NEXTNRG, INC. annual report, FY2021

Business context and reporting period

Entity mismatch: The supplied filing is EzFill Holdings, Inc. (Nasdaq: EZFL), not NEXTNRG, Inc. It is the audited Form 10-K for the fiscal year ended December 31, 2021; it does not provide separate fourth-quarter results.

EzFill operates app-based mobile fuel delivery in South Florida, serving consumer, commercial fleet and specialty customers. It reported a fleet of 24 mobile fueling trucks and began Nasdaq trading in September 2021.

Financial performance and condition

Revenue rose 102%, reflecting 53% more gallons delivered and a higher average price per gallon. Cost of sales rose 98%; despite improved gross margin, gross profit remained small relative to operating costs. Net loss widened 29%. Adjusted EBITDA also deteriorated; it is a company-defined non-GAAP measure.

At year-end, cash and cash equivalents were $13.56 million and short-term debt securities were $3.36 million. Working capital surplus was $16.44 million. Total liabilities were $1.06 million, including $476,307 of notes payable; debt maturities were $178,871 in 2022, with the balance due through 2026. The company reported $16.92 million in cash and investments in its MD&A. The filing also describes a securities-backed bank credit line with a discretionary limit of approximately $16 million and a 1.5% year-end rate; the bank can demand repayment and terminate it.

Cash from financing activities was $24.37 million, primarily reflecting the September IPO. The IPO sold 7,187,500 shares at $4.00 each for approximately $25.25 million net proceeds (gross proceeds were $28.75 million); about $8.3 million of net proceeds had been used by year-end. The company reported an accumulated deficit of $17.34 million.

Changes, outlook, risks and unusual items

• Operating costs increased 24%, driven by payroll, sales and marketing, insurance, technology and public-company costs. Depreciation and amortization increased following vehicle purchases and a technology license.
• Management expects continued operating losses and cash use, and says additional capital will be needed. It expected year-end cash to fund operations for at least 12 months after the financial statements were issued, but warned financing may not be available on acceptable terms. No revenue, earnings or margin guidance is provided.
• COVID-related lower office-park fueling was partly offset by large delivery fleets, which carry lower margins. Management expected customer activity to normalize post-pandemic.
• Customer concentration is material: one customer represented 57% of revenue in MD&A; the financial-statement note reports approximately 58%, versus 38% in 2020. One supplier provides substantially all fuel, and the company says it has no written agreement with that supplier.
• Other key risks include fuel-price and margin volatility, competition and electric-vehicle adoption, hazardous-material and environmental liabilities, changing mobile-fueling regulation, cybersecurity, and reliance on additional financing. The prior-year audit report contained a going-concern qualification; the 2021 audit report did not, though substantial losses and future financing needs remain.
• Unusual items include $154,673 of PPP loan forgiveness recorded in 2021 other income; IPO-related share issuance and dilution; and $2.95 million in shares issued for a technology license. The license arrangement includes potential additional shares, options and a 50% sharing of defined net revenue pending exercise of acquisition options; significant revenue was not expected before at least the second half of 2022.
• Subsequent to year-end, EzFill agreed to acquire substantially all assets of Full Service Fueling for $325,000 cash and $50,000 in stock, subject to closing conditions, and to use Palmdale Oil as a major supplier with preferred pricing. The filing also reports a January 2022 executive separation payment of $118,125.
• The independent auditor gave an unqualified opinion on the financial statements. Management concluded disclosure controls and internal control over financial reporting were effective; the auditor did not audit or opine on internal-control effectiveness.

Most important facts to verify

1. Confirm the intended issuer: this filing concerns EzFill Holdings, Inc., not NEXTNRG, Inc.
2. Reconcile the 57% versus approximately 58% major-customer revenue concentration and assess customer retention and economics.
3. Review cash burn, remaining IPO proceeds, the maturity schedule, and the demandable, securities-secured bank credit line when evaluating liquidity.
4. Assess gross-margin sustainability given very low 2021 gross margin, commodity-price exposure, and lower margins from large fleet customers.
5. Check closing status, consideration and expected costs for the Full Service Fueling/Palmdale transaction, and track any dilution or revenue-sharing obligations under the Fuel Butler license.