Driveitaway Holdings, Inc. 10-K

Item 9A. 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 September 30, 2021. 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 September 30, 2021, 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 September 30, 2021 due to the following identified material weaknesses: ● 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, including internal controls related to complex or nonroutine transactions. ● We lack the necessary accounting resources with sufficient SEC reporting experience, US GAAP knowledge and accounting experience. Management believes that despite our material weaknesses, our consolidated financial statements for the year ended September 30, 2021 are fairly stated, in all material respects, in accordance with GAAP. (c) Changes in Internal Control Over Financial Reporting During the fourth quarter of 2021, 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. 31 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. Item 9B. Other Information None. 32 PART III Item 10. Directors, Executive Officers and Corporate Governance Directors and Executive Officers Our directors and executive officers and their ages at December 31, 2021, are listed in the following table: Name Age Title Christopher Rego 51 Director and Chief Executive Officer Rod K. Whiton 52 Director and President John Simento 60 Director R. Gary Zell, II 54 Director Mike Elkin 65 Chief Financial Officer Christopher Rego became a director in February 2020, at which time he also became chief executive officer of BFK Franchise Company, LLC (“BFK”), our principal operating subsidiary. On April 30, 2020, Mr. Rego became Chief Executive Officer of the Company. Mr. Rego has over 20 years of software quality development experience building complex enterprise applications with high-performance requirements in the business-to-business, software-as-a-service, and consumer advertising industries. Mr. Rego is an accomplished corporate strategist and drives the vision and strategic direction of his software company, Teknowland, Inc., and his STREAM education company, Bricknowland, Inc. Mr. Rego has assembled a dedicated team of engineers that focuses on building STREAM education that includes AR/VR learning technology, drones, artificial intelligent education, 3-D printing, coding, and more. Mr. Rego has been the CEO of Teknowland, Inc. since 2013, and the founder and managing partner of Bricknowland, Inc., since 2015. From March 2014 until April 2016, Mr. Rego was Quality Assurance Consulting/Manager at Tibco Software. Mr. Rego has also held various management and architect roles to contribute to the success of rapidly growing technology companies such as Oracle, Yahoo!, Tapjoy, and Intuit. Mr. Rego has been a Bricks 4 Kidz franchisee since November 2013, and has been a partner with Mr. Simento in a Bricks 4 Kidz franchise in the United Arab Emirates since May 2015. Mr. Rego earned a Bachelor of Science degree from Andhra Loyola College in Andhra Pradesh India and an MBA in Marketing and Finance from Acharya Nagarjuna University Andhra Pradesh, India. Rod K. Whiton became a director in February 2020. On June 2, 2020, Mr. Whiton became the president of the Company. Mr. Whiton has over 20 years of experience managing public and private investments. His experience focuses largely on early stage and turnaround operations in franchising, technology, biometrics, manufacturing, and payment processing. In addition, Mr. Whiton was an early investor in the Company and served as its Interim CEO from July 22, 2015 to May 11, 2017. He has owned and managed a successful private cosmetics company for over 10 years. From October 2016 to the present, Mr. Whiton has been managing member of Trew Pharma LLC, which used to manufacture, markets, and distributes beauty products (but is in the process of winding down operations), and from January 2019 to the present has been CEO of Smart Tires USA LLC, a franchise company that provides a rent-to-own program for tires. John Simento has served as a director of the Company since May 19, 2020. Mr. Simento is the co-founder and managing partner of Almoe Group of Companies, founded in 1994, Specktron Educational Products, founded in 2011 and Bricknowland founded in 2015. Mr. Simento has over three decades of executive leadership experience managing high-technology and high-growth companies, having been responsible for strategic direction, execution of business plans, technology development, and development of corporate infrastructure. Almoe Group of Companies consists of six divisions, employs over 400 staff spread across four countries, and has over 40 renowned audio visual and IT products and solutions. The Almoe Group of Companies partners with over 55 audio and video and software companies that provide AV and software solutions to retail, corporate, and education institutions. Mr Simento created his own product line, Specktron (www.specktron.com) that is a leading brand pioneering in Audio Visual and Information & Communication Technology. Specktron has championed the use of Interactive Touch Technology for the education, corporate, government, and hospitality sectors. Mr. Simento has been a partner with Mr. Rego in a Bricks 4 Kidz franchise in the United Arab Emirates since May 2015. 