EzFill (EZFL) - 2022 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS EzFill Holdings, Inc.'s unaudited condensed consolidated financial statements and notes for Q1 2022 and 2021 are presented Condensed Consolidated Balance Sheets The condensed consolidated balance sheets present the company's financial position as of March 31, 2022, and December 31, 2021 Condensed Consolidated Balance Sheets | Metric | March 31, 2022 ($) | December 31, 2021 ($) | | :-------------------------------- | :------------- | :---------------- | | Cash and cash equivalents | $10,571,774 | $13,561,266 | | Total Current Assets | $14,379,399 | $17,257,032 | | Total Assets | $22,039,756 | $22,924,118 | | Total Current Liabilities | $1,631,572 | $758,236 | | Total Liabilities | $2,964,420 | $1,055,672 | | Total Stockholders' Equity | $19,075,335 | $21,868,446 | Condensed Consolidated Statements of Operations The condensed consolidated statements of operations detail revenues, costs, and net loss for Q1 2022 and 2021 Condensed Consolidated Statements of Operations | Metric | Three Months Ended March 31, 2022 ($) | Three Months Ended March 31, 2021 ($) | | :--------------------------------------- | :-------------------------------- | :-------------------------------- | | Revenues | $2,340,068 | $1,521,819 | | Cost of sales | $2,324,160 | $1,394,396 | | Operating expenses | $2,948,001 | $1,244,490 | | Operating loss | $(3,269,757) | $(1,235,811) | | Net loss | $(3,266,510) | $(1,348,155) | | Basic and diluted net loss per share | $(0.12) | $(0.08) | Condensed Consolidated Statements of Stockholders' Equity (Deficit) This statement outlines changes in stockholders' equity from December 31, 2021, to March 31, 2022 Condensed Consolidated Statements of Stockholders' Equity (Deficit) | Metric | December 31, 2021 ($) | March 31, 2022 ($) | | :-------------------------- | :---------------- | :--------------- | | Common stock amount | $2,624 | $2,631 | | Additional Paid-in Capital | $39,210,291 | $39,730,969 | | Accumulated Deficit | $(17,339,396) | $(20,605,906) | | Accumulated Other Comprehensive Loss | $(5,073) | $(52,359) | | Total Stockholders' Equity | $21,868,446 | $19,075,335 | - Stock-based compensation for the three months ended March 31, 2022, was $470,685[14] Condensed Consolidated Statements of Cash Flows The cash flow statement summarizes cash generated and used by activities for Q1 2022 and 2021 Condensed Consolidated Statements of Cash Flows | Cash Flow Activity | Three Months Ended March 31, 2022 ($) | Three Months Ended March 31, 2021 ($) | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(2,329,978) | $(905,579) | | Net cash used in investing activities | $(1,592,798) | $(23,841) | | Net cash provided by financing activities | $933,283 | $227,376 | | Net change in cash and cash equivalents | $(2,989,493) | $(652,044) | | Cash and cash equivalents at end of period | $10,571,774 | $230,826 | Notes to Condensed Consolidated Financial Statements These notes provide detailed explanations for the condensed consolidated financial statements, covering policies, liquidity, and transactions (1) Nature of Organization and Summary of Significant Accounting Policies This note describes EzFill's mobile gas delivery business and outlines key accounting policies, including estimates and concentrations - EzFill Holdings, Inc. operates an on-demand mobile gas delivery service in South Florida[20][83] Cash and Cash Equivalents | Metric | March 31, 2022 ($) | December 31, 2021 ($) | | :-------------------------- | :------------- | :---------------- | | Cash and cash equivalents | $10,571,774 | $13,561,266 | - For the three months ended March 31, 2022 and 2021, one customer accounted for approximately 49% and 55% of revenue, respectively, and the company purchases substantially all of its fuel from one vendor[28][30] (2) Liquidity This note addresses liquidity, highlighting accumulated deficit, operating losses, and future capital needs Liquidity Metrics | Metric | March 31, 2022 ($) | | :------------------ | :------------- | | Net loss (Q1 2022) | $(3,266,510) | | Accumulated deficit | $(20,605,906) | | Working capital surplus | $12,747,827 | - The company expects its cash on hand to fund operations for approximately 12-14 months after the issuance date of these financial statements[39] - The company anticipates needing to raise additional capital to fund operations, with no assurance such funding will be available on favorable terms or at all[39] (3) Related Party Transactions This note details related party transactions, including executive stock compensation, a consulting agreement, and a technology license - During Q1 2022, the company issued 160,219 shares of restricted stock and 396,511 stock options to executives, resulting in $475,000 in stock compensation expense over the vesting period[40] - The company has a consulting