EzFill (EZFL) - 2021 Q3 - Quarterly Report

PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS This section presents the unaudited condensed consolidated financial statements, including the balance sheets, statements of operations, stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, financial position changes, and specific transactions for the periods ended September 30, 2021, and December 31, 2020 Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights: | Metric | September 30, 2021 | December 31, 2020 | | :----------------------------- | :----------------- | :------------------ | | Cash | $20,650,989 | $882,870 | | Total Current Assets | $20,961,216 | $1,277,643 | | Total Assets | $25,663,945 | $2,806,752 | | Total Current Liabilities | $1,447,766 | $3,737,472 | | Total Liabilities | $1,521,254 | $4,288,496 | | Total Stockholders' Equity (Deficit) | $24,142,691 | $(1,481,744) | Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Operations (Three Months Ended September 30): | Metric | 2021 | 2020 | Change ($) | Change (%) | | :----------------------------- | :------------ | :------------ | :------------ | :--------- | | Revenues | $1,863,599 | $1,121,133 | $742,466 | 66% | | Cost of Sales | $1,825,739 | $1,064,362 | $761,378 | 72% | | Operating Expenses | $1,794,575 | $641,945 | $1,152,630 | 180% | | Net Loss | $(2,373,603) | $(724,184) | $(1,649,420) | 228% | | Basic and Diluted Net Loss Per Share | $(0.13) | $(0.08) | $(0.05) | 62.5% | Condensed Consolidated Statements of Operations (Nine Months Ended September 30): | Metric | 2021 | 2020 | Change ($) | Change (%) | | :----------------------------- | :------------ | :------------ | :------------ | :--------- | | Revenues | $5,236,016 | $2,460,174 | $2,775,842 | 113% | | Cost of Sales | $5,057,628 | $2,417,456 | $2,640,173 | 109% | | Operating Expenses | $4,705,108 | $2,719,394 | $1,985,714 | 73% | | Net Loss | $(5,729,693) | $(3,071,841) | $(2,657,853) | 87% | | Basic and Diluted Net Loss Per Share | $(0.33) | $(0.33) | $0.00 | 0% | Condensed Consolidated Statements of Stockholders' Equity (Deficit) Stockholders' Equity (Deficit) Evolution: | Metric | December 31, 2020 | September 30, 2021 | | :----------------------------- | :------------------ | :----------------- | | Common Stock Amount | $1,720 | $2,592 | | Additional Paid-in Capital | $6,472,536 | $37,825,792 | | Accumulated Deficit | $(7,956,000) | $(13,685,693) | | Total Stockholders' Equity (Deficit) | $(1,481,744) | $24,142,691 | - Initial Public Offering (net of expenses) contributed $25,249,574 to stockholders' equity during the nine months ended September 30, 2021[17] Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (Nine Months Ended September 30): | Activity | 2021 | 2020 | | :----------------------------- | :------------ | :------------ | | Net cash used in operating activities | $(3,412,763) | $(816,057) | | Net cash used in investing activities | $(813,283) | $(87,661) | | Net cash provided by financing activities | $23,994,165 | $1,260,812 | | Net change in cash and cash equivalents | $19,768,119 | $357,094 | | Cash and cash equivalents at end of period | $20,650,989 | $389,186 | - Proceeds from Initial Public Offering (IPO) were $28,750,000, with IPO expenses of $(3,500,426), contributing significantly to financing activities in 2021[20] Notes to Condensed Consolidated Financial Statements (1) Nature of Organization and Summary of Significant Accounting Policies - EzFill Holdings, Inc. was incorporated on March 28, 2019, in Delaware and operates an on-demand mobile gas delivery service in South Florida[22] - In September 2021, the Company issued 7,187,500 shares in its Initial Public Offering (IPO) at $4.00 per share, generating net proceeds of approximately $25,250,000[23] - The Company has significant customer concentration, with one customer accounting for approximately 58% of revenue for the nine months ended September 30, 2021, and 60% for the three months ended September 30, 2021[30] - The Company purchases substantially all of its fuel from one vendor[31] (2) Going concern - The Company has sustained a net loss since inception and had an accumulated deficit of $13,685,695 at September 30, 2021[39] - The Company mitigated its previously reported going concern issue by raising approximately $25,250,000 in net proceeds from its Initial Public Offering[39] (3) Related Party Transactions - Issued 26,573 shares of common stock to executives as a signing bonus during the nine months ended September 30, 2021, recording $100,000 in stock-based compensation expense[40] - Entered a consulting agreement with Balance Labs, Inc. (related party), involving stock issuance, a $200,000 IPO payment, and monthly fees[41] - The Company is party to a technology