Form 10-Q EVO Transportation & For: Mar 31

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

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10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ______________

Commission file number 000-54218

EVO Transportation & Energy Services, Inc.

(Exact name of registrant as specified in its charter)


Delaware		37-1615850
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

2075 West Pinnacle Peak Rd. Suite 130

Phoenix, AZ 85027

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: 877-973-9191

Securities registered pursuant to Section 12(b) of the Act: None.


Title of each class	Trading Symbol(s)	Name of each exchange on which registered

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (Exchange Act) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐ No ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of June 27, 2022, there were 16,387,944 shares of the registrant’s common stock, par value $0.0001, outstanding.

Explanatory Note

We have been delayed in filing this Quarterly Report on Form 10-Q (this “Q1 2021 Quarterly Report”). Immediately following the filing of this Q1 2021 Quarterly Report, we expect to file our Annual Report on Form 10-K for the year ended December 31, 2021 (the “2020 10-K”). Unless otherwise noted, the disclosures in this Q1 2021 Quarterly Report speak as of March 31, 2021 and for the three-month period then ended.

EVO TRANSPORTATION & ENERGY SERVICES, INC.

INDEX


	Page No.

PART I – FINANCIAL INFORMATION	2

Item 1. Condensed Consolidated Financial Statements (unaudited)	2

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	32

Item 3. Quantitative and Qualitative Disclosures About Market Risk	39

Item 4. Controls and Procedures	39

PART II – OTHER INFORMATION	42

Item 1. Legal Proceedings	42

Item 1A. Risk Factors	42

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	42

Item 3. Defaults Upon Senior Securities	42

Item 4. Mine Safety Disclosures	42

Item 5. Other Information	42

Item 6. Exhibits	42

EXHIBIT INDEX	43

SIGNATURES	44

EVO TRANSPORTATION & ENERGY SERVICES, INC.

PART I – FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (unaudited)

Condensed Consolidated Balance Sheets (unaudited)


	March 31, 2021			December 31, 2020
($ in thousands, except share and per share data)
Assets
Current assets
Cash	$	16,287		$	26,644
Accounts receivable - trade, net		18,678			13,033
Alternative fuels tax credit receivable		234			1,054
Due from related party		10			40
Prepaids and other current assets		2,763			2,205
Total current assets		37,972			42,976
Non-current assets
Property and equipment, net		26,395			28,240
Goodwill		23,837			23,837
Intangible assets, net		4,857			5,087
Operating lease right-of-use assets, net		8,212			10,473
Finance lease right-of-use assets, net		25,844			27,913
Deposits and other long-term assets		4,834			3,797
Total non-current assets		93,979			99,347
Total assets	$	131,951		$	142,323
Liabilities, Temporary Equity and Stockholders’ Deficit
Current liabilities
Accounts payable	$	8,902		$	11,698
Accrued expenses and other current liabilities		11,430			18,589
Accrued interest - related party		2,489			2,249
Embedded derivative liability		1,490			2,278
Warrant liabilities		8,157			11,264
Advances under factoring arrangements, current portion		11,875			24,397
Current portion of long-term debt		20,167			12,727
Current portion of long-term debt - related party		29,666			50,252
Operating lease liabilities, current portion		3,337			3,801
Finance lease liabilities, current portion		4,512			4,597
Total current liabilities		102,025			141,852
Non-current liabilities
Advances under factoring arrangements, less current portion		6,502			—
Long-term debt, less current portion		15,980			24,737
Long-term debt, less current portion - related party		4,957			3,379
Operating lease liabilities, less current portion		4,829			6,553
Finance lease liabilities, less current portion		23,138			24,884
Deferred tax liability		24			17
Total non-current liabilities		55,430			59,570
Total liabilities		157,455			201,422
Commitments and contingencies (Note 11)
Temporary Equity
Series A Redeemable Convertible Preferred stock, $0.0001 par value; 10,000,000 shares authorized, 100,000 shares issued and outstanding, includes accrued and undeclared dividends $107 (March 31, 2021) and $98 (December 31, 2020) liquidation preference $407 (March 31, 2021) and $398 (December 31, 2020)		407			398
Series B Redeemable Convertible Preferred stock, $0.0001 par value; 3,075,000 shares authorized, 2,050,000 shares issued and outstanding, includes accrued and undeclared dividends $627 (March 31, 2021) and $475 (December 31, 2020) liquidation preference $6,777 (March 31, 2021) and $6,625 (December 31, 2020)		6,777			6,625
Redeemable common stock, at redemption value; 2,240,000 (March 31, 2021 and December 31, 2020)		1,200			1,200
Stockholders’ deficit
Common stock, $0.0001 par value; 100,000,000 shares authorized; 12,972,815 (March 31, 2021 and December 31, 2020) shares issued and outstanding		2			2
Common stock subscribed and not yet issued 330 (March 31, 2021) and 80 (December 31, 2020)		—			—
Common stock issuable		4,390			3,474
Additional paid-in capital		32,116			30,821
Accumulated deficit		(70,396	)		(101,619	)
Total stockholders’ deficit		(33,888	)		(67,322	)
Total liabilities, temporary equity, and stockholders’ deficit	$	131,951		$	142,323

See notes to unaudited condensed consolidated financial statements.

