EzFill Holdings Inc (NASDAQ:EZFL), a company in the retail-auto dealers and gasoline stations industry, has entered into a material definitive agreement with NextNRG Holding Corp., as disclosed in a recent 8-K filing with the SEC. The agreement, dated Monday, involves a promissory note for a loan of $181,500, intended for EzFill's working capital needs.
The promissory note, which includes an original issue discount of $16,500, stipulates an 8% annual interest rate for the first nine months. After this period, the interest rate will increase to 18% per annum. The principal and accrued interest are due by the earlier of November 14, 2025, or upon the completion of a capital raise of at least $5 million by EzFill.
In the event of a default, NextNRG is entitled to convert the outstanding balance into EzFill's common stock at a conversion price either equal to the average VWAP over the five trading days prior to conversion or a floor price of $0.70, whichever is greater. However, the conversion price cannot exceed the stock's closing price on the NASDAQ on the date of the note.
The agreement also includes a clause that limits the cumulative number of common stock shares issued to NextNRG to meet Nasdaq Listing Rule 5635(d), which caps share issuance at 19.99% of the company's common stock without shareholder approval. If such approval is not obtained, the remaining balance of the note must be repaid in cash.
The relationship between EzFill and NextNRG is notably interconnected, as Michael Farkas, the CEO of NextNRG, is also the beneficial owner of approximately 70% of EzFill's issued and outstanding common stock. This loan follows previous agreements between the companies, including an exchange agreement where EzFill agreed to acquire 100% of the membership interests of NextNRG in exchange for EzFill's common stock.
In other recent news, EzFill Holdings Inc. has announced plans to acquire the fueling division of Yoshi, Inc., a move expected to enhance its national expansion efforts in the on-demand fueling sector. The acquisition will integrate Yoshi Mobility's assets, field technicians, and customer base into EzFill's existing infrastructure. The financial terms of the transaction remain undisclosed, but completion is anticipated by the year's end.
Simultaneously, EzFill has made significant financial strides, revising its agreement with NextNRG Holding Corp. shareholders and increasing the total shares to be issued from 40 million to 100 million. This revision is part of EzFill's planned acquisition of 100% of NextNRG.
The company has also regained compliance with Nasdaq's equity rule, converting approximately $13.5 million of its debt into equity through agreements with NextNRG Holding Corp and AJB Capital Investments.
InvestingPro Insights
EzFill Holdings Inc's recent loan agreement with NextNRG Holding Corp. comes at a time when the company is facing financial challenges. According to InvestingPro data, EzFill has a market capitalization of just $15.27 million and is not profitable over the last twelve months. The company's revenue for the last twelve months as of Q3 2024 stands at $26.67 million, with a revenue growth of 19.14% during this period.
InvestingPro Tips highlight that EzFill is "quickly burning through cash" and "suffers from weak gross profit margins." This aligns with the company's need for additional working capital, as evidenced by the recent loan agreement. The gross profit margin for the last twelve months as of Q3 2024 is indeed low at 7.46%.
Despite these challenges, InvestingPro Tips also indicate that analysts anticipate sales growth in the current year, which could potentially improve the company's financial position. Additionally, EzFill "operates with a moderate level of debt," which may provide some flexibility in its financial management.
Investors should note that EzFill's stock has taken a significant hit recently, with a 16.13% decline over the past week and a 60.31% drop over the last six months. This performance reflects the market's current sentiment towards the company's financial situation and growth prospects.
For those interested in a more comprehensive analysis, InvestingPro offers 12 additional tips for EzFill Holdings Inc, providing a deeper insight into the company's financial health and market position.
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