agreement with Balance Labs, Inc., led by a former company president who beneficially owns approximately 26% of the company's common stock[41] - A technology license agreement exists with Fuel Butler LLC, 20% owned by a company executive[42] (4) Fixed Assets This note provides a breakdown of fixed assets, including vehicles and construction in process, and depreciation expense Fixed Assets Breakdown | Fixed Asset Category | March 31, 2022 ($) | December 31, 2021 ($) | | :-------------------------- | :------------- | :---------------- | | Vehicles | $2,545,647 | $975,377 | | Vehicle construction in process | $1,153,256 | $1,394,355 | | Total fixed assets, net | $3,610,638 | $2,286,320 | | Depreciation expense (Q1) | $100,230 | $28,760 | (5) Intangible Assets This note details intangible assets, including goodwill and a technology license, with accumulated and future amortization Intangible Assets Breakdown | Intangible Asset Category | March 31, 2022 ($) | December 31, 2021 ($) | | :-------------------------------- | :------------- | :---------------- | | Goodwill | $146,838 | $109,983 | | Technology license | $2,950,000 | $2,950,000 | | Total other intangible assets, net | $3,151,288 | $3,207,327 | | Amortization expense (Q1) | $237,434 | $89,984 | - The company entered into a Technology License Agreement on April 7, 2021, involving common stock issuance, potential future shares/options, and 50% sharing of pre-revenue costs and net revenue with the licensor[45] Future Amortization Schedule | Year | Future Amortization ($) | | :-------------------------- | :------------------ | | 2022 (April to December) | $681,724 | | 2023 | $834,205 | | 2024 | $747,659 | | 2025 | $633,941 | | 2026 | $246,507 | | 2027 | $7,252 | | TOTAL | $3,151,288 | (6) Accounts Payable and Accrued Liabilities This note presents the composition of accounts payable and accrued liabilities as of March 31, 2022, and December 31, 2021 Accounts Payable and Accrued Liabilities | Liability Category | March 31, 2022 ($) | December 31, 2021 ($) | | :--------------------------------------- | :------------- | :---------------- | | Accounts payable | $735,261 | $491,598 | | Accrued payroll | $100,991 | $82,080 | | Total Accounts Payable and Accrued Liabilities | $836,252 | $579,365 | (7) Debt This note details the company's debt instruments, including a revolving line of credit, vehicle loans, and notes payable - The company has a revolving Line of Credit with City National Bank of Florida, with outstanding borrowings of $152,500 at March 31, 2022, and an interest rate of 1.75%[50] - Vehicle loans have interest rates ranging from 3.5% to 7.4%, with approximately $1.3 million remaining available under a commercial line of credit for vehicle financing[51] Debt Maturities Schedule | Year | Debt Maturities ($) | | :-------------------------- | :-------------- | | 2022 (April to December) | $314,108 | | 2023 | $429,261 | | 2024 | $421,551 | | 2025 | $92,170 | | Total | $1,257,090 | (8) Shareholders Equity This note details common stock, restricted stock, stock options, and warrants, including grants and compensation expense - As of March 31, 2022, 26,312,131 shares of common stock were issued and outstanding[9] Restricted Stock Activity | Restricted Stock Activity | Shares | Weighted Average Grant Date Fair Value ($) | | :-------------------------------- | :----- | :------------------------------------- | | Outstanding at December 31, 2021 | 317,586 | 3.27 | | Granted (Q1 2022) | 182,539 | 1.30 | | Vested (Q1 2022) | (32,321) | 1.72 | | Forfeited (Q1 2022) | (7,500) | 2.93 | | Outstanding at March 31, 2022 | 460,304 | 3.36 | - During Q1 2022, 522,462 stock options were granted to executives with an exercise price of $1.26 and an 8-year term, vesting 1/3 per year over three years[64] (9) Commitments and Contingencies This note addresses litigation status and details lease commitments for office space, including future payments - As of March 31, 2022, the company is not aware of any litigation requiring accrual or disclosure under GAAP[68] - The company signed a 39-month lease for office space effective January 1, 2022, with a total monthly payment of $21,773, recognizing an initial Right of Use (ROU) asset of $735,197[69] Future Minimum Lease Payments (Undiscounted) | Year | Future Minimum Lease Payments (Undiscounted) ($) | | :-------------------------- | :------------------------------------------- | | 2022 (April 1 to December 31) | $195,961 | | 2023 | $251,403 | | 2024 | $256,414 | | 2025 | $69,421 | | Total undiscounted operating leases payments | $773,199 | | Present Value of Operating Lease Liabilities | $718,578 | (10) Income Taxes This note reports zero income tax expense for Q1 2022 and 2021 due to net loss, with no uncertain tax positions - Tax expense for the three months ended March 31, 2022, and 2021, was $0 due to a net