# NEXTNRG, INC. (NXXT) FY 2025 MD&A

Verbatim Item 7 Management's Discussion and Analysis from NEXTNRG, INC.'s 10-K for fiscal year 2025.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1817004/000149315226016896/form10-k.htm
Accession: 0001493152-26-016896
Filing date: 2026-04-16
Report date: 2025-12-31
Extracted from a later financial-section MD&A body after the formal Item 7 span was a short reference. Published MD&A gate trimmed front/tail over-capture.
Confidence: high

Company profile: /company/NXXT/
All MD&A years: /company/NXXT/mda/
Previous year: /company/NXXT/mda/fy2024/ (FY 2024)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The
following discussion and analysis summarizes the significant factors affecting the consolidated operating results, financial condition,
liquidity and cash flows of our Company 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 our consolidated financial statements and related notes included
in this Annual Report on Form 10-K and the audited financial statements and notes thereto as of and for the year ended December 31, 2025
and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations. Unless the context requires
otherwise, references in this Annual Report on Form 10-K to “we,” “us,” and “our” refer to NextNRG,
Inc.

Overview

We
were incorporated under the laws of Delaware in March 2019. We are in the business of operating mobile fueling trucks and are headquartered
in Miami, Florida. NextNRG provides its customers with the ability to have fuel delivered to their vehicles (cars, boats, trucks) without
leaving their home or office and to construction sites, generators and reserve tanks.

Our
mobile fueling solution gives our fleet, consumer and other customers the ability to fuel their vehicles with the touch of an app or
regularly scheduled service, and without the inconvenience of going to the gas station.

Critical
Accounting Policies and Estimates

Management’s
discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which
were prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of these consolidated
financial statements requires us to make estimates and assumptions for the reported amounts of assets, liabilities, revenue, and expenses.
Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates under different assumptions or conditions, and those differences may
be material.

While
our significant accounting policies are more fully described in Note 2—Summary of Significant Accounting Policies of
the Notes to Consolidated Financial Statements included in this annual report, we believe the following discussion addresses our most
critical accounting policies, which are those that are most important to our financial condition and results of operations and which
require our most difficult, subjective and complex judgments.

Principles
of Consolidation

The
consolidated financial statements have been prepared in accordance with GAAP and include the accounts of the Company and its wholly owned
subsidiaries. The Company consolidates entities where it has a controlling financial interest, as defined by the Financial Accounting
Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 810, “Consolidation”.

41

In
accordance with ASC 810-10, consolidation applies to:

[[GREPCENT_TABLE]]
[["","\u25cf","Entities with more than 50% voting interest, unless control is not with the Company; and"],["","\u25cf","Variable interest entities (\u201cVIEs\u201d), where the Company is the primary beneficiary, possessing both (i) power over significant activities and (ii) the obligation to absorb losses or receive benefits."]]
[[/GREPCENT_TABLE]]

All
intercompany transactions and balances are eliminated in consolidation per ASC 810-10-45. The Company continuously evaluates its investments
and relationships to assess consolidation requirements.

Business
Combinations, Asset Acquisitions, and Reverse Acquisitions

The
Company accounts for acquisitions in accordance with ASC 805, “Business Combinations,” and applicable SEC reporting requirements
under Regulation S-X, Rule 3-05 and Regulation S-K, Items 101 and 303. Transactions qualifying as business combinations are accounted
for under the acquisition method, while those classified as asset acquisitions follow the guidance in ASC 805-50. Additionally, the Company
evaluates whether a transaction qualifies as a reverse acquisition under ASC 805-40 and applies the appropriate accounting and disclosure
requirements.

Business
Combinations

For
transactions classified as business combinations, the Company:

[[GREPCENT_TABLE]]
[["","\u25cf","Recognizes and measures identifiable assets acquired, liabilities assumed, and noncontrolling interests at their fair values at the acquisition date (ASC 805-20-25-1)."],["","\u25cf","Records goodwill as the excess of the fair value of consideration transferred over the fair value of net assets acquired, including any previously held equity interests (ASC 805-30-30-1)."],["","\u25cf","Expenses acquisition-related costs as incurred, per ASC 805-10-25-23."],["","\u25cf","Uses preliminary purchase price allocations, with adjustments permitted within the measurement period (not exceeding one year) per ASC 805-10-25-13. Adjustments beyond the measurement period are recorded in earnings."]]
[[/GREPCENT_TABLE]]

Significant
judgments in fair value determinations include:

[[GREPCENT_TABLE]]
[["","\u25cf","Intangible asset valuations, based on estimates of future cash flows and discount rates."],["","\u25cf","Useful life assessments, impacting amortization and financial results."],["","\u25cf","Contingent consideration, which is remeasured at fair value through earnings per ASC 805-30-35-1."]]
[[/GREPCENT_TABLE]]

For
SEC registrants, Regulation S-X, Rule 3-05 may require audited financial statements of the acquired business if the acquisition is significant.
The determination of significance follows Rule 1-02(w) of Regulation S-X, which considers investment, asset, and income tests.

Asset
Acquisitions

For
transactions classified as asset acquisitions under ASC 805-50, the Company:

[[GREPCENT_TABLE]]
[["","\u25cf","Applies the \u201cscreen test\u201d to determine whether substantially all of the fair value of gross assets acquired is concentrated in a single identifiable asset or group of similar assets (ASC 805-10-55-3A)."],["","\u25cf","Allocates the purchase price using a cost accumulation model, assigning costs to acquired assets based on their relative fair values (ASC 805-50-30-3)."],["","\u25cf","Capitalizes direct acquisition costs as part of the asset\u2019s cost, unlike business combinations where such costs are expensed (ASC 805-50-25-1)."]]
[[/GREPCENT_TABLE]]

42

The
classification between business combinations and asset acquisitions requires significant judgment, particularly when applying the screen
test. Incorrect classification can materially impact:

[[GREPCENT_TABLE]]
[["","\u25cf","The recognition of goodwill (only in business combinations)."],["","\u25cf","The measurement and presentation of acquired assets and assumed liabilities."],["","\u25cf","The Company\u2019s financial position and results of operations."]]
[[/GREPCENT_TABLE]]

Reverse
Acquisitions

A
reverse acquisition occurs when the entity that issues securities (the legal acquirer) is identified as the accounting acquiree, and
the entity whose equity interests are acquired (the legal acquiree) is identified as the accounting acquirer under ASC 805-40, “Reverse
Acquisitions.”

