UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14C
Information
Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
(Amendment No. 1)
Check
the appropriate box:
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Preliminary
Information Statement |
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Confidential,
for Use of the Commission Only (as permitted by Rule 14c-5(d)(2)) |
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Definitive
Information Statement |
EZFILL
HOLDINGS, INC.
(Name
of Registrant as Specified In Its Charter)
Payment
of Filing Fee (Check the appropriate box):
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No
fee required |
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Fee
paid previously with preliminary materials. |
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Fee
computed on table in exhibit required by Item 25(b) of Schedule 14A (17CFR 240.14a-101) per Item 1 of this Schedule and Exchange
Act Rules 14c-5(g) and 0-11 |
EZFILL
HOLDINGS, INC.
67
NE 183rd Street, Miami, Florida 33169
305-791-1169
December
[●], 2023
NOTICE
OF WRITTEN CONSENT OF STOCKHOLDERS
WE
ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY
To
the Stockholders of EzFill Holdings, Inc.:
This
Notice and the accompanying Information Statement are being furnished to the stockholders of EzFill Holdings, Inc., a Delaware corporation
(the “Company,” “we,” “us,” or “our”), in connection with
the corporate actions described below. The holders of a majority of the Company’s voting capital stock by written consents in lieu
of meetings delivered on November 21, 2023 pursuant to Section 228 of the Delaware General Corporation Law (“DGCL”)
and Section 9 of Article II of our bylaws, and provided approval for the following corporate actions, respectively (the “Authorizations”):
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Item
1. |
The
approval of and filing of an amendment to the Company’s Amended and Restated Certificate of Incorporation to increase the number
of authorized shares of common stock, par value $0.001 per share (the “Common Stock”) from 50,000,000 to 500,000,000
to provide for a sufficient number of authorized shares of Common Stock for the issuances of Common Stock described below. |
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Item 2. |
The
approval of the following actions in connection with the
entry into an exchange agreement dated as of August 10, 2023, as amended by the amended and restated exchange agreement dated
November 2, 2023 (the “Exchange Agreement”) by and between the Company, the members (“Members”)
of Next Charging LLC (“Next Charging”), and Michael D. Farkas, as the representative of the Members (“Members’
Representative”), with respect to the acquisition of 100% of the membership interest of the Members in Next Charging (“Membership
Interests”), in exchange for the issuance of 100,000,000 shares of Common Stock of the Company (“Exchange Shares”),
to the Members:
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| (a) | Approval
of the issuance of the Exchange Shares as required under Nasdaq Listing Rule 5635(a), which
requires listed companies to obtain stockholder approval prior to the issuance of securities
in connection with the acquisition of the stock or assets of another company if where, due
to the present or potential issuance of common stock, including shares issued pursuant to
an earn-out provision or similar type of provision, (i) the common stock has or will have
upon issuance voting power equal to or in excess of 20% of the voting power outstanding before
the issuance of the stock, or (ii) the number of shares of common stock to be issued is or
will be equal to or in excess of 20% of the number of shares of common stock outstanding
before the issuance of the stock. In addition, Nasdaq Listing Rule 5635(a) requires listed
companies to obtain stockholder approval prior to the issuance of securities in connection
with the acquisition of the stock or assets of another company if any director, officer or
substantial shareholder of the listed company has a 5% or greater interest (or such persons
collectively have a 10% or greater interest), directly or indirectly, in the company or assets
to be acquired or in the consideration to be paid in the transaction or series of related
transactions and the present or potential issuance of common stock, or securities convertible
into or exercisable for common stock, could result in an increase in outstanding common shares
or voting power of 5% or more, which requirement applies in the case of the issuance of the
Exchange Shares because Michael Farkas, who is the beneficial owner of approximately 20%
of the Company’s issued and outstanding common stock, holds more than 5% interest in
Next Charging, and qualifies as a “substantial shareholder” under Nasdaq rules. |
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| | (b) | Approval
of the issuance of the Exchange Shares as required under Nasdaq Listing Rule 5635(b), which
requires stockholder approval prior to the issuance of securities when the issuance or potential
issuance will result in a “change of control” of the company. |
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Item 3. |
Approval of the issuance
of the Company’s Common Stock as required under NASDAQ Listing Rule 5635(d) in connection with the
entry into the following securities purchase agreements and related promissory notes and the security agreement by and between
the Company and AJB Capital Investments, LLC (the “Investor”): (i) securities purchase agreement dated as of April
19, 2023, as amended; (ii) securities purchase agreement dated as of September 22, 2023; and (iii) securities purchase agreement
dated as of October 13, 2023. The agreements with the Investor contemplate issuance of shares of Common
Stock of the Company pursuant to conversion rights available to the Investor upon occurrence of events of default under the promissory
notes. Under NASDAQ Listing Rule 5635(d), the Company may not issue shares of Common Stock (or securities convertible into or exercisable
for Common Stock) in other than public offerings without stockholder approval if the aggregate number of shares of Common Stock issued
would be equal to or greater than 20% of the Company’s issued and outstanding shares of Common Stock as of the date of issuance; and |
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Item 4. |
An
amendment to the EzFill Holdings, Inc. 2023 Equity Incentive Plan (the “Plan Amendment”) as adopted by the board
of directors of the Company (the “Board”) upon the recommendation of the Compensation Committee. The Plan Amendment
relates to an increase in the number of shares of Common Stock that shall be available for the grant of awards under the Plan
from 900,000 shares of Common Stock to 2,900,000 shares of Common Stock. The Plan Amendment and any transactions contemplated pursuant
to the Plan, as amended by the Plan Amendment will be effective only upon closing of the transactions contemplated in the Exchange
Agreement between the Company, Members and the Members’ Representative. |
Concurrently
with the Authorizations, all of the members of the Board, by written consents in lieu of a meeting, as provided under the DGCL, provided
similar authorizations.
This
Information Statement is being furnished to our stockholders of record as of December [●], 2023 in accordance with Rule
14c-2 under the Securities Exchange Act of 1934, as amended, and the rules promulgated by the Securities and Exchange Commission thereunder,
solely for the purpose of informing our stockholders of the actions taken by the written consent. As the matters set forth in this Information
Statement have been duly authorized and approved by the written consent of the holders of more than a majority of the Company’s
voting securities, your vote or consent is not requested or required to approve these matters. The Information Statement is provided
solely for your information, and also serves the purpose of informing stockholders of the matters described herein pursuant to Section
14(c) of the Securities Exchange Act of 1934, as amended, and the rules and regulations prescribed thereunder, including Regulation 14C.
This Information Statement also serves as the notice required by Section 228 of the DGCL of the taking of a corporate action without
a meeting by less than unanimous written consent of the Company’s stockholders. You do not need to do anything in response to this
Notice and the Information Statement.
The
actions taken by written consent of the majority stockholders will not become effective until the date that is twenty (20) calendar days
after this Information Statement is first mailed or otherwise delivered to holders of our Common Stock as of the Record Date.
THIS
IS NOT A NOTICE OF A MEETING AND NO STOCKHOLDERS’ MEETING WILL BE HELD TO CONSIDER THE MATTERS DESCRIBED HEREIN. WE ARE NOT ASKING
YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
| By
Order of the Board of Directors |
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| /s/
Yehuda Levy |
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| Yehuda
Levy |
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| Interim
Chief Executive Officer |
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| December
[●], 2023 |
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Nasdaq
Requirements
The
Company is subject to the NASDAQ Stock Market’s Listing Rules because our Common Stock is currently listed on the NASDAQ Capital
Market (“NASDAQ”). The issuance of shares of our Common Stock under the agreements described under Items 2 and 3 of this
information statement implicate certain of the NASDAQ listing standards requiring prior stockholder approval in order to maintain our
listing on NASDAQ.
The
foregoing resolutions for the transactions contemplated by the Exchange Agreement under Item 2 above are required
because under the terms of the Exchange Agreement, the Company is issuing more than 19.99% of its issued and outstanding Common Stock
to the Members.
NASDAQ Listing Rule 5635(a)
requires stockholder approval prior to the issuance of securities in connection with the acquisition of another company if such securities
are not issued in a public offering and (i) have, or will have upon issuance, voting power equal to or in excess of 20% of the voting
power outstanding before the issuance of such securities (or securities convertible into or exercisable for common stock); or (ii) the
number of shares of common stock to be issued is or will be equal to or in excess of 20% of the number of shares of common stock outstanding
before the issuance of the stock or securities.
Nasdaq Listing Rule 5635(b) requires stockholder approval prior
to the issuance of securities when the issuance or potential issuance will result in a “change of control” of the company.
This rule does not define when a change in control of a company may be deemed to occur; however, Nasdaq suggests in its guidance that
a change of control would occur, subject to certain limited exceptions, if after a transaction a person or entity will hold 20% or more
of the outstanding shares of common stock or voting power of an issuer and such ownership or voting power of an issuer would represent
the largest ownership position in the issuer.
The
foregoing resolution for the transactions contemplated by the agreements under Item 3 above is required because under
NASDAQ Listing Rule 5635(d), the Company may not issue shares of Common Stock (or securities convertible into or exercisable for Common
Stock) in other than public offerings without stockholder approval if the aggregate number of shares of Common Stock issued would be
equal to or greater than 20% of the Company’s issued and outstanding shares of Common Stock as of the date of issuance, and the
price per share of Common Stock issued is less than the closing price immediately preceding the signing of the binding agreement or the
average closing price of the Common Stock for the five trading days immediately preceding the signing of the binding agreement (the “Minimum
Price”).
As
a result of the foregoing resolution, on the date which is 20 calendar days after the date of mailing this Information Statement to
its shareholders, the Company will comply with NASDAQ Listing Rule 5635(d), as the resolution will then constitute shareholder approval
for the Company to issue shares of Common Stock to the Members, in an amount more than 19.99% of the then issued and outstanding
Common Stock of the Company, even if the price per share of Common Stock issued in connection with the transactions is less than the
Minimum Price.
Dissenters’
Right of Appraisal
No
dissenters’ or appraisal rights under the DGCL are afforded to the Company’s stockholders as a result of the approval of
the Authorizations.
The
consent we have received constitutes the only stockholder approval required under the DGCL, NASDAQ Listing Rules 5635(a), 5635(b) and
5635(d), our Certificate of Incorporation and our Bylaws, to approve the issuance of the issuance of securities under the Exchange Agreement,
an increase in our authorized Common Stock and the issuance of securities under the AJB Agreements. Our Board of Directors is not soliciting
your consent or your proxy in connection with this action and neither consents nor proxies are being requested from stockholders.
Vote
Required
The
vote, which was required to approve the above Authorizations, was the affirmative vote of the holders of a majority of the Company’s
voting stock. Each holder of Common Stock is entitled to one (1) vote for each share of Common Stock held.
The
date used for purposes of determining the number of outstanding shares of the voting stock of the Company entitled to vote to approve
the Exchange Agreement, the Purchase Agreements, the Plan Amendment and the transactions contemplated thereby is November 20,
2023 (the “Voting Record Date”). The record date for determining those shareholders of the Company entitled to receive
this Information Statement is the close of business on [●], 2023 (the “Mailing Record Date”). As of
the Voting Record Date, the Company had 4,491,531 shares of voting stock outstanding, with all 4,491,531 shares being Common Stock. All
outstanding shares are fully paid and nonassessable.
Vote
Obtained
Section
228(a) of the DGCL and Section 9 of Article II of our bylaws provide that any action which may be taken at any annual or special meeting
of stockholders may be taken without a meeting, without prior notice and without a vote, via written consent of the holders of outstanding
stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted.
The
approximate ownership percentage of the voting stock of the Company as of the Voting Record Date of the consenting stockholders who voted
to approve the Exchange Agreement, the Purchase Agreements, the Plan Amendment and the transactions contemplated thereby totaled in the
aggregate 60.58%.
Notice
Pursuant to Section 228 of the DGCL
Pursuant
to Section 228 of the DGCL, no advance notice is required to be provided to the other shareholders, who have not consented in writing
to such action, of the taking of the stated corporate action without a meeting of stockholders. No additional action will be undertaken
pursuant to such written consents, and no dissenters’ rights under the DGCL are afforded to the Company’s stockholders as
a result of the action to be taken.
Pursuant
to Section 228 of the DGCL, we are required to provide prompt notice of the taking of corporate action by written consent to our stockholders
who have not consented in writing to such action. This Information Statement serves as the notice required by Section 228 of the DGCL.
TABLE OF CONTENTS
SUMMARY
TERM SHEET FOR ITEM 2 (ENTRY INTO THE EXCHANGE AGREEMENT AND INCREASE IN AUTHORIZED SHARES FOR ISSUANCE UNDER THE EXCHANGE
AGREEMENT)
Summary
Term Sheet
The
following is a brief summary of the material terms of the Exchange Agreement. This summary highlights certain information contained elsewhere
in this Information Statement, including the Annexes to this Information Statement and may not contain all the information that may be
important to you. Reference is made to, and this summary is qualified in its entirety by, the more detailed information contained in
this Information Statement and in the Annexes to this Information Statement. You should carefully read this entire Information Statement,
the Annexes to this Information Statement and the other documents referenced herein for a complete understanding of the Exchange Agreement.
Capitalized terms used but not defined herein have the meanings assigned to them in the Exchange Agreement.
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The
parties to the Exchange Agreement are EzFill holdings, Inc. a Delaware corporation (“EzFill” or the “Company”),
a Delaware corporation, the members (“Members”) of Next Charging LLC, a Florida limited liability company (“Next
Charging”), and Michael D. Farkas, as the representative of the Members (the “Members’ Representative”). |
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EzFill
Holdings, Inc., a Delaware corporation (the “Company”), 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. |
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Next
Charging LLC has plans to develop and deploy wireless
electric vehicle charging technology coupled with battery storage and solar energy solutions. |
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The
Company, Members and the Members’ Representative entered into an exchange agreement dated as of August 10, 2023, as amended
by the amended and restated exchange agreement dated November 2, 2023 (the “Exchange Agreement”)
with respect to the acquisition of 100% of the membership interests of the Members in Next
Charging (“Membership Interests”). |
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As
consideration for the acquisition of the Membership Interests, the Company will issue 100,000,000 shares of Common Stock of the Company
(“Exchange Shares”), to the Members. The
Membership Interests will be exchanged for the Exchange Shares which shall be apportioned between the Members pro rata. In the event
Next Charging completes the acquisition of the acquisition target as set forth in the Exchange Agreement’s disclosure schedules
(directly or indirectly through Next Charging or through a subsidiary of Next Charging) prior to the Closing, then 70,000,000 Exchange
Shares will vest on the Closing Date, and the remaining 30,000,000 Exchange Shares will be subject to vesting or forfeiture. In the
event Next Charging does not complete such acquisition prior to the Closing, then 35,000,000 Exchange Shares will vest on the Closing
Date, and the remaining 65,000,000 Exchange Shares will be subject to vesting or forfeiture (such shares subject to vesting or forfeiture,
the “Restricted Shares”). |
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The
Restricted Shares will vest, if at all, according the schedule as specified in the Exchange Agreement. See page 4 below for
more information. |
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Pursuant
to the terms of the Exchange Agreement: (i) Next Charging will become a wholly-owned subsidiary of the Company, and (ii) the board
of directors of the Company will appoint Michael D. Farkas (the Members’ Representative) as the Chief Executive Officer, Director,
and Executive Chairman of the Company. |
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Each
of the parties to the Exchange Agreement have made certain customary representations and warranties to the other parties. See pages
4-5 below for more information. |
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The
closing of the transactions contemplated under the Exchange Agreement is subject to certain customary closing conditions, including
(i) that the Company file the Certificate of Amendment with the Secretary of State of the State of Delaware (ii) the receipt of the
requisite third-party consents, and (iii) compliance with the rules and regulations of The Nasdaq Stock Market. See page 3 below
for more information. |
On
the Closing Date (as defined in the Exchange Agreement), the Members shall sell, assign, transfer and deliver to the Company, free and
clear of all liens, pledges, encumbrances, charges, restrictions or known claims of any kind, nature, or description, all of the Membership
Interests.
Parties
involved and business conducted:
EzFill
Holdings, Inc.
The
Company 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 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. For a more comprehensive discussion of the Company’s business,
please refer to our Form 10-K for the fiscal year ended December 31, 2022, filed on March 20, 2023 and the Form S-1 filed on November
28, 2023.
Next
Charging LLC, its Members and Members’ Representative
Next
Charging is a Florida limited liability company and
a renewable energy company formed by Michael D. Farkas and has plans to develop and deploy wireless electric vehicle charging technology
coupled with battery storage and solar energy solutions. The members of Next Charging and the Members’ Representative have entered
into the Exchange Agreement with the Company.
Contact
information for the parties:
Ezfill
Holdings, Inc.
Attention:
Yehuda Levy
2999
NE 191st Street
Aventura,
Florida 33180
Next
Charging LLC
Attention:
Michael D. Farkas
407
Lincoln Road, Suite 701
Miami
Beach, FL 33139
WE
ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND A PROXY
ITEM
1. APPROVAL OF THE INCREASE IN the AUTHORIZED CAPITAL STOCK OF THE COMPANY
The Company into an exchange agreement dated
as of August 10, 2023, as amended by the amended and restated exchange agreement dated November 2, 2023 (the “Exchange Agreement”)
with the members (“Members”) of Next Charging LLC (“Next Charging”), and Michael D. Farkas, as
the representative of the Members (“Members’ Representative”), with respect to the acquisition of 100% of the
membership interest of the Members in Next Charging (“Membership Interests”). In exchange for the acquisition of the
Membership Interests by the Company, the Exchange Agreement contemplates issuance of 100,000,000 shares of Common Stock of the Company
(“Exchange Shares”), to the Members. In addition, the Company has also entered into the following securities purchase
agreements and related promissory notes and the security agreement by and between the Company and AJB Capital Investments, LLC (the “Investor”):
(i) securities purchase agreement dated as of April 19, 2023, as amended; (ii) securities purchase agreement dated as of September 22,
2023; and (iii) securities purchase agreement dated as of October 13, 2023. The agreements with the Investor contemplate issuance of
shares of Common Stock of the Company pursuant to conversion rights available to the Investor upon occurrence of events of default under
the promissory notes, more specifically discussed under Item 3 below.
For giving effect to the issuance of the Exchange
Shares under the Exchange Agreement and issuance of any shares of Common Stock pursuant to the conversion events under the agreements
entered into with the Investor, the majority stockholders of the Company are required to approve an amendment to the Company’s
Amended and Restated Certificate of Incorporation to increase the number of authorized shares of common stock, par value $0.001 per share
(the “Common Stock”) from 50,000,000 to 500,000,000. The increase in the authorized Common Stock is required to provide
a sufficient number of authorized shares of Common Stock to allow for issuance of the shares of Common Stock of the Company to the members
of Next Charging under the Exchange Agreement.
The Board has also determined it is in the best
interest of the Company to increase the total number of authorized shares of Common Stock to provide for the issuance of additional shares
of Common Stock in connection with various events, including, but not limited to, future capital raises and potential future acquisitions.
As a result, while approval of the increase in the authorized capital stock will be necessary in order to effectuate the Exchange Agreement
and the agreements with the Investor, approval of such increase is not conditioned upon these transactions. The approved increase will
allow the Company to issue additional shares of Common Stock as needed for such events. In the event the Company issues additional shares
to new investors, stockholders of the Company will be diluted.
The holders of 2,720,889 shares of our Common
Stock representing approximately 60.58% of our voting power, executed and delivered to the Company written consents on November 21, 2023
approved the Exchange Agreement, the agreements with the Investor, and the transactions contemplated thereunder, including the approval
and filing of an amendment to the Company’s Amended and Restated Certificate of Incorporation
in the form set out in Annex A to this information statement.
Item
2. Exchange Agreement between Company, members of Next Charging LLC and the representative of the members of Next Charging LLC
This
discussion of the transaction is qualified in its entirety by reference to the Exchange Agreement, which is attached to this information
statement as Annex B. You should read the entire Exchange Agreement carefully as it is the legal document that governs this transaction.
Terms
of the Transaction
Parties
to the Exchange Agreement
The
Company entered into an exchange agreement on August 10, 2023, as amended by the amended and restated
exchange agreement dated November 2, 2023 (the “Exchange Agreement”) with the members (the “Members”)
of Next Charging and Michael D. Farkas, an individual, as the representative of the Members (“Members’ Representative”).
The
Company 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. Next Charging is a renewable energy company formed by Michael
D. Farkas. Next Charging has plans to develop and deploy wireless electric vehicle charging technology coupled with battery storage and
solar energy solutions.
On
August 9, 2023, the Company’s board of directors unanimously approved the Exchange Agreement and the issuance of the Exchange Shares.
The holders of 2,720,889 shares of our Common Stock representing approximately 60.58% of our voting power, executed and delivered to
the Company written consents on November 21, 2023 approving the Exchange Agreement and the transactions contemplated thereunder, including
the issuance of the Exchange Shares.
Structure
of the Transaction
Under
the Exchange Agreement, the Company will acquire 100% of the membership interest of the Members in Next Charging (“Membership
Interests”), in exchange for the issuance of 100,000,000 shares of Common Stock, par value $0.0001 per share, of the Company
(“Exchange Shares”), to the Members (such exchange of Common Stock for the Membership Interests, the “Exchange”).
The Exchange Shares will be apportioned between the Members pro rata.
Pursuant
to the terms of the Exchange Agreement, upon consummation of the transactions contemplated therein: (i) Next Charging will become a wholly-owned
subsidiary of the Company, and (ii) the board of directors of the Company will appoint Michael D. Farkas as Chief Executive Officer,
Director, and Executive Chairman of the Company.
When
Transactions under the Exchange Agreement Become Effective
The
closing of the transactions contemplated under the Exchange Agreement are subject to certain customary closing conditions, including:
(i) that the Company file a Certificate of Amendment with the Secretary of State of the State of Delaware to increase its authorized
common stock from 50 million shares to 500 million shares (ii) the receipt of the requisite third-party consents, and (iii) compliance
with the rules and regulations of The Nasdaq Stock Market (“Nasdaq”), which includes the filing of an Initial Listing
Application with Nasdaq and approval of such application by Nasdaq.
On
the Closing Date (as defined under Section 2.03 of the Exchange Agreement), the Members shall sell, assign, transfer and deliver to the
Company, free and clear of all liens, pledges, encumbrances, charges, restrictions or known claims of any kind, nature, or description,
all of the Membership Interests. Upon consummation of the transactions contemplated by the Exchange Agreement (the “Closing”
and, the date of the Closing, the “Closing Date”), Next Charging will become a wholly-owned subsidiary of the Company.
At the Closing, the Company shall enter into a lock-up agreement, in the form as attached in the Exchange Agreement, with (i) each director
of the Company; (ii) each officer of the Company; and (iii) each Member, which lock-up agreements shall provide that the equity securities
of the Company held by such counterparties to the lock-up agreements are restricted from transfer for a period of twelve (12) months
following the Closing, and in each case subject to the terms and conditions of the lock-up agreements. As an additional condition to
be satisfied prior to the Closing, Next Charging is also required to take actions to record the assignment to itself of a patent mentioned
in the Exchange Agreement.
Consideration
under the Exchange Agreement
Pursuant
to Section 2.02(c) of the Exchange Agreement, at the Closing, the Membership Interests will be exchanged for the Exchange Shares which
shall be apportioned between the Members pro rata. In the event Next Charging completes the acquisition of the acquisition target as
set forth in the Exchange Agreement’s disclosure schedules (directly or indirectly through Next Charging or through a subsidiary
of Next Charging) prior to the Closing, then 70,000,000 Exchange Shares will vest on the Closing Date, and the remaining 30,000,000 Exchange
Shares will be subject to vesting or forfeiture. In the event Next Charging does not complete such acquisition prior to the Closing,
then 35,000,000 Exchange Shares will vest on the Closing Date, and the remaining 65,000,000 Exchange Shares will be subject to vesting
or forfeiture (such shares subject to vesting or forfeiture, the “Restricted Shares”).
The
Restricted Shares will vest, if at all, according to the following schedule:
| (1) |
In
the event Next Charging does not complete the acquisition of the acquisition target as set forth in the Exchange Agreement’s
disclosure schedules (directly or indirectly through Next Charging or through a subsidiary of Next Charging) prior to the Closing,
then 35,000,000 of the Restricted Shares shall vest upon the Company (directly or indirectly through Next Charging or a subsidiary
of Next Charging), completing the acquisition of such acquisition target. In the event that the Members’ Representative determines
that such an acquisition target as set forth in the Exchange Agreement’s disclosure schedules is not capable of being acquired,
either prior to or after the Closing, then the Members’ Representative and the Company shall negotiate in good faith to determine
a replacement acquisition target, which replacement would thereafter be considered as the acquisition target under the Exchange Agreement;
and |
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| (2) |
30,000,000
Restricted Shares shall vest upon the Company commercially deploying the third solar, wireless electric vehicle charging, microgrid,
and/or battery storage system (such systems as more specifically defined under Section 2.07(d)(ii) of the Exchange Agreement). |
Representations
and Warranties
The
Exchange Agreement contains representations and warranties of the Members’ Representative with respect to the following aspects
relating to Next Charging:
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corporate
organization, existence, and good standing; |
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the
capitalization of Next Charging including, in particular, the Membership Interests constituting 100% of equity interests in Next
Charging and the absence of any options, subscriptions, warrants, rights of conversion or similar securities or rights; |
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the
existence of transactions with any affiliates; |
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pending
or threatened legal proceedings and government orders; |
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compliance
with applicable laws except as would not, individually or in the aggregate, reasonably be expected to have a material adverse effect
(as defined in the Exchange Agreement); |
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retention
of no brokers and finders in connection with the transactions contemplated by the Exchange Agreement; |
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material
compliance with applicable environmental laws; and |
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preparation
of projections and valuations of Next Charging as provided to the Company in good faith. |
The
Exchange Agreement also contains customary representations and warranties of the Members (offered severally and not jointly and severally)
as of the effective date of the Exchange Agreement (November 2, 2023) and as of the Closing Date with respect to such Member, the Exchange
Shares to be received by such Member and the Membership Interests held by such Member in Next Charging.
The
Exchange Agreement contains representations and warranties of the Company as to, among other things:
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corporate
organization, existence, and good standing; |
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no
violation of the Company’s organizational documents as defined in the Exchange Agreement for the execution, delivery and performance
of the Exchange Agreement, except as otherwise set forth in the Exchange Agreement; |
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no
consents required to be made or obtained in connection with the execution and delivery of the Exchange Agreement or the consummation
of the transactions contemplated thereby, except as otherwise set forth in the Exchange Agreement; |
| ● |
the
capitalization of the Company including, in particular, the number of shares of common stock and preferred stock outstanding and
the existence of any options, subscriptions, warrants, rights of conversion or similar securities or rights; |
| ● |
the
Exchange Shares being fully-paid, non-assessable, free and clear of liens, except as otherwise set forth in Section 5.07 of the Exchange
Agreement; |
| ● |
pending
or threatened legal proceedings and government orders; |
| ● |
timely
filing of all forms, schedules, reports, and other documents required to be filed or furnished with the SEC; and |
| ● |
compliance
with applicable laws except as would not, individually or in the aggregate, reasonably be expected to have a material adverse effect
(as defined in the Exchange Agreement). |
Termination
The
Exchange Agreement may be terminated on or prior to the Closing Date in the following manner:
| ● |
by
the mutual written consent of the Company and the Members’ Representative; |
| ● |
by
the Company: (i) if the conditions to the Closing as set forth in Section 7.01 and Section 7.02 of the Exchange Agreement have not
been satisfied or waived by the Company, which waiver the Company may give or withhold in its sole discretion, by December 30, 2023
(“Termination Date”), provided, however, that the Company may not terminate the Exchange Agreement if the reason
for the failure of any such condition to occur was the breach of the terms of the Exchange Agreement by the Company; or (ii) if there
has been a material violation, breach or inaccuracy of any representation, warranty, covenant or agreement of the Members or the
Members’ Representative contained in the Exchange Agreement, which violation, breach or inaccuracy would cause any of the conditions
set forth in Section 7.02 of the Exchange Agreement not to be satisfied, and such violation, breach or inaccuracy has not been waived
by the Company or cured by the Members or the Members’ Representative, as applicable, within five business days (as defined
in the Exchange Agreement) after receipt by the Members’ Representative of written notice thereof from the Company or is not
reasonably capable of being cured prior to the Termination Date; |
| ● |
by
the Members’ Representative: (i) if the conditions to Closing as set forth in Section 7.01 and Section 7.03 of the Exchange
Agreement have not been satisfied or waived by the Members’ Representative, which waiver the Members’ Representative
may give or withhold in its sole discretion, by the Termination Date, provided, however, that the Members’ Representative may
not terminate the Exchange Agreement pursuant to this clause (i) of this Section 8.01(c) if the reason for the failure of any such
condition to occur was the breach of the terms of this Agreement by the Members’ Representative or any Member; or (ii) if there
has been a material violation, breach or inaccuracy of any representation, warranty, covenant or agreement of the Company contained
in the Exchange Agreement, which violation, breach or inaccuracy would cause any of the conditions set forth in Section 7.03 of the
Exchange Agreement not to be satisfied, and such violation, breach or inaccuracy has not been waived by the Members’ Representative
or cured by the Company, applicable, within five business days (as defined in the Exchange Agreement) after receipt by the Company
of written notice thereof from the Members’ Representative or is not reasonably capable of being cured prior to the Termination
Date; or |
| ● |
By
Company or the Members’ Representative, if a court of competent jurisdiction or other governmental authority (as defined in
the Exchange Agreement) shall have issued an order or taken any other action permanently restraining, enjoining or otherwise prohibiting
the transactions contemplated under the Exchange Agreement and the other transaction documents as defined thereunder and such order
or action shall have become final and nonappealable. |
Expenses
Except
as otherwise provided in the Exchange Agreement, whether or not the Exchange is consummated, each of the Parties will bear their own
respective expenses, including legal, accounting and professional fees, incurred in connection with the transactions contemplated under
the Exchange Agreement and the other transaction documents as defined therein.
Amendments
and Modification
The
Exchange Agreement may be amended, modified, superseded, terminated or cancelled, and any of the terms, covenants, representations, warranties
or conditions hereof may be waived, only by a written instrument executed by the Company and the Members’ Representative.
Specific
Performance
The
parties to the Exchange Agreement have agreed that each party shall be entitled to an injunction or injunctions, specific performance
and other equitable relief to prevent breaches of the provisions of the Exchange Agreement and to enforce specifically the terms and
provisions hereof, without the proof of actual damages, in addition to any other remedy to which they are entitled at law or in equity.
Governing
Law
The
Exchange Agreement, and any and all claims, proceedings or causes of action relating to it or arising therefrom or the transactions contemplated
herein, including, without limitation, tort claims, statutory claims and contract claims, shall be interpreted, construed, governed and
enforced under and solely in accordance with the substantive and procedural Laws of the State of Delaware, in each case as in effect
from time to time and as the same may be amended from time to time, and as applied to agreements performed wholly within the State of
Delaware.
Consideration
offered to stockholders
There
is no consideration being offered to the Company’s stockholders.
Reasons
for engaging in the Transaction
As
a fueling company, the Company deals with many fleet customers, the fleet managers are looking for solutions to transition their fleet
to EV. The Company believes that expanding its business offering into the electric vehicle space will help it become fueling agnostic
to properly prepare itself for the future. The Company expects that once it has an electric vehicle charging solution it will be able
to assist its fleet customers with the transition to EV.
Additionally,
the Company’s platform aligns with Next Charging’s goal of developing refueling stations and renewable energy solutions nationwide.
By integrating with the Company’s platform, Next Charging’s fueling centers can promote a unified, forward-thinking approach
to refueling services where both ICE and EV refueling/recharging services co-exist. As EVs continue to claim a larger market share of
vehicle sales, traditional gas station investments are poised to decline in value. This shift augments the potential value of the Company’s
app-based fuel delivery services, especially with the decline in traditional gas stations. By leveraging the Company’s distinct
proficiency in app-based fuel delivery, this venture is positioned not only as today’s premier integrated ICE provider but also
as the EV trailblazer of tomorrow. Therefore, we believe that the planned acquisition of Next Charging will create a leader in the ICE
fueling, wireless EV charging, and the broader renewable energy solutions industry.
Vote
Required for Approval of the Exchange Agreement and Related Actions
The vote, which was required to approve the Exchange
Agreement, the increase in authorized Common Stock of the Company and the issuance of Exchange Shares under the Exchange Agreement
in accordance with the requirements under NASDAQ Listing Rule 5635(a) and NASDAQ Listing Rule 5635(b), was the affirmative vote of
the holders of a majority of the Company’s voting stock. Each holder of Common Stock is entitled to one (1) vote for each share
of Common Stock held. The holders of 2,720,889 shares of our Common Stock representing approximately 60.58% of our voting power, executed
and delivered to the Company written consents on November 21, 2023 approving the Exchange Agreement, the increase in authorized Common
Stock of the Company, and the issuance of the Exchange Shares under the Exchange Agreement in accordance with the requirements
under NASDAQ Listing Rule 5635(a) and NASDAQ Listing Rule 5635(b).
Explanation
of Material Differences in the Rights of Stockholders as a Result of the Transaction
The
issuance of shares of Common Stock pursuant to the Exchange Agreement that was approved by the consenting stockholders, will dilute the
ownership and voting rights of stockholders and could also have a negative effect on the trading price of the Company’s Common
Stock.
Accounting
Treatment of the Transaction
The
following represents the Company’s anticipated accounting treatment upon the closing
of the acquisition:
The
unaudited pro forma condensed combined financial information included under Annex D of this information statement has been prepared using
the acquisition method of accounting under GAAP. GAAP requires that business combinations are accounted for under the acquisition method
of accounting, which requires all of the following steps:
| (a) | identifying
the acquirer; |
| (b) | determining
the acquisition date; |
| (c) | recognizing
and measuring the identifiable assets acquired, the liabilities assumed, and any noncontrolling
interest in the acquiree; and |
| (d) | recognizing
and measuring goodwill or a gain from a bargain purchase. |
On
the acquisition date (which for purposes of the proforma condensed combined financial information was September 30, 2023), the identifiable
assets acquired and liabilities assumed will be measured at fair value, with limited exceptions.