33 R. Gary Zell, II has served as a director of the Company since May 19, 2020. Mr. Zell has been a Multiple Line General Agent with American National Insurance Company since 1994, responsible for sales, profitability, and recruiting of a $62 million+ insurance agency with over 70 agents and subproducers. From 2016 to the present, Mr. Zell has been president of ThirdPatent Holdings and ThirdPro HMM, which provide social media audits for parents, colleges, universities, human resources professionals, and professional sports. Mr. Zell earned a Bachelors Degree in Economics from Sewanee: The University of the South in Sewanee, Tennessee. Mike Elkin became the Company’s Chief Financial Officer on October 1, 2020. Mr. Elkin has over 20 years of experience as a controller and financial manager. His experience includes providing financial and accounting advice to REIT’s, non-profits and turnaround situations in the manufacturing, distribution and service company sectors. Since 2017, Mr. Elkin has served as the controller for a private Real Estate Investment Trust (“REIT”). From 2005 to 2006, Mr. Elkin operated a consulting business in which he served as part-time controller or chief financial officer for various private businesses. Mr. Elkin has a B.S. Degree in Accounting from the University of Florida, a Masters Degree in Accounting from Nova Southeastern University, and a Masters Degree in Finance from Florida International University. Mr. Elkin has been recognized by the Jacksonville Business Journal as CFO of the year. He was also honored by the Jacksonville Jewish Journal for Social Action Work in the community. None of the directors and executive officers share any familial relationship with any other executive officers or key employees. None of the directors and executive officers has been involved in any legal proceedings as listed in Regulation S-K, Item 401(f). Director Nomination Process Our Board is responsible for overseeing the selection of persons to be nominated to serve on our Board, and has not formed separate nominating committee. The Board believes that nominating decisions are best determined by the entire board in light of a recent proxy solicitation effort by certain shareholders to make changes to the board’s composition. The Board does not have a formal policy on Board candidate qualifications. The Board may consider those factors it deems appropriate in evaluating director nominees made either by the Board or stockholders, including judgment, skill, strength of character, experience with businesses and organizations comparable in size or scope to the Company, experience and skill relative to other Board members, and specialized knowledge or experience. Depending upon the current needs of the Board, certain factors may be weighed more or less heavily. In considering candidates for the Board, the directors evaluate the entirety of each candidate’s credentials and do not have any specific minimum qualifications that must be met. “Diversity,” as such, is not a criterion that the Board considers. The directors will consider candidates from any reasonable source, including current Board members, stockholders, professional search firms or other persons. The directors will not evaluate candidates differently based on who has made the recommendation. The Board nomination process is designed to ensure that the Board fulfills its responsibility to recommend candidates who are properly qualified to serve the Company for the benefit of all of its stockholders, consistent with the standards established by the Board under our corporate governance principles. There have been no material changes to the procedures by which shareholders may recommend nominees to our board of directors. Audit Committee Functions Since May 2020, we have not had a separately designated standing Audit Committee established in accordance with Section 3(a)(58)(a) of the Exchange Act. Prior to May 2020, we had an Audit Committee, the only member of which was Gary Herman. When constituted, the Audit Committee is responsible for oversight of the quality and integrity of the accounting, auditing and reporting practices of the Company. More specifically, it assists the Board of Directors in fulfilling its oversight responsibilities relating to (i) the quality and integrity of our financial statements, reports and related information provided to stockholders, regulators and others, (ii) our compliance with legal and regulatory requirements, (iii) the qualifications, independence and performance of our independent registered public accounting firm, (iv) the internal control over financial reporting that management and the Board have established, and (v) the audit, accounting and financial reporting processes generally. The Committee is also responsible for review and approval of related-party transactions. The Audit Committee has the authority to obtain advice and assistance from, and receive appropriate funding from the Company for, outside legal, accounting or other advisors as it deems necessary to carry out its duties. During periods in which the Company does not have an active Audit Committee, the entire board performs the functions of the Audit Committee. 