Accounting
for Reverse Acquisitions

[[GREPCENT_TABLE]]
[["","\u25cf","The legal acquiree (accounting acquirer) is treated as the continuing reporting entity, and its assets, liabilities, and operations are measured at historical cost."],["","\u25cf","The legal acquirer (accounting acquiree) is recognized at fair value, similar to a business combination."],["","\u25cf","No goodwill is recognized, as the transaction is considered a capital reorganization rather than an acquisition of a business per ASC 805-40-30-2."],["","\u25cf","The equity structure (common stock and additional paid-in capital) is adjusted to reflect that of the legal acquirer, but the retained earnings balance is that of the accounting acquirer."]]
[[/GREPCENT_TABLE]]

Disclosure
Requirements for Reverse Acquisitions

Under
SEC Regulation S-X, Rule 3-05, and Regulation S-K, Items 101 and 303, the Company must disclose:

[[GREPCENT_TABLE]]
[["","\u25cf","A detailed description of the transaction, including how control was obtained."],["","\u25cf","A comparative analysis of financial statements before and after the acquisition."],["","\u25cf","Pro forma financial information in accordance with Regulation S-X, Article 11, showing the impact of the transaction as if it had occurred at the beginning of the reporting period."],["","\u25cf","Changes in governance, management, and operations post-acquisition."]]
[[/GREPCENT_TABLE]]

For
SEC registrants, a reverse merger with a public shell company may also trigger “Super 8-K” reporting requirements under Form
8-K, Item 2.01, requiring disclosure within four business days of the transaction closing.

Regulatory
and Financial Reporting Considerations

For
SEC registrants, acquisitions may trigger additional disclosure and reporting requirements:

[[GREPCENT_TABLE]]
[["","\u25cf","Regulation S-X, Rule 3-05: Requires separate financial statements of the acquired business if it meets significance thresholds under Rule 1-02(w)."],["","\u25cf","Regulation S-K, Item 101: Requires disclosure of the impact of material acquisitions on the Company\u2019s business operations."],["","\u25cf","Regulation S-K, Item 303: Mandates discussion of the impact of acquisitions on the Company\u2019s financial condition and results of operations in Management\u2019s Discussion and Analysis."],["","\u25cf","Regulation S-X, Article 11: Requires pro forma financial statements if the acquisition is significant."],["","\u25cf","Form 8-K, Item 2.01: Immediate reporting requirements for material acquisitions, including reverse mergers."]]
[[/GREPCENT_TABLE]]

The
Company continuously evaluates acquisitions, including reverse acquisitions, to ensure proper classification and compliance with ASC
805, SEC reporting requirements, and regulatory guidance.

Use
of Estimates and Assumptions

The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the
recognition of revenues and expenses during the reporting period. Actual results may differ from these estimates, and such differences
could be material.

43

In
accordance with ASC 250-10-50-4, changes in estimates are recorded in the period in which they become known and are accounted for prospectively.
The Company bases its estimates on historical experience, industry trends, and other relevant factors, incorporating both quantitative
and qualitative assessments that it believes are reasonable under the circumstances.

Significant
estimates for the years ended December 31, 2025, and 2024, respectively, include: 

[[GREPCENT_TABLE]]
[["","\u25cf","Allowance for doubtful accounts and other receivables"],["","\u25cf","Inventory reserves and classifications"],["","\u25cf","Valuation of loss contingencies"],["","\u25cf","Valuation of stock-based compensation"],["","\u25cf","Estimated useful lives of property and equipment"],["","\u25cf","Impairment of intangible assets"],["","\u25cf","Implicit interest rate in right-of-use operating leases"],["","\u25cf","Uncertain tax positions"],["","\u25cf","Valuation allowance on deferred tax assets"]]
[[/GREPCENT_TABLE]]

Risks
and Uncertainties

The
Company operates in a highly competitive industry that is subject to intense market dynamics, shifting consumer demand, and economic
fluctuations. The Company’s operations are exposed to significant financial, operational, and strategic risks, including potential
business disruptions, supply chain constraints, and liquidity challenges.

In
accordance with ASC 275, “Risks and Uncertainties,” the Company evaluates and discloses risks that could materially affect
its financial condition, results of operations, and business outlook. Key factors contributing to variability in sales and earnings include:

[[GREPCENT_TABLE]]
[["","1.","Industry Cyclicality (ASC 275-10-50-6) \u2013 The Company\u2019s financial performance is affected by industry trends, seasonality, and shifts in market demand."],["","2.","Macroeconomic Conditions (ASC 275-10-50-8) \u2013 Economic downturns, inflationary pressures, interest rate changes, and geopolitical risks may impact consumer purchasing behavior and the Company\u2019s revenue streams."],["","3.","Pricing Volatility (ASC 275-10-50-4) \u2013 The cost and availability of raw materials, supply chain disruptions, and competitive pricing pressures can lead to fluctuations in gross margins and profitability."]]
[[/GREPCENT_TABLE]]

Given
these uncertainties, the Company faces challenges in accurately forecasting financial performance and may experience material risks affecting
liquidity, business continuity, and long-term strategic growth. The Company continuously assesses these risks and implements measures
to mitigate their potential impact.

Accounts
Receivable

The
Company accounts for accounts receivable in accordance with ASC 310, Receivables. Receivables are recorded at their net realizable value,
which represents the amount management expects to collect from outstanding customer balances (ASC 310-10-35-7).

The
Company extends credit to customers based on an evaluation of their financial condition and other factors. The Company does not require
collateral, and interest is not accrued on overdue accounts receivable (ASC 310-10-45-4).

Allowance
for Doubtful Accounts

Management
periodically assesses the collectability of accounts receivable and establishes an allowance for doubtful accounts as needed. The allowance
is determined based on:

[[GREPCENT_TABLE]]
[["","\u25cf","A review of outstanding accounts,"],["","\u25cf","Historical collection experience, and"],["","\u25cf","Current economic conditions (ASC 310-10-35-9)."]]
[[/GREPCENT_TABLE]]

Accounts
deemed uncollectible are written off against the allowance when determined to be uncollectible (ASC 310-10-35-10).

44

Inventory

The
Company accounts for inventory in accordance with ASC 330, Inventory. Inventory consists solely of fuel and is stated at the lower of
cost or net realizable value using the first-in, first-out (FIFO) method, as required by ASC 330-10-35-1.

Inventory
Valuation and Reserve Assessment

Management
assesses the recoverability of inventory each reporting period and establishes reserves for potential inventory write-downs when necessary.
The Company evaluates factors such as:

[[GREPCENT_TABLE]]
[["","\u25cf","Market conditions affecting fuel prices,"],["","\u25cf","Net realizable value based on estimated selling price, and"],["","\u25cf","Inventory turnover trends (ASC 330-10-35-2)."]]
[[/GREPCENT_TABLE]]

Right
of Use Assets and Lease Obligations

The Company accounts for right-of-use (“ROU”)
assets and lease liabilities in accordance with ASC 842, Leases. These amounts reflect the present value of the Company’s estimated
future minimum lease payments over the lease term, including any reasonably certain renewal options, discounted using a collateralized
incremental borrowing rate (ASC 842-20-30-1).

The Company classifies its leases as either operating or finance leases based on the criteria outlined in ASC 842-10-25-2.
The Company’s real-estate and certain equipment leases are classified as operating leases and are included as ROU assets and operating
lease liabilities on the consolidated balance sheet.

Short-Term
Leases

The
Company has elected the short-term lease exemption allowed under ASC 842-20-25-2, whereby leases with a term of 12 months or less are
not recorded on the balance sheet. Instead, lease payments are expensed on a straight-line basis over the lease term.