Both
the Company and Next Charging have common ownership, and this transaction is deemed to be with a related party. Prior to the transaction,
Michael Farkas owned approximately 20% of the Company and 100% of Next Charging. Since the reverse acquisition occurred with a related
party, the Company did not recognize goodwill or any intangible assets, rather an adjustment to additional paid in capital was recorded
to reflect the nature of the transaction.
In
reporting its weighted average shares outstanding and earnings (loss) per share data, all share and per share amounts have been retroactively
restated to the earliest period presented.
The
transaction costs associated with the reverse acquisition were $0.
The
results of operations for the combined company will be reported prospectively after the acquisition date.
While
pro forma adjustments related to the Company’s assets and liabilities were based on estimates of fair value determined from preliminary
information received from the Company and initial discussions between Next and the Company’s management, due diligence efforts,
and information available in the historical audited financial statements of the Company and the related notes, the detailed valuation
studies necessary to arrive at the required estimates of the fair value of the Company’s assets to be acquired and the liabilities
to be assumed, as well as the identification of all adjustments necessary to conform Next Charging and the Company’s accounting
policies, remain subject to completion.
Next
Charging intends to complete the valuations and other studies upon completion of the transaction and will finalize the purchase price
allocation as soon as practicable within the measurement period, but in no event later than one year following the closing date of the
transaction. The assets and liabilities of the Company have been measured based on various preliminary estimates using assumptions that
Next Charging believes is reasonable, based on information that is currently available.
Differences
between these preliminary estimates and the final acquisition accounting may occur, and those differences could have a material impact
on the accompanying unaudited pro forma condensed combined financial statements and the combined company’s future results of operations
and financial position.
The
unaudited pro forma condensed combined financial statements constitute forward-looking information and are subject to certain risks and
uncertainties that could cause actual results to differ materially from those anticipated. See “Cautionary Statement Concerning
Forward-Looking Information” and “Risk Factors” included elsewhere in this information statement, in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2022, and the Form S-1 dated November 27, 2023 filed on November 28, 2023.
Certain
U.S. Federal Income Tax Consequences
For
U.S. federal tax purposes, the Exchange of the Exchange Shares is intended to qualify as a “reorganization” within the meaning
of Section 351 and Section 368(a) of the Internal Revenue Code of 1986 Code and the Treasury Regulations promulgated thereunder. The
parties to the Exchange Agreement adopted the Exchange Agreement as a “plan of reorganization” within the meaning of Treasury
Regulations Sections 1.368-2(g) and 1.368-3(a). Next Charging LLC, while a state law unincorporated entity (i.e., an LLC), had lawfully
elected effective as of January 1, 2022 to be characterized as a corporation for federal income tax purposes.
Regulatory
Approvals
Other
than the approval of the Exchange Agreement by the Company’s stockholders under the Delaware General Corporation Law and filing
of the Certificate of Amendment with the Secretary of State of the State of Delaware, the Company is not aware of any material federal,
state or foreign regulatory requirements or approvals required for the execution of the Exchange Agreement or completion of the transaction
thereunder.
Reports,
Opinions and Appraisals
There
is no report, opinion or appraisal materially relating to the Exchange Agreement received from an outside party, and no such report,
opinion or appraisal has been referred to in this referred to in this statement.
Past
Contacts, Transactions and Negotiations
The
following chronology summarizes the key meetings and events that led to the signing of the Exchange Agreement. This chronology does not
purport to catalog every conversation of or among the Company’s executive team, our representatives, or other parties.
The
Company’s executive team regularly evaluates the Company’s strategic direction and ongoing business plans with a view toward
strengthening its business and enhancing stockholder value. As part of this evaluation, the executive team has, from time to time, considered
a variety of strategic alternatives. These have included, among others, (i) the expansion into new markets; (ii) the investment in, and
development of, fueling depots; (iii) potential expansion opportunities through acquisitions, partnerships or other commercial relationships;
and (iv) business combinations, acquisitions, and other financial and strategic alternatives.
In
mid-2023, the Company was approached by one of its largest shareholders, Michael D. Farkas, about an opportunity to expand into the wireless
EV Charging and renewable energy space. The opportunity was presented as the purchase of Next Charging, a company then principally owned
by Mr. Michael D. Farkas, who was also its managing member.
The
Company’s executive team had multiple discussions with Mr. Farkas and the Next Charging team. Mr. Farkas presented the opportunity
to the board and management of the Company. On May 23, 2023, the Company and Next Charging executed a term sheet for the Company’s
purchase of Next Charging, subject to continued due diligence.
The
Company’s executive team and board had many discussions regarding the different strategic benefits presented by the purchase. After
conducting due diligence, on August 10, 2023, the Company entered into the definitive exchange agreement with Next Charging LLC.
Following
the execution of the exchange agreement dated August 10, 2023, the closing of the transaction contemplated thereunder was delayed through
no fault of either party, Next Charging continued executing on its business plan and due to the progress it had made, Next Charging then
approached the Company’s management to re-negotiate the milestones set forth in the definitive agreement. Accordingly, on November
2, 2023, after careful consideration and verification of Next Charging’s progress, the Board of the Company unanimously approved
the execution of an amended and restated agreement for the exchange with the members of Next Charging and the Members’ Representative,
Michael D. Farkas.
Potential
Effect of the Transaction arising out of the Exchange Agreement
Any
issuance of additional shares of Common Stock as a result of the Exchange Agreement that was approved by the consenting stockholders
pursuant to the Authorization will dilute the ownership and voting rights of stockholders and, depending upon the price at which the
shares are issued, could have a negative effect on the trading price of the Company’s Common Stock.
Changes
in and Disagreements with Accountants on Accounting and Financial Disclosure
There
were no disagreements related to accounting principles or practices, financial statement disclosure, internal controls or auditing scope
or procedure during the two fiscal years ended December 31, 2021 and December 31, 2022 between Next Charging and its independent registered
accounting firm, M&K CPAS, PLLC.
Description
of Next Charging’s Business
Overview,
General Nature and Scope of Next Charging’s Business
Next
Charging is a developmental stage company working on solutions in the renewable energy/wireless electric vehicle (“EV”) charging
space. Next Charging will be focused on the deployment of smart microgrids coupled with renewable energy generation and battery storage
solutions all over the United States, and eventually globally.
Next
Charging hopes to be on the forefront of solving issues in the renewable energy space and deploying renewable energy solutions globally.
In order to achieve our mission, it plans to develop, own and operate smart microgrid connected renewable energy generation and energy
storage facilities across the United States. It has established a team to develop, build, and provide operations and maintenance and
customer servicing for our assets. Additionally, it has plans to deploy state of the art wireless EV charging solutions at its customer
locations, where appropriate.
Next
Charging believes that its merger with the Company/ EzFill is a component in its business plan and acquisition strategy. EzFill has many
fleet customers that are already beginning the transition to electric vehicles, and by offering wireless EV charging solutions Next Charging
can assist these fleet owners with their transition to EV.
Next
NRG LLC (“Next NRG”), a subsidiary of Next Charging, is a developmental stage company working on solutions in the renewable
energy/wireless EV charging space. Next NRG’s solutions are supported by seven patented technologies developed by and to be licensed
from, Florida International University (“FIU”). These technologies were tested on the largest smart grid dataset in the world.
The patents target two different renewable energy industry sectors - smart microgrids/Virtual power plants (“VPP”), and wireless
power transfer (“WPT”) technology, created to wirelessly charge EVs. Next Charging is in the process of purchasing an exclusive
license in perpetuity for the seven patents that includes all global markets, and full ownership of the products developed based on the
patents and plans. The patents covering WPT will be utilized by Next Charging in its plans to develop and deploy wireless EV charging
solutions. Next NRG will be focused on the deployment of smart microgrids coupled with renewable energy generation and battery storage
solutions all over the United States, and eventually globally.
The
main drivers of renewable energy can be summarized in the following points:
| ● |
Increased
global need for energy; |
| ● |
Decreasing
costs of renewable energy plants; |
| ● |
Regulations
aiming to decrease pollution from fossil fuel; |
| ● |
Political
will to use clean and sustainable energy sources; and |
| ● |
Incentives
and subsidies. |
The
market size for microgrid was $30 billion in 2022 and is expected to reach $168 billion by 2032 (precedenceresearch.com). The global
annual market size for solar farms was $61 billion in 2021 and is expected to reach $230 billion by 2030 (verifiedmarketresearch.com).
According to pv-magazine-usa.com, 2022, solar energy accounted for about 4.7% of the total energy production in the United States, up
from 3.9% the previous year. This solar power market growth is attributed to factors such as technological advancements in solar technology,
rising electricity costs, growing adoption in developing countries, increasing demand for renewable energy.
Next
Charging believes that through strategic deployment it will be able to build and operate clean energy systems on commercial properties,
schools and municipal buildings. The electricity Next Charging will generate will help customers to gain access to electricity where
needed, reduce electricity bills, progress towards decarbonization targets and support resource management needs throughout their asset
lifecycles. Next Charging expects its primary product offering to be entering into leases or easements with building or landowners and
revenue contracts to sell the power generated by the solar energy system to those landowners, or various commercial, utility, municipal
and community solar off-takers. In addition to the sale of clean power, Next Charging plans to address its customer’s needs through
wireless EV charging and energy storage offerings, and where applicable, the delivery of gasoline.
The
primary challenge that the renewable sources market faces is the uncertainty around energy generation. This problem leads to system supply/demand
imbalances that can interrupt power and increase costs. Next Charging’s Artificial Intelligence (“AI”)/Machine Learning
(“ML”)-based patented technologies increase forecasting accuracy and efficiency and allow users to combine renewable power
sources to improve the power system’s resiliency. The second challenge is the cost of building renewable energy microgrids. To
address this challenge, Next NRG hopes to capitalize on government incentives currently available for the deployment of renewable energy
solutions. Next Charging believes its offerings will provide multiple advantages to our customers relative to the status quo, such as:
| ● |
Lower
electricity bills: Once established, it plans for its process to allow for solar energy credits to get directly applied to a
customer’s utility bill, which should allow them to realize immediate savings. |
| ● |
Increased
accessibility of clean electricity: Through its deployment of microgrid and solar solutions it believes it will be able to provide
clean electricity to customers who otherwise would not have been able to construct on-site solar (e.g. apartment and condominium
customers). This increases the total addressable market and enables energy security for all. |
| ● |
Supporting
clean energy ecosystem: Demand for clean sources of electricity is anticipated to only increase. Next Charging strives to support
its customers in their continued transition to the clean energy ecosystem through its microgrid, solar and battery storage systems
as well as our wireless EV charging stations. It expects that its continued growth and expansion of product offerings will allow
it to support even more customers in this transition. |
In
simple terms, a microgrid is a small-scale power grid that can operate independently or collaboratively with other small power grids.
Next NRG’s technology is designed to mitigate risk of utilizing renewable energy, while maximizing energy output efficiencies.
Microgrids serve as an effective platform for integrating distributed energy resources (“DERs”) and achieving optimal performance
in reduced costs and emissions while bolstering the resilience of a city, a building, or rural communities’ electrification systems.
Additionally, they achieve cost savings through peak shaving and selling excess power to offtakers.
Next
NRG is purchasing the license to four patented technologies which enable the creation of smart microgrids and virtual power plants (“VPP”).
The algorithms used to secure the patents were developed with the support and research of Federal agencies and have been tested and proven
on the infrastructure of the largest renewable energy company in the world. Certain of the above technologies are currently being utilized
with approximately 6 million of this renewable energy company’s customers. The combined technologies are referred to as the Next
Smart Microgrid and are explained in more detail below.
The
RenCast Predictor
| ● |
The
RenCast predictor is an online tool which can be independently installed with current and new solar systems using an open API architecture.
It can be deployed as a software as a service (“SaaS”) or on-premises depending on customer needs. The RenCast predictions
are based on weather parameters coupled with past and future data. Its use of global data sources improves its output accuracy. RenCast
uses ML based systems and methods to forecast renewable energy generation using weather station and sensor data. |
| ● |
The
RenCast Predictor’s renewable energy generation forecast includes a 5-minute, 15-minute, 1-hour, or 7-day prediction with up
to 93% accuracy. The system includes weather sensors and imaging cameras. Weather parameters include wind speed, wind direction,
ambient temperature, precipitation, atmosphere turbidity, and translucency. The forecaster receives this data from a geo-satellite
feed, estimates the cloud cover, and derives the cloud shading profile. The processor receives and uses aggregation data to forecast
renewable energy generation. |
| ● |
The
RenCast Predictor uses the web service API to implement photovoltaic (“PV”)-generation forecasts into the algorithms
(e.g., economic dispatch), enabling customers to accurately plan and manage renewable energy generation. |
Smart
Microgrid Controller
| ● |
The
Smart Microgrid Controller integrates and synthesizes systems and AI/ML from multiple power sources to create a comprehensive overview
of which source the microgrid should be pulling its energy from. |
| ● |
The
Smart Microgrid Controller uniquely addresses customer needs to optimize renewable energy use. As smaller versions of main energy
grids, microgrids can operate in grid-connected and “island” mode as needed. For example, when severe weather affects
the energy grid, a microgrid can operate autonomously using its local energy sources to power buildings or facilities. It connects
and disconnects from the grid through a grid-forming inverter, which performs black-starts to independently restart the grid. Using
the Smart Microgrid Controller ensures that the customer is always using its best and most reliable source of energy. |
The
Battery State of Charge (“SOC”) System
| ● |
The
Battery SOC provides AI/ML systems to forecast SOC of the systems’ lithium-ion batteries. |
| ● |
The
system uses a multi-step forecasting process and experimentally obtained decreasing C-rate datasets and with ML to forecast the system
batteries’ SOC. The multi-step approach combines at least one univariate technique with ML techniques to forecast first C-rate,
voltage, current, and SOC percentage to the ML model and forecast the battery’s SOC using an optimizer and ML model. The parameters
from a second C-rate are collected by the battery analyzer and can be stored on the machine-readable medium to train the ML model(s)
before forecasting. The forecasted battery SOC can be displayed in operable communication with the processor, the machine-readable
medium, and the battery analyzer. This enables the customer to always be informed on the stored energy and health of each battery
in the system. |
Battery
storage is vital. It supports integrating and expanding renewable energy sources, such as solar power, while reducing reliance on fossil
fuels. Storing excess energy generated during periods of high renewable generation (sunny or windy) helps mitigate the reliability issues
associated with renewable power sources. This equipment can dramatically improve electrification in rural areas, on tribal lands, and
in low-income communities in-need of clean, reliable power. Battery energy storage systems provide a versatile and scalable solution
for energy storage and power management, load management, backup power, and improved power quality.
The
Portable Emergency AC Energy (“PEACE”) Controller
| ● |
The
Peace Controller is a smaller version of the smart microgrid that uses the same AI/ML technologies to provide a mobile source of
renewable power in the case of local energy interruption. The controller’s short-term goal is to provide uninterrupted clean
energy to consumers during and after natural disasters to power emergency appliances, and for daily use to reduce the energy costs.
Long-term the controllers can be scaled up as medium-to-large scale power hubs to provide grid services and network resilience. |
| ● |
During
power outages the PEACE supplier serves as a mobile power source for users with PV and/or energy storage systems. PEACE can also
provide power when users do not have sufficient solar energy for their needs. The supplier includes an inverter to create seamless
three-way connection between a PV cell or system, an energy storage unit, and the power grid. Additionally, PEACE includes a web
application that displays the location, battery SOC, power generation, local weather systems, and charts. |
The
RenCast Predictor, the Smart Microgrid Controller, Battery SOC, and PEACE Controller can be combined to turn a renewable energy microgrid
into a “smart” system that uses AI/ML to increase the system’s efficiencies by up to 10%. Our smart microgrid solution
aggregates accurate estimates of future energy generation and SOC and programs the Smart Microgrid Controller to optimize the energy
use based on the customer’s needs.
HOPES
Controller (“VPP”)
| ● |
The
HOPES controller is still under development. |
| ● |
The
HOPES controller will allow microgrids in different locations to communicate and control to facilitate VPP applications and provide
a VPP concept for grid-connected renewable energy sources. |
| ● |
The
software component will include predictive and prescriptive computation models to address and mitigate the concerns facing high-penetration
scenarios into the grid. The controller allows consumers to integrate novel computational tools for state-of-the-art renewable energy
generation forecasting, wide-area aggregation, optimize dynamic renewable hosting capacity, intelligently synchronize devices, and
dispatch on-demand. The HOPES Controller will integrate and manage small-to-large-scale renewable energy solutions across smart grids.
Additionally it will integrate renewable energies to the grid. The HOPES controller connects individual plants to build a VPP that
transfers energy between locations connected through transmission lines based on availability and demand to improve the overall system
resiliency. |
The
HOPES Controller will be able to:
| ● |
Conduct
short-term forecasting of the power generated by the renewable energy power plant. |
| ● |
Execute
a dispatch for bulk energy transfer using a hybrid energy storage module to minimize renewable energy curtailment and increase the
renewable energy hosting capacity. |
| ● |
Predict
renewable energy generation intermittencies with wide-area aggregation using a wavelet theory-based transformation model and cooperative
game theoretic modeling. |
| ● |
Conduct
predictive smart load control to effectively use renewable energy and hybrid energy modules to address critical and deferrable loads
and minimize system instabilities. |
| ● |
Support
functionalities for energy pricing and economics of the grid-connected renewable energy to ensure feasibility of intelligence and
visibility of renewable energy. |
| ● |
Work
with utility-level applications like distributed energy resource management systems and advanced distribution management systems
to optimize existing renewable energy power plants. |
The
first deployments of the Next Charging Smart Microgrid are expected to be on tribal land in the United States. The reason Next Charging
is targeting tribal land is because, in 2022, the U.S. Energy Department’s Office of Indian Energy issued a report citing that
nearly 17,000 tribal homes were without electricity, with most being in southwestern states and in Alaska. Assistant Secretary for Indian
Affairs Mr. Bryan Newland testified before Congress earlier this year that 1 in 5 homes on the Navajo Nation and more than one-third
of homes on the neighboring Hopi reservation are without electricity. Our goal is to work with the Native American Tribes to reduce this
number to zero.
At
each location where the Next NRG Smart Microgrid is deployed, Next Charging plans to evaluate the possibility of deploying Next Charging’s
wireless EV charging solutions. These solutions are explained in more detail below.
EV
wireless charging offers several benefits:
| ● |
By
definition, the number one benefit of wireless EV charging is that there are no wires. EV owners do not need to carry heavy charging
cables or plug their cars in at every charging station, alleviating range anxiety. |
| ● |
EV
charging cables can become damaged over time, particularly in extreme heat and cold areas, which can be hazardous to the vehicle
and its owner. No wires mean less risk, and replacing cables is expensive, too. |
| ● |
Wireless
charging is simply more convenient, even when only available as static charging – and if and when dynamic charging becomes
a reality, it will be extremely convenient as well. |
Next
Charging’s primary patent covers an electric vehicle charging station, designed as a bumper, that ensures proper alignment between
the vehicle’s battery charger and the charger pad in the charging station.
| ● |
Integrated
sensors detect the vehicle’s position as it parks. |
| ● |
A
built-in radio frequency receiver identifies the vehicle through a unique code. |
| ● |
Once
the system verifies payment with a server, an internal processor activates wireless, inductive charging. |
| ● |
The
entire setup offers a seamless integration of sleek design, precise vehicle detection, and secure payment verification for efficient
charging. |
| ● |
Next
Charging’s parking bumper patent is the integration of a networked wireless charging bumper with a contactless payment system,
and advanced communication protocols and encryption methods. |
| ● |
Next
Charging is in the process of purchasing the exclusive license for three patents in the wireless power transfer (“WPT”)
space - two for the static transfer of energy and one for the dynamic transfer of energy: |
The
licensed WPT solutions are based on a unique analog architecture. The static solution also provides a bi-direction (grid to vehicle and
vehicle to grid) power transfer which allows a charged EV to serve as a reserve generator for the home in case of power failure.
To
date, Next Charging’s static and dynamic solutions have been designed and prototypes are being tested at 25 kwh of output in a
laboratory environment at FIU. Next Charging expects for this static WPT solution to automate EV charging such that drivers
do not need to do anything to charge. There are no cables inside or outside of the car.
Next
Charging expects for its dynamic WPT solution
to be implemented on highways and public roads so it can provide essentially unlimited range for EVs without plugging-in or stopping
for recharging. These solutions will revolutionize the future of transportation systems. Next Charging is working with FIU to
deploy the dynamic WPT solution as a pilot for use on their campus and demonstrate its capabilities.
Next
Charging’s solutions are not expected to be affected by rain, snow, ice, dust, or dirt. They will be a clean and safe way to charge
EVs. Next Charging expect that its bidirectional WPT systems will support connecting grid-to-vehicle (“G2V”)
and vehicle-to-grid (“V2G”). It also plans for its systems to be able to integrate with the grid to
help create a resilient network to handle disaster conditions. For example, during a hurricane in areas with power outages, EVs with
V2G capability would be able to power hospitals, homes, and other critical infrastructure to create a reliable, longer lasting energy
source.
Next
Charging believes that it is positioning
itself to be able to offer a combination of: (i) wireless charging outputs from 25kwh; (ii) bi-directional wireless charging;
and (iii) both static and dynamic wireless EV charging.
The
microgrid, solar, and EV Charging markets in the U.S. have been growing steadily with the presence of key players engaged in research
and development to increase efficiency and decrease the cost of the components. Next Charging believes the confluence of
multiple clean energy trends creates a significant market opportunity. According to the U.S. Energy Information Administration (“EIA”),
the U.S. spends $400 billion on electricity each year, of which $200 billion is spent on C&I. An additional $98 billion of investment
will be required to meet the country’s 2030 sustainability goals. Renewable energy microgrids have proven an effective tool to
help communities respond to natural disasters, and support countries who depend on foreign oil supplies. It may be necessary to rapidly
increase the scale and scope of renewable generation assets in the U.S. in order to meet the various targets and commitments set by corporations
and governments. Through its strategic partnerships and market-leading financing, Next Charging believes it is positioning itself to
help meet this demand and lead in the clean energy transition.
Agreements
and Collaborations
License
Agreement with Florida International University
Next
Charging is in the process of obtaining exclusive licenses to a portfolio of seven patents owned by FIU. Under the licenses, Next Charging
will be obligated to pay fixed royalty payments for the licenses to FIU on an annual basis. The terms of the licenses shall continue
for the life of the patents or until terminated by either party, pursuant to the terms of the licenses. Next Charging will also have
certain performance obligations pursuant to the terms of the licenses.
Intellectual
Property
Next
Charging is the owner of US Patent No. 10,836,269 which is a patent for an inductive charging parking bumper with automatic payment processing.
Next
Charging is in the process of obtaining licenses from FIU to the following U.S. patents related to wireless electric vehicle
charging: US Patents Numbered: 10637294; 9919610; and 9731614.
Next
Charging is also in the process of obtaining licenses from FIU to the following U.S. patents related to smart microgrid
technology: US Patents Numbered: 10326280; 10969436; 10958211; and 11022720.
Next
Charging has also filed trademark applications for “NextCharge,” “Next Charge,” “Next Charging,”
“NextCharging,” “NextNRG,” “Next NRG,” and the Next logo.
Next
Charging owns the domain names: NextCharging.com and NextNRG.com
Regulatory
Although
Next Charging is not regulated as a public utility in the United States under applicable national, state or other local regulatory regimes
where it conducts business, it competes primarily with regulated utilities. As a result, it has developed and is committed to maintaining
a policy team to focus on the key regulatory and legislative issues impacting the entire industry. It believes these efforts help it
better navigate local markets through relationships with key stakeholders and facilitate a deep understanding of the national and regional
policy environment.
To
operate its systems, Next Charging obtains interconnection permission from the applicable local primary electric utility. Depending on
the size of the solar energy system and local law requirements, interconnection permission is provided by the local utility directly
to us and/or our customers. In almost all cases, interconnection permissions are issued on the basis of a standard process that has been
pre-approved by the local public utility commission or other regulatory body with jurisdiction over net metering policies. As such, no
additional regulatory approvals are required once interconnection permission is given.
Next
Charging’s operations are subject to stringent and complex federal, state and local laws, including regulations governing the occupational
health and safety of our employees and wage regulations. For example, it is subject to the requirements of the federal Occupational Safety
and Health Act, as amended (“OSH Act”), and comparable state laws that protect and regulate employee health and safety. Next
Charging endeavors to maintain compliance with applicable OSH Act and other comparable government regulations.
Government
Incentives
Federal,
state and local government bodies provide incentives to owners, distributors, system integrators and manufacturers of solar energy systems
to promote solar energy in the form of rebates, tax credits, payments for renewable energy credits (“RECs”) associated with
renewable energy generation and exclusion of solar energy systems from property tax assessments. These incentives enable Next Charging
to lower the price it charges customers for energy from, and to lease, its solar energy systems, helping to catalyze customer acceptance
of solar energy as an alternative to utility-provided power. In addition, for some investors, the acceleration of depreciation creates
a valuable tax benefit that reduces the overall cost of the solar energy system and increases the return on investment.
The
Inflation Reduction Act of 2022 (the “IRA”), which was passed in August 2022, substantially changed and expanded existing
federal tax benefits for renewable energy. The IRA extended the existing framework for investment tax credits (“ITC”) offered
by the federal government under Section 48(a) of the Internal Revenue Code (the “Code”) for the installation of certain solar
power facilities owned for business purposes. Prior to the IRA, if construction on the facility began before January 1, 2020, the amount
of the ITC available was 30%, if construction began during 2020, 2021, or 2022 the amount of the ITC available was 26%, with additional
step downs in later years. Projects placed in service before January 1, 2022 are still set at 26%. However, with the enactment of the
IRA, solar power facilities installed between 2022 and 2032 will receive a 30% ITC of the cost of installed equipment for ten years so
long as the facilities meet wage and apprenticeship requirements or are less than 1 MWac, which will decrease to 26% for solar power
facilities installed in 2033 and to 22% for solar power facilities installed in 2034; and for those solar power facilities installed
in 2022, the ITC has increased from 22% to 30% if the ITC has not yet been claimed. The prevailing wage rates also must be paid for alteration
and repair during the 5 years after a project is placed in service.
Pursuant
to the IRA, certain ITC projects are eligible for a 10% domestic content bonus so long as the facilities meet wage and apprenticeship
requirements, if all the steel and iron are produced in the United States and at least 40% of the facility is produced in the United
States, which domestic content percentage requirement increases for facilities that start construction after 2024 and eventually reach
55% for projects which begin construction in 2027 or later.
Pursuant
to the IRA, certain ITC projects are eligible for an additional 10% or 20% energy community bonus so long as the facilities meet wage
and apprenticeship requirements, and if the facility owner applies for and receives an environmental justice allocation from the Internal
Revenue Service (the “IRS”). Solar (and certain related storage) facilities that are less than 5 MWac that are either located
in a low-income community or on Indian land, or are part of a qualified low-income residential building project or a qualified low-income
economic benefit project qualify. For example, qualified low-income economic benefit projects can receive a 20% bonus if low-income households
receive at least one-half of the financial benefits. The IRS provided taxpayers guidance in Notice 2023-18 for determining the requirements
for allocation of the ITC bonus. The IRA also included additional incentives, including in relation to stand-alone storage and claiming
interconnection costs under the ITC in certain situations.
Additionally,
the Inflation Reduction Act has secured historic levels of funding specifically for Tribal Nations and Native communities, including
$32 billion in the American Rescue Plan, $13 billion in the Bipartisan Infrastructure Law, and more than $720 million in the IRA.
The
U.S. Department of Energy’s Clean Energy for Low Income Communities Accelerator partnered with state and local leaders that committed
$335 million to help 155,000 low-income households access renewable energy and efficiency to save up to 30% or more on energy bills.
In
addition to the incentives at the federal government, more than half of the states, and many local jurisdictions, have established property
tax incentives for renewable energy systems that include exemptions, exclusions, abatements and credits. Approximately thirty states
and the District of Columbia have adopted a renewable portfolio standard (and approximately eight other states have some voluntary goal)
that requires regulated utilities to procure a specified percentage of total electricity delivered in the state from eligible renewable
energy sources, such as solar energy systems, by a specified date. To prove compliance with such mandates, utilities must surrender solar
renewable energy credits (“SRECs”) to the applicable authority. Solar energy system owners such as our investment funds often
are able to sell SRECs to utilities directly or in SREC markets. While there are numerous federal, state and local government incentives
that benefit our business, some adverse interpretations or determinations of new and existing laws can have a negative impact on Next
Charging’s business.
Manufacturing
and Supply
Next
Charging plans to purchase equipment, including solar panels, inverters, batteries, wireless charging station components from a variety
of manufacturers and suppliers. If one or more of the suppliers and manufacturers that Next Charging relies upon to meet anticipated
demand reduces or ceases production, it may be difficult to quickly identify and qualify alternatives on acceptable terms. In addition,
equipment prices may increase in the coming years, or not decrease at the rates it has historically experienced, due to tariffs
or other factors. Eventually, Next Charging believes it will be manufacturing some, if not all, of its products in-house.
Employees
As
of November 30, 2023, Next Charging had 6 full-time employees.
Facilities
Next
Charging leases approx. 3,000 square feet of office space, located at 407 Lincoln Road, Ste 9F, Miami Beach, FL 33139.
Financial
Information
Unaudited
Pro Forma Condensed Combined Financial Information of the Company and Next Charging
Please
refer to Annex C for the unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2023
and the year ended December 31, 2022 which give pro forma effect to the Exchange as if it had occurred on January 1, 2023 and 2022, respectively.
Financial
Information for Next Charging
Please
refer to Annex D for the audited financial statements of Next Charging for the fiscal years ended December 31, 2021 and December 31,
2022, and the unaudited financial information for Next Charging for the nine months ended September 30, 2022 and September 30, 2023.
Management’s
Discussion & Analysis of Financial Condition and Results of Operations of Next Charging
The
following discussion and analysis summarizes the significant factors affecting the consolidated operating results, financial condition,
liquidity and cash flows of Next Charging 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 the unaudited condensed consolidated financial statements and
related notes included in this information statement and the audited financial statements and notes thereto as of and for the year ended
December 31, 2022 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of
which are contained in the Form S-1 filed by EzFill Holdings, Inc. with the Securities and Exchange Commission, or SEC, on November 28,
2023. Unless the context requires otherwise, references in this section discussing the management’s discussion and analysis of
financial condition and results of operations of Next Charging to “we,” “us,” and “our” refer to
Next Charging LLC.
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
Next
Charging LLC (“Next” or the “Company”) was incorporated on April 20, 2016, under the laws of the State of Florida.
Next is a developmental stage company working on solutions in the renewable energy/wireless electric vehicle (“EV”) charging
space. Next Charging will be focused on the deployment of smart microgrids coupled with renewable energy generation and battery storage
solutions all over the United States, and eventually globally.
Next
Charging hopes to be on the forefront of solving issues in the renewable energy space and deploying renewable energy solutions globally.
In order to achieve our mission, it plans to develop, own and operate smart microgrid connected renewable energy generation and energy
storage facilities across the United States. It has established a team to develop, build, and provide operations and maintenance and
customer servicing for our assets. Additionally, it has plans to deploy state of the art wireless EV charging solutions at its customer
locations, where appropriate.
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, 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.
Nine
months ended September 30, 2023 compared to the nine months ended September 30, 2022
Operating
Expenses
We
incurred operating expenses of $465,385 during the nine months ended September 30, 2023, as compared to $6,808 during the prior period,
an increase of $458,577. This increase was primarily due to an increase in operations from payroll, marketing and professional services.
Depreciation
and Amortization
For
the nine months ending September 30, 2023 and 2022, depreciation expenses was $5,555 and $0, respectively. Depreciation increased in
the current period as a result of depreciation expense from a newly purchased vehicle in 2023.
Other
Income (Expense)
Interest
income for the nine months ending September 30, 2023 and 2022 was $137,797 and $1,162, respectively, an increase of $136,635. This increase
was due to interest income earned from borrowings to EzFill Holdings, Inc., a related party. Interest expense for the nine months ending
September 30, 2023 and 2022 was $38,420 and $2,592, respectively. Interest expense increased in the current period due to increased borrowing
from a related party, Michael Farkas.
Liquidity
and Capital Resources
Cash
Flow Activities
As
of September 30, 2023, we had approximately $54,843 in cash and cash equivalents compared to approximately $1,457 at December 31, 2022.
In addition, the Company had $1 million in restricted cash as of September 30, 2023.
Operating
Activities
Net
cash used in operating activities was $382,880 for the nine months ended September 30, 2023, which was made up primarily by the net loss
of $366,008, offset by non-cash adjustments of net amount of $89,801 and an increase in note receivable related party of $54,484. Net
cash used in operating activities was $5,907 during the prior period, which was made up primarily by the net loss of $8,238.
Investing
Activities
During
the nine months ended September 30, 2023 net cash provided by investing activities was $1,463,734. The cash provided was the result of
the Company purchasing a vehicle for $88,734 and proceeds of $1,375,000 paid to related party. Net cash used by investing activities
during the nine months ended September 30, 2022 was $0.
Financing
Activities
The
Company generated $2,900,000 of cash flows from financing activities during the nine months ended September 30, 2023, from loans from
a related party. For the nine months ended September 30, 2022, $0 of cash flows from financing activities during the nine months ended
September 30, 2022.
Sources
of Capital
The
Company has sustained net losses since inception and does not have sufficient revenues and income to fully fund the operations. As a
result, the Company has relied on debt financing to fund its activities to date. For the nine months ended September 30, 2023, the Company
had a net loss of $366,008. At September 30, 2023, the Company had an accumulated deficit of $307,593. The Company anticipates that it
will continue to generate operating losses and use cash in operations through the foreseeable future.
The
Company has limited capital and is currently relying on a related party 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 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, reduce, or cease our operations.
Off-Balance
Sheet Arrangements
We
do not have any off-balance sheet arrangements as defined in Regulation S-K Item 303(a)(4).
Market
for Next Charging’s Equity Interests, Related Stockholder Matters and Purchases of Equity Interests
Market
Information
Next
Charging’s membership interests are not currently traded on any exchange.
Dividends
Next
Charging has not paid cash dividends on its stock since inception and has no intention to do so in the foreseeable future.
Equity
Compensation Plans
Next
Charging does not currently have an equity compensation plan.
