# NEXTNRG, INC. (NXXT) FY 2023 MD&A

Verbatim Item 7 Management's Discussion and Analysis from NEXTNRG, INC.'s 10-K for fiscal year 2023.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1817004/000149315224012378/form10-k.htm
Accession: 0001493152-24-012378
Filing date: 2024-04-01
Report date: 2023-12-31
Extracted from a later financial-section MD&A body after the formal Item 7 span was a short reference.
Confidence: high

Company profile: /company/NXXT/
All MD&A years: /company/NXXT/mda/
Previous year: /company/NXXT/mda/fy2022/ (FY 2022)
Next year: /company/NXXT/mda/fy2024/ (FY 2024)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The
following discussion and analysis summarizes the significant factors affecting the consolidated operating results, financial condition,
liquidity and cash flows of our Company as of and for the periods presented below. The following discussion and analysis of our financial
condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and
related notes included in this Annual Report on Form 10-K and the audited financial statements and notes thereto as of and for the year
ended December 31, 2023 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operation. Unless
the context requires otherwise, references in this Annual Report on Form 10-K to “we,” “us,” and “our”
refer to Ezfill Holdings, Inc.

Forward-Looking
Statements

The
information in this discussion contains forward-looking statements and information within the meaning of Section 27A of the Securities
Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act,
which are subject to the “safe harbor” created by those sections. These forward-looking statements include, but are not limited
to, statements concerning our strategy, future operations, future financial position, future revenues, projected costs, prospects and
plans and objectives of management. The words “anticipates,” “believes,” “estimates,” “expects,”
“intends,” “may,” “plans,” “projects,” “will,” “would” and similar
expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying
words. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should
not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions
and expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks and uncertainties
that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation,
the risks set forth in our filings with the SEC. The forward-looking statements are applicable only as of the date on which they are
made, and we do not assume any obligation to update any forward-looking statements.

Overview

We were incorporated under the laws
of Delaware in March 2019. We are in the business of operating mobile fueling trucks and are headquartered in Miami, Florida. EzFill provides
its customers the ability to have fuel delivered to their vehicles (cars, boats, trucks) without leaving their home or office and to construction
sites, generators and reserve tanks.

Our mobile fueling solution gives
our fleet, consumer and other customers the ability to fuel their vehicles with the touch of an app or regularly scheduled service, and
without the inconvenience of going to the gas station.

On April 27, 2023, the Company executed
a 1-for-8 reverse stock split and decreased the number of shares of its authorized common stock from 500,000,000 shares to 50,000,000
and its preferred stock from 50,000,000 to 5,000,000. As a result, all share activity has been restated as if the reverse stock split
had been consummated as of the beginning of the respective period.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of
operations are based on our financial statements, which have been prepared in accordance with generally accepted accounting
principles in the U.S., or GAAP. We have identified certain accounting policies as critical to understanding our financial condition
and results of our operations. For a detailed discussion on the application of these and other accounting policies, see the notes to
our financial statements included in this Annual Report on
Form 10-K.

30

Results
of Operations

The following table sets forth our results of operations
for the year ended December 31, 2023, and 2022:

[[GREPCENT_TABLE]]
[["","","Year Ended December 31,"],["","","2023","","","2022"],["Revenues","","$","23,216,423","","","$","15,044,721"],["Cost of sales","","","21,845,574","","","","15,218,234"],["Operating expenses","","","9,087,223","","","","15,543,145"],["Depreciation and amortization","","","1,108,186","","","","1,769,621"],["Operating loss","","","(8,824,560",")","","","(17,486,279",")"],["Other income (expense)","","","(1,647,329",")","","","(19,486",")"],["Net loss","","$","(10,471,889",")","","$","(17,505,765",")"]]
[[/GREPCENT_TABLE]]

Non-GAAP Financial Measures

Adjusted EBITDA is a non-GAAP financial measure which
we use in our financial performance analyses. This measure should not be considered a substitute for GAAP-basis measures, nor should it
be viewed as a substitute for operating results determined in accordance with GAAP. We believe that the presentation of Adjusted EBITDA,
a non-GAAP financial measure that excludes the impact of net interest expense, taxes, depreciation, amortization, impairment of goodwill,
other intangibles and fixed assets, and stock compensation expense, provides useful supplemental information that is essential to a proper
understanding of our financial results. Non-GAAP measures are not formally defined by GAAP, and other entities may use calculation methods
that differ from ours for the purposes of calculating Adjusted EBITDA. As a complement to GAAP financial measures, we believe that Adjusted
EBITDA assists investors who follow the practice of some investment analysts who adjust GAAP financial measures to exclude items that
may obscure underlying performance and distort comparability.