34 Audit Committee Financial Expert The Board has determined that it does not have an “audit committee financial expert” within the meaning of SEC rules. Code of Ethics The Company has adopted a Code of Ethics applicable to its principal executive, financial and accounting officers and persons performing similar functions, as well as all directors and employees of the Company. A copy of the Code of Ethics is filed as an exhibit to this report, and posted on the Company’s website, creativelearningcorp.com. In addition, the Company will provide a copy of the Code of Ethics to any shareholder who submits a written request in writing to our chief executive officer at Creative Learning Corp., 1637 S. Main Street, Milpitas, CA 94035; e-mail: rwhiton@creativelearningcorp.com Communication with the Board of Directors Our stockholders and other interested parties may send written communications directly to the Board or to specified individual directors, including the Chairman or any other non-management directors, by sending such communications to our corporate headquarters. Such communications will be reviewed by our outside legal counsel and, depending on the content, will be: ● forwarded to the addressees or distributed at the next scheduled board meeting; ● if they relate to financial or accounting matters, forwarded to the audit committee or distributed at the next scheduled audit committee meeting; ● if they relate to executive officer compensation matters, forwarded to the compensation committee or discussed at the next scheduled compensation committee meeting; ● if they relate to the recommendation of the nomination of an individual, forwarded to the full Board or discussed at the next scheduled Board meeting; or ● if they relate to our operations, forwarded to the appropriate officers of our company, and the response or other handling of such communications reported to the Board at the next scheduled board meeting. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires directors, executive officer and persons who beneficially own more than 10% of a registered class of our equity securities to file with the SEC initial reports of ownership and reports or changes in ownership of such equity securities. Such persons are also required to furnish us with copies of all Section 16(a) forms that they file. Based upon a review of the copies of the forms furnished to us and written representations from certain reporting persons, we believe that, during the year ended September 30, 2021, none of our executive officers, directors or beneficial owners of more than 10% of any class of registered equity security failed to file on a timely basis any such report, except as follows: ● On January 22, 2021, April 6, 2021, May 10, 2021, August 11, 2021, and November 23, 2021, Blake Furlow, who beneficially owns more than 10% of the Company’s common stock, filed Form 4’s that included sales of common stock that were reported past the deadline for reporting such sales on Form 4. 35 Item 11. Executive Compensation The following identifies the elements of compensation for the fiscal years 2021 and 2020 with respect to our “named executive officers,” which term is defined by Item 402 of the SEC’s Regulation S-K to include (i) all individuals serving as our principal executive officer at any time during fiscal year 2021, (ii) our two most highly compensated executive officers other than the principal executive officer who were serving as executive officers at September 30, 2021 and whose total compensation (excluding nonqualified deferred compensation earnings) exceeded $100,000, and (iii) up to two additional individuals for whom disclosure would have been provided pursuant to the foregoing item (ii) but for the fact that the individual was not serving as an executive officer of the Company at September 30, 2021. Based on our compensation for the fiscal year ended September 30, 2021, Rod Whiton and Christopher Rego constitute our only “named executive officers” pursuant to Item 402 of Regulation S-K. Summary Compensation Table Stock All Other Fiscal Compensation Compensation Name and Principal Position Year Salary (4) (5) Total Rod K. Whiton (1) 2021 $ 100,000 $ — $ — $ 100,000 President 2020 $ 33,333 $ — $ — $ 33,333 Christopher Rego (2) 2021 $ 100,000 $ — $ — $ 100,000 CEO 2020 $ 40,000 $ — $ — $ 40,000 1) Rod K. Whiton has acted as our president from June 2, 2020 to September 30, 2021, and our Principal Executive Officer from August 4, 2020 to September 30, 2021. 2) Christopher Rego has acted as president of one of our operating subsidiaries from February 5, 2020 to April 30, 2020, and CEO from May 1, 2020 to September 30, 2021. Mr. Rego was our Principal Executive Officer from May 1, 2020 to August 4, 2020. The Company does not provide its officers or employees with pension, stock appreciation rights, long-term incentive or other plans. The Company does not have a defined benefit, pension, profit sharing plan but does offer a 401(k) plan. We did not grant any stock options or stock appreciation rights to our named executive officers in the last fiscal year. We did not reprice any options or stock appreciation rights during the last fiscal year. We did not waive or modify any specified performance target, goal or condition to payout with respect to