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
Commission
File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) | |
(Address of principal executive offices) | (Zip Code) |
Registrant’s
telephone number, including area code:
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
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. ☒
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and ‘‘emerging growth company’’ in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company filer | ||
Emerging growth company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of May 14, 2024, the registrant had shares of common stock, par value $0.0001 per share, outstanding.
EZFILL HOLDINGS, INC.
TABLE OF CONTENTS
Page No. | ||
PART I | FINANCIAL INFORMATION | |
ITEM 1. | FINANCIAL STATEMENTS | F- 1 |
Consolidated Balance Sheets | F- 1 | |
Consolidated Statements of Operations | F- 3 | |
Consolidated Statements of Stockholders’ Equity | F- 4 - F-5 | |
Consolidated Statements of Cash Flows | F- 6 | |
Notes to Consolidated Financial Statements | F- 7 | |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 3 |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 9 |
ITEM 4. | CONTROLS AND PROCEDURES | 9 |
PART II | OTHER INFORMATION | |
ITEM 1. | LEGAL PROCEEDINGS | 9 |
ITEM 1A. | RISK FACTORS | 9 |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 9 |
ITEM 6. | EXHIBITS | 10 |
SIGNATURES | 12 |
2 |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
EzFill Holdings, Inc.
F-1 |
EzFill Holdings, Inc. and Subsidiary
Consolidated Balance Sheets
March 31, 2024 | December 31, 2023 | |||||||
(Unaudited) | ||||||||
Assets | ||||||||
Current Assets | ||||||||
Cash | $ | $ | ||||||
Accounts receivable - net | ||||||||
Inventory | ||||||||
Prepaids and other | ||||||||
Total Current Assets | ||||||||
Property and equipment - net | ||||||||
Operating lease - right-of-use asset | ||||||||
Operating lease - right-of-use asset - related party | ||||||||
Deposits | ||||||||
Total Assets | $ | $ | ||||||
Liabilities and Stockholders’ Deficit | ||||||||
Current Liabilities | ||||||||
Accounts payable and accrued expenses | $ | $ | ||||||
Accounts payable and accrued expenses - related parties | ||||||||
Notes payable - net | ||||||||
Notes payable - related parties - net | ||||||||
Operating lease liability | ||||||||
Operating lease liability - related party | ||||||||
Total Current Liabilities | ||||||||
Long Term Liabilities | ||||||||
Notes payable - net | ||||||||
Operating lease liability | ||||||||
Operating lease liability - related party | ||||||||
Total Long Term Liabilities | ||||||||
Total Liabilities | ||||||||
Commitments and Contingencies | ||||||||
Stockholders’ Deficit | ||||||||
Preferred stock - $ | par value; shares authorized issued and outstanding||||||||
Common stock - $ | par value, shares authorized and shares issued and outstanding, respectively||||||||
Common stock issuable | ||||||||
Additional paid-in capital | ||||||||
Accumulated deficit | ( | ) | ( | ) | ||||
Total Stockholders’ Deficit | ( | ) | ( | ) | ||||
Total Liabilities and Stockholders’ Deficit | $ | $ |
The accompanying notes are an integral part of these unaudited consolidated financial statements
F-2 |
EzFill Holdings, Inc. and Subsidiary
Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
For the Three Months Ended March 31, | ||||||||
2024 | 2023 | |||||||
Sales - net | $ | $ | ||||||
Costs and expenses | ||||||||
Cost of sales | ||||||||
General and administrative expenses | ||||||||
Depreciation and amortization | ||||||||
Total costs and expenses | ||||||||
Loss from operations | ( | ) | ( | ) | ||||
Other income (expense) | ||||||||
Interest income | ||||||||
Other income | ||||||||
Interest expense | ( | ) | ( | ) | ||||
Total other income (expense) - net | ( | ) | ( | ) | ||||
Net loss | $ | ( | ) | $ | ( | ) | ||
Loss per share - basic and diluted | $ | ) | $ | ) | ||||
Weighted average number of shares - basic and diluted | ||||||||
Comprehensive loss: | ||||||||
Net loss | $ | ( | ) | $ | ( | ) | ||
Change in fair value of debt securities | ||||||||
Total comprehensive loss: | $ | ( | ) | $ | ( | ) |
The accompanying notes are an integral part of these unaudited consolidated financial statements
F-3 |
EzFill Holdings, Inc. and Subsidiary
Consolidated Statements of Changes in Stockholders’ Deficit
For the Three Months Ended March 31, 2024
(Unaudited)
Preferred Stock | Common Stock | Common Stock Issuable | Additional Paid-in | Accumulated | Total Stockholders’ | |||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||||||||
December 31, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
Stock based compensation - related parties | - | |||||||||||||||||||||||||||||||||||
Stock issued as debt issue costs - related party | - | - | ||||||||||||||||||||||||||||||||||
Stock issued for services | - | - | ||||||||||||||||||||||||||||||||||
Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
March 31, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) |
The accompanying notes are an integral part of these unaudited consolidated financial statements
F-4 |
EzFill Holdings, Inc. and Subsidiary
Consolidated Statements of Changes in Stockholders’ Deficit
For the Three Months Ended March 31, 2023
(Unaudited)
Preferred Stock | Common Stock | Additional Paid-in | Accumulated | Accumulated Other Comprehensive | Total Stockholders’ | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Loss | Equity | |||||||||||||||||||||||||
December 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
Stock based compensation - related parties | ||||||||||||||||||||||||||||||||
