Debt

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Debt

Note 5 – Debt

The following represents a summary of the Company’s debt (notes payable – related parties, third party debt for notes payable (including those owed on vehicles), and line of credit, including key terms, and outstanding balances at June 30, 2023 and December 31, 2022, respectively.

Notes Payable – Related Parties and Redeemable Common Stock

	Note #1			Note #2
	Note Payable			Note Payable
Terms	Related Party			Related Party			Total
Issuance date of note		April 2023			April 2023
Maturity date		October 2023			April 2024
Interest rate #1		18	%		5% - in the first month
Interest rate #2		N/A			13% - beginning second month
Collateral		All assets			Unsecured
Balance - December 31, 2022	$	-		$	-		$	-
Advances		1,500,000			262,500			1,762,500
Original issue discount		(546,000	)		(12,500	)		(558,500	)
Amortization of debt discount		-			12,500			12,500
Repayments		217,800			(262,500	)		(44,700	)
Balance - June 30, 2023		1,171,800			-			1,171,800
Current		1,171,800			-			1,171,800
Long term	$	-		$	-		$	-

Note #1

The Company executed a six-month (6) note payable with a face amount of $1,500,000, less an original issue discount of $150,000, along with an additional $140,000 in transaction related fees (total debt discount and issue costs of $290,000), resulting in net proceeds of $1,210,000. The $290,000 in debt discounts and issuance costs are being amortized over the life of the note to interest expense in the accompanying consolidated statements of operations.

EZFILL HOLDING, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

(UNAUDITED)

In connection with obtaining this debt, the Company also committed 250,000 shares of common stock to the lender as additional interest expense (commitment fee). Under the terms of the agreement, only 100,000 shares of common stock were required to be issued on the commitment date resulting in a fair value of $256,000 ($2.56 /share), based upon the quoted closing price. The Company recorded this amount as a debt discount which is being amortized over the life of the note . See Note 8.

The remaining 150,000 commitment fee shares are deemed to be redeemable common stock (temporary equity), having a stated redemption value of $8. If the Company repays the note at the maturity date (October 2023), these shares are returnable. If the note is extended past the maturity date, these shares will then be issued to the lender and valued at the quoted closing price on the note extension date as additional interest expense and amortized over the remaining term of that note.

These 150,000 shares of redeemable common stock are considered contingently returnable shares and therefore, in accordance with ASC 260-10-45-12C and ASC 260-10-45-13, contingently issuable shares (outstanding common shares that are contingently returnable are treated in the same manner as contingently issuable shares), including shares issuable for little or no consideration, are included in the denominator for basic EPS only when the contingent condition has been met and there is no longer a circumstance in which those shares would not be issued. At June 30, 2023, these 150,000 shares of redeemable common stock have been excluded from the calculation of both basic and diluted earnings per share.

At June 30, 2023, and the date of these consolidated financial statements, while the Company believes it will repay the loan at the maturity date (no extension would be needed), the contingency has not yet been resolved.

This note also contains a conversion feature only upon an event of default. The conversion feature is equal to the greater of (a) $0.74 and (b) the lower of (i) the average VWAP over the ten (10) trading day period preceding conversion. Additionally, the note contains an anti-dilution right in the form of a ratchet feature. If at the time of eligible conversion (only if Company is in default) common stock is sold or other debt is converted into common stock at a price lower than the defined conversion price under the terms of this note, the conversion price of this note will be reduced to the lower amount.

The Company has determined that in the event of default, the note will be treated as a derivative liability subject to fair value and related mark to market adjustments at each reporting period.

The unamortized debt discount at June 30, 2023 was $328,200.

This lender has a greater than 10% controlling interest in the Company’s outstanding common stock.

Note #2

An entity controlled by a majority stockholder (approximately 24% common stock ownership) advanced working capital funds (net proceeds of $250,000) to the Company.

In April 2023, note principal of $262,500 along with accrued interest of $13,125, aggregating $275,625 was repaid.

