Business Context and Reporting Period
This Form 8-K was filed by EzFill Holdings, Inc. (Ticker: EZFL) on June 14, 2024, reporting events occurring on June 10 and June 11, 2024. The filing details a material definitive agreement to acquire NextNRG Holding Corp. (formerly Next Charging LLC) and the issuance of a related promissory note. The transaction involves Michael Farkas, CEO of NextNRG and a beneficial owner of approximately 27% of EzFill's common stock.
Key Financial Metrics and Agreements
- Promissory Note: EzFill issued a $165,000 promissory note to NextNRG on June 10, 2024, for working capital.
- Interest Rates: 8% per annum for the first nine months; increases to 18% per annum thereafter.
- Original Issue Discount (OID): $15,000 (10% of principal).
- Maturity Date: August 10, 2024, with automatic 2-month extensions unless NextNRG provides 10 days' written notice to terminate.
- Commitment Fee: 52,000 shares of EzFill common stock issued to NextNRG, deemed fully earned as of June 10, 2024.
- Conversion Rights: Upon default, NextNRG may convert the outstanding balance into EzFill common stock at the greater of the 10-day VWAP or a $0.70 floor price, capped at the closing price on June 10, 2024.
- Default Penalty: Unpaid principal and interest multiplied by 150% become immediately due upon default.
Material Changes and Transaction Status
Next Charging LLC converted to a Nevada corporation named NextNRG Holding Corp. effective March 1, 2024. On June 11, 2024, EzFill, NextNRG shareholders, and Michael Farkas executed a Second Amended and Restated Exchange Agreement to reflect this conversion. Under this agreement, EzFill will acquire 100% of NextNRG's shareholding in exchange for common stock. As of the filing date, the closing of this acquisition has not occurred.
Guidance, Risks, and Contingencies
- Nasdaq Listing Rule 5635(d): Stock issuance under the note and exchange agreement is subject to the 19.99% cap. If shareholder approval is not obtained to exceed this cap, any remaining note balance must be repaid in cash upon NextNRG's request.
- Related Party Transaction: The transaction involves Michael Farkas, who controls NextNRG and holds a significant stake in EzFill, creating potential conflicts of interest.
- Stock Split Protection: The note includes provisions to adjust conversion shares and prices in the event of a stock split or reverse split.
- Financial Statements: The filing does not provide updated revenue, profit, or cash flow metrics for EzFill Holdings, Inc. beyond the specific terms of the new debt instrument.
Investor Verification Checklist
- Verify the current market price of EZFL relative to the $0.70 conversion floor price and the June 10, 2024 closing price cap.
- Confirm whether shareholder approval has been sought or obtained to issue stock exceeding the Nasdaq 19.99% ownership cap.
- Review the full text of the Second Amended and Restated Exchange Agreement (Exhibit 10.1) for specific closing conditions.
- Assess the impact of the 150% default penalty and potential dilution from the 52,000 commitment fee shares and future conversions.
- Monitor the status of the acquisition closing, which was pending as of June 14, 2024.