Lease
Term and Renewal Options

In
determining the lease term, the Company evaluates whether renewal options are reasonably certain to be exercised, as required by ASC
842-10-30-1. Factors considered include:

[[GREPCENT_TABLE]]
[["","\u25cf","The useful life of leasehold improvements relative to the lease term,"],["","\u25cf","The economic performance of the business at the leased location,"],["","\u25cf","The comparative cost of renewal rates versus market rates, and"],["","\u25cf","The presence of any significant economic penalties for non-renewal (ASC 842-10-55-26)."]]
[[/GREPCENT_TABLE]]

If a renewal option is deemed reasonably
certain to be exercised, the ROU asset and lease liability reflect those additional future lease payments. The Company’s operating
leases contain renewal options with no residual value guarantees. Currently, management does not expect to exercise any renewal options,
which are therefore excluded in the measurement of lease obligations.

Discount
Rate and Lease Liability Measurement

Since the implicit rate in the Company’s operating
leases is not readily determinable, the Company applies an incremental borrowing rate that represents the rate it would incur to borrow
on a collateralized basis over a similar term and currency environment (ASC 842-20-30-3).

45

Lease
Impairment

In
accordance with ASC 360-10-35, the Company evaluates ROU assets for impairment indicators whenever events or changes in circumstances
suggest the carrying amount may not be recoverable. No impairments of ROU assets were recognized for the years ended December 31, 2025,
and 2024.

See
Note 7 for details on third-party and related-party operating leases.

The
Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers, as amended by Accounting Standards Update
(“ASU”) 2014-09. Under ASC 606, revenue is recognized when control of the promised goods or services is transferred to the
customer in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services.

The
Company generates revenue from mobile fuel sales, which can be purchased as a one-time transaction or through a monthly membership. Revenue
from fuel sales is recognized at the time of delivery, and membership revenue is recognized at the end of each month, reflecting the
satisfaction of the performance obligation over time within a one-month membership cycle.

The
Company follows the five-step revenue recognition model outlined in ASC 606-10-05-4:

[[GREPCENT_TABLE]]
[["","1.","Identify the Contract with a Customer"]]
[[/GREPCENT_TABLE]]

A
contract exists when the following criteria are met, per ASC 606-10-25-1:

[[GREPCENT_TABLE]]
[["","\u25cf","The contract creates enforceable rights and obligations between the Company and the customer."],["","\u25cf","The contract has commercial substance (i.e., it affects the Company\u2019s cash flows)."],["","\u25cf","The payment terms are identified, and the consideration is determinable."],["","\u25cf","It is probable that the Company will collect the consideration in exchange for the goods or services transferred."]]
[[/GREPCENT_TABLE]]

Contracts
for mobile fuel sales and memberships meet these criteria. Collectability is assessed based on historical customer payment trends and
credit risk in accordance with ASC 606-10-25-5.

[[GREPCENT_TABLE]]
[["","2.","Identify the Performance Obligations in the Contract"]]
[[/GREPCENT_TABLE]]

A
performance obligation is a distinct good or service promised in the contract that is both capable of being distinct and distinct in
the context of the contract, per ASC 606-10-25-19.

The
Company has determined that its contracts, based on sales type, contain two distinct performance obligations:

[[GREPCENT_TABLE]]
[["","\u25cf","Fuel Sales \u2013 The delivery of fuel to a customer, with revenue recognized at the point of delivery."],["","\u25cf","Membership Fees \u2013 Monthly membership services, with revenue recognized over time within a one-month membership cycle, as the customer benefits from access to services throughout the period."]]
[[/GREPCENT_TABLE]]

These
performance obligations are not bundled or combined, as each service is separately identifiable, in accordance with ASC 606-10-25-22.

[[GREPCENT_TABLE]]
[["","3.","Determine the Transaction Price"]]
[[/GREPCENT_TABLE]]

The
transaction price is the amount of consideration the Company expects to receive in exchange for transferring goods or services to the
customer, per ASC 606-10-32-2.

46

The
Company’s transaction price considerations include:

[[GREPCENT_TABLE]]
[["","\u25cf","Fixed consideration \u2013 Prices are clearly stated and do not vary based on performance."],["","\u25cf","No variable consideration \u2013 The Company does not formally offer refunds, rebates, or pricing incentives. During the years ended December 31, 2025 and 2024, respectively, the Company granted insignificant discounts of less than 1% of total revenues."],["","\u25cf","No financing component \u2013 Payments are made upon fuel delivery or at the end of the monthly membership cycle, per ASC 606-10-32-15."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","4.","Allocate the Transaction Price to Performance Obligations"]]
[[/GREPCENT_TABLE]]

For
contracts with a single performance obligation, the entire transaction price is allocated to that obligation, per ASC 606-10-32-40.

If
a contract included multiple performance obligations, the transaction price would be allocated based on relative standalone selling prices
(“SSP”) as required by ASC 606-10-32-28. The standalone selling price is determined based on observable sales data.

The
Company’s fuel sales and memberships each have a distinct standalone selling price, eliminating the need for allocation adjustments.

[[GREPCENT_TABLE]]
[["","5.","Recognize Revenue When (or As) Performance Obligations Are Satisfied"]]
[[/GREPCENT_TABLE]]

Revenue
is recognized at the point in time when control over a product or service is transferred to the customer, in accordance with ASC 606-10-25-30.

[[GREPCENT_TABLE]]
[["","\u25cf","Fuel Sales: Control transfers at the time of fuel delivery, at which point revenue is recognized."],["","\u25cf","Membership Fees: Revenue is recognized over time within a one-month cycle, as customers receive continuous access to fuel delivery services throughout the month."]]
[[/GREPCENT_TABLE]]

The
Company does not recognize revenue based on customer invoicing dates; instead, it ensures revenue recognition aligns with the actual
satisfaction of performance obligations per ASC 606-10-25-31.

Sale-Leaseback
Transactions

During
the year ended December 31, 2025, the Company entered into four sale-leaseback transactions with Equify Financial, LLC under Master Lease
No. 17348L pursuant to which the Company sold certain transportation equipment and concurrently leased the equipment back for a 36-month
term, with monthly rent paid in advance and a lessee-paid TRAC residual due at the end of the term.

The
Company evaluated these transactions under ASC 606 and ASC 842-40 and concluded that the transfers did not qualify for sale accounting
because the present value of the lease payments, including the TRAC, represents substantially all of the fair value of the underlying
equipment (ASC 842-10-25-2(d)). Accordingly, the transactions are accounted for as financings: the equipment remains on the Company’s
balance sheet within property and equipment and continues to be depreciated on a straight-line basis over its estimated useful life of
five years; the cash proceeds received are recorded as a financing obligation; and scheduled lease payments are bifurcated between interest
expense (recognized using the implicit rate in the arrangement) and principal reduction of the financing obligation.

As
of December 31, 2025, the weighted-average implicit rate across the four arrangements was approximately 16.4% per annum and the aggregate
outstanding financing obligation was approximately $3.6 million.