The following is a reconciliation of net loss to the
non-GAAP financial measure referred to as Adjusted EBITDA for the year ended December 31, 2023, and 2022:

[[GREPCENT_TABLE]]
[["","","Year Ended December 31,"],["","","2023","","","2022"],["Net loss","","$","(10,471,889",")","","$","(17,505,765",")"],["Interest expense, net","","","1,719,296","","","","19,486"],["Depreciation and amortization","","","1,108,186","","","","1,769,621"],["Impairment of goodwill, other intangibles and fixed assets","","","105,506","","","","2,894,516"],["Stock compensation","","","1,525,146","","","","1,412,283"],["Adjusted EBITDA","","$","(6,013,755",")","","$","(11,409,859",")"],["Gallons delivered","","","5,853,167","","","","3,589,415"],["Average fuel margin per gallon","","$","0.65","","","$","0.50"]]
[[/GREPCENT_TABLE]]

Year ended December 31, 2023 compared to the Year
ended December 31, 2022

Revenues

We generated revenues of $23,216,423 for the year
ended December 31, 2023, compared to $15,044,721 for the year ended December 31, 2022, an increase of $8,171,702 or 54%. This increase
is due to a 39% increase in gallons delivered as well as an increase in the average price per gallon. The additional gallons were in existing
as well as new markets.

Cost of sales was $21,845,574 for the year ended December
31, 2023, resulting in a gross profit of 1,370,849, compared to $(173,513) for the prior year. The $6,627,340 or 44% increase in cost
of sales is due to the increase in sales and an increase in labor costs primarily related to the expansion into new markets. Our gross
profit improved year over year due to higher fuel revenues as well as increased delivery fees and driver efficiency.

31

Operating Expenses

We incurred operating expenses of $9,087,223
during the year ended December 31, 2023, as compared to $15,543,145 during the prior year, a decrease of $6,455,922 or 42%. The
decrease was primarily due to decreases in payroll, sales and marketing, insurance, technology, and public company expenses offset
by an increase in stock based compensation.

Depreciation and Amortization

Depreciation increased in the current year as a result
of the increase in the fleet of delivery vehicles. Amortization decreased in the current year as a result of the impairment of goodwill
and other intangible assets recorded in the fourth quarter of 2022.

Impairment of Goodwill, Fixed Assets and Other
Intangibles

During the year ended December 31, 2023, the Company
recorded impairment of $105,506 related to materials purchased for construction of delivery vehicles to reduce the carrying value to the
expected realizable value. During the year ended December 31, 2022, the Company recorded an impairment loss of $1,987,500 related to a
license of technology for which the Company has proposed termination of the agreement and which was not expected to generate any revenue
in 2023. Goodwill was considered impaired, and the Company recognized an impairment loss of $166,838, or the remaining balance of goodwill.
This loss was primarily due to the fall in the Company’s stock price and the decrease of the Company’s market capitalization
as well as past operating performance. As a consequence, management forecasts were revised, and additional risk factors were applied.
The fair value of the intangibles was estimated using a combination of market comparables (level 1 inputs) and expected present value
of future cash flows (level 3 inputs) and as a result impairment was recorded for a total of $482,064. Also, the Company recorded an impairment
of $258,114 related to materials purchased for construction of delivery vehicles to reduce the carrying value to the expected realizable
value

Other Income (Expense)

Interest expense increased in the current year due
to increased borrowing for truck purchases.

Net Losses

We sustained a net loss of $10,471,889 for the year
ended December 31, 2023, as compared to $17,505,765 for the prior year, a decrease of $7,033,876 or 40% as a result of the above.

