UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
(Mark
One)
☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended December 31, 2022
or
☐TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from [____] to [____]
Commission
file number 001-40809
EZFILL
HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
(Address of principal executive offices) (Zip Code)
Registrant’s
Telephone number, including area code: (305)791-1169
Securities
registered pursuant to Section 12(b) of the Act:
Title of Class Trading Symbol (s) Name of each exchange on which registered
Common Stock, Par Value $0.0001 EZFL Nasdaq Capital Market
Securities
registered pursuant to Section 12(g) of the Act:
Title of Each Class Name of Each Exchange On Which Registered
N/A N/A
Indicate
by check mark if the registered is a well-known seasonal issuer, as defined in Rule 405 the Securities Act Yes ☐ No ☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act Yes ☐ No ☒
Indicate
by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2)
has been subject to such filing requirements for the last 90 days. Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-K (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files). Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☒
If
an emerging growth company, indicate by a check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☐
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The
aggregate market value of common stock held by non-affiliates of the registrant based on the closing price of the registrant’s
common stock as reported on the Nasdaq Capital Market on June 30, 2022, was $10,255,995.
Indicate
the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date.
As
of March 10, 2023, 26,804,616 shares of the registrant’s common stock, par value $0.0001 per share, were outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
Portions
of the Proxy Statement for Registrant’s 2023 Annual Meeting of Stockholders, which Proxy Statement shall be filed with the Commission
not later than 120 days after the end of the fiscal year covered by this report, are incorporated by reference into Part III of this
Annual Report on Form 10-K.
TABLE
OF CONTENTS
Item 1. Business 4
Item 1A. Risk Factors 12
Item 1B. Unresolved Staff Comments 19
Item 2. Properties 19
Item 3. Legal Proceedings 19
Item 4. Mine Safety Disclosures 19
Item 6. Selected Financial Data 20
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 23
Item 8. Financial Statements and Supplementary Data 25
Item 9A. Controls and Procedures 42
Item 9B. Other Information 42
Item 10. Directors, Executive Officers and Corporate Governance 43
Item 11. Executive Compensation 43
Item 14. Principal Accounting Fees and Services 43
Item 15. Exhibits, Financial Statement Schedules 44
Cautionary
Note Regarding Forward-Looking Statements
This
annual report 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.
As
used in this report, the terms “EzFill” “we”, “us”, “our” and “Company” mean
EzFill Holdings, Inc. and/or our subsidiaries, unless otherwise indicated.
PART
1
Item
1. Business
Overview
EzFill
is a leading on-demand fuel delivery company in Florida and the only mobile fueling company that combines on-demand fills and subscription
services which fill customer vehicles on routine intervals. The emergence of the digital technology, GPS-Based / On-Demand consumer deliveries,
and the sharp increase in home delivery of products and services during the COVID-era are trends expected to continue in the post-COVID
economy. The increased adoption rate of such ‘at home’ or ‘at work’ delivery of products and services has become
the method both individual and commercial customers prefer.
EzFill
Model – Resolving Pain Points in the Consumer and Commercial Fuel Customer Markets
EzFill’s
experience in this market indicates that the legacy gas station model is ripe for disruption specifically by a model which works to address
major issues with the status of the industry, such as:
Our
Product Offerings
We
provide gas delivery via our Mobile Fueling Trucks in the greater South Florida area as well as in the West Palm Beach, Jacksonville,
Tampa, and Orlando areas, and expect to soon begin fueling in other areas in Florida. Our goal is to service all our customers across
all our lines of business at predictable locations during vehicle downtimes. Our fleet currently includes 24 Mobile Fueling Trucks that
we utilize to deliver fuel directly to our customers. We have three major lines of business and to our knowledge we are the only company
in the space which fuels all three verticals:
1. SERVICING CONSUMERS AT HOME AND AT WORK
We
offer residential fueling services to customers who can request a fuel delivery through our app and have fuel delivered directly to their
vehicle, from the comfort of their home or apartment building, while they go about their night. We offer convenient weekly schedules
to our residential customers, so they can live with the comfort of knowing that they will never be without a full tank of gas when they
need it. Additionally, because of our lower operational costs, our competitive pricing keeps our residential customers from having to
travel out of their neighborhood for lower gas prices. Our residential customers currently pay a delivery fee or they have the option
to pay a monthly subscription for unlimited deliveries. We currently offer delivery to residential customers in Miami-Dade, Broward,
and Palm Beach counties, as well as the Tampa area. Our service is a great new amenity for condominiums, which has been widely used by
residents of the buildings we service and has been enhancing residents’ experience.