Principal
vs. Agent Considerations

In
evaluating whether the Company acts as a principal or an agent in its fuel sales transactions, the Company applies the guidance in ASC
606-10-55-36 through 55-40. The Company has determined that it is the principal in these transactions based on the following factors:

[[GREPCENT_TABLE]]
[["","\u25cf","The Company controls the fuel before it is transferred to the customer."],["","\u25cf","The Company has discretion in pricing, as it sets the selling price of fuel."],["","\u25cf","The Company is responsible for fulfilling the obligation of delivering fuel to the customer."],["","\u25cf","The Company is exposed to inventory risk, as it procures and holds fuel before sale."]]
[[/GREPCENT_TABLE]]

Based
on these factors, the Company recognizes revenue on a gross basis, as it is the principal in fuel sales transactions in accordance with
ASC 606-10-55-37A.

Summary
of Compliance with ASC 606 and ASU Updates

[[GREPCENT_TABLE]]
[["Revenue Stream","","Performance Obligation","","Recognition Timing","","Consideration Type"],["Fuel Sales","","Fuel Delivery","","At time of delivery","","Fixed price per gallon"],["Membership Fees","","Monthly access to fuel services","","Over time (one-month cycle)","","Fixed monthly subscription"]]
[[/GREPCENT_TABLE]]

47

Contract
Liabilities (Deferred Revenue)

Contract
liabilities represent amounts received from customers before the satisfaction of performance obligations, which are subsequently recognized
as revenue upon fulfillment.

Under
ASC 606-10-45-2, the Company discloses contract balances related to deferred revenue when applicable. Any prepayments received for fuel
deliveries or memberships are classified as contract liabilities until revenue recognition criteria are met.

Income
Taxes

The
Company accounts for income taxes using the asset and liability method prescribed by ASC 740, Income Taxes. Under this method, deferred
tax assets and liabilities are recognized for the future tax consequences of differences between the financial reporting and tax bases
of assets and liabilities. These amounts are measured using enacted tax rates expected to apply in the periods when temporary differences
reverse (ASC 740-10-30-8).

The
effect of a change in tax rates on deferred tax balances is recognized as income or expense in the period that includes the enactment
date (ASC 740-10-45-4).

Uncertain
Tax Positions

The
Company evaluates uncertain tax positions in accordance with ASC 740-10-25, which requires that a tax position be recognized in the financial
statements only if it is more likely than not (greater than 50% likelihood) to be sustained upon examination by tax authorities.

As
of December 31, 2025 and 2024, respectively, the Company had no uncertain tax positions that qualified for recognition or disclosure
in the financial statements (ASC 740-10-50-15). 

The
Company also recognizes interest and penalties related to uncertain tax positions in other expense in the consolidated statement of operations
(ASC 740-10-45-25). No interest and penalties were recorded for the years ended December 31, 2025 and 2024. 

Valuation
of Deferred Tax Assets

The
Company’s deferred tax assets include certain future tax benefits, such as net operating losses (NOLs), tax credits, and deductible
temporary differences. Under ASC 740-10-30-5, a valuation allowance is required if it is more likely than not that some portion, or all,
of the deferred tax assets will not be realized.

The
Company reviews the realizability of deferred tax assets on a quarterly basis, or more frequently if circumstances warrant, considering
both positive and negative evidence (ASC 740-10-30-16).

Factors
Considered in Valuation Allowance Assessment

The
Company evaluates multiple factors in determining whether a valuation allowance is necessary, including:

[[GREPCENT_TABLE]]
[["","\u25cf","Historical earnings trends (cumulative pre-tax income or losses in the most recent three-year period)"],["","\u25cf","Future financial projections, including expected taxable income based on long-term estimates of business performance and market conditions"],["","\u25cf","Statutory carryforward periods for net operating losses and other deferred tax assets"],["","\u25cf","Prudent and feasible tax planning strategies that could impact the realization of deferred tax assets"],["","\u25cf","Nature and predictability of temporary differences and the timing of their reversal"],["","\u25cf","Sensitivity of financial forecasts to external factors such as commodity prices, market demand, and operational risks"]]
[[/GREPCENT_TABLE]]

While
cumulative three-year losses are a strong indicator that a valuation allowance may be needed, ASC 740-10-30-23 states that a valuation
allowance determination is not solely based on past losses—all available positive and negative evidence must be considered.

48

Valuation
Allowance Determination

At
December 31, 2025 and 2024, respectively, the Company recorded a full valuation allowance against its deferred tax assets, resulting
in a net carrying amount of $0.  This determination was based on cumulative losses in recent years and the lack of sufficient positive
evidence to support the realization of deferred tax assets in the near term (ASC 740-10-30-24).

The
Company will continue to evaluate its valuation allowance each reporting period and will recognize deferred tax assets in the future
if sufficient positive evidence emerges to support their realization.

Stock-Based
Compensation

The
Company accounts for stock-based compensation in accordance with ASC 718, “Compensation – Stock Compensation,” using
the fair value-based method. Under this guidance, compensation cost is measured at the grant date based on the fair value of the award
and is recognized over the requisite service period, typically the vesting period.

ASC
718 establishes accounting standards for transactions in which an entity exchanges its equity instruments for goods or services. It also
applies to transactions where an entity incurs liabilities based on the fair value of its equity instruments or liabilities that may
be settled using equity instruments.

In
compliance with ASU 2018-07, the Company applies the fair value method for equity instruments granted to both employees and non-employees,
aligning non-employee share-based payment accounting with that of employees. The fair value of stock-based compensation is determined
as of the grant date or the measurement date (i.e., when the performance obligation is completed) and is recognized over the vesting
period in accordance with ASC 718.

The
Company determines the fair value of stock options using the Black-Scholes option pricing model, considering the following key assumptions:

[[GREPCENT_TABLE]]
[["","\u25cf","Exercise price \u2013 The agreed-upon price at which the option can be exercised."],["","\u25cf","Expected dividends \u2013 The anticipated dividend yield over the expected life of the option."],["","\u25cf","Expected volatility \u2013 Based on historical stock price fluctuations."],["","\u25cf","Risk-free interest rate \u2013 Derived from U.S. Treasury securities with similar maturities."],["","\u25cf","Expected life of the option \u2013 Estimated based on historical exercise patterns and contractual terms."]]
[[/GREPCENT_TABLE]]

Additionally,
the Company follows the guidance under ASU 2016-09, which introduced amendments to simplify certain accounting aspects of share-based
compensation, including:

[[GREPCENT_TABLE]]
[["","\u25cf","The treatment of tax benefits and tax deficiencies in income tax reporting."],["","\u25cf","The option to recognize forfeitures as they occur rather than estimating them upfront."],["","\u25cf","Cash flow classification for certain tax-related transactions."]]
[[/GREPCENT_TABLE]]

The
Company continues to evaluate and apply the latest ASUs and interpretive releases related to stock-based compensation to ensure compliance
with evolving financial reporting requirements.

Basic
and Diluted Earnings (Loss) per Share and Reverse Stock Split

The
Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings Per Share.” The calculation
of basic EPS follows the two-class method and is determined by dividing net earnings available to common shareholders by the weighted
average number of common shares outstanding, including certain other shares committed to be issued.

