MIAMI, FL - EzFill Holdings Inc. (NASDAQ:EZFL), a company operating in the auto dealers and gasoline stations sector, has entered into a material definitive agreement with NextNRG Holding Corp., as per a recent 8-K filing with the U.S. Securities and Exchange Commission. The agreement, dated Monday, involves a promissory note for $165,000, intended to support EzFill's working capital needs.
The promissory note, carrying an original issue discount of $15,000, stipulates an 8% annual interest rate for the initial nine months, escalating to 18% thereafter. The note is set to mature on August 24, 2024, with provisions for automatic two-month extensions unless NextNRG opts out with a 10-day notice.
In the event of a default, NextNRG holds the right to demand immediate payment of 150% of the outstanding balance or convert the debt into shares of EzFill's common stock at a conversion price pegged to the higher of the 10-day average VWAP prior to conversion or a floor price of $0.70. However, the conversion price cannot surpass the closing price of EzFill's stock on the NASDAQ Capital Market as of the note's issuance date.
As part of the agreement, EzFill has committed to issuing 52,000 shares of its common stock to NextNRG, considered fully earned as of the note's inception. This issuance is subject to the Nasdaq Listing Rule 5635(d), which caps the number of shares issued at 19.99% of the company's outstanding common stock, unless shareholder approval is obtained for a higher amount. If such approval is not secured, any remaining balance on the note must be settled in cash at NextNRG's request.
Michael Farkas, CEO and major shareholder of NextNRG, who also holds a significant stake in EzFill, was previously involved in an Exchange Agreement that would make NextNRG a wholly-owned subsidiary of EzFill. While the closing of this transaction has not yet occurred, the current promissory note represents a continued financial relationship between the two entities.
InvestingPro Insights
EzFill Holdings Inc. (NASDAQ:EZFL) has recently been on the radar for its financial maneuvers, including the material definitive agreement with NextNRG Holding Corp. To provide additional insight, InvestingPro data shows a challenging financial landscape for EzFill. With a market capitalization of just $9.82 million and a negative P/E ratio of -0.78, reflecting its lack of profitability in the last twelve months as of Q1 2024, investors should be cautious. The company's revenue growth is a bright spot, having increased by 37.06% over the last twelve months as of Q1 2024, which aligns with analysts' anticipation of sales growth in the current year, a notable InvestingPro Tip.
However, the company's cash burn rate and its significant debt burden, as highlighted by two InvestingPro Tips, are areas of concern, particularly as EzFill may have trouble making interest payments on its debt. The company's stock price has also fared poorly over the last month, with a -16.05% return, although it has shown a strong return over the last three months at 19.3%. For investors seeking a deeper analysis and more InvestingPro Tips, there are 11 additional tips available at: https://www.investing.com/pro/EZFL. To access these insights, use coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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