Potential
Interest of Certain Persons in Matters to Be Acted Upon
The
Members’ Representative for Next Charging (Michael D. Farkas) is the managing member of Next Charging and has also lent sums amounting
to $2,925,000 through the issuance of 15 promissory notes to Next Charging. The Members’ Representative is also the beneficial
owner of approximately 20% of the Company’s issued and outstanding common stock. Furthermore, pursuant to the terms of the Exchange
Agreement, upon consummation of the transactions contemplated therein, the board of directors of the Company will appoint Michael D.
Farkas as Chief Executive Officer, Director, and Executive Chairman of the Company.
Risks
Related to Transactions contemplated by the Exchange Agreement
Neither
the Company’s board of directors nor any committee thereof obtained a fairness opinion (or any similar report or appraisal) in
determining whether or not to pursue the acquisition of Next Charging, which is owned by the Company’s largest shareholder. Consequently,
there is no assurance from an independent source that the price the Company is paying for Next Charging is fair to the Company —
and, by extension, its securityholders — from a financial point of view.
Neither
the Company’s board of directors nor any committee thereof is required to obtain an opinion (or any similar report) from an independent
investment banking or accounting firm that the price that the Company is paying for Next Charging is fair to the Company from a financial
point of view, although pursuant to Nasdaq Rule 5630 the Company is required to conduct an appropriate review and oversight of all related
party transactions for potential conflict of interest situations on an ongoing basis by the Company’s audit committee or another
independent body of the board of directors. In analyzing the acquisition of Next Charging, the Company’s board of directors reviewed
summaries of due diligence results and financial analyses prepared by management. The Company’s board of directors also consulted
with legal counsel and with the Company management and considered a number of factors, uncertainty and risks and concluded that the acquisition
of Next Charging was in the best interest of the Company’s stockholders. The Company’s board of directors believes that because
of the professional experience and background of its directors, it was qualified to conclude that the acquisition of Next Charging was
fair from a financial perspective to its stockholders. Accordingly, investors will be relying solely on the judgment of the Company’s
board of directors in valuing Next Charging, and the Company’s board of directors may not have properly valued such acquisition.
As a result, the terms may not be fair from a financial point of view to the public stockholders of the Company.
If
the conditions to the Exchange are not met, the Exchange may not occur.
Although
the Exchange was approved by the stockholders of the Company and the members of Next Charging, specified conditions must be satisfied
or waived to complete the Exchange. These conditions are described in detail in the Exchange Agreement and in addition to stockholder
and member consent, include among other requirements, (i) receipt of requisite regulatory approvals and no law or order preventing the
transactions, (ii) the representations and warranties of the representative of the members of Next Charging and of such members being
true and correct as of the date of the Exchange Agreement and as of the Closing in all material respects, (iii) the Company having amended
its Certificate of Incorporation to increase its authorized share capital and having completed and filed a listing of additional securities
with Nasdaq and the waiting period thereunder shall have expired, and the Company shall have completed such additional requirements of
Nasdaq such that the Share Exchange may be consummated in compliance with the rules and regulations of Nasdaq, (iv) no Material Adverse
Effect with respect to Next Charging, (v) the members of the post-Closing board being elected or appointed, (vi) Next Charging shall
have provided to the Company audited financial statements for Next Charging and related auditor reports thereon from a Public Company
Accounting Oversight Board-registered auditor, which consents to the inclusion of its statements in SEC public filings, for each of the
two most recently ended fiscal years and any other period audited or unaudited but reviewed financials are required to be included in
the Company’s SEC filings following the closing pursuant to applicable law, and unaudited statements for any other required interim
periods, and (vi) the stockholder approval by the Company’s stockholders shall have become effective under applicable law, including
the requirement that this Information Statement on Schedule 14C shall have been disseminated to the Company’s stockholders at least
20 days prior to the closing of the Share Exchange. The Company and Next Charging cannot assure you that all of the conditions will be
satisfied. If the conditions are not satisfied or waived, the Exchange may not occur, or may be delayed and such delay may cause the
Company and Next Charging to each lose some or all of the intended benefits of the Exchange.
Next
Charging has a very limited operating history, which makes it difficult to evaluate its business and prospects.
Risk’s
Relating to Next Charging’s Business:
Next
Charging’s business is subject to numerous risks and uncertainties, including those highlighted in the section titled “Risk
Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, and the Form S-1 dated November
27, 2023 filed on November 28, 2023, which represent challenges that we face in connection with the successful implementation of our
strategy and growth of our business. The occurrence of one or more of the events or circumstances described in that section, alone or
in combination with other events or circumstances, may have a material adverse effect on Next Charging’s business, cash flows,
financial condition and results of operations. These risk factors include, but are not limited to, the following:
| ● |
If
Next Charging cannot compete successfully against other solar and energy companies, we may not be successful in developing our operations
and our business may suffer; |
| ● |
With
respect to providing electricity on a price-competitive basis, solar systems face competition from traditional regulated electric
utilities, from less-regulated third party energy service providers and from new renewable energy companies; |
| ● |
A
material reduction in the retail price of traditional utility-generated electricity or electricity from other sources could harm
Next Charging’s business, financial condition, results of operations and prospects; |
| ● |
Due
to the limited number of suppliers in Next Charging’s industry, the acquisition of any of these suppliers by a competitor or
any shortage, delay, quality issue, price change, or other limitations in its ability to obtain requisite components or technologies
it uses could result in adverse effects; |
| ● |
Although
Next Charging’s business has benefited from the declining cost of solar panels in the past, its financial results may be harmed
with the recent increase in the price of solar panels, and its costs overall may continue to increase in the future due to further
increases in the cost of solar panels and tariffs on imported solar panels imposed by the U.S. government; |
| ● |
The
operation and maintenance of Next Charging’s facilities is subject to many operational risks, the consequences of which could
have a material adverse effect on our business, financial condition, results of operations and prospects; |
| ● |
Next
Charging’s business, financial condition, results of operations and prospects could suffer if it does not proceed with projects
under development or is unable to complete the construction of, or capital improvements to, facilities on schedule or within budget; |
| ● |
Next
Charging faces risks related to project siting, financing, construction, permitting, supply chain delays, governmental approvals
and the negotiation of project development agreements that may impede their development and operating activities; and |
| ● |
While
Next Charging’s growth strategy includes seeking acquisitions of operating solar power generation assets and portfolios, it
may not be successful in identifying or making any acquisitions in the future. Further, it may not realize the anticipated benefits
of acquisitions, and integration of these acquisitions may disrupt its business and management. |
| ● |
Next
Charging may not be able to successfully close on our planned acquisitions. |
| ● |
Next
Charging may not be able to obtain the licenses from FIU. |
| ● |
Next
Charging may not be able to properly develop the technologies covered by the FIU patents. |
Risks
Relating to the Company’s Business and Operations
You
should read and consider risk factors specific to the Company’s business and operations that will also affect the Company after
the Exchange. These risks are described in the section titled “Risk Factors” in the Company’s Annual Report
on Form 10-K for the year ended December 31, 2022, and the Form S-1 dated November 27, 2023 filed on November 28, 2023. See the section
titled “Additional Information – Incorporation by Reference” on page [●] for the location of information
incorporated by reference into this Statement.
Information
Relating to the Company
For
information about the Company, refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, and the
Form S-1 dated November 27, 2023 filed on November 28, 2023, including the section therein titled “Management’s Discussion
and Analysis of Financial Condition and Results of Operations”, which is incorporated herein by reference.
Item
3. Purchase Agreements, PROMISSORY NOTES AND SECURITY AGREEMENT between the Company and AJB Capital Investments, LLC
This
discussion of the transaction is qualified by reference to the Purchase Agreements, the promissory notes, the security agreement and
any amendments thereto which are incorporated by reference to this Information Statement. You should read the Purchase Agreements, the
promissory notes, the security agreement and any amendments thereto carefully as they are the legal documents that govern the transactions.
The
Company entered into the following securities purchase agreements (and any amendments and related agreements thereto, including the promissory
notes and the security agreement) by and among the Corporation and AJB Capital Investments, LLC (“Investor”) (the
agreements, “Purchase Agreements”):
| (1) |
A
securities purchase agreement dated April 19, 2023 and amended on May 17, 2023, August 3, 2023, September 18, 2023, and October 25, 2023
(“First Purchase Agreement”), with respect to the sale and issuance to the Investor of: (i) an initial commitment
fee in the amount of $700,000 in the form of 2,000,000 shares (the “Commitment Fee Shares”) of the Company’s
Common Stock and (ii) a promissory note in the aggregate principal amount of $1,500,000 (together with any note(s) issued in replacement
thereof or as a dividend thereon or otherwise with respect thereto in accordance with the terms of the Purchase Agreement), subsequently
amended and restated on May 17, 2023 (“First AJB Promissory Note”). |
| (2) |
A
securities purchase agreement dated September 22, 2023 (“Second Purchase Agreement”) with respect to issuance
of issue a promissory note to the Investor in the principal amount of $600,000, with an original issue discount of $60,000, which
note is convertible into shares of common stock, par value $0.0001 per share, of the Company following an event of default (“Second
AJB Promissory Note”). |
| |
|
| (3) |
A
securities purchase agreement dated October 13, 2023 (“Third Purchase Agreement”) with respect to issuance of
issue a promissory note to the Investor in the principal amount of $320,000, with an original issue discount of $48,000, which note
is convertible into shares of common stock, par value $0.0001 per share, of the Company following an event of default (“Third
AJB Promissory Note”). |
In
connection with the Purchase Agreements, the Company and Investor also entered into a security agreement dated April 19, 2023, as amended
on September 22, 2023, and October 13, 2023 (“Security Agreement”).
Additional
details in relation to the Purchase Agreements, promissory notes and the security agreement are as follows:
| (1) |
First
Purchase Agreement, First AJB Promissory Note and the security agreement |
Pursuant
to the terms of the First Purchase Agreement, the initial Commitment Fee Shares were issued at a value of $700,000, the First AJB Promissory
Note was issued in a principal amount of $1,500,000 for a purchase price of $1,350,000, resulting in an original issue discount of $150,000.
The net proceeds received by the Company from the Investor for the issuance of the Commitment Fee Shares and the First AJB Promissory
Note was $1,260,000, due to a reduction in the $1,350,000 purchase price as a result of broker, legal, and transaction fees.
The
First Purchase Agreement includes additional Company obligations including obligations to satisfy the current public information requirements
under SEC Rule 144(c) and obligations with respect to the use of proceeds from the sale of securities under the First Purchase Agreement.
Pursuant to the terms of the First Purchase Agreement, the Company granted the Investor certain rights to accept the securities issued
in certain future Company financings in lieu of the securities issued pursuant to the First Purchase Agreement.
The
First AJB Promissory Note matures six (6) months after the original issue date as defined thereunder, and provides for interest to accrue
at an interest rate equal to 10% per annum, or, upon an event of default, as defined in the First AJB Promissory Note, the lesser of
(i) 18% per annum, and (ii) the maximum amount permitted under law (the “Default Interest”). The Investor shall have
the right, only following an event of default and ending on the date of payment of the default, to convert all or any part of the outstanding
and unpaid principal, interest, penalties, and all other amounts under the First AJB Promissory Note into fully paid and non-assessable
shares of the Company’s Common Stock, as such Common Stock existed on the date of issuance of the shares underlying the First AJB
Promissory Note, or any shares of capital stock or other securities of the Company into which such Common Stock shall thereafter be changed
or reclassified (the “Conversion Shares”).
The
First AJB Promissory Note is subject to adjustment upon certain events such as distributions and mergers, and has anti-dilution protections
for issuance of securities by the Company at a price that is lower than the then-current conversion price except for certain exempt issuances.
In addition, if, at any time while the First AJB Promissory Note is issued and outstanding, the Company issues any convertible securities
or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of the Company’s
Common Stock, then the Investor will be entitled to acquire, upon the terms applicable to such sales, the aggregate number of shares
it could have acquired if the First AJB Promissory Note had been converted.
The
First AJB Promissory Note also contains certain negative covenants, including prohibitions on incurrence of indebtedness without the
Investor’s consent, sales of assets, stock repurchases, and distributions. The Investor may not convert the First AJB Promissory Note into
an amount of shares of Common Stock that would result in the beneficial ownership by the Investor and its affiliates of greater than
9.99% of the number of shares of Common Stock outstanding. The First AJB Promissory Note may be prepaid at any time. The First AJB Promissory
Note includes customary events of default, including, among other things, payment defaults, covenant breaches, breaches of certain representations
and warranties, certain events of bankruptcy, liquidation and suspension of the Company’s Common Stock from trading. If such an
event of default occurs, the holders of the First AJB Promissory Note may be entitled to take various actions, which may include the
acceleration of amounts due under the First AJB Promissory Note and accrual of interest as described above, as well as the conversion
of the First AJB Promissory Note.
On
May 17, 2023, the Company and AJB entered into an amendment to the first purchase agreement (the “First Amendment Agreement”).
Pursuant to the First Amendment Agreement, the Company was given additional time within which to receive the stockholder approval required
by the First Purchase Agreement. The First Amendment Agreement also provided for amending the First AJB Promissory Note that was issued
on April 19, 2023 pursuant to the Purchase Agreement and, on May 17, 2023, the Company executed an amended and restated
Promissory Note. Pursuant to the amended and restated promissory note, the conversion price was amended to add a floor price such that
as revised the conversion price (as adjusted) will equal (x) until the date of the stockholder approval the greater of (a) $5.92, and
(b) the lower of the average weighted volume average price (VWAP) over the ten (10) trading day period either (i) ending on date of conversion
of the amended and restated promissory note or (ii) the date thereof and (y) following the date of the stockholder approval, the greater
of the average VWAP over the ten (10) trading day period either (i) ending on date of conversion of the amended and restated promissory
note or (ii) $0.20 (the “Floor Price”). For the avoidance of doubt, no conversion may be effected under the First
AJB Promissory Note at a price per share less than the Floor Price, notwithstanding the receipt of Shareholder Approval.
Under
the amended and restated promissory note, the holder only has a conversion right following an event of default (as defined in such amended
and restated promissory note).
The
Company and AJB entered into certain amendments to the Purchase Agreement dated August 3, 2023, and September 18, 2023 providing the
Company with additional time within which to receive the Shareholder Approval required by the Purchase Agreement (“Amended Purchase
Agreement”). Subsequently, on November 1, 2023, the Company and AJB executed an additional amendment to the Amended Purchase
Agreement (the “November Amendment”), retroactively effective as of October 25, 2023, providing the Company until
November 30, 2023 to obtain the Shareholder Approval required by the Purchase Agreement.
| (2) |
Second
Purchase Agreement, Second AJB Promissory Note and the first amendment to security agreement |
Pursuant
to the terms of the Second Purchase Agreement, on the closing date, the Investor will pay a purchase price of $540,000 to the Company
and the Company will deliver the executed note along with 150,000 shares of its common stock (the “Second Commitment Fee Shares”).
Pursuant to the Second AJB Promissory Note, the Company agreed to reserve 637,500 shares for issuance upon conversion of the Second AJB
Promissory Note. For purposes of clarity, clause (ii) of Section 4(o) of the First Purchase Agreement, dated as of April 19, 2023, as
amended on May 17 and August 3, 2023, between the parties was deleted because the Company extended the First AJB Promissory Note for
an additional 6 months. The Agreement was executed in reliance upon Regulation D, the Investor is an “accredited investor”
as that term is defined in Rule 501(a) of Regulation D.
As
discussed above, on September 22, 2023, the Company and its transfer agent, Worldwide Stock Transfer, entered into an irrevocable letter
agreement with respect to the issuance of 150,000 shares of the Common Stock of the Company representing the Second Commitment Shares
and the reservation of 637,500 shares of common stock of the Company to be issued upon conversion of the Second AJB Promissory Note.
The
Second AJB Promissory Note is convertible into shares of common stock, par value $0.0001 per share, of the Company, following an event
of default. The Note has an interest rate of ten percent (10%) per calendar year. The interest is payable monthly beginning one month
following the issuance of the Second AJB Promissory Note. All principal and accrued but unpaid interest, along with any other amounts,
will be due on March 22, 2024, unless extended in accordance with the terms of the Second AJB Promissory Note. The Note can be prepaid
in whole or in part without penalty. Any amount of principal or interest on the Second AJB Promissory Note that is not paid when due
will incur interest at the rate of the lesser of (i) eighteen percent (18%) per annum and (ii) the maximum amount permitted under law
from the due date (the “Second Note Default Interest”). The Second Note Default Interest will begin accruing upon an event
of default and will be computed on the basis of a 360-day year and the number of days elapsed.
The
Investor shall have the right, only following an event of default and ending on the date of payment of the default, to convert all or
any part of the outstanding and unpaid principal, interest, penalties, and all other amounts under the Second AJB Promissory Note into
fully paid and non-assessable shares of the Company’s Common Stock, as such Common Stock exists on the date of issuance of the
shares underlying the Second AJB Promissory Note, or any shares of capital stock or other securities of the Company into which such Common
Stock shall thereafter be changed or reclassified (the “Conversion Shares”).
The
conversion price shall equal (x) until the date of approval of the holders of a majority of the Company’s outstanding voting Common
Stock: (a) $1.23 (the “Nasdaq Minimum Price”) and (b) the lower of the average VWAP over the ten (10) trading day period
either (i) ending on date of conversion of the Second AJB Promissory Note of (ii) the date hereof and (y) following the date of the stockholder
approval, the greater of the average VWAP over the ten (10) Trading Day period either (i) ending on the date of conversion of this Note
or (ii) $0.20 (the “Second Note Floor Price”). No conversion may be effected under the Second AJB Promissory at a price per
share less than the Second Note Floor Price, notwithstanding the receipt of approval from the Company’s shareholders.
The
Second AJB Promissory Note is subject to adjustment upon certain events such as distributions and mergers, and has anti-dilution protections
for issuance of securities by the Company at a price that is lower than the then-current conversion price except for certain exempt issuances.
In addition, if, at any time while the Second AJB Promissory Note is issued and outstanding, the Company issues any convertible securities
or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of common stock, then
the Investor will be entitled to acquire, upon the terms applicable to such sales, the aggregate number of shares it could have acquired
if the Note had been converted.
Also
on September 22, 2023, the Company and the Investor entered into a first amendment to the security agreement, which amends the security
agreement dated April 19, 2023, pursuant to which the Company granted a security interest in its assets to secure the obligations of
the Company in respect to the First AJB Promissory Note. The security agreement was amended to revise the Obligations definition in Section
1 of the security agreement to include the new agreements.
| (3) |
Third
Purchase Agreement, Third AJB Promissory Note and the second amendment to security agreement |
The
Third AJB Promissory Note has an original issue discount of $48,000 (the “OID”), to cover the Investor’s monitoring
costs associated with the purchase and sale of the Note, which is included in the principal balance. The purchase price will be $272,000,
computed as follows: the Principal Amount minus the OID (the “Purchase Price”).
On
the closing date, the Investor paid a purchase price of $272,000 to the Company and the Company delivered the executed note along with
260,000 shares of its Common Stock (the “Third Commitment Fee Shares”). Pursuant to the Third AJB Promissory Note, the Company
agreed to reserve 460,000 shares for issuance upon a conversion of the Third AJB Promissory Note. The Agreement was executed in reliance
upon Regulation D, the Investor is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D.
The
Third AJB Promissory Note is convertible into shares of the Company’s Common Stock following an event of default. The Third AJB
Promissory Note has an interest rate of the lesser of (i) eighteen percent (18%) per annum and (ii) the maximum amount permitted under
law from the due date thereof until the same is paid (the “Third Note Default Interest”). The Third Note Default Interest
will begin accruing upon an event of default and will be computed on the basis of a 360-day year and the actual number of days elapsed.
The principal amount, along with any other amounts, will be due on January 13, 2024. The Third AJB Promissory Note can be prepaid in
whole or in part without penalty.
The
Investor has the right, only following an event of default and ending on the date of payment of the default, to convert all or any part
of the outstanding and unpaid principal, interest, penalties, and all other amounts under the Third AJB Promissory Note into fully paid
and non-assessable shares of the Company’s Common Stock, as such Common Stock exists on the date of issuance of the shares underlying
the Note, or any shares of capital stock or other securities of the Company into which such Common Stock shall thereafter be changed
or reclassified (the “Conversion Shares”).
The
conversion price shall equal (a) until the date of approval of the holders of a majority of the Company’s outstanding voting Common
Stock: (a) $1.23 and (b) the lower of the average VWAP over the ten (10) trading day period either (i) ending on date of conversion of
the Third AJB Promissory Note or (ii) the date hereof and (y) following the date of the stockholder approval, the greater of the average
VWAP over the ten (10) Trading Day period either (i) ending on the date of conversion of this Note or (ii) $0.20 (the “Third Note
Floor Price”). No conversion may be effected under the Third AJB Promissory Note at a price per share less than the Third Note
Floor Price, notwithstanding the receipt of approval from the Company’s shareholders.
The
Third AJB Promissory Note is subject to adjustment upon certain events such as distributions and mergers, and has anti-dilution protections
for issuance of securities by the Company at a price that is lower than the then-current conversion price except for certain exempt issuances.
In addition, if, at any time while the Third AJB Promissory Note is issued and outstanding, the Company issues any convertible securities
or rights to purchase stock, warrants, or securities pro rata to the record holders of any class of Common Stock, then the Investor will
be entitled to acquire, upon the terms applicable to such sales, the aggregate number of shares it could have acquired if the Note had
been converted.
On
October 13, 2023, the Company and its transfer agent, Worldwide Stock Transfer, entered into an irrevocable letter agreement with respect
to the issuance of 260,000 shares of Common Stock representing the Third Commitment Fee Shares and the reservation of 460,000 shares
of Common Stock of the Company to be issued upon conversion of the Third AJB Promissory Note.
Upon
the Investor’s request, the Company will instruct its transfer agent to issue from time to time following Closing certificate(s)
or book entry statement(s) for an aggregate amount of 260,000 shares of Common Stock, such that the Investor will never be in possession
of more than 9.99% of the issued and outstanding Common Stock of the Company; provided, however that (i) such ownership restriction can
be waived by the Investor, in whole or in part, upon 61 days’ prior written notice, (ii) the Company will not issue such shares
until such time as Investor’s ownership is less than 9.99%, or (iii) upon request by Investor, the Company shall issue pre-funded
warrants providing the Investor with the same economic benefits as if the shares had been issued to it.
Also
on October 13, 2023, the Company and the Investor entered into a second amendment to the security agreement, which amends the security
agreement dated April 19, 2023, pursuant to which the Company initially granted a security interest in its assets to secure the obligations
of the Company in respect of the First Purchase Agreement. The security agreement was previously amended on September 22, 2023. The second amendment
to the security agreement revises the Obligations definition in Section 1 to include the new agreements.
By way of written consents
delivered on November 21, 2023, a majority of the Company’s shareholders holding 2,720,889
shares of our Common Stock representing approximately 60.58% of our voting power approved the
transactions contemplated under the Purchase Agreements, the First, Second and Third AJB Promissory Notes, the security agreement,
any amendments thereto in accordance with the requirement under NASDAQ Listing Rule 5635(d).
Item
4. Amendment to EzFill Holdings, Inc. 2023 Equity Incentive Plan
This
discussion of this item is qualified in its entirety by reference to the EzFill Holdings, Inc. 2023 Equity Incentive Plan, as
amended.
The
Board of Directors of the Company (the “Board”), upon a recommendation of the Compensation Committee of the Board
(“Compensation Committee”) had previously approved the EzFill Holdings, Inc.’s 2023 Equity Incentive Plan (“Plan”)
to provide stock-based incentives that align the interests of employees, consultants and directors with those of the shareholders of
the Company by motivating its employees to achieve long-term results and rewarding them for their achievements; and to attract and retain
the types of employees, consultants and directors who will contribute to the Company’s long range success. The Plan was subsequently
approved by the Stockholders of the Company.
On
November 20, 2023, the Board upon the recommendation of the Compensation Committee approved and recommended to the stockholders of the
Company, an amendment to the Plan (such amendment, the “Plan Amendment”). The Plan Amendment increases the number
of shares of Common Stock of the Company that shall be available for the grant of awards under the Plan from 900,000 shares of Common
Stock to 2,900,000 shares of Common Stock and will be effective only upon closing of the transactions contemplated by the Exchange Agreement.
By
way of written consents delivered on November 21, 2023, a majority of the Company’s shareholders holding
2,720,889 shares of our Common Stock representing approximately 60.58% of our voting power
approved the Plan Amendment, subject to the Plan Amendment being effective only upon closing the transactions contemplated by the Exchange
Agreement.
Summary
of Material Features of the Plan
The
following summary of the material terms of the Plan is qualified in its entirety by the full text of the Plan, a copy of which is included
under Annex A in the proxy statement in Form DEF 14A filed by the Company on April 28, 2023 and the amendment to the Plan, a copy of
which is included under Annex E to this information statement. You also may obtain a copy of the Plan, free of charge, by writing to
the Company, Attention: Corporate Secretary, EzFill Holdings, Inc., 67 NE 183rd Street, Miami, FL 33169.
Effective
Date; Duration of the Plan
The
Plan became effective upon approval by the Company’s shareholders and will remain in effect until the tenth anniversary of the
date it is approved by shareholders, unless terminated earlier by the Board.
Plan
Administration
The
Plan will be administered by the Committee. The Committee will have the authority to, among other things, interpret the Plan, determine
who will be granted awards under the Plan, determine the terms and conditions of each award, and take action as it determines to be necessary
or advisable for the administration of the Plan.
Eligibility
The
Committee may grant awards to any employee, officer, consultant or director of the Company and its affiliates. Only employees are eligible
to receive incentive stock options. Non-employee directors currently receive awards as described in this proxy statement under Director
Compensation and the Company’s named executive officers receive awards as described in this proxy statement under Compensation,
Discussion & Analysis and Executive Compensation.
Shares
Available for Awards; Limits on Awards
The
Plan authorizes the issuance of up to 2,900,000 shares of common stock (the “Total Share Reserve”).
Up
to 2,900,000 of the Total Share Reserve may be issued under the Plan, in the aggregate, through the exercise of incentive stock options.
If
any outstanding award expires or is canceled, forfeited, or terminated without issuance of the full number of shares of common stock
to which the award related, then the shares subject to such award will again become available for future grant under the Plan.
Shares
tendered in payment of the option exercise price or delivered or withheld by the Company to satisfy any tax withholding obligation, or
shares covered by a stock-settled stock appreciation right or other awards that were not issued upon the settlement of the award will
not again become available for future grants under the Plan.
The
Committee will make appropriate adjustments to these limits in the event of certain changes in the capitalization of the Company (see
Adjustments Upon Changes in Stock).
Types
of Awards That May Be Granted
Subject
to the limits in the Plan, the Committee has the authority to set the size and type of award and any vesting or performance conditions.
The types of awards that may be granted under the Plan are: stock options (including both incentive stock options (ISOs) and nonqualified
stock options), stock appreciation rights (SARs), restricted stock, restricted stock units (RSUs), performance awards, cash awards and
other stock-based awards.
Stock
Options
A
stock option is the right to purchase shares of common stock at a future date at a specified price per share called the exercise price.
An option may be either an ISO or a nonqualified stock option. ISOs and nonqualified stock options are taxed differently, as described
under Federal Income Tax Treatment of Awards Under the Plan. Except in the case of options granted pursuant to an assumption or substitution
for another option, the exercise price of a stock option may not be less than the fair market value (or in the case of an ISO granted
to a ten percent shareholder, 110% of the fair market value) of a share of common stock on the grant date. Full payment of the exercise
price must be made at the time of such exercise either in cash or bank check or in another manner approved by the Committee.
Stock
Appreciation Rights
A
SAR is the right to receive payment of an amount equal to the excess of the fair market value of a share of common stock on the date
of exercise of the SAR over the exercise price. The exercise price of a SAR may not be less than the fair market value of a share of
common stock on the grant date. SARs may be granted alone (“freestanding rights”) or in tandem with options (“related
rights”).
Restricted
Stock
A
restricted stock award is an award of actual shares of common stock which are subject to certain restrictions for a period of time determined
by the Committee. Restricted stock may be held by the Company in escrow or delivered to the participant pending the release of the restrictions.
Participants who receive restricted stock awards generally have the rights and privileges of shareholders regarding the shares of restricted
stock during the restricted period, including the right to vote and the right to receive dividends
Restricted
Stock Units
An
RSU is an award of hypothetical common stock units having a value equal to the fair market value of an identical number of shares of
common stock, which are subject to certain restrictions for a period of time determined by the Committee. No shares of common stock are
issued at the time an RSU is granted, and the Company is not required to set aside any funds for the payment of any RSU award. Because
no shares are outstanding, the participant does not have any rights as a shareholder. The Committee may grant RSUs with a deferral feature
(deferred stock units or DSUs), which defers settlement of the RSU beyond the vesting date until a future payment date or event set out
in the participant’s award agreement. The Committee has the discretion to credit RSUs or DSUs with dividend equivalents.
Performance
Awards
A
performance award is an award of shares of common stock or units that are only earned if certain conditions are met. The Committee has
the discretion to determine the number of shares of common stock or stock-denominated units subject to a performance share award, the
applicable performance period, the conditions that must be satisfied for a participant to earn an award, and any other terms, conditions,
and restrictions of the award.
Other
Equity-Based Awards
The
Committee may grant other equity-based awards, either alone or in tandem with other awards, in amounts and subject to conditions as determined
by the Committee as set out in an award agreement.
Cash
Awards
The
Committee may grant cash awards that are designated performance compensation awards.
Vesting
The
Committee has the authority to determine the vesting schedule of each award, and to accelerate the vesting and exercisability of any
award. The Company’s practice since inception has been for time-based vesting for signing shares and for subsequent shares to be
granted based upon achievement of goals during a calendar year and then be subject to time-based vesting.
Adjustments
Upon Changes in Stock
In
the event of changes in the outstanding common stock or in the capital structure of the Company by reason of any stock or extraordinary
cash dividend, stock split, reverse stock split, an extraordinary corporate transaction such as any recapitalization, reorganization,
merger, consolidation, combination, exchange, or other relevant change in capitalization occurring after the grant date of any award,
awards granted under the Plan and any award agreements, the exercise price of options and SARs, the maximum number of shares of common
stock subject to all awards and the maximum number of shares of common stock with respect to which any one person may be granted awards
during any period will be equitably adjusted or substituted, as to the number, price or kind of a share of common stock or other consideration
subject to such awards to the extent necessary to preserve the economic intent of the award.
Unless
the Committee specifically determines that such adjustment is in the best interests of the Company or its affiliates, the Committee will,
in the case of ISOs, ensure that any adjustments made will not constitute a modification, extension or renewal of the ISO within the
meaning of Section 424(h)(3) of the Internal Revenue Code (the “Code”) and in the case of non-qualified stock options, ensure
that any adjustments will not constitute a modification of such non-qualified stock options within the meaning of Section 409A of the
Code. Any adjustments will be made in a manner which does not adversely affect the exemption provided under Rule 16b-3 under the Exchange
Act. The Company will give participants notice of any adjustment.
Change
in Control
In
the case of performance awards, in the event of a change in control, all performance goals or other vesting criteria will be deemed achieved
at 100% of target levels and all other terms and conditions will be deemed met.
In
the event of a change in control, the Committee may in its discretion and upon at least 10 days’ advance notice to the affected
persons, cancel any outstanding awards and pay to the holders the value of the awards based upon the price per share of common stock
received or to be received by other shareholders of the Company in the event. In the case of any option or SAR with an exercise price
that equals or exceeds the price paid for a share of common stock in connection with the change in control, the Committee may cancel
the option or SAR without the payment of any consideration.
A
change in control is defined as (a) the acquisition by one person or more than one person acting as a group, of Company stock representing
more than 50% of the total fair market value or total voting power of the Company’s stock; (b) the acquisition by one person or
more than one person acting as a group, of Company stock possessing more than 30% of the total voting power of the Company’s stock;
(c) a majority of the members of the Board are replaced during any 12-month period by directors whose appointment or election is not
endorsed by a majority of the Board; or (d) the acquisition by one person or more than one person acting as a group, of Company assets
with a total gross fair market value of more than 40% of the total gross fair market value of all of the Company’s assets immediately
before the acquisition.
Amendment
or Termination of the Plan
The
Board may amend or terminate the Plan at any time. However, except in the case of adjustments upon changes in common stock, no amendment
will be effective unless approved by the shareholders of the Company to the extent shareholder approval is necessary to satisfy applicable
laws or the rules of NASDAQ. The Plan will terminate on the ten year anniversary of the effective date of the Plan, unless previously
terminated by the Board.
Amendment
of Awards
The
Committee may amend the terms of any one or more awards. However, the Committee may not amend an award that would impair a participant’s
rights under the award without the participant’s written consent.
Clawback
and Recoupment
The
Company may cancel any award or require the participant to reimburse any previously paid compensation provided under the Plan or an award
agreement in accordance with the Company’s clawback policy.
Federal
Income Tax Consequences of Awards
The
following is a summary of U.S. federal income tax consequences of awards granted under the Plan, based on current U.S. federal income
tax laws. This summary does not constitute legal or tax advice and does not address municipal, state or foreign income tax consequences.
Nonqualified
Stock Options
The
grant of a nonqualified stock option will not result in taxable income to the participant. The participant will recognize ordinary income
at the time of exercise equal to the excess of the fair market value of the shares on the date of exercise over the exercise price and
the Company will be entitled to a corresponding deduction for tax purposes. Gains or losses realized by the participant upon the sale
of the shares acquired on exercise will be treated as capital gains or losses.
Incentive
Stock Options (ISOs)
The
grant of an ISO will not result in taxable income to the participant. The exercise of an ISO will not result in taxable income to the
participant if at the time of exercise the participant has been employed by the Company or its subsidiaries at all times beginning on
the date the ISO was granted and ending not more than 90 days before the date of exercise. However, the excess of the fair market value
of the shares on the date of exercise over the exercise price is an adjustment that is included in the calculation of the participant’s
alternative minimum tax liability for the year the shares are sold.
If
the participant does not sell the shares acquired on exercise within two years from the date of grant and one year from the date of exercise
then on the sale of the shares any amount realized in excess of the exercise price will be taxed as capital gain. If the amount realized
in the sale is less than the exercise price, then the participant will recognize a capital loss.