Stock based compensation - other | - | - | ||||||||||||||||||||||||||||||
Stock sold for cash (ATM) - net of offering costs | ||||||||||||||||||||||||||||||||
Cash paid for direct offering costs | ( | ) | ( | ) | ||||||||||||||||||||||||||||
Unrealized gain on debt securities | - | - | ||||||||||||||||||||||||||||||
Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
March 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ |
The accompanying notes are an integral part of these unaudited consolidated financial statements
F-5 |
EzFill Holdings, Inc. and Subsidiary
Consolidated Statements of Cash Flows
(Unaudited)
For the Three Months Ended March 31, | ||||||||
2024 | 2023 | |||||||
Operating activities | ||||||||
Net loss | $ | ( | ) | $ | ( | ) | ||
Adjustments to reconcile net loss to net cash used in operations | ||||||||
Depreciation and amortization | ||||||||
Amortization of bond premium and realized loss on investments in debt securities | ||||||||
Amortization of operating lease - right-of-use asset | ||||||||
Amortization of operating lease - right-of-use asset - related party | ||||||||
Amortization of debt discount | ||||||||
Bad debt expense | ||||||||
Stock issued for services - related parties | ||||||||
Changes in operating assets and liabilities | ||||||||
(Increase) decrease in | ||||||||
Accounts Receivable | ( | ) | ( | ) | ||||
Inventory | ( | ) | ||||||
Prepaids and other | ( | ) | ( | ) | ||||
Increase (decrease) in | ||||||||
Accounts payable and accrued expenses | ( | ) | ||||||
Accounts payable and accrued expenses - related party | ||||||||
Operating lease liability | ( | ) | ( | ) | ||||
Operating lease liability - related party | ( | ) | ||||||
Net cash used in operating activities | ( | ) | ( | ) | ||||
Investing activities | ||||||||
Proceeds from sale of marketable debt securities | ||||||||
Purchase of fixed assets | ( | ) | ||||||
Net cash used provided by (used in) investing activities | ( | ) | ||||||
Financing activities | ||||||||
Proceeds from notes payable - related party | ||||||||
Proceeds from stock issued for cash | ||||||||
Cash paid for direct offering costs | ( | ) | ||||||
Repayments on notes payable | ( | ) | ( | ) | ||||
Net cash provided by (used in) financing activities | ( | ) | ||||||
Net decrease in cash | ( | ) | ( | ) | ||||
Cash - beginning of period | ||||||||
Cash - end of period | $ | $ | ||||||
Supplemental disclosure of cash flow information | ||||||||
Cash paid for interest | $ | $ | ||||||
Cash paid for income tax | $ | $ | ||||||
Supplemental disclosure of non-cash investing and financing activities | ||||||||
Debt discount in connection with the issuance of notes payable - related party | $ | $ |
The accompanying notes are an integral part of these unaudited consolidated financial statements
F-6 |
EZFILL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Note 1 - Organization and Nature of Operations
Organization and Nature of Operations
EzFill
Holdings, Inc. and Subsidiary (“EzFill,” “EHI,” “we,” “our” or “the Company”),
and its operating subsidiary, was incorporated on
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements (“U.S. GAAP”) and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements.
In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements contain all of the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of March 31, 2024 and the results of operations and cash flows for the periods presented. The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the operating results for the full fiscal year or any future period.
These unaudited consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on April 1, 2024.
Management acknowledges its responsibility for the preparation of the accompanying unaudited consolidated financial statements which reflect all adjustments, consisting of normal recurring adjustments, considered necessary in its opinion for a fair statement of its consolidated financial position and the consolidated results of its operations for the periods presented.
F-7 |
EZFILL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Liquidity and Going Concern
As reflected in the accompanying consolidated financial statements, for the three months ended March 31, 2024, the Company had:
● | Net
loss of $ |
● |
Net cash used in operations was $ |
Additionally, at March 31, 2024, the Company had:
● | Accumulated deficit of $ |
● | Stockholders’ deficit of $ |
● | Working capital deficit of $ |
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 $
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 March 31, 2025, and our current capital structure including equity-based instruments and our obligations and debts.
F-8 |
EZFILL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
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, |
● | Collaborations with other operating businesses for strategic opportunities; and |
● | Acquire other businesses to enhance or complement our current business model while accelerating our growth. |
Note 2 - Summary of Significant Accounting Policies
Principles of Consolidation
These consolidated financial statements have been prepared in accordance with U.S. GAAP and include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated.
Business Combinations and Asset Acquisitions
The Company accounts for acquisitions that qualify as business combinations by applying the acquisition method according to Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”).
Transaction costs related to the acquisition of a business are expensed as incurred and excluded from the fair value of consideration transferred.
