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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 10-Q
☒ QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2026
or
☐ TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transitional period from _____________ to
______________
Commission File Number: 000-52883
DRIVEITAWAY HOLDINGS, INC. |
(Exact name of registrant as specified in its charter) |
|
Delaware |
|
20-4456503 |
(State or other jurisdiction of
incorporation or organization) |
|
(I.R.S. Employer
Identification No.) |
3401 Market Street , Suite 200/201 , Philadelphia , PA 19104
(Address of principal executive offices) (Zip Code)
(856) 577-2763
(Registrant’s telephone number, including
area code)
n/a
(Former name or former
address if changed since last report)
Securities registered pursuant to Section 12(b) of
the Act:
Title of each class: |
|
Trading Symbol(s): |
|
Name of each exchange on which registered: |
N/A |
|
N/A |
|
N/A |
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 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, a smaller reporting company, or an emerging growth company. See
the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and
“emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated Filer |
☐ |
|
Accelerated Filer |
☐ |
|
Non-accelerated Filer |
☒ |
|
Small Reporting Company |
☒ |
|
|
|
|
Emerging growth company |
☐ |
|
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 May 22, 2026, there were 127,065,629 shares
of common stock outstanding.
TABLE OF CONTENTS
|
|
Page |
|
|
|
|
PART I – FINANCIAL INFORMATION |
F-1 |
|
|
|
Item 1. |
Financial Statements |
F-1 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
1 |
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
7 |
Item 4. |
Controls and Procedures |
8 |
|
|
|
|
PART II – OTHER INFORMATION |
10 |
|
|
|
Item 1. |
Legal Proceedings |
10 |
Item 1A. |
Risk Factors |
10 |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
10 |
Item 3. |
Defaults Upon Senior Securities |
10 |
Item 4. |
Mine Safety Disclosures |
10 |
Item 5. |
Other Information |
10 |
Item 6. |
Exhibits |
11 |
PART I – FINANCIAL
INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DRIVEITAWAY HOLDINGS,
INC.
INDEX TO UNAUDITED INTERIM
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2026
|
Page |
|
|
Condensed Consolidated Balance Sheets as of March 31, 2026 (Unaudited) and September 30, 2025 |
F-2 |
|
|
Condensed Consolidated Statements of Operations for the three and six months ended March 31, 2026 and 2025 (Unaudited) |
F-3 |
|
|
Condensed Consolidated Statements of Changes in Stockholders’ Deficit for the three and six months ended March 31, 2026 and 2025 (Unaudited) |
F-4 |
|
|
Condensed Consolidated Statements of Cash Flows for the three and six months ended March 31, 2026 and 2025 (Unaudited) |
F-5 |
|
|
Notes to the Condensed Consolidated Financial Statements (Unaudited) |
F-6 |
F- 1
DriveItAway Holdings,
Inc.
Condensed Consolidated
Balance Sheets
| |
| | | |
| | |
| |
March 31 | |
September 30, |
| |
2026 | |
2025 |
| |
(Unaudited) | |
|
Assets | |
| | | |
| | |
Current assets | |
| | | |
| | |
Cash | |
$ | 83,006 | | |
$ | 39,930 | |
Accounts receivable, net | |
| 44,107 | | |
| 42,532 | |
Total current assets | |
| 127,113 | | |
| 82,462 | |
| |
| | | |
| | |
Deferred financing costs, net | |
| — | | |
| 11,811 | |
Fixed assets, net | |
| 123,067 | | |
| 585,120 | |
Intangible assets, net | |
| — | | |
| 899 | |
Total Assets | |
$ | 250,180 | | |
$ | 680,292 | |
| |
| | | |
| | |
Liabilities and Stockholders’ Deficit | |
| | | |
| | |
Current Liabilities | |
| | | |
| | |
Accounts payable and accrued liabilities | |
$ | 1,627,915 | | |
$ | 1,682,957 | |
Accrued interest – related parties | |
| 20,994 | | |
| 21,252 | |
Deferred revenue | |
| 26,261 | | |
| 15,740 | |
Due to related parties | |
| 26,332 | | |
| 26,380 | |
Short term notes payable | |
| 252,877 | | |
| 150,253 | |
Current portion of SBA Loan | |
| 2,594 | | |
| 2,546 | |
Promissory notes payable, current portion | |
| 110,889 | | |
| 510,305 | |
Promissory notes payable, in default | |
| 20,000 | | |
| 20,000 | |
Promissory notes payable - related parties, in default | |
| 21,250 | | |
| 42,500 | |
Convertible notes payable, net, in default | |
| 450,000 | | |
| 450,000 | |
Convertible notes payable, net of debt discount | |
| 1,851,590 | | |
| 1,693,877 | |
Derivative liability | |
| 4,811,079 | | |
| 4,454,765 | |
Total Current Liabilities | |
| 9,221,781 | | |
| 9,070,576 | |
| |
| | | |
| | |
SBA Loan - noncurrent | |
| 110,531 | | |
| 111,840 | |
Total Liabilities | |
| 9,332,312 | | |
| 9,182,416 | |
| |
| | | |
| | |
Stockholders’ Deficit | |
| | | |
| | |
Preferred stock, $ 0.0001 par value; 10,000,000 shares authorized; no shares issued and outstanding | |
| — | | |
| — | |
Common stock, $ 0.0001 par value; 1,000,000,000 shares authorized; 121,525,082 shares issued and 121,525,082 outstanding at March 31, 2026 and 120,025,082 issued and 120,009,982 outstanding September 30, 2025, respectively | |
| 12,153 | | |
| 12,003 | |
Additional paid in capital | |
| 2,356,719 | | |
| 1,965,619 | |
Treasury stock, at cost - 15,100 shares at March 31, 2026 and September 30, 2025 | |
| ( 18,126 | ) | |
| ( 18,126 | ) |
Accumulated deficit | |
| ( 11,432,878 | ) | |
| ( 10,461,619 | ) |
Total Stockholders’ Deficit | |
| ( 9,082,132 | ) | |
| ( 8,502,124 | ) |
Total Liabilities and Stockholders’ Deficit | |
$ | 250,180 | | |
$ | 680,292 | |
The accompanying notes are
an integral part of these unaudited condensed consolidated financial statements.
F- 2
DriveItAway Holdings,
Inc.
Condensed Consolidated
Statements of Operations
(Unaudited)
| |
| | | |
| | | |
| | | |
| | |
| |
Three Months Ended | |
Six Months Ended |
| |
March 31, | |
March 31, |
| |
2026 | |
2025 | |
2026 | |
2025 |
Revenues | |
$ | 377,522 | | |
$ | 210,665 | | |
$ | 659,764 | | |
$ | 452,611 | |
Cost of Goods Sold | |
| 322,725 | | |
| 181,089 | | |
| 521,073 | | |
| 324,344 | |
Gross Profit | |
| 54,797 | | |
| 29,576 | | |
| 138,691 | | |
| 128,267 | |
| |
| | | |
| | | |
| | | |
| | |
Operating Expenses | |
| | | |
| | | |
| | | |
| | |
Salaries and payroll taxes | |
| 82,253 | | |
| 44,125 | | |
| 167,008 | | |
| 139,875 | |
Professional fees | |
| 51,813 | | |
| 97,429 | | |
| 83,930 | | |
| 117,686 | |
General and administrative | |
| 21,808 | |
| 115,886 | | |
| 82,483 | |
| 202,567 | |
Software development | |
| 8,000 | | |
| 10,800 | | |
| 14,000 | | |
| 32,415 | |
Stock compensation | |
| 35,625 | | |
| — | | |
| 76,250 | | |
| — | |
Total Operating Expenses | |
| 199,499 | | |
| 268,240 | | |
| 423,671 | | |
| 492,543 | |
| |
| | | |
| | | |
| | | |
| | |
Operating Loss | |
| ( 144,702 | ) | |
| ( 238,664 | ) | |
| ( 284,980 | ) | |
| ( 364,276 | ) |
| |
| | | |
| | | |
| | | |
| | |
Other Income (Expenses) | |
| | | |
| | | |
| | | |
| | |
Gain (loss) on change in fair value of derivative liability | |
| ( 887,668 | ) | |
| ( 1,580 | ) | |
| 93,686 | | |
| 911,982 | |
Amortization debt discount | |
| ( 293,338 | ) | |
| ( 19,102 | ) | |
| ( 402,251 | ) | |
| ( 78,480 | ) |
Amortization of deferred financing costs | |
| — | | |
| ( 33,888 | ) | |
| ( 11,811 | ) | |
| ( 171,468 | ) |
Loss on extinguishment of debt | |
| ( 21,798 | ) | |
| — | | |
| ( 21,798 | ) | |
| — | |
Interest expense | |
| ( 116,850 | ) | |
| ( 152,628 | ) | |
| ( 266,795 | ) | |
| ( 285,015 | ) |
Interest expense - related parties | |
| ( 2,270 | ) | |
| ( 2,096 | ) | |
| ( 3,492 | ) | |
| ( 4,238 | ) |
Gain (loss) on disposition of assets | |
| ( 53,403 | ) | |
| — | | |
| ( 73,820 | ) | |
| — | |
Total Other Income (Expense) | |
| ( 1,375,327 | ) | |
| ( 209,294 | ) | |
| ( 686,281 | ) | |
| 372,781 | |
| |
| | | |
| | | |
| | | |
| | |
Net Income (Loss) | |
$ | ( 1,520,029 | ) | |
$ | ( 447,958 | ) | |
$ | ( 971,261 | ) | |
$ | 8,505 | |
| |
| | | |
| | | |
| | | |
| | |
Net Income (Loss) Per Common Share | |
| | | |
| | | |
| | | |
| | |
Basic and diluted net income (loss) per common share | |
$ | ( 0.01 | ) | |
$ | ( 0.00 | ) | |
$ | ( 0.01 | ) | |
$ | 0.00 | |
Diluted net income (loss) per common share | |
$ | ( 0.00 | ) | |
$ | ( 0.00 | ) | |
$ | ( 0.00 | ) | |
$ | 0.00 | |
Basic and diluted weighted average number of common shares outstanding | |
| 121,525,082 | | |
| 113,951,722 | | |
| 121,417,939 | | |
| 113,881,667 | |
Diluted weighted average number of common shares outstanding | |
| 372,258,876 | | |
| 284,283,803 | | |
| 372,258,876 | | |
| 284,283,803 | |
The accompanying notes are
an integral part of these unaudited condensed consolidated financial statements.
F- 3
DriveItAway Holdings,
Inc.
Condensed Consolidated
Statement of Changes in Stockholders’ Deficit
(Unaudited)
For the Three and Six Months
Ended March 31, 2026
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| |
| |
Additional | |
| |
| |
| |
Total |
| |
Common Stock | |
Paid in | |
Treasury Stock | |
Accumulated | |
Stockholders’ |
| |
Shares | |
Amount | |
Capital | |
Shares | |
Amount | |
Deficit | |
Deficit |
| |
| |
| |
| |
| |
| |
| |
|
Balance - September 30, 2025 | |
| 120,025,082 | | |
$ | 12,003 | | |
$ | 1,965,619 | | |
| ( 15,100 | ) | |
$ | ( 18,126 | ) | |
$ | ( 10,461,619 | ) | |
$ | ( 8,502,123 | ) |
Stock issued to convert related party debt | |
| 1,250,000 | | |
| 125 | | |
| 24,875 | | |
| — | | |
| — | | |
| — | | |
| 25,000 | |
Stock compensation | |
| 250,000 | | |
| 25 | | |
| 40,600 | | |
| — | | |
| — | | |
| — | | |
| 40,625 | |
Warrants issued | |
| — | | |
| — | | |
| 240,000 | | |
| — | | |
| — | | |
| — | | |
| 240,000 | |
Net loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 548,868 | | |
| 548,868 | |
Balance - December 31, 2025 | |
| 121,525,082 | | |
$ | 12,153 | | |
$ | 2,271,094 | | |
| ( 15,100 | ) | |
$ | ( 18,126 | ) | |
$ | ( 9,912,751 | ) | |
$ | ( 7,647,630 | ) |
Sale of warrants for cash | |
| — | | |
| — | | |
| 50,000 | | |
| — | | |
| — | | |
| — | | |
| 50,000 | |
Stock compensation | |
| — | | |
| — | | |
| 35,625 | | |
| — | | |
| — | | |
| — | | |
| 35,625 | |
Net loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| ( 1,520,130 | ) | |
| ( 1,520,130 | ) |
Balance – March 31, 2026 | |
| 121,525,082 | | |
$ | 12,153 | | |
$ | 2,356,719 | | |
| ( 15,100 | ) | |
$ | ( 18,126 | ) | |
$ | ( 11,432,878 | ) | |
$ | ( 9,082,132 | ) |
For the Three and Six Months
Ended March 31, 2025
| |
| |
| |
Additional | |
| |
| |
| |
Total |
| |
Common Stock | |
Paid in | |
Treasury Stock | |
Accumulated | |
Stockholders’ |
| |
Shares | |
Amount | |
Capital | |
Shares | |
Amount | |
Deficit | |
Deficit |
| |
| |
| |
| |
| |
| |
| |
|
Balance - September 30, 2024 | |
| 113,701,722 | | |
$ | 11,371 | | |
$ | 1,606,292 | | |
| ( 15,100 | ) | |
$ | ( 18,126 | ) | |
$ | ( 5,559,139 | ) | |
$ | ( 3,959,602 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Common stock sold for cash | |
| 250,000 | | |
| 25 | | |
| 4,975 | | |
| — | | |
| — | | |
| — | | |
| 5,000 | |
Warrants sold for cash | |
| — | | |
| — | | |
| 50,000 | | |
| | | |
| | | |
| | | |
| 50,000 | |
Net income | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 456,463 | | |
| 456,463 | |
Balance - December 31, 2024 | |
| 113,951,722 | | |
$ | 11,396 | | |
$ | 1,661,267 | | |
| ( 15,100 | ) | |
$ | ( 18,126 | ) | |
$ | ( 5,102,676 | ) | |
$ | ( 3,448,139 | ) |
Net loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| ( 447,958 | ) | |
| ( 447,958 | ) |
Balance – March 31, 2025 | |
| 113,951,722 | | |
$ | 11,396 | | |
$ | 1,661,267 | | |
| ( 15,100 | ) | |
$ | ( 18,126 | ) | |
$ | ( 5,550,634 | ) | |
$ | ( 3,896,097 | ) |
The accompanying notes are
an integral part of these unaudited condensed consolidated financial statements.
F- 4
DriveItAway Holdings,
Inc.