Through
entering agreements with local and national businesses, we work directly with businesses HR departments to offer employee perks, and
fuel employees’ cars while they are working. This is a new and creative benefit for employers to offer, enabling their employees
to have their cars filled, stress free. Additionally, we work directly with the landlords of corporate office parks to bring the amenity
of EzFill to their tenants. Our corporate employee fueling is currently done at competitive prices with no delivery fee. Our corporate
office park solution offers benefits to employers and EzFill. Benefits to employers include: (i) a new perk to offer their employees;
and (ii) happier employees who do not have to waste precious time going to the gas station. Benefits to EzFill include: (i) multiple
deliveries at one location creates efficiencies and cuts operating costs; (ii) the employers serve as “influencers” which
reduces our marketing costs for each location; and (iii) push-marketing by the employers also results in more residential consumer fills.
2. SERVICING COMMERCIAL ENTITIES
We
partner with and offer national and local businesses who operate fleets an alternative solution for fueling their fleet to reduce the
businesses operational costs and improve fleet efficiency. Our solution for fleets helps businesses: (i) save money spent on expensive
gas stations; (ii) save money on paying employees to go to gas stations; (iii) eliminate unnecessary wear and tear to Company fleet vehicles
on trips to the gas station; (iv) better monitor their gas consumption; (v) eliminate employee mistakes (putting regular gas into a diesel
engine); and (vi) prevent theft by employees (customers have reported instances where it was months before they realized their employee
was making unauthorized charges on their fleet card).
We
fuel fleets at night, so they are ready to go the next day. This way, drivers stay on the road when and where they are needed most, instead
of spending idle time at a gas station. EzFill also reduces a driver’s Off Route Time, saving a company money as well as wear and
tear on the company vehicles. The technology provided, including a customized Dashboard, monitors the fleet and simplifies invoicing
for every customer.
The
cost analysis makes this point even greater especially when taking in to account that EzFill’s prices are competitive with the
local gas station.
3. SERVICING SPECIALTY MARKETS
EzFill
delivers fuel directly to other, market-specific personal and commercial vehicles. In our home market, the prevalence of boats and boat
owners was the first specialty market we developed, particular to the south Florida area which is the base of our services. Marina gas
stations are some of the highest priced in the country. We offer low prices and pre-scheduling so our marine customers can get affordable
fuel whenever they need it. The same is true for the markets which we have targeted to enter. In these markets we find similar, market-specific
vehicles which our future customers use for; construction or agricultural purposes, personal or recreational vehicle use, motorsports,
or other sporting events where a large concentration of vehicles can be serviced at specific locations.
Customers
In
addition to our individual, residential customers, we also have structured relationships with property management companies and builders
who co-market our services as a benefit to their residents and allow our trucks to enter their communities to fill vehicle owners at
their single-family homes, condominiums, or apartments. Employers who have offered at-work fueling as a corporate perk have included Ryder,
Norwegian Cruise Lines, Carnival Cruise Lines, Royal Caribbean, Telemundo, Loreal, Y Green, and more. Our services are very flexible,
and our residential customers do not have to sign any long-term commitments with us and can decide not to use our service whenever they
choose.
Our
commercial vertical has serviced the fleets for many national and local businesses, such as a leading national delivery company, a leading
national grocer, a leading OEM, Enterprise, Telemundo, Easy Scripts and Air Around the Clock
In
our specialty market vertical, we service hundreds of boats at various marinas across Miami-Dade and Broward Counties, as well as boats
at customers’ homes and recently began serving marine customers in the Tampa area. We are a preferred delivery partner for a mobile
application with thousands of boat-owner users. We have recently begun developing this line of business and it is growing, mostly through
existing customer outreach and strategic partnerships with marinas.
Software
Systems, IT, User Interface and Experience
Our
software systems provide us logistical and cost saving efficiencies that allow us to forecast the need for truckloads of fuel to effectively
service clusters of customers in a specific area or zip code. At the front end of our system, we employ an app-based approach that provides
all our customers with an easy-to-engage user interface and ordering system. Customers are able to select the times and locations of
their on-demand or routinely scheduled fills and manage their account on their mobile device and in the future on a computer browser
via our customer portal.