Note Payable (non-vehicles)

The following is a summary of the Company’s note payable (non-vehicles) at June 30, 2023 and December 31, 2022, respectively:

Terms	Note #1
Issuance date of note		June 2023
Maturity date		December 2024
Interest rate		N/A
Collateral		All assets
Balance - December 31, 2022	$	-
Face amount of note		275,250
Debt discount /issuance costs		(25,250	)
Repayments		(4,295	)
Amortization of debt discount		739
Balance - June 30, 2023		246,444
Current		-
Long term	$	246,444

Note #1

The Company executed a note payable with a face amount of $275,250. Under the terms of the agreement, the lender will withhold 8.9% of the Company’s daily funds arising from sales through the lender’s payment processing services until the Company has repaid the $275,250 (interest is $25,250 or approximately 10% of the note amount). The $25,250 is considered a debt issuance cost and is being amortized over the life of the note to interest expense in the accompanying consolidated statements of operations. The Company received net proceeds of $250,000.

EZFILL HOLDING, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

(UNAUDITED)

The unamortized debt discount at June 30, 2023 was $24,511.

Notes Payable - Vehicles

The following is a summary of the Company’s notes payable for its vehicles at June 30, 2023 and December 31, 2022, respectively:

					Default
Issue Date	Maturity Dates		Interest Rate		Interest Rate		Collateral		June 30, 2023		December 31, 2022
2019		January 2022 - December 2023		3.5% - 9.0%		N/A		Vehicles	$	14,419	$	25,830
2021		December 2024 - November 2025		3.5% - 9.0%		N/A		Vehicles		215,258		271,217
2022		January 2025 - May 2027		3.5% - 9.0%		N/A		Vehicles		1,354,045		1,712,849
										1,583,722		2,009,896
								Current		767,339		811,516
								Long-Term	$	816,383	$	1,198,380

The Company executed various vehicle notes with third parties as follows:

Balance - December 31, 2021	$	476,313
Acquisition of vehicles in exchange for notes payable		2,166,643
Repayments		(633,060	)
Balance - December 31, 2022		2,009,896
Repayments		(426,174	)
Balance - June 30, 2023	$	1,583,722

EZFILL HOLDING, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

(UNAUDITED)

Debt Maturities

The following represents the maturities of the Company’s various debt arrangements for each of the five (5) succeeding years and thereafter as follows:

For the Year Ended December 31,	Notes Payable - Related Parties		Notes Payable		Vehicles		Total
2023 (6 Months)	$	1,171,800	$	-	$	412,004	$	1,583,804
2024		-		246,444		818,903		1,065,347
2025		-		-		282,212		282,212
2026		-		-		55,827		55,827
2027		-		-		14,776		14,776
Total	$	1,171,800	$	246,444	$	1,583,722	$	3,001,966

Line of Credit

On December 10, 2021, the Company entered into a Securities-Based Line of Credit, Promissory Note, Security, Pledge and Guaranty Agreement (the “Line of Credit”) with City National Bank of Florida.

Pursuant to the revolving Line of Credit, the Company may borrow up to the Credit Limit, determined from time to time in the sole discretion of the Bank. The Credit Limit was approximately $1,000,000 and $3,000,000 at June 30, 2023 and December 31, 2022, respectively.

Outstanding borrowings under the line of credit were $1,000,000 and $3,000,000 at June 30, 2023 and December 31, 2022, respectively.

To secure the repayment of the Credit Limit, the Bank will have a first priority lien and continuing security interest in the securities held in the Company’s investment portfolio with the Bank. The Company liquidated its entire position in the investment portfolio during the second quarter of 2023. The amount outstanding under the Line of Credit shall bear interest equal to the Reference Rate plus the Spread (as defined in the Line of Credit) in effect each day. Interest is due and payable monthly in arrears.

The interest rate on the Line of Credit was 6.50% at June 30, 2023, and 5.75% at December 31, 2022.

The Bank may, at any time, without notice, and at its sole discretion, demand the repayment of the outstanding line of credit. At June 30, 2023, no demand has been made by the bank for repayment.

EZFILL HOLDING, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

(UNAUDITED)