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
| |
| | | |
| | |
| |
| |
|
| |
For the Six Months Ended |
| |
March 31, |
| |
2026 | |
2025 |
CASH FLOWS FROM OPERATING ACTIVITIES: | |
| | | |
| | |
Net income (loss) | |
$ | ( 971,259 | ) | |
$ | 8,505 | |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | |
| | | |
| | |
(Gain) loss on change in fair value of derivative liability | |
| ( 93,686 | ) | |
| ( 911,982 | ) |
Amortization of deferred financing costs | |
| 11,811 | | |
| 171,468 | |
Amortization and depreciation | |
| 41,344 | | |
| 74,292 | |
Amortization of debt discount | |
| 402,251 | | |
| 78,480 | |
Loss on sale of fixed assets | |
| 73,820 | | |
| — | |
Loss on extinguishment of debt | |
| 21,798 | | |
| — | |
Stock compensation | |
| 76,250 | | |
| — | |
Changes in operating assets and liabilities: | |
| | | |
| | |
Prepaid expenses | |
| — | | |
| ( 1,247 | ) |
Due to related party | |
| | | |
| | |
Accounts receivable | |
| ( 1,575 | ) | |
| ( 11,544 | ) |
Customer deposits | |
| — | | |
| ( 1,340 | ) |
Deferred revenue | |
| 10,521 | | |
| 4,357 | |
Accounts payable and accrued liabilities | |
| ( 51,262 | ) | |
| 432,423 | |
Accrued liabilities- related party | |
| — | | |
| 4,238 | |
Net Cash used in Operating Activities | |
| ( 479,987 | ) | |
| ( 161,862 | ) |
| |
| | | |
| | |
CASH FLOWS FROM INVESTING ACTIVITIES: | |
| | | |
| | |
Proceeds from sale of fixed assets | |
| 347,500 | | |
| — | |
Purchase of vehicles | |
| — | | |
| ( 137,289 | ) |
Net Cash provided by (used in) Investing Activities | |
| 347,500 | | |
| ( 137,289 | ) |
| |
| | | |
| | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |
| | | |
| | |
Related party advances | |
| — | | |
| 1,300 | |
Proceeds from convertible notes payable | |
| 914,658 | | |
| 103,708 | |
Proceeds from the sale of common stock for cash | |
| — | | |
| 5,000 | |
Proceeds from sale of warrants | |
| 290,000 | | |
| 50,000 | |
Proceeds from notes payable | |
| 230,213 | | |
| 268,812 | |
Repayment of promissory notes payable | |
| ( 548,808 | ) | |
| ( 112,087 | ) |
Repayment of convertible promissory notes | |
| ( 710,500 | ) | |
| — | |
Net Cash provided by Financing Activities | |
| 175,563 | | |
| 316,733 | |
| |
| | | |
| | |
Net change in cash and restricted cash | |
| 43,076 | | |
| 17,582 | |
Cash and restricted cash, beginning of period | |
| 39,930 | | |
| 33,588 | |
Cash and restricted cash, end of period | |
$ | 83,006 | | |
$ | 51,170 | |
| |
| | | |
| | |
Supplemental cash flow information | |
| | | |
| | |
Cash paid for interest | |
$ | 54,017 | | |
$ | 82,940 | |
Cash paid for taxes | |
$ | — | | |
$ | — | |
| |
| | | |
| | |
Non-cash Investing and Financing transactions: | |
| | | |
| | |
Common stock issued upon conversion of related party note | |
$ | 25,000 | | |
$ | — | |
| |
$ | — | | |
$ | — | |
The accompanying notes are
an integral part of these unaudited condensed consolidated financial statements
F- 5
DriveItAway Holdings, Inc.
Notes to the Condensed Consolidated Financial Statements
March 31, 2026
Unaudited
Note
1 – Organization, Description of Business and Going Concern
Nature
of Organization
DriveItAway
Holdings, Inc. (“DIA”, “the Company”, “we” or “us”) was formed in Delaware on March 8,
2006 as B2 Health, Inc. On July 2, 2010, the Company acquired BFK Franchise Company, LLC (“BFK”), a Nevada limited liability
company, and concurrently changed its name to Creative Learning Corporation. On February 24, 2022, the Company acquired DriveItAway, Inc.,
and on March 18, 2022, disposed of BFK and its other subsidiaries involved in the learning business. On April 18, 2022, the name was changed
to DriveItAway Holdings, Inc. On April 12, 2024, the Company formed DIA Leasing, LLC, a Florida limited liability company, which is a
wholly owned subsidiary.
DIA is a national
dealer focused mobility platform that enables car dealers to sell more vehicles in a seamless way through eCommerce, with its exclusive
“Pay as You Go” app-based subscription program. DIA provides a comprehensive turnkey, solutions driven program with proprietary
mobile technology and driver app, insurance coverages and training to get dealerships up and running quickly and profitably in emerging
online sales opportunities. The company is planning to soon expand its easy and transparent consumer app ‘subscription to ownership’
platform to enable entry level consumers to drive and acquire new Electric Vehicles. For further information, please see www.driveitaway.com.
Going
Concern
The Company’s
financial statements are prepared in accordance with Generally Accepted Accounting Principles (“GAAP”) of the United States,
applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business.
During the six months ended March 31, 2026, the Company had net loss of $ ( 971,259 and cash used in operating activities of $ ( 479,987 ) .
As of March 31, 2026, the Company had an accumulated deficit of $ ( 11,432,878 ) . The Company has not established sufficient revenue to cover
its operating costs and will require additional capital to continue its operating plan. The ability of the Company to continue as a going
concern depends on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable
to obtain adequate capital, it could be forced to cease operations. These factors raise substantial doubt about its ability to continue
as a going concern.
To continue
as a going concern, the Company will need, among other things, additional capital resources. Management’s plan to obtain such resources
for the Company includes: sales of equity instruments; traditional financing, such as loans; and obtaining capital from management and
significant stockholders sufficient to meet its minimum operating expenses. However, management cannot provide any assurance that the
Company will be successful in accomplishing this plan.
There is no
assurance that the Company will be able to obtain sufficient additional funds when needed or that such funds, if available, will be obtainable
on terms satisfactory to the Company. In addition, profitability will ultimately depend upon the level of revenues received from business
operations. However, there is no assurance that the Company will attain profitability. The accompanying financial statements do not include
any adjustments that might be necessary if the Company is unable to continue as a going concern.
F- 6
DriveItAway Holdings, Inc.
Notes to the Condensed Consolidated Financial Statements
March 31, 2026
Unaudited
Note 2 - Summary
of Significant Accounting Policies
Basis
of Presentation
The Company
prepares its financial statements in accordance with rules and regulations of the Securities and Exchange Commission (“SEC”)
and Generally Accepted Accounting Principles (“GAAP”) in the United States of America. The accompanying interim financial
statements have been prepared in accordance with GAAP for interim financial information in accordance with Article 8 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the Company’s
opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating
results for the three months ended March 31, 2026, are not necessarily indicative of the results for the full year. While management of
the Company believes that the disclosures presented herein are adequate and not misleading, these interim financial statements should
be read in conjunction with the audited financial statements and the footnotes thereto for the year ended September 30, 2025, contained
in the Company’s Form 10K, as filed on February 24, 2026.
Basis of Consolidation
The consolidated financial statements include the
accounts of DriveItAway Holdings Inc. and its wholly owned subsidiary DriveItAway, Inc., and its wholly owned subsidiary DIA Leasing,
LLC collectively referred to as the “Company”. All inter-company balances and transactions are eliminated in consolidation.
Use of
Estimates
The preparation
of consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of consolidated financial statements
and the reported amounts of revenues and expenses during the reporting period. The significant estimates and assumptions made by management
include allowance for doubtful accounts, allowance for deferred tax assets, and fair value of equity instruments. Actual results could
differ from those estimates as the current economic environment has increased the degree of uncertainty inherent in these estimates and
assumptions.
Cash and Cash Equivalents
The Company considers all highly liquid securities
with original maturities of three months or less when acquired, to be cash equivalents. As of March
31, 2026 and September 30, 2025 , the Company had cash of $ 83,006 and $ 39,930 , respectively and did not have any cash equivalents.
F- 7
DriveItAway Holdings, Inc.
Notes to the Condensed Consolidated Financial Statements
March 31, 2026
Unaudited
Accounts Receivable
The Company reviews accounts receivable periodically
for collectability and establishes an allowance for doubtful accounts and records bad debt expense when deemed necessary. The Company
records an allowance for doubtful accounts that is based on historical trends, customer knowledge, any known disputes, and considers the
aging of the accounts receivable balances combined with management’s estimate of future potential recoverability. Accounts and receivables
are written off against the allowance after all attempts to collect a receivable have failed. The Company believes its allowances for
doubtful accounts as of March 31, 2026 and September 30, 2025 are adequate, but actual write-offs
could exceed the recorded allowance. As of March 31, 2026 and September 30, 2025 the balances
in the allowance for doubtful accounts was $ 423 .
Fixed Assets
Fixed assets are recorded at
cost and depreciated using the straight-line method over the estimated useful lives, currently seven (7) years. Maintenance and repair
costs are charged to expense as incurred. Major improvements, which extend the useful life of the related asset, are capitalized. Upon
disposal of a fixed asset, we record a gain or loss based on the difference between the proceeds received and the net book value of the
disposed asset. We remove fully depreciated assets from the cost and accumulated depreciation amounts disclosed.
Intangible Assets
Our intangible assets include
website and software development costs. The costs incurred in the preliminary stages of website and software development are expensed
as incurred. Once an application has reached the development stage, internal and external costs, if direct and incremental and deemed
by management to be significant, are capitalized and amortized on a straight-line basis over their estimated useful lives. Maintenance
and enhancement costs, including those costs in the post-implementation stages, are typically expensed as incurred, unless such costs
relate to substantial upgrades and enhancements to the website or software that result in added functionality, in which case the costs
are capitalized and amortized on a straight-line basis over the estimated useful lives. Amortization expense related to capitalized website
and software development costs is included in operating expenses in our consolidated statements of operations.
Capitalized development activities
placed in service are amortized over the expected useful lives of those releases, currently estimated at three ( 3 ) years. The estimated
useful lives of website and software development activities are reviewed frequently and adjusted as appropriate to reflect upcoming development
activities that may include significant upgrades and/or enhancements to the existing functionality. We remove fully amortized website
and software development costs from the cost and accumulated amortization amounts disclosed.
Construction-in-progress primarily
consists of website development costs that are capitalizable, but for which the associated applications have not been placed in service.
Leases
The Company’s operating
lease portfolio for the period ended March 31, 2026 and September 30, 2025, includes the vehicle leases from third parties and the Company’s
owned vehicles that are leased to the customers under operating leases. The contracts for these operating leases are short-term in nature
with terms less than twelve (12) months. The Company has elected as an accounting policy not to apply the recognition requirements in
ASC 2016-02, Leases (“ASC 842”) to short-term leases. The Company recognizes the lease payments for short-term leases on a
straight-line basis over the lease term. As of March 31, 2026, the Company did not have leases that qualified as ROU assets.
F- 8
DriveItAway Holdings, Inc.
Notes to the Condensed Consolidated Financial Statements
March 31, 2026
Unaudited
Fair Value
Measurements
The Company
follows ASC 820, “Fair Value Measurements and Disclosures”, which defines fair value as the exchange price that would be received
for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in
an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes
between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2)
an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances
(unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted
prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three
levels of the fair value hierarchy are described below:
Level 1
Level 1 applies
to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2
Level 2 applies
to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted
prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient
volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can
be derived principally from, or corroborated by, observable market data.
Level 3
Level 3 applies
to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement
of the fair value of the assets or liabilities.
The carrying
amounts shown of the Company’s financial instruments including cash, accounts receivable, prepaid expense, accounts payable,
and accrued liabilities approximate fair value due to their short-term nature.
All financial assets and liabilities are approximate to their fair value.
Derivative liabilities are valued at Level 3.
Schedule of fair value of financial assets and liabilities | |
| | | |
| | | |
| | | |
| | |
| |
| |
Fair Value Measurements at March 31, 2026 using: |
| |
March 31, 2026 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | |
Significant Other Observable Inputs (Level 2) | |
Significant Unobservable Inputs (Level 3) |
| |
| |
| |
| |
|
Liabilities | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
Derivative Liabilities | |
$ | 4,811,079 | | |
$ | — | | |
$ | — | | |
$ | 4,811,079 | |
| |
| | | |
| | | |
| | | |
| | |
| |
| |
Fair Value Measurements at September 30, 2025 using: |
| |
September 30, 2025 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | |
Significant Other Observable Inputs (Level 2) | |
Significant Unobservable Inputs (Level 3) |
| |
| |
| |
| |
|
Liabilities | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
Derivative Liabilities | |
$ | 4,454,765 | | |
$ | — | | |
$ | — | | |
$ | 4,454,765 | |
F- 9
DriveItAway Holdings, Inc.
Notes to the Condensed Consolidated Financial Statements
March 31, 2026
Unaudited
Derivative Financial Instruments
The Company accounts for its derivative financial instruments in accordance with ASC 815 “Derivatives and Hedging” therefore
any embedded conversion options and warrants accounted for as derivatives are to be recorded at their fair values as of the inception
date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating,
non-cash income or expense for each reporting period at each balance sheet date. The Company reassesses the classification of its derivative
instruments at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified
as of the date of the event that caused the reclassification.
The Black-Scholes option valuation model was used
to estimate the fair value of the embedded conversion options and warrants. The model includes subjective input assumptions that can materially
affect the fair value estimates.
Revenue Recognition
The Company’s revenue is recognized in accordance
with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, for all periods presented. The
Company, through its DriveItAway online/app-based platform (“platform”), operates in the automotive rental industry. The Company
assists subprime and deep subprime candidates to rent/lease vehicles on a short-term basis, generally on a weekly or, in some cases monthly,
basis under a Pay-As You-Go program. Through its platform the Company will track vehicle values and reduce vehicle pricing through the
customers usage payments to show drivers a vehicle purchase price should they be interested in buying the vehicle, at which time the customer
would procure financing if the Company determined they wanted to sell the vehicle at the listed purchase price.
During the periods ended March
31, 2026 and 2025, the Company derived its revenue from signed contracts for vehicle rentals between the Company, other leasing
companies, or car dealerships and individual car rental customers (“customers”).
Customers book a vehicle through the Company’s
platform, starting first with a rental contract with the vehicle. When the customer books the vehicle, per the terms of the individual
rental agreements, the customer shall pay a stated rental rate, a stated insurance amount, an initial non-refundable fee, and, in some
cases, a refundable deposit. At the end of the usage cycle, the system calculates miles driven and if the customer has driven more than
the prorated, included amount, they pay extra usage/mileage fees. In instances when a customer pays late, they pay a late fee and in cases
of incurring charges for tolls they pay for the toll costs incurred. Additionally, contracts may be extended (a new contract is signed)
at which time the credit card on file for the customer will be charged at the beginning of the contract extension period for rental rate
and insurance amount for the new extension period.
Vehicles available in the platform can be owned or
leased by the Company or made available through arrangements with independent car dealerships (“dealerships”). For vehicles
owned or leased by the Company, the Company’s performance obligation for rental revenue is to provide customers with a vehicle and
an application to track vehicle rental arrangements. For vehicles made available through dealerships the Company’s performance obligation
for rental revenue is to provide an application to track vehicle rental arrangements and to collect cash from customers and remit those
amounts to dealerships net of the Company’s revenue share. The vehicle rental arrangements are over a fixed contracted period; therefore,
the Company recognizes rental revenue ratably over the contract term. Costs related to rental revenue include depreciation for Company
owned vehicles and monthly lease payments when the vehicles are leased from a leasing company. The amount of revenue transferred to dealerships
is treated as contra-revenue because the Company acts as an agent in these transactions resulting in only the Company’s revenue
share being recognized.