loss[71] - There are no uncertain tax positions requiring recognition in the consolidated financial statements[72] (11) Acquisition This note details the acquisition of Full Service Fueling, including purchase price allocation and pro forma impact - On March 11, 2022, the company acquired substantially all assets of Full Service Fueling for $321,250 cash and 40,323 common shares valued at $50,000[74][76] Purchase Price Allocation for Full Service Fueling Acquisition | Purchase Price Allocation | Amount ($) | | :-------------------------- | :----- | | Vehicles | $153,000 | | Customer list | $66,413 | | Loading rack license | $58,857 | | Other identifiable intangibles | $56,124 | | Goodwill | $36,856 | | Total | $371,250 | - The acquired business contributed approximately $13,000 of revenue and a $3,000 net loss from the acquisition date to March 31, 2022[77] (12) Subsequent Events The company evaluates subsequent events but has not disclosed any material events after the balance sheet date - The company evaluates subsequent events but no material events are disclosed[79] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management discusses financial condition, operating results, liquidity, and cash flows for Q1 2022, including non-GAAP reconciliation - As of March 31, 2022, the company had $13,874,666 in cash and investments[96] - The company expects its cash on hand to fund operations for approximately 12-14 months after the issuance date of these financial statements[103] - The company anticipates needing to raise additional capital to fund operations, with no assurance of favorable terms or availability[103] Overview EzFill's core business is mobile fueling in South Florida, with consumer business recovering but office park fueling lagging - EzFill operates mobile fueling trucks, providing on-demand fuel delivery to vehicles at homes, offices, construction sites, and for generators/reserve tanks[83] - The consumer business largely recovered in 2021 for residential fueling, but office park fueling is still recovering to pre-pandemic levels[84] Results of Operations This section summarizes key financial results for Q1 2022 and 2021, showing increases in revenues, costs, and net loss Comparative Summary of Operations | Metric | Three Months Ended March 31, 2022 ($) | Three Months Ended March 31, 2021 ($) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Revenues | $2,340,068 | $1,521,819 | | Cost of sales | $2,324,160 | $1,394,396 | | Operating expenses | $2,948,001 | $1,244,490 | | Operating loss | $(3,269,757) | $(1,235,811) | | Net loss | $(3,266,510) | $(1,348,155) | Non-GAAP Financial Measures This section defines Adjusted EBITDA as a non-GAAP measure and provides its reconciliation to net loss - Adjusted EBITDA is a non-GAAP measure excluding net interest expense, taxes, depreciation, amortization, and stock compensation expense[87] Adjusted EBITDA Reconciliation | Metric | Three Months Ended March 31, 2022 ($) | Three Months Ended March 31, 2021 ($) | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Net loss | $(3,266,510) | $(1,348,155) | | Depreciation and amortization | $337,664 | $118,744 | | Stock compensation | $470,685 | $417,462 | | Adjusted EBITDA | $(2,461,408) | $(699,605) | | Gallons delivered (Gallons) | 591,505 | 543,062 | | Average fuel margin per gallon ($/Gallon) | $0.47 | $0.36 | Revenues and Cost of Sales Revenues increased by 54% due to higher gallons and price, while cost of sales increased by 67% due to sales and driver hires - Revenues increased by $818,249 (54%) to $2,324,068 for Q1 2022, driven by a 9% increase in gallons delivered and higher average price per gallon[89] - Cost of sales increased by $928,432 (67%) to $2,324,160 for Q1 2022, primarily due to increased sales and hiring of additional drivers[90] Operating Expenses Operating expenses surged by 137% to $2,948,000 in Q1 2022, driven by payroll, marketing, insurance, and technology - Operating expenses increased by $1,703,510 (137%) to $2,948,000 for Q1 2022[91] - The primary drivers for the increase in operating expenses were increases in payroll, marketing, insurance, technology, and public company expenses[91] Depreciation and Amortization Depreciation and amortization expenses increased in Q1 2022 due to a technology license acquisition and vehicle purchases - Amortization increased due to the acquisition of a technology license[93] - Depreciation increased due to purchases of vehicles and delivery equipment[93] Other Income (Expense) Other income in Q1 2022 resulted from interest income, while interest expense decreased due to pre-IPO debt repayment - Other income in Q1 2022 resulted from interest income on investments[94] - Interest expense decreased due to the repayment of pre-IPO debt[94] Net Losses The company's net loss significantly increased by 142% to $3,266,510 for Q1 2022 - Net loss