On
the back end of our system, we have built a proprietary admin control dashboard where we aggregate customer orders based on their location
and expected gallon demand for their vehicles. The aggregation of customer orders based on these variables triggers a truckload fill
of one of our mobile tankers designated for each of the customer orders our system generates.
Our
software and IT systems have been developed and customized in-house to provide cost-saving efficiencies which produce higher margins
than traditional, gas station fuel margins.
We
are planning to expand our software capabilities with a routing system built from the ground up specific for the on-demand business EzFill
runs. This system will use AI and machine learning algorithms that will, among other things, automatically generate outbound “fill
reminder” communications to customers based on their recorded usage amounts and time intervals. Collecting this data allows us
to be reactive with our customers instead of proactive.
Our
Mobile Application
The
EzFill Mobile Application has been designed for iPhone and Android devices with our customers and convenience in mind. The goal when
building the app was to order gas in four easy steps.
Sign
Up: The EzFill App provides a quick and easy registration process.
Profile
Management: The EzFill App provides easy profile management where users can seamlessly update personal information, such as: vehicle
details and location, this way we are able to provide the best services to our customers.
Location
Sharing: This feature enables our customers to simply drop a pin at their location on an integrated map which lets our driver know
where to deliver the fuel.
Wallet:
A central location for updating payment methods, redeem promo codes and earning free credits by referring friends, family, and colleagues.
Request
Fuel Delivery: The EzFill App lets our customers pick the type and quantity of fuel to be delivered in addition to the time and date
of availability.
Weekly
Delivery Schedule: The EzFill App also enables our customers to preschedule weekly deliveries, on a specific day of the week. This
feature enables our customers to request their delivery for a specific time window, this ensures they can schedule their fill up at convenient
times when they would be busy attending other tasks and their car is idle.
Push
Notifications: The EzFill App has a push notification feature. This allows us to keep customers informed of all the activities associated
with the service they have requested. We also use it to keep our customers updated with recent offers and discounts, which helps to boost
customer satisfaction and promotes our business.
Transaction
History: The EzFill App offers our customers the ability to always view their transaction history. This gives our customers an option
to check the previous fuel delivery requests and bills.
Loyalty:
We plan on soon rolling out our new EzFill Unlimited Loyalty Program. We believe that a loyalty program will allow our customers
to remain sticky while strengthening the relationship with our brand.
Our
Market Opportunity
Information
provided by Statista indicates that there are about 275 million registered cars in the United States as of 2018. According to the US
Energy Information Administration, as of May 2022 there was an average of approximately 39 million fill-ups per day. According to Statista.com,
in 2021, US gas stations produced revenues of roughly 583 billion dollars. EzFill wants to take advantage of the growing number of US
drivers and the dwindling number of gas stations by bringing the gas directly to the consumers. We feel that our service is years in
the making and solves many problems posed by the legacy gas station. EzFill presents a new way for Americans to get gas: at home, at
the office, wherever, on demand.
The
on-demand market continues to grow. According to a study conducted by rockresearch.com, in 2019 the on-demand market was $110 billion,
growing by 18% from the previous year (according to PwC research that number is expected to grow to $335 billion by 2025). The same study
by rockresearch.com indicates that participation in the on-demand market has tripled since 2016, with an estimated 64+ million consumers
purchasing on-demand goods or services. EzFill believes that the on-demand market will continue to grow and expand into new areas, such
as the gasoline market.
We
believe our market opportunity is to expand into major MSAs across the continental U.S. with sufficient concentration of business and
residential customers. We want to be in locations where people rely heavily on their personal cars to get places. Based on our research,
we have identified several major MSAs across the U.S that would be attractive for expansion.
As
we expand to a new market, we plan to employ a strategy that has helped us build a strong base of business in our existing market. The
strategy we developed begins with sales in our fleet category, preferably a larger anchor tenant, to build a base of business in the
target city, while developing and strengthening our delivery operations. Next, after launch, we build outwards from our anchor tenant
and depot to secure corporate and landlord agreements which will allow us to begin marketing our services to their employees and tenants.