The Pay-As-You-Go program manages or includes insurance.
Fleet insurance is sometimes provided where the Company has a fleet policy and the driver is added to it when needed. In this case, the
driver pays the cost of insurance as a separate payment in the system. This payment is a type of revenue. The Company pays the insurance
company providing the coverage. This is a cost of goods sold. The Company also allows for drivers to bring their own insurance. The Company
works with associated insurance brokers to write a policy for the customer for that vehicle and a separate finance company that pays for
the policy in full. The Company acts as trustee in collecting installments and transferring them to the finance company. Collected payments
are treated as a revenue and transfers to the finance company are treated as contra-revenue because the Company acts as an agent in these
transactions. Lastly, in markets where the Company cannot support this program, drivers are allowed to bring their own insurance and pay
it directly themselves with no involvement of the Company. No revenue is collected or recognized in this instance. Because any insurance
revenue is collected at contract inception and covers the fixed contract period the Company recognizes insurance revenue ratably over
the contract term.
F- 10
DriveItAway Holdings, Inc.
Notes to the Condensed Consolidated Financial Statements
March 31, 2026
Unaudited
Initial non-refundable fees
are recognized when payment is received as the Company has no obligation to provide additional services at that point. Miscellaneous charges
for extra mileage, late fees, or toll charges calculated and charged to the customer credit card at the end of the usage cycle are recognized
when the credit card charge goes through. Refundable deposits are recorded on the balance sheet until deposits are returned to customers
or applied to their account for fees incurred. Deferred revenue includes rental and insurance amounts that are paid for contracts that
overlap a reporting date and relate to usages after that date. As of March 31, 2026 and September 30, 2025 refundable deposits were $ 0
and $ 0 and deferred revenue was $ 26,261 and $ 15,740 , respectively.
In addition to the costs
associated with rental revenue and insurance revenue, within the Cost of Goods Sold account the Company also records credit card fees
incurred from the cash collections and cash remittance process, as a significant portion of its performance obligation is to collect and
remit payments through its credit card processors.
Stock-Based Compensation
The Company recognizes compensation expense for
all restricted stock awards and stock options. The fair value of restricted stock awards is measured using the grant date fair value
of our stock, as determined by the Board of Directors. The fair value of stock options is estimated at the grant date using the
Black-Scholes option-pricing model, and the portion that is ultimately expected to vest is recognized as compensation cost over the
requisite service period. We have elected to recognize compensation expense for all options with graded vesting on a straight-line
basis over the vesting period of the entire option. The determination of fair value using the Black-Scholes pricing model is
affected by our stock value as well as assumptions regarding a number of complex and subjective variables, including expected stock
price volatility and the risk-free interest rate. Stock-based compensation expense for the six months ended March 31, 2026 and March
31, 2025 was $ 76,250 and $ 0 , respectively.
Advertising and Marketing Costs
Advertising and marketing costs are expensed as incurred.
The Company incurred advertising and marketing costs for the three months ended March 31, 2026 and 2025 of $ 0 and $ 0 , respectively.
Income Taxes
The provision for income taxes and deferred income
taxes are determined using the asset and liability method. Deferred tax assets and liabilities are determined based on temporary differences
between the financial carrying amounts and the tax basis of assets and liabilities using enacted tax rates in effect in the years in which
the temporary differences are expected to reverse. On a periodic basis, the Company assesses the probability that its net deferred tax
assets, if any, will be recovered. If after evaluating all of the positive and negative evidence, a conclusion is made that it is more
likely than not that some portion or all of the net deferred tax assets will not be recovered, a valuation allowance is provided by a
charge to tax expense to reserve the portion of the deferred tax assets which are not expected to be realized.
Reconciliation of expected federal income tax to the
income tax provision is as follows:
Schedule of Reconciliation of expected federal income tax to the
income tax provision | |
| | | |
| | |
| |
2026 |
Expected Federal Tax | |
$ | (330,000 | ) | |
| 21.0 | % |
State income taxes (net of federal benefit) | |
| — | | |
| 0.0 | % |
Permanent adjustments | |
| — | | |
| 0.0 | % |
State tax rate change | |
| — | | |
| 0.0 | % |
Other | |
| — | | |
| 0.0 | % |
Change in valuation allowance | |
| 330,000 | | |
| 21.0 | % |
Total income tax provision | |
$ | — | | |
| — | |
F- 11
DriveItAway Holdings, Inc.
Notes to the Condensed Consolidated Financial Statements
March 31, 2026
Unaudited
Net
Income/(Loss) per Share of Common Stock
The Company
calculates net income/(loss) per share in accordance with ASC Topic 260, “Earnings per Share.” Basic loss per share is computed
by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted earnings per share of
common stock are computed by dividing net earnings by the weighted average number of shares and potential shares outstanding during the
period. Potential shares of common stock consist of shares issuable upon the conversion of outstanding convertible debt, preferred stock,
warrants and stock option. Potential shares of common stock consist of shares issuable upon the conversion of outstanding convertible
debt and warrants.
Schedule of computation of diluted net loss per share | |
| | | |
| | |
| |
March 31, | |
March 31, |
| |
2026 | |
2025 |
Convertible notes | |
| 98,800,850 | | |
| 132,302,137 | |
Warrants | |
| 109,749,999 | | |
| 38,099,999 | |
| |
| 208,550,851 | | |
| 170,402,136 | |
Reclassification
Certain accounts from prior periods have been reclassified
to conform to the current period presentation.
Recent
Accounting Pronouncements
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update
(“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09
requires enhanced annual disclosures regarding the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for
fiscal years beginning after December 15, 2024, and may be adopted on a prospective or retrospective basis. Early adoption is permitted.
The Company is evaluating the impact of this guidance on its consolidated financial statements and related disclosures.
In the period from October 2025 through May 2026 the
FASB has not issued any additional accounting standards updates that have a significant impact on the Company. Management has evaluated
other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a significant impact on
our condensed consolidated financial statements and related disclosures.
Note 3 –
Related Party Transactions
Advances and Repayments
In the normal course of business, the Company’s
management team or their affiliates will make payments on behalf of the Company or will provide short-term advances to the Company to
cover operating expenses.
As of March
31, 2026 and September 30, 2025, the Company owed related parties for an unsecured, non-interest-bearing advance, payable on demand,
in the amount of $ 26,332 and $ 26,380 , respectively.
On March 1, 2023, the Company entered into three promissory
note agreements with three related parties for a total of $ 50,000 with interest bearing at 15 % per annum, maturity date of 120 days from
issuance (December 31, 2023) and issuance of 100,000 warrants with exercise price of $ 0.05 that expire on March 1, 2028 ( 5 years). As
a result of the Company’s equity environment being tainted the warrants qualified for derivative accounting and were assigned a
value of $ 3,068 which was recorded as a derivative liability and debt discount (see Note 8). During the three months ended March 31, 2026
the Company reclassified one of these promissory notes with a value of $ 7,500 from Promissory notes payable – related party to Promissory
notes payable due the note holder, a former director, no longer being considered a related party. As of March
31, 2026 and September 30, 2025, the amount due to related parties for Promissory notes payable was $ 21,500 and $ 42,500 , respectively.
During the six months ended March 31, 2026 and 2025,
the Company recorded related party interest expense of $ ( 3,492 ) and $ ( 4,238 ) respectively.
F- 12
DriveItAway Holdings, Inc.
Notes to the Condensed Consolidated Financial Statements
March 31, 2026
Unaudited
Note 4 – Fixed
and Intangible Assets
The following
table summarizes the components of our fixed assets as of the dates presented:
Schedule of fixed assets | |
| | | |
| | |
| |
March 31, | |
September 30, |
| |
2026 | |
2025 |
Vehicle costs | |
$ | 250,147 | | |
$ | 786,662 | |
Accumulated depreciation | |
| ( 127,080 | ) | |
| ( 201,502 | ) |
Vehicles, net | |
$ | 123,067 | | |
$ | 585,120 | |
Vehicles with a net book value of
$ 18,878 are pledged as collateral on a line of credit with an investor.
Depreciation
expense for the six months ended
March 31, 2026 and 2025, was $ 40,445 and $ 36,182 , respectively. During the six months ended March 31, 2026 and the year ended
September 30, 2025, the Company purchased vehicles of $ 0 and $ 137,290 , respectively .
The following
table summarizes the components of our intangible assets as of the dates presented:
Schedule of intangible assets | |
| | | |
| | |
| |
March 31, | |
September 30, |
| |
2026 | |
2025 |
Website development costs | |
$ | 16,331 | | |
$ | 16,331 | |
Accumulated depreciation | |
| ( 16,331 | ) | |
| ( 15,432 | ) |
Website, net | |
$ | — | | |
$ | 899 | |
Amortization
expense for the six months ended March 31, 2026 and 2025, was $ 899 and $ 2,714 , respectively. During the six months ended March 31, 2026
and 2025, the Company incurred no website development costs.
Note 5 – Equity
Authorized
The Company
has authorized one billion ( 1,000,000,000 ) shares of common stock having a par value of $ 0.0001 per share, and ten million ( 10,000,000 )
shares of preferred stock having a par value of $ 0.0001 per share. All or any part of the capital stock may be issued by the Corporation
from time to time and for such consideration and on such terms as may be determined and fixed by the Board of Directors, without action
of the stockholders, as provided by law, unless the Board of Directors deems it advisable to obtain the advice of the stockholders.
Series
A Preferred Stock
The Company
has authorized one series of preferred stock, which is known as the Series A Convertible Preferred Stock (the “ Series A Preferred ”).
The Board has authorized the issuance of 5,000,000 shares of Series A Preferred. The Series A Preferred Stock has the following
rights and preferences:
Dividends :
The Series A Preferred Stock is entitled to receive non-cumulative dividends equal to the amount of dividends that the holder of such
share would have received if such share of Series A Preferred Stock were converted into shares of Common Stock immediately prior to the
record date of the dividend declared on the Common Stock.
F- 13
DriveItAway Holdings, Inc.
Notes to the Condensed Consolidated Financial Statements
March 31, 2026
Unaudited
Liquidation
Preference : The Series A Preferred Stock is entitled to receive, prior to any distribution to any junior class of securities,
an amount equal to $0.01 per share as a liquidation preference before any distribution may be made to the holders of any junior security,
including the Common Stock.
Voting Rights : Each
holder of Series A Preferred Stock shall vote with holders of the Common Stock upon any matter submitted to a vote of shareholders, in
which event it shall have the number of votes equal to the number of shares of Common Stock into which such share of Series A Preferred
Stock would be convertible on the record date for the vote or consent of shareholders. Each holder of Series A Preferred Stock shall also
be entitled to one vote per share on each submitted to a class vote of the holders of Series A Preferred Stock.
Voluntary
Conversion Rights : Each share of Series A Preferred Stock is convertible into 33.94971 shares of Common Stock at the option of
the holder thereof.
Mandatory
Conversion Right : The Company has the right to convert each share of Series A Preferred Stock into 33.94971 shares of Common
Stock at any time that there are less than 200,000 shares of Series A Preferred Stock outstanding.
During the six
months ended March 31, 2026 and 2025 there were no issuances of the Series A Preferred shares.
As of March
31, 2026 and September 30, 2025, the Company had no shares of Series A Preferred
stock outstanding.
Common Stock
During the
six months ended March 31, 2026, the Company issued 250,000
shares of common stock as stock-based compensation .
During the six months ended March 31, 2026, 1,250,000 shares were issued to convert a related party debt.
During the six
months ended March 31, 2025,the Company issued 250,000 shares of common stock to a private investor for gross proceeds of $ 5,000 .
As of March
31, 2026 and September 30, 2025, the Company had 121,525,082 and 120,025,082 common
shares issued, respectively.
Treasury
stock
The Company
records treasury stock at cost. Treasury stock is comprised of shares of common stock purchased by the Company in the secondary market.
As of March 31, 2026 and September 30, 2025 the Company had 15,100 shares of treasury stock valued at $ 18,126 .
Warrants
On February 24, 2022, in conjunction with the issuance
of a promissory note of $ 750,000 , the Company issued 1,000,000 warrants for $0.30 per share. The transaction led to no explicit limit
to the number of shares to be delivered upon future settlement of the conversion options (see Note 8), therefore the equity environment
became tainted and the warrants qualified for derivative accounting and were assigned a value of $ 107,283 which was recorded as a derivative
liability and debt discount. The warrants expire on February 24, 2027.
F- 14
DriveItAway Holdings, Inc.
Notes to the Condensed Consolidated Financial Statements
March 31, 2026
Unaudited
In June 2022, in conjunction with a private offering
and the issuance of secured promissory notes of $ 250,000 (see Note 8), the Company issued 125,000 warrants for $0.30 per share. As a result
of the Company’s equity environment being tainted the warrants qualified for derivative accounting and were assigned a value of
$ 8,136 which was recorded as a derivative liability and debt discount. The warrants expire in June 2027.
In November
2022, in conjunction with a private offering and the issuance of secured promissory notes of $ 200,000 , the Company issued 100,000 warrants
for $0.30 per share. As a result of the Company’s equity environment being tainted the warrants qualified for derivative accounting
and were assigned a value of $ 4,074 which was recorded as a derivative liability and debt discount. The warrants expire in November 2027.
In February
2023, in conjunction with a promissory note amendment which was recognized as debt extinguishment, 2,000,000 warrants with exercise price
of $ 0.05 were issued that expire on February 24, 2027 ( 4 year), which replaced the original 1,000,000 warrants issued with an exercise
price of $0.30 previously issued with the original promissory note. As a result of the Company’s equity environment being tainted
the warrants qualified for derivative accounting and were assigned a value of $21,469 which was recorded as a derivative liability and
debt discount.
In March 2023,
125,000 warrants with an exercise price of $ 0.05 were issued that expire on March 1, 2028 ( 5 year). As a result of the Company’s
equity environment being tainted the warrants qualified for derivative accounting and were assigned a value of $ 3,837 which was recorded
as a derivative liability and debt discount.
In December 2023, in conjunction with the issuance
of a promissory note of $ 195,000 , the Company issued warrants to purchase 5,000,000 shares of Company’s common stock for
nominal exercise price of $ 0.00001 per share. The warrant is exercisable at any time on or after December 15, 2023 and until the
warrant is exercised in full. The warrants also include various covenants of the Company for the benefit of the warrant holder and includes
a beneficial ownership limitation on the holder that, in certain circumstances, may serve to restrict the holder’s right to exercise
the warrants. As a result of the Company’s equity environment being tainted the warrants qualified for derivative accounting and
were assigned a value of $ 248,952 which was recorded as a derivative liability. The note was discounted to a principal balance of $ 0 and
a debt discount of $ 195,000 was recorded at inception. The difference between the fair value of the warrants and the net proceeds received
was recognized as interest expense.