license agreement with Fuel Butler LLC, which is 20% owned by a Company executive[42] - All related party debt was repaid in September 2021[43] (4) Fixed Assets Fixed Assets, Net: | Metric | September 30, 2021 | December 31, 2020 | | :----------------------------- | :----------------- | :------------------ | | Equipment | $167,038 | $42,643 | | Vehicles | $538,562 | $529,742 | | Deposits on trucks | $663,803 | $0 | | Total fixed assets, net | $1,147,140 | $428,567 | - Depreciation expense totaled $94,710 for the nine months ended September 30, 2021, compared to $77,076 for the same period in 2020[44] (5) Intangible Assets Intangible Assets, Net: | Metric | September 30, 2021 | December 31, 2020 | | :----------------------------- | :----------------- | :------------------ | | Goodwill | $109,983 | $109,983 | | Technology license | $2,950,000 | $0 | | Total other intangible assets, net | $3,445,606 | $990,559 | - On April 7, 2021, the Company entered into a Technology License Agreement, issuing 265,728 shares upon signing and 332,160 shares upon patent application filing[46] - Amortization expense on intangible assets totaled $494,953 for the nine months ended September 30, 2021, compared to $247,159 for the same period in 2020[47] (6) Accounts Payable and Accrued Liabilities Accounts Payable and Accrued Liabilities: | Metric | September 30, 2021 | December 31, 2020 | | :----------------------------- | :----------------- | :------------------ | | Accounts payable | $344,733 | $215,599 | | Accrued payroll | $304,488 | $160,417 | | Total Accounts Payable and Accrued Liabilities | $655,335 | $488,405 | | Total Accounts Payable and Accrued Liabilities, Related Parties | $700,000 | $2,250,000 | (7) Notes Payable - The Company issued a $1,000,000 note payable in November 2020, bearing 1% monthly interest, with extensions until August 2021[51] - Issued $300,000 in promissory notes to three related parties in March 2021, bearing 1% monthly interest[52] - Issued a $1,166,000 promissory note in April 2021, bearing 8% annual interest, and granted 400,000 stock warrants to the lender[53] - All debt, except for vehicle loans, was repaid in September 2021 after the consummation of the Company's IPO[58] (8) SBA PPP Loan - The Company received $154,673 in loan proceeds under the Paycheck Protection Program (PPP) on April 20, 2020[59] - 100% of the PPP loan, totaling $154,673 plus accrued interest, was forgiven by the SBA on September 17, 2021[60] (9) Shareholders Equity - Immediately prior to the IPO in September 2021, all outstanding common stock converted into 18,750,000 shares following a one-for-3.763243 reverse stock split[64] - As of September 30, 2021, there were 175,384 stock options outstanding, all vested, with exercise prices ranging from $0.64 to $2.26[69] - Warrants to purchase up to 359,375 shares were issued to IPO underwriters, exercisable from March 14, 2022, to September 14, 2026, at an exercise price of $5.00 per share[71] - Warrants for 106,291 shares were issued to a lender, exercisable until September 14, 2024, at $5.00 per share, with approximately $198,000 included in interest expense for Q3 2021[71] (10) Commitments and Contingencies - The Company is not aware of any litigation, pending litigation, or other transactions that would require accrual or disclosure under GAAP as of September 30, 2021[73] - The Company's lease commitment for office space is not material to the consolidated financial statements[74] (11) Income Taxes - Book income before taxes was negative, resulting in $0 tax expense for the nine months ended September 30, 2021 and 2020[75] - There are no uncertain tax positions that would require recognition in the consolidated financial statements[76] (12) Subsequent Events - Upon completion of the Company's IPO, 186,010 shares were due to the technology licensor and were issued on October 15, 2021[77] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section provides management's perspective on the company's financial performance, condition, liquidity, and cash flows for the three and nine months ended September 30, 2021, compared to the prior year, highlighting key drivers of revenue growth, increased expenses, and the impact of the IPO on liquidity Overview - EzFill operates mobile fueling trucks, providing on-demand fuel delivery to vehicles, construction sites, generators, and reserve tanks in South Florida[81] - The consumer business was significantly impacted by the COVID-19 pandemic in 2020; residential fueling has largely returned in 2021, but office park fueling is still recovering[82] Results of Operations Results of Operations (Three Months Ended September 30): | Metric | 2021 | 2020 | Change ($) | Change (%) | | :----------------------------- | :------------ | :------------ | :------------ | :--------- | | Revenues | $1,863,599 | $1,121,133 | $742,466 | 66% | | Cost of Sales | $1,825,739 | $1,064,362 | $761,378 | 72% | | Operating Expenses | $1,794,575 | $641,945 | $1,152,630 | 180% | | Net Loss | $(2,373,603) | $(724,184) | $(1,649,420) | 228% | | Adjusted EBITDA | $(1,217,013) | $(316,225) | $(900,788) | 285% | | Gallons delivered | 580,462 | 481,587 | 98,875 | 21% | Results of Operations (Nine Months Ended September 30): | Metric | 2021 | 2020 | Change ($) | Change (%) | | :----------------------------- | :------------ | :------------ | :------------ | :--------- | | Revenues | $5,236,016 | $2,460,174 | $2,775,842 | 113% | | Cost of Sales | $5,057,628 | $2,417,456 | $2,640,173 | 109% | | Operating Expenses | $4,705,108 | $2,719,394 | $1,985,714 | 73% | | Net Loss | $(5,729,693) | $(3,071,841) | $(2,657,853) | 87% | | Adjusted EBITDA | $(3,160,504) | $(1,205,168) | $(1,955,336) | 162% | | Gallons delivered | 1,731,289 | 1,032,932 | 698,357 | 68% | - Amortization expense increased in both periods due to the acquisition of a technology license[91][98] - Other income in 2021 resulted from the forgiveness of a loan under the Paycheck Protection Program[92][99] Liquidity and Capital Resources - Cash balance increased significantly to $20,650,989 as of September 30, 2021, from $882,870 at December 31, 2020[101] - Net cash used in operating activities was $(3,412,763) for the nine months ended September 30, 2021, primarily due to net loss[102] - Net cash used in investing activities was $(813,283) for the nine months ended September 30, 2021, including deposits on 33 fuel trucks[103] - Net cash provided by financing activities was $23,994,165 for the nine months ended September 30, 2021, largely from $25,250,000 net proceeds from the Initial Public Offering[104] - The IPO proceeds mitigated the previously reported going concern issue, despite continued net losses[106] Off-Balance Sheet Arrangements - The Company does not have any off-balance sheet arrangements as defined in Regulation S-K Item 303(a)(4)[108] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK This section is not required for smaller reporting companies - This disclosure is not required for smaller reporting companies[109] ITEM 4. CONTROLS AND PROCEDURES Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of September 30, 2021, and reported no material changes to internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2021[111] - There has been no material change in the Company's internal control over financial reporting during the most recent fiscal quarter[112] PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The company is not currently involved in any material legal proceedings - The Company is not aware of any litigation, pending litigation, or other transactions that would require accrual or disclosure under GAAP[73][115] ITEM 1A. RISK FACTORS This section is not required for smaller reporting companies - This disclosure is not required for smaller reporting companies[116] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS During the quarter ended September 30, 2021, the company issued various unregistered equity securities for acquisitions, bonuses, settlements, and services. The net proceeds from the IPO, approximately $25.25 million, are being used as described in the prospectus, with about $5.1 million used as of September 30, 2021 - On September 30, 2021, the Company authorized the issuance of 93,750 shares of common stock to Neighborhood Fuel, valued at $375,000[117] - On September 30, 2021, the Company authorized the issuance of 150,000 shares of common stock for accrued bonuses and settlements, valued at $900,000[118] - The net proceeds from the IPO were approximately $25.25 million after deducting underwriting discounts, commissions, and offering costs[121] - As of September 30, 2021, approximately $5.1 million of the net proceeds from the IPO have been used[122] ITEM 6. EXHIBITS This section lists all exhibits filed as part of the Quarterly Report on Form 10-Q, including underwriting agreements, corporate documents, promissory notes, and certifications - Exhibits include the Underwriting Agreement, Amended and Restated Certificate of Incorporation, Bylaws, various Promissory Notes, and Certifications (31.1, 31.2, 32.1)[130][132] SIGNATURES Signatures Details The report was duly signed on November 10, 2021, by Michael McConnell, Chief Executive Officer and Director, and Arthur Levine, Chief Financial Officer - The report was signed on November 10, 2021[135] - Signed by Michael McConnell, Chief Executive Officer and Director (Principal Executive Officer)[136] - Signed by Arthur Levine, Chief Financial Officer (Principal Financial Officer)[136]