These agreements include fueling at large office parks during daytime hours and fueling at residential buildings during nighttime hours.
We
generate business through establishing corporate and landlord partnerships, we then leverage companies’ internal communication
channels to market directly to their employees or residential tenants. By implementing our digital marketing campaigns as well as placement
of our content throughout residential and corporate facilities, we are able to develop greater brand awareness. We coordinate with our
partners to set up organic marketing efforts and on-site activations with our brand ambassadors to help increase recognition and assist
users with downloading the app and setting up their accounts.
Our
Growth Strategy
Our
strategy is to leverage our established business relationships and generate organic methods of acquiring new markets. This has given
us significant brand recognition by the consumer and has enabled us to acquire competitor territories. As we continue to develop our
business relationships and expand our geographic footprint in Florida, our goal is to open in new markets along the east coast.
EzFill’s
current focus is on expanding its geographic footprint. We aim to open in new markets along the east coast in the future both organically
and through acquisitions of existing companies in the space. We make our expansion decisions based off research into optimal target markets
where public transportation is less prevalent, leading to more residents owning cars and the areas where a demand for lifestyle improving
technology is present. We also consider State/City/County regulations when assessing new areas to expand into. We are targeting high
potential locations with the least regulations on mobile fuel delivery.
EzFill
currently has strategic partnerships with businesses across industries such as property management, parking solutions services, travel
industry, delivery industry, transportation and logistics, marinas, and other diversified business sectors. By establishing these
strategic business-to-business relationships, we are able to offer cost effective business solutions, whether through human resource
departments as employee perks, optimization of efficiency for fleet companies, or tenant satisfaction by adding amenities.
EzFill
believes a strategic partnership with a major oil company will help with our expansion by enabling us to lower cost and attract a larger
customer base by selling branded gasoline. However, there cannot be any assurance that EzFill will be able to obtain such a strategic
partnership. The oil companies Exxon and Shell are both in the mobile fuel delivery space though investments in mobile fueling companies.
Technology
License Agreement
On
April 7, 2021, the Company entered into a Technology License Agreement with Fuel Butler LLC (“Fuel Butler” or “Licensor”),
under which the Company licensed certain proprietary technology. Under the terms of the license, the Company issued 265,728 shares of
its common stock to the Licensor upon signing. The Company also issued 332,160 shares to the Licensor in May 2021 upon the filing of
a patent application related to the licensed technology. Upon completion of the Company’s IPO, 186,010 shares were issued to the
Licensor. The Company will issue up to 730,752 additional shares to the Licensor upon the achievement of certain milestones. In addition,
the Company has granted stock options for 531,456 shares at an exercise price of $3.76 per share that will become exercisable for three
years after the end of the fiscal year in which certain sales levels are achieved using the licensed technology. The Company has the
option for four years after the achievement of certain milestones to either acquire the technology or acquire the Licensor for the purchase
price of 1,062,913 of its common shares. Until the Company exercise one of these options, it will share with the Licensor 50% of pre-revenue
costs and 50% of the net revenue, as defined, from the use of the technology.
Under
the Technology Agreement, the Company licenses proprietary technology that it believes will enable the Company to expand its services
into certain highdensity areas like New York City. The Company does not expect any significant revenue from this agreement in 2023.
Fuel Butler has delivered a purported notice of termination of the Technology Agreement based on certain alleged breaches arising from
our failure to issue equity securities to Fuel Butler. We have been in communications with Fuel Butler regarding the termination of the
Technology Agreement and continue to believe that the Company is in compliance with the Technology Agreement and that the Technology
Agreement continues to be in force. While we contest Fuel Butler’s claims of breach and contend that in fact Fuel Butler is in
breach, we have communicated to Fuel Butler that we wish to terminate the Technology Agreement. We have sent a proposal to Fuel Butler
whereby we will cease utilizing the Technology and Fuel Butler will return any shares it received under the Technology Agreement. However,
to date, the Company has not had further communications with Fuel Butler regarding this matter. Currently, the Company does not expect
to expand into the state of New York for the foreseeable future.
Competition
EzFill
is a mobile fuel delivery service and competes with other local fuel delivery companies and gas stations. We differentiate ourselves
by allowing our customers to request our service via a mobile app and delivering the fuel directly to the end user. We use our innovative
technology and excellent concierge service to offer convenient fueling solutions to all our vertical markets at different times of the
day to maximize the efficiency of each mobile fueling truck.