49

Basic
EPS

Basic
EPS is calculated using the two-class method, as prescribed by ASC 260-10-45-60, and is computed as follows:

[[GREPCENT_TABLE]]
[["","\u25cf","Net earnings available to common shareholders represent net earnings to common shareholders, adjusted for the allocation of earnings to participating securities."],["","\u25cf","Losses are not allocated to participating securities in accordance with ASC 260-10-45-61."],["","\u25cf","The denominator includes common shares outstanding and certain other shares committed to be issued, such as restricted stock and restricted stock units (\u201cRSUs\u201d), for which no future service is required."]]
[[/GREPCENT_TABLE]]

Diluted
EPS

Diluted
EPS is calculated under both the two-class method and the treasury stock method, and the more dilutive result is reported, as required
by ASC 260-10-45-45.

[[GREPCENT_TABLE]]
[["","\u25cf","Diluted EPS is computed by taking the sum of:"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cb","Net earnings available to common shareholders"],["","\u25cb","Dividends on preferred shares"],["","\u25cb","Dividends on dilutive mandatorily redeemable convertible preferred shares"],["","\u25cb","Divided by the weighted average number of common shares outstanding and certain other shares committed to be issued, plus all dilutive common stock equivalents during the period, such as:"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25a0","Stock options"],["","\u25a0","Warrants"],["","\u25a0","Convertible preferred stock"],["","\u25a0","Convertible debt"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","Preferred shares and unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) qualify as participating securities under the two-class method, per ASC 260-10-45-62."]]
[[/GREPCENT_TABLE]]

Net
Loss Per Share Considerations

In
computing net loss per share, unvested shares of common stock are excluded from the denominator, as required by ASC 260-10-45-48.

Participating
Securities & Share-Based Compensation

Restricted
stock and RSUs granted as part of share-based compensation contain nonforfeitable rights to dividends and dividend equivalents, respectively.
Therefore:

[[GREPCENT_TABLE]]
[["","\u25cf","Before the requisite service is rendered for the right to retain the award, these instruments meet the definition of a participating security under ASC 260-10-45-59."],["","\u25cf","RSUs granted under an executive compensation plan, however, are not considered participating securities because the rights to dividend equivalents are forfeitable (ASC 718-10-25)."]]
[[/GREPCENT_TABLE]]

Related
Parties

The
Company defines related parties in accordance with ASC 850, “Related Party Disclosures,” and Regulation S-X, Rule 4-08(k).
Related parties include entities and individuals that, directly or indirectly, through one or more intermediaries, control, are controlled
by, or are under common control with the Company.

Related
parties include, but are not limited to:

[[GREPCENT_TABLE]]
[["","\u25cf","Principal owners of the Company."],["","\u25cf","Members of management (including directors, executive officers, and key employees)."],["","\u25cf","Immediate family members of principal owners and members of management."],["","\u25cf","Entities affiliated with principal owners or management through direct or indirect ownership."],["","\u25cf","Entities with which the Company has significant transactions, where one party has the ability to exercise control or significant influence over the management or operating policies of the other."]]
[[/GREPCENT_TABLE]]

50

A
party is considered related if it has the ability to control or significantly influence the management or operating policies of the Company
in a manner that could prevent either party from fully pursuing its own separate economic interests.

The
Company discloses all material related party transactions, including:

[[GREPCENT_TABLE]]
[["","\u25cf","The nature of the relationship between the parties."],["","\u25cf","A description of the transaction(s), including terms and amounts involved."],["","\u25cf","Any amounts due to or from related parties as of the reporting date."],["","\u25cf","Any other elements necessary for a clear understanding of the transactions\u2019 effects on the financial statements."]]
[[/GREPCENT_TABLE]]

Disclosures
are made in accordance with ASC 850-10-50-1 through 50-6 and Regulation S-X, Rule 4-08(k), which requires registrants to disclose material
related party transactions and their effects on the financial position and results of operations.

[[GREPCENT_TABLE]]
[["","\u25cf","See Notes 1, 10 and 12, which discuss a common control merger between Next and EZFL, after year end, on February 13, 2025"],["","\u25cf","See Note 4 which includes accrued interest payable \u2013 related parties."],["","\u25cf","See Notes 5 and 12 for a discussion of related party debt."],["","\u25cf","See Note 7 regarding right-of-use operating lease with the Company\u2019s Chief Technology Officer."],["","\u25cf","See Note 8 for a discussion of equity transactions with certain officers and directors."]]
[[/GREPCENT_TABLE]]

Recent
Accounting Standards 

In
November 2023, the FASB issued ASU 2023-07, which enhances disclosure requirements for reportable segments by:

[[GREPCENT_TABLE]]
[["","\u25cf","Requiring enhanced disclosures of significant segment expenses."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","Aligning segment reporting requirements with information regularly reviewed by management."]]
[[/GREPCENT_TABLE]]

The
Company adopted ASU 2023-07 on January 1, 2024. The adoption did not have a material impact on the Company’s consolidated financial
statements.

Recently
Issued Accounting Standards Not Yet Adopted

In
December 2023, the FASB issued ASU 2023-09, which enhances income tax disclosure requirements by:

[[GREPCENT_TABLE]]
[["","\u25cf","Standardizing and disaggregating rate reconciliation categories."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","Requiring disclosure of income taxes paid by jurisdiction."]]
[[/GREPCENT_TABLE]]

This
ASU is effective for annual periods beginning after December 15, 2024, and may be applied on a prospective or retrospective basis. Early
adoption is permitted.

The
Company is currently assessing the impact of ASU 2023-09 on its income tax disclosures and reporting requirements.

51

In
November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation
Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). This standard requires
additional disclosures of certain expenses, including purchases of inventory, employee compensation, depreciation, intangible asset
amortization, and other specific expense categories. This standard also requires disclosure of the total amount of selling expenses
and the Company’s definition of selling expenses. This update is effective for fiscal years beginning after December 15, 2026,
and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. We are evaluating the impact
this update will have on our annual disclosures; however, it will not impact our financial condition, results of operations, or cash
flows.

Other
Accounting Standards Updates

The
FASB has issued various technical corrections and industry-specific updates that are not expected to have a material impact on the Company’s
consolidated financial position, results of operations, or cash flows.

Results
of Operations

General

The
Company operates an on-demand mobile fueling service that allows customers—ranging from individual consumers to commercial fleets—to
schedule fuel deliveries directly to their vehicles or equipment via a proprietary technology platform. The Company’s revenue is
generated primarily from the sale and delivery of fuel. Cost of sales includes the cost of fuel, direct labor, and other delivery-related
expenses. Operating expenses consist of selling, general and administrative expenses, technology development, and other unallocated overhead.