The identifiable assets acquired, liabilities assumed, and noncontrolling interests in an acquired entity are recognized and measured at their estimated fair values. The excess of the fair value of consideration transferred over the fair values of identifiable assets acquired, liabilities assumed, and noncontrolling interests in an acquired entity, net of the fair value of any previously held interest in the acquired entity, is recorded as goodwill. Such valuations require management to make significant estimates and assumptions.
F-9 |
EZFILL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Purchase price allocations may be preliminary, and, during the measurement period not to exceed one year from the date of acquisition, changes in assumptions and estimates that result in adjustments to the fair value of assets acquired and liabilities assumed are recorded in the period the adjustments are determined.
Significant judgments are used in determining fair values of assets acquired and liabilities assumed, as well as intangibles. Fair value and useful life determinations are based on, among other factors, estimates of future expected cash flows, and appropriate discount rates used in computing present values. These judgments may materially impact the estimates used in allocating acquisition date fair values to assets acquired and liabilities assumed, as well as the Company’s current and future operating results. Actual results may vary from these estimates which may result in adjustments to goodwill and acquisition date fair values of assets and liabilities during a measurement period or upon a final determination of asset and liability fair values, whichever occurs first. Adjustments to fair values of assets and liabilities made after the end of the measurement period are recorded within the Company’s earnings.
The Company evaluates acquisitions of assets and other similar transactions to assess whether the transaction should be accounted for as a business combination or asset acquisition by first applying a screen test to determine whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If so, the transaction is accounted for as an asset acquisition. If not, further determination is required as to whether the Company has acquired inputs and processes that can create outputs that would meet the definition of a business. When applying the screen test, significant judgment is required to determine whether an acquisition is a business combination or an acquisition of assets.
Accounting for asset acquisitions falls under the guidance of Topic 805, Business Combinations, specifically Subtopic 805-50. A cost accumulation model is used to determine an asset acquisition’s cost. Assets acquired are based on their cost, generally allocated to them on a relative fair value basis. Direct acquisition-related costs are included in the cost of the acquired assets.
The distinction between business combinations and asset acquisitions involves judgment, particularly when applying the screen test to determine the nature of the transaction. Incorrect judgments or changes in decisions in these areas could materially affect the determination of goodwill, the recognition and measurement of acquired assets and assumed liabilities, and, consequently, our financial position and results of operations.
F-10 |
EZFILL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Business Segments and Concentrations
The Company uses the “management approach” to identify its reportable segments. The management approach requires companies to report segment financial information consistent with information used by management for making operating decisions and assessing performance as the basis for identifying the Company’s reportable segments. The Company manages its business as one reportable segment.
Customers in the United States accounted for 100% of our revenues. We do not have any property or equipment outside of the United States.
Use of Estimates and Assumptions
Preparing financial statements in conformity with U.S. GAAP 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 the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates, and those estimates may be material.
Changes in estimates are recorded in the period in which they become known. The Company bases its estimates on historical experience and other assumptions, which include both quantitative and qualitative assessments that it believes to be reasonable under the circumstances.
Significant estimates during the three months ended March 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 related to property and equipment, impairment of intangible assets, implicit interest rate in right-of-use operating leases, uncertain tax positions, and the valuation allowance on deferred tax assets.
Risks and Uncertainties
The Company operates in an industry that is subject to intense competition and changes in consumer demand. The Company’s operations are subject to significant risk and uncertainties including financial and operational risks including the potential risk of business failure.
The Company has experienced, and in the future may experience, variability in sales and earnings. The factors expected to contribute to this variability include, among others, (i) the cyclical nature of the industry, (ii) general economic conditions in the various local markets in which the Company competes, including a potential general downturn in the economy, and (iii) the volatility of prices in connection with the Company’s distribution of the product. These factors, among others, make it difficult to project the Company’s operating results on a consistent basis.
F-11 |
EZFILL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Fair Value of Financial Instruments
The Company accounts for financial instruments under Financial Accounting Standards Board (“FASB”) ASC 820, Fair Value Measurements. ASC 820 provides a framework for measuring fair value and requires disclosures regarding fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based on the Company’s principal or, in absence of a principal, most advantageous market for the specific asset or liability.
The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value.
The three tiers are defined as follows:
● | Level 1 – Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets; | |
● | Level 2 – Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and | |
● | Level 3 – Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions. |
The determination of fair value and the assessment of a measurement’s placement within the hierarchy requires judgment. Level 3 valuations often involve a higher degree of judgment and complexity. Level 3 valuations may require the use of various cost, market, or income valuation methodologies applied to unobservable management estimates and assumptions. Management’s assumptions could vary depending on the asset or liability valued and the valuation method used. Such assumptions could include estimates of prices, earnings, costs, actions of market participants, market factors, or the weighting of various valuation methods. The Company may also engage external advisors to assist us in determining fair value, as appropriate. Although the Company believes that the recorded fair value of our financial instruments is appropriate, these fair values may not be indicative of net realizable value or reflective of future fair values.
F-12 |
EZFILL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
The Company’s financial instruments, including cash, accounts receivable, accounts payable and accrued expenses, and accounts payable and accrued expenses – related party, are carried at historical cost. At March 31, 2024 and December 31, 2023, respectively, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments.