If
these holding requirements are not met, then the participant will generally recognize ordinary income at the time the shares are sold
in an amount equal to the lesser of (a) the excess of the fair market value of the shares on the date of exercise over the exercise price,
or (b) the excess, if any, of the amount realized on the sale of the shares over the exercise price, and the Company will be entitled
to a corresponding deduction.
SARs
The
grant of a SAR will not result in taxable income to the participant. The participant will recognize ordinary income at the time of exercise
equal to the amount of cash received or the fair market value of the shares received and the Company will be entitled to a corresponding
deduction for tax purposes. If the SARs are settled in shares, then when the shares are sold the participant will recognize capital gain
or loss on the difference between the sale price and the amount recognized at exercise. Whether it is a long-term or short-term gain
or loss depends on how long the shares are held.
Restricted
Stock and Performance Shares
Unless
a participant makes an election to accelerate the recognition of income to the grant date (as described below), the grant of restricted
stock or performance shares awards will not result in taxable income to the participant. When the restrictions lapse, the participant
will recognize ordinary income on the excess of the fair market value of the shares on the vesting date over the amount paid for the
shares, if any, and the Company will be entitled to a corresponding deduction.
If
the participant makes an election under Section 83(b) of the Code within thirty days after the grant date, the participant will recognize
ordinary income as of the grant date equal to the fair market value of the shares on the grant date over the amount paid, if any, and
the Company will be entitled to a corresponding deduction. Any future appreciation will be taxed at capital gains rates. However, if
the shares are later forfeited, the participant will not be able to recover any taxes paid.
RSUs
and PSUs
The
grant of an RSU or PSU will not result in taxable income to the participant. When the RSU is settled, the participant will recognize
ordinary income equal to the fair market value of the shares or the cash provided on settlement and the Company will be entitled to a
corresponding deduction. Any future appreciation will be taxed at capital gains rates.
Section
409A
Section
409A of the Code imposes complex rules on nonqualified deferred compensation arrangements, including requirements with respect to elections
to defer compensation and the timing of payment of deferred amounts. Depending on how they are structured, certain equity-based awards
may be subject to Section 409A of the Code, while others are exempt. If an award is subject to Section 409A of the Code and a violation
occurs, the compensation is includible in income when no longer subject to a substantial risk of forfeiture and the participant may be
subject to a 20% penalty tax and, in some cases, interest penalties. The Plan and awards granted under the Plan are intended to be exempt
from or conform to the requirements of Section 409A of the Code.
Section
162(m) and Limits on the Company’s Deductions
Section
162(m) of the Code denies deductions to publicly held corporations for compensation paid to certain senior executives that exceeds $1,000,000.
New
Plan Benefits
Awards
under the Plan will be granted in amounts and to individuals as determined by the Committee in its sole discretion. Therefore, the benefits
or amounts that will be received by employees, officers, directors and consultants under the Plan are not determinable at this time.
Executive Compensation
For
information about executive compensation relating to the Company, refer to the Form S-1 dated November 27, 2023 filed on November 28,
2023, specifically the section therein titled “Executive Compensation”, which is incorporated herein by reference.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information regarding the ownership of the Company’s common stock as of November 15, 2023 by:
(i) each executive officer and director; (ii) all executive officers and directors of the Company as a group; and (iii) all those known
by the Company to be beneficial owners of more than five percent (5%) of its common stock.
Unless
otherwise indicated in the footnotes to this table and subject to community property laws where applicable, the Company believes that
each of the stockholders named in this table has sole voting and investment power with respect to the shares indicated as beneficially
owned. Applicable percentages are based on shares of common stock issued and outstanding on November 15, 2023, adjusted as required by
rules promulgated by the SEC.
| Name of Beneficial Owner (1) | |
Shares of Common Stock Beneficially Owned(7, 8) | | |
Percentage(2) | |
| Beneficial Owners of more than 5%: | |
| | |
| |
| The Farkas Group, Inc (3) | |
| 422,335 | | |
| 9.4 | |
| SIF Energy LLC (3) | |
| 387,067 | | |
| 8.6 | |
| Balance Labs, Inc. (3) | |
| 66,443 | | |
| 1.5 | |
| Jacob Sod (4) | |
| 785,942 | | |
| 17.5 | |
| AJB Capital | |
| 400,000 | | |
| 8.9 | |
| Executive Officers and Directors: | |
| | | |
| | |
| Yehuda Levy (5) | |
| 45,673 | | |
| 1.0 | |
| Michael Handelman | |
| 0 | | |
| - | |
| Avi Vaknin | |
| 325,000 | | |
| 7.2 | |
| Daniel Arbour | |
| 69,241 | | |
| 1.5 | |
| Jack Leibler | |
| 54,714 | | |
| 1.2 | |
| Bennett Kurtz | |
| 52,589 | | |
| 1.2 | |
| Sean Oppen | |
| 111,885 | | |
| 2.5 | |
| | |
| | | |
| | |
| All Officers and Directors as a Group (7 persons) | |
| 659,102 | | |
| 14.7 | % |
*Less
than 1%
| |
(1) |
The
address of each of the officers and directors is 67 NW 183rd St., Miami, Florida 33169; the address of Michael D. Farkas is 1221
Brickell Avenue, Ste. 900, Miami, FL 33131; the address for Jacob Sod is 14 Wall Street, Suite 2064, New York, New York 10005. |
| |
|
|
| |
(2) |
The
calculation in this column is based upon 4,491,531 shares of common stock outstanding on November 15, 2023. Beneficial ownership
is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to the subject
securities. Shares of common stock that are currently exercisable or exercisable within 60 days of September, 2023 are deemed to
be beneficially owned by the person holding such securities for the purpose of computing the percentage beneficial ownership of such
person, but are not treated as outstanding for the purpose of computing the percentage beneficial ownership of any other person. |
| |
|
|
| |
(3) |
Michael
D. Farkas has voting and investment control of the shares of common stock held by the Farkas Group, Inc., SIF Energy LLC and Balance
Labs, Inc. |
| |
|
|
| |
(4) |
The
shares of common stock are held by LH MA 2 LLC; and Crestview 360 Holdings, LLC. Jacob Sod has voting and investment control of the
shares of common stock held by these entities. |
INTERESTS
OF CERTAIN PERSONS IN THE AUTHORIZATIONS
No
officer, director, nominee for election as a director, associate of any director, executive officer or nominee, or beneficial owner of
more than 5% of our Common Stock has any substantial interest in the matters acted upon by our Board and shareholders, other than his
role as an officer, director or beneficial owner, except that Michael D. Farkas, who is a beneficial owner of more than 5% of our Common
Stock, is the managing member of Next Charging.
CAUTIONARY
STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
This
Information Statement may contain “forward-looking statements” made under the “safe harbor” provisions of the
Private Securities Litigation Reform Act of 1995. The statements include, but are not limited to, statements concerning the effects of
the stockholder approval and statements using terminology such as “expects,” “should,” “would,” “could,”
“intends,” “plans,” “anticipates,” “believes,” “projects” and “potential.”
Such statements reflect the current view of the Company with respect to future events and are subject to certain risks, uncertainties,
and assumptions. Known and unknown risks, uncertainties and other factors could cause actual results to differ materially from those
contemplated by the statements.
In
evaluating these statements, you should specifically consider various factors that may cause our actual results to differ materially
from any forward-looking statements. These risk factors include the following risk factor relating to the Company’s compliance
with the continued listing requirements of Nasdaq:
If
we fail to comply with the continued listing requirements of NASDAQ, we would face possible delisting, which would result in a limited
public market for our shares and make obtaining future debt or equity financing more difficult for us.
On
August 22, 2023, the Company received a letter from the Listing Qualifications Staff (the “Staff”) of The Nasdaq Stock Market
LLC (“Nasdaq”) indicating that the Company’s stockholders’ equity as reported in its Quarterly Report on Form
10-Q for the quarterly period ended June 30, 2023 (the “Form 10-Q”), did not satisfy the continued listing requirement under
Nasdaq Listing Rule 5550(b)(1), which requires that a listed company’s stockholders’ equity be at least $2,500,000 (the “Stockholders’
Equity Requirement”). As reported in its Form 10-Q, the Company’s stockholders’ equity as of June 30, 2023 was approximately
$1,799,365. The Staff’s notice has no immediate impact on the listing of the Company’s common stock on Nasdaq.
On
October 1, 2023, the Company submitted its compliance plan to Nasdaq and is awaiting Nasdaq’s compliance determination. If the
plan is accepted, the Staff may grant the Company an extension period of up to 180 calendar days from the date of the deficiency notice
to regain compliance.
There
can be no assurance that the Staff will accept the Company’s plan to regain compliance with the Stockholders’ Equity Requirement,
or, if accepted, that the Company will evidence compliance with the Stockholders’ Equity Requirement during any extension period
that the Staff may grant. If the Staff does not accept the Company’s plan or if the Company is unable to regain compliance within
any extension period granted by the Staff, the Staff would be required to issue a delisting determination. The Company would at that
time be entitled to request a hearing before a Nasdaq Hearings Panel to present its plan to regain compliance and to request a further
extension period to regain compliance. The request for a hearing would stay any delisting action by the Staff.
If
we are unable to achieve and maintain compliance with such listing standards or other Nasdaq listing requirements in the future, we could
be subject to suspension and delisting proceedings. A delisting of our common stock and our inability to list on another national securities
market could negatively impact us by: (i) reducing the liquidity and market price of our common stock; (ii) reducing the number of investors
willing to hold or acquire our common stock, which could negatively impact our ability to raise equity financing; (iii) limiting our
ability to use certain registration statements to offer and sell freely tradable securities, thereby limiting our ability to access the
public capital markets; and (iv) impairing our ability to provide equity incentives to our employees.
ADDITIONAL
INFORMATION
Householding
of Materials
Some
banks, brokers, and other nominee record holders may be participating in the practice of “householding” proxy statements
and annual reports. This means that only one copy of our Information Statement may have been sent to multiple Company stockholders in
each household unless otherwise instructed by such Company stockholders. We will deliver promptly a separate copy of the Information
Statement to any Company stockholder upon written or oral request to us, at Corporate Secretary, EzFill Holdings, Inc., 67 NE 183rd
Street, Miami, FL 33169, or contact (305) 791-1169. Any Company stockholder wishing to receive separate copies of our proxy statement
or annual report to Company stockholders in the future, or any Company stockholder who is receiving multiple copies and would like to
receive only one copy per household, should contact the Company stockholder’s bank, broker, or other nominee record holder, or
the Company stockholder may contact us at the above address and phone number.
Costs
We
will make arrangements with brokerage firms and other custodians, nominees, and fiduciaries who are record holders of our Common Stock
for the forwarding of this Information Statement to the beneficial owners of our Common Stock. We will reimburse these brokers, custodians,
nominees, and fiduciaries for the reasonable out-of-pocket expenses they incur in connection with the forwarding of the Information Statement.
Incorporation
By Reference
The
SEC allows us to “incorporate by reference” information into this Information Statement, which means that we can disclose
important information to you by referring you to other documents that we have filed separately with the SEC and are delivering to you
with a copy of this Information Statement. The information incorporated by reference is deemed to be part of this Information Statement.
This Information Statement incorporates by reference the following documents:
| |
● |
Annual
Report on Form 10-K filed on March 20, 2023. |
| |
|
|
| |
● |
Quarterly
Report for the quarter ended March 31, 2023 on Form 10-Q filed on May 4, 2023. |
| |
|
|
| |
● |
Quarterly
Report for the quarter ended June 30, 2023 on Form 10-Q filed on August 21, 2023.
|
| |
● |
Quarterly
Report for the quarter ended September 30, 2023 on Form 10-Q filed on November 14, 2023.
|
| |
● |
Preliminary
Prospectus on Form S-1 filed on November 28, 2023 |
| |
|
|
| |
● |
Proxy
Statement on Form DEF 14A filed on April 28, 2023 |
| |
|
|
| |
● |
Current
Report on Form 8-K filed on November 8, 2023, November 3, 2023, October 18, 2023, September 27, 2023, September 21, 2023, August 23, 2023, August 16, 2023, August 10, 2023, August 4, 2023, August 3, 2023, July 11, 2023, June 6, 2023, May 18, 2023, May 1, 2023
and April 21, 2023, including the exhibits thereto. |
You
may read and copy any reports, statements, or other information we file at the public reference facilities maintained by the SEC in Room
1590, 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for additional information on the operation of
the SEC’s public reference facilities. The SEC maintains a website that contains reports, proxy statements, and other information,
including those filed by us, at http://www.sec.gov.
Any
statement contained in a document incorporated or deemed to be incorporated by reference in this Information Statement will be deemed
modified, superseded or replaced for purposes of this Information Statement to the extent that a statement contained in this Information
Statement or in any subsequently filed document that also is or is deemed to be incorporated by reference in this Information Statement
modifies, supersedes or replaces such statement.
| By
Order of the Board |
|
| /s/
Yehuda Levy |
|
| Yehuda
Levy |
|
| Interim
Chief Executive Officer |
|
| December
[●], 2023 |
|
ANNEX
A
CERTIFICATE
OF AMENDMENT
TO
AMENDED
AND RESTATED CERTIFICATE OF INCORPORATION
OF
EZFILL
HOLDINGS, INC.
Yehuda
Levy hereby certifies that:
1.
He is the Interim Chief Executive Officer of EzFill Holdings, Inc. (the “Corporation”), a Delaware Corporation
2.
Paragraph A of Article IV of the Amended and Restated Certificate of Incorporation shall be amended to read in its entirety as follows:
“A.
This Company is authorized to issue two classes of stock to be designated, respectively, “Common Stock” and
“Preferred Stock.” The total number of shares which the Company is authorized to issue is 505,000,000 shares.
500,000,000 shares shall be Common Stock, each having a par value of $0.0001, and 5,000,000 shares shall be Preferred Stock, each having
a par value of $0.0001.”
3.
Resolutions were duly adopted by the Board of Directors of the Corporation setting forth the foregoing amendment to the Amended and Restated
Certificate of Incorporation, and declaring said amendment to be advisable and recommended for approval by the stockholders of the Corporation
4.
That in lieu of a meeting and vote of the stockholders of the Corporation (the “Stockholders”), the Stockholders have
given written consent to said amendment in accordance with the provisions of Section 228 of the DGCL, and written notice of the adoption
of the amendments has been given as provided in Section 228 of the DGCL to every stockholder entitled to such notice. The number of shares
voting in favor of the foregoing amendment equaled or exceeded the vote required.
5.
The aforesaid amendment to the Certificate of Incorporation will take effect on the [*] day of [*], 2023, at 12:01 AM Eastern Standard
Time.
6.
The foregoing amendment to the Corporation’s Amended and Restated Certificate of Incorporation was duly adopted in accordance with
Section 242 of the General Corporation Law of the State of Delaware.
| |
EZFILL
HOLDINGS, INC |
| |
|
|
| |
By: |
|
| |
|
|
| |
Name: |
Yehuda
Levy |
| |
|
|
| |
Title: |
Interim
Chief Executive Officer |
ANNEX B
Amended
and Restated Exchange Agreement
by
and among
EZFill
Holdings, Inc.,
all
of the Members of Next Charging LLC
and
Michael
Farkas as the Members’ Representative
TABLE
OF CONTENTS
| |
PAGE |
| Article
I. Definitions and Interpretations |
1 |
| Section
1.01 Definitions. |
1 |
| Section
1.02 Interpretive Provisions. |
7 |
| Article
II. The Transactions |
7 |
| Section
2.01 Amendment of Certificate. |
7 |
| Section
2.02 The Exchange. |
7 |
| Section
2.03 Closing |
8 |
| Section
2.04 Member Deliverables at the Closing. |
8 |
| Section
2.05 Company Deliverables at the Closing. |
9 |
| Section
2.06 Additional Agreements and Actions at and Following the Closing. |
9 |
| Section
2.07 Vesting and Forfeiture of Exchange Shares. |
9 |
| Section
2.08 Additional Documents. |
11 |
| Section
2.09 Tax Consequences. |
11 |
| Article
III. Representations and Warranties Relating to Next
Charging |
11 |
| Section
3.01 Existence and Power. |
11 |
| Section
3.02 Capitalization. |
11 |
| Section
3.03 Compliance with Laws. |
12 |
| Section
3.04 Actions; Orders; Permits. |
12 |
| Section
3.05 Litigation. |
12 |
| Section
3.06 Transactions with Affiliates. |
13 |
| Section
3.07 Investment Company Act. |
13 |
| Section
3.08 Projections. |
13 |
| Section
3.09 Independent Investigation. |
13 |
| Section
3.10 No Brokers. |
13 |
| Article
IV. Representations and Warranties of Each Member |
14 |
| Section
4.01 Existence and Power. |
14 |
| Section
4.02 Due Authorization. |
14 |
| Section
4.03 Valid Obligation |
14 |
| Section
4.04 No Conflict With Other Instruments |
14 |
| Section
4.05 Non-Contravention. |
14 |
| Section
4.06 Capitalization; Title to Membership Interests. |
15 |
| Section
4.07 Investment Representations |
15 |
| Section
4.08 Independent Investigation. |
17 |
| Section
4.09 No Brokers. |
17 |
| Article
V. Representations and Warranties of the Company |
17 |
| Section
5.01 Corporate Existence and Power |
17 |
| Section
5.02 Due Authorization. |
18 |
| Section
5.03 Valid Obligation |
18 |
| Section
5.04 Governmental Approvals. |
18 |
| Section
5.05 Non-Contravention. |
18 |
| Section
5.06 Capitalization. |
19 |
| Section
5.07 Exchange Shares. |
19 |
| Section
5.08 SEC Filings and Company Financials. |
20 |
| Section
5.09 Compliance with Laws. |
21 |
| Section
5.10 Actions; Orders; Permits. |
21 |
| Section
5.11 Litigation. |
21 |
| Section
5.12 Transactions with Affiliates. |
21 |
| Section
5.13 Investment Company Act. |
22 |
| Section
5.14 Independent Investigation. |
22 |
| Section
5.15 No Brokers. |
22 |
| Article
VI. Additional Agreements and Covenants |
22 |
| Section
6.01 Delivery of Books and Records |
22 |
| Section
6.02 Third Party Consents and Certificates. |
22 |
| Section
6.03 Notices of Certain Events. |
22 |
| Section
6.04 Stockholder Approval. |
23 |
| Section
6.05 Members’ Representative. |
23 |
| Article
VII. Conditions to the Closing |
24 |
| Section
7.01 Conditions to the Obligations of all of the Parties. |
24 |
| Section
7.02 Conditions to the Obligations of the Company. |
25 |
| Section
7.03 Condition to the Obligations of the Member |
25 |
| Article
VIII. Termination; Survival |
26 |
| Section
8.01 Termination |
26 |
| Section
8.02 Specific Enforcement. |
27 |
| Section
8.03 Survival After Termination. |
27 |
| Section
8.04 Survival Following Closing. |
27 |
| Article
IX. Miscellaneous |
27 |
| Section
9.01 Notices |
27 |
| Section
9.02 Governing Law; Jurisdiction. |
28 |
| Section
9.03 Waiver of Jury Trial. |
29 |
| Section
9.04 Mediation. |
29 |
| Section
9.05 Limitation on Damages. |
30 |
| Section
9.06 Attorneys’ Fees |
30 |
| Section
9.07 Confidentiality |
30 |
| Section
9.08 Third Party Beneficiaries |
30 |
| Section
9.09 Expenses |
31 |
| Section
9.10 Entire Agreement |
31 |
| Section
9.11 Amendment; Waiver |
31 |
| Section
9.12 No Presumption Against Drafter. |
31 |
| Section
9.13 Headings. |
31 |
| Section
9.14 No Assignment or Delegation. |
31 |
| Section
9.15 Commercially Reasonable Efforts |
32 |
| Section
9.16 Further Assurances. |
32 |
| Section
9.17 Specific Performance. |
32 |
| Section
9.18 Counterparts |
32 |
Exhibits
| Exhibit |
A Assignment of Membership Interests |
| Exhibit |
B Form of Lock-Up Agreement |
Amended
and Restated Exchange Agreement
Dated
as of November 2, 2023
This
Amended and Restated Exchange Agreement (this “Agreement”) is entered into as of the date first set forth above (the “Effective
Date”) by and between (i) EZFill Holdings, Inc., a Delaware corporation (the “Company”); (ii) all of the members of
Next Charging LLC, a Florida limited liability company (“Next Charging”) as set forth on the signature pages hereof (the
“Members”); and (iii) Michael Farkas as the representative of the Members (the “Members’ Representative”).
Each of the Company, the Members and the Members’ Representative may be referred to herein collectively as the “Parties”
and separately as a “Party”.
WHEREAS,
the Parties are all of the parties to that certain Exchange Agreement, dated as of August 10, 2023 (the “Original Agreement”)
and now desire to amend and restate the Original Agreement as set forth herein, and the Original Agreement may be so amended and restated
in writing;
WHEREAS,
the Members are all of the members of Next Charging, and at the Closing (as defined below), the Company agrees to acquire from the Members
100% of the membership interests of Next Charging (the “Membership Interests”) in exchange for the issuance by the Company
to the Members of shares of common stock, par value $0.0001 per share (the “Common Stock”);
WHEREAS,
Next Charging will become a wholly owned subsidiary of the Company; and
WHEREAS,
for Federal income tax purposes, it is intended that the Exchange (as defined below) qualify as a reorganization under the provisions
of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”);
NOW
THEREFORE, on the stated premises and for and in consideration of the mutual covenants and agreements hereinafter set forth and the mutual
benefits to the Parties to be derived herefrom, and intending to be legally bound hereby, the Original Agreement is hereby amended and
restated in its entirety to provide as set forth herein, and it is hereby agreed as follows:
Article
I. Definitions and
Interpretations
Section
1.01 Definitions. The following terms, as used herein, have the following meanings
| |
(a) |
“Accredited
Investor” has the meaning set forth in Section 4.07(b). |
| |
(b) |
“Action”
means any legal action, suit, claim, investigation, hearing or proceeding, including any audit, claim or assessment for Taxes or
otherwise. |
| |
(c) |
“Affiliate”
means, with respect to any Person, any other Person directly or indirectly Controlling, Controlled by, or under common Control with
such Person. |
| |
(d) |
“Agreement”
has the meaning set forth in the introductory paragraph hereto. |
| |
(e) |
“Assignment
of Membership Interests” has the meaning set forth in Section 2.04(a). |
| |
(f) |
“Business
Day” means any day that is not a Saturday, Sunday or other day on which banking institutions in Delaware are authorized or
required by law or executive order to close. |
| |
(g) |
“Capitalization
Table” has the meaning set forth in Section 3.02(b). |
| |
(h) |
“Certificate
Amendment” has the meaning set forth in Section 2.01. |
| |
(i) |
“Closing
Date” has the meaning set forth in Section 2.03. |
| |
(j) |
“Closing”
has the meaning set forth in Section 2.03. |
| |
(k) |
“Code”
has the meaning set forth in the recitals hereto. |
| |
(l) |
“Common
Stock” has the meaning set forth in the recitals hereto. |
| |
(m) |
“Company
Board” means the Board of Directors of the Company. |
| |
(n) |
“Company
Disclosure Schedules” has the meaning set forth in the introductory paragraph to Article V. |
| |
(o) |
“Company
Financials” has the meaning set forth in Section 5.08(b). |
| |
(p) |
“Company
Organizational Documents” has the meaning set forth in Section 5.01. |
| |
(q) |
“Company”
has the meaning set forth in the introductory paragraph hereto. |
| |
(r) |
“Consent”
means any consent, approval, waiver, authorization or Permit of, or notice to or declaration or filing with any Governmental Authority
or any other Person. |
| |
(s) |
“Contracts”
means all contracts, agreements, binding arrangements, bonds, notes, indentures, mortgages, debt instruments, purchase order, licenses,
franchises, leases and other instruments or obligations of any kind, written or oral (including any amendments and other modifications
thereto). |
| |
(t) |
“Control”
of a Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies
of such Person, whether through the ownership of voting securities, by contract, or otherwise, with “Controlled”, “Controlling”
and “under common Control with” have correlative meanings; and provided that, without limiting the foregoing a Person
(the “Controlled Person”) shall be deemed Controlled by (a) any other Person (the “10% Owner”) (i) owning
beneficially, as meant in Rule 13d-3 under the Exchange Act, securities entitling such Person to cast 10% or more of the votes for
election of directors or equivalent governing authority of the Controlled Person or (ii) entitled to be allocated or receive 10%
or more of the profits, losses, or distributions of the Controlled Person; (b) an officer, director, general partner, partner (other
than a limited partner), manager, or member (other than a member having no management authority that is not a 10% Owner ) of the
Controlled Person; or (c) a spouse, parent, lineal descendant, sibling, aunt, uncle, niece, nephew, mother-in-law, father-in-law,
sister-in-law, or brother-in-law of an Affiliate of the Controlled Person or a trust for the benefit of an Affiliate of the Controlled
Person or of which an Affiliate of the Controlled Person is a trustee. |
| |
(u) |
“Derivatives”
means any options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character relating
to the Equity Securities of a Person or obligating such Person to issue or sell any of its Equity Securities, including, without
limitation any simple agreements for future equity or any similar agreements or instruments. |
| |
(v) |
“DGCL”
means the Delaware General Corporation Law. |
| |
(w) |
“Effective
Date” has the meaning set forth in the introductory paragraph hereto. |
| |
(a) |
“Enforceability
Exceptions” means (a) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar
Laws of general application affecting enforcement of creditors’ rights generally and (b) general principles of equity. |
| |
(x) |
“Equity
Security” means, in respect of any Person, (a) any capital stock or similar security, (b) any security convertible into or
exchangeable for any security described in clause (a), (c) any option, warrant, or other right to purchase or otherwise acquire any
security described in clauses (a), (b), or (c), and, (d) any “equity security” within the meaning of the Exchange Act. |
| |
(y) |
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. |
| |
(z) |
“Exchange
Shares” has the meaning set forth in Section 2.02(b). |
| |
(aa) |
“Exchange”
has the meaning set forth in Section 2.02(d). |
| |
(bb) |
“Florida
Act” means the Florida Revised Limited Liability Company Act. |
| |
(cc) |
“GAAP”
means generally accepted accounting principles as in effect in the United States of America. |
| |
(b) |
“Governmental
Authority” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality
of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or
quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force
of Law), or any arbitrator, court or tribunal of competent jurisdiction. |
| |
(dd) |
“Indebtedness”
of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money (including the outstanding principal
and accrued but unpaid interest), (b) all obligations for the deferred purchase price of property or services (other than trade payables
incurred in the ordinary course of business), (c) any other indebtedness of such Person that is evidenced by a note, bond, debenture,
credit agreement or similar instrument, (d) all obligations of such Person under leases that should be classified as capital leases
in accordance with GAAP, (e) all obligations of such Person for the reimbursement of any obligor on any line or letter of credit,
banker’s acceptance, guarantee or similar credit transaction, in each case, that has been drawn or claimed against, (f) all
obligations of such Person in respect of acceptances issued or created, (g) interest rate and currency swaps, caps, collars and similar
agreements or hedging devices under which payments are obligated to be made by such Person, whether periodically or upon the happening
of a contingency, (h) all obligations secured by a Lien on any property of such Person, (i) any premiums, prepayment fees or other
penalties, fees, costs or expenses associated with payment of any Indebtedness of such Person and (j) all obligation described in
clauses (a) through (i) above of any other Person which is directly or indirectly guaranteed by such Person or which such Person
has agreed (contingently or otherwise) to purchase or otherwise acquire or in respect of which it has otherwise assured a creditor
against loss. |
| |
(ee) |
“Knowledge
of the Company” means the actual knowledge of the officers of the Company, after and assuming reasonable inquiry. |
| |
(ff) |
“Knowledge
of the Members’ Representative” means the actual knowledge of the Members’ Representative, after and assuming reasonable
inquiry. |
| |
(c) |
“Law”
means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement
or rule of law of any Governmental Authority. |
| |
(d) |
“Liabilities”
means any and all liabilities, Indebtedness, Actions or obligations of any nature (whether absolute, accrued, contingent or otherwise,
whether known or unknown, whether direct or indirect, whether matured or unmatured, whether due or to become due and whether or not
required to be recorded or reflected on a balance sheet under GAAP or other applicable accounting standards), including Tax liabilities
due or to become due. |
| |
(gg) |
“Lien”
means any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, and any conditional
sale or voting agreement or proxy, including any agreement to give any of the foregoing. |
| |
(hh) |
“Lock-Up
Agreement” has the meaning set forth in Section 2.06(b). |
| |
(ii) |
“Material
Adverse Effect”, with respect to any Person, means any event, occurrence, fact, condition or change that is, or could reasonably
be expected to become, individually or in the aggregate, materially adverse to (a) the business, results of operations, condition
(financial or otherwise) or assets of such Person, or (b) the ability of such Person to consummate the Transactions on a timely basis;
provided, however, that “Material Adverse Effect” shall not include any event, occurrence, fact, condition, or change,
directly or indirectly, arising out of or attributable to: (i) any changes, conditions or effects in the United States economies
or securities or financial markets in general; (ii) changes, conditions or effects that generally affect the industries in which
such Person operates; (iii) any change, effect or circumstance resulting from an action required or permitted by this Agreement;
or (iv) conditions caused by acts of terrorism or war (whether or not declared); provided further, however, that any event, occurrence,
fact, condition, or change referred to in clauses (i), (ii) or (iv) immediately above shall be taken into account in determining
whether a Material Adverse Effect on a subject Person has occurred to the extent that such event, occurrence, fact, condition, or
change has a disproportionate effect on such Person compared to other participants in the industries in which such Person conducts
its business. |
| |
(jj) |
“Mediator”
has the meaning set forth in Section 9.04(a). |
| |
(kk) |
“Member
Disclosure Schedules” has the meaning set forth in the introductory paragraph to Article III. |
| |
(ll) |
“Members’
Representative” has the meaning set forth in the introductory paragraph hereto. |
| |
(mm) |
“Members”
has the meaning set forth in the introductory paragraph hereto. |
| |
(nn) |
“Membership
Interests” has the meaning set forth in the recitals. |
| |
(oo) |
“Nasdaq”
means the Nasdaq Capital Market. |
| |
(pp) |
“Next
Charging Organizational Documents has the meaning set forth in Section 3.02(a). |
| |
(qq) |
“Next
Charging” has the meaning set forth in the introductory paragraph hereto. |
| |
(rr) |
“Order”
means any decree, order, judgment, writ, award, injunction, rule, injunction, stay, decree, judgment or restraining order or consent
of or by an Governmental Authority. |
| |
(ss) |
“Party”
and “Parties” have the meanings set forth in the introductory paragraph hereto. |
| |
(tt) |
“Period
of Restriction” has the meaning set forth in Section 2.07(b). |
| |
(uu) |
“Permits”
means all federal, state, local or foreign or other third-party permits, grants, easements, consents, approvals, authorizations,
exemptions, licenses, franchises, concessions, ratifications, permissions, clearances, confirmations, endorsements, waivers, certifications,
designations, ratings, registrations, qualifications or orders of any Governmental Authority or any other Person. |
| |
(vv) |
“Permitted
Liens” means (a) Liens for Taxes or assessments and similar governmental charges or levies, which either are (i) not delinquent
or (ii) being contested in good faith and by appropriate proceedings, and adequate reserves have been established with respect thereto,
(b) other Liens imposed by operation of Law arising in the ordinary course of business for amounts which are not due and payable
and as would not in the aggregate materially adversely affect the value of, or materially adversely interfere with the use of, the
property subject thereto, (c) Liens incurred or deposits made in the ordinary course of business in connection with social security,
(d) Liens on goods in transit incurred pursuant to documentary letters of credit, in each case arising in the ordinary course of
business, or (v) Liens arising under this Agreement or any Transaction Document. |
| |
(ww) |
“Person”
means an individual, corporation, partnership (including a general partnership, limited partnership or limited liability partnership),
limited liability company, association, trust or other entity or organization, including a government, domestic or foreign, or political
subdivision thereof, or an agency or instrumentality thereof. |
| |
(xx) |
“Preferred
Stock” has the meaning set forth in Section 5.06(a). |
| |
(yy) |
“Public
Certifications” has the meaning set forth in Section 5.08(a). |
| |
(zz) |
“Representative”
means, with respect to any Person, any and all directors, officers, employees, consultants, financial advisors, counsel, accountants
and other agents of such Person. |
| |
(aaa) |
“Required
Stockholder Approval” has the meaning set forth in Section 6.04(b). |
| |
(bbb) |
“Restricted
Shares” has the meaning set forth in Section 2.02(c). |
| |
(ccc) |
“Rule
144” has the meaning set forth in Section 4.07(f). |
| |
(ddd) |
“SEC
Reports” has the meaning set forth in Section 5.08(a). |
| |
(eee) |
“SEC”
means the U.S. Securities and Exchange Commission. |
| |
(fff) |
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. |
| |
(ggg) |
“Selected
Courts” has the meaning set forth in Section 9.02(b). |
| |
(hhh) |
“Stockholder
Approval Matters” has the meaning set forth in Section 6.04(a). |
| |
(iii) |
“Target”
has the meaning set forth in Section 2.07(d)(i). |
| |
(jjj) |
“Tax
Return” means any return, declaration, report, claim for refund, information return or other documents (including any related
or supporting schedules, statements or information) filed or required to be filed in connection with the determination, assessment
or collection of any Taxes or the administration of any Laws or administrative requirements relating to any Taxes. |
| |
(kkk) |
“Tax(es)”
means any federal, state, local or foreign tax, charge, fee, levy, custom, duty, deficiency, or other assessment of any kind or nature
imposed by any Taxing Authority (including any income (net or gross), gross receipts, profits, windfall profit, sales, use, goods
and services, ad valorem, franchise, license, withholding, employment, social security, workers compensation, unemployment compensation,
employment, payroll, transfer, excise, import, real property, personal property, intangible property, occupancy, recording, minimum,
alternative minimum, environmental or estimated tax), including any Liability therefor as a transferee (including under Section 6901
of the Code or similar provision of applicable Law) or successor, as a result of Treasury Regulation Section 1.1502-6 or similar
provision of applicable Law or as a result of any Tax sharing, indemnification or similar agreement, together with any interest,
penalty, additions to tax or additional amount imposed with respect thereto. |
| |
(lll) |
“Taxing
Authority” means the Internal Revenue Service and any other Governmental Authority responsible for the collection, assessment
or imposition of any Tax or the administration of any Law relating to any Tax. |
| |
(mmm) |
“Termination
Date” means December 30, 2023. |
| |
(nnn) |
“Transaction
Documents” means this Agreement, the Assignment of Membership Interests, the Lock-Up Agreements and any other certificate,
agreement or document entered into or delivered in connection with the transactions as contemplated herein or therein. |
| |
(ooo) |
“Transactions”
means the transactions contemplated by the Transaction Documents. |
| |
(ppp) |
“Vested
Shares” has the meaning set forth in Section 2.02(c). |
Section
1.02 Interpretive Provisions. Unless the express context otherwise requires (i) the words “hereof,” “herein,”
and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not
to any particular provision of this Agreement; (ii) terms defined in the singular shall have a comparable meaning when used in the plural,
and vice versa; (iii) the terms “Dollars” and “$” mean United States Dollars; (iv) references herein to a specific
Section, Subsection, Recital or Exhibit shall refer, respectively, to Sections, Subsections, Recitals or Exhibits of this Agreement;
(v) wherever the word “include,” “includes,” or “including” is used in this Agreement, it shall be
deemed to be followed by the words “without limitation”; (vi) references herein to any gender shall include each other gender;
(vii) references herein to any Person shall include such Person’s heirs, executors, personal Representatives, administrators, successors
and assigns; provided, however, that nothing contained herein is intended to authorize any assignment or transfer not otherwise permitted
by this Agreement; (viii) references herein to a Person in a particular capacity or capacities shall exclude such Person in any other
capacity; (ix) references herein to any contract or agreement (including this Agreement) mean such contract or agreement as amended,
supplemented or modified from time to time in accordance with the terms thereof; (x) with respect to the determination of any period
of time, the word “from” means “from and including” and the words “to” and “until” each
means “to but excluding”; (xi) references herein to any Law or any license mean such Law or license as amended, modified,
codified, reenacted, supplemented or superseded in whole or in part, and in effect from time to time; and (xii) references herein to
any Law shall be deemed also to refer to all rules and regulations promulgated thereunder.