Liquidity and Capital Resources

Cash Flow Activities

As of December 31, 2023, we had an accumulated deficit
of $(43,317,050). We have incurred net losses since inception and have funded operations primarily through sales of our common stock and
issuance of notes payable, including to related parties. As of December 31, 2023, we had $226,985 in cash and investments, as compared
to December 31, 2022 when we had $4,186,875 in cash and investments.

Operating Activities

Net cash used in operating activities was $(6,643,397)
during year ended December 31, 2023, which was made up primarily by the net loss and partially offset by stock compensation of $1,525,146
and depreciation and amortization of $1,108,186 and impairment loss of $105,506 and loss on debt extinguishment – related party
of $291,000 and amortization of debt discount of $1,403,244. Net cash used in operating activities was $(11,599,581) for the prior year
ended December 31, 2022, which was made up primarily by the net loss and partially offset by stock compensation of $1,412,283 and depreciation
and amortization of $1,769,621 and impairment losses of $2,894,516.

Investing Activities

During the year ended December 31, 2023, we provided
cash of $2,170,732, during the year ended December 31, 2022 we used cash of $(3,258,417). Investments matured during 2023 of $2,130,116.
Also in 2023 we had refunds on prior purchases of fixed assets, primarily delivery trucks of $40,616. Investments matured during 2022
for total proceeds of $1,151,186. We used $321,250 for the acquisition of a fueling business in 2022. We used $3,258,417 for the acquisition
of fixed assets, primarily delivery trucks

32

Financing Activities

We generated $2,632,857 of cash flows from financing
activities during the year ended December 31, 2023 including $4,590,600 in new loans for truck purchases, $250,000 loan from a related
party, less principal repayments of $3,732,889 and received proceeds from the issuance of common stock from the ATM of $25,308 and recorded
related expenses of $25,308.We generated $2,533,589 of cash flows from financing activities during the year ended December 31, 2022, including
$3,191,308 from new debt borrowings, less $657,719 for the repayment of debt.

Liquidity and Sources of Capital

From inception to December 31, 2023, we have funded
our activities through capital contributions from issuances of notes payable and the sale of securities pursuant to the exemption provided
by Regulation D, by sale of securities to accredited investors and a public offering. We have also financed truck purchases from manufacturer
loans and from our bank line of credit.

Although our financial statements for the year ended
December 31, 2023 were prepared under the assumption that we would continue our operations as a going concern, the report of our independent
registered public accounting firm that accompanies our financial statements for the year ended December 31, 2023 contains a going concern
qualification in which said firm expressed substantial doubt about our ability to continue as a going concern, based on the financial
statements at that time. The Company has sustained a net loss since inception and does not have sufficient revenues and income to fully
fund the operations. As a result, the Company has relied on loans from stockholders and others as well as stock sales to fund its activities
to date. For the year ended December 31, 2023, the Company had a net loss of $10,471,889. At December 31, 2023, the Company had an accumulated
deficit of 45,317,050. We anticipate that we will continue to generate operating losses and use cash in operations through the foreseeable
future.

Since inception, the Company’s operations have
primarily been funded through proceeds received in equity and debt financings. In September 2021, the Company completed its Initial Public
Offering and raised $25,250,000 in net proceeds after deducting the underwriting discount and offering expenses. The Company anticipates
that it will need to raise additional capital, in order to continue to fund its operations. There is no assurance that the Company will
be able to obtain funds on commercially acceptable terms, if at all. There is also no assurance that the amount of funds the Company might
raise will enable the Company to complete its initiatives or attain profitable operations. The Company’s operating needs include
the planned costs to operate its business, including amounts required to fund working capital and capital expenditures. The Company’s
future capital requirements and the adequacy of its available funds will depend on many factors, including the Company’s ability
to successfully expand to new markets, competition, and the need to enter into collaborations with other companies or acquire other companies
to enhance or complement its product and service offerings. There can be no assurances that, in the event that we require additional financing,
such financing will be available on terms which are favorable to us, or at all. If we are unable to raise additional funding to meet our
working capital needs in the future, we will be forced to delay or reduce, limit or cease our operations.