ASC 825-10 “Financial Instruments” allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (“fair value option”). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding financial instruments.
Cash and Cash Equivalents and Concentration of Credit Risk
For purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the purchase date and money market accounts to be cash equivalents.
At March 31, 2024 and December 31, 2023, respectively, the Company did not have any cash equivalents.
The
Company is exposed to credit risk on its cash and cash equivalents in the event of default by the financial institutions to the extent
account balances exceed the amount insured by the FDIC, which is $
At March 31, 2024 and December 31, 2023, respectively, the Company did not experience any losses on cash balances in excess of FDIC insured limits.
Investments
Available-for-sale debt securities are recorded at fair value with the net unrealized gains and losses (that are deemed to be temporary) reported as a component of other comprehensive income (loss).
Realized gains and losses and charges for other-than-temporary impairments are included in determining net income, with related purchase costs based on the first-in, first-out method.
Premiums or discounts on debt are amortized straight line over the term.
F-13 |
EZFILL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
The Company evaluates its available-for-sale-investments for possible other-than-temporary impairments by reviewing factors such as the extent to which, and length of time, an investment’s fair value has been below the Company’s cost basis, the issuer’s financial condition, and the Company’s ability and intent to hold the investment for sufficient time for its market value to recover. For impairments that are other-than-temporary, an impairment loss is recognized in earnings equal to the difference between the investment’s cost and its fair value at the balance sheet date of the reporting period for which the assessment is made. The fair value of the investment then becomes the new amortized cost basis of the investment, and it is not adjusted for subsequent recoveries in fair value.
During
the three months ended March 31, 2024 and 2023, the Company received proceeds of $ and $
Realized
losses, including amortization of bond premiums on these debt securities were $
Accounts Receivable
Accounts receivable are stated at the amount management expects to collect from outstanding customer balances. Credit is extended to customers based on an evaluation of their financial condition and other factors. Interest is not accrued on overdue accounts receivable. The Company does not require collateral.
Management periodically assesses the Company’s accounts receivable and, if necessary, establishes an allowance for estimated uncollectible amounts. The Company provides an allowance for doubtful accounts based upon a review of the outstanding accounts receivable, historical collection information and existing economic conditions. Accounts determined to be uncollectible are charged to operations when that determination is made.
The following is a summary of the Company’s accounts receivable at March 31, 2024 and December 31, 2023:
March 31, 2024 | December 31, 2023 | |||||||
Accounts receivable | $ | $ | ||||||
Less: allowance for doubtful accounts | ||||||||
Accounts receivable – net | $ | $ |
There
was bad debt expense of $ and $
F-14 |
EZFILL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Inventory
Inventory consists solely of fuel. Inventory is stated at the lower of cost or net realizable value using the first-in, first-out (“FIFO”) method of inventory valuation. Management assesses the recoverability of its inventory and establishes reserves on a quarterly basis.
There
were
At
March 31, 2024 and December 31, 2023, the Company had inventory of $
Concentrations
The Company has the following concentrations related to its sales, accounts receivable and vendor purchases greater than 10% of their respective totals:
Sales
Three Months Ended March 31, | ||||||||
Customer | 2024 | 2023 | ||||||
A | % | % | ||||||
B | % | % | ||||||
Total | % | % |
Accounts Receivable
Three Months Ended March 31, | Year Ended December 31, | |||||||
Customer | 2024 | 2023 | ||||||
A | % | % | ||||||
B | % | % | ||||||
Total | % | % |
F-15 |
EZFILL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Vendor Purchases
Three Months Ended March 31, | ||||||||
Vendor | 2024 | 2024 | ||||||
A | % | % | ||||||
B | % | % | ||||||
C | % | % | ||||||
Total | % | % |
Impairment of Long-lived Assets including Internal Use Capitalized Software Costs
Management evaluates the recoverability of the Company’s identifiable intangible assets and other long-lived assets when events or circumstances indicate a potential impairment exists, in accordance with the provisions of ASC 360-10-35-15 “Impairment or Disposal of Long-Lived Assets.” Events and circumstances considered by the Company in determining whether the carrying value of identifiable intangible assets and other long-lived assets may not be recoverable include but are not limited to significant changes in performance relative to expected operating results; significant changes in the use of the assets; significant negative industry or economic trends; and changes in the Company’s business strategy. In determining if impairment exists, the Company estimates the undiscounted cash flows to be generated from the use and ultimate disposition of these assets.
If impairment is indicated based on a comparison of the assets’ carrying values and the undiscounted cash flows, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.
There
were
See note 3 for discussion of impairments of long lived assets.
Property and Equipment
Property and equipment is stated at cost less accumulated depreciation. Depreciation is provided on the straight-line basis over the estimated useful lives of the assets.
Expenditures for repair and maintenance which do not materially extend the useful lives of property and equipment are charged to operations. When property or equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the respective accounts with the resulting gain or loss reflected in operations.
F-16 |
EZFILL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Management reviews the carrying value of its property and equipment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.
There
were
See note 3 for discussion of impairments of long lived assets.