The
following table sets forth our results of operations for the year ended December 31, 2025 and 2024:

[[GREPCENT_TABLE]]
[["","","Years Ended December 31,","","","Year over Year Changes"],["","","2025","","","2024","","","Increase (Decrease)"],["Operating Expenses","","Amount","","","Amount","","","$ Amount","","","% Change"],["Revenues","","$","81,835,279","","","$","27,770,280","","","$","54,064,999","","","","194.69","%"],["Cost of Sales","","","74,928,249","","","","25,983,342","","","","48,944,907","","","","188.37","%"],["Operating Expenses","","","65,874,460","","","","11,950,573","","","","53,923,887","","","","451.22","%"],["Depreciation and amortization","","","2,689,293","","","","1,545,806","","","","1,143,487","","","","73.97","%"],["Impairment loss","","","8,535,825","","","","-","","","","8,535,825","","","","100.00","%"],["Operating Loss","","","(70,192,548",")","","","(11,709,441",")","","","(58,483,107",")","","","499.45","%"],["Other income (expense)","","","(17,983,449",")","","","(9,687,192",")","","","(8,296,257",")","","","85.64","%"],["Net Loss","","$","(88,175,997",")","","$","(21,396,633",")","","$","(66,779,364",")","","","312.10","%"]]
[[/GREPCENT_TABLE]]

52

Revenues

Revenues
for the year ended December 31, 2025, increased significantly compared to the prior year December 31, 2024. This growth was primarily
attributable to a rise in gallons delivered, as well as an uptick in the average price per gallon. Several factors contributed to this
performance:

[[GREPCENT_TABLE]]
[["","1.","Expanded Customer Base"]]
[[/GREPCENT_TABLE]]

The
Company successfully grew its presence in existing markets while entering new regions, resulting in a higher total volume of fuel
delivered. This expansion was supported by focused sales efforts and brand-building initiatives that attracted both new commercial and residential customers.

[[GREPCENT_TABLE]]
[["","2.","Fleet Partnerships"]]
[[/GREPCENT_TABLE]]

Strategic
partnerships with commercial fleet operators continued to drive fueling volumes. These partnerships often involve recurring, contracted
deliveries that provide a stable, predictable revenue stream. As more fleet operators adopt on-demand fueling to reduce downtime and
optimize logistics, EzFill benefits from increased, repeat business.

[[GREPCENT_TABLE]]
[["","3.","Enhanced Technology & Marketing"]]
[[/GREPCENT_TABLE]]

Ongoing
enhancements to the EzFill mobile application—including user interface improvements and expanded scheduling features—improved
the customer experience and streamlined order placement. Coupled with targeted marketing campaigns, these tech and branding initiatives
boosted visibility and encouraged higher consumer adoption rates, further lifting revenues.

Cost
of Sales

Cost
of sales rose year over year, in line with the higher sales volumes and expanded market coverage. Despite the increase in absolute costs,
gross profit improved, reflecting disciplined pricing, higher-margin sales, and operational efficiencies. Key factors influencing cost
of sales include:

[[GREPCENT_TABLE]]
[["","1.","Higher Fuel Volume"]]
[[/GREPCENT_TABLE]]

As
overall demand increased, the Company purchased and delivered a greater volume of fuel. Although this drove up the total cost of sales,
it remained proportionate to revenue growth, preserving gross margins.

[[GREPCENT_TABLE]]
[["","2.","Fuel Price Fluctuations"]]
[[/GREPCENT_TABLE]]

Commodity
price swings can significantly affect fuel costs. However, the Company’s dynamic pricing strategies and supplier relationships
helped ensure that these fluctuations did not adversely impact overall profitability.

[[GREPCENT_TABLE]]
[["","3.","Logistics & Delivery Costs"]]
[[/GREPCENT_TABLE]]

Expansion
into new geographic areas required additional delivery routes and staffing. While these investments raised labor and transportation costs,
they were essential for meeting growing customer demand. Improved driver efficiency and delivery scheduling helped partially offset the
impact of these higher costs, contributing to the year-over-year improvement in gross profit.

Operating
Expenses

Operating
expenses increased compared to the prior year, primarily due to an increase in sales and revenue.

53

Depreciation
and Amortization

Depreciation
and amortization also increased year over year. The primary driver of this increase was the depreciation of newly acquired vehicles during the year, reflecting the Company’s ongoing
investments in delivery vehicles, fueling technology, and other capital expenditures necessary to support continued growth and maintain
operational efficiency.

Other
Income (Expense)

Other
income and (expense) consisted of the following

[[GREPCENT_TABLE]]
[["","","For the Years Ended December 31,","","","Year over Year Changes"],["","","2025","","","2024","","","Increase (Decrease)"],["","","Amount","","","Amount","","","$ Amount","","","% Change"],["Interest income","","$","8","","","$","283,193","","","$","(283,185",")","","","100.00","%"],["Other income","","","150,183","","","","305,030","","","","(154,847",")","","","(50.76",")%"],["Interest expense (including amortization of debt discount)","","","(17,270,979",")","","","(9,367,915",")","","","(7,903,064",")","","","84.36","%"],["Gain (loss) on settlement of liabilities","","","(862,661",")","","","-","","","","(862,661",")","","","(100",")%"],["Loss on debt extinguishment - related party","","","-","","","","(907,500",")","","","907,500","","","","(100.00",")%"],["Total other income (expense) - net","","$","(17,983,449",")","","$","(9,687,192",")","","$","(8,296,257",")","","","85.64","%"]]
[[/GREPCENT_TABLE]]

The
Company’s other income (expense), net, deteriorated significantly for the year ended December 31, 2025, compared to the prior year.
The primary drivers were the increase in interest expense—particularly from default penalty interest—and the loss on debt
extinguishment associated with related-party debt transactions. Below is a detailed breakdown of the major components.

Interest
Income

Interest
income decreased in 2025, reflecting a continuation in the Company’s cash management strategy. In 2024, the Company had short-term
investments or interest-bearing accounts that generated interest, which did not recur in 2025.

Other
income

Other
income decreased year over year.

Interest
Expense (including amortization of debt discount)

Interest
expense surged in 2025, primarily due to:

[[GREPCENT_TABLE]]
[["","1.","Default Penalty Interest: The Company incurred significantly more in default penalty interest in 2025 than in the prior year. This penalty arose from contractual defaults related to late note payments."]]
[[/GREPCENT_TABLE]]

54

[[GREPCENT_TABLE]]
[["","2.","Amortization of Debt Discount: The amortization of debt discount increased to $9,586,418 in 2025 from $5,352,448 in 2024. This reflects additional debt arrangements with original issue discounts. Additionally, in connection with the conversion of debt converted to equity, related unamortized discounts were expensed at that time."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","3.","Existing and New Borrowings: Interest expense was recognized on outstanding debt instruments."]]
[[/GREPCENT_TABLE]]

Loss
on Sale of Marketable Debt Securities - Net

The
Company had no activity related to marketable securities in 2024 or 2025.

Loss
on Debt Extinguishment – Related Party

The
Company recorded a loss on debt extinguishment of $907,500 in 2024 in connection with the conversion of related-party debt to Series
A Preferred Stock. By contrast, in 2025, the Company did not record a loss on debt extinguishment.

