Business context and reporting period
The filing is EzFill Holdings, Inc.’s unaudited Form 10-Q for the quarter and nine months ended September 30, 2022, filed November 14, 2022. The company operates mobile fuel-delivery services, headquartered in Aventura, Florida. The supplied metadata names NEXTNRG, Inc., but the filing identifies the registrant as EzFill Holdings, Inc. (NASDAQ: EZFL); verify the issuer mapping.
Financial performance
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | $4.09 million | $1.86 million | $10.19 million | $5.24 million |
| Gross profit (loss) | $(117,000) | $38,000 | $(102,000) | $178,000 |
| Gross margin | (2.9%) | 2.0% | (1.0%) | 3.4% |
| Operating loss | $(4.07) million | $(1.99) million | $(11.21) million | $(5.12) million |
| Net loss | $(4.08) million | $(2.37) million | $(11.22) million | $(5.73) million |
| Adjusted EBITDA, non-GAAP | $(3.32) million | $(1.22) million | $(8.79) million | $(3.16) million |
Q3 revenue rose 120% year over year; nine-month revenue rose 95%. Gallons delivered increased 71% in Q3 and 37% year to date. Average fuel margin per gallon improved to $0.43 from $0.37 in Q3 and to $0.47 from $0.37 for the nine-month period. However, cost of sales grew faster than revenue, and gross margin turned negative in both 2022 periods. Operating expenses rose 94% in Q3 and 109% year to date, with increases including payroll, insurance, marketing, technology and public-company costs. Q3 advertising expense was $488,000 versus $11,000; year-to-date expense was $1.07 million versus $87,000.
Cash, liquidity and debt
At September 30, 2022, cash and cash equivalents were $4.58 million and debt securities were $2.43 million, or about $7.01 million combined, compared with about $16.92 million at December 31, 2021. Current assets were $8.06 million and current liabilities $3.08 million. Total liabilities were $4.86 million; loans payable were $2.21 million, plus $1.00 million outstanding on the bank line of credit. Operating lease liabilities totaled $604,000.
For the first nine months, operating cash use was $8.98 million, investing cash use was $2.73 million, and financing provided $2.73 million. Fixed-asset purchases, primarily delivery trucks, were $3.24 million. Management said it expected to need additional capital within the next 2–3 months to continue operations and warned that unavailable financing could force it to delay, reduce or cease operations. The bank line was secured by investment securities, bore 4.50% interest at quarter-end, and could be called for repayment at the bank’s discretion. The company also reported approximately $2.3 million remaining under a vehicle-financing facility through December 31, 2022.
Material changes, outlook and risks
- The company acquired substantially all assets of Full Service Fueling in March 2022 for $321,250 cash and 40,323 shares valued at $50,000. Since acquisition, the business contributed about $72,000 revenue and a $5,000 net loss.
- Delivery-vehicle fixed assets increased substantially, supporting expansion into existing and new markets. Management attributed higher revenue to greater volume, higher fuel prices and new fleet customers.
- The company reported ongoing losses since inception, insufficient operating revenue to fund operations, and expected continued operating losses and cash use. No specific revenue or earnings guidance was provided.
- Customer concentration remained significant: one customer accounted for 29% of Q3 revenue and 37% of nine-month revenue; another accounted for 14% of Q3 revenue. The company purchases substantially all fuel from two vendors.
- The filing reported no litigation requiring accrual or disclosure and no material change in internal control over financial reporting; management concluded disclosure controls were effective at a reasonable-assurance level.
- Management reported $18.3 million of the IPO’s approximately $25.3 million net proceeds used by September 30, 2022. The filing also describes related-party relationships and equity compensation grants that investors may wish to review.
Most important facts to verify
- Confirm that this EzFill Holdings, Inc. filing corresponds to the intended NEXTNRG, Inc. issuer.
- Assess the cash runway against the stated need to raise capital within 2–3 months and the $8.98 million nine-month operating cash outflow.
- Review whether revenue growth can translate into positive gross margins, given rising cost of sales and negative 2022 gross margins.
- Check the terms, availability and callable nature of the securities-backed bank line, vehicle financing and any subsequent financing or liquidity developments.
- Evaluate customer and fuel-supplier concentration, the Full Service Fueling acquisition, and related-party arrangements and share-based compensation.