In May 2024, in conjunction with the issuance of
a promissory note of $ 63,000 , the Company issued warrants to purchase 5,000,000 shares of Company’s common stock for nominal exercise
price of $ 0.00001 per share. The warrant is exercisable at any time on or after May 28, 2024 and until the warrant is exercised in full.
The warrants also include various covenants of the Company for the benefit of the warrant holder and includes a beneficial ownership
limitation on the holder that, in certain circumstances, may serve to restrict the holder’s right to exercise the warrants. As
a result of the Company’s equity environment being tainted the warrants qualified for derivative accounting and were assigned a
value of $ 348,500 which was recorded as a derivative liability. The note was discounted to a principal balance of $ 0 and a debt discount
of $ 63,000 was recorded at inception. The difference between the fair value of the warrants and the net proceeds received was recognized
as interest expense.
F- 15
DriveItAway Holdings, Inc.
Notes to the Condensed Consolidated Financial Statements
March 31, 2026
Unaudited
In May 2024, in conjunction with the issuance of a
line of credit of $ 2,000,000 , the Company issued warrants to purchase 5,000,000 shares of Company’s common stock for
nominal exercise price of $ 0.00001 per share. The warrant is exercisable at any time on or after May 1, 2024 and until the warrant
is exercised in full. The warrants also include various covenants of the Company for the benefit of the warrant holder and includes a
beneficial ownership limitation on the holder that, in certain circumstances, may serve to restrict the holder’s right to exercise
the warrants. As a result of the Company’s equity environment being tainted, the warrants qualified for derivative accounting and
were assigned a value of $ 180,000 which was recorded as a derivative liability. The assigned value of the warrants along with $ 7,500 of
loan fees and a 2% (or $40,000) required broker fee was initially recorded as deferred financing costs and will be recorded as a discount
to the note pro rata to draws made on the Promissory Note. Discounts will be amortized over the repayment term of the draw.
In June 2024, in conjunction with the issuance of
a line of credit of $ 250,000 , the Company issued warrants to purchase 5,000,000 shares of Company’s common stock for
nominal exercise price of $ 0.00001 per share. The warrant is exercisable at any time on or after June 14, 2024 and until the warrant
is exercised in full. The warrants also include various covenants of the Company for the benefit of the warrant holder and includes a
beneficial ownership limitation on the holder that, in certain circumstances, may serve to restrict the holder’s right to exercise
the warrants. As a result of the Company’s equity environment being tainted, the warrants qualified for derivative accounting and
were assigned a value of $ 337,500 which was recorded as a derivative liability. As the assigned value of the warrants plus a $ 25,000 original
issue discount and $ 12,500 of loan fees exceeded the face value of the note, the face value of the note was initially recorded as deferred
financing costs and will be recorded as a discount to the note pro rata to draws made on the Promissory Note. Discounts will be amortized
over the repayment term of the draw. The difference between the fair value of the warrants and the face value of the note was recorded
as interest expense.
On July 12, 2024, the Company sold a warrant to purchase
5,000,000 shares of the Company’s common stock at an exercise price of $ 0.00001 to an investor for $ 50,000 (the “Investor
Warrant”). The warrant has no expiration date. The investor has the option of funding the Company with two additional tranches of
$ 50,000 . The second tranche of $ 50,000 is due within 60 days of the first funding date of July 12, 2024.
On August 19, 2024, the Company received the funding
for the second tranche and issued to the investor a cash warrant to purchase up to 666,666 shares of Common Stock at an exercise price
of $ 0.08 per share. The warrant has no expiration date.
At any time 90 days after the second tranche funding
date the investor may invest an additional $ 50,000 and the Company will issue to the investor a pre-funded warrant to purchase up to 2,500,000
shares of Common Stock in the and a cash warrant to purchase up to 333,333 shares of Common Stock at an exercise price of $ 0.08 per share.
The warrant does not have an expiration date.
On November 1, 2024, the Investor Warrant agreement
was amended to allow the purchase warrants to purchase up to 2,500,000 shares in a third tranche. During the three months ended March
31, 2026, the Company issued warrants to purchase up to 2,500,000 shares of common stock for gross proceeds of $50,000.
All derivative liabilities recognized for the warrants
issued were valued using the Black-Scholes pricing model. The Black-Scholes model requires six basic data inputs: the exercise or strike
price, time to expiration, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future,
and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement (see Note 8).
F- 16
DriveItAway Holdings, Inc.
Notes to the Condensed Consolidated Financial Statements
March 31, 2026
Unaudited
A summary of
warrant activity during the six months ended March 31, 2026, is as follows:
Schedule of common stock warrants activity | |
| |
| |
|
| |
Warrants | |
Weighted-
Average | |
Weighted-
Average |
| |
Outstanding | |
Exercise Price | |
Life (years) |
Balance as of September 30, 2025 | |
| 93,900,000 | | |
$ | 0.01 | | |
| * | |
Issuance | |
| 28,750,000 | | |
| 0.00001 | | |
| # | |
Exercised | |
| — | | |
$ | — | | |
| | |
Expired | |
| — | | |
$ | — | | |
| | |
Balance as of March 31, 2026 | |
| 122,650,000 | | |
$ | 0.01 | | |
| * | |
*25,666,666 warrants issued during the year ended
September 30, 2025 do not have an expiration date.
# 28,750,000 warrants
issued during the six months ended March 31, 2026 do not have an expiration date.
The intrinsic
value of the warrants as of March 31, 2026, is $ 200 . All of the outstanding warrants are exercisable as of March 31, 2026.
Note 6 – Notes Payable
SBA Loan
On June 3, 2020,
the Company entered into a SBA Loan for $ 78,500 at a rate of 3.75 %. On August 12, 2021, the loan increased to $ 114,700 and
the Company obtained $ 36,200 on October 8, 2021. The SBA Loan requires payments starting 30 months from the initial funding date
and matures on June 7, 2050. During the six months ended March 31, 2026 and 2025, the Company recorded interest expense of
$ 2,135 and $ 2,180 , respectively, on the SBA Loan and as of March 31, 2026 and September 30,
2025, the accrued interest on the SBA Loan was $ 5,989 and $ 5,989 , respectively. As of March 31, 2026 and September 30, 2025 the outstanding
principal of SBA Loan was $ 113,125 and $ 114,386 , respectively.
The following represents the future aggregate maturities
of the Company’s SBA Loan as of March 31, 2026 , for each of the five (5) succeeding
years and thereafter as follows:
Schedule of future aggregate maturities | |
| | |
| |
|
Fiscal year ending September 30, | |
Amount |
2026 (remaining) | |
$ | 2,594 | |
2027 | |
| 2,594 | |
2028 | |
| 2,594 | |
2029 | |
| 2,594 | |
2030 | |
| 2,594 | |
Thereafter | |
| 100,155 | |
Total | |
$ | 113,125 | |
Promissory Notes Payable, in Default
As of March
31, 2026 and September 30, 2025, the Company had defaulted on the following promissory notes payable with aggregate outstanding
principal of $ 20,000 and $ 20,000 respectively, and owed unpaid interest of $ 11,769 and $ 9,775 , respectively:
F- 17
DriveItAway Holdings, Inc.
Notes to the Condensed Consolidated Financial Statements
March 31, 2026
Unaudited
On
March 1, 2023, the Company entered into a promissory note agreement with an investor for the amount of $12,500 with interest bearing at
15% per annum, maturity date of 120 days from issuance and issuance of 25,000 warrants with exercise price of $0.05 that expire on March
1, 2028 (5 year). As a result of the Company’s equity environment being tainted the warrants qualified for derivative accounting
and were assigned a value of $767 which was recorded as a derivative liability and debt discount (see Note 8). The note matured on June
30, 2023 and has not been repaid.
On
March 1, 2023, the Company entered into a promissory note agreement with an investor for the amount of $ 7,500 with interest bearing at
15 % per annum, maturity date of 120 days from issuance and issuance of 15,000 warrants with exercise price of $0.05 that expire on March
1, 2028 (5 year). As a result of the Company’s equity environment being tainted the warrants qualified for derivative accounting
and were assigned a value of $ 668 which was recorded as a derivative liability and debt discount (see Note 8). The note matured on June
30, 2023 and has not been repaid.
Credit Agreement
On March 1, 2024, DIA Leasing, LLC. (the “Borrower”),
a direct wholly owned subsidiary of DriveitAway Holdings, Inc. (“DIA”), closed a $2,000,000 line of credit facility (the “Credit
Facility”) with an investor (the “Lender”). In connection with the Credit Facility, a credit agreement, promissory note,
security agreement and several related ancillary agreements were entered into by the parties.
Pursuant to the Credit Agreement dated May 1, 2024
(the “Credit Agreement”), among the Borrower and the Lender, the Lender agreed to make advances of principal (the “draws”)
to the Borrower and to issue letters of credit on behalf of the Borrower. The Lender committed to provide up to $ 250,000 for each draw
and up to $ 2,000,000 of letters of credit. The Borrower must use the letters of credit and the proceeds of the draws only for the purchase
of motor vehicles to be used in the course of the Borrower’s business. As of the date hereof, there are no Loans or letters of credit
outstanding under the Credit Agreement. The Borrower will pay a commitment fee to the Lender’s broker equal to 2.0% of the available
commitments. DIA is a guarantor on the draws.
Promissory Note
Pursuant to the Promissory Note (the “Note”)
dated May 1, 2024, Borrower promises to pay Lender the principal sum of Two Million Dollars and 00/100 ($2,000,000.00), or so much thereof
as may be disbursed to, or for the benefit of the Borrower, for the sole purpose of purchasing new motor vehicles for use in Borrower’s
business. Disbursements shall be at the sole discretion of the Lender. The unpaid principal of this line of credit shall bear simple interest
at the rate of fifteen percent (15%) per annum. Interest shall be calculated based on the principal balance as may be adjusted from time
to time to reflect additional advances.
Each advance of principal shall be called a “Draw”.
Each Draw shall be in an amount no greater than Two Hundred Fifty Thousand Dollars and 00/100 ($250,000.00). The eight Draws may be taken
at any time over the 180 days following execution of the Note. Each Draw will be paid over a period of eighteen (18) months from the date
that the funds for each Draw are disbursed to Borrower. During the first three (3) months after disbursement, Borrower shall make payments
of interest only on the funds disbursed. From month four (4) through month seventeen (17), Borrower shall make payments of principal and
interest based on an amortization of forty-eight (48) months. On month eighteen (18) all outstanding principal and unpaid interest shall
be paid in full. All payments are due on first day of the month following disbursement.
The Borrower shall be in default of this Note on the
occurrence of any of the following events: (i) the Borrower shall fail to meet its obligation to make the required principal or interest
payments hereunder or any term contained in the Loan Documents. (ii) the Borrower shall be dissolved or liquidated; (iii) the Borrower
shall make an assignment for the benefit of creditors or shall be unable to, or shall admit in writing their inability to pay their debts
as they become due; (iv) the Borrower shall commence any case, proceeding, or other action under any existing or future law of any jurisdiction
relating to bankruptcy, insolvency, reorganization or relief of debtors, or any such action shall be commenced against the undersigned;
(v) the Borrower shall suffer a receiver to be appointed for it or for any of its property or shall suffer a garnishment, attachment,
levy or execution. Upon default of this Note, Lender may declare the entire amount due and owing hereunder to be immediately due and payable.
F- 18
DriveItAway Holdings, Inc.
Notes to the Condensed Consolidated Financial Statements
March 31, 2026
Unaudited
As of March 31, 2026, the Company has drawn $ 684,509 on the Promissory Note
and $ 47,500 in broker and legal fees. The Company recorded deferred offering costs of $ 199,999 related to the warrant issued in conjunction
with the Promissory Note. The Company amortized $ 11,811 of deferred offering costs during the six months ended March 31, 2026. The amount
of interest accrued on the Promissory note was $ 98,808 during the six months ended March 31, 2026. The promissory notes payable balance
was $ 684,509 and $ 574,478 as of March 31, 2026 and September 30, 2025, respectively. The unamortized discount on the note payable was
$ 0 and $ 34,349 at March 31, 2026 and September 30, 2025, respectively.
Security Agreement
Pursuant to a Security Agreement dated May 1, 2024,
all vehicles purchased shall be titled in the name of Borrower, and Borrower consents to a lien in favor of Lender on the title to each
vehicle purchased. Lender shall only be required to release the lien on each vehicle once Lender has received payment in full of all principal,
interest, and any other sums due on the Draw through which the vehicle was purchased. The net book value of the vehicles that serve as
collateral on this obligation is $ 18,878 . The gross value of the pledged vehicles is less than the gross borrowings on the Promissory
Note.
Warrant
As further consideration for the credit facility,
DIA issued Lender a prefunded warrant (the “Warrant”) for the purchase of up to 5,000,000 shares of DIA’s common stock.
The fair market value of the Warrant was $ 180,000 the date of grant, which was recorded as a derivative liability. The assigned value
of the warrants along with $ 7,500 of loan fees and a 2% (or $ 40,000 ) required broker fee was initially recorded as deferred financing
costs and will be recorded as a discount to the note pro rata to draws made on the Promissory Note.
Promissory
Notes Payable
On
May 1, 2023 the Company executed a note payable with a face amount of $ 35,982 from a lender. Under the terms of the agreement, the lender
will withhold 20% of the Company’s daily funds arising from sales through the May 2023 Lender’s payment processing services
until the Company has repaid the $ 35,982 (including fixed fees of $ 3,682 or approximately 10% of the note amount). The Company received
net proceeds of $ 32,300 and the $ 3,685 of fixed fees were recorded as debt discount. As of March 31, 2026, the Company had amortized the
full $ 3,682 of debt discount, had made repayments of $ 27,752 , and rolled $ 8,230 of the notes principal still due into a second note (see
below), therefore the loan was considered paid in full.
On
August 15, 2023 the Company executed
a second note payable with the same lender with a face amount of $ 64,206 . Under the terms of the agreement, the lender will withhold 20%
of the Company’s daily funds arising from sales through the lender’s payment processing services until the Company has repaid
the $ 64,206 (including fixed fees of $ 6,206 or approximately 10% of the note amount). The Company received net proceeds of $ 49,770 after
paying off the May 1, 2023 note and rolling $8,230 of its balance into the August 15, 2023 note and recording the $ 6,206 of fixed fees
as a debt discount. During the six months ended March 31, 2025, the Company amortized the full $ 6,206 of the debt discount and made repayments
of $ 53,132 , and rolled $ 6,856 of the notes principal still due into a third note (see below), therefore the loan was considered paid in
full as of September 30, 2025 .
On
February 22, 2024, the Company executed a third note payable with the same lender with a face amount of $ 57,474 . Under the terms of the
agreement, the lender will withhold 20% of the Company’s daily funds arising from sales through the lender’s payment processing
services until the Company has repaid the $ 57,474 (including fixed fees of $ 5,974 or approximately 10% of the note amount). The Company
received net proceeds of $ 44,644 after paying off the August 15, 2023 note and rolling $ 6,856 of its balance into the February 22, 2024
note and recording the $ 5,974 of fixed fees as a debt discount. During the year ended September 30, 2025, the Company amortized $ 5,974
of the debt discount and made repayments of $ 38,211 . The remaining balance of $ 19,263 was rolled into a fourth note (see below), therefore
the loan was considered paid in full as of September 30, 2025.