We
distinguish ourselves from our competitors by:
● Prioritizing our customer’s experience and satisfaction;
● Streamlining our customers ordering experience;
● Rigorously vetting and training our drivers;
● Providing the latest in scheduling, GPS technology, and payment systems;
● Offering competitive pricing in the zip codes which we service;
Though
the electric vehicle industry is growing, we do not consider this relatively new subsegment of the vehicle market a threat to our business
model or growth trajectory. The vast majority of vehicles are gas or diesel powered and the entire fuel industry is a major component
of the economy. According to Inside Climate News, less than 5% of the vehicles sold in the U.S. in 2020 were electric vehicles.
Additionally,
the continued growth of the electric vehicle industry means more and more traditional gas stations are closing because of: (i) high overhead
because of rising real-estate prices; (ii) lack of demand due to electric vehicle adoption; and (iii) their inability to fuel vehicles
outside of their station. Our mobile fueling solution allows us to service many zip codes with one truck, so if sales slowdown in one
area we are able to transition seamlessly to areas with higher demand.
Government
Regulation
Our
industry has certain government regulations, EzFill is dedicated to ensuring that we are always operating in a way that is in compliance
with all applicable regulations.
Our
operations may also be subject to local fire marshal regulations, which varies in the different cities and counties. EzFill keeps up
to date on the local regulations in each of the locations it operates and does ample research into local regulations before opening in
any new location.
The
costs of compliance includes general liability insurance, workman’s comp. insurance, vehicle insurance, meters and registers maintenance
for yearly inspection, vehicle maintenance for yearly inspection, hazmat permits and licensing, safety procedures and equipment, emergency
response team, and live safety monitoring system.
Our
safety protocol includes:
Training
Management
oversight
Live
tracking 24-7
Safety
spill kits
Automatic
pump shut off system
24-7
800# support line
We
have implemented a safety protocol and monitoring system that allows us to operate at maximum efficiency in optimal safety conditions.
Our drivers carry the proper commercial driver’s licenses and endorsements and are fully trained and certified to transport and
dispense fuel. We have been licensed by the U.S. Department of Transportation and our fueling trucks have been fitted with safety equipment
and emergency tools such as spill kits, fire extinguishers, emergency response handbook and a dedicated 24/7 emergency responder support
team in the event of emergency situations. We have management oversight around the clock to ensure safe operations. We have an emergency
response team on call, in the unlikely situation where there is a spill, the emergency response team will come to the scene to control
and properly handle the clean-up of any hazardous materials. We also have state of the art technology that enables us, in real-time,
to track the location of our Mobile Fueling Trucks and the inventory levels of each Mobile Fueling Truck.
Corporate
Information
EzFill
FL, LLC was established on July 27, 2016, in the state of Florida. The assets of EzFill, LLC were acquired as of April 9, 2019, by EzFill,
Holdings Inc. (formed in March of 2019) which purchased certain assets of EzFill FL LLC’s mobile fueling business. The business
is located and operates in South Florida.
Our
principal executive offices are located at 2999 NE 191st Street, Suite 500, Aventura, FL 33180, and our telephone number is
305-791-1169. Our website address is ezfl.com. Information contained on, or accessible through, our website is not a part of this 10K
or the registration statement of which it forms a part.
Ezfl.com, EZFL, EzFill, and other trade names, trademarks, or service marks of EzFill appearing in this 10K are the property of EzFill.
Trade names, trademarks, and service marks of other companies appearing in this 10K are the property of their respective holders.
Human
Capital Resources
As
of March 10, 2023, we had a total of approximately 53 employees, all of whom were full-time. None of our employees are covered by a collective
bargaining agreement, and we consider our relations with our employees to be good.
Properties
We
lease office space at 2999 NE 191st Street, Aventura, FL 33180 and pay approximately $22,000 per month, including operating
expenses and taxes. Additionally, we have office space and parking for our trucks at our fuel supplier located at 2965 E. 11th Ave.,
Hialeah, FL 33013. We also have access to parking for our trucks at various locations of Palmdale Oil Company in Florida. We believe
our current office space is sufficient to meet our needs.