increased by $1,918,355 (142%) to $3,266,510 for Q1 2022[95] Liquidity and Capital Resources This section discusses cash position, cash flow activities, and reliance on equity and debt financings, anticipating future capital needs Cash Flow Activities This sub-section summarizes net cash changes from operating, investing, and financing activities Cash Flow Activities Summary | Cash Flow Activity | Three Months Ended March 31, 2022 ($) | Three Months Ended March 31, 2021 ($) | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(2,329,978) | $(905,579) | | Net cash used in investing activities | $(1,592,798) | $(23,841) | | Net cash provided by financing activities | $933,283 | $227,376 | Operating Activities Net cash used in operating activities significantly increased in Q1 2022, primarily due to the net loss - Net cash used in operating activities was $2,329,978 for Q1 2022, primarily due to the net loss[97] Investing Activities Cash used in investing activities increased substantially in Q1 2022 due to fixed asset and Full Service Fueling acquisitions - Cash used for acquisition of fixed assets (primarily trucks) was $1,271,548 for Q1 2022, compared to $23,841 in Q1 2021[98] - The company acquired the mobile fueling assets of Full Service Fueling during Q1 2022[98] Financing Activities Cash flows from financing activities increased in Q1 2022 from line of credit borrowings and new truck loans - Cash flows from financing activities were $933,283 for Q1 2022, including $152,500 from bank line of credit borrowings and $893,928 from new truck purchase loans[99] Sources of Capital The company funds operations through equity and debt, including $25.25 million IPO proceeds, and anticipates needing additional capital - The company has funded activities through capital contributions from notes payable and the sale of securities[100] - The September 2021 IPO raised $25,250,000 in net proceeds[103] - The company anticipates needing to raise additional capital to fund operations and expansion, with no assurance of favorable terms or availability[103] Off-Balance Sheet Arrangements The company reports no off-balance sheet arrangements as defined by Regulation S-K Item 303(a)(4) - The company does not have any off-balance sheet arrangements[104] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Quantitative and qualitative disclosures about market risk are not required for smaller reporting companies - Disclosure about market risk is not required for smaller reporting companies[105] ITEM 4. CONTROLS AND PROCEDURES This section details the evaluation of disclosure controls and procedures and reports on internal control changes Evaluation of Disclosure Controls and Procedures Management concluded that disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2022 - Disclosure controls and procedures were evaluated and deemed effective at the reasonable assurance level as of March 31, 2022[107] Changes in Internal Control Over Financial Reporting The company reported no material changes in internal control over financial reporting during the most recent fiscal quarter - There has been no material change in internal control over financial reporting during the most recent fiscal quarter[108] PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The company reports no legal proceedings to disclose - No legal proceedings are reported[111] ITEM 1A. RISK FACTORS Risk factor disclosures are not required for smaller reporting companies - Risk factor disclosures are not required for smaller reporting companies[112] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS This section confirms no unregistered equity sales or repurchases and details IPO net proceeds usage - No equity securities were sold in unregistered transactions during the period, and no shares were repurchased[113] Use of Proceeds The company received $25.3 million net IPO proceeds, used $11.4 million, and invested unused funds in income instruments - The IPO in September 2021 generated approximately $25.3 million in net proceeds[114] - As of March 31, 2022, approximately $11.4 million of the IPO net proceeds have been used[115] - Unused IPO proceeds are invested in fixed, non-speculative income instruments and money market funds[115] ITEM 6. EXHIBITS This section lists all exhibits filed as part of the Quarterly Report on Form 10-Q, including agreements and documents - The report includes exhibits such as the Underwriting Agreement, Asset Purchase and Fuel Supply Agreement, Amended and Restated Certificate of Incorporation, Bylaws, various Promissory Notes, and Employment Offer Letters[123][124] SIGNATURES SIGNATURES This section contains the official signatures of the CEO and CFO, certifying the Quarterly Report on Form 10-Q - The report is signed by Michael McConnell, Chief Executive Officer and Director, and Arthur Levine, Chief Financial Officer[128]