F- 19
DriveItAway Holdings, Inc.
Notes to the Condensed Consolidated Financial Statements
March 31, 2026
Unaudited
On
July 3, 2024, the Company executed a fourth note payable with a lender with a face amount of $ 88,800 . Under the terms of the agreement,
the lender will withhold 20% of the Company’s daily funds arising from sales through the lender’s payment processing services
until the Company has repaid the $ 88,800 (including fixed fees of $8,800 or approximately 10% of the note amount). The Company received
net proceeds of $ 60,737 after paying off the February 22, 2024 note and rolling $ 19,263 of its balance into the July 3, 2024 note and
recording the $ 8,800 of fixed fees as a debt discount. As of March 31, 2026, the Company had amortized $ 8,800 of the debt discount and
made repayments of $ 49,496 , resulting in a debt discount balance of $5,861 and a loan balance of $ 39,304 , for a net note balance of $ 38,159
at September 30, 2025. As of March 31, 2026, the note balance was rolled into the fifth note, therefore the loan was considered paid in
full as of March 31, 2026.
On
November 19, 2024, the Company executed a fifth note payable with a lender with a face amount of $ 85,314 . Under the terms of the agreement,
the lender will withhold 20% of the Company’s daily funds arising from sales through the lender’s payment processing services
until the Company has repaid the $ 85,314 (including fixed fees of $ 7,614 or approximately 10% of the note amount). The Company received
net proceeds of $ 57,816 after paying off the July 2024 note and rolling $ 19,764 of its balance into the November 19, 2024 note and recording
the $ 7,614 of fixed fees as a debt discount. As of March 31, 2026, the Company had amortized $ 7,614 of the debt discount and made repayments
of 85,314 , resulting in a debt discount balance of $ 0 and a loan balance of $ 0 at March 31, 2026.
On
March 17, 2025, the Company executed a sixth note payable with a lender with a face amount of $ 113,600 . Under the terms of the agreement,
the lender will withhold 20% of the Company’s daily funds arising from sales through the lender’s payment processing services
until the Company has repaid the $ 113,600 (including fixed fees of $ 11,132 or approximately 10% of the note amount). The Company received
net proceeds of $ 88,695 after paying off the November 2024 note and rolling $ 24,905 of its balance into the March 17, 2025 note and recording
the $ 11,132 of fixed fees as a debt discount. As of March 31, 2026, the Company had amortized $ 388 of the debt discount and made repayments
of $ 3,962 , resulting in a debt discount balance of $ 10,744 and a loan balance of $ 109,639 at March 31, 2026.
On August 25, 2025, the Company
executed a seventh note payable with a lender with a face amount of $ 188,300 . Under the terms of
the agreement, the lender will withhold 20% of the Company’s daily funds arising from sales through the lender’s payment processing
services until the Company has repaid the $ 188,300 (including fixed fees of $ 19,771 or approximately 10% of the note amount). The Company
received net proceeds of $ 148,333 after paying off the March 2025 note and rolling $ 39,967 of its balance into the August 25, 2025 note
and recording the $ 19,771 of fixed fees as a debt discount. As of December 31, 2025, the Company had amortized $ 8,656 of the debt discount
and made repayments of $ 62,008 , resulting in a debt discount balance of $ 11,115 and a loan balance of $ 94,756 at September 30, 2025.
On March 27, 2026, the Company
executed a eighth note payable with a lender with a face amount of $ 257,618 . Under the terms of
the agreement, the lender will withhold 20% of the Company’s daily funds arising from sales through the lender’s payment processing
services until the Company has repaid the $ 257,618 (including fixed fees of $ 22,565 or approximately 10% of the note amount). The Company
received net proceeds of $ 206,716 after paying off the August 25, 2025 note and rolling $ 28,334 of its balance into the March 27, 2026
note and recording the $ 22,565 of fixed fees as a debt discount. As of March 31, 2026, the Company had amortized $ 99 of the debt discount
and made repayments of $ 0 , resulting in a debt discount balance of $ 22,466 and a loan balance of $ 257,618 at March 31, 2026 .
The
following represents the future aggregate maturities as of March 31, 2026 of the Company’s Promissory Notes Payable:
Schedule of Promissory Notes Payable |
|
|
|
|
|
Period ending March 31, |
|
Amount |
2026 |
|
|
$ |
257,618 |
|
Total |
|
|
$ |
257,618 |
|
F- 20
DriveItAway Holdings, Inc.
Notes to the Condensed Consolidated Financial Statements
March 31, 2026
Unaudited
Note 7 – Convertible
Notes Payable
AJB Capital Investments,
LLC Notes
Effective February 24, 2022,
the Company entered into a Securities Purchase Agreement (the “SPA”) with AJB Capital Investments, LLC (“AJB”),
and issued a Promissory Note in the principal amount of $ 750,000 (the “AJB Note”) to AJB in a private transaction for a purchase
price of $ 675,000 (after giving effect to a 10% original issue discount). In connection with the sale of the AJB Note, the Company also
paid $ 33,750 in certain fees and due diligence costs of AJB and brokerage fees to J.H. Darbie & Co., a registered broker dealer. After
payment of the fees and costs, the net proceeds to the Company were $641,250, which will be used for working capital and other general
corporate purposes.
The maturity date of the
AJB Note was extended to February 24, 2023 . The AJB Note bears interest at 10 % per annum for the original note’s period and 12%
per annum for extension period which was started from August 24, 2022, and it is payable on the first of each month beginning April 1,
2022. The Company may prepay the AJB Note at any time without penalty.
The note is convertible into
Common Stock of the Company at any time that the note is in default, provided that at no time may the note be convertible into an amount
of common stock that would result in the holder having beneficial ownership of more than 4.99% of the outstanding shares of common stock,
as determined in accordance with Section 13(d) under the Securities Exchange Act of 1934 (the “Exchange Act”). The conversion
price equals the lowest trading price during either the 20 days trading days prior to the date of conversion or the 20 trading days prior
to the date of issuance of the note (which was $0.14 per share). The conversion is subject to reduction in the following situations: (i)
a 10% discount will apply anytime a conversion occurs when the company is not eligible to deliver the shares by DWAC; (ii) a 15% discount
will apply whenever the shares are “chilled” for deposit into the DTC system; (iii) a 15% discount will apply if the Company’s
common stock ceases to be registered under Section 12 of the Exchange Act; (iv) a 15% discount will apply if the note cannot be converted
into free trading shares 181 days after its issue date; (v) in the event any other party has the right to convert debt into Common Stock
at a greater discount to market than under the note, then the holder has the right to utilize such discount in determining the conversion
price; or (vi) if the Company issues any shares of Common Stock for less than the conversion price in effect on the date of issuance,
including any options, warrants or securities convertible into Common Stock at price less than the conversion price, then the conversion
price shall be automatically reduced to the amount of consideration received by the company for such shares, except for any issuance that
is an exempt issuance.
Also pursuant to the SPA,
the Company was to pay AJB a commitment fee of $ 800,000 , payable in the form of 4,000,000 unregistered shares of the Company’s common
stock (the “Commitment Fee Shares”) which were issued at note inception. If, after the sixth month anniversary of closing
and before the thirty-sixth month anniversary of closing, AJB has been unable to sell the Commitment Fee Shares for $ 800,000 , then the
Company may be required to issue additional shares or pay cash in the amount of the shortfall. However, if the Company pays the AJB Note
off on or before its maturity date, then the Company may redeem 2,000,000 of the Commitment Fee Shares for one dollar and the amount of
the commitment fee will be reduced to $ 400,000 . On issuance of the note, the Company determined that the guarantee on the commitment fee
was a make-whole provision and an embedded derivative within the host instrument. The guarantee was bifurcated from the host instrument
and recorded as a derivative liability valued at $ 384,287 using a Black-Scholes option pricing model (see Note 8).
Pursuant to the SPA, the
Company also issued to AJB common stock purchase warrants (the “warrants”) to purchase 1,000,000 shares of the Company’s
common stock for $ 0.30 per share, which was assigned a value of $ 107,283 that was recorded as derivative liability (see Notes 5 and 8).
The warrants expire on February 24, 2027. The warrants also include various covenants of the Company for the benefit of the warrant holder
and includes a beneficial ownership limitation on the holder that, in certain circumstances, may serve to restrict the holder’s
right to exercise the warrants.
After recording the derivative
liabilities associated with the SPA, the Company allocated the net proceeds to the 4,000,000 common shares issued and the note itself
based on their relative fair market values, resulting in the common shares being assigned a value of $ 65,274 (see Note 5). The allocation
of the financing costs of $ 108,750 , the derivative for the guarantee of $ 384,287 , the derivative for the warrant of $ 107,283 , and issuance
of the 4,000,000 Commitment Fee shares of $ 65,274 , to the debt component resulted in a $ 665,594 debt discount that is being amortized
to interest expense over the term of the AJB Note.
F- 21
DriveItAway Holdings, Inc.
Notes to the Condensed Consolidated Financial Statements
March 31, 2026
Unaudited
On October 31, 2022, the
Company amended the AJB Note to issue 1,000,000 additional Commitment Fee Shares, recognizing the value of the shares and a debt discount
of $ 60,000 .
On February 10, 2023, the
Company entered into second amendment with AJB by increasing the original principal of the note by $ 85,000 , which increased the restricted
cash balance to be used for payments for professional services, replacing the original 1,000,000 warrants with an exercise price of $ 0.30
with 2,000,000 warrants with an exercise price of $ 0.05 and extending the maturity date of the note to May 24, 2023. The Company determined
the extension of cash and modification to other terms met the conditions of a debt extinguishment; therefore, the Company recorded a loss
on extinguishment of debt for the total amount of $36,313 included in other income (expenses) within the accompanying statement of operation.
On September 27, 2023, the
Company entered into second amendment with AJB by increasing the original principal of the note by $ 25,000 which increased the restricted
cash balance to be used for payments for professional services.
On November 28, 2023, the
Company entered into a third amendment with AJB Capital Investments, LLC by increasing the original principal of note with amount of $ 22,222
in which the Company received $ 20,000 in cash (after giving effect to a 10% original issue discount) for payment to vendors.
Effective December 15, 2023,
the Company entered into a Securities Purchase Agreement (the “SPA”) with AJB Capital Investments, LLC (“AJB”),
and issued a Promissory Note in the principal amount of $195,000 (the “AJB Note”) to AJB in a private transaction for a purchase
price of $ 165,750 (after giving effect to a 15% original issue discount). In connection with the sale of the AJB Note, the Company also
paid certain fees and due diligence costs of AJB and brokerage fees. After payment of the fees and costs, the net proceeds to the Company
were $ 150,750 , which will be used for working capital and other general corporate purposes.
The maturity date of the
AJB Note was June 14, 2024. The AJB Note bears interest at 10% per year, and principal and accrued interest is due on the maturity date.
The Company may prepay the AJB Note at any time without penalty.
The note is convertible into
Common Stock of the Company at any time that the note is in default, provided that at no time may the note be convertible into an amount
of common stock that would result in the holder having beneficial ownership of more than 4.99% of the outstanding shares of common stock,
as determined in accordance with Section 13(d) under the Securities Exchange Act of 1934 (the “Exchange Act”). The conversion
price equals the lowest trading price during either the 20 days trading days prior to the date of conversion or the 20 trading days prior
to the date of issuance of the note (which was $0.14 per share). The conversion is subject to reduction in the following situations: (i)
a 15% discount will apply anytime a conversion occurs when the company is not eligible to deliver the shares by DWAC; (ii) a 15% discount
will apply whenever the shares are “chilled” for deposit into the DTC system; (iii) a 15% discount will apply if the Company’s
common stock ceases to be registered under Section 12 of the Exchange Act; (iv) a 15% discount will apply if the note cannot be converted
into free trading shares 181 days after its issue date; (v) in the event any other party has the right to convert debt into Common Stock
at a greater discount to market than under the note, then the holder has the right to utilize such discount in determining the conversion
price; or (vi) if the Company issues any shares of Common Stock for less than the conversion price in effect on the date of issuance,
including any options, warrants or securities convertible into Common Stock at price less than the conversion price, then the conversion
price shall be automatically reduced to the amount of consideration received by the company for such shares, except for any issuance that
is an exempt issuance. The maturity date of the note has been extended to May 31, 2025.
On December 15, 2023, in
conjunction with the issuance of this promissory note of $ 195,000 , the Company also issued to AJB common stock purchase warrants (the
“December 2023 warrants”) to purchase 5,000,000 shares of the Company’s common stock for a nominal exercise price of
$ 0.00001 per share. The December 2023 warrants may be exercised at any time on or after December 15, 2023 and until the warrant is exercised
in full. The warrants also include various covenants of the Company for the benefit of the warrant holder and includes a beneficial ownership
limitation on the holder that, in certain circumstances, may serve to restrict the holder’s right to exercise the warrants. As a
result of the Company’s equity environment being tainted the warrants qualified for derivative accounting and were assigned a value
of $ 248,952 which was recorded as a derivative liability, with corresponding amounts of $ 150,750 was allocated to debt discount and the
difference between the fair value of the December 2023 warrants and the net proceeds received of $ 98,202 was recognized as interest expense.
F- 22
DriveItAway Holdings, Inc.
Notes to the Condensed Consolidated Financial Statements
March 31, 2026
Unaudited
Effective February 23, 2024, the Company entered into
a Securities Purchase Agreement (the “SPA”) with AJB Capital Investments, LLC (“AJB”), and issued a Promissory
Note in the principal amount of $ 140,000 (the “AJB Note”) to AJB in a private transaction for a purchase price of $ 112,000
(after giving effect to a 20% original issue discount). In connection with the sale of the AJB Note, the Company also paid certain fees
and due diligence costs of AJB and brokerage fees, totaling $ 10,000 . After payment of the fees and costs, the net proceeds to the Company
were $ 102,000 , which were used for working capital and other general corporate purposes.
The maturity date of the AJB Note is May 31,
2025 . The AJB Note bears interest at 12 % per year, and principal and accrued interest is due on the maturity date. The Company may
prepay the AJB Note at any time without penalty.
Also pursuant to the SPA, the Company paid to AJB
a commitment fee of $ 50,000 , payable in the form of 5,000,000 unregistered shares of the Company’s common stock (the “Commitment
Fee Shares”) which were issued at note inception.
On May 28, 2024, the Company entered into another
SPA with AJB, and issued a promissory note in the amount of $ 63,000 (the “May 2024 AJB Note”) to AJB in a private transaction
for a purchase price of $ 56,700 (after giving effect to a 10% original issue discount). In connection with the sale of the AJB Note,
the Company also paid certain fees and due diligence costs of AJB and brokerage fees, totaling $ 6,700 . After payment of the fees and
costs, the net proceeds to the Company were $ 50,000 , which were used for working capital and other general corporate purposes.