Article
II. The Transactions
Section
2.01 Amendment of Certificate. Prior to the Closing, and as a condition precedent thereto, the Company shall undertake such actions
as required to amend the Certificate of Incorporation of the Company to increase the number of authorized shares of Common Stock from
50,000,000 shares of Common Stock to 500,000,000 shares of Common Stock (the “Certificate Amendment”).
Section
2.02 The Exchange.
| |
(a) |
On
the terms and subject to the conditions set forth in this Agreement, at the Closing, the Members shall sell, assign, transfer and
deliver to the Company, free and clear of all Liens, pledges, encumbrances, charges, restrictions or known claims of any kind, nature,
or description, all of the Membership Interests. |
| |
(b) |
All
of the Membership Interests shall be exchanged, collectively, for 100,000,000 shares of Common Stock (“Exchange Shares”),
which shall be apportioned between the Members pro rata based on the respective proportion of the Membership Interests as owed by
each Member as set forth on the Capitalization Table (as defined below). The Exchange Shares shall be issued in book entry form and
shall not be certificated. |
| |
(c) |
Either
35,000,000 or 70,000,000 of the Exchange Shares (as determined pursuant to Section 2.02(c)(i) and Section 2.02(c)(ii), the “Vested
Shares”) shall be fully earned and vested as of the Closing Date, and the remaining 30,000,0000 or 65,000,000 Exchange Shares
(as determined pursuant to Section 2.02(c)(i) and Section 2.02(c)(ii), the “Restricted Shares”) shall be subject to vesting
or forfeiture as set forth in Section 2.07. |
| |
(i) |
In
the event that the acquisition of the Target (as defined below) by Next Charging, directly or indirectly through Next Charging or
a subsidiary of Next Charging, has been completed prior to the Closing, then 70,000,000 of the Exchange Shares shall be the “Vested
Shares” and 30,000,000 of the Exchange Shares shall be the “Restricted Shares” subject to vesting pursuant to Section
2.07(d)(ii) or forfeiture as set forth in the remainder of Section 2.07. |
| |
(ii) |
In
the event that the acquisition of the Target by Next Charging, directly or indirectly through Next Charging or a subsidiary of Next
Charging, has not been completed prior to the Closing, then 35,000,000 of the Exchange Shares shall be the “Vested Shares”
and 65,000,000 of the Exchange Shares shall be the “Restricted Shares” subject to vesting pursuant to Section 2.07(d)(i)
and Section 2.07(d)(ii) or forfeiture as set forth in the remainder of Section 2.07. |
| |
(d) |
The
exchange as set forth in this Section 2.02, subject to the other terms and conditions herein, is referred to collectively herein
as the “Exchange”. |
| |
(e) |
At
the Closing (as defined below) the Members shall, on transfer of their respective Membership Interests to the Company, be recorded
in the stock ledger of the Company as the owners of the applicable portions of the Exchange Shares. |
Section
2.03 Closing. The closing of the Transactions (the “Closing”) shall occur on second Business Day following the satisfaction
or waiver (by the Party for whose benefit the conditions to exist) of the conditions to closing set forth in Section 7.01, Section 7.02
and Section 7.03, or at such other date, time or place as the Company and the Members’ Representative may agree (the date and time
at which the Closing is actually held being the “Closing Date”), via the exchange of electronic documents and other items
as required herein.
Section
2.04 Member Deliverables at the Closing. At the Closing, the Members’ Representative on behalf of the Members shall deliver
to the Company the following:
| |
(a) |
An
Assignment of Membership Interests in the form as attached hereto as Exhibit A (the “Assignment of Membership Interests”),
duly completed and executed by each Member. |
| |
(b) |
A
certificate of the Members’ Representative, dated as of the Closing Date, and: |
| |
(i) |
certifying
that the conditions set forth in Section 7.02(a), Section 7.02(b) and Section 7.02(d) have been satisfied and that the statements
therein are true and correct; and |
| |
(ii) |
attaching
a certificate of status issued by the Florida Secretary of State for Next Charging, dated as of a date within 5 days of the Closing
Date. |
Section
2.05 Company Deliverables at the Closing. At the Closing, the Company shall:
| |
(a) |
Record
the Members in the books and records of the Company as the owners of the applicable portions of the Exchange Shares; |
| |
(b) |
Deliver
to the Members’ Representative on behalf of the Members a certificate of an executive Officer of the Company, dated as of the
Closing Date; and: |
| |
(i) |
certifying
that the conditions set forth in Section 7.03(a), Section 7.03(b) and Section 7.03(c) have been satisfied and that the statements
therein are true and correct; and |
| |
(ii) |
attaching
a certificate of status issued by the Delaware Secretary of State for the Company, dated as of a date within 5 days of the Closing
Date. |
Section
2.06 Additional Agreements and Actions at and Following the Closing.
| |
(a) |
At
the Closing, the Company Board shall name Michael Farkas as Chief Executive Officer and as a Director and as the Executive Chairman
of the Company. |
| |
(b) |
At
the Closing, the Company shall enter into a lock-up agreement, in the form as attached hereto as Exhibit B (each, a “Lock-Up
Agreement”), with (i) each Director of the Company; (ii) each officer of the Company; and (iii) each Member, which Lock-Up
Agreements shall provide that the Equity Securities of the Company held by such counterparties to the Lock-Up Agreements are restricted
from transfer for a period of 12 months following the Closing, and in each case subject to the terms and conditions of the Lock-Up
Agreements. |
Section
2.07 Vesting and Forfeiture of Exchange Shares.
| |
(a) |
The
Restricted Shares, however comprised as set forth in Section 2.02(c), shall be subject to vesting or forfeiture as set forth in this
Section 2.07. |
| |
(b) |
For
purposes herein, “Period of Restriction” shall mean the period commencing on the Closing Date and expiring on the third
annual anniversary of the Closing Date. During the Period of Restriction, the Restricted Shares may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, and the Company as escrow agent will hold the Restricted Shares, until the restrictions
thereon have lapsed and such Restricted Shares have vested, as set forth herein. During the Period of Restriction, Members holding
Restricted Shares granted hereunder may exercise full voting rights with respect to those Shares, and will be entitled to receive
all dividends and other distributions paid with respect to the Common Stock. If any such dividends or distributions are paid in shares
of Common Stock, such shares of Common Stock will be subject to the same restrictions on transferability as the Restricted Shares
with respect to which they were paid. At the time that such the restrictions thereon have lapsed and such Restricted Shares have
vested, as set forth herein, the Restricted Shares shall constitute fully earned and vested shares of Common Stock, and the Member
holding such shares shall have all the rights of a stockholder with respect thereto. |
| |
(c) |
Any
vesting or forfeiture of the Restricted Shares shall be allocated pro rata between the Members in the same proportion as the Members
received the Vested Stock at the Closing. |
| |
(d) |
The
Restricted Shares shall vest, if at all, as follows: |
| |
(i) |
In
the event that, prior to the Closing, Next Charging, directly or indirectly through Next Charging or a subsidiary of Next Charging,
has not completed the acquisition of the acquisition target as set forth in Section 2.07(d)(i) of the Company Disclosure Schedules
(the “Target”), and therefore 35,000,000 of the Exchange Shares were “Vested Shares” as of the Closing pursuant
to the provisions of Section 2.02(c), then upon the Company (directly or indirectly through Next Charging or a subsidiary of Next
Charging), completing the acquisition of the Target, 35,000,000 of the Restricted Shares shall vest. In the event that the Members’
Representative determines that the Target as set forth in Section 2.07(d)(i) of the Company Disclosure Schedules is not capable of
being acquired, either prior to or after the Closing, then the Members’ Representative and the Company shall negotiate in good
faith to determine a replacement “Target”, which shall thereafter be the “Target” for all purposes herein. |
| |
(ii) |
Upon
the Company deploying the third solar, wireless electric vehicle charging, microgrid, and/or battery storage system, 30,000,000 Restricted
Shares shall vest. For purposes herein; (i) a “solar system” means a 500kw to 5MW system in which the Company produces
solar energy and transmits it to the electrical grid, or to a third party which purchase the energy, which third party may be the
customer for the solar energy in the event that such energy powered the Company’s charging stations; (ii) “battery storage
system” means systems in which energy is stored in order to reduce load and capacities on the electrical grid; and “microgrid”
means a local energy grid controlled locally that can exist in isolation or be disconnected from a ‘traditional’ grid
and operate autonomously. Deployment shall be determined by the Company receiving verification from the contractor that the system
is functioning and in use. For a deployment to satisfy this condition it must be a commercial deployment. |
| |
(e) |
The
determination of whether any of the conditions to the vesting of the Restricted Shares as set forth in Section 2.07(d) have been
satisfied, and therefore whether any or all of the Restricted Shares are to vest, shall be made jointly by the Members’ Representative
and the Board of Directors of the Company. In the event that the Members’ Representative and the Board of Directors of the
Company are not able to agree thereon within 30 days of the commencement of efforts to do so, either the Members’ Representative
or the Company may proceed to resolve such disagreement pursuant to the procedures as set forth in Section 9.04. |
| |
(f) |
In
the event that any of the Restricted Shares, however comprised as set forth in Section 2.02(c), have not vested pursuant to the provisions
herein as of the end of the Period of Restriction, such unvested Restricted Shares will be forfeited and will revert to the Company
and will be returned to the status of authorized and unissued shares of Common Stock. |
Section
2.08 Additional Documents. At and following the Closing, the Parties shall execute, acknowledge, and deliver (or shall ensure
to be executed, acknowledged, and delivered), any and all certificates, opinions, financial statements, schedules, agreements, resolutions,
rulings or other instruments required by this Agreement to be so delivered at or prior to or following the Closing, together with such
other items as may be reasonably requested by the Parties and their respective legal counsel in order to effectuate or evidence the Transactions.
Section
2.09 Tax Consequences. For U.S. federal Tax purposes, the Exchange is intended to qualify as a “reorganization” within
the meaning of Section 351 and Section 368(a) of the Code and the Treasury Regulations promulgated thereunder. The Parties adopt this
Agreement as a “plan of reorganization” within the meaning of Treasury Regulations Sections 1.368-2(g) and 1.368-3(a).
Article
III. Representations
and Warranties Relating to Next Charging
As
an inducement to, and to obtain the reliance of the Company, the Members’ Representative represents and warrants to the Company,
except as set forth in the Disclosure Schedules delivered by the Members’ Representative to the Company on the Effective Date (the
“Member Disclosure Schedules”), the Section numbers of which are numbered to correspond to the Section numbers of this Agreement
to which they refer, as of the Effective Date and as of the Closing Date, except as otherwise specifically set forth below as to representations
and warranties which speak solely with respect to a particular date, as follows:
Section
3.01 Existence and Power. Next Charging is a limited liability company, duly organized, validly existing, and in good standing
under the Laws of the state of Delaware and is duly authorized under all applicable Laws, regulations, ordinances, and orders of public
authorities to carry on its business in all material respects as it is now being conducted.
Section
3.02 Capitalization.
| |
(a) |
The
Membership Interests constitute 100% of the equity interests of Next Charging. None of the Membership Interests is subject to pre-emptive
or similar rights pursuant to any organizational document of Next Charging, including the Articles of Organization and any operating
agreement of Next Charging (the “Next Charging Organizational Documents”). Except for the Next Charging Organizational
Documents, there are no voting agreements, rights of first refusal, drag-along, tag-along, rights of participation or other similar
rights with respect to the Membership Interests to which all of the Members and Next Charging are a party. |
| |
(b) |
The
Membership Interests are held by the Members in the proportions as set forth in Section 3.02(b) of the Member Disclosure Schedules
(the “Capitalization Table”). |
| |
(c) |
All
of the Membership Interests are duly authorized, validly issued, fully paid and non-assessable and are not subject to or issued in
violation of any purchase option, right of first refusal, preemptive right, subscription right or any similar right under any provision
of the Florida Act or the Next Charging Organizational Documents. None of the outstanding Membership Interests have been issued in
violation of any applicable securities Laws |
| |
(d) |
There
are no (i) outstanding options, warrants, puts, calls, convertible securities, preemptive or similar rights, (ii) bonds, debentures,
notes or other Indebtedness having general voting rights or that are convertible or exchangeable into securities having such rights
or (iii) subscriptions or other rights, agreements, arrangements, Contracts or commitments of any character (other than this Agreement
and the Transaction Documents), (A) relating to the issued or unissued Equity Securities of Next Charging or (B) obligating Next
Charging to issue, transfer, deliver or sell or cause to be issued, transferred, delivered, sold or repurchased any options or shares
or securities convertible into or exchangeable for such Equity Securities, or (C) obligating Next Charging to grant, extend or enter
into any such option, warrant, call, subscription or other right, agreement, arrangement or commitment for such Equity Securities.
Other than as expressly set forth in this Agreement, there are no outstanding obligations of Next Charging to repurchase, redeem
or otherwise acquire any Equity Securities of Next Charging or to provide funds to make any investment (in the form of a loan, capital
contribution or otherwise) in any Person. |
| |
(e) |
All
Indebtedness of Next Charging as of the Effective Date is disclosed in Section 3.02(e) of the Member Disclosure Schedules. No Indebtedness
of Next Charging contains any restriction upon (i) the prepayment of any of such Indebtedness, (ii) the incurrence of Indebtedness
by Next Charging or (iii) the ability of Next Charging to grant any Lien on its properties or assets. |
Section
3.03 Compliance with Laws. Next Charging is, and has since its formation been, in compliance with all Laws applicable to it and
the conduct of its business except for such noncompliance which would not reasonably be expected to have a Material Adverse Effect on
Next Charging, and Next Charging has not received written notice alleging any violation of applicable Law in any material respect by
Next Charging. Next Charging is not under investigation with respect to any violation or alleged violation of, any law, or judgment,
order or decree entered by any court, arbitrator or Governmental Authority, domestic or foreign, and Next Charging has not previously
received any subpoenas from any Governmental Authority.
Section
3.04 Actions; Orders; Permits. There is no pending or, to the Knowledge of the Members’ Representative, threatened, material
Action to which Next Charging is subject which would reasonably be expected to have a Material Adverse Effect on Next Charging. There
is no material Action that Next Charging has pending against any other Person. Next Charging is not subject to any material Orders of
any Governmental Authority, nor are any such Orders pending. Next Charging holds all material Permits necessary to lawfully conduct its
business as presently conducted, and to own, lease and operate its assets and properties, all of which are in full force and effect,
except where the failure to hold such Consent or for such Consent to be in full force and effect would not reasonably be expected to
have a Material Adverse Effect on Next Charging.
Section
3.05 Litigation. There is no (a) Action of any nature currently pending or, to the Knowledge of the Members’ Representative,
threatened, and no such Action has been brought since its incorporation; or (b) Order now pending or outstanding or that was rendered
by a Governmental Authority since its organization, in either case of (a) or (b) by or against Next Charging, its current or former managers,
officers or equity holders (provided, that any litigation involving the directors, officers or equity holders of Next Charging must be
related to Next Charging’s business, equity securities or assets), its business, equity securities or assets. Since its organization,
none of the current or former officers, senior management or managers of Next Charging have been charged with, indicted for, arrested
for, or convicted of any felony or any crime involving fraud.
Section
3.06 Transactions with Affiliates. Section 3.06 of the Member Disclosure Schedules sets forth a true, correct and complete list
of the Contracts and arrangements that are in existence as of the Effective Date under which there are any existing or future Liabilities
or obligations between Next Charging and any (a) present or former manager, officer or employee or Affiliate of Next Charging, or any
immediate family member of any of the foregoing, or (b) record or beneficial owner of more than five percent (5%) of Next Charging’s
outstanding membership interests as of the Effective Date.
Section
3.07 Investment Company Act. Next Charging is not an “investment company” or a Person directly or indirectly “controlled”
by or acting on behalf of an “investment company,” or required to register as an “investment company,” in each
case within the meaning of the Investment Company Act of 1940, as amended.
Section
3.08 Projections. The Members’ Representative represents and warrants that the projections and valuations of Next Charging
as provided to the Company have been prepared in good faith, but neither none of the Members’ Representative, any Member nor Next
Charging has any means of assuring that the results, valuation or other matters as set forth therein will ultimately be achieved or obtained,
and makes no representations or warranties with respect thereto.
Section
3.09 Independent Investigation. The Members’ Representative has conducted its own independent investigation, review and
analysis of the business, results of operations, prospects, condition (financial or otherwise) or assets of the Company and acknowledges
that it has been provided adequate access to the personnel, properties, assets, premises, books and records, and other documents and
data of the Company for such purpose. The Members’ Representative acknowledges and agrees that: (a) in making its decision to enter
into this Agreement and to consummate the transactions contemplated hereby, it has relied solely upon its own investigation and the express
representations and warranties of the Company set forth in this Agreement and in any certificate delivered to the Members’ Representative
pursuant hereto; and (b) none of the Company nor its respective Representatives have made any representation or warranty as to the Company,
or this Agreement, except as expressly set forth in this Agreement or in any certificate delivered to the Members’ Representative
or the Members pursuant hereto.
Section
3.10 No Brokers. The Members’ Representative has not retained any broker or finder in connection with any of the Transactions,
and the Members’ Representative has not incurred or agreed to pay, or taken any other action that would entitle any Person to receive,
any brokerage fee, finder’s fee or other similar fee or commission with respect to any of the Transactions. The Parties acknowledge
and agree that Farkas Capital LLC has an agreement in place with Next Charging, as disclosed in Section 3.06 of the Member Disclosure
Schedules, but no fees shall be due or payable to Farkas Capital LLC thereunder as a result of the Transactions.
Article
IV. Representations
and Warranties of Each Member
As
an inducement to, and to obtain the reliance of the Company, each Member, severally and not jointly and severally, represents and warrant
to the Company, as of the Effective Date and as of the Closing Date, except as otherwise specifically set forth below as to representations
and warranties which speak solely with respect to a particular date as follows with respect to such Member, the Exchange Shares to be
received by such Member and the Membership Interests held by such Member, as follows:
Section
4.01 Existence and Power. Such Member is a natural person or is an entity duly organized, validly existing, and in good standing
under the Laws of the state of its organization and is duly authorized under all applicable Laws, regulations, ordinances, and orders
of public authorities to carry on its business in all material respects as it is now being conducted.
Section
4.02 Due Authorization. Such Member has taken all actions required by Law, its organizational documents (if applicable) or otherwise
to authorize the execution, delivery and performance of this Agreement and to consummate the Transactions.
Section
4.03 Valid Obligation. This Agreement and all Transaction Documents executed by such Member in connection herewith constitute
the valid and binding obligations of such Member, enforceable in accordance with its or their terms, except as may be limited by the
Enforceability Exceptions.
Section
4.04 No Conflict With Other Instruments. The execution of this Agreement by such Member and the consummation of the Transactions
by such Member will not result in the breach of any term or provision of, constitute a default under, or terminate, accelerate or modify
the terms of, any indenture, mortgage, deed of trust, or other material agreement or instrument to which such Member is a party or to
which any of such Member’s assets, properties or operations are subject.
Section
4.05 Non-Contravention. The execution and delivery by such Member of this Agreement and each Transaction Document to which it
is a party, the consummation by such Member of the transactions contemplated hereby and thereby, and compliance by such Member with any
of the provisions hereof and thereof, will not (a) conflict with or violate any provision of the organizational documents of the Company,
(b) conflict with or violate any Law, Order or Consent applicable to such Member, or any of its properties or assets, or (c) (i) violate,
conflict with or result in a breach of, (ii) constitute a default (or an event which, with notice or lapse of time or both, would constitute
a default) under, (iii) result in the termination, withdrawal, suspension, cancellation or modification of, (iv) accelerate the performance
required by such Member under, (v) result in a right of termination or acceleration under, (vi) give rise to any obligation to make payments
or provide compensation under, (vii) result in the creation of any Lien upon any of the properties or assets of such Member under, (viii)
give rise to any obligation to obtain any third party Consent or provide any notice to any Person or (ix) give any Person the right to
declare a default, exercise any remedy, claim a rebate, chargeback, penalty or change in delivery schedule, accelerate the maturity or
performance, cancel, terminate or modify any right, benefit, obligation or other term under, any of the terms, conditions or provisions
of, any Contract which is material to the operations of such Member, except for any deviations from any of the foregoing clauses (a),
(b) or (c) that would not reasonably be expected to have a Material Adverse Effect on such Member.
Section
4.06 Capitalization; Title to Membership Interests.
| |
(a) |
Such
Members is, as of the Effective Date, and on the Closing Date will be, the record and beneficial owner and holder of the Membership
Interests to be delivered by such Member, free and clear of all Liens. None of the Membership Interests held by such Member is subject
to pre-emptive or similar rights pursuant to any requirement of Law or any contract with such Member, and no Person has any pre-emptive
rights or similar rights to purchase or receive any Membership Interests or other interests in Next Charging from such Member. |
| |
(b) |
The
Membership Interests held by such Member are duly authorized, validly issued, fully paid and non-assessable and are not subject to
or issued in violation of any purchase option, right of first refusal, preemptive right, subscription right or any similar right
under any provision of the Florida Act, the Next Charging Organizational Documents or any Contract to which such Member or Next Charging
is a party. |
Section
4.07 Investment Representations.
| |
(a) |
Investment
Purpose. Such Member understands and agrees that the consummation of the Transactions including the delivery of the Exchange
Shares to such Member in exchange for the Membership Interests held by such Member as contemplated hereby, constitutes the offer
and sale of securities under the Securities Act and applicable state statutes and that the Exchange Shares are being acquired by
such Member for such Member’s own account and not with a present view towards the public sale or distribution thereof, except
pursuant to sales registered or exempted from registration under the Securities Act. |
| |
(b) |
Investor
Status. Such Member is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D (and “Accredited
Investor”). |
| |
(c) |
Reliance
on Exemptions. Such Member understands that the Exchange Shares are being offered and sold to such Member in reliance upon specific
exemptions from the registration requirements of United States federal and state securities Laws and that the Company is relying
upon the truth and accuracy of, and such Member’s compliance with, the representations, warranties, agreements, acknowledgments
and understandings of such Member set forth herein in order to determine the availability of such exemptions and the eligibility
of such Member to acquire the Exchange Shares. |
| |
(d) |
Information.
Such Member has been furnished with all materials relating to the business, finances and operations of the Company and materials
relating to the offer and sale of the Exchange Shares which have been requested by such Member. Such Member has been afforded the
opportunity to ask questions of the Company. Such Member has such knowledge and experience in financial and business matters that
such Member is capable of evaluating the merits and risks of the prospective investment and the receipt of the Exchange Shares. Such
Member understands that such Member’s investment in the Exchange Shares involves a significant degree of risk. Such Member
is not aware of any facts that may constitute a breach of any of the Company’s representations and warranties made herein. |
| |
(e) |
Governmental
Review. Such Member understands that no United States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the Exchange Shares. |
| |
(f) |
Transfer
or Resale. Such Member understands that (i) the sale or re-sale of the Exchange Shares have not been and is not being registered
under the Securities Act or any applicable state securities Laws, and the Exchange Shares may not be transferred unless (a) the Exchange
Shares are sold pursuant to an effective registration statement under the Securities Act, (b) such Member shall have delivered to
the Company, at the cost of such Member, an opinion of counsel that shall be in form, substance and scope customary for opinions
of counsel in comparable transactions to the effect that the Exchange Shares to be sold or transferred may be sold or transferred
pursuant to an exemption from such registration, which opinion shall be accepted by the Company, (c) the Exchange Shares are sold
or transferred to an “affiliate” (as defined in Rule 144 promulgated under the Securities Act (or a successor rule) (“Rule
144”)) of such Member who agree to sell or otherwise transfer the Exchange Shares only in accordance with this Section 4.07(f)
and who is an Accredited Investor, (d) the Exchange Shares are sold pursuant to Rule 144, or (e) the Exchange Shares are sold pursuant
to Regulation S under the Securities Act (or a successor rule) (“Regulation S”), and such Member shall have delivered
to the Company, at the cost of such Member, an opinion of counsel that shall be in form, substance and scope customary for opinions
of counsel in corporate transactions, which opinion shall be accepted by the Company; (ii) any sale of such Exchange Shares made
in reliance on Rule 144 may be made only in accordance with the terms of said Rule and further, if said Rule is not applicable, any
re-sale of such Exchange Shares under circumstances in which the seller (or the person through whom the sale is made) may be deemed
to be an underwriter (as that term is defined in the Securities Act) may require compliance with some other exemption under the Securities
Act or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other person is under any obligation
to register such Exchange Shares under the Securities Act or any state securities Laws or to comply with the terms and conditions
of any exemption thereunder (in each case). Notwithstanding the foregoing or anything else contained herein to the contrary, the
Exchange Shares may be pledged as collateral in connection with a bona fide margin account or other lending arrangement. |
| |
(g) |
Legends.
Such Member understands that the Exchange Shares, until such time as the Exchange Shares have been registered under the Securities
Act, or may be sold pursuant to Rule 144 or Regulation S without any restriction as to the number of securities as of a particular
date that can then be immediately sold, the Exchange Shares may bear a standard Rule 144 legend and a stop-transfer order may be
placed against transfer of the certificates for such Exchange Shares. |
| |
(h) |
Removal.
The legend(s) referenced in Section 4.07(g) shall be removed and the Company shall issue a certificate without such legend to the
holder of any Exchange Shares upon which it is stamped, if, unless otherwise required by applicable state securities Laws, (a) the
Exchange Shares are registered for sale under an effective registration statement filed under the Securities Act or otherwise may
be sold pursuant to Rule 144 or Regulation S without any restriction as to the number of securities as of a particular date that
can then be immediately sold, or (b) such holder provides the Company with an opinion of counsel, in form, substance and scope customary
for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Exchange Shares may be made
without registration under the Securities Act, which opinion shall be accepted by the Company so that the sale or transfer is effected.
Such Member agrees to sell all Exchange Shares, including those represented by a certificate(s) from which the legend has been removed,
in compliance with applicable prospectus delivery requirements, if any. |
Section
4.08 Independent Investigation. Such Member has conducted its own independent investigation, review and analysis of the business,
results of operations, prospects, condition (financial or otherwise) or assets of the Company and acknowledges that it has been provided
adequate access to the personnel, properties, assets, premises, books and records, and other documents and data of the Company for such
purpose. Such Member acknowledges and agrees that: (a) in making its decision to enter into this Agreement and to consummate the transactions
contemplated hereby, it has relied solely upon its own investigation and the express representations and warranties of the Company set
forth in this Agreement and in any certificate delivered to such Member pursuant hereto; and (b) none of the Company nor its respective
Representatives have made any representation or warranty as to the Company, or this Agreement, except as expressly set forth in this
Agreement or in any certificate delivered to such Member pursuant hereto.
Section
4.09 No Brokers. Such Member has not retained any broker or finder in connection with any of the Transactions, and such Member
has not incurred or agreed to pay, or taken any other action that would entitle any Person to receive, any brokerage fee, finder’s
fee or other similar fee or commission with respect to any of the Transactions.
Article
V. Representations
and Warranties of the Company
As
an inducement to, and to obtain the reliance of the Members and the Members’ Representative, the Company represents and warrants
to the Members and the Members’ Representative, except as set forth in the Company Disclosure Schedules delivered by the Company
to the Members’ Representative on the date of the Original Agreement and as amended and updated on the Effective Date (the “Company
Disclosure Schedules”), the Section numbers of which are numbered to correspond to the Section numbers of this Agreement to which
they refer, as of the Effective Date and as of the Closing Date, except as otherwise specifically set forth below as to representations
and warranties which speak solely with respect to a particular date, as follows:
Section
5.01 Corporate Existence and Power. The Company is a corporation duly organized, validly existing, and in good standing under
the Laws of the State of Delaware and has the corporate power and is duly authorized under all applicable Laws, regulations, ordinances,
and orders of public authorities to carry on its business in all material respects as it is now being conducted. The SEC Reports contain
copies of the certificate of incorporation and bylaws of the Company as in effect on the Effective Date (the “Company Organizational
Documents”). The execution and delivery of this Agreement does not, and the consummation of the Transactions will not, violate
any provision of the Company Organizational Documents. Other than as set forth herein as to the conditions to the Closing, the Company
has taken all action required by Law, the Company Organizational Documents, or otherwise to authorize the execution and delivery of this
Agreement, and the Company has full power, authority, and legal right and has taken all action required by Law, the Company Organizational
Documents or otherwise to consummate the Transactions.
Section
5.02 Due Authorization. The execution, delivery and, subject to the completion of the Certificate Amendment, the performance,
of this Agreement does not, and the consummation of the Transactions will not, violate any provision of the Company Organizational Documents.
Other than the Required Stockholder Approval, the Company has taken all actions required by Law, the Company Organizational Documents
or otherwise to authorize the execution, delivery and performance of this Agreement and to consummate the Transactions. The Company Board
has authorized the execution and delivery of this Agreement by the Company and has approved this Agreement and the Transactions and has
not withdrawn such approval.
Section
5.03 Valid Obligation. This Agreement and all agreements and other documents executed by the Company in connection herewith constitute
the valid and binding obligations of the Company, enforceable in accordance with its or their terms, except as may be limited the Enforceability
Exceptions.
Section
5.04 Governmental Approvals. Except as otherwise described in Section 5.04 of the Company Disclosure Schedules, no Consent of
or from any Governmental Authority, on the part of the Company is required to be obtained or made in connection with the execution, delivery
or performance by the Company of this Agreement and each Transaction Document to which it is a party or the consummation by the Company
of the transactions contemplated hereby and thereby, other than (a) such filings as contemplated by this Agreement, (b) any filings required
with Nasdaq or the SEC with respect to the transactions contemplated by this Agreement, (c) applicable requirements, if any, of the Securities
Act, the Exchange Act, and/ or any state “blue sky” securities Laws, and the rules and regulations thereunder, and (d) where
the failure to obtain or make such Consents or to make such filings or notifications, would not reasonably be expected to have a Material
Adverse Effect on the Company.
Section
5.05 Non-Contravention. Except as otherwise described in Section 5.05 of the Company Disclosure Schedules, the execution and delivery
by the Company of this Agreement and each Transaction Document to which it is a party, the consummation by the Company of the transactions
contemplated hereby and thereby, and compliance by the Company with any of the provisions hereof and thereof, will not (a) conflict with
or violate any provision of the Company Organizational Documents, (b) subject to obtaining the Consents from Governmental Authorities
referred to in Section 5.04, and the waiting periods referred to therein having expired, and any condition precedent to such Consent
or waiver having been satisfied, conflict with or violate any Law, Order or Consent applicable to the Company, or any of their properties
or assets, or (c) (i) violate, conflict with or result in a breach of, (ii) constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, (iii) result in the termination, withdrawal, suspension, cancellation or modification
of, (iv) accelerate the performance required by the Company under, (v) result in a right of termination or acceleration under, (vi) give
rise to any obligation to make payments or provide compensation under, (vii) result in the creation of any Lien upon any of the properties
or assets of the Company under, (viii) give rise to any obligation to obtain any third party Consent or provide any notice to any Person
or (ix) give any Person the right to declare a default, exercise any remedy, claim a rebate, chargeback, penalty or change in delivery
schedule, accelerate the maturity or performance, cancel, terminate or modify any right, benefit, obligation or other term under, any
of the terms, conditions or provisions of, any Contract which is material to the operations of the Company, except for any deviations
from any of the foregoing clauses (a), (b) or (c) that would not reasonably be expected to have a Material Adverse Effect on the Company.
Section
5.06 Capitalization.
| |
(a) |
The
Company is authorized to issue 50,000,000 shares of Common Stock, and 5,000,000 shares of preferred stock, par value $0.0001 per
share (the “Preferred Stock”). No shares of Preferred Stock have been designated as any class or series of preferred
stock, and no shares of Preferred Stock are issued and outstanding. There are 3,600,577 shares of Common Stock issued and outstanding.