Derivative Liabilities
The Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic No. 480, (“ASC 480”), “Distinguishing Liabilities from Equity” and FASB ASC Topic No. 815, (“ASC 815”) “Derivatives and Hedging”. Derivative liabilities are adjusted to reflect fair value at each reporting period, with any increase or decrease in the fair value recorded in the results of operations (other income/expense) as a gain or loss on the change in fair value of derivative liabilities. The Company uses a binomial pricing model to determine fair value of these instruments.
Upon conversion or repayment of a debt instrument in exchange for shares of common stock, where the embedded conversion option has been bifurcated and accounted for as a derivative liability (generally convertible debt and warrants), the Company records the shares of common stock at fair value, relieves all related debt, derivative liabilities, and any remaining unamortized debt discounts, and where appropriate recognizes a net gain or loss on debt extinguishment (debt based derivative liabilities). In connection with any extinguishments of equity based derivative liabilities (typically warrants), the Company records an increase to additional paid-in capital for any remaining liability balance extinguished.
Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liabilities at the fair value of the instrument on the reclassification date.
At
March 31, 2024 and December 31, 2023, respectively, the Company had
Original Issue Discounts and Other Debt Discounts
For certain notes issued, the Company may provide the debt holder with an original issue discount. The original issue discount is recorded as a debt discount, reducing the face amount of the note, and is amortized to interest expense over the life of the debt, in the Consolidated Statements of Operations.
F-17 |
EZFILL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Additionally, the Company may issue common stock with certain notes issued, which are recorded at fair value. These discounts are also recorded as a component of debt discount, reducing the face amount of the note, and is amortized to interest expense over the life of the debt, in the Consolidated Statements of Operations. The combined debt discounts cannot exceed the face amount of the debt issued.
Debt Issue Cost
Debt issuance cost paid to lenders, or third parties are recorded as debt discounts and amortized to interest expense over the life of the underlying debt instrument, in the Consolidated Statements of Operations.
Right of Use Assets and Lease Obligations
The Right of Use Asset and Lease Liability reflect the present value of the Company’s estimated future minimum lease payments over the lease term, which may include options that are reasonably assured of being exercised, discounted using a collateralized incremental borrowing rate.
Typically, renewal options are considered reasonably assured of being exercised if the associated asset lives of the building or leasehold improvements exceed that of the initial lease term, and the performance of the business remains strong. Therefore, the Right of Use Asset and Lease Liability may include an assumption on renewal options that have not yet been exercised by the Company. The Company’s operating leases contained renewal options that expire at various dates with no residual value guarantees. Future obligations relating to the exercise of renewal options is included in the measurement if, based on the judgment of management, the renewal option is reasonably certain to be exercised. Factors in determining whether an option is reasonably certain of exercise include, but are not limited to, the value of leasehold improvements, the value of the renewal rate compared to market rates, and the presence of factors that would cause a significant economic penalty to the Company if the option is not exercised. Management reasonably plans to exercise all options, and as such, all renewal options are included in the measurement of the right-of-use assets and operating lease liabilities.
As the rate implicit in leases are not readily determinable, the Company uses an incremental borrowing rate to calculate the lease liability that represents an estimate of the interest rate the Company would incur to borrow on a collateralized basis over the term of a lease within a particular currency environment. See Note 7 for third party and related party operating leases.
F-18 |
EZFILL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Revenue Recognition
The Company generates its revenue from mobile fuel sales, either as a one-time purchase, or through a monthly membership. Revenue is recognized at the time of delivery and includes a delivery fee for each delivery or a subscription fee on a monthly basis for memberships.
Under Accounting Standards Update (“ASU”) No. 2014-09 (Topic 606) “Revenue from Contracts with Customers”, revenue from contracts with customers is measured based on the consideration specified in the contract with the customer, and excludes any sales incentives, discounts, rebates, and amounts collected on behalf of third parties.
A performance obligation is a promise in a contract to transfer a distinct good or service to a customer and is the unit of account under Topic 606. The Company’s contracts with its customers do not include multiple performance obligations. The Company recognizes revenue when a performance obligation is satisfied by transferring control over a product or service to a customer. The amount of revenue recognized reflects the consideration the Company expects to be entitled to in exchange for such products or services.
The following represents the analysis management has considered in determining its revenue recognition policy:
Identify the contract with a customer
A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the services to be transferred and identifies the payment terms related to these services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer.
Identify the performance obligations in the contract
Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services, the Company must apply judgment to determine whether promised services are capable of being distinct and distinct in the context of the contract. If these criteria are not met the promised services are accounted for as a combined performance obligation.
F-19 |
EZFILL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Determine the transaction price
The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur.
None of the Company’s contracts contain a significant financing component.
Allocate the transaction price to performance obligations in the contract
If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. However, if a series of distinct services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract. For example, a bonus or penalty may be associated with one or more, but not all, distinct services promised in a series of distinct services that forms part of a single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately.
If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations.
The Company’s contracts have a distinct single performance obligation and there are no contracts with variable consideration.
Recognize revenue when or as the Company satisfies a performance obligation
Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised service to a customer.
F-20 |
EZFILL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
The following reflects additional discussion regarding our revenue recognition policies for each of our material revenue streams. For each revenue stream we do not offer any returns, refunds or warranties, and no arrangements are cancellable. Additionally, all contract consideration is fixed and determinable at the initiation of the contract.