The maturity date of the AJB Note is May 31,
2025 . The AJB Note bears interest at 12 % per year, and principal and accrued interest is due on the maturity date. The Company may
prepay the AJB Note at any time without penalty.
Also pursuant to the SPA, the Company paid to AJB
a commitment fee in the form of 1,000,000 unregistered shares of the Company’s common stock (the “Commitment Fee Shares”)
which were issued at note inception. The Company also issued to AJB common stock purchase warrants (the “May 2024 warrants”)
to purchase 5,000,000 shares of the Company’s common stock for a nominal exercise price of $0.00001 per share. The May 2024 warrants
may be exercised at any time on or after May 28, 2024 and until the warrant is exercised in full. The warrants also include various covenants
of the Company for the benefit of the warrant holder and includes a beneficial ownership limitation on the holder that, in certain circumstances,
may serve to restrict the holder’s right to exercise the warrants. As a result of the Company’s equity environment being tainted
the warrants qualified for derivative accounting and were assigned a value of $ 348,500 which was recorded as a derivative liability. The
note was discounted to a principal balance of $ 0 and a debt discount of $ 63,000 was recorded at inception. The difference between the
fair value of the warrants and the net proceeds received was recognized as interest expense.
On June 14, 2024, the Company entered into another
SPA with AJB, and issued a promissory note with a face amount of $ 250,000 (the “June 2024 AJB Note”) to AJB in a private transaction
for a purchase price of $ 225,000 (after giving effect to a 10% original issue discount). In connection with the sale of the AJB Note,
the Company also paid certain fees and due diligence costs of AJB and brokerage fees, totaling $ 12,500 . The Company may draw on the June
2024 AJB Note as automobiles for the rental fleet are purchased, up to a maximum amount of $ 212,500 . As a result, the Company accounted
for this note as a line of credit.
The maturity date of the AJB Note is May 31,
2025 . The AJB Note bears interest at 15 % per year, and principal and accrued interest is due on the maturity date. The Company may
prepay the AJB Note at any time without penalty.
F- 23
DriveItAway Holdings, Inc.
Notes to the Condensed Consolidated Financial Statements
March 31, 2026
Unaudited
The note is convertible into Common Stock of the Company
at any time that the note is in default provided that at no time may the note be convertible into an amount of common stock that would
result in the holder having beneficial ownership of more than 9.99% of the outstanding shares of common stock, as determined in accordance
with Section 13(d) under the Securities Exchange Act of 1934 (the “Exchange Act”). The conversion price shall equal $0.01
per share, subject to adjustments. The conversion is subject to reduction in the following situations: (i) a 15% discount will apply anytime
a conversion occurs when the company is not eligible to deliver the shares by DWAC; (ii) a 15% discount will apply whenever the shares
are “chilled” for deposit into the DTC system; (iii) a 15% discount will apply if the Company’s common stock ceases
to be registered under Section 12 of the Exchange Act; (iv) a 15% discount will apply if the note cannot be converted into free trading
shares 181 days after its issue date; (v) in the event any other party has the right to convert debt into Common Stock at a greater discount
to market than under the note, then the holder has the right to utilize such discount in determining the conversion price; or (vi) if
the Company issues any shares of Common Stock for less than the conversion price in effect on the date of issuance, including any options,
warrants or securities convertible into Common Stock at price less than the conversion price, then the conversion price shall be automatically
reduced to the amount of consideration received by the company for such shares, except for any issuance that is an exempt issuance.
Also pursuant to the SPA, the Company paid to AJB
a commitment fee in the form of a warrant to purchase 5,000,000 unregistered shares of the Company’s common stock for nominal exercise
price of $ 0.00001 per share. The warrant is exercisable at any time on or after June 14, 2024 and until the warrant is exercised in full.
The warrants also include various covenants of the Company for the benefit of the warrant holder and includes a beneficial ownership limitation
on the holder that, in certain circumstances, may serve to restrict the holder’s right to exercise the warrants. As a result of
the Company’s equity environment being tainted, the warrants qualified for derivative accounting and were assigned a value of $ 337,500
which was recorded as a derivative liability. As the assigned value of the warrants plus a $ 25,000 original issue discount and $12,500
of loan fees exceeded the face value of the note, the face value of the note was initially recorded as deferred financing costs and will
be recorded as a discount to the note pro rata to draws made on the Promissory Note. Discounts will be amortized over the repayment term
of the draw. The difference between the fair value of the warrants and the face value of the note was recorded as interest expense. The
Company has drawn 100% of the available credit on the note as of March 31, 2026.
On January 2, 2026, the Company refinanced the notes
dated December 15, 2023, February 23, 2024, May 28, 2024, March 7, 2025, May 8, 2025, June 16, 2025, July 18, 2025, and September 9, 2025
with a new note with a principal balance of $ 1,150,000 bearing interest at 15 % and due on July 22, 2026. The Company may prepay the AJB
Note at any time without penalty. The refinancing is accounted for as a debt extinguishment, upon which the Company recorded a loss on
debt extinguishment of $ 21,798 .
The note is convertible into Common Stock of the Company
at any time that the note is in default provided that at no time may the note be convertible into an amount of common stock that would
result in the holder having beneficial ownership of more than 9.99% of the outstanding shares of common stock, as determined in accordance
with Section 13(d) under the Securities Exchange Act of 1934 (the “Exchange Act”). The conversion price shall equal $0.01
per share, subject to adjustments. The conversion is subject to reduction in the following situations: (i) a 15% discount will apply anytime
a conversion occurs when the company is not eligible to deliver the shares by DWAC; (ii) a 15% discount will apply whenever the shares
are “chilled” for deposit into the DTC system; (iii) a 15% discount will apply if the Company’s common stock ceases
to be registered under Section 12 of the Exchange Act; (iv) a 15% discount will apply if the note cannot be converted into free trading
shares 181 days after its issue date; (v) in the event any other party has the right to convert debt into Common Stock at a greater discount
to market than under the note, then the holder has the right to utilize such discount in determining the conversion price; or (vi) if
the Company issues any shares of Common Stock for less than the conversion price in effect on the date of issuance, including any options,
warrants or securities convertible into Common Stock at price less than the conversion price, then the conversion price shall be automatically
reduced to the amount of consideration received by the company for such shares, except for any issuance that is an exempt issuance.
F- 24
DriveItAway Holdings, Inc.
Notes to the Condensed Consolidated Financial Statements
March 31, 2026
Unaudited
Also pursuant to the SPA, the Company paid to AJB
a commitment fee in the form of a warrant to purchase 10,000,000 unregistered shares of the Company’s common stock for nominal exercise
price of $ 0.00001 per share. The warrant is exercisable at any time on or after January 22, 2026 and until the warrant is exercised in
full. The warrants also include various covenants of the Company for the benefit of the warrant holder and includes a beneficial ownership
limitation on the holder that, in certain circumstances, may serve to restrict the holder’s right to exercise the warrants. As a
result of the Company’s equity environment being tainted, the warrants qualified for derivative accounting and were assigned a value
of $ 450,000 which was recorded as a derivative liability. As the assigned value of the warrants plus a $ 230,000 original issue discount
and $ 7,500 of loan fees exceeded the face value of the note, the face value of the note was initially recorded as deferred financing costs
and will be recorded as a discount to the note pro rata to draws made on the Promissory Note. Discounts will be amortized over the repayment
term of the draw. The difference between the fair value of the warrants and the face value of the note was recorded as interest expense.
The Company has drawn 100% of the available credit on the note as of March 31, 2026.
During the six months ended
March 31, 2026, the Company recorded interest expense of $ 176,406 , amortization of debt discount of $ 393,680 , amortization of deferred
financing costs of $0, and a gain on change in fair value of derivative liability of $ 92,499 for the guarantee and warrants. As of March
31, 2026 and September 30, 2025, the derivative liability was $ 4,484,743 and $ 4,127,242 for the guarantee and warrants, the debt discount
recorded on the notes was $ 430,632 and $ 136,812 , the note payable principal was $ 2,282,222 and $ 1,818,722 , and the Company owed accrued
interest of $ 597,157 and $ 573,395 .
During the six months ended March 31, 2025, the Company recorded interest expense
of $ 141,121 , amortization of debt discount of $ 46,674 , amortization of deferred financing costs of $ 104,092 , and a gain on change in fair
value of derivative liability of $ 699,850 for the guarantee and warrants.
Effective February 14, 2023,
the Company went into default on the AJB Note, however the lender waived all default provisions through May 31, 2025 therefore no default
interest or penalties were incurred during the six months ended March 31, 2026 and the AJB note was not convertible as of March 31, 2026.
The following represents the future aggregate maturities
of the Company’s Convertible Notes Payable as of March 31, 2026 for each of the five (5) succeeding years and thereafter as follows:
Schedule of future aggregate maturities | | |
| | |
Period ending March 31, | |
Amount |
2026 (remaining) | | |
$ | 2,282,222 | |
Total | | |
$ | 2,282,222 | |
Convertible Promissory Notes Payable, in Default
During June 2022, the Company sold a total of $ 250,000
worth of Units to U.S. Escrow Services Corporation and Kevin Leach, two accredited investors, which resulted in the issuance of two secured
promissory notes with an aggregate principal amount of $ 250,000 for cash proceeds of $ 230,000 (net of an original issuance discount of
$ 20,000 ), and the issuance of 125,000 warrants (see Note 6). The $ 20,000 was recorded as a debt discount and the conversion option embedded
in the notes was bifurcated and accounted for as a derivative liability resulting in the Company recording a debt discount and derivative
liability of $ 50,491 . As a result of the Company’s equity environment being tainted the warrants qualified for derivative accounting
and were assigned a value of $ 8,136 which was recorded as a derivative liability (see Note 8) and debt discount. The total debt discount
of $ 78,627 is being amortized to interest expense over the term of the Note. The debt discount was $ 0 on September 30, 2025. These notes
matured in June 2024, are in default, and are still outstanding.
F- 25
DriveItAway Holdings, Inc.
Notes to the Condensed Consolidated Financial Statements
March 31, 2026
Unaudited
In June 2022,
the Company’s board of directors approved an offering of up to 10 Units at $ 50,000 per Unit in a private offering. Each Unit consists
of a Secured Convertible Note with an original principal balance of $ 50,000 and one warrant to purchase Common Stock for every $2 invested
in the offering. The warrants have an exercise price of $ 0.30 per share and expire five (5) years from the date of issuance. Each Secured
Convertible Note bears interest at 15% per annum, matures two years after the date of issuance, and is convertible at the option of the
holder into common stock at $ 0.20 per share. Pursuant to a security agreement between the Company and investors in the Unit offering,
and the subscription agreements executed by the Company and the investors, the Secured Convertible Notes are secured by liens on four
existing electric vehicles that were owned by the Company at the time of the commencement of the offering, and eight additional electric
vehicles that will be purchased with the proceeds of the offering, assuming all 10 Units are sold in the offering. The Company also granted
subscribers in the Unit offering piggyback registration rights with respect to any shares of common stock issuable upon conversion of
the Secured Convertible Notes or upon exercise of the warrants issued in the Unit offering.
During June
2022, the Company sold a total of $ 250,000 worth of Units to U.S. Escrow Services Corporation and Kevin Leach, two accredited investors,
which resulted in the issuance of two secured promissory notes with an aggregate principal amount of $ 250,000 for cash proceeds of $ 230,000
(net of an original issuance discount of $ 20,000 ), and the issuance of 125,000 warrants (see Note 5). The $ 20,000 was recorded as a debt
discount and the conversion option embedded in the notes was bifurcated and accounted for as a derivative liability resulting in the Company
recording a debt discount and derivative liability of $ 50,491 . As a result of the Company’s equity environment being tainted the
warrants qualified for derivative accounting and were assigned a value of $ 8,136 which was recorded as a derivative liability (see Note
8) and debt discount. The total debt discount of $ 78,627 is being amortized to interest expense over the term of the Note. Effective June
3, 2024 and June 16, 2024, these two secured promissory notes went into default, respectively.
During November
2022, the Company sold a total of $ 200,000 worth of Units to Cestone Family Foundation and Michele and Agnese Cestone Foundation, two
accredited investors, which resulted in the issuance of two secured promissory notes with an aggregate principal amount of $ 200,000 for
cash proceeds of $ 180,000 (net of an original issuance discount of $ 20,000 ), and the issuance of 100,000 warrants (see Note 5). The $ 20,000
was recorded as a debt discount and the conversion option embedded in the notes was bifurcated and accounted for as a derivative liability
resulting in the Company recording a debt discount and derivative liability of $ 19,330 . As a result of the Company’s equity environment
being tainted the warrants qualified for derivative accounting and were assigned a value of $ 7,254 which was recorded as a derivative
liability (see Note 8) and debt discount). The total debt discount of $ 43,124 is being amortized to interest expense over the term of
the Note.
During
the six months ended March 31, 2026 , the Company recorded interest expense of $ 44,878 , paid
interest of $ 0 and amortization of debt discount of $ 0 .
As
of March 31, 2026 and September 30, 2025, the accrued interest on the Convertible Promissory Notes Payable, in Default was $ 275,249 and $ 230,371 , respectively. As of
March 31, 2026 and September 30, 2025 the outstanding principal of Convertible Promissory Notes Payable, in Default was $ 450,000 and $ 450,000 , respectively. As
of March 31, 2026, the Company had defaulted on these promissory notes payable.
Note 8 – Derivative
Liabilities
Certain features
and instruments issued as part of the Company’s debt financing arrangements qualified for derivative accounting under ASC 815, Derivatives
and Hedging, as the number of common shares that are to be issued under the arrangements are indeterminate, therefore the Company’s
equity environment is tainted.
ASC 815 requires
that we record the fair market value of the derivative liabilities at inception and at the end of each reporting period and recognize
any change in the fair market value as other income or expense item.
F- 26
DriveItAway Holdings, Inc.
Notes to the Condensed Consolidated Financial Statements
March 31, 2026
Unaudited
The Company
determined our derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes pricing model to calculate the
fair values at inception and as of March 31, 2026. The Black-Scholes model requires six basic data inputs: the exercise or strike price,
time to expiration, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and
the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement. The following assumptions
were used in the Black-Scholes model during the six months ended March 31, 2026, and year ended September 30, 2025:
Schedule of defined benefit plan, assumptions |
|
|
|
|
|
|
|
|
|
|
Six months ended |
|
Year Ended |
|
|
March 31, |
|
September 30, |
|
|
2026 |
|
2025 |
Expected term |
|
|
0.01 - 4.82 years |
* |
|
|
0.68 - 5.00 years |
|
Expected average volatility |
|
|
350 % - 405 |
% |
|
|
111 % - 499 |
% |
Expected dividend yield |
|
|
— |
|
|
|
|
|
Risk-free interest rate |
|
|
3.68 % - 3.92 |
% |
|
|
3.93 % - 4.93 |
% |
* |
10,000,000 warrants issued during the six months ended March 31, 2026 do not have an expiration date. |
The following table provides a summary of changes
in fair value of the Company’s Level 3 financial liabilities during the three months ended March 31, 2026:
Schedule of derivative liabilities | |
| | |
Derivative liability balance - September 30, 2025 | |
$ | 4,454,765 | |
Addition of new derivatives recognized as debt discounts | |
| 450,000 | |
Loss on change in fair value of the derivative | |
| ( 93,686 | ) |
Derivative liability balance – March 31, 2026 | |
$ | 4,811,079 | |
Note 9 – Subsequent
Events
On April 14, 2026, the Company entered into a settlement agreement with
a vendor whereby the vendor agreed to convert $ 160,000 of open invoices into 4,000,000 shares of the Company’s common stock and
a pre-funded warrant to purchase 4,000,000 shares of the Company’s common stock.