All outstanding shares of the Common Stock are duly authorized, validly issued, fully paid and non-assessable and are not subject
to or issued in violation of any purchase option, right of first refusal, preemptive right, subscription right or any similar right
under any provision of the DGCL, the Company Organizational Documents or any Contract to which the Company is a party. None of the
outstanding Common Stock, and any other Derivatives or Equity Securities of the Company have been issued in violation of any applicable
securities Laws |
| |
(b) |
Except
as set forth in Section 5.06(b) of the Company Disclosure Schedules there are no (i) outstanding options, warrants, puts, calls,
convertible securities, preemptive or similar rights, (ii) bonds, debentures, notes or other Indebtedness having general voting rights
or that are convertible or exchangeable into securities having such rights or (iii) subscriptions or other rights, agreements, arrangements,
Contracts or commitments of any character (other than this Agreement and the Transaction Documents), (A) relating to the issued or
unissued shares of the Company or (B) obligating the Company to issue, transfer, deliver or sell or cause to be issued, transferred,
delivered, sold or repurchased any options or shares or securities convertible into or exchangeable for such shares, or (C) obligating
the Company to grant, extend or enter into any such option, warrant, call, subscription or other right, agreement, arrangement or
commitment for such capital shares. Other than as expressly set forth in this Agreement, there are no outstanding obligations of
the Company to repurchase, redeem or otherwise acquire any shares of the Company or to provide funds to make any investment (in the
form of a loan, capital contribution or otherwise) in any Person. Except as set forth in Section 5.06(b) of the Company Disclosure
Schedules, there are no stockholders agreements, voting trusts or other agreements or understandings to which Company is a party
with respect to the voting of any shares of the Company. |
| |
(c) |
All
Indebtedness of the Company as of the Effective Date is disclosed in Section 5.06(c) of the Company Disclosure Schedules. No Indebtedness
of the Company contains any restriction upon (i) the prepayment of any of such Indebtedness, (ii) the incurrence of Indebtedness
by Company or (iii) the ability of the Company to grant any Lien on its properties or assets. |
Section
5.07 Exchange Shares. The Exchange Shares to be issued and delivered to the Members in accordance with this Agreement shall be,
upon issuance and delivery of such Exchange Shares, be fully paid and non-assessable, free and clear of all Liens, other than restrictions
arising from applicable securities Laws, any applicable Lock-Up Agreement and any Liens incurred by the Members, and the issuance and
sale of such Exchange Shares pursuant hereto will not be subject to or give rise to any preemptive rights or rights of first refusal.
Section
5.08 SEC Filings and Company Financials.
| |
(a) |
The
Company has filed all forms, reports, schedules, statements, registration statements, prospectuses and other documents required to
be filed or furnished by the Company with the SEC under the Securities Act and/or the Exchange Act, together with any amendments,
restatements or supplements thereto, and will file all such forms, reports, schedules, statements and other documents required to
be filed subsequent to the Effective Date. Except to the extent available on the SEC’s web site through EDGAR, the Company
has delivered to the Members’ Representative copies in the form filed with the SEC of all of the following: (i) the Company’s
annual reports on Form 10-K for each fiscal year of the Company beginning with the first year the Company was required to file such
a form, (ii) the Company’s quarterly reports on Form 10-Q for each fiscal quarter that the Company filed such reports to disclose
its quarterly financial results in each of the fiscal years of the Company referred to in clause (i) above, (iii) all other forms,
reports, registration statements, prospectuses and other documents (other than preliminary materials) filed by the Company with the
SEC since the beginning of the first fiscal year referred to in clause (i) above (the forms, reports, registration statements, prospectuses
and other documents referred to in clauses (i), (ii) and (iii) above, whether or not available through EDGAR, are, collectively,
the “SEC Reports”) and (iv) all certifications and statements required by (A) Rules 13a-14 or 15d-14 under the Exchange
Act, and (B) 18 U.S.C. §1350 (Section 906 of SOX) with respect to any report referred to in clause (i) above (collectively,
the “Public Certifications”). The SEC Reports (x) were prepared in all material respects in accordance with the requirements
of the Securities Act and the Exchange Act, as the case may be, and the rules and regulations thereunder and (y) did not, as of their
respective effective dates (in the case of SEC Reports that are registration statements filed pursuant to the requirements of the
Securities Act) and at the time they were filed with the SEC (in the case of all other SEC Reports) contain any untrue statement
of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not misleading. To the Knowledge of the Company, as of the
Effective Date, there are no outstanding or unresolved comments in comment letters received from the SEC with respect to any SEC
Reports, and none of the SEC Reports filed on or prior to the Effective Date is subject to ongoing SEC review or investigation as
of the Effective Date. The Public Certifications are each true as of their respective dates of filing. As used in this Section 5.08,
the term “file” shall be broadly construed to include any manner permitted by SEC rules and regulations in which a document
or information is furnished, supplied or otherwise made available to the SEC. As of the Effective Date, (A) the Common Stock is listed
on Nasdaq, (B) the Company has not received any written deficiency notice from Nasdaq relating to the continued listing requirements
of the Common Stock, (C) there are no Actions pending or, to the Knowledge of the Company, threatened against the Company by the
Financial Industry Regulatory Authority with respect to any intention by such entity to suspend, prohibit or terminate the quoting
of such Common Stock on Nasdaq and (D) the Company is in compliance with all of the applicable corporate governance rules of Nasdaq. |
| |
(b) |
The
financial statements and notes of the Company contained or incorporated by reference in the SEC Reports (the “Company Financials”),
fairly present in all material respects the financial position and the results of operations, changes in stockholders’ equity,
and cash flows of the Company at the respective dates of and for the periods referred to in such financial statements, all in accordance
with (i) GAAP methodologies applied on a consistent basis throughout the periods involved and (ii) Regulation S-X or Regulation S-K,
as applicable (except as may be indicated in the notes thereto and for the omission of notes and audit adjustments in the case of
unaudited quarterly financial statements to the extent permitted by Regulation S-X or Regulation S-K, as applicable). |
| |
(c) |
Except
as and to the extent reflected or reserved against in the Company Financials, the Company has not incurred any Liabilities or obligations
of the type required to be reflected on a balance sheet in accordance with GAAP that are not adequately reflected or reserved on
or provided for in the Company Financials, other than Liabilities of the type required to be reflected on a balance sheet in accordance
with GAAP that have been incurred since the Company’s formation in the ordinary course of business. All debts and Liabilities,
fixed or contingent, which should be included under U.S. GAAP on a balance sheet are included in all material respects in the Company
Financials as of the date of such Company Financial. |
Section
5.09 Compliance with Laws. The Company is, and has since its formation been, in compliance with all Laws applicable to it and
the conduct of its business except for such noncompliance which would not reasonably be expected to have a Material Adverse Effect on
the Company, and the Company has not received written notice alleging any violation of applicable Law in any material respect by the
Company. The Company is not under investigation with respect to any violation or alleged violation of, any law, or judgment, order or
decree entered by any court, arbitrator or Governmental Authority, domestic or foreign, and the Company has not previously received any
subpoenas from any Governmental Authority.
Section
5.10 Actions; Orders; Permits. There is no pending or, to the Knowledge of the Company, threatened, material Action to which the
Company is subject which would reasonably be expected to have a Material Adverse Effect on the Company. There is no material Action that
the Company has pending against any other Person. The Company is not subject to any material Orders of any Governmental Authority, nor
are any such Orders pending. The Company holds all material Permits necessary to lawfully conduct its business as presently conducted,
and to own, lease and operate its assets and properties, all of which are in full force and effect, except where the failure to hold
such Consent or for such Consent to be in full force and effect would not reasonably be expected to have a Material Adverse Effect on
the Company.
Section
5.11 Litigation. There is no (a) Action of any nature currently pending or, to the Knowledge of the Company, threatened, and no
such Action has been brought since its incorporation; or (b) Order now pending or outstanding or that was rendered by a Governmental
Authority since its incorporation, in either case of (a) or (b) by or against the Company, its current or former directors, officers
or equity holders (provided, that any litigation involving the directors, officers or equity holders of the Company must be related to
the Company’s business, equity securities or assets), its business, equity securities or assets. Since its incorporation, none
of the current or former officers, senior management or directors of the Company have been charged with, indicted for, arrested for,
or convicted of any felony or any crime involving fraud.
Section
5.12 Transactions with Affiliates. Section 5.12 of the Company Disclosure Schedules sets forth a true, correct and complete list
of the Contracts and arrangements that are in existence as of the Effective Date under which there are any existing or future Liabilities
or obligations between the Company and any (a) present or former director, officer or employee or Affiliate of the Company, or any immediate
family member of any of the foregoing, or (b) record or beneficial owner of more than five percent (5%) of the Company’s outstanding
capital stock as of the Effective Date.
Section
5.13 Investment Company Act. The Company is not an “investment company” or a Person directly or indirectly “controlled”
by or acting on behalf of an “investment company,” or required to register as an “investment company,” in each
case within the meaning of the Investment Company Act of 1940, as amended.
Section
5.14 Independent Investigation. The Company has conducted its own independent investigation, review and analysis of the business,
results of operations, prospects, condition (financial or otherwise) or assets of Next Charging and acknowledges that it has been provided
adequate access to the personnel, properties, assets, premises, books and records, and other documents and data of Next Charging for
such purpose. The Company acknowledges and agrees that: (a) in making its decision to enter into this Agreement and to consummate the
transactions contemplated hereby, it has relied solely upon its own investigation and the express representations and warranties of the
Members and the Members’ Representative set forth in this Agreement and in any certificate delivered to Company pursuant hereto;
and (b) none of the Members, the Members’ Representative nor their respective Representatives have made any representation or warranty
as to Next Charging, or this Agreement, except as expressly set forth in this Agreement or in any certificate delivered to Company pursuant
hereto.
Section
5.15 No Brokers. The Company has not retained any broker or finder in connection with any of the Transactions, and the Company
has not incurred or agreed to pay, or taken any other action that would entitle any Person to receive, any brokerage fee, finder’s
fee or other similar fee or commission with respect to any of the Transactions.
Article
VI. Additional Agreements
and Covenants
Section
6.01 Delivery of Books and Records. At the Closing, the Members’ Representative shall deliver to the Company the originals
of the minute books, books of account, contracts, records, and all other books or documents of Next Charging now in the possession of
the Members’ Representative or its Representatives.
Section
6.02 Third Party Consents and Certificates. The Parties agree to cooperate with each other in order to obtain any required third
party consents to this Agreement and the Transactions.
Section
6.03 Notices of Certain Events. In addition to any other notice required to be given by the terms of this Agreement, each of the
Parties shall promptly notify the other Parties of:
| |
(a) |
any
notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with any
of the Transactions; |
| |
(b) |
any
notice or other communication from any governmental or regulatory agency or authority in connection with the Transactions; and |
| |
(c) |
any
actions, suits, claims, investigations or proceedings commenced or, to its knowledge threatened against, relating to or involving
or otherwise affecting such Party that, if pending on the Effective Date, would have been required to have been disclosed pursuant
hereto or that relates to the consummation of the Transactions. |
Section
6.04 Stockholder Approval.
| |
(a) |
As
promptly as practicable after the date hereof, the Company shall undertake such actions to obtain the approval of the stockholders
of the Company for (i) the adoption and approval of this Agreement and the Transactions, including the issuance of the Exchange Shares
and the shares of Common Stock which may be issued upon the Closing, in accordance with the Company Organizational Documents, the
Securities Act, the DGCL and the rules and regulations of the SEC and Nasdaq, (ii) the adoption and approval of the amendment to
the Certificate of Incorporation of the Company as required to effect the Certificate Amendment, and (iii) such other matters as
the Company and Members’ Representative shall hereafter mutually determine to be necessary or appropriate in order to effect
the Transactions (the approvals described in foregoing clauses (i) through (ii), collectively, the “Stockholder Approval Matters”). |
| |
(b) |
The
Parties acknowledge and agree that the Company shall use its commercially reasonable efforts to obtain the approval of the Stockholder
Approval Matters by the stockholders of the Company (the “Required Stockholder Approval”) via a written consent in lieu
of a meeting of the stockholders of the Company. In the event that the Required Stockholder Approval is so obtained via a written
consent, the Company shall file a Schedule 14C with the SEC and thereafter take such additional actions to cause the written consent
to be effective and operative. |
| |
(c) |
In
the event that the Required Stockholder Approval has not been received via a written consent of the stockholders of the Company by
November 15, 2023, then the Company shall thereafter as promptly as practicable call a special meeting of the stockholders of the
Company for the purpose of obtaining the Required Stockholder Approval, and shall thereafter file with the SEC such filings as required
to call such special meeting and to solicit proxies from Company stockholders for the approval of the Stockholder Approval Matters
and shall thereafter take such actions as reasonably required to hold and conclude such special meeting and to obtain the Required
Stockholder Approval thereat. The Company and the Members’ Representative shall reasonably cooperate with respect to any such
filings with the SEC, and the Members’ Representative and its counsel shall be provided with a reasonable opportunity to review
and comment thereon, and Company shall consider any such comments timely made in good faith. The Company shall take any and all reasonable
and necessary actions required to satisfy the requirements of the Securities Act, the Exchange Act and other applicable Laws in connection
with such filings and the special meeting of the Company’s stockholders and in obtaining the Required Stockholder Approval. |
Section
6.05 Members’ Representative.
| |
(a) |
Each
Member constitutes and appoints the Members’ Representative as its Representative and its true and lawful attorney in fact,
with full power and authority in its name and on its behalf: |
| |
(i) |
to
act on such Members’ behalf in the absolute discretion of Members’ Representative with respect to all matters relating
to this Agreement, including execution and delivery of any amendment, supplement, or modification of this Agreement or any Transaction
Document and any waiver of any claim or right arising out of this Agreement or the provision of any consent or agreement hereunder;
and |
| |
(ii) |
in
general, to do all things and to perform all acts, including executing and delivering all agreements, certificates, receipts, instructions,
and other instruments contemplated by or deemed advisable to effectuate the provisions of this Section 6.05. |
| |
(b) |
This
appointment and grant of power and authority is coupled with an interest and is in consideration of the mutual covenants made in
this Agreement and is irrevocable and will not be terminated by any act of any Member or by operation of law, whether by the death
or incapacity of any Member or by the occurrence of any other event. Each Member hereby consents to the taking of any and all actions
and the making of any decisions required or permitted to be taken or made by Members’ Representative pursuant to this Section
6.05. Each Member agrees that Members’ Representative shall have no obligation or liability to any Person for any action taken
or omitted by Members’ Representative in good faith, even if taken or omitted negligently, and each Member shall indemnify
and hold harmless Members’ Representative from, and shall pay to Members’ Representative the amount of, or reimburse
Members’ Representative for, any Loss that Members’ Representative may suffer, sustain, or become subject to as a result
of any claim made or threatened against Members’ Representative in his capacity as such. |
| |
(c) |
The
Company shall be entitled to rely upon any document or other paper delivered by Members’ Representative as being authorized
by Members, and the Company shall not be liable to any Member for any action taken or omitted to be taken by the Company based on
such reliance. |
Article
VII. Conditions to
the Closing
Section
7.01 Conditions to the Obligations of all of the Parties. The obligations of all of the Parties to consummate the Closing are
subject to the satisfaction, or waiver by the Company, on behalf of the Company, or by the Members’ Representative on behalf of
the Members’ Representative and the Members, at or before the Closing Date of all the following conditions:
| |
(a) |
No
Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law (whether temporary, preliminary or permanent)
or Order that is then in effect and which has the effect of making the transactions or agreements contemplated by this Agreement
illegal or which otherwise prevents or prohibits consummation of the transactions contemplated by this Agreement and no Governmental
Authority shall have imposed any terms or conditions on the Transactions which would reasonably be expected to materially impact
the operations of the Company or Next Charging following the Closing. |
| |
(b) |
There
shall not be any Action brought by a third-party non-Affiliate to enjoin or otherwise restrict the consummation of the Closing. |
| |
(c) |
The
Parties shall have received all necessary approvals from all required Governmental Authorities to consummate the Transactions. |
| |
(d) |
The
Company Board shall have approved this Agreement and the Transactions and shall not have withdrawn such approval. |
| |
(e) |
The
Required Stockholder Approval shall have been obtained and shall have become effective under applicable Law. |
| |
(f) |
The
Certificate Amendment shall have been completed and the Company shall have provided reasonable evidence thereof to the Members’
Representative. |
| |
(g) |
The
Company shall have completed and filed a listing of additional securities with Nasdaq and the waiting period thereunder shall have
expired, and the Company shall have completed such additional requirements of Nasdaq such that the Transactions may be consummated
in compliance with the rules and regulations of Nasdaq. |
| |
(h) |
Next
Charging shall have undertaken such actions as required to record the assignment of U.S. Patent no. US 10,836,269 B2 to Next Charging. |
Section
7.02 Conditions to the Obligations of the Company. The obligations of the Company to consummate the Closing are subject to the
satisfaction (or waiver by the Company in its sole discretion), at or before the Closing Date, of the following conditions:
| |
(a) |
The
representations and warranties made by the Members’ Representative and the Members in this Agreement shall have been true and
correct when made and shall be true and correct in all material respects (other than representations and warranties which are qualified
as to materiality and the representations and warranties in Section 3.01, Section 3.02, Section 4.01, Section 4.02 and Section 4.06,
which shall each be true and correct in all respects) at the Closing Date with the same force and effect as if such representations
and warranties were made at and as of the Closing Date, except for changes therein permitted by this Agreement; |
| |
(b) |
The
Members and the Members’ Representative shall have performed or complied with all covenants and conditions required by this
Agreement to be performed or complied with by the Members and the Members’ Representative prior to or at the Closing; |
| |
(c) |
The
Members’ Representative shall have provided to the Company audited financial statements for Next Charging and related auditor
reports thereon from a Public Company Accounting Oversight Board-registered auditor, which consents to the inclusion of its statements
in SEC public filings, for each of the two most recently ended fiscal years and any other period audited or unaudited but reviewed
financials are required to be included in the SEC Reports following the Closing pursuant to applicable Law, and unaudited statements
for any other required interim periods; and |
| |
(d) |
There
shall have occurred no Material Adverse Effect with respect to Next Charging. |
Section
7.03 Condition to the Obligations of the Members. The obligations of the Members and the Members’ Representative to consummate
the Closing are subject to the satisfaction (or waiver by the Members’ Representative in its sole discretion), at or before the
Closing Date, of the following conditions:
| |
(a) |
The
representations and warranties made by the Company in this Agreement shall have been true and correct when made and shall be true
and correct in all material respects (other than representations and warranties which are qualified as to materiality, and other
than the representations and warranties as set forth in Section 5.01, Section 5.02 and Section 5.07, which shall each be true and
correct in all respects) at the Closing Date with the same force and effect as if such representations and warranties were made at
and as of the Closing Date, except for changes therein permitted by this Agreement; |
| |
(b) |
The
Company shall have performed or complied with all covenants and conditions required by this Agreement to be performed or complied
with by the Company prior to or at the Closing; and |
| |
(c) |
There
shall have occurred no Material Adverse Effect with respect to the Company. |
Article
VIII. Termination;
Survival
Section
8.01 Termination. This Agreement may be terminated on or prior to the Closing Date:
| |
(a) |
By
the mutual written consent of the Company and the Members’ Representative; |
| |
(b) |
By
the Company (i) if the conditions to the Closing as set forth in Section 7.01 and Section 7.02 have not been satisfied or waived
by the Company, which waiver the Company may give or withhold in its sole discretion, by the Termination Date, provided, however,
that the Company may not terminate this Agreement pursuant to this clause (i) of this Section 8.01(b) if the reason for the failure
of any such condition to occur was the breach of the terms of this Agreement by the Company; or (ii) if there has been a material
violation, breach or inaccuracy of any representation, warranty, covenant or agreement of the Members or the Members’ Representative
contained in this Agreement, which violation, breach or inaccuracy would cause any of the conditions set forth in Section 7.02 not
to be satisfied, and such violation, breach or inaccuracy has not been waived by the Company or cured by the Members or the Members’
Representative, as applicable, within five (5) Business Days after receipt by the Members’ Representative of written notice
thereof from the Company or is not reasonably capable of being cured prior to the Termination Date; |
| |
(c) |
By
the Members’ Representative (i) if the conditions to Closing as set forth in Section 7.01 and Section 7.03 have not been satisfied
or waived by the Members’ Representative, which waiver the Members’ Representative may give or withhold in its sole discretion,
by the Termination Date, provided, however, that the Members’ Representative may not terminate this Agreement pursuant to this
clause (i) of this Section 8.01(c) if the reason for the failure of any such condition to occur was the breach of the terms of this
Agreement by the Members’ Representative or any Member; or (ii) if there has been a material violation, breach or inaccuracy
of any representation, warranty, covenant or agreement of the Company contained in this Agreement, which violation, breach or inaccuracy
would cause any of the conditions set forth in Section 7.03 not to be satisfied, and such violation, breach or inaccuracy has not
been waived by the Members’ Representative or cured by the Company, applicable, within five (5) Business Days after receipt
by the Company of written notice thereof from the Members’ Representative or is not reasonably capable of being cured prior
to the Termination Date; or |
| |
(d) |
By
Company or the Members’ Representative, if a court of competent jurisdiction or other Governmental Authority shall have issued
an order or taken any other action permanently restraining, enjoining or otherwise prohibiting the Transactions and such order or
action shall have become final and nonappealable. |
Section
8.02 Specific Enforcement. Notwithstanding the foregoing, the Parties acknowledge and agree that (i) if the Company has a right
to terminate this Agreement pursuant to the provisions of clause (ii) of Section 8.01(b), the Company may elect not to terminate this
Agreement and may instead seek to specifically enforce this Agreement pursuant to the provisions of Section 9.17, provided that all conditions
to Closing have been satisfied in the event that such specific performance is seeking to cause the Closing to occur, waiver of any condition
to close not being sufficient to implicate the right of specific performance as set forth herein; and (ii) if the Members’ Representative
has a right to terminate this Agreement pursuant to the provisions of clause (ii) of Section 8.01(c), the Members’ Representative
may elect not to terminate this Agreement and may instead seek to specifically enforce this Agreement pursuant to the provisions of Section
9.17, provided that all conditions to Closing have been satisfied in the event that such specific performance is seeking to cause the
Closing to occur, waiver of any condition to close not being sufficient to implicate the right of specific performance as set forth herein.
Section
8.03 Survival After Termination. If this Agreement is terminated by in accordance with Section 8.01, this Agreement shall become
void and of no further force and effect with no liability to any Person on the part of any Party hereto (or any officer, agent, employee,
direct or indirect holder of any equity interest or securities, or Affiliates of any Party); provided, however, that this Section 8.03
and Article IX shall survive the termination of this Agreement and nothing herein shall relieve any Party from any liability for fraud
or any willful and material breach of the provisions of this Agreement prior to the termination of this Agreement.
Section
8.04 Survival Following Closing. In the event that the Closing occurs, the representations and warranties of the Parties contained
in this Agreement or in any certificate or instrument delivered by or on behalf of the either of the Parties pursuant to this Agreement
shall not survive the Closing, and from and after the Closing, the Parties and their respective Representatives shall not have any further
obligations, nor shall any claim be asserted or action be brought against either Party or their respective Representatives with respect
thereto. The covenants and agreements made by the Parties in this Agreement or in any certificate or instrument delivered pursuant to
this Agreement, including any rights arising out of any breach of such covenants or agreements, shall not survive the Closing, except
for those covenants and agreements contained herein and therein that by their terms apply or are to be performed in whole or in part
after the Closing (which such covenants shall survive the Closing and continue until fully performed in accordance with their terms).
Article
IX. Miscellaneous
Section
9.01 Notices.
| |
(a) |
Any
notice or other communications required or permitted hereunder shall be in writing and shall be sufficiently given if personally
delivered to it or sent by email, overnight courier or registered mail or certified mail, postage prepaid, addressed as follows: |
If
to the Members’ Representative, to:
Michael
D. Farkas
407
Lincoln Road, Suite 701
Miami
Beach, FL 33139
Email:
MDF@FarkasGroup.co
With
a copy, which shall not constitute notice, to:
Anthony
L.G., PLLC
Attn:
Laura Anthony
625
N. Flagler Drive, Suite 600
West
Palm Beach, FL 33401
Email:
lanthony@anthonypllc.com
If
to any Member(s), to the Members’ Representative for further distribution to the applicable Member(s).
If
to the Company, to:
EZFill
Holdings, Inc.
Attn:
Yehuda Levy
2999
NE 191st Street
Aventura,
Florida 33180
Email:
yehuda@ezfl.com
With
a copy, which shall not constitute notice, to:
Sichenzia
Ross Ference LLP
Attn:
David B. Manno
1185
Avenue of the Americas, 31st Floor
New
York, NY 10036
Email:
DManno@SRF.LAW
| |
(b) |
Any
Party may change its address for notices hereunder upon notice to each other Party in the manner for giving notices hereunder. |
| |
(c) |
Any
notice hereunder shall be deemed to have been given (i) upon receipt, if personally delivered, (ii) on the day after dispatch, if
sent by overnight courier, (iii) upon dispatch, if transmitted by email with return receipt requested and received and (iv) three
(3) days after mailing, if sent by registered or certified mail. |
Section
9.02 Governing Law; Jurisdiction.
| |
(a) |
This
Agreement, and any and all claims, proceedings or causes of action relating to this Agreement or arising from this Agreement or the
transactions contemplated herein, including, without limitation, tort claims, statutory claims and contract claims, shall be interpreted,
construed, governed and enforced under and solely in accordance with the substantive and procedural Laws of the State of Delaware,
in each case as in effect from time to time and as the same may be amended from time to time, and as applied to agreements performed
wholly within the State of Delaware. |
| |
(b) |
Subject
to the provisions of Section 9.04, each of the Parties irrevocably consents and agrees that any legal or equitable action or proceedings
arising under or in connection with this Agreement shall be brought exclusively in the state or federal courts of the United States
with jurisdiction in Miami-Dade County, Florida (the “Selected Courts”). By execution and delivery of this Agreement,
each Party hereby (a) submits to the exclusive jurisdiction of any Selected Court for the purpose of any Action arising out of or
relating to this Agreement brought by any Party hereto and (b) irrevocably waives, and agrees not to assert by way of motion, defense
or otherwise, in any such Action, any claim that it is not subject personally to the jurisdiction of the Selected Courts, that its
property is exempt or immune from attachment or execution, that the Action is brought in an inconvenient forum, that the venue of
the Action is improper, or that this Agreement or the transactions contemplated hereby may not be enforced in or by any Selected
Court. Each Party agrees that a final judgment in any Action shall be conclusive and may be enforced in other jurisdictions by suit
on the judgment or in any other manner provided by Law. Each Party irrevocably consents to the service of the summons and complaint
and any other process in any other Action relating to the transactions contemplated by this Agreement, on behalf of itself, or its
property, by personal delivery of copies of such process to such Party at the applicable address set forth in Section 9.01, provided
that nothing in this Section 9.02(b) shall affect the right of any Party to serve legal process in any other manner permitted by
Law. |
Section
9.03 Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREIN (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT
OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS Section 9.03.Each of the
Parties acknowledge that each has been represented in connection with the signing of this waiver by independent legal counsel selected
by the respective Party and that such Party has discussed the legal consequences and import of this waiver with legal counsel. Each of
the Parties further acknowledge that each has read and understands the meaning of this waiver and grants this waiver knowingly, voluntarily,
without duress and only after consideration of the consequences of this waiver with legal counsel.
Section
9.04 Mediation.
| |
(a) |
The
Parties shall promptly submit any dispute, claim, or controversy arising out of or relating to this Agreement (including with respect
to the meaning, effect, validity, termination, interpretation, performance, or enforcement of this Agreement) or any alleged breach
thereof (including any action in tort, contract, equity, or otherwise), to mediation before one mediator who is generally experienced
in industries in which the Company and Next Charging operate, to be selected by the Company and the Members’ Representative
(the “Mediator”). If the Company and the Members’ Representative cannot agree upon the Mediator within ten (10)
Business Days of the commencement of the efforts to so agree on an Mediator, each of the Company and the Members’ Representative
shall select one person as a mediator and the two mediators so selected shall select the sole Mediator who shall hear and resolve
the dispute. |
| |
(b) |
The
Parties will endeavor to resolve the applicable dispute with the assistance of the Mediator for a period of thirty (30) days following
the selection of the Mediator, and in the event that they are unable to do so, each Party shall be free to pursue other rights and
remedies as may be available to them hereunder and under applicable Law. |
| |
(c) |
In
any mediation hereunder, this Agreement and any agreement contemplated hereby shall be governed by the laws of the State of Delaware
applicable to a contract negotiated, signed, and wholly to be performed in the State of Delaware, which laws the Mediator shall apply.
The mediation shall be held in Miami-Beach, Florida, Florida. |
| |
(d) |
In
any mediation hereunder, the Members’ Representative shall have the right to act for, and bind, any of the Members, pursuant
to the provisions of Section 6.05. |
Section
9.05 Limitation on Damages. In no event will any Party be liable to any other Party under
or in connection with this Agreement or in connection with the Transactions for special, general, indirect or consequential damages,
including damages for lost profits or lost opportunity, even if the Party sought to be held liable has been advised of the possibility
of such damage.
Section
9.06 Attorneys’ Fees. In the event that any Party institutes any action or suit to enforce this Agreement or to secure relief
from any default hereunder or breach hereof, the prevailing Party shall be reimbursed by the losing Party for all costs, including reasonable
attorneys’ fees, incurred in connection therewith and in enforcing or collecting any judgment rendered therein.
Section
9.07 Confidentiality. Each Party agrees that, unless and until the Transactions have been consummated, it and its Representatives
will hold in strict confidence all data and information obtained with respect to another Party or any subsidiary thereof from any Representative,
officer, director or employee, or from any books or records or from personal inspection, of such other Party, and shall not use such
data or information or disclose the same to others, except (i) to the extent such data or information is published, is a matter of public
knowledge, or is required by Law or any regulation of any Governmental Authority to be published; or (ii) to the extent that such data
or information must be used or disclosed in order to consummate the Transactions. In the event of the termination of this Agreement,
each Party shall return to the applicable other Party all documents and other materials obtained by it or on its behalf and shall destroy
all copies, digests, work papers, abstracts or other materials relating thereto, and each Party will continue to comply with the confidentiality
provisions set forth herein.
Section
9.08 Third Party Beneficiaries. This contract is strictly between the Parties, and except as specifically provided herein, no
other Person and no director, officer, shareholder, employee, agent, independent contractor or any other Person shall be deemed to be
a third-party beneficiary of this Agreement.
Section
9.09 Expenses. Subject to Section 9.04 and Section 9.06 and other than as specifically set forth herein, whether or not the Exchange
is consummated, each of the Parties will bear their own respective expenses, including legal, accounting and professional fees, incurred
in connection with the Exchange or any of the other Transactions.
Section
9.10 Entire Agreement. This Agreement, the other Transaction Documents and the other agreements and documents references herein
represent the entire agreement between the Parties relating to the subject matter thereof and supersede all prior agreements, understandings
and negotiations, written or oral, with respect to such subject matter.
Section
9.11 Amendment; Waiver; Remedies.
| |
(a) |
This
Agreement may be amended, modified, superseded, terminated or cancelled, and any of the terms, covenants, representations, warranties
or conditions hereof may be waived, only by a written instrument executed by the Company and the Members’ Representative. |
| |
(b) |
Every
right and remedy provided herein shall be cumulative with every other right and remedy, whether conferred herein, at law, or in equity,
and may be enforced concurrently herewith, and no waiver by any Party of the performance of any obligation by the other shall be
construed as a waiver of the same or any other default then, theretofore, or thereafter occurring or existing. |
| |
(c) |
Neither
any failure or delay in exercising any right or remedy hereunder or in requiring satisfaction of any condition herein nor any course
of dealing shall constitute a waiver of or prevent any Party from enforcing any right or remedy or from requiring satisfaction of
any condition. No notice to or demand on a Party waives or otherwise affects any obligation of that Party or impairs any right of
the Party giving such notice or making such demand, including any right to take any action without notice or demand not otherwise
required by this Agreement. No exercise of any right or remedy with respect to a breach of this Agreement shall preclude exercise
of any other right or remedy, as appropriate to make the aggrieved Party whole with respect to such breach, or subsequent exercise
of any right or remedy with respect to any other breach. |
Section
9.12 No Presumption Against Drafter. This Agreement creates no fiduciary or other special relationship between the Parties, and
no such relationship otherwise exists. No presumption in favor of or against any Party in the construction or interpretation of this
Agreement or any provision hereof shall be made based upon which Person might have drafted this Agreement or such provision.
Section
9.13 Headings. The headings contained in this Agreement are intended solely for convenience and shall not affect the rights of
the Parties.
Section
9.14 No Assignment or Delegation. This Agreement shall be binding upon and shall inure to the benefit of the Parties and their
respective successors and permitted assigns. No Party shall have any power or any right to assign or transfer, in whole or in part, this
Agreement, or any of its rights or any of its obligations hereunder, including, without limitation, any right to pursue any claim for
damages pursuant to this Agreement or the transactions contemplated herein, or to pursue any claim for any breach or default of this
Agreement, or any right arising from the purported assignor’s due performance of its obligations hereunder, without the prior written
consent of the other Party and any such purported assignment in contravention of the provisions herein shall be null and void and of
no force or effect.
Section
9.15 Commercially Reasonable Efforts. Subject to the terms and conditions herein provided, each Party shall use their respective
commercially reasonable efforts to perform or fulfill all conditions and obligations to be performed or fulfilled by it under this Agreement
so that the Transactions shall be consummated as soon as practicable, and to take, or cause to be taken, all actions and to do, or cause
to be done, all things necessary, proper or advisable under applicable Laws and regulations to consummate and make effective this Agreement
and the Transactions.
Section
9.16 Further Assurances. From and after the Effective Date, each Party shall execute and deliver such documents and take such
action, as may reasonably be considered within the scope of such Party’s obligations hereunder, necessary to effectuate the Transactions.
Section
9.17 Specific Performance. The Parties agree that irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed by them in accordance with the terms hereof or were otherwise breached and that each Party hereto shall
be entitled to an injunction or injunctions, specific performance and other equitable relief to prevent breaches of the provisions hereof
and to enforce specifically the terms and provisions hereof, without the proof of actual damages, in addition to any other remedy to
which they are entitled at law or in equity. Each Party agrees to waive any requirement for the security or posting of any bond in connection
with any such equitable remedy, and agrees that it will not oppose the granting of an injunction, specific performance or other equitable
relief on the basis that (a) the other Party has an adequate remedy at law, or (b) an award of specific performance is not an appropriate
remedy for any reason at law or equity.
