DEF 14C: EzFill Holdings Stockholders Approve Potential Issuance of Shares to Alcourt, Gad International, and NextNRG Holding Corp.

EzFill Holdings' stockholders have approved the potential issuance of common stock to Alcourt LLC, Gad International Ltd., and NextNRG Holding Corp. to satisfy obligations under promissory notes.

Summary

• EzFill Holdings, Inc. is furnishing this information statement to its stockholders regarding corporate actions approved by the Board of Directors and holders of a majority of the company's voting capital stock via written consent on January 15, 2025.
• The stockholders approved the potential issuance of $500,000 worth of common stock to Alcourt LLC if a promissory note is not repaid by April 15, 2025.
• They also approved the potential issuance of $5,000,000 worth of common stock to Gad International Ltd. if a promissory note is not repaid by February 23, 2025.
• Additionally, they approved the potential issuance of up to 4,460,354 shares of common stock to NextNRG Holding Corp. under certain promissory notes.
• These approvals are required under Nasdaq Listing Rules, specifically 5635(a) and 5635(d), due to the potential issuance of shares exceeding 20% of the company's outstanding shares and related party considerations.
• The actions will become effective 20 calendar days after the information statement is mailed to stockholders as of January 31, 2025.
• The company had 6,483,052 shares of voting stock outstanding as of January 15, 2025, and the consenting stockholders held approximately 63.7% of the voting power.

Sentiment

Score: 4

Explanation: The sentiment is neutral to slightly negative. While the company is taking steps to comply with Nasdaq regulations, the reliance on debt and potential equity dilution raises concerns about its financial health.

Positives

• The company has secured stockholder approval to potentially issue shares to settle debts, providing flexibility in managing its working capital needs.
• The company is complying with Nasdaq Listing Rules by obtaining stockholder approval for potential share issuances that exceed 20% of outstanding shares or involve related parties.

Negatives

• The potential issuance of a significant number of shares could dilute existing stockholders' ownership.
• The need to issue shares to settle debts suggests potential challenges in managing cash flow and meeting financial obligations.
• The reliance on promissory notes and potential share issuances to cover working capital needs may indicate underlying financial instability.

Risks

• Failure to repay the promissory notes to Alcourt LLC and Gad International Ltd. could result in the issuance of a substantial number of new shares, diluting existing stockholders.
• The company's ability to maintain its Nasdaq listing depends on compliance with listing rules, including obtaining necessary stockholder approvals for share issuances.
• The company's financial condition and ability to generate sufficient cash flow to meet its obligations remain a concern.

Future Outlook

The company anticipates complying with Nasdaq Listing Rule 5635(d) 20 calendar days after mailing this Information Statement, as the resolution will then constitute stockholder approval for the company to issue shares of Common Stock to the relevant parties as contemplated by the agreements under Items 1 through 3 above.

Management Comments

• The Board of Directors believes that obtaining stockholder approval for the potential share issuances is necessary to comply with Nasdaq Listing Rules and maintain the company's listing on the Nasdaq Capital Market.

Industry Context

Many companies, especially smaller ones, use promissory notes and potential equity issuances to manage short-term financing needs; however, this can be a sign of financial strain and potential dilution for existing shareholders.

Comparison to Industry Standards

• The use of promissory notes and potential equity issuances for working capital is a common practice among small-cap companies, particularly in volatile sectors.
• However, the potential dilution of over 20% requires careful consideration, as it can negatively impact shareholder value if not managed effectively.
• Companies like FuelCell Energy and Workhorse Group have also utilized similar financing methods, but faced scrutiny regarding dilution and long-term financial stability.

Related Party Transactions

• Michael D. Farkas, a beneficial owner of more than 5% of the company's common stock, is the CEO and largest stockholder of NextNRG Holding Corp., creating a related party transaction.

Stakeholder Impact

• Existing stockholders may experience dilution of their ownership if the company issues new shares to settle debts.
• The company's ability to meet its financial obligations and maintain its Nasdaq listing impacts its reputation and relationships with creditors and other stakeholders.

Next Steps

• The company will mail this information statement to stockholders of record as of January 31, 2025.
• The actions approved by written consent will become effective 20 calendar days after the information statement is first mailed.
• The company will monitor its cash flow and ability to repay the promissory notes to avoid issuing shares.

Key Dates

Keywords

stockholder approval, share issuance, promissory notes, Nasdaq Listing Rules, dilution, EzFill Holdings, NextNRG Holding Corp, Gad International Ltd, Alcourt LLC, common stock