Legal
Proceedings
From
time to time, we may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business. Litigation
is subject to inherent uncertainties, and an adverse result in matters may arise from time to time that may harm our business. As of
the date of this 10K, management believes that there are no claims against us, which it believes will result in a material adverse
effect on our business or financial condition.
RISK
FACTORS
Any
investment in our securities involves a high degree of risk. You should carefully consider the risks described below as well as other
information provided to you in this document, including information in the section of this document entitled “Information Regarding
Forward Looking Statements.” If any of the following risks actually occur, the Company’s business, financial condition or
results of operations could be materially adversely affected, the value of the Company’s Common Stock could decline, and you may
lose all or part of your investment.
Our
business, financial condition or operating results could be materially adversely affected by any of these risks. In such case, the trading
price of our common stock could decline, and our stockholders may lose all or part of their investment in our securities.
Risks
Related to Our Business
Our
business and results of operations have
been, and may continue to be, impacted by the global COVID-19 pandemic.
The
coronavirus pandemic and the resulting macroeconomic trends have had, and may continue to have, an adverse impact on our operations,
our customers’ demand for our products and services, our ability to find new clients, and our revenue. This is due in part to restrictions
such as social distancing requirements, stay at home orders, the shutdown of non-essential businesses and the impact these restrictions
have had on peoples’ and companies’ driving habits and their need for gasoline for their personal cars, fleets, and boats.
For example, we have noted that we have not had the number of car fills at office parks compared to prior periods, even as pandemic-related
restrictions have been lifted. The reduced number of office park fills has been largely offset by increased sales to delivery service
fleets. Therefore, our current customers may not need our services as often and we may have trouble attracting new customers. If our
customers need less gas and we have trouble finding new customers, this may negatively impact our operations and revenues.
Uncertain
geopolitical conditions could adversely affect our results of operations.
Uncertain
geopolitical conditions, including the invasion of Ukraine, sanctions, and other potential impacts on this region’s economic environment
and currencies, may cause demand for our products and services to be volatile, cause abrupt changes in our customers’ buying patterns,
and interrupt our ability to supply products or limit customers’ access to financial resources and ability to satisfy obligations
to us. Specifically, terrorist attacks, the outbreak of war, or the existence of international hostilities could damage the world economy,
adversely affect the availability of and demand for crude oil and petroleum products and adversely affect both the price of our fuel
and our ability to obtain fuel.
Operating
and litigation risks may not be covered by insurance.
Our
operations are subject to all of the operating hazards and risks normally incidental to handling, storing, transporting and otherwise
providing combustible liquids such as gasoline for use by consumers. These risks could result in substantial losses due to personal injury
and/or loss of life, and severe damage to and destruction of property and equipment arising from explosions and other catastrophic events,
including acts of terrorism. Additionally, environmental contamination could result in future legal proceedings. There can be no assurance
that our insurance coverage will be adequate to protect us from all material expenses related to pending and future claims or that such
levels of insurance would be available in the future at economical prices. Moreover, defense and settlement costs may be substantial,
even with respect to claims and investigations that have no merit. If we cannot resolve these matters favorably, our business, financial
condition, results of operations and future prospects may be materially adversely affected.
Future
climate change laws and regulations and the market response to these changes may negatively impact our operations.
Increased
regulation of greenhouse (GHG) emissions, from products such as petroleum and diesel, could impose significant additional costs on us,
our suppliers, and our customers. Some states have adopted laws and regulations regulating the emission of GHGs for some industry sectors.
Mandatory reporting by our customers and suppliers could have an effect on our operations or financial condition.
The
adoption of additional federal or state climate change legislation or regulatory programs to reduce emissions of GHGs could also require
us or our suppliers to incur increased capital and operating costs, with resulting impact on product price and demand. The impact of
new legislation and regulations will depend on a number of factors, including (i) which industry sectors would be impacted, (ii) the
timing of required compliance, (iii) the overall GHG emissions cap level, (iv)the allocation of emission allowances to specific sources,
and (v) the costs and opportunities associated with compliance. At this time, we cannot predict the effect that climate change regulation
may have on our business, financial condition or operations in the future.
Our
auditors have included an explanatory paragraph in their opinion regarding our ability to continue as a going concern. If we are unable
to continue as a going concern, our securities will have little or no value.