Net
Loss

[[GREPCENT_TABLE]]
[["","","Years Ended December 31,","","","Year over Year Changes"],["","","2025","","","2024","","","Increase (Decrease)"],["","","Amount","","","Amount","","","$ Amount","","","% Change"],["Net Loss","","$","(88,175,997",")","","$","(21,396,633",")","","$","(66,779,364",")","","","312.10","%"]]
[[/GREPCENT_TABLE]]

Our
net loss was the result of the categories discussed above. Overall, the increase in revenues, driven by both volume and pricing, showcases
the Company’s successful market expansion and deepening fleet partnerships. While costs naturally rose with higher delivery volumes,
disciplined operational execution and strategic pricing helped improve gross profit. Ongoing cost-optimization initiatives further reduced
operating expenses, though the Company continues to invest in talent and technology to fuel long-term growth.

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, impairment of goodwill, other intangibles and fixed assets, 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.

The
following is a reconciliation of net loss to the non-GAAP financial measure referred to as Adjusted EBITDA for the year ended December
31, 2025 and 2024:

[[GREPCENT_TABLE]]
[["","","Years Ended December 31,","","","Year over Year Changes"],["","","2025","","","2024","","","Increase (Decrease)"],["","","Amount","","","Amount","","","$ Amount","","","% Change"],["Net loss","","$","88,175,997","","","$","21,396,633","","","$","66,779,364","","","","312.10","%"],["Interest expense, net","","","17,270,979","","","","9,367,915","","","","7,903,064","","","","84.36","%"],["Depreciation and amortization","","","2,689,293","","","","1,545,806","","","","839,222","","","","73.97","%"],["Impairment of goodwill, other intangibles and fixed assets","","","8,535,825","","","","13,422","","","","8,522,403","","","","63,495.78","%"],["Stock compensation","","","42,589,563","","","","1,531,640","","","","41,057,923","","","","2,969.91","%"],["Adjusted EBITDA","","$","17,090,337","","","$","8,937,850","","","$","7,440,017","","","","83.24","%"]]
[[/GREPCENT_TABLE]]

55

Liquidity
and Capital Resources

Cash
Flow Activities

Our
cash balances at December 31, 2025 and 2024 were as follows:

[[GREPCENT_TABLE]]
[["","","","","","","","","Year-over-Year Changes"],["","","December 31,","","","December 31,","","","Increase (Decrease)"],["","","2025","","","2024","","","$ Amount","","","% Change"],["Cash and cash equivalents","","$","384,140","","","$","1,612,117","","","$","(1,227,977",")","","","(76.17",")%"]]
[[/GREPCENT_TABLE]]

Cash
and cash equivalents decreased year-over-year. The primary drivers of this increase were:

[[GREPCENT_TABLE]]
[["","1.","Debt Financing Received Late in the Year"]]
[[/GREPCENT_TABLE]]

The
Company secured additional financing toward the end of the fiscal year, boosting its cash position. This infusion of funds was a key
component in supporting ongoing operational needs and future growth initiatives.

[[GREPCENT_TABLE]]
[["","2.","Timing of Expenses"]]
[[/GREPCENT_TABLE]]

Certain
operating expenses were either deferred or settled after year-end, resulting in higher cash on hand as of December 31, 2025. This timing
variance can create short-term fluctuations in the Company’s reported cash balances.

Overall,
the Company’s stronger cash position provides added liquidity to support daily operations, manage working capital requirements,
and pursue strategic opportunities.

Management
continues to monitor cash flows carefully to ensure that the Company maintains sufficient funding for near-term obligations and future
expansion.

The
following reflects our inflows (outflows) from our various operating, investing and financing activities:

[[GREPCENT_TABLE]]
[["","","For the Years Ended December 31,","","","Year over Year Changes"],["","","2025","","","2024","","","Increase (Decrease)"],["Net Cash Provided by (Used in)","","Amount","","","Amount","","","$ Amount","","","% Change"],["Operating activities","","$","(14,497,300",")","","$","(6,257,209",")","","$","(8,240,091",")","","","(131.69",")%"],["Investing activities","","","-","","","","(11,677,978",")","","$","11,677,978","","","","100.00","%"],["Financing activities","","","13,269,323","","","","18,526,043","","","$","(5,256,720",")","","","(28.37",")%"],["Net change in cash and cash equivalents","","$","(1,227,977",")","","$","590,856","","","$","(1,818,833",")","","","(307.83",")%"]]
[[/GREPCENT_TABLE]]

56

Year
Ended December 31, 2025 as compared to the Year Ended December 31, 2024

Operating
Activities

Net cash used in operating activities increased by
approximately $8,2 million, or 28.13%, year-over-year. This increase is largely due to the increase in operating expenses and net loss,
as well as a decrease in interest income.

Investing
Activities

Cash received from investing activities increased
$11.7 million, or 100%, from December 31, 2024 to December 31, 2025, driven by a decrease in a purchase of fixed assets and cash proceeds
from the sale of vehicles.

Financing
Activities

Net cash provided by financing activities decreased
by $5.3 million, or 28.37%, and was largely driven by proceeds from notes receivable and cash from the sale of common stock, offset by
the repayment of notes payable, and entry into a financing lease via a sales
leaseback transaction. .

Net
Change in Cash and Cash Equivalents

Overall, the Company’s cash position decreased
by approximately $1.2 million, or 76%, in 2025. This decrease is primarily the result of increased operating expenses, partially offset
by the increase in revenue, as well as by the decrease of cash provided by financing activities.

Cash
Flow Summary

[[GREPCENT_TABLE]]
[["","1.","Strengthened Liquidity: The significant uptick in financing inflows helped offset operating and investing outflows, resulting in a positive net change in cash and cash equivalents."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","2.","Growth-Focused Investments: The higher cash outflows for investing activities underscore the Company\u2019s commitment to scaling its operations, although this increases near-term cash usage."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","3.","Improving Operational Cash Use: A reduction in net cash used in operating activities highlights improving efficiencies and stronger sales, but continued focus on cost management remains critical to achieving positive operating cash flows in the future."]]
[[/GREPCENT_TABLE]]

Overall,
the Company’s cash flow trends reflect a deliberate effort to fund growth initiatives while managing day-to-day operational needs.
Management believes that recent financing activities, coupled with ongoing improvements in operational efficiency, will position the
Company for future stability and expansion.