Section
9.18 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all
of which taken together shall be but a single instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf
or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and
any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
[Signatures
Appear on Following Pages]
IN
WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.
| |
Members’
Representative |
| |
|
|
| |
By:
|
/s/
Michael Farkas |
| |
Name:
|
Michael
Farkas |
| |
Title:
|
Manager |
| |
|
|
| |
EZFill
Holdings, Inc. |
| |
|
|
| |
By: |
/s/
Yehuda Levy |
| |
Name:
|
Yehuda
Levy |
| |
Title:
|
Interim
Chief Executive Officer |
[Members’
Signatures appear on following pages]
| |
Member name: Inductive Holdings, LLC |
| |
|
|
| |
By: |
/s/
Michael Farkas |
| |
Name:
|
Michael
Farkas |
| |
Title: |
Manager |
| |
|
|
| |
Member
name: |
Michael
Farkas |
| |
|
|
| |
By: |
/s/
Michael Farkas |
| |
Name:
|
Michael
Farkas |
[Members’
Signature Page to Exchange Agreement]
Exhibit
A
Assignment
of Membership Interests
(Attached)
Exhibit
B
Form
of Lock-Up Agreement
(Attached)
ANNEX C
UNAUDITED
PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Introduction
On
August 10, 2023, the Company, the members (the “Members”) of Next Charging LLC (“Next Charging” or “Next”)
and Michael Farkas, an individual, as the representative of the members, entered into an Exchange Agreement (the “Exchange Agreement”),
pursuant to which the Company agreed to acquire from the Members 100% of the membership interests of Next Charging (the “Membership
Interests”) in exchange for up to 100,000,000 shares of common stock.
This
agreement was amended on November 2, 2023, as follows:
| |
- |
35,000,000
shares of common stock will vest upon the closing of the acquisition of Next Charging, |
| |
- |
35,000,000
shares of common stock will vest upon the acquisition of the first target; and |
| |
- |
30,000,000
shares of common stock will vest upon the Company commercially deploying the third solar, wireless electric vehicle charging, microgrid,
and/or battery storage system. |
As
an additional condition to be satisfied prior to the Closing, Next Charging is also required to take actions to record the assignment
to itself of a patent mentioned in the Amended and Restated Exchange Agreement.
Next
Charging is a renewable energy company formed by Michael D. Farkas. Next Charging has plans to develop and deploy wireless electric vehicle
charging technology coupled with battery storage and solar energy solutions.
Upon
Closing, the board of directors of the Company will appoint Michael Farkas as Chief Executive Officer, Director and Executive Chairman
of the Company. Mr. Farkas is the managing member and CEO of Next Charging. Mr. Farkas is also the beneficial owner of approximately
20% of the Company’s issued and outstanding common stock.
The
Closing is subject to customary closing conditions, including (i) that the Company take the actions necessary to amend its certificate
of incorporation to increase the number of authorized shares of Common Stock from 50,000,000 shares of Common Stock to 500,000,000 shares
of Common Stock, (ii) the receipt of the requisite stockholder approval, (iii) the receipt of the requisite third-party consents and
(iv) compliance with the rules and regulations of The Nasdaq Stock Market.
At
the time of closing, there will be a change in control, in a transaction treated as a reverse acquisition.
See
Form 8-K filed on November 2, 2023 for additional information.
The
following unaudited pro forma condensed combined financial information presents the combination of the financial information of EZFL
and Next adjusted to present the merger. Primarily due to a change in control, this transaction has been accounted for as a reverse acquisition.
Effects of adjustments made are collectively referred to as the “transaction accounting adjustments.”
The
transaction between EZFL and Next is also considered a related party transaction. Prior to the transaction, Michael Farkas owned approximately
20% of EZFL and 100% of Next Charging.
The
unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2023 and the year ended December
31, 2022 give pro forma effect to the reverse acquisition as if it had occurred on January 1, 2023 and 2022, respectively.
The
historical financial statements of EZFL included in this Pro Forma were filed by the Company on Form 10K (Year ended December 31, 2022
on March 20, 2023) and on Form 10Q (Nine Months Ended September 30, 2023 on November 14, 2023).
The
unaudited pro forma condensed combined balance sheet and unaudited pro forma condensed combined statement of operations are collectively
referred to as the “pro forma financial information.”
The
pro forma financial information should be read in conjunction with the accompanying notes. In addition, the pro forma financial information
is derived from and should be read in conjunction with the following historical consolidated financial statements and accompanying notes
of the Company and Next:
The
pro forma financial information does not reflect adjustments for any other consummated or probable acquisitions by the Company since
such transactions were not significant in accordance with Regulation S-X Rule 3-05, as amended by Release No. 33-10786, Amendments
to Financial Disclosures About Acquired and Disposed Businesses, as adopted by the Securities and Exchange Commission on May 20,
2020.
The
pro forma financial information has been prepared by the Company in accordance with Regulation S-X Article 11, Pro Forma Financial
Information, as amended by the final rule, Release No. 33-10786, which is referred to herein as Article 11.
The
Company and Next prepare their respective financial statements in accordance with United States generally accepted accounting principles.
The Next Acquisition will be accounted for using the acquisition method of accounting, with Next being treated as the accounting acquirer
in a transaction classified as a reverse acquisition.
In
identifying Next Charging as the acquiring entity for accounting purposes, EZFL and Next took into account a number of factors, including
the relative voting rights of all equity instruments in the combined company, in which Next Charging stockholders and EZFL stockholders
are expected to own approximately 96% and 4%, respectively, of the common stock, the composition of senior management of the combined
company and the corporate governance structure of the combined company. No single factor was the sole determinant in the overall conclusion
that Next Charging is the acquirer for accounting purposes; rather all factors were considered in arriving at such conclusion.
The
transaction accounting adjustments are preliminary, based upon available information as of the date of the Schedule 14C filing,
and have been prepared solely for the purpose of this pro forma financial information. These adjustments are based on preliminary estimates
and may be different from the adjustments that will be determined based on the finalization of acquisition accounting, and these differences
could be material. The transaction accounting adjustments are based on preliminary estimates of the fair value of consideration related
to the Next Charging Acquisition, including the fair values of assets acquired and liabilities assumed. Certain valuations and assessments
related to the assets and liabilities acquired and consideration provided are in process and will not be completed until subsequent to
the filing of the Form 8-K/A. The estimated fair values assigned in this unaudited pro forma financial information are preliminary and
represent the Company’s current best estimates of fair value and are subject to revision.
The
pro forma financial information is based on various adjustments and assumptions and is not necessarily indicative of what the Company’s
consolidated statement of operations or consolidated balance sheet would have been had the Next Acquisition been completed as of the
dates indicated or will be for any future periods. The pro forma financial information does not purport to project the future financial
position or operating results of the combined companies. The pro forma financial information does not include adjustments to reflect
any potential revenue, synergies or dis-synergies, or cost savings that may be achieved in the future, or the associated costs that may
be necessary to achieve such revenues, synergies or cost savings.
Description
of the Share Exchange Agreement and Valuation
The
Company expects to issue up to a total of 100,000,000 shares of common stock as follows:
| |
● |
Issuance
of 35,000,000 shares of common stock to Next’s members upon closing the reverse acquisition (see above), |
| |
● |
Issuance
of 35,000,000 shares of common stock to Next’s members upon closing the first target acquisition; and |
| |
● |
Issuance
of 30,000,000 shares of common stock to Next’s members upon the deployment of 3 solar, wireless electrical vehicle charging,
microgrid and/or other battery storage system. |
None
of the above milestones (65,000,000 shares of common stock) have been met to date as the Company must first increase their authorized
shares of common stock to be able to effectuate these transactions.
The
issuance of the first 35,000,000 shares of common stock upon the closing of the Next merger are valued using the closing stock price
on September 30, 2023 for purposes of this Pro Forma. The additional 65,000,000 shares are considered part of a contingent consideration
arrangement and have also been valued using the closing stock price on September 30, 2023 for purposes of this Pro Forma. The valuation
of these shares are subject to revision and adjustment. All shares are expected to vest in full.
The
Company has determined that the contingent consideration arrangement will meet the requirements for classification as an equity transaction
upon the closing of the Next Charging merger. First, the Company has satisfied the criteria in ASC 815-40-15 and 815-40-25 for equity
treatment. Second, since the transaction has occurred with a related party, the Company believes this is in substance a capital transaction.
Anticipated
Accounting Treatment
Next
(“accounting acquirer,” and the entity whose equity interests were acquired) merged with and into EZFL (“legal acquirer,”
and the entity that issued securities for financial reporting purposes), a then operating public company, in a transaction accounted
for as a reverse acquisition.
UNAUDITED
PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The
unaudited pro forma condensed combined financial information has been prepared using the acquisition method of accounting under GAAP.
GAAP requires that business combinations are accounted for under the acquisition method of accounting, which requires all of the following
steps:
| |
(a)
|
identifying
the acquirer; |
| |
(b)
|
determining
the acquisition date; |
| |
(c)
|
recognizing
and measuring the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree; and |
| |
(d)
|
recognizing
and measuring goodwill or a gain from a bargain purchase. |
On
the acquisition date (for purposes of the proforma was September 30, 2023), the identifiable assets acquired and liabilities assumed
will be measured at fair value, with limited exceptions.
Both
EZFL and Next Charging have common ownership, and this transaction is deemed to be with a related party. Prior to the transaction, Michael
Farkas owned approximately 20% of EZFL and 100% of Next Charging. Since the reverse acquisition occurred with a related party, the Company
did not recognize goodwill or any intangible assets, rather an adjustment to additional paid in capital was recorded to reflect the nature
of the transaction.
In
reporting its weighted average shares outstanding and earnings (loss) per share data, all share and per share amounts have been retroactively
restated to the earliest period presented.
Transaction
costs associated with the reverse acquisition were $0.
The
results of operations for the combined company will be reported prospectively after the acquisition date.
While
pro forma adjustments related to EZFL’s assets and liabilities were based on estimates of fair value determined from preliminary
information received from EZFL and initial discussions between Next and EZFL management, due diligence efforts, and information available
in the historical audited financial statements of EZFL and the related notes, the detailed valuation studies necessary to arrive at the
required estimates of the fair value of the EZFL assets to be acquired and the liabilities to be assumed, as well as the identification
of all adjustments necessary to conform Next and EZFL accounting policies, remain subject to completion.
Next
Charging intends to complete the valuations and other studies upon completion of the transaction and will finalize the purchase price
allocation as soon as practicable within the measurement period, but in no event later than one year following the closing date of the
transaction. The assets and liabilities of EZFL have been measured based on various preliminary estimates using assumptions that Next
believes are reasonable, based on information that is currently available.
Differences
between these preliminary estimates and the final acquisition accounting may occur, and those differences could have a material impact
on the accompanying unaudited pro forma condensed combined financial statements and the combined company’s future results of operations
and financial position.
The
unaudited pro forma condensed combined financial statements constitute forward-looking information and are subject to certain risks and
uncertainties that could cause actual results to differ materially from those anticipated. See “Cautionary Statement Concerning
Forward-Looking Statements” and “Risk Factors” included elsewhere in this information statement, in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2022, and the Form S-1 dated November 27, 2023 filed on November 28, 2023.
Pro
Forma Condensed Combined Balance Sheet
September 30, 2023
(Unaudited)
| | |
Legal
Acquirer
Historical EzFill
Holdings,
Inc. | | |
Accounting
Acquirer
Historical
Next Charging,
LLC | | |
Transaction
Accounting
Adjustments | | |
Notes | | |
Pro
Forma
Combined | |
| | |
| | |
| | |
| | |
| | |
| |
| Assets | |
| | | |
| | | |
| | | |
| | |
| | |
| | |
| | | |
| | | |
| | | |
| | |
| | |
| Current Assets | |
| | | |
| | | |
| | | |
| | |
| | |
| Cash | |
$ | 405,230 | | |
$ | 54,843 | | |
$ | - | | |
| | |
$ | 460,073 | |
| Restricted cash | |
| - | | |
| 1,000,000 | | |
| - | | |
| | |
| 1,000,000 | |
| Investment in debt securities | |
| - | | |
| - | | |
| - | | |
| | |
| - | |
| Accounts receivable – net | |
| 1,326,133 | | |
| - | | |
| - | | |
| | |
| 1,326,133 | |
| Note receivable - related party - net | |
| - | | |
| 1,511,395 | | |
| - | | |
| | |
| 1,511,395 | |
| Inventory | |
| 183,271 | | |
| - | | |
| - | | |
| | |
| 183,271 | |
| Prepaids and other | |
| 357,929 | | |
| - | | |
| - | | |
| | |
| 357,929 | |
| Total Current Assets | |
| 2,272,563 | | |
| 2,566,238 | | |
| - | | |
| | |
| 4,838,801 | |
| | |
| | | |
| | | |
| | | |
| | |
| | |
| Property and equipment – net | |
| 3,715,860 | | |
| 83,179 | | |
| - | | |
| | |
| 3,799,039 | |
| | |
| | | |
| | | |
| | | |
| | |
| | |
| Operating lease - right-of-use asset | |
| 354,601 | | |
| - | | |
| - | | |
| | |
| 354,601 | |
| | |
| | | |
| | | |
| | | |
| | |
| | |
| Deposits | |
| 53,017 | | |
| - | | |
| - | | |
| | |
| 53,017 | |
| | |
| | | |
| | | |
| | | |
| | |
| | |
| Total Assets | |
$ | 6,396,041 | | |
$ | 2,649,417 | | |
$ | - | | |
| | |
$ | 9,045,458 | |
| | |
| | | |
| | | |
| | | |
| | |
| | |
| Liabilities and Stockholders’ Equity (Deficit) | |
| | | |
| | | |
| | | |
| | |
| | |
| | |
| | | |
| | | |
| | | |
| | |
| | |
| Current Liabilities | |
| | | |
| | | |
| | | |
| | |
| | |
| Accounts payable and accrued expenses | |
$ | 1,141,624 | | |
$ | 22,360 | | |
$ | - | | |
| | |
$ | 1,163,984 | |
| Accounts payable and accrued expenses - related parties | |
| 31,815 | | |
| - | | |
| - | | |
| | |
| 31,815 | |
| Line of credit | |
| - | | |
| - | | |
| - | | |
| | |
| - | |
| Notes payable – net | |
| 818,629 | | |
| - | | |
| - | | |
| | |
| 818,629 | |
| Notes payable - related party | |
| 3,145,997 | | |
| 2,934,650 | | |
| - | | |
| | |
| 6,080,647 | |
| Operating lease liability | |
| 238,042 | | |
| - | | |
| | | |
| | |
| 238,042 | |
| Total Current Liabilities | |
| 5,376,107 | | |
| 2,957,010 | | |
| - | | |
| | |
| 8,333,117 | |
| | |
| | | |
| | | |
| | | |
| | |
| | |
| Long Term Liabilities | |
| | | |
| | | |
| | | |
| | |
| | |
| Notes payable – net | |
| 742,053 | | |
| - | | |
| - | | |
| | |
| 742,053 | |
| Operating lease liability | |
| 140,375 | | |
| - | | |
| - | | |
| | |
| 140,375 | |
| Total Long Term Liabilities | |
| 882,428 | | |
| - | | |
| - | | |
| | |
| 882,428 | |
| | |
| | | |
| | | |
| | | |
| | |
| | |
| Total Liabilities | |
| 6,258,535 | | |
| 2,957,010 | | |
| - | | |
| | |
| 9,215,545 | |
| | |
| | | |
| | | |
| | | |
| | |
| | |
| Stockholders’ Equity (Deficit) | |
| | | |
| | | |
| | | |
| | |
| | |
| Preferred stock - $0.0001 par value | |
| - | | |
| - | | |
| - | | |
| | |
| - | |
| Common stock - $0.0001 par value | |
| 396 | | |
| 100 | | |
| 3,500 | | |
1 | | |
| 10,396 | |
| | |
| | | |
| | | |
| 6,500 | | |
2 | | |
| | |
| | |
| | | |
| | | |
| (100 | ) | |
3 | | |
| | |
| Additional paid-in capital | |
| 42,026,591 | | |
| 26,295 | | |
| 94,146,500 | | |
1 | | |
| 153,505 | |
| | |
| | | |
| | | |
| (94,150,000 | ) | |
1 | | |
| | |
| | |
| | | |
| | | |
| 174,843,500 | | |
2 | | |
| | |
| | |
| | | |
| | | |
| (174,850,000 | ) | |
2 | | |
| | |
| | |
| | | |
| | | |
| 100 | | |
3 | | |
| | |
| | |
| | | |
| | | |
| (41,889,481 | ) | |
4 | | |
| | |
| | |
| | | |
| | | |
| | | |
| | |
| | |
| Accumulated deficit | |
| (41,889,481 | ) | |
| (333,988 | ) | |
| 41,889,481 | | |
4 | | |
| (333,988 | ) |
| Accumulated other comprehensive loss | |
| - | | |
| - | | |
| - | | |
| | |
| - | |
| Total Stockholders’ Equity (Deficit) | |
| 137,506 | | |
| (307,593 | ) | |
| - | | |
| | |
| (170,087 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| | |
| Total Liabilities and Stockholders’ Equity (Deficit) | |
$ | 6,396,041 | | |
$ | 2,649,417 | | |
$ | - | | |
| | |
$ | 9,045,458 | |
1
- reflects the issuance of 35,000,000 shares of common stock, having a fair value of $94,150,000 ($2.69/share), based upon the quoted
closing trading price on the acquisition date. The Company acquired net liabilities of $307,593.
2 - reflects the issuance of 65,000,000 shares of common stock as contingent consideration, having a fair value of $174,850,000 ($2.69/share), based upon the quoted closing trading price on the acquisition date.
3
- reflects the elimination of the accounting acquirers common stock in connection with the reverse acquisition.
4
- reflects the elimination of the legal acquirers historical accumulated deficit as of the acquisition date.
The
accompanying notes are an integral part of this unaudited pro forma condensed combined financial statements
Pro
Forma Condensed Combined Statement of Operations
For the Nine Months Ended September 30, 2023
(Unaudited)
| | |
Legal Acquirer Historical EzFill
Holdings, Inc. | | |
Accounting Acquirer Historical Next
Charging, LLC | | |
Transaction Accounting
Adjustments | | |
Notes | | |
Pro Forma
Combined | |
| | |
| | |
| | |
| | |
| | |
| |
| Sales - net | |
$ | 17,525,677 | | |
$ | - | | |
$ | - | | |
| | |
$ | 17,525,677 | |
| | |
| | | |
| | | |
| | | |
| | |
| | |
| Costs and expenses | |
| | | |
| | | |
| | | |
| | |
| | |
| Cost of sales | |
| 16,529,030 | | |
| - | | |
| - | | |
| | |
| 16,529,030 | |
| General and administrative expenses | |
| 6,250,013 | | |
| 459,830 | | |
| - | | |
| | |
| 6,709,843 | |
| Depreciation and amortization | |
| 829,137 | | |
| 5,555 | | |
| - | | |
| | |
| 834,692 | |
| Total Costs and Expenses | |
| 23,608,180 | | |
| 465,385 | | |
| - | | |
| | |
| 24,073,565 | |
| | |
| | | |
| | | |
| | | |
| | |
| | |
| Loss from operations | |
| (6,082,503 | ) | |
| (465,385 | ) | |
| - | | |
| | |
| (6,547,888 | ) |
| | |
| | | |
| | | |
| - | | |
| | |
| - | |
| Other income (expense) | |
| | | |
| | | |
| | | |
| | |
| | |
| Interest income | |
| 31,717 | | |
| 137,797 | | |
| - | | |
| | |
| 49,217 | |
| Interest expense | |
| (966,374 | ) | |
| (38,420 | ) | |
| - | | |
| | |
| (1,004,794 | ) |
| Loss on sale of marketable debt securities | |
| (27,160 | ) | |
| - | | |
| - | | |
| | |
| (27,160 | ) |
| Total other income (expense) - net | |
| (961,817 | ) | |
| 99,377 | | |
| - | | |
| | |
| (862,440 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| | |
| Net loss | |
$ | (7,044,320 | ) | |
$ | (366,008 | ) | |
$ | - | | |
| | |
$ | (7,410,328 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| | |
| Loss per share - basic and diluted | |
$ | (2.02 | ) | |
$ | (3.66 | ) | |
| | | |
| | |
$ | (0.07 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| | |
| Weighted average number of shares - basic and diluted | |
| 3,493,760 | | |
| 100,000 | | |
| | | |
1 | | |
| 103,493,760 | |
1
- reflects the issuance of 100,000,000 shares of common stock as of the beginning of the period in connection with the reverse acquisition.
The
accompanying notes are an integral part of these unaudited consolidated financial statements
Pro
Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2022
(Unaudited)
| | |
Legal Acquirer Historical EzFill
Holdings, Inc. | | |
Accounting Acquirer Historical Next
Charging, LLC | | |
Transaction Accounting
Adjustments | | |
Notes | |
Pro Forma Combined | |
| | |
| | |
| | |
| | |
| |
| |
| Sales - net | |
$ | 15,044,721 | | |
$ | - | | |
$ | - | | |
| |
$ | 15,044,721 | |
| | |
| | | |
| | | |
| | | |
| |
| | |
| Costs and expenses | |
| | | |
| | | |
| | | |
| |
| | |
| Cost of sales | |
| 15,218,234 | | |
| - | | |
| - | | |
| |
| 15,218,234 | |
| General and administrative expenses | |
| 15,543,145 | | |
| 11,808 | | |
| - | | |
| |
| 15,554,953 | |
| Depreciation and amortization | |
| 1,769,621 | | |
| - | | |
| - | | |
| |
| 1,769,621 | |
| Total Costs and Expenses | |
| 32,531,000 | | |
| 11,808 | | |
| - | | |
| |
| 32,542,808 | |
| | |
| | | |
| | | |
| | | |
| |
| | |
| Income (loss) from operations | |
| (17,486,279 | ) | |
| (11,808 | ) | |
| - | | |
| |
| (17,498,087 | ) |
| | |
| | | |
| | | |
| - | | |
| |
| - | |
| Other income (expense) | |
| | | |
| | | |
| | | |
| |
| | |
| Interest income | |
| 84,603 | | |
| 1,556 | | |
| - | | |
| |
| 86,159 | |
| Interest expense | |
| (104,089 | ) | |
| (3,463 | ) | |
| - | | |
| |
| (107,552 | ) |
| Loss on sale of marketable debt securities | |
| - | | |
| | | |
| - | | |
| |
| - | |
| Total other income (expense) - net | |
| (19,486 | ) | |
| (1,907 | ) | |
| - | | |
| |
| (21,393 | ) |
| | |
| | | |
| | | |
| | | |
| |
| | |
| Net loss | |
$ | (17,505,765 | ) | |
$ | (13,715 | ) | |
$ | - | | |
| |
$ | (17,519,480 | ) |
| | |
| | | |
| | | |
| | | |
| |
| | |
| Loss per share - basic and diluted | |
$ | (0.66 | ) | |
$ | (0.14 | ) | |
| | | |
| |
$ | (0.17 | ) |
| | |
| | | |
| | | |
| | | |
| |
| | |
| Weighted average number of shares - basic and diluted | |
| 26,411,874 | | |
| 100,000 | | |
| | | |
1 | |
| 103,301,484 | |
1
- reflects the issuance of 100,000,000 shares of common stock as of the beginning of the period in connection with the reverse acquisition.
The accompanying notes are an integral part of these unaudited consolidated financial statements
Results of Operations for the Nine Months Ended September 30, 2023 and 2022
| | |
September 30, 2023 | | |
September 30, 2022 | | |
$ Change | | |
Notes | |
| | |
| | |
| | |
| | |
| |
| Revenues | |
$ | - | | |
$ | - | | |
$ | - | | |
1 | |
| | |
| | | |
| | | |
| | | |
| |
| General and administrative expenses | |
| 465,385 | | |
| 6,808 | | |
| 458,577 | | |
2 | |
| | |
| | | |
| | | |
| | | |
| |
| Operating loss | |
| (465,385 | ) | |
| (6,808 | ) | |
| (458,577 | ) | |
| |
| | |
| | | |
| | | |
| | | |
| |
| Other income (expense) | |
| | | |
| | | |
| | | |
| |
| Interest income | |
| 137,797 | | |
| 1,162 | | |
| 136,635 | | |
3 | |
| Interest expense | |
| (38,420 | ) | |
| (2,592 | ) | |
| (35,828 | ) | |
4 | |
| Total other income (expense) | |
| 99,377 | | |
| (1,430 | ) | |
| 100,807 | | |
| |
| | |
| | | |
| | | |
| | | |
| |
| Net loss | |
$ | (366,008 | ) | |
$ | (8,238 | ) | |
$ | (357,770 | ) | |
5 | |
1
- The Company has not yet begun revenue generating activities.
2
- The increase of $458,577 in G&A in 2023 from 2022 related to legal and professional fees of $281,138, depreciation of $5,555
and compensation of $114,643 in 2023 as compared to $1,808 in 2022. The Company also incurred various other costs related to
day to day operations of $64,049 in 2023 as compared to $5,000 in 2022.
3
- The Company earned interest income (3%) of $137,797 and $1,162, in 2023 and 2022 respectively, on a note receivable with its
founder and Chief Executive Officer.
4
- The Company recorded interest expense (10%) of $38,420 and $2,592, in 2023 and 2022 respectively, for the stated (5%) and imputed (5%)
amounts on a notes due to its Founder and Chief Executive Officer. The increase related to a higher outstanding balance in 2023 as compared
to 2022.
5
- The net loss of $366,008 in 2023 as compared to $8,238 in 2022, respectively, and its components were determined based on all
activities discussed in 1, 2, 3, and 4 noted above.
Results
of Operations for the Years Ended December 31, 2022 and 2021
| | |
December 31, 2022 | | |
December 31, 2021 | | |
$ Change | | |
Notes | |
| | |
| | |
| | |
| | |
| |
| Revenues | |
$ | - | | |
$ | - | | |
$ | - | | |
1 | |
| | |
| | | |
| | | |
| | | |
| |
| General and administrative expenses | |
| 11,808 | | |
| 13,510 | | |
| (1,702 | ) | |
2 | |
| | |
| | | |
| | | |
| | | |
| |
| Operating loss | |
| (11,808 | ) | |
| (13,510 | ) | |
| 1,702 | | |
| |
| | |
| | | |
| | | |
| | | |
| |
| Other income (expense) | |
| | | |
| | | |
| | | |
| |
| Interest income | |
| 1,556 | | |
| 1,556 | | |
| - | | |
3 | |
| Interest expense | |
| (3,463 | ) | |
| (1,680 | ) | |
| (1,783 | ) | |
4 | |
| Total other income (expense) | |
| (1,907 | ) | |
| (124 | ) | |
| (1,783 | ) | |
| |
| | |
| | | |
| | | |
| | | |
| |
| Net loss | |
$ | (13,715 | ) | |
$ | (13,634 | ) | |
$ | (81 | ) | |
5 | |
1 - The Company has not yet begun revenue generating activities.
2
- The decrease in G&A related to legal and professional fees of $1,808 as compared to $2,200, in 2022 and 2021, respectively, and
other general costs related to the day to day operations of $10,000 as compared to $11,310, in 2022 and 2021, respectively.
3
- The Company earned interest income (3%) of $1,556 and $1,556, in 2023 and 2022 respectively, on a note receivable with its founder
and Chief Executive Officer.
4
- The Company recorded interest expense (10%) of $3,463 and $1,680, in 2023 and 2022 respectively, for the stated (5%) and imputed (5%)
amounts on a note due to its Founder and Chief Executive Officer. The increase related to a higher outstanding balance in 2022 as compared
to 2021.
5
- The net loss of $13,715 in 2022 as compared to $13,634 in 2021, respectively, and its components were determined based
on all activities discussed in 1, 2, 3, and 4 noted above.
Liquidity and Cash Flows
Next has experienced net losses and negative cash
flows from operations since its inception. At September 30, 2023, Next had:
Cash and cash equivalents of $1,054,843 (including restricted cash of $1,000,000),
Working capital deficit of $390,772,
Accumulated deficit of $333,988,
Stockholders’ deficit of $307,593,
Net cash used in operations of $382,880; and
Net loss of $366,008
Next is dependent upon its Founder and Chief Executive
Officer for working capital as other outside sources are not currently available. Without adequate funding, Next may not be able to meet
its obligations as they come due. The management of Next believes these conditions raise substantial doubt about its ability to continue
as a going concern. Next is focused on developing its proprietary technology and effecting a merger with an operating business. The Company
will need to continue to raise additional debt and/or equity based capital to sustain its future plans.
| | |
September 30, 2023 | | |
September 30, 2022 | | |
$ Change | | |
Notes | |
| | |
| | |
| | |
| | |
| |
| Net cash used in operating activities | |
$ | 382,880 | | |
$ | 5,907 | | |
$ | 376,973 | | |
1, 2 | |
| Net cash used in investing activities | |
$ | 1,463,734 | | |
$ | - | | |
$ | 1,463,734 | | |
3 | |
| Net cash provided by financing activities | |
$ | 2,900,000 | | |
$ | - | | |
$ | 2,900,000 | | |
4 | |
1
- net cash used in operations for the nine months ended September 30, 2023 was $382,880 and consisted of the following:
-
net loss of ($366,008), plus adjustments to reconcile the net loss to net cash used in operations of:
-
depreciation expense - $5,555,
-
original issue discount accretion – ($118,689)
-
interest receivable - related party - $23,333
-
loan from note receivable - related party - $54,484
-
accounts payable and accrued expenses - $18,445
2
- net cash used in operations for the nine months ended September 30, 2022 was $5,907 and consisted of the following:
-
net loss of ($8,238), plus adjustments to reconcile the net loss to net cash used in operations of:
-
interest receivable - related party - $1,296
-
loan from note receivable - related party – ($1,165)
-
accounts payable and accrued expenses - $2,200
3
- net cash used in investing activities for the nine months ended September 30, 2023 was $1,463,734 related to advances made through
a related party note receivable of $1,375,000 and the purchase of a Company vehicle for $88,734. There were no transactions for the nine
months ended September 30, 2022.
4
- net cash provided by financing activities for the nine months ended September 30, 2023 was $2,900,000 related to advances from the
Chief Executive Officer. There were no transactions for the nine months ended September 30, 2022.
| | |
December 31, 2022 | | |
December 31, 2021 | | |
$ Change | | |
Notes | |
| | |
| | |
| | |
| | |
| |
| Net cash used in operating activities | |
$ | 10,907 | | |
$ | 13,510 | | |
$ | (2,603 | ) | |
1, 2 | |
| Net cash used in investing activities | |
$ | - | | |
$ | - | | |
$ | - | | |
3 | |
| Net cash provided by financing activities | |
$ | - | | |
$ | 25,850 | | |
$ | (25,850 | ) | |
4 | |
1
- net cash used in operations for the year ended December 31, 2022 was $10,907 and consisted of the following:
-
net loss of ($13,715), plus adjustments to reconcile the net loss to net cash used in operations of:
-
interest receivable - related party - $1,732
-
loan from note receivable - related party - ($1,556)
-
accounts payable and accrued expenses - $2,632
2
- net cash used in operations for the year ended December 31, 2021 was $13,510 and consisted of the following:
-
net loss of ($13,634), plus adjustments to reconcile the net loss to net cash used in operations of:
-
interest receivable - related party - $840
-
loan from note receivable - related party - ($1,556)
-
accounts payable and accrued expenses - $840
3
- net cash used in investing activities for the years ended December 31, 2022 and 2021 was $0 and $0, respectively.
4
- net cash provided by financing activities for the year ended December 31, 2021 was $25,850 related to advances from the Chief Executive
Officer. There were no transactions for the year ended December 31, 2022.
The preparation of financial statements in conformity
with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the
reporting period. In our financial statements, estimates are used for, but not limited to, valuation of financial instruments, estimated
useful life of our vehicle, deferred taxes and the related valuation allowance.
On an ongoing basis, we evaluate these estimates and
assumptions, including those described below. We base our estimates on historical experience and on various other assumptions that we
believe to be reasonable under the circumstances. These estimates and assumptions form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates, and
those estimates may be material. Due to the estimation processes involved, the following summarized accounting policies and their application
are considered to be critical to understanding our business operations, financial condition and operating results.
Notes and Interest Receivable
Note and Interest receivable are recorded at fair
value on the date revenue is recognized. The Company provides allowances for doubtful accounts by specific customer identification. If
market conditions decline, actual collections may not meet expectations and may result in decreased cash flow and increased bad debt expense.
Once collection efforts by the Company and its collection agency are exhausted, the determination for charging off uncollectible receivables
is made.
Income Taxes
The Company recognizes deferred tax assets and liabilities
for the expected future tax consequences of items that have been included or excluded in the financial statements or tax returns. Deferred
tax assets and liabilities are determined on the basis of the difference between the tax basis of assets and liabilities and their respective
financial reporting amounts (“temporary differences”) at enacted tax rates in effect for the years in which the temporary
differences are expected to reverse.
The Company adopted the provisions of Accounting Standards
Codification (“ASC”) Topic 740-10, which prescribes a recognition threshold and measurement process for financial statement
recognition and measurement of a tax position taken or expected to be taken in a tax return. Income taxes are passed through to the members
of Next Charging LLC for 2021. Effective January 1, 2022, the Company is treated as a Corporation and the taxes are paid by the Corporation.
Management has evaluated and concluded that there
are no material tax positions requiring recognition in the Company’s unaudited financial statements as of September 30,
2023. The Company does not expect any significant changes in its unrecognized tax benefits within twelve months of the reporting date.
The Company’s 2020, 2021, and 2022 tax returns remain open for audit for Federal and State taxing authorities.
The Company’s policy is to classify assessments,
if any, for tax related interest as interest expense and penalties as general and administrative expenses in the statement of operations.
Property and Equipment
Property and equipment consist of furniture and office
equipment and is stated at cost less accumulated depreciation. Depreciation is determined by using the straight-line method for property
and equipment, over the estimated useful lives of the related assets, generally three to five years and vehicles over the useful life
of 5 years. Expenditures for repairs and maintenance of equipment are charged to expense as incurred. Major replacements and betterments
are capitalized and depreciated over the remaining useful lives of the related assets.
Recently Issued Accounting Pronouncements
The Company has evaluated all new accounting standards
that are in effect and may impact its unaudited financial statements and does not believe that there are any other new accounting standards
that have been issued that might have a material impact on its financial position or results of operations.