On April 15, 2026, the Company agreed to convert a promissory note with
a principal balance of $12,500 and accrued interest of $6,511, for a total of $19,011 into 970,547 shares of the Company’s common
stock.
On April 15, 2026, the Company agreed to convert a promissory note with
a principal balance of $7,500 and accrued interest of $3,900, for a total of $11,400 into 570,000 shares of the Company’s common
stock.
F- 27
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF OPERATIONS
Special Note Regarding Forward-Looking Information
The following discussion and analysis of the results
of operations and financial condition of DriveItAway Holdings, Inc., and its wholly owned subsidiary, DriveItAway, Inc., should be read
in conjunction with the financial statements of the Company. and the notes to those financial statements that are included elsewhere in
this Form 10-Q. References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to “us”,
“we”, “our” and similar terms refer to the Company. This Quarterly Report contains forward-looking statements
as that term is defined in the federal securities laws. The events described in forward-looking statements contained in this Quarterly
Report may not occur. Generally, these statements relate to business plans or strategies, projected or anticipated benefits or other consequences
of our plans or strategies, projected or anticipated benefits from acquisitions to be made by us, or projections involving anticipated
revenues, earnings or other aspects of our operating results. The words “may,” “will,” “expect,” “believe,”
“anticipate,” “project,” “plan,” “intend,” “estimate,” and “continue,”
and their opposites and similar expressions, are intended to identify forward-looking statements. We caution you that these statements
are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which
are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based.
Our actual results, performance and achievements
could differ materially from those expressed or implied in these forward-looking statements. Except as required by federal securities
laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether from new information, future events
or otherwise.
U.S. Dollars are denoted herein by “USD,” “$”
and “dollars”.
Overview
DIA is the first
national dealer focused mobility platform that enables car dealers to sell more vehicles in a seamless way through eCommerce, with its
exclusive “Pay as You Go” app-based subscription program. DIA provides a comprehensive turnkey, solutions driven program with
proprietary mobile technology and driver app, insurance coverages and training to get dealerships up and running quickly and profitably
in emerging online sales opportunities. The company is planning to soon to expand its easy and transparent consumer app ‘subscription
to ownership’ platform to enable entry level consumers to drive and acquire new electric vehicles.
RESULTS OF OPERATIONS
For the three months
ended March 31, 2026, compared to the three months ended March 31, 2025
Our operating results for
the three months ended March 31, 2026 and 2025 are summarized as follows:
| |
Three months ended | |
| |
|
| |
March 31, | |
| |
|
| |
2026 | |
2025 | |
Change | |
% |
Revenues | |
$ | 377,522 | | |
$ | 210,665 | | |
| 166,857 | | |
| 79 | % |
Cost of revenue | |
| 322,725 | | |
| 181,089 | | |
| 141,636 | | |
| 78 | % |
Gross Profit | |
| 54,797 | | |
| 29,576 | | |
| 25,221 | | |
| 86 | % |
Gross Profit Percentage | |
| 15 | % | |
| 14 | % | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
Operating expense | |
| 196,850 | | |
| 268,240 | | |
| (71,390 | ) | |
| (27 | )% |
Operating loss | |
| (142,053 | ) | |
| (238,664 | ) | |
| 96,611 | | |
| (40 | )% |
| |
| | | |
| | | |
| | | |
| | |
Other (income) / expense | |
| (1,375,327 | ) | |
| (209,294 | ) | |
| (1,166,033 | ) | |
| 557 | )% |
Net income (loss) before income taxes | |
| (1,517,380 | ) | |
$ | (447,958 | ) | |
$ | (1,069,422 | ) | |
| (239 | )% |
Income tax expense | |
| | | |
| | | |
| | | |
| | |
Net income (loss) | |
$ | (1,517,380 | ) | |
$ | (447,958 | ) | |
$ | (1,069,422 | ) | |
| (239 | )% |
1
Revenues for the three months
ended March 31, 2026, increased $166,857 from $210,665 for the period ending March 31, 2025, to $377,522 for the period ending March 31,
2026. This was due to a $166,857 increase in rental revenue and insurance revenue as a result of more vehicles available to rent.
We anticipate that, in 2026
automotive supply and demand will see a continuing return to more historically normal levels which should translate into greater vehicle
availability for vehicles on our platform, leading to a further increase in revenues.
Cost of revenue for the three months ended March
31, 2026, increased $141,636, from $181,089 for the period ending March 31, 2025, to $322,725 for the period ending March 31, 2026.
Operating expenses for the
three months ended March 31, 2026, decreased $71,390 as compared to the three months ended March 31, 2025. The decrease was primarily
attributable to decreases in general and administrative of $96,728, professional fees of $45,616, and offset by increases in salaries
and payroll taxes of $38,128, and stock compensation of $35,625.
Loss from operations was
$142,053 for the three months ended March 31, 2026, as compared to $(238,664) for the three months ended March 31, 2025. The decrease
of $96,611 was due to lower operating expenses.
Other expense for the three months ended March 31, 2026, was $(1,375,327),
as compared to net other expense of $(209,294)1 for the three months ended March 31, 2025. The change of $(1,166,033) is primarily attributable
to the reduced amortization of debt discount as the maturity dates of notes payable is reached.
For the six months
ended March 31, 2026, compared to the six months ended March 31, 2025
Our operating results for
the six months ended March 31, 2026 and 2025 are summarized as follows:
| |
Six months ended | |
| |
|
| |
March 31, | |
| |
|
| |
2026 | |
2025 | |
Change | |
% |
Revenues | |
$ | 659,764 | | |
$ | 452,611 | | |
| 207,153 | | |
| 46 | % |
Cost of revenue | |
| 521,073 | | |
| 324,344 | | |
| 196,729 | | |
| 61 | % |
Gross Profit | |
| 138,691 | | |
| 128,267 | | |
| 10,424 | | |
| 8 | % |
Gross Profit Percentage | |
| 21 | % | |
| 28 | % | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
Operating expense | |
| 423,671 | | |
| 492,543 | | |
| (68,874 | ) | |
| (14 | )% |
Operating loss | |
| (284,980 | ) | |
| (364,276 | ) | |
| 79,296 | | |
| (22 | )% |
| |
| | | |
| | | |
| | | |
| | |
Other (income) / expense | |
| (668,556 | ) | |
| 372,781 | | |
| (1,059,062 | ) | |
| (284 | )% |
Net income (loss) before income taxes | |
| (971,259 | ) | |
$ | 8,505 | | |
$ | (979,764 | ) | |
| (11,520 | )% |
Income tax expense | |
| | | |
| | | |
| | | |
| | |
Net income (loss) | |
$ | (971,259 | ) | |
$ | 8,505 | | |
$ | (979,764 | ) | |
| (11,520 | )% |
Revenues for the six months
ended March 31, 2026, increased $207,153 from $452,611 for the period ending March 31, 2025, to $659,764for the period ending March 31,
2026. This was due to a $207,153 increase in rental revenue and insurance revenue as a result of more vehicles available to rent.
We anticipate that, in 2026
automotive supply and demand will see a continuing return to more historically normal levels which should translate into greater vehicle
availability for vehicles on our platform, leading to a further increase in revenues.
Cost of revenue for the six months ended March 31, 2026, increased $196,729,
from $324,344 for the period ending March 31, 2025, to $521,073 for the period ending March 31, 2026.
2
Operating expenses for the
six months ended March 31, 2026, decreased $68,874 as compared to the six months ended March 31, 2025. The increase was primarily attributable
to decreases in general and administrative of $120,084, and software development of $18,415, offset by increases in stock compensation
of $76,250 and salaries and payroll taxes of $27,131.
Loss from operations was
$284,978 for the six months ended March 31, 2026, as compared to $364,276 for the six months ended March 31, 2025. The increase of $79,298
was due to higher operating expenses.
Other expense for the six months ended March 31, 2026, was $686,281, as compared
to net other income of $372,781 for the six months ended March 31, 2025. The change of $1,059,062 is primarily attributable to the change
in fair value of derivative liabilities of $818,296 and an increase in discount amortization of $323,771.
Liquidity and Capital Resources:
The following table provides selected financial data about our Company
as of March 31, 2026, and September 30, 2025.
Working Capital
| |
March 31, | |
September 30, | |
| |
|
| |
2026 | |
2025 | |
Change | |
% |
Cash | |
$ | 83,006 | | |
$ | 39,930 | | |
$ | 43,076 | | |
| 108 | % |
| |
| | | |
| | | |
| | | |
| | |
Current assets, net of restricted cash | |
$ | 127,113 | | |
$ | 82,462 | | |
$ | 44,651 | | |
| 110 | % |
Current liabilities | |
| 9,221,781 | | |
| 9,070,575 | | |
| 151,206 | | |
| 2 | % |
Working capital (deficiency) | |
$ | (9,011,662 | ) | |
$ | (8,948,183 | ) | |
$ | (63,479 | ) | |
| 2 | % |
As of March 31, 2026, our working capital deficiency decreased $63,479 as
compared to September 30, 2025. This was primarily attributable to a $44,651 increase in current assets offset by the increase in current
liabilities of $151,206.
Cash Flow Data:
| |
Six months ended | |
|
| |
March
31, |
|
| |
2026 | |
2025 | |
Change |
Cash
provided by (used in) operating activities | |
$ | (479,987 | ) | |
$ | (161,862 | ) | |
$ | (318,125 | ) |
Cash
provided by (used in) investing activities | |
$ | 347,500 | | |
$ | (137,289 | ) | |
$ | 484,789 | |
Cash
provided by (used in) financing activities | |
$ | 175,563 | | |
$ | 316,733 | | |
$ | (141,170 | ) |
Net
Change in Cash and Restricted Cash | |
$ | 43,076 | | |
$ | 17,582 | | |
$ | 25,494 | |
Cash Flows from Operating
Activities
During the six months ended March 31, 2026, we did not generate positive cash
flows from operating activities. For the six months ended March 31, 2026, net cash flows used in operating activities was $(479,987) consisting
of a net loss of $971,259 a gain on change in fair value of derivative liability of $93,686, and increased by amortization debt discount
of $402,251, amortization of deferred financing costs of $11,811, depreciation and amortization of $41,344, and a change in operating
assets and liabilities of $42,316.
During the six months ended March 31, 2025, we did not generate positive cash
flows from operating activities. For the six months ended March 31, 2025, net cash flows used in operating activities was $161,862, consisting
of a net income of $8,505, reduced by a loss on change in fair value of derivative liability of $911,982, amortization debt discount of
$78,480, depreciation and amortization of $74,292, amortization of deferred financing costs of $171,468, and a change in operating assets
and liabilities of $417,375.
3
Cash Flows from Investing
Activities
During the six months ended
March 31, 2026, the Company received $347,500 cash from proceeds from sale of fixed assets from investing activities..
During the six months ended
March 31, 2025, the Company used $137,289 cash from investing activities to purchase vehicles for its rental fleet.
Cash Flows from Financing
Activities
During the six months ended March 31, 2026, the Company generated $175,563 from
financing activities including proceeds of $290,000 from the sale of warrants, and $914,658 from the issuance of convertible promissory
notes, which was offset by $548,808 for repayment of promissory notes, proceeds from Notes Payable of $230,213 and $710,500 for repayment
of convertible notes payable.
During the six months ended
March 31, 2025, the Company generated $316,733 from financing activities including proceeds of $1,300 from related party advances, $268,812
from the issuance of promissory notes, $103,708 from the issuance of convertible promissory notes, proceeds from the sale of warrants
of $50,000, and proceeds from the sale of common stock of $5,000 which was partially offset by $112,087 for repayment of promissory notes.
Going Concern
As of March 31, 2026, the Company had a net loss of $971,259, accumulated
deficit of $11,432,878 and did not have sufficient cash on hand to cover expenses for the next twelve (12) months. The Company intends
to convert its convertible debt into common stock and to fund operations through equity financing arrangements, which may be insufficient
to fund its capital expenditures, working capital and other cash requirements for the ensuing twelve months.
The ability of our Company
to emerge from the development stage is dependent upon, among other things, obtaining additional financing to continue operations, and
development of our business plan. In response to these requirements, management intends to raise additional funds through public or private
placement offerings. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.
The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Critical Accounting Policies and
Estimates
Our consolidated financial
statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), which require
management to make estimates, judgments and assumptions that affect the amounts reported in our condensed consolidated financial statements
and accompanying notes. We believe our most critical accounting policies and estimates relate to the following:
|
● |
Revenue Recognition |
|
|
|
|
● |
Stock-Based Compensation |
|
|
|
|
● |
Income Taxes |
|
|
|
|
● |
Financial Instruments |
|
|
|
|
● |
Derivative Financial Instruments |
While our estimates and assumptions
are based on our knowledge of current events and actions we may undertake in the future, actual results may ultimately differ from these
estimates and assumptions. For a discussion of the Company’s significant accounting policies, refer to Note 2 of Notes to the Condensed
Consolidated Financial Statements.
4
Revenue Recognition
The Company’s revenue is recognized in accordance
with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, for all periods presented. The
Company, through its DriveItAway online/app-based platform (“platform”), operates in the automotive rental industry. The Company
assists subprime and deep subprime candidates to rent/lease vehicles on a short-term basis, generally on a weekly or, in some cases monthly,
basis under a Pay-As You-Go program. Through its platform the Company will track vehicle values and reduce vehicle pricing through the
customers usage payments to show drivers a vehicle purchase price should they be interested in buying the vehicle, at which time the customer
would procure financing if the Company determined they wanted to sell the vehicle at the listed purchase price.
During the periods ended March 31, 2026 and 2025, the Company derived its revenue
from signed contracts for vehicle rentals between the Company, other leasing companies, or car dealerships and individual car rental customers
(“customers”).
Customers book a vehicle through the Company’s
platform, starting first with a rental contract with the vehicle. When the customer books the vehicle, per the terms of the individual
rental agreements, the customer shall pay a stated rental rate, a stated insurance amount, an initial non-refundable fee, and, in some
cases, a refundable deposit. At the end of the usage cycle, the system calculates miles driven and if the customer has driven more than
the prorated, included amount, they pay extra usage/mileage fees. In instances when a customer pays late, they pay a late fee and in cases
of incurring charges for tolls they pay for the toll costs incurred. Additionally, contracts may be extended (a new contract is signed)
at which time the credit card on file for the customer will be charged at the beginning of the contract extension period for rental rate
and insurance amount for the new extension period.