Currently, the Company only has two separate and distinct single performance obligations in its contractual arrangements.
First, the Company generally recognizes membership revenues at the end of each month after services have been rendered. There are no prepaid membership revenues.
Second, the Company recognizes fuel sales each month after delivery has occurred.
Contract Liabilities (Deferred Revenue)
Contract liabilities represent deposits made by customers before the satisfaction of performance obligation and recognition of revenue. Upon completion of the performance obligation(s) that the Company has with the customer based on the terms of the contract, the liability for the customer deposit is relieved and revenue is recognized.
At
March 31, 2024 and December 31, 2023, the Company had deferred revenue of $
The following represents the Company’s disaggregation of revenues for the three months ended March 31, 2024 and 2023:
Three Months Ended March 31, | ||||||||||||||||
2024 | 2023 | |||||||||||||||
Revenue | % of Revenues | Revenue | % of Revenues | |||||||||||||
Fuel sales | $ | % | $ | % | ||||||||||||
Other | % | % | ||||||||||||||
Total Sales | $ | % | $ | % |
Cost of Sales
Cost of sales primarily include fuel costs and wages/benefits paid to our drivers.
F-21 |
EZFILL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Income Taxes
The Company accounts for income tax using the asset and liability method prescribed by ASC 740, “Income Taxes”. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.
The Company follows the accounting guidance for uncertainty in income taxes using the provisions of ASC 740 “Income Taxes”. Using that guidance, tax positions initially need to be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities.
At
March 31, 2024 and December 31, 2023, respectively, the Company had
The
Company recognizes interest and penalties related to uncertain income tax positions in other expense.
Valuation of Deferred Tax Assets
The Company’s deferred income tax assets include certain future tax benefits. The Company records a valuation allowance against any portion of those deferred income tax assets when it believes, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred income tax asset will not be realized.
The Company reviews the likelihood that it will realize the benefit of its deferred tax assets and therefore the need for valuation allowances on a quarterly basis, or more frequently if events indicate that a review is required. In determining the requirement for a valuation allowance, the historical and projected financial results of the legal entity or consolidated group recording the net deferred tax asset is considered, along with all other available positive and negative evidence.
Certain categories of evidence carry more weight in the analysis than others based upon the extent to which the evidence may be objectively verified. The Company looks to the nature and severity of cumulative pretax losses (if any) in the current three-year period ending on the evaluation date, recent pretax losses and/or expectations of future pretax losses.
F-22 |
EZFILL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Other factors considered in the determination of the probability of the realization of the deferred tax assets include, but are not limited to:
● | Earnings history; | |
● | Projected future financial and taxable income based upon existing reserves and long-term estimates of commodity prices; | |
● | The duration of statutory carry forward periods; | |
● | Prudent and feasible tax planning strategies readily available that may alter the timing of reversal of the temporary difference; | |
● | Nature of temporary differences and predictability of reversal patterns of existing temporary differences; and | |
● | The sensitivity of future forecasted results to commodity prices and other factors. |
Concluding that a valuation allowance is not required is difficult when there is significant negative evidence which is objective and verifiable, such as cumulative losses in recent years. The Company utilizes a rolling twelve quarters of pre-tax income or loss as a measure of its cumulative results in recent years. However, a cumulative three year loss is not solely determinative of the need for a valuation allowance. The Company also considers all other available positive and negative evidence in its analysis.
At
March 31, 2024 and December 31, 2023, respectively, the Company has recorded a full valuation allowance against its deferred tax assets
resulting in a net carrying amount of $
Advertising Costs
Advertising costs are expensed as incurred. Advertising costs are included as a component of general and administrative expense in the consolidated statements of operations.
The
Company recognized $
The Company accounts for our stock-based compensation under ASC 718 “Compensation – Stock Compensation” using the fair value-based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.
F-23 |
EZFILL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
The Company uses the fair value method for equity instruments granted to non-employees and uses the Black-Scholes model for measuring the fair value of options.
The fair value of stock-based compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods.
When determining fair value of stock options, the Company considers the following assumptions in the Black-Scholes model:
● | Exercise price, |
● | Expected dividends, |
● | Expected volatility, |
● | Risk-free interest rate; and |
● | Expected life of option |
Stock Warrants
In connection with certain financing (debt or equity), consulting and collaboration arrangements, the Company may issue warrants to purchase shares of its common stock. The outstanding warrants are standalone instruments that are not puttable or mandatorily redeemable by the holder and are classified as equity awards. The Company measures the fair value of warrants issued for compensation using the Black-Scholes option pricing model as of the measurement date. However, for warrants issued that meet the definition of a derivative liability, fair value is determined based upon the use of a binomial pricing model.
Warrants issued in conjunction with the issuance of common stock are initially recorded at fair value as a reduction in additional paid-in capital of the common stock issued. All other warrants (for services) are recorded at fair value and expensed over the requisite service period or at the date of issuance if there is not a service period.