In June 2016, the FASB issued ASU No. 2016-13, “Financial
Instruments—Credit Losses (Topic 326).” The standard introduces a new model for recognizing credit losses on financial
instruments based on an estimate of current expected credit losses and will apply to trade receivables. The new guidance will be effective
for the Company’s annual and interim periods beginning after December 15, 2022. The Company has adopted this pronouncement effective
January 1, 2023 and determined there was no material effect on the financial statements.
ANNEX D
AUDIT REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM AND NEXT CHARGING’S FINANCIAL STATEMENTS AND ACCOMPANYING NOTES
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Stockholders of
Next
Charging LLC
Opinion
on the Financial Statements
We
have audited the accompanying balance sheets of Next Charging LLC (the Company) as of December 31, 2022 and 2021, and the related statements
of income, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2022, and the related
notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows
for each of the years in the two-year period ended December 31, 2022, in conformity with accounting principles generally accepted in
the United States of America.
Going
Concern
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note
2 to the financial statements, the Company has net losses since and limited cash flows, which raises substantial doubt about its ability
to continue as a going concern. Management’s plans regarding those matters are discussed in Note 2. The financial statements do
not include any adjustments that might result from the outcome of this uncertainty.
Basis
for Opinion
These
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits,
we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion
on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error
or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits
provide a reasonable basis for our opinion.
Critical
Audit Matters
The
critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated
or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial
statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters
does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit
matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Going
Concern
As
discussed in Note 2 to the financial statements, the Company had a going concern due to net losses, negative cash flows from operations
and limited business operations as of December 31, 2022. Auditing management’s evaluation of a going concern can be a significant
judgment given the fact that the Company uses management estimates on future revenues and expenses which are not able to be substantiated.
To
evaluate the appropriateness and accuracy of the assessment by management, we evaluated management’s assessment in relationship
to the relevant agreements and the related disclosures in the financial statements.
/s/
M&K CPAS, PLLC
We
have served as the Company’s auditor since 2023
The
Woodlands, TX
November 27, 2023
Next
Charging LLC
Balance
Sheets
| | |
December 31, 2022 | | |
December 31, 2021 | |
| | |
| | |
| |
| Assets | |
| | | |
| | |
| | |
| | | |
| | |
| Current Assets | |
| | | |
| | |
| Cash and cash equivalents | |
$ | 1,457 | | |
$ | 12,364 | |
| Note receivable, related party, net of allowance | |
| 72,191 | | |
| 70,635 | |
| Total Current Assets | |
| 73,648 | | |
| 82,999 | |
| | |
| | | |
| | |
| | |
| | | |
| | |
| Total Assets | |
$ | 73,648 | | |
$ | 82,999 | |
| | |
| | | |
| | |
| Liabilities and Stockholders’ Equity | |
| | | |
| | |
| | |
| | | |
| | |
| Current Liabilities | |
| | | |
| | |
| Accounts payable and accrued expenses | |
$ | 3,916 | | |
$ | 1,284 | |
| Notes payable – related party | |
| 34,650 | | |
| 34,650 | |
| Total Current Liabilities | |
| 38,566 | | |
| 35,934 | |
| | |
| | | |
| | |
| Total Liabilities | |
| 38,566 | | |
| 35,934 | |
| | |
| | | |
| | |
| Commitments and Contingencies (Note 4) | |
| - | | |
| - | |
| | |
| | | |
| | |
| Stockholders’ Equity | |
| | | |
| | |
| Common stock, par value $0.001: authorized 100,000 shares, 100,000 issued and outstanding as of December 31, 2022 and 2021 | |
| 100 | | |
| 100 | |
| Additional paid-in capital | |
| 2,962 | | |
| 1,230 | |
| Accumulated earnings | |
| 32,020 | | |
| 45,735 | |
| Stockholders’ Equity | |
| 35,082 | | |
| 47,065 | |
| | |
| | | |
| | |
| Total Stockholders’ Equity | |
| 35,082 | | |
| 47,065 | |
| | |
| | | |
| | |
| Total Liabilities and Stockholders’ Equity | |
$ | 73,648 | | |
$ | 82,999 | |
The
accompanying notes are an integral part of the financial statements
Next
Charging LLC
Statements
of Operations
| | |
For the Years Ended
December 31, | |
| | |
2022 | | |
2021 | |
| | |
| | |
| |
| Revenues | |
$ | - | | |
$ | - | |
| | |
| | | |
| | |
| Costs and Expenses | |
| | | |
| | |
| General and administrative expenses | |
| 10,000 | | |
| 11,310 | |
| Professional fees | |
| 1,808 | | |
| 2,200 | |
| Total operating expenses | |
| 11,808 | | |
| 13,510 | |
| | |
| | | |
| | |
| Operating Loss | |
| (11,808 | ) | |
| (13,510 | ) |
| | |
| | | |
| | |
| Other Income (Expense) | |
| | | |
| | |
| Interest income | |
| 1,556 | | |
| 1,556 | |
| Interest expense | |
| (3,463 | ) | |
| (1,680 | ) |
| Total other income (expense)– net | |
| (1,907 | ) | |
| (124 | ) |
| | |
| | | |
| | |
| Net Loss | |
$ | (13,715 | ) | |
$ | (13,634 | ) |
| | |
| | | |
| | |
| Weighted Average Shares – Basic and Diluted | |
| 100,000 | | |
| 100,000 | |
| Earnings Per Share – Basic and Diluted | |
| (0.14 | ) | |
| (0.14 | ) |
The
accompanying notes are an integral part of the financial statements.
Next
Charging LLC
Statements
of Changes in Stockholders’ Equity
For
the Years Ended December 31, 2022, and 2021
| | |
Common Stock | | |
Additional Paid-in | | |
Accumulated | | |
Total Stockholders’ | |
| | |
Shares | | |
Amount | | |
Capital | | |
Earnings | | |
Equity | |
| | |
| | |
| | |
| | |
| | |
| |
| Balance December 31, 2020 | |
| 100,000 | | |
$ | 100 | | |
$ | 390 | | |
$ | 59,369 | | |
$ | 59,859 | |
| Imputed Interest – Related Party | |
| - | | |
| - | | |
| 840 | | |
| - | | |
| 840 | |
| Net loss | |
| - | | |
| - | | |
| - | | |
| (13,634 | ) | |
| (13,634 | ) |
| Balance December 31, 2021 | |
| 100,000 | | |
$ | 100 | | |
$ | 1,230 | | |
$ | 45,735 | | |
$ | 47,065 | |
| Imputed Interest – Related Party | |
| - | | |
| - | | |
| 1,732 | | |
| - | | |
| 1,732 | |
| Net loss | |
| - | | |
| - | | |
| - | | |
| (13,715 | ) | |
| (13,715 | ) |
| Balance December 31, 2022 | |
| 100,000 | | |
$ | 100 | | |
$ | 2,962 | | |
$ | 32,020 | | |
$ | 35,082 | |
The
accompanying notes are an integral part of the financial statements.
Next
Charging LLC
Statements
of Cash Flows
| | |
For the Years December 31, | |
| | |
2022 | | |
2021 | |
| Cash Flows Operating activities | |
| | | |
| | |
| Net loss | |
$ | (13,715 | ) | |
$ | (13,634 | ) |
| Adjustments to reconcile net loss to net cash (used) by operations: | |
| | | |
| | |
| Imputed interest – Related Party | |
| 1,732 | | |
| 840 | |
| Changes in operating assets and liabilities: | |
| | | |
| | |
| Increase in: | |
| | | |
| | |
| Note receivables | |
| (1,556 | ) | |
| (1,556 | ) |
| Increase in: | |
| | | |
| | |
| Accounts payable and accrued expenses | |
| 2,632 | | |
| 840 | |
| Net cash used in operating activities | |
| (10,907 | ) | |
| (13,510 | ) |
| | |
| | | |
| | |
| Cash Flows Financing activities | |
| | | |
| | |
| Proceeds from borrowings – related party | |
| - | | |
| 25,850 | |
| Net cash provided by financing activities | |
| - | | |
| 25,850 | |
| | |
| | | |
| | |
| Net (decrease) increase in cash | |
| (10,907 | ) | |
| 12,340 | |
| | |
| | | |
| | |
| Cash and cash equivalents - beginning of period | |
| 12,364 | | |
| 24 | |
| | |
| | | |
| | |
| Cash and cash equivalents - end of period | |
$ | 1,457 | | |
$ | 12,364 | |
| | |
| | | |
| | |
| Supplemental disclosure of cash flow information | |
| | | |
| | |
| Cash paid for interest | |
$ | - | | |
$ | - | |
| Cash paid for income tax | |
$ | - | | |
$ | - | |
The
accompanying notes are an integral part of the financial statements.
NEXT
CHARGING LLC
Notes
to Financial Statements
For
The Years Ended December 31, 2022 and 2021
Note
1 – Business Organization and Nature of Operations
Next
Charging LLC (“Next Charging LLC” or the “Company”) was incorporated on April 20, 2016, under the laws of the
State of Florida. Next Charging LLC is a Next Charging is a forward-thinking technology company dedicated to revolutionizing the vehicle
(EV) charging industry. The Company owns the patent for contactless transactions, included payment processing across a communication
network or charging a vehicle without physical cables or connecters.
The
accompanying audited financial statements have been prepared in accordance with accounting principles generally accepted in the United
States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information
and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, such statements include all adjustments
(consisting only of normal recurring items) which are considered necessary for a fair presentation of the audited financial position
of Next Charging LLC as of December 31, 2022 and December 31, 2021, and the audited results of its operations and cash flows for the
years ended December 31, 2022 and 2021.
Note
2 – Summary of Significant Accounting Policies
Going
Concern
There
is substantial doubt about the Company to continue as a going concern. The Company without additional sources of debt or equity capital
would potentially need to cease operations. Management plans to raise additional capital within the next twelve months that is expected
to sustain its operations for the next year. No assurance can be given that any future financing will be available or, if available,
that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain
restrictions on our operations, in the case of debt financing or cause substantial dilution for our stockholders, in case of equity financing.
In addition, the Company expects to begin a marketing campaign to market and sell its services. There can be no assurance that such a
plan will successful.
The
accompanying condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be
unable to continue as a going concern.
Cash
and Cash Equivalents
The
Company considers all highly liquid temporary cash investments with an original maturity of 90 days or less to be cash equivalents. At
December 31, 2022, and December 31, 2021, the Company has $1,457 and $12,364 in cash equivalents, respectively.
Use
of Estimates
The
preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”)
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
periods. Actual results could materially differ from those estimates.
Note
and Interest Receivable
Note
and Interest receivable are recorded at fair value on the date revenue is recognized. The Company provides allowances for doubtful accounts
by specific customer identification. If market conditions decline, actual collections may not meet expectations and may result in decreased
cash flow and increased bad debt expense. Once collection efforts by the Company and its collection agency are exhausted, the determination
for charging off uncollectible receivables is made.
NEXT
CHARGING LLC
Notes
to Financial Statements
For
The Years Ended December 31, 2022 and 2021
Income
Taxes
The
Company recognizes deferred tax assets and liabilities for the expected future tax consequences of items that have been included or excluded
in the financial statements or tax returns. Deferred tax assets and liabilities are determined on the basis of the difference between
the tax basis of assets and liabilities and their respective financial reporting amounts (“temporary differences”) at enacted
tax rates in effect for the years in which the temporary differences are expected to reverse.
The
Company adopted the provisions of Accounting Standards Codification (“ASC”) Topic 740-10, which prescribes a recognition
threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken
in a tax return. Income taxes are passed through to the members of Next Charging LLC for 2021. Effective January 1, 2022, the Company
is treated as a Corporation and the taxes are paid by the Corporation.
Management
has evaluated and concluded that there are no material tax positions requiring recognition in the Company’s audited financial statements
as of December 31, 2022. The Company does not expect any significant changes in its unrecognized tax benefits within twelve months of
the reporting date. The Company’s 2020, 2021, and 2022 tax returns remain open for audit for Federal and State taxing authorities.
The
Company’s policy is to classify assessments, if any, for tax related interest as interest expense and penalties as general and
administrative expenses in the statement of operations.
As
of December 31, 2022, we had a net operating loss carry-forward of approximately $(13,715) and a deferred tax asset of $2,880 using the
statutory rate of 21%. The deferred tax asset may be recognized in future periods, not to exceed 20 years. However, due to the uncertainty
of future events we have booked a valuation allowance of $(2,880). FASB ASC 740 prescribes recognition threshold and measurement attributes
for the financial statement recognition and measurement of a tax position taken or expected to be takin in a tax return. FASB ASC 740
also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.
As of December 31, 2020, the Company had not taken any tax positions that would require disclosure under FASB ASC 740.
Net
deferred tax assets consist of the following components as of December 31, 2022:
| | |
December 31, 2022 | |
| Deferred tax assets: | |
$ | 2,880 | |
| Valuation allowance | |
| (2,880 | ) |
| Net deferred tax asset | |
$ | - | |
Advertising,
Marketing and Promotional Costs
Advertising,
marketing, and promotional expenses are expensed as incurred and are included in selling, general and administrative expenses on the
accompanying audited statement of operations. For the twelve months ended December 31, 2022, and December 31, 2021, advertising, marketing,
and promotion expenses were $10,000 and $10,875, respectively.
NEXT
CHARGING LLC
Notes
to Financial Statements
For
The Years Ended December 31, 2022 and 2021
Recently
Issued Accounting Pronouncements
The
Company has evaluated all new accounting standards that are in effect and may impact its audited financial statements and does not believe
that there are any other new accounting standards that have been issued that might have a material impact on its financial position or
results of operations.
In
June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments—Credit Losses (Topic 326).” The standard
introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses
and will apply to trade receivables. The new guidance will be effective for the Company’s annual and interim periods beginning
after December 15, 2022. The Company is currently evaluating the impact of the adoption of the standard on the consolidated financial
statements.
Note
3 – Note Receivable - Related Party Transactions
During
2016 and 2017, the Company loaned to the Farkas Group, a related party, a total of $62,395 at 3% and due on demand. The notes have an
accrued interest balance of $9,796 and $8,240 at December 31, 2022 and 2021, respectively. For the twelve months ended December 31, 2022
and 2021, the Company recorded $1,556 and $1,556, respectively, of interest income in relation to this note. The note balance of $62,395
is included in the note receivable – related party in current assets as of December 31, 2022 and December 31, 2021.
Note
4 – Commitments and Contingencies
Litigation,
Claims and Assessments
In
the normal course of business, the Company may be involved in legal proceedings, claims and assessments arising in the ordinary course
of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. In the opinion of management,
the ultimate disposition of these matters will not have a material adverse effect on the Company’s financial position or results
of operations.
Note
5 -Notes Payable-Related Party
During
the normal course of business, Michael Farkas, a related party, has lent funds to the company to continue their operations. As of December
31, 2022 and 2021 the note payable -related party which is due on demand totaled $34,650 and is included in note payable-related party.
Borrowings for the years ended December 31, 2022 and 2021 were $0 and $25,850, respectively. The note bears 5% interest and an additional
5% interest was imputed. Imputed interest expense for the years ended December 31, 2022 and 2021 was $1,732 and $840, respectively. Interest
expense for the years ended December 31, 2022 and 2021 was $3,463 and $1,680, respectively.
Note
6 – Stockholders’ Equity
Authorized
Capital
The
Company is authorized to issue 100,000 shares of common stock, $0.001 par value, and 100,000 shares of common stock, $0.001 par value.
Since the inception of the Company, all shares authorized, issued and outstanding has been to Michael Farkas, a related party.
Note
7 - Subsequent Event
Subsequent
Event:
In
2023, the Company entered an agreement to be purchased by EzFill and is in the process of the due diligence process as of October 20,
2023.
Next
Charging LLC
Balance
Sheets
| | |
September 30, 2023
(unaudited) | | |
December 31, 2022
(audited) | |
| | |
| | |
| |
| Assets | |
| | | |
| | |
| | |
| | | |
| | |
| Current Assets | |
| | | |
| | |
| Cash and cash equivalents | |
$ | 54,843 | | |
$ | 1,457 | |
| Restricted cash | |
| 1,000,000 | | |
| - | |
| Note receivable, related party, net of allowance | |
| 1,511,395 | | |
| 72,191 | |
| Total Current Assets | |
| 2,566,238 | | |
| 73,648 | |
| | |
| | | |
| | |
| Fixed Assets, net | |
| 83,179 | | |
| - | |
| | |
| | | |
| | |
| Total Assets | |
$ | 2,649,417 | | |
$ | 73,648 | |
| | |
| | | |
| | |
| Liabilities and Stockholders’ Equity (Deficit) | |
| | | |
| | |
| | |
| | | |
| | |
| Current Liabilities | |
| | | |
| | |
| Accounts payable and accrued expenses | |
$ | 22,360 | | |
$ | 3,916 | |
| Notes payable – related party | |
| 2,934,650 | | |
| 34,650 | |
| Total Current Liabilities | |
| 2,957,010 | | |
| 38,566 | |
| | |
| | | |
| | |
| Total Liabilities | |
| 2,957,010 | | |
| 38,566 | |
| | |
| | | |
| | |
| Commitments and Contingencies (Note 4) | |
| - | | |
| - | |
| | |
| | | |
| | |
| Stockholders’ Equity (Deficit) | |
| | | |
| | |
| Common stock, par value $0.001: authorized 100,000 shares, 100,000 issued and outstanding as of September 30, 2023 and December 31, 2022 | |
| 100 | | |
| 100 | |
| Additional paid-in capital | |
| 26,295 | | |
| 2,962 | |
| Accumulated (deficit) earnings | |
| (333,988 | ) | |
| 32,020 | |
| Stockholders’ Equity (Deficit) | |
| (307,593 | ) | |
| 35,082 | |
| | |
| | | |
| | |
| Total Stockholders’ Equity (Deficit) | |
| (307,593 | ) | |
| 35,082 | |
| | |
| | | |
| | |
| Total Liabilities and Stockholders’ Equity (Deficit) | |
$ | 2,649,417 | | |
$ | 73,648 | |
The
accompanying notes are an integral part of the unaudited financial statements
Next
Charging LLC
Statements
of Operations
For
the Nine Months Ended September 30, 2023 and 2022
(Unaudited)
| | |
2023 | | |
2022 | |
| | |
| | |
| |
| Revenues | |
$ | - | | |
$ | - | |
| | |
| | | |
| | |
| Costs and Expenses | |
| | | |
| | |
| General and administrative | |
| 64,049 | | |
| 5,000 | |
| Professional fees | |
| 281,138 | | |
| 1,808 | |
| Depreciation | |
| 5,555 | | |
| - | |
| Salaries and wages | |
| 114,643 | | |
| - | |
| Total operating expenses | |
| 465,385 | | |
| 6,808 | |
| | |
| | | |
| | |
| Operating Loss | |
| (465,385 | ) | |
| (6,808 | ) |
| | |
| | | |
| | |
| Other Income (expense) | |
| | | |
| | |
| Interest income | |
| 137,797 | | |
| 1,162 | |
| Interest expense | |
| (38,420 | ) | |
| (2,592 | ) |
| Total other income | |
| 99,377 | | |
| (1,430 | ) |
| | |
| | | |
| | |
| Net Loss | |
$ | (366,008 | ) | |
$ | (8,238 | ) |
| | |
| | | |
| | |
| Weighted Average Shares – Basic and Diluted | |
| 100,000 | | |
| 100,000 | |
| Earnings Per Share – Basic and Diluted | |
| (3.66 | ) | |
| (0.08 | ) |
The
accompanying notes are an integral part of the unaudited financial statements
Next
Charging LLC
Statements
of Changes in Stockholders’ Equity (Deficit)
For
the Nine Months Ended September 30, 2023 and 2022
(Unaudited)
| | |
Common Stock | | |
Additional
Paid-in | | |
Accumulated | | |
Total
Stockholders’
Equity | |
| | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
(Deficit) | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance, December 31, 2022 | |
| 100,000 | | |
$ | 100 | | |
$ | 2,962 | | |
$ | 32,020 | | |
$ | 35,082 | |
| Imputed Interest – Related Party | |
| - | | |
| - | | |
| 23,333 | | |
| - | | |
| 23,333 | |
| Net loss | |
| - | | |
| - | | |
| - | | |
| (366,008 | ) | |
| (366,008 | ) |
| Balance, September 30, 2023 | |
| 100,000 | | |
$ | 100 | | |
$ | 26,295 | | |
$ | (333,988 | ) | |
$ | (307,593 | ) |
| | |
Common Stock | | |
Accumulated | | |
Total Stockholders’ Equity | |
| | |
Shares | | |
Amount | | |
Capital | | |
Earnings
| | |
(Deficit) | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance, December 31, 2021 | |
| 100,000 | | |
$ | 100 | | |
$ | 1,230 | | |
$ | 45,735 | | |
$ | 47,065 | |
| Imputed Interest – Related Party | |
| - | | |
| - | | |
| 1,296 | | |
| - | | |
| 1,296 | |
| Net loss | |
| - | | |
| - | | |
| - | | |
| (8,238 | ) | |
| (8,238 | ) |
| Balance, September 30, 2022 | |
| 100,000 | | |
$ | 100 | | |
$ | 2,526 | | |
$ | 37,497 | | |
$ | 40,123 | |
The
accompanying notes are an integral part of the unaudited financial statements
Next
Charging LLC
Statements
of Cash Flows
| | |
For the Nine Months Ended
September 30, 2023 (Unaudited) | | |
For the Nine Months Ended
September 30, 2022 (Unaudited) | |
| Operating activities | |
| | | |
| | |
| Net loss | |
$ | (366,008 | ) | |
$ | (8,238 | ) |
| Adjustments to reconcile net loss to net cash (used) by operations: | |
| | | |
| | |
| Depreciation expense | |
| 5,555 | | |
| - | |
| Original Issue Discount Accretion | |
| (118,689 | ) | |
| - | |
| Imputed Interest – Related Party | |
| 23,333 | | |
| 1,296 | |
| Changes in operating assets and liabilities | |
| | | |
| | |
| (Increase) in: | |
| | | |
| | |
| Note receivable – related party | |
| 54,484 | | |
| (1,165 | ) |
| Increase in: | |
| | | |
| | |
| Accounts payable and accrued expenses | |
| 18,445 | | |
| 2,200 | |
| Net cash (used) in operating activities | |
| (382,880 | ) | |
| (5,907 | ) |
| | |
| | | |
| | |
| Cash Flows Investing activities | |
| | | |
| | |
| Proceeds paid to related party | |
| (1,375,000 | ) | |
| - | |
| Vehicle purchase | |
| (88,734 | ) | |
| - | |
| Net cash (used) in investing activities | |
| (1,463,734 | ) | |
| - | |
| | |
| | | |
| | |
| Cash Flow Financing activities | |
| | | |
| | |
| Proceeds from Related Party Notes Payable | |
| 2,900,000 | | |
| - | |
| Net cash provided by financing activities | |
| 2,900,000 | | |
| - | |
| | |
| | | |
| | |
| Net increase (decrease) in cash | |
| 1,053,386 | | |
| (5,907 | ) |
| | |
| | | |
| | |
| Cash and cash equivalents - beginning of period | |
| 1,457 | | |
| 12,364 | |
| | |
| | | |
| | |
| Cash and cash equivalents - end of period | |
$ | 1,054,843 | | |
$ | 6,457 | |
| | |
| | | |
| | |
| Supplemental disclosure of cash flow information | |
| | | |
| | |
| Cash paid for interest | |
$ | - | | |
| - | |
| Cash paid for income tax | |
$ | - | | |
| - | |
The
accompanying notes are an integral part of the unaudited financial statements
NEXT CHARGING LLC
Notes to Financial Statements
For The Nine Months Ending September 30, 2023
(unaudited)
Note
1 – Business Organization and Nature of Operations
Next
Charging LLC (“Next Charging LLC” or the “Company”) was incorporated on April
20, 2016, under the laws of the State of
Florida. Next Charging LLC is a Next Charging is a forward-thinking technology company dedicated to revolutionizing the vehicle
(EV) charging industry. The Company
owns the patent for contactless transactions, included payment processing across a communication network or charging a vehicle without physical cables or connecters.
The
accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United
States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information
and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, such statements include all adjustments
(consisting only of normal recurring items) which are considered necessary for a fair presentation of the unaudited financial position
of Next Charging LLC as of September 30, 2023 and September 30, 2022, and the unaudited results of its operations and cash flows for
the nine months ended September 30, 2023 and 2022.
Note
2 – Summary of Significant Accounting Policies
Going
Concern
There
is substantial doubt about the Company to continue as a going concern. The Company without additional sources of debt or equity capital
would potentially need to cease operations. Management plans to raise additional capital within the next twelve months that is expected
to sustain its operations for the next year. No assurance can be given that any future financing will be available or, if available,
that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain
restrictions on our operations, in the case of debt financing or cause substantial dilution for our stockholders, in case of equity financing.
In addition, the Company expects to begin a marketing campaign to market and sell its services. There can be no assurance that such a
plan will successful.
The
accompanying condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be
unable to continue as a going concern.
Cash
and Cash Equivalents
The
Company considers all highly liquid temporary cash investments with an original maturity of 90 days or less to be cash equivalents. At
September 30, 2023, the Company has $54,843
in cash and cash equivalents (excluding
$1,000,000 of restricted cash) and $1,457
at December 31, 2022.
Restricted
Cash
In
the 3rd quarter of 2023, the Company paid a deposit of $1
million into a 3rd party escrow bank
account held by an outside attorney for the purpose of purchasing Wave Charging, a subsidiary of Ideanomics Inc. Next Charging
and Ideanomics are currently in the process of negotiating a transaction wherein Ideanomics Inc will sell Wireless Advanced Vehicle Electrification,
LLC (Wave Charging), a Delaware limited liability company and a wholly owned subsidiary of Ideanomics to Next Charging ; Once Next Charging,
as part of the due diligence review, has received a legal opinion confirming ownership of the Wave IP and thus completing its due diligence
the escrow payment of $1 million will be released to Ideanomics Inc.
Use
of Estimates
The
preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”)
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
periods. Estimates may include those pertaining to stock-based compensation, depreciable lives of fixed assets and deferred tax assets.
Actual results could materially differ from those estimates.
NEXT CHARGING LLC
Notes to Financial Statements
For The Nine Months Ending September 30, 2023
(unaudited)
Note
and Interest Receivable
Note
and Interest receivable are recorded at fair value on the date revenue is recognized. The Company provides allowances for doubtful accounts
by specific customer identification. If market conditions decline, actual collections may not meet expectations and may result in decreased
cash flow and increased bad debt expense. Once collection efforts by the Company and its collection agency are exhausted, the determination
for charging off uncollectible receivables is made.
Income
Taxes
The
Company recognizes deferred tax assets and liabilities for the expected future tax consequences of items that have been included or excluded
in the financial statements or tax returns. Deferred tax assets and liabilities are determined on the basis of the difference between
the tax basis of assets and liabilities and their respective financial reporting amounts (“temporary differences”) at enacted
tax rates in effect for the years in which the temporary differences are expected to reverse.
The
Company adopted the provisions of Accounting Standards Codification (“ASC”) Topic 740-10, which prescribes a recognition
threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken
in a tax return. Income taxes are passed through to the members of Next Charging LLC for 2021.
Effective January 1, 2022, the Company is treated as a Corporation and the taxes are paid by the Corporation.
Management
has evaluated and concluded that there are no material tax positions requiring recognition in the Company’s unaudited financial
statements as of September 30, 2023. The Company does not expect any significant changes in its unrecognized tax benefits within twelve
months of the reporting date. The Company’s 2020, 2021, and 2022 tax returns remain open for audit for Federal and State taxing
authorities.
The
Company’s policy is to classify assessments, if any, for tax related interest as interest expense and penalties as general and
administrative expenses in the statement of operations.
As
of September 30, 2023, we had a net operating loss carry-forward of approximately $(366,008)
and a deferred tax asset of $76,862
using the statutory rate of 21%.
The deferred tax asset may be recognized in future periods, not to exceed 20
years. However, due to the uncertainty of future
events we have booked a valuation allowance of $(76,862).
FASB ASC 740 prescribes recognition threshold and
measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be takin in a tax
return. FASB ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods,
disclosure and transition. As of September 30, 2023, the Company had not taken any tax positions that would require disclosure under
FASB ASC 740.
Advertising,
Marketing and Promotional Costs
Advertising,
marketing, and promotional expenses are expensed as incurred and are included in selling, general and administrative expenses on the
accompanying unaudited statement of operations. For the nine months ended September 30, 2023 and 2022, advertising, marketing, and promotion
expenses were $20,539 and
$5,000,
respectively.
NEXT
CHARGING LLC
Notes to Financial Statements
For The Nine Months Ending September 30, 2023
(unaudited)
Property
and equipment
Property
and equipment consist of furniture and office equipment and is stated at cost less accumulated depreciation. Depreciation is determined
by using the straight-line method for property and equipment, over the estimated useful lives of the related assets, generally three
to five years and vehicles over the useful life of 5 years.
Expenditures
for repairs and maintenance of equipment are charged to expense as incurred. Major replacements and betterments are capitalized and depreciated
over the remaining useful lives of the related assets.
Property
and equipment as of September 30, 2023:
| Vehicle | |
$ | 88,734 | |
| Total | |
| 88,734 | |
| Less Accumulated Depreciation | |
| 5,555 | |
| Property and Equipment, net | |
$ | 83,179 | |
Depreciation
expense for the nine months ended September 30, 2023 totaled $5,555.
Recently
Issued Accounting Pronouncements
The
Company has evaluated all new accounting standards that are in effect and may impact its unaudited financial statements and does not
believe that there are any other new accounting standards that have been issued that might have a material impact on its financial position
or results of operations.
In
June 2016, the FASB issued ASU No. 2016-13, “Financial
Instruments—Credit Losses (Topic 326).” The standard introduces a new model for
recognizing credit losses on financial instruments based on an estimate of current expected credit losses and will apply to trade receivables.
The new guidance will be effective for the Company’s annual and interim periods beginning after December 15, 2022. The Company
has adopted this pronouncement effective January 1, 2023 and determined no material effect on the consolidated financial statements.
Note
3 – Note Receivable - Related Party Transactions
During
2016 and 2017, the Company loaned to the Farkas Group, a related party, a total of $62,395 at 3% and due on demand. The notes have an
accrued interest balance of $0 and $9,796 at September 30, 2023 and December 31, 2022, respectively. The note receivable balance was
fully paid off during the 3rd quarter of 2023.
On
September 22, 2023, the Company loaned to the Next NRG LLC, a related party, a total of $25,000 at 4% and due on September 22, 2024.
The notes have an accrued interest balance of $22 at September 30, 2023.
During
2023, the Company loaned several two-month (2) notes receivables to EZFill, a related party, with an aggregate face
amount of $1,485,000, less original issue discounts of $135,000, resulting in net proceeds of $1,350,000
at 8%
with an automatic extension
for an additional 2 months periods unless Lender sends 10 days written notice, prior to end of any two month period, that it does not
wish to extend the note at which point the end of the then current two month period shall be the Maturity Date.
Notwithstanding the above, upon Borrower completing a capital raise (debt or equity) of at least $3,000,000
the entire outstanding principal and interest
through the Maturity Date shall be immediately due and payable. The accretion income earned as of September 30, 2023, was $118,689
which is included in interest income. The notes have an accrued interest balance of $16,076
at September 30, 2023.
NEXT CHARGING LLC
Notes to Financial Statements
For The Nine Months Ending September 30, 2023
(unaudited)
Note
4 – Commitments and Contingencies
Litigation,
Claims and Assessments
In
the normal course of business, the Company may be involved in legal proceedings, claims and assessments arising in the ordinary course
of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. In the opinion of management,
the ultimate disposition of these matters will not have a material adverse effect on the Company’s financial position or results
of operations.
Note
5- Notes Payable- Related Party
Notes
Payable – Related Party
During
the normal course of business, Michael Farkas, a related party, has lent funds to the company to continue their operations. As of September
30, 2023 and December 31, 2022, the note payable -related party which is due on demand totaled $2,934,650
and $34,650,
respectively, and is included in long term note payable-related party. Borrowings for the nine-month periods ended September 30,
2023 and 2022 were $2,900,000
and $34,650,
respectively. The note bears 4%-5%
interest and an additional 5%-6%
interest was imputed. Interest expense for the nine-month
periods ended September 30, 2023 and 2022 was $23,333
and $1,296,
respectively.
Note
6 – Stockholders’ Equity
Authorized
Capital
The
Company is authorized to issue 100,000
shares of common stock, $0.001
par value, and 100,000
shares of common stock, $0.001
par value. Since the inception of the Company,
all shares authorized, issued and outstanding has been to Michael Farkas, a related party.
Note
7 - Subsequent Event
Subsequent
Event:
In
2023, the Company entered into an agreement to be purchased by EzFill and is in the process of the due diligence process as of November
21, 2023
ANNEX
E
AMENDMENT
TO THE EZFILL HOLDINGS, INC. 2023 EQUITY INCENTIVE PLAN
| 1. | Section
4.1 and Section 4.3 of the EzFill Holdings, Inc. 2023 Equity Incentive Plan (the “Plan”)
of EzFill, Holdings Inc. (the “Company”) are amended to state as follows: |
4.
Shares Subject to the Plan.
4.1
Subject to adjustment in accordance with Section 14 (Adjustments Upon Changes in Stock), no more than 2,900,000 shares of Common Stock
shall be available for the grant of Awards under the Plan (the “Total Share Reserve”). During the terms of the Awards,
the Company shall keep available at all times the number of shares of Common Stock required to satisfy such Awards.
…
4.3
Subject to adjustment in accordance with Section 14, no more than 2,900,000 shares of Common Stock may be issued in the aggregate pursuant
to the exercise of Incentive Stock Options (the “ISO Limit”).
| 2. | All
other provisions of the Plan remain in full force and effect. |
ANNEX
F
INFORMATION CONSENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation in this
Information Statement on Form 14-C of our report dated November 27, 2023, of NEXT Charging LLC. relating to the audit of the financial
statements as of December 31, 2022 and 2021, and for the periods then ended, and the reference to our firm under the caption “Experts”
in the Information Statement.
/s/ M&K CPA’s, PLLC
The Woodlands, Texas
December 1, 2023
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