M&K
CPA’s, PLLC, our independent registered public accounting firm for the fiscal year ended December 31, 2022, has included an explanatory
paragraph in their opinion that accompanies our audited consolidated financial statements as of and for the year ended December 31, 2022,
indicating that our current liquidity position raises substantial doubt about our ability to continue as a going concern. If we are unable
to improve our liquidity position, we may not be able to continue as a going concern.
We
anticipate that we will continue to generate operating losses and use cash in operations through the foreseeable future. As further set
forth below, we anticipate that we will need significant additional capital by March 31, 2023, or we may be required to curtail or cease
operations.
In
order to continue as a going concern, we will need significant additional capital by March 31, which we may be unable to obtain.
Revenues
generated from our operations are not presently sufficient to sustain our operations. Therefore, we will need to raise additional capital
in the future to continue our operations. We anticipate that our principal sources of liquidity will only be sufficient to fund our activities
through March 31, 2023. In order to have sufficient cash to fund our operations beyond March 31, 2023, we will need to raise additional
equity or debt capital. There can be no assurance that additional funds will be available when needed from any source or, if available,
will be available on terms that are acceptable to us. We will be required to pursue sources of additional capital through various
means, including debt or equity financings. Future financings through equity investments are likely to be dilutive to existing stockholders.
Also, the terms of securities we may issue in future capital transactions may be more favorable for new investors. Newly issued securities
may include preferences, superior voting rights, the issuance of warrants or other derivative securities, and the issuances of incentive
awards under equity employee incentive plans, which may have additional dilutive effects. Further, we may incur substantial costs in
pursuing future capital and/or financing, including investment banking fees, legal fees, accounting fees, printing and distribution expenses
and other costs. We may also be required to recognize non-cash expenses in connection with certain securities we may issue, such as convertible
notes and warrants, which will adversely impact our financial condition. Our ability to obtain needed financing may be impaired by such
factors as the capital markets and our history of losses, which could impact the availability or cost of future financings. If the amount
of capital we are able to raise from financing activities, together with our revenues from operations, is not sufficient to satisfy our
capital needs, even to the extent that we reduce our operations accordingly, we may be required to curtail or cease operations.
If
we are unable to protect our information technology systems against service interruption, misappropriation of data, or breaches of security
resulting from cyber security attacks or other events, or we encounter other unforeseen difficulties in the operation of our information
technology systems, our operations could be disrupted, our business and reputation may suffer, and our internal controls could be adversely
affected.
In
the ordinary course of business, we rely on information technology systems, including the Internet and third-party hosted services, to
support a variety of business processes and activities and to store sensitive data, including (i) intellectual property, (ii) our proprietary
business information and that of our suppliers and business partners, (iii) personally identifiable information of our customers and
employees, and (iv) data with respect to invoicing and the collection of payments, accounting, procurement, and supply chain activities.
In addition, we rely on our information technology systems to process financial information and results of operations for internal reporting
purposes and to comply with financial reporting, legal, and tax requirements. Despite our security measures, our information technology
systems may be vulnerable to attacks by hackers or breached due to employee error, malfeasance, sabotage, or other disruptions. A loss
of our information technology systems, or temporary interruptions in the operation of our information technology systems, misappropriation
of data, or breaches of security could have a material adverse effect on our business, financial condition, results of operations, and
reputation.
Moreover,
the efficient execution of our business is dependent upon the proper functioning of our internal systems. Any significant failure or
malfunction of this information technology system may result in disruptions of our operations. Our results of operations could be adversely
affected if we encounter unforeseen problems with respect to the operation of this system.
High
fuel prices can lead to customer conservation and attrition, resulting in reduced demand for our product.
Prices
for fuel are subject to volatile fluctuations in response to changes in supply and other market conditions. During periods of high fuel
costs our prices generally increase. High prices can lead to customer conservation and attrition, resulting in reduced demand for our
product.
Low
fuel prices may also result in less demand for our product.
Low
fuel prices may lead to us being unable to attract customers due to the fact that we charge a delivery price that may make our pricing
less competitive.
Changes
in commodity market prices may have a negative effect on our gross margin.
Our
current fuel supplier agreements set terms and establishes formulas based on Oil Price Information Service (OPIS) pricing as of the time
of wholesale acquisition, and we do not store inventory. OPIS is a leading source for worldwide petroleum pricing. There is a mark-up
for retail fuel prices above wholesale cost, per standard practice in the retail fuel distribution model. Cost of goods sold includes
direct labor, including drivers. Our gross margin as a percentage of revenue decreases as a result of increase in fuel costs.