Basic earnings per share is calculated using the two-class method and is computed by dividing net earnings available to common shareholders by the weighted average number of common shares outstanding and certain other shares committed to be, but not yet issued. Net earnings available to common shareholders represent net earnings to common shareholders reduced by the allocation of earnings to participating securities. Losses are not allocated to participating securities. Common shares outstanding and certain other shares committed to be, but not yet issued, include restricted stock and restricted stock units (“RSUs”) for which no future service is required.
F-24 |
EZFILL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Diluted earnings per share is calculated under both the two-class and treasury stock methods, and the more dilutive amount is reported. Diluted earnings per share is computed by taking the sum of net earnings available to common shareholders, dividends on preferred shares and 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, but not yet issued, plus all dilutive common stock equivalents outstanding during the period (stock options, warrants, convertible preferred stock, and convertible debt).
Preferred shares and unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and, therefore, are included in the earnings allocation in computing earnings per share under the two-class method of earnings per share.
Unvested shares of common stock are excluded from the denominator in computing net loss per share.
Restricted stock and RSUs granted as part of share-based compensation contain nonforfeitable rights to dividends and dividend equivalents, respectively, and therefore, prior to the requisite service being rendered for the right to retain the award, restricted stock and RSUs meet the definition of a participating security. RSUs granted under an executive compensation plan are not considered participating securities as the rights to dividend equivalents are forfeitable.
March 31, 2024 | March 31, 2023 | |||||||
Warrants (vested) | ||||||||
Total common stock equivalents |
Warrants and stock options included as commons stock equivalents represent those that are fully vested and exercisable. See Note 9.
Based on the potential common stock equivalents noted above at March 31, 2024, the Company has sufficient authorized shares of common stock ( ) to settle any potential exercises of common stock equivalents.
On
April 27, 2023, the Company executed a
F-25 |
EZFILL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Related Parties
Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.
See Note 4 which includes accrued interest payable – related parties.
See Notes 5 and 10 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.
See Note 9 regarding expected share exchange agreement with NextNRG Holding Corp.
Related Party Agreement with Company owned by Daniel Arbour
In
2023, the Company entered into a consulting agreement with an affiliate of a board member to provide services as an outsourced chief
revenue officer. The Company will pay $
Related Party Agreement with Company owned by Avishai Vaknin
In
2023, the Company entered into a services agreement with an affiliate of the Company’s Chief Technology Officer. Services include
overseeing all matters relating to the Company’s technology. The Company will pay $
In connection with this agreement, the Company issued shares of common stock. At March 31, 2024 and December 31, 2023, and shares have vested, respectively. The remaining shares will vest in April 2024 ( shares) and April 2025 ( shares), respectively. See Note 7.
F-26 |
EZFILL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Recent Accounting Standards
Changes to accounting principles are established by the FASB in the form of Accounting Standards Updates (“ASU’s”) to the FASB’s Codification. We consider the applicability and impact of all ASU’s on our consolidated financial position, results of operations, stockholders’ equity, cash flows, or presentation thereof. Management has evaluated all recent accounting pronouncements issued through the date these financial statements were available to be issued and found no recent accounting pronouncements issued, but not yet effective accounting pronouncements, when adopted, will have a material impact on the consolidated financial statements of the Company.
In March 2022, the Financial Accounting Standards Board (the “FASB”) issued ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”), which eliminates the accounting guidance on troubled debt restructurings (“TDRs”) for creditors in ASC 310, Receivables (Topic 310), and requires entities to provide disclosures about current period gross write-offs by year of origination. Also, ASU 2022-02 updates the requirements related to accounting for credit losses under ASC 326, Financial Instruments – Credit Losses (Topic 326), and adds enhanced disclosures for creditors with respect to loan refinancings and restructurings for borrowers experiencing financial difficulty.
This guidance was adopted on January 1, 2023. The adoption of ASU 2022-02 did not have a material impact on the Company’s consolidated financial statements.
In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07 - Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is evaluating the impact this will have on the Company’s consolidated financial statements and disclosures.
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”). ASU 2023-09 includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, on either a prospective or retrospective basis. Early adoption is permitted. The Company is evaluating the impact of ASU 2023-09 on its consolidated financial statements and related disclosures.
There are various other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on our consolidated financial position, results of operations or cash flows.
F-27 |
EZFILL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Reclassifications
Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no material effect on the consolidated results of operations, stockholders’ equity, or cash flows.
Note 3 – Property and Equipment
Property and equipment consisted of the following:
March 31, 2024 | December 31, 2023 | Estimated Useful Lives (Years) | ||||||||
Vehicles | $ | $ | ||||||||
Equipment | ||||||||||
Office furniture | ||||||||||
Leasehold improvements | ||||||||||
Office equipment | ||||||||||
Accumulated depreciation | ( | ) | ( | ) | ||||||
Total property and equipment - net | $ | $ |
Three Months Ended March 31, 2024
Depreciation
and amortization expense for the three months ended March 31, 2024 and 2023 was $
These amounts are included as a component of general and administrative expenses in the accompanying consolidated statements of operations.
