Business context and reporting period
This is EzFill Holdings, Inc.’s unaudited Form 10-Q for the quarter ended March 31, 2023. The filing describes a Florida-based mobile fuel-delivery business. The request metadata names NEXTNRG, Inc.; the supplied filing itself is for EzFill Holdings, Inc. (NASDAQ: EZFL).
Financial performance and position
| Metric | Q1 2023 | Q1 2022 / comparison |
|---|---|---|
| Revenue | $5.23 million | $2.34 million; up 124% |
| Cost of sales | $5.07 million | $2.32 million; up 118% |
| Gross profit and margin | $162,551; 3.1% | $15,908; 0.7% |
| Operating loss | $2.31 million | $3.27 million |
| Net loss / diluted loss per share | $2.35 million / $0.70 | $3.27 million / $0.98 |
| Adjusted EBITDA (non-GAAP) | $(1.84) million | $(2.46) million |
| Operating cash flow | $(2.51) million | $(2.33) million |
Gallons delivered increased 122% to 1,315,226. Management attributes revenue growth mainly to higher delivery volume and fees, including activity in existing and new markets. Operating expenses fell 25% to $2.20 million, which management attributed to lower payroll, stock compensation, marketing, and public-company costs. Interest expense increased, partly reflecting borrowing for truck purchases. The reported share and per-share figures reflect the filing’s treatment of the subsequent 1-for-8 reverse split.
At March 31, cash was $504,581 and investments in debt securities were $978,479, totaling approximately $1.48 million in cash and investments. Current assets were $3.00 million versus current liabilities of $2.83 million. Total liabilities were $4.11 million and stockholders’ equity was $3.66 million. Debt comprised $1.0 million drawn on a bank line and $1.79 million in vehicle loans; operating lease liabilities were approximately $501,000. The bank line was callable at the bank’s discretion and secured by the investment portfolio.
Material changes and notable items
- Revenue more than doubled and gross margin improved to 3.1%, but the business remained loss-making and operating cash use increased year over year.
- Cash and investments declined from approximately $4.19 million at December 31, 2022, to $1.48 million at quarter-end. The company used $2.51 million in operating cash and received $1.15 million from maturities and sales of debt securities during the quarter.
- Q1 2023 capital spending on fixed assets was zero, compared with $1.27 million in Q1 2022. Debt principal repayments were $199,723.
- The company’s at-the-market stock sales agreement was terminated March 24, 2023; Q1 sales under it generated $26,601 gross proceeds, largely offset by expenses.
- One customer represented 21% of Q1 revenue, down from 49% a year earlier; one customer accounted for 41% of quarter-end receivables. The company sourced substantially all fuel from three vendors.
Outlook, risks and subsequent events
Management said it expected continuing operating losses and cash use and anticipated needing additional capital within one to two months. It concluded that substantial doubt existed about the company’s ability to continue as a going concern; financing was not assured, and failure to obtain it could force the company to delay, reduce, or cease operations. The filing provides no quantified revenue or profitability guidance.
- After quarter-end, the company borrowed $262,500 under a related-party note dated April 4, 2023; it reported repaying the note for $275,625 on April 20.
- On April 19, the company entered into a $1.5 million note financing with AJB Capital. Net proceeds were reported as $1.26 million after original issue discount and transaction costs. The note matures October 19, 2023, carries 10% annual interest, is secured by company assets, and includes default, conversion, anti-dilution, and restrictive-covenant provisions.
- On April 27, 2023, the company effected a 1-for-8 reverse stock split and reduced authorized common and preferred shares. The cover page reports 3,600,639 common shares outstanding as of April 27.
- The company disputes Fuel Butler LLC’s purported termination of a technology license, asserting it remains in force while also stating it has proposed ending use of the technology and seeking return of shares. The license was fully impaired in 2022. Fuel Butler is partly owned by a company executive.
- The filing reports no legal proceedings requiring disclosure or accrual as of quarter-end. It also identifies related-party arrangements, including a consulting agreement with an entity founded by a newly appointed director.
Important facts for investors to verify
- Whether the company secured sufficient additional financing after the filing and its current cash runway, liquidity, and going-concern status.
- The complete economics, collateral, covenants, default triggers, and potential dilution of the AJB Capital financing, including any later amendments or repayment.
- Whether gross margins can improve as delivery volume expands, and whether operating cash burn is declining.
- The status and potential operational impact of the Fuel Butler license dispute and any related-party obligations.
- The concentration and collectability of receivables, dependence on three fuel vendors, and the post-split share count and dilution from equity awards or financing.