EVO TRANSPORTATION & ENERGY SERVICES, INC.

Condensed Consolidated Statements of Operations (Unaudited)


	Three Months Ended March 31,
($ in thousands, except share and per share data)	2021			2020
Revenue
Trucking	$	53,952		$	55,406
Other		34,758			—
CNG		136			320
Total revenue		88,846			55,726
Operating expenses
Payroll, benefits and related		21,462			27,531
Purchased transportation		9,188			8,093
Fuel		5,368			7,141
Equipment rent		2,555			3,238
Maintenance and supplies		2,250			2,833
General and administrative		5,044			4,944
Operating supplies and expenses		4,088			3,857
Depreciation and amortization		3,624			3,470
Insurance and claims		2,586			2,560
CNG expenses		178			186
Total operating expenses		56,343			63,853
Operating income (loss)		32,503			(8,127	)
Other income (expense)
Interest expense		(4,103	)		(3,624	)
Change in fair value of embedded derivative liability		788			(45	)
Change in fair value of warrant liabilities		3,107			8,235
Gain (loss) on extinguishment of debt		534			(10,086	)
Total other income (expense)		326			(5,520	)
Income (loss) before income taxes		32,829			(13,647	)
(Provision) benefit for income taxes		(1,606	)		(55	)
Net income (loss)	$	31,223		$	(13,702	)
Earnings per share:
Basic	$	1.06		$	(0.71	)
Diluted	$	0.95		$	(0.71	)
Weighted average shares outstanding:
Basic		29,342,042			19,902,498
Diluted		33,214,707			19,902,498

See notes to unaudited condensed consolidated financial statements.

EVO TRANSPORTATION & ENERGY SERVICES, INC.

Condensed Consolidated Statements of Changes in Stockholders’ Deficit (Unaudited)

For the Three Months Ended March 31, 2021


	Common Stock				Common Stock Subscribed				Common Stock		Additional Paid-in			Accumulated			Total Stockholders’
($ in thousands, except share data)	Shares		Amount		Shares		Amount		Issuable		Capital			Deficit			Deficit
Balance - December 31, 2020		15,212,815	$	2		80	$	—	$	3,474	$	30,821		$	(101,619	)	$	(67,322	)
Obligation to issue common stock - related party		—		—		—		—		916		—			—			916
Issuance of warrants to extinguish debt		—		—		—		—		—		1,224			—			1,224
Common stock issued for services - related party		—		—		250		—		—		—			—			—
Stock-based compensation expense		—		—		—		—		—		232			—			232
Series A Redeemable Preferred stock dividend		—		—		—		—		—		(9	)		—			(9	)
Series B Redeemable Preferred stock dividend		—		—		—		—		—		(152	)		—			(152	)
Net income		—		—		—		—		—		—			31,223			31,223
Balance - March 31, 2021		15,212,815	$	2		330	$	—	$	4,390	$	32,116		$	(70,396	)	$	(33,888	)

See notes to unaudited condensed consolidated financial statements.

EVO TRANSPORTATION & ENERGY SERVICES, INC.

Condensed Consolidated Statements of Changes in Stockholders’ Deficit (Unaudited)

For the Three Months Ended March 31, 2020


	Common Stock					Common Stock Subscribed						Common Stock		Additional Paid-in			Accumulated			Total Stockholders’
($ in thousands)	Shares			Amount		Shares			Amount			Issuable		Capital			Deficit			Deficit
Balance - December 31, 2019		14,333,834		$	1		8,664		$	12		$	3,474	$	38,611		$	(54,771	)	$	(12,673	)
Reclassification of warrants from equity classified to liability classified		—			—		—			—			—		(7,648	)		—			(7,648	)
Common stock issued for accrued interest		8,664			—		(8,664	)		(12	)		—		12			—			—
Issuance of common stock for cash - related party		1,260,000			—		—			—			—		3,150			—			3,150
Redemption of common stock for Series B redeemable preferred stock - related party		(1,260,000	)		—		—			—			—		(3,150	)		—			(3,150	)
Issuance of warrants as deemed dividend - related party		—			—		—			—			—		(455	)		—			(455	)
Stock-based compensation expense		—			—		—			—			—		368			—			368
Series A Redeemable Preferred stock dividend		—			—		—			—			—		(30	)		—			(30	)
Series B Redeemable Preferred stock dividend		—			—		—			—			—		(12	)		—			(12	)
Net loss		—			—		—			—			—		—			(13,702	)		(13,702	)
Balance - March 31, 2020		14,342,498		$	1		—		$	—		$	3,474	$	30,846		$	(68,473