The
decline of the retail fuel market may impact our potential to get new customers.
The
retail gasoline industry has been declining over the past several years, with no or modest growth or decline in total demand foreseen
in the next several years. Accordingly, we expect that year-to-year industry volumes will be principally affected by weather patterns.
Therefore, our ability to grow within the industry is dependent on our ability to acquire other retail distributors and to achieve internal
growth, which includes the success of our sales and marketing programs designed to attract and retain customers. Any failure to retain
and grow our customer base would have an adverse effect on our results.
Competition
in the fuel delivery industry may negatively impact our operations.
We
compete with other mobile fuel delivery companies nationwide. There is little to no barrier to entry and therefore, our competition in
the industry may grow. Our ability to compete in our current markets and expand to new markets may be negatively impacted by our competitors’
successes. Additionally, fuel competes with other sources of energy, some of which are less costly on an equivalent energy basis. In
addition, we cannot predict the effect that the development of alternative energy sources might have on our operations. We compete for
customers against suppliers of electricity. Electricity is becoming a competitor of fuel. The convenience and efficiency of electricity
make it an attractive energy source for vehicle drivers. The expansion of the electric vehicle industry may have a negative impact on
our customer base.
Our
trucks transport hazardous flammable fuel, which may cause environmental damage and liability to us.
Due
to the hazardous nature and flammability of our product, we face the risk of a simple accident causing serious damage to life and property.
Additionally, a spill of our product may result in environmental damage, the liability for which our Company may not be able to overcome.
If we are involved in a spill, leak, fire, explosion or other accident involving hazardous substances or if there are releases of fuel
or fuel products we own or are transporting, our operations could be disrupted and we could be subject to material liabilities, such
as the cost of investigating and remediating contaminated properties or claims by customers, employees or others who may have been injured,
or whose property may have been damaged. These liabilities, to the extent not covered by insurance, could have a material adverse effect
on our business, financial condition and results of operations. Some environmental laws impose strict liability, which means we could
have liability without regard to whether we were negligent or at fault.
In
addition, compliance with existing and future environmental laws regulating fuel storage terminals, fuel delivery vessels and/or storage
tanks that we own or operate may require significant capital expenditures and increased operating and maintenance costs. The remediation
and other costs required to clean up or treat contaminated sites could be substantial and may not be covered by insurance.
Our
cash flow and net income may decrease if we are forced to comply with new governmental regulation surrounding the transportation of fuel.
We
are subject to various federal, state, and local safety, health, transportation, and environmental laws and regulations governing the
storage, distribution, and transportation of fuel. It is possible we will incur increased costs as a result of complying with new safety,
health, transportation and environmental regulations and such costs will reduce our net income. It is also possible that material environmental
liabilities will be incurred, including those relating to claims for damages to property and persons.
Our
current dependence on a single fuel supplier increases our risk of an interruption in fuel supply, impacting our operations.
Although
we are in the process of establishing other sources, we currently purchase almost all of our fuel needs from two principal suppliers
in Florida. We do not have a written agreement with the largest supplier, and as such, if fuel from this source was interrupted, the
cost of procuring replacement fuel and transporting that fuel from alternative locations might be materially higher and, at least on
a short-term basis, our earnings could be negatively affected. This supplier is also a shareholder in the Company.
Our
profitability is subject to fuel pricing and inventory risk.
The
retail fuel business is a “margin-based” business in which gross profits are dependent upon the excess of the sales price
over the fuel supply costs. Fuel is a commodity, and, as such, its unit price is subject to volatile fluctuations in response to changes
in supply or other market conditions. We have no control over supplies, commodity prices or market conditions. Consequently, the unit
price of the fuel that we and other marketers purchase can change rapidly over a short period of time, including daily.
Loss
of a major customer could result in a decrease in our future sales and earnings.
In
any given quarter or year, sales of our products may be concentrated in a few major customers. We anticipate that a limited number of
customers in any given period may account for a substantial portion of our total net revenue for the foreseeable future. The business
risks associated with this concentration, including increased credit risks for these and other customers and the possibility of related