57

In
connection with our prior discussion, the following provides a line by line detail of the items affecting our changes in cash flow activities
in the tables below:

Operating
Activities

[[GREPCENT_TABLE]]
[["","","For the Years Ended December 31,"],["","","2025","","","2024","","","Net Change"],["Operating activities"],["Net loss","","$","(88,175,997",")","","$","(21,396,634",")","","$","(66,779,363",")"],["Adjustments to reconcile net income to net cash used in operations"],["Depreciation and amortization","","","2,385,028","","","","1,545,806","","","","839,222"],["Impairment loss - project deposit","","","3,929,161","","","","-","","","","3,929,161"],["Impairment loss - intangible assets","","","4,606,664","","","","-","","","","4,606,664"],["Impairment of fixed assets","","","-","","","","13,422","","","","(13,422",")"],["Contributed capital","","","571,215","","","","168,700","","","","402,515"],["Amortization of operating lease - right-of-use asset","","","-","","","","236,243","","","","(236,243",")"],["Amortization of operating lease - right-of-use asset - related party","","","106,603","","","","55,791","","","","50,812"],["Amortization of debt discount","","","5,697,124","","","","5,352,448","","","","344,676"],["Loss on settlement of liabilities- notes payable","","","3,965,8011","","","","907,500","","","","3,058,301"],["Loss on disposal of vehicles","","","-","","","","-","","","","-"],["Bad debt expense","","","(5,654",")","","","50,581","","","","(56,235",")"],["Default penalty, note extension fee, and imputed interest","","","5,690,694","","","","4,475,565","","","","1,215,129"],["Stock issued for services","","","42,589,563","","","","187,968","","","","42,401,595"],["Stock issued for services - related parties","","","17,333","","","","268,667","","","","(251,334",")"],["(Increase) decrease in"],["Accounts Receivable","","","(418,896",")","","","(427,899",")","","","9,003"],["Inventory","","","(483,461",")","","","7,657","","","","(491,118",")"],["Prepaids and other","","","(110,322",")","","","183,974","","","","(294,296",")"],["Deposits","","","(181,595",")","","","-","","","","(181,595",")"],["Increase (decrease) in"],["Accounts payable and accrued expenses","","","2,405,951","","","","803,810","","","","1,602,141"],["Accounts payable and accrued expenses - related party","","","2,502,104","","","","1,528,173","","","","973,931"],["Stock payable - related party","","","520,000","","","","-","","","","520,000"],["Operating lease liability","","","(4,831",")","","","(246,880",")","","","242,049"],["Operating lease liability - related party","","","(103,785",")","","","27,899","","","","(131,684",")"],["Net cash used in operating activities","","$","(14,497,300",")","","$","(6,257,209",")","","$","(8,240,091",")"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","","For the Years Ended December 31,"],["","","2025","","","2024","","","Net Change"],["Investing activities"],["Cash proceeds from sale of vehicles","","$","-","","","$","-","","","$","-"],["Cash proceeds from the refund of project deposit (Yoshi)","","","-","","","","-","","","","-"],["Deposit on future asset purchase (Yoshi)","","","-","","","","(2,035,283",")","","","2,035,283"],["Project deposit","","","-","","","","(3,929,161",")","","","3,929,161"],["Purchase of fixed assets","","","-","","","","(5,696,384",")","","","5,696,384"],["Advances - related party","","","-","","","","(17,150",")","","","17,150"],["Net cash provided by (used in) investing activities","","$","-","","","$","(11,677,978",")","","$","11,677,978"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","","For the Years Ended December 31,"],["","","2025","","","2024","","","Net Change"],["Financing activities"],["Proceeds from issuance of Series B - convertible preferred stock - related party","","$","-","","","$","1,400,000","","","$","(1,400,000",")"],["Proceeds from notes payable","","","18,977,110","","","","14,651,722","","","","4,325,388"],["Proceeds from notes payable - related party","","","2,001,594","","","","3,300,000","","","","(1,298,406",")"],["Proceeds from common stock issued for cash","","","15,226,134","","","","-","","","","15,226,134"],["Cash paid for direct offering costs - common stock","","","(1,557,005",")","","","-","","","","(1,557,005",")"],["Equify","","","3,577,478","","","","-","","","","3,577,478"],["Repayments on notes payable","","","(23,845,988",")","","","(825,679",")","","","(23,020,309",")"],["Repayments on loan payable - related party","","","(1,110,000",")","","","-","","","","(1,110,000",")"],["Net cash provided by financing activities","","$","13,269,323","","","$","18,526,043","","","$","(5,256,720",")"]]
[[/GREPCENT_TABLE]]

58

Conclusion

[[GREPCENT_TABLE]]
[["","1.","Liquidity and Capital Resources: The decrease in cash from financing activities is primarily due to repayments of notes payable exceeding new funds received from the issuance of new notes payable. Higher interest expense and ongoing operational requirements underscore the importance of prudent cash management and careful monitoring of debt covenants."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","2.","Focus on Operational Efficiency: Management continues to prioritize cost controls, aiming to reduce the net cash used in operating activities. Improved working capital management, route optimization, and potential price adjustments are key levers for achieving positive cash flow from operations in future periods."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","3.","Related-Party Financing: The continued reliance on related-party notes and convertible preferred stock indicates a supportive investor base. Nonetheless, the Company must remain mindful of the terms and potential ramifications of such financing, including interest rates, default provisions, and equity dilution."]]
[[/GREPCENT_TABLE]]

By
maintaining a disciplined approach to both spending and financing, the Company aims to strengthen its balance sheet and sustain the growth
momentum of its on-demand fueling business.

Liquidity
and Sources of Capital

At
this time, we believe our existing funding sources may not be sufficient to meet our operational requirements and service our debt obligations
over the next 12 months from the issuance date of these consolidated financial statements. This assessment is based on our historical
operating performance, ongoing capital needs, and our current reliance on external financing.

Historical
Operating Performance and Financing

Since
inception, the Company has incurred net losses and has not generated sufficient revenues or positive operating income to independently
fund our operations. Consequently, we have depended on equity and debt financings—including those from related parties—to
finance our activities and support our growth initiatives. This reliance on external funding has been critical for maintaining day-to-day
operations, expanding our service capacity, and investing in technology and assets. However, it has also introduced risks related to
interest expense, equity dilution, and dependency on the availability of future financing.

Current
Liquidity Position

Our
liquidity position primarily reflects a combination of cash on hand and available debt arrangements.

Despite
recent improvements in cash balances due to targeted financing activities, we continue to face challenges in achieving sustainable cash
flow from operations. The timing of expenditures and capital outlays, coupled with the inherent volatility in revenue generation in our
industry, adds to the uncertainty of our liquidity profile.

Debt
Obligations and Capital Expenditures

A
significant portion of our near-term cash outflows is attributable to scheduled debt repayments and interest expense, including higher
financing costs incurred from default penalty interest and increased debt discount amortization. Additionally, as we invest in capital
expenditures—such as the purchase of new delivery vehicles and technology enhancements—to support expansion into new markets,
our cash requirements remain elevated. These commitments, while essential for long-term growth, further strain our liquidity in the short
term.

59

Reliance
on External Financing

Given
the current financial dynamics, we have continually relied on external sources of capital. Our funding strategies have included:

[[GREPCENT_TABLE]]
[["","\u25cf","Equity Issuances: Raising capital through the sale of common or preferred shares, including convertible securities from related parties."],["","\u25cf","Debt Financings: Securing loans and other debt instruments, often under terms that include default penalty interest or other onerous conditions, which have contributed to higher financing costs."],["","\u25cf","Related-Party Transactions: Engaging with supportive investors and related parties who have provided additional funds, albeit at terms that may affect our overall capital structure."]]
[[/GREPCENT_TABLE]]

Going
Concern Considerations

Our