| Summary of Significant Accounting Policies | 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 nine months ended June 30, 2024, 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, 2023, contained
in the Company’s Form 10K, as filed on March 8, 2024. 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. Restatement
to Previously Reported Financial Statements
Schedule of Restatement
to Previously Reported Financial Statement
Impact to the unaudited condensed consolidated balance sheet as of June 30, 2024
As reported Adjustments As restated
Deferred financing costs, net $ 445,684 $ (39,141 ) $ 406,543
Total assets $ 725,722 $ (39,141 ) $ 686,581
Accounts payable and accrued liabilities $ 947,284 $ (105,652 ) $ 841,632
Promissory notes payable, net of debt discount 12,835 (12,835 ) —
Convertible notes payable, net of debt discount 1,426,836 (40,208 ) 1,386,628
Derivative liability 1,387,303 11,679 1,398,682
Total current liabilities 4,124,720 (122,375 ) 4,002,345
SBA Loan - non current 114,700 308 115,008
Convertible note payable - noncurrent, net 15,735
Promissory notes payable - concurrent 120,112 (37,155 ) 82,957
Total liabilities $ 4,359,532 $ (143,487 ) $ 4,216,045
Additional paid in capital $ 1,405,174 $ 93,158 $ 1,498,332
Total stockholders’ deficit $ (3,633,810 ) $ 104,346 $ (3,529,464 )
Impact to the unaudited condensed consolidated statement of operations for the three months ended June 30, 2024
As reported Adjustments As restated
Gain (loss) on change in fair value of derivative liability $ 238,379 $ (74,793 ) $ 163,586
Amortization debt discount (134,346 ) 6,869 (127,477 )
Amortization of deferred financing costs — (43,456 ) (43,456 )
Interest expense (505,676 ) 91,088 (4,145,880 )
Interest expense - related parties (2,149 ) 252 (1,897 )
Net loss $ (529,649 ) $ 10,802 $ (518,847 )
Net loss per share of common stock:
Basic and diluted $ — $ — $ —
Impact to the unaudited condensed consolidated statement of operations for the nine months ended June 30, 2024
As reported Adjustments As restated
Gain (loss) on change in fair value of derivative liability $ (271,039 ) $ (74,793 ) $ (345,832 )
Amortization debt discount (296,397 ) 6,869 (289,528 )
Amortization of deferred financing costs — (43,456 ) (43,456 )
Interest expense (707,693 ) 60,294 (647,399 )
Interest expense - related parties (6,627 ) 252 (6,375 )
Net loss $ (1,721,293 ) $ 11,188 $ (1,710,105 )
Net loss per share of common stock:
Basic and diluted $ (0.02 ) $ — $ (0.02 )
Impact to the unaudited condensed consolidated statement of changes in stockholders’ equity for the three months ended June 30, 2024
As reported Adjustments As restated
Net income $ (529,649 ) $ 10,802 $ (518,847 )
Additional paid in capital 1,405,174 93,158 1,498,332
Accumulated deficit (5,032,189 ) 11,188 (5,021,001 )
Total stockholders’ deficit $ (3,633,810 ) $ 104,346 $ (3,529,464 )
Impact to the unaudited condensed consolidated statement of changes in stockholders’ equity for the nine months ended June 30, 2024
As reported Adjustments As restated
Net income $ (1,721,293 ) $ 11,188 $ (1,710,105 )
Additional paid in capital 1,405,174 93,158 1,498,332
Accumulated deficit (5,032,189 ) 11,188 (5,021,001 )
Total stockholders’ deficit $ (3,633,810 ) $ 104,346 $ (3,529,464 )
Impact to the unaudited condensed consolidated statement of cash flows for the nine months ended June 30, 2024
As reported Adjustments As restated
Net loss $ (1,721,293 ) $ 11,188 $ (1,710,105 )
Adjustments to reconcile net income to cash used in operating activities:
Gain (loss) on change in fair value of derivative liability 271,039 (616,871 ) (345,832 )
Amortization debt discount 296,397 (6,869 ) 289,528
Amortization of deferred financing costs —
Financing fee 484,197 (440,741 ) 43,456
Changes in operating assets and liabilities
Accounts payable and accrued liabilities 282,577 (105,652 ) 176,925
Net cash used in operating activities (362,766 ) (447,768 ) (830,047 )
Cash flows from financing activities:
Proceeds from convertible notes payable and notes payable 659,804 281,871 941,675
Repayment of promissory notes payable (87,121 ) 35,561 (51,560 )
Net cash provided by financing activities $ 437,834 $ 467,281 $ 905,115
Non-cash investing and financing transactions:
Common stock in connection with promissory note $ 26,842 $ 93,158 $ 120,000
Recognition of derivative liability as debt discount $ 200,750 $ (200,750 ) $ —
Deferred offering costs in connection with promissory note $ 477,500 $ (27,501 ) $ 449,999
Amortization of deferred offering costs to debt discount $ 31,816 $ 11,640 $ 43,456 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. Foreign Currency Translation Foreign currency translation is recognized in accordance
with ASC 830. The Company’s functional currency is USD, therefore all amounts of revenues received from foreign accounts are translated
to the Company’s functional currency (USD) upon receipt and thereby, translation gains and losses are recognized upon receipt. 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 June
30, 2024 3,422 4,632 0 18,559 Restricted Cash As of September 30, 2023, the Company had $ 18,559 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 June 30, 2024 June 30, 2024 0 Fixed Assets Fixed assets are recorded at
cost and depreciated using the straight-line method over the estimated useful lives, currently seven ( 7 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 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 June 30, 2024 and September 30, 2023, 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 June 30, 2024, the Company did not have leases that qualified as ROU assets. 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 June 30, 2024 using:
June 30, 2024 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level Significant Unobservable Inputs (Level
Liabilities $ — $ — $ — $ —
Derivative Liabilities $ 1,398,982 $ — $ — $ 1,398,982
Fair Value Measurements at September 30, 2023 using:
September 30, 2023 Quoted Prices in Active Markets for Identical Assets (Level Significant Other Observable Inputs (Level Significant Unobservable Inputs (Level
Liabilities $ — $ — $ — $ —
Derivative Liabilities $ 1,317 $ — $ — $ 1,317 Derivative Financial Instruments 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 June
30, 2024 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 June 30, 2024 1,339 2,234 759 7,233 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. Advertising and Marketing Costs Advertising and marketing costs are expensed as incurred.
The Company incurred advertising and marketing costs for the nine months ended June 30, 2024 4,288 38,838 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. Net
Loss per Share of Common Stock The Company
calculates net 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. For the periods ended June 30, 2024 and 2023, the common stock equivalents were excluded from the computation of diluted net
loss per share as the result of the computation was anti-dilutive.
Schedule of computation of anti-dilutive
June 30, June 30,
2024 2023
Convertible notes 2,250,000 2,250,000
Warrants 22,350,000 2,350,000
24,600,000 4,600,000 Reclassification Certain accounts from prior periods have been reclassified
to conform to the current period presentation. Recent Accounting Pronouncements In the period from October 2023 through August 2024
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 consolidated financial statements and related disclosures. |