Vehicles available in the platform can be owned or
leased by the Company or made available through arrangements with independent car dealerships (“dealerships”). For vehicles
owned or leased by the Company, the Company’s performance obligation for rental revenue is to provide customers with a vehicle and
an application to track vehicle rental arrangements. For vehicles made available through dealerships the Company’s performance obligation
for rental revenue is to provide an application to track vehicle rental arrangements and to collect cash from customers and remit those
amounts to dealerships net of the Company’s revenue share. The vehicle rental arrangements are over a fixed contracted period; therefore,
the Company recognizes rental revenue ratably over the contract term. Costs related to rental revenue include depreciation for Company
owned vehicles and monthly lease payments when the vehicles are leased from a leasing company. The amount of revenue transferred to dealerships
is treated as contra-revenue because the Company acts as an agent in these transactions resulting in only the Company’s revenue
share being recognized.
The Pay-As-You-Go program manages or includes insurance.
Fleet insurance is sometimes provided where the Company has a fleet policy and the driver is added to it when needed. In this case, the
driver pays the cost of insurance as a separate payment in the system. This payment is a type of revenue. The Company pays the insurance
company providing the coverage. This is a cost of goods sold. The Company also allows for drivers to bring their own insurance. The Company
works with associated insurance brokers to write a policy for the customer for that vehicle and a separate finance company that pays for
the policy in full. The Company acts as trustee in collecting installments and transferring them to the finance company. Collected payments
are treated as a revenue and transfers to the finance company are treated as contra-revenue because the Company acts as an agent in these
transactions. Lastly, in markets where the Company cannot support this program, drivers are allowed to bring their own insurance and pay
it directly themselves with no involvement of the Company. No revenue is collected or recognized in this instance. Because any insurance
revenue is collected at contract inception and covers the fixed contract period the Company recognizes insurance revenue ratably over
the contract term.
Initial non-refundable fees are recognized when payment
is received as the Company has no obligation to provide additional services at that point. Miscellaneous charges for extra mileage, late
fees, or toll charges calculated and charged to the customer credit card at the end of the usage cycle are recognized when the credit
card charge goes through. Refundable deposits are recorded on the balance sheet until deposits are returned to customers or applied to
their account for fees incurred. Deferred revenue includes rental and insurance amounts that are paid for contracts that overlap a reporting
date and relate to usages after that date. As of March 31, 2026 and September 30, 2025 refundable deposits were $0 and $0 and deferred
revenue was $26,261 and $15,740, respectively.
5
In addition to the costs associated with rental revenue
and insurance revenue, within the Cost of Goods Sold account the Company also records credit card fees incurred from the cash collections
and cash remittance process, as a significant portion of its performance obligation is to collect and remit payments through its credit
card processors.
Stock-Based Compensation
The Company
recognizes compensation expense for all restricted stock awards and stock options. The fair value of restricted stock awards is measured
using the grant date fair value of our stock, as determined by the Board of Directors. The fair value of stock options is estimated at
the grant date using the Black-Scholes option-pricing model, and the portion that is ultimately expected to vest is recognized as compensation
cost over the requisite service period. We have elected to recognize compensation expense for all options with graded vesting on a straight-line
basis over the vesting period of the entire option. The determination of fair value using the Black-Scholes pricing model is affected
by our stock value as well as assumptions regarding a number of complex and subjective variables, including expected stock price volatility
and the risk-free interest rate.
Income Taxes
The provision for income taxes and deferred income
taxes are determined using the asset and liability method. Deferred tax assets and liabilities are determined based on temporary differences
between the financial carrying amounts and the tax basis of assets and liabilities using enacted tax rates in effect in the years in which
the temporary differences are expected to reverse. On a periodic basis, the Company assesses the probability that its net deferred tax
assets, if any, will be recovered. If after evaluating all of the positive and negative evidence, a conclusion is made that it is more
likely than not that some portion or all of the net deferred tax assets will not be recovered, a valuation allowance is provided by a
charge to tax expense to reserve the portion of the deferred tax assets which are not expected to be realized.
Fair Value
Measurements
The Company
follows ASC 820, “Fair Value Measurements and Disclosures”, which defines fair value as the exchange price that would be received
for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in
an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes
between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2)
an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances
(unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted
prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three
levels of the fair value hierarchy are described below:
Level 1
Level 1 applies
to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2
Level 2 applies
to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted
prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient
volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can
be derived principally from, or corroborated by, observable market data.
Level 3
Level 3 applies
to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement
of the fair value of the assets or liabilities.
6
The carrying
amounts shown of the Company’s financial instruments including cash, accounts receivable, prepaid expense, accounts payable,
and accrued liabilities are approximate fair value due to their short-term nature.
All financial assets and liabilities are approximate to their fair value.
Derivative liabilities are valued at Level 3.
| |
| |
Fair Value Measurements as of March 31, 2026 using: |
| |
March 31, 2026 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | |
Significant Other Observable Inputs (Level 2) | |
Significant Unobservable Inputs (Level 3) |
| |
| |
| |
| |
|
Liabilities | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
Derivative Liabilities | |
$ | 4,811,079 | | |
$ | — | | |
$ | — | | |
$ | 4,811,079 | |
| |
| |
Fair Value Measurements as of September 30, 2025 using: |
| |
September 30, 2025 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | |
Significant Other Observable Inputs (Level 2) | |
Significant Unobservable Inputs (Level 3) |
| |
| |
| |
| |
|
Liabilities | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
Derivative Liabilities | |
$ | 4,454,765 | | |
$ | — | | |
$ | — | | |
$ | 4,454,765 | |
Derivative Financial Instruments
The Company accounts for their derivative financial instruments in accordance with ASC 815 “Derivatives and Hedging” therefore
any embedded conversion options and warrants accounted for as derivatives are to be recorded at their fair values as of the inception
date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating,
non-cash income or expense for each reporting period at each balance sheet date. The Company reassesses the classification of its derivative
instruments at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified
as of the date of the event that caused the reclassification.
The Black-Scholes
option valuation model was used to estimate the fair value of the embedded conversion options and warrants. The model includes subjective
input assumptions that can materially affect the fair value estimates. The expected volatility is estimated based on the most recent historical
period of time of our common stock, equal to the weighted average life of the options.
Off-Balance Sheet Arrangements
We have no off-balance sheet
arrangements.
ITEM 3. QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are a smaller reporting company as defined by Rule
12b-2 of the Exchange Act and are not required to provide the information under this item.
7
ITEM 4. CONTROLS AND PROCEDURES.
(a) |
Evaluation of Disclosure Controls and Procedures |
Our Principal Executive Officer
and Principal Financial Officer conducted an evaluation of the effectiveness of our disclosure controls and procedures as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”). Based on this evaluation, our Principal
Executive Officer and Principal Financial Officer concluded that in light of the material weaknesses described below, our disclosure controls
and procedures were not effective as of March 31, 2026. See material weaknesses discussed below in Management’s Annual Report on
Internal Control over Financial Reporting.
(b) |
Management’s Annual Report on Internal Control Over Financial Reporting |
Our management is responsible
for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f).
Our management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in
the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Our internal control over
financial reporting is a process designed under the supervision of our Principal Executive Officer and Principal Financial Officer to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external
reporting purposes in accordance with GAAP. Internal control over financial reporting includes those policies and procedures that (i)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our
assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with GAAP, and that receipts and expenditure are being made only in accordance with authorizations of our management and directors;
and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our
assets that could have a material effect on the financial statements.
A material weakness is a
deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility
that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
As of March 31, 2026, we
conducted an evaluation of the effectiveness of our internal control over financial reporting. Our management concluded that our internal
controls over financial reporting were not effective as of March 31, 2026, due to the following identified material weaknesses:
|
● |
Our control environment is inadequate. We have no risk assessment procedures, no formal information or communication process, and no monitoring activities in place. Additionally, we lack policies that require formal written approval for related party transactions. |
|
|
|
|
● |
We have not established and/or maintained adequately designed internal controls in order to prevent or detect and correct material misstatements to the financial statements. We do not have controls in place to prevent individuals from manipulating financial data or entering inaccurate data into the accounting software, and there are no controls over the financial reporting close process. Additionally, we lack segregation of duties and review procedures to ensure our financial data is accurate. |
Management believes that
despite our material weaknesses, our condensed consolidated financial statements for the quarter ended March 31, 2026 are fairly stated,
in all material respects, in accordance with GAAP.
8
(c) |
Changes in Internal Control Over Financial Reporting |
During the quarter ended
March 31, 2026, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.
Inherent Limitations Over Internal Controls
Management, including our
Principal Executive Officer and Principal Financial Officer, does not expect that disclosure controls and internal controls will prevent
all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance
that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are no resource
constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company
have been detected. These inherent limitations include the realities that judgements in decision-making can be faulty, and that breakdowns
can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion
of two or more people or by management override of the controls.
9
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are currently
not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations.
There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory
organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against
or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors
in their capacities as such, in which an adverse decision could have a material adverse effect.
ITEM 1A. RISK FACTORS
We are a smaller reporting company as defined by Rule
12b-2 of the Exchange Act and are not required to provide the information under this item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES
AND USE OF PROCEEDS
On
April 14, 2026, the Company sold 4,000,000 shares of its $0.001 par value common stock and issued a warrant to purchase 4,000,000 of
the Company’s $0.001 par value common stock in settlement of a debt of $160,000. The securities were issued in reliance upon the
exemption from registration provided by Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D promulgated thereunder.
Each purchaser represented that it is an 'accredited investor' as defined in Rule 501(a) of Regulation D, and the securities were offered
and sold without any form of general solicitation or general advertising.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
During June
2022, the Company sold a total of $250,000 worth of Units to U.S. Escrow Services Corporation and Kevin Leach, two accredited investors,
which resulted in the issuance of two secured promissory notes with an aggregate principal amount of $250,000 for cash proceeds of $230,000
(net of an original issuance discount of $20,000), and the issuance of 125,000 warrants. These two convertible notes payable matured on
June 30, 2024 and have not been repaid .
During November
2022, the Company sold a total of $200,000 worth of Units to Cestone Family Foundation and Michele and Agnese Cestone Foundation, two
accredited investors, which resulted in the issuance of two secured promissory notes with an aggregate principal amount of $200,000 for
cash proceeds of $180,000 (net of an original issuance discount of $20,000), and the issuance of 100,000 warrants. These convertible notes
payable matured on November 15, 2024 and have not been repaid.
On
March 1, 2023, the Company entered into a promissory note agreement with an investor for the amount of $12,500 with interest bearing at
15% per annum, maturity date of 120 days from issuance and issuance of 25,000 warrants with exercise price of $0.05 that expire on March
1, 2028 (5 year). The promissory note matured on June 30, 2023 and has not been repaid.
On
March 1, 2023, the Company entered into a promissory note agreement with an investor for the amount of $7,500 with interest bearing at
15% per annum, maturity date of 120 days from issuance and issuance of 15,000 warrants with exercise price of $0.05 that expire on March
1, 2028 (5 year). The promissory note matured on June 30, 2023 and has not been repaid.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
During the quarter ended March 31, 2026, no director
or Section 16 officer adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements.
10
ITEM 6. EXHIBITS
|
|
Incorporated by Reference |
Filed or Furnished |
Exhibit Number |
Exhibit Description |
Form |
Exhibit |
Filing Date |
Herewith |
|
|
|
|
|
|
31.1 |
Certification of Principal Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
x |
31.2 |
Certification of Principal Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
x |
32.1* |
Certification of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
x |
32.2* |
Certification of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
|
|
x |
101 |
Inline XBRL Document Set for the condensed consolidated financial statements and accompanying notes in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q. |
|
|
|
x |
104 |
Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set. |
|
|
|
x |
* In
accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are furnished and not filed.
11
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
DRIVEITAWAY HOLDINGS, INC. |
|
|
|
Date: May 22, 202
### EX-31.1 - EXHIBIT 31.1
EX-31.1
2
e7661_ex31-1.htm
EXHIBIT 31.1
EXHIBIT 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, John Possumato, certify that:
|
1. |
I have reviewed this quarterly report on Form 10-Q of DriveItAway, Holdings, Inc.; |
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; |
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; |
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; |
|
b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
c) |
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; |
|
d) |
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; |
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function): |
|
a) |
all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
|
b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting. |
Date: May 22, 2026 |
By: |
/s/ John Possumato |
|
|
John Possumato |
|
|
Chief Executive Officer (Principal Executive Officer) |
### EX-31.2 - EXHIBIT 31.2
EX-31.2
3
e7661_ex31-2.htm
EXHIBIT 31.2
EXHIBIT 31.2
CERTIFICATION OF
PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C.
SECTION 1350,
AS ADOPTED PURSUANT
TO SECTION 302 OF THE
SARBANES-OXLEY ACT
OF 2002
I, Steven M. Plumb, certify that:
|
1. |
I have reviewed this quarterly report on Form 10-Q of DriveItAway Holdings, Inc.; |
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; |
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; |
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; |
|
b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
c) |
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; |
|
d) |
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; |
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function): |
|
a) |
all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
|
b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting. |
Date: May 22, 2026 |
By: |
/s/ Steven M. Plumb |
|
|
Steven M. Plumb |
|
|
Chief Financial Officer (Principal Financial Officer) |
### EX-32.1 - EXHIBIT 32.1
EX-32.1
4
e7661_ex32-1.htm
EXHIBIT 32.1
EXHIBIT 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the Annual
Report of DriveItAway Holdings, Inc., (the “Company”) on Form 10-Q for the period ended March 31, 2026 as filed with the Securities
and Exchange Commission on the date hereof (the “Report”), John Possumato, Chief Executive Officer of the Company, certifies,
pursuant to 18 U.S.C. section 1350 of the Sarbanes-Oxley Act of 2002, that:
|
(1) |
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: May 22, 2026 |
By: |
/s/ John Possumato |
|
|
Chief Executive Officer |
|
|
(Principal Executive Officer) |
A signed original of this written
statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in
typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company
and furnished to the Securities and Exchange Commission or its staff upon request.
### EX-32.2 - EXHIBIT 32.2
EX-32.2
5
e7661_ex32-2.htm
EXHIBIT 32.2
EXHIBIT 32.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the Annual
Report of DriveItAway Holdings, Inc., (the “Company”) on Form 10-Q for the period ended March 31, 2026 as filed with the Securities
and Exchange Commission on the date hereof (the “Report”), Steven M. Plumb, Chief Financial Officer of the Company, certifies,
pursuant to 18 U.S.C. section 1350 of the Sarbanes-Oxley Act of 2002, that:
|
(1) |
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: May 22, 2026 |
By: |
/s/ Steven M. Plumb |
|
|
Steven M. Plumb |
|
|
Chief Financial Officer |
|
|
(Principal Financial Officer) |
A signed original of this written
statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in
typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company
and furnished to the Securities and Exchange Commission or its staff upon request.