase in the average price per gallon.
Cost of sales was $5,057,628 for the nine months ended September 30, 2021, compared to $2,417,456 for the prior year. The $2,640,173 or 109% increase in cost of sales is due to the increase in sales.
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Operating Expenses
We incurred operating expenses of $4,705,108 during the nine months ended September 30, 2021, as compared to $2,719,394 during the prior year, an increase of $1,985,714 or 73%. This increase was primarily due to increases in payroll, technology spending, insurance, truck maintenance and marketing.
Depreciation and Amortization
Amortization increased in the current year as a result of the acquisition of a technology license.
Other Income (Expense)
Other income in the current year resulted from the forgiveness of a loan under the Paycheck Protection Program. Interest expense increased due to warrants and shares issued in connection with new debt as well as the early repayment of debt and the resulting write-off of unamortized debt discounts.
Net Losses
We sustained a net loss of $5,729,693 for the nine months ended September 30, 2021, as compared to $3,071,841 for the prior year, an increase of $2,657,853 or 87% as a result of the above.
Liquidity and Capital Resources
Cash Flow Activities
As of September 30, 2021, we had an accumulated deficit of $(13,685,693). We have incurred net losses since inception and have funded operations primarily through sales of our common stock and issuance of notes payable, including to related parties. As of September 30, 2021, we had $20,650,989 in cash as compared to December 31, 2020, when we had $882,870 in cash.
Operating Activities
Net cash used in operating activities was $(3,412,763) for the nine months ended September 30, 2021, which was made up primarily by the net loss and partially offset by an increase in stock-based compensation of $1,211,543, warrants and shares to lenders of $248,011, and depreciation and amortization of $589,663. Net cash used in operating activities was $(816,057) during the prior year, which was made up primarily by the net loss and partially offset by depreciation and amortization of $324,235, stock-based compensation of $1,471,508, and loss on settlement of $300,000.
Investing Activities
During the nine months ended September 30, 2021 and 2020, we used $813,283 and $87,661, respectively, for the acquisition of fixed assets. The amount for 2021 includes deposits on 33 fuel trucks purchased during the quarter.
Financing Activities
We generated $23,994,165 of cash flows from financing activities during the nine months ended September 30, 2021, including $28,750,000 less related expense of $(3,500,426) from the Initial Public Offering, $2,650,000 from new debt borrowings and $115,000 from issuance of stock, less $4,020,409 for the repayment of debt. During the same period of the prior year, we generated $1,260,812 from financing activities, $174,673 from new debt and $1,307,209 from the sale of shares, less $221,070 for the repayment of debt.
Sources of Capital
From inception to September 30, 2021, we have funded our activities through capital contributions from issuances of notes payable and the sale of securities pursuant to the exemption provided by Regulation D, by sale of securities to accredited investors.
The Company has sustained a net loss since inception and does not have sufficient revenues and income to fully fund the operations. As a result, the Company has relied on loans from stockholders and others as well as stock sales to fund its activities to date. For the nine months ended September 30, 2021, the Company had a net loss of $5,729,693. At September 30, 2021, the Company had an accumulated deficit of $13,685,693 and a working capital surplus of $19,513,450. The Company anticipates that it will continue to incur losses in future periods until the Company is successful in significantly increasing its revenues, if ever. However, the Company has mitigated the previously reported going concern issue by raising approximately $25,250,000 in net proceeds from its Initial Public Offering.
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Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements as defined in Regulation S-K Item 303(a)(4).
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not required for smaller reporting companies.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic and current reports that we file with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives. In reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, the design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
As of September 30, 2021, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2021.
There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
Not required for smaller reporting companies.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
| (a) | During the quarter ended September 30, 2021, the company issued the following securities which were not registered under the Securities Act: |
On September 30, 2021, we authorized the issuance of 93,750 shares of our common stock to Neighborhood Fuel. The shares were valued at $375,000.
On September 30, 2021, we authorized the issuance of 150,000 shares of common stock as accrued bonuses and settlements. The shares were valued at $900,000.
On September 30, 2021, we authorized the issuance of 53,144 shares of common stock to our Directors. The shares were valued at $200,000.
On September 30, 2021, we authorized the issuance of 25,000 shares to our legal counsel. The shares were valued at $100,000.
During the quarter ended September 30, 2021, we authorized the issuance of 57,995 shares to for marketing and promotion. The shares were valued at $373,249.
During the quarter ended September 30, 2021, we authorized the issuance of 5,979 shares to employees. The shares were valued at $22,500.
All of the sales were made pursuant to an exemption from registration afforded by Section 4(a)(2) of the Securities Act or Rule 506(b) of Regulation D promulgated thereunder and applicable state securities laws.
Use of Proceeds
(b) On September 14, 2021, our Registration Statement, as amended, and originally filed on Form S-1 (file No. 333-256691) was declared effective by the SEC for our initial public offering of 7,187,500 shares of common stock, including 937,500 shares of common stock purchased by the underwriters pursuant to the exercise of the over-allotment option each at an offering price of $4.00 per share, for aggregate gross proceeds of approximately $28.75 million. After deducting underwriting discounts, commissions and offering costs incurred by us of approximately $3.50 million, the net proceeds from the offering were approximately $25.25 million. ThinkEquity LLC acted as sole book-running manager of the initial public offering. No offering costs were paid or are payable, directly, or indirectly, to our directors or officers, to persons owning 10% or more of any class of our equity securities, or to any of our affiliates.
There has been no material change in the expected use of the net proceeds from our IPO as described in our final prospectus filed with the SEC on September 16, 2021. Upon receipt, the net proceeds from our IPO were held in cash, cash equivalents and short-term investments. As of September 30, 2021, we have used approximately $5.1 million of the net proceeds from the IPO. Pending such uses, we plan to continue investing the unused proceeds from the IPO in fixed, non-speculative income instruments and money market funds.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Mine Safety Disclosures.
Not Applicable.
Item 5. Other Information.
Not applicable.
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Item 6. Exhibits
The following exhibits are filed as part of this Quarterly Report on Form 10-Q.
| * | Filed herewith. |
| ** | Furnished herewith. |
| + | Indicates management contract or compensatory plan. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date: November 10, 2021 | EZFILL HOLDING, INC. | |
| By: | /s/ Michael McConnell | |
| Michael McConnell | ||
| Chief Executive Officer and Director | ||
| (Principal Executive Officer) | ||
| By: | /s/ Arthur Levine | |
| Arthur Levine | ||
| Chief Financial Officer | ||
| (Principal Financial Officer) | ||
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