Year ended December 31, 2023
The
Company recorded an impairment loss of $
During
the year ended December 31, 2023, the Company adjusted the balance of its vehicles and related notes payable – vehicles by $
F-28 |
EZFILL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Note 4 – Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities were as follows at March 31, 2024 and December 31, 2023, respectively:
March 31, 2024 | December 31, 2023 | |||||||
Accounts payable | $ | $ | ||||||
Accrued interest payable - related parties | ||||||||
Accounts payable and accrued liabilities | $ | $ |
Note 5 – Debt
The following represents a summary of the Company’s debt (notes payable – related parties, third party debt for notes payable (including those owed on vehicles), and line of credit, including key terms, and outstanding balances at March 31, 2024 and December 31, 2023, respectively.
Notes Payable – Related Parties
The following is a summary of the Company’s notes payable – related parties at March 31, 2024 and December 31, 2023:
Balance - December 31, 2022 | $ | |||
Advances | ||||
Debt discount/issue costs | ( | ) | ||
Amortization of debt discount/issue costs | ||||
Repayments | ( | ) | ||
Balance - December 31, 2023 | ||||
Advances | ||||
Debt discount/issue costs - original issue discount | ( | ) | ||
Debt discount/issue costs - stock issuances | ( | ) | ||
Amortization of debt discount/issue costs | ||||
Balance - March 31, 2024 | $ |
F-29 |
EZFILL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
The following is a detail of the Company’s notes payable – related parties at March 31, 2024 and December 31, 2023:
Notes Payable - Related Parties | |||||||||||||||||||||||||
Note Holder | Issue Date | Maturity Date | Shares Issued with Debt |
Interest Rate | Default Interest Rate | Collateral | March 31, 2024 | December 31, 2023 | |||||||||||||||||
Note #1 | A, B | % | % | $ | | $ | | ||||||||||||||||||
Note #2 | A, B | % | % | ||||||||||||||||||||||
Note #3 | A, B |
% | % | ||||||||||||||||||||||
Note #4 | % | % | |||||||||||||||||||||||
Note #5 | % | % | |||||||||||||||||||||||
Note #6 | % | % | |||||||||||||||||||||||
Note #7 | % | % | |||||||||||||||||||||||
Note #8 | % | % | |||||||||||||||||||||||
Note #9 | % | % | |||||||||||||||||||||||
Note #10 | % | % | |||||||||||||||||||||||
Note #11 | % | % | |||||||||||||||||||||||
Note #12 | % | % | |||||||||||||||||||||||
Note #13 | % | % | |||||||||||||||||||||||
Note #14 | % | % | |||||||||||||||||||||||
Note #15 | % | % | |||||||||||||||||||||||
Note #16 | % | % | |||||||||||||||||||||||
Note #17 | % | % | |||||||||||||||||||||||
Note #18 | % | % | |||||||||||||||||||||||
Note #19 | % | % | |||||||||||||||||||||||
Note #20 | % | % | |||||||||||||||||||||||
Note #21 | % | % | |||||||||||||||||||||||
Note #22 | C | % | % | ||||||||||||||||||||||
Note #23 | C | % | % | ||||||||||||||||||||||
Note #24 | C | % | % | ||||||||||||||||||||||
Note #25 | C | % | % | ||||||||||||||||||||||
Less: unamortized debt discount | |||||||||||||||||||||||||
$ | $ |
A | |
B | |
C |
F-30 |
EZFILL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Year Ended December 31, 2023
Note #1 – Note Payable – Related Party - Material Stockholder greater than 5% and related Loss on Debt Extinguishment
During
2023, the Company originally executed a six-month (6) note payable with a face amount of $
In
connection with obtaining this debt, the Company also committed
See Note 8.
In October 2023 (the initial maturity date), the Company executed a loan extension with the lender to extend the due date from October 2023 to April 2024. At this time, the remaining shares were issued to the lender.
The Company evaluated the modification of terms under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension of the maturity date resulted in significant and consequential changes to the economic substance of the debt and thus resulted in an extinguishment of the debt.
Specifically, on the date of modification, the Company determined that the present value of the cash flows of the modified debt instrument was greater than 10% different from the present value of the remaining cash flows under the original debt instrument.
For
the year ended December 31, 2023, the Company recorded a loss on debt extinguishment of $
Fair value of debt and common stock on extinguishment date* | $ | |||
Fair value of debt subject to modification | ||||
Loss on debt extinguishment - related party | $ |
* |
F-31 |
EZFILL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Pursuant
to the January 17, 2024 global amendment, effective for all previously issued notes with this lender, in the event of default, the lender
may convert the note into shares of common stock equal to the greater of $
The Company has determined that in the event of default, the note at that time may be treated as a derivative liability subject to financial reporting at fair value and related mark to market adjustments in subsequent reporting periods.
This note is subject to cross-default. In the event this note or any other notes issued by this lender are in default (Notes #1, #2 and #3), all of the notes with this lender will be considered in default.
At March 31, 2024, the Company is not in default on this note and believes it is in compliance with all terms and conditions of the note. See May 9, 2024 loan date extension below.
This
lender is considered a related party since it has a greater than
Note #2 – Note Payable – Related Party - Material Stockholder greater than 5%
During
2023, the Company executed a six-month (6) note payable with a face amount of $
In
connection with obtaining this note, the Company also issued