any amount included in any incentive plan compensation included in the summary compensation table. Compensation Philosophy The Board is responsible for creating and reviewing the compensation of our executive officers, as well as overseeing our compensation and benefit plans and policies and administering our equity incentive plans. We believe in providing a competitive total compensation package to its executives through a combination of base salary, annual performance bonuses, and long-term equity awards. The executive compensation program is designed to achieve the following objectives: ● provide competitive compensation that will help attract, retain and reward qualified executives; ● align executives’ interests with our success by making a portion of the executive’s compensation dependent upon corporate performance; and ● align executives’ interests with the interests of stockholders by including long-term equity incentives. 36 The Board believes that our executive compensation program should include annual and long-term components, including cash and equity-based compensation, and should reward consistent performance that meets or exceeds expectations. The Board evaluates both performance and compensation to make sure that the compensation provided to executives remains competitive relative to compensation paid by companies of similar size and stage of development operating in the payment processing industry and taking into account our relative performance and its own strategic objectives. Outstanding Equity Awards At Fiscal Year-End None of the named executive officers have any unvested equity awards or unexercised options in the Company as of September 30, 2021. Employee Benefit Plans and Pension Benefits The Company does not provide its officers or employees with pension, stock appreciation rights, long-term incentive or other plans. The Company does not have a defined benefit, pension or profit-sharing plan. The Company sponsors a 401(k) plan, in which our named executive officers’ participate on the same basis as our other employees. Effective May 1, 2015, our Board approved a matching contribution of 100% on the first 4% of an employee’s compensation which is treated as an elective deferral. During the years ended September 30, 2021 and 2020, the Company made contributions to this plan of approximately $443 and $10,775, respectively. Nonqualified Deferred Compensation None of our NEOs are covered by a deferred contribution or other plan that provides for the deferral of compensation on a basis that is not tax-qualified. Director Compensation The following table details the total compensation earned by our non-employee directors during the year ended September 30, 2021. Name Fee Earned or Paid in Cash ($)(1) Restricted Stock Awards ($) All Other Compensation ($) Total $ John Simento $ — $ — — — R. Gary Zell, II $ — $ — — — (1) Excludes travel expense reimbursements. 37 Our Board does not have a current compensation policy for its directors. However, we reimburse our directors for reasonable travel and other related expenses. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The following table sets forth, as of December 31, 2021, certain information concerning the beneficial ownership of our common stock by (i) each person known by us to own beneficially five percent (5%) or more of the outstanding shares of each class, (ii) each of our directors and named executive officers, and (iii) all of our executive officers and directors as a group. The number of shares beneficially owned by each 5% stockholder, director or executive officer is determined under the rules of the Securities & Exchange Commission, or SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under those rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting power or investment power and also any shares that the individual or entity has the right to acquire within 60 days after March 25, 2020 through the exercise of any stock option, warrant or other right, or the conversion of any security. Unless otherwise indicated, each person or entity has sole voting and investment power (or shares such power with his or her spouse) with respect to the shares set forth in the following table. The inclusion in the table below of any shares deemed beneficially owned does not constitute an admission of beneficial ownership of those shares. Name and Address of Beneficial Owner Amount and Nature of Beneficial Ownership Percent of Class (1) 5% Beneficial Owners: Blake Furlow 2110 N. Westgate Drive Boise, ID 83704 1,801,610 13.3 % Michelle Cote (2) 1600 San Carlos St. St. Augustine, FL 32080 1,420,000 10.5 % Named Executive Officers and Directors: Rod Whiton (3) (5) 1,299,035 9.6 % Christopher Rego (4) (5) 666,250 4.9 % John Simento (5) — — % R. Gary Zell, II (5) — — % All Officers and Directors as a Group 1,965,285 14.5 % (1) Based upon 13,525,838 shares of Common Stock issued and outstanding as of December 31, 2021. (2) All shares held by Cote Trading, LLC, an entity controlled by Ms. Cote. (3) Includes 6,067 shares held in UTMA accounts for Mr. Whiton’s children, over which Mr. Whiton has voting and dispositive power. (4) Includes 250,250 shares owned directly and 416,000 owned in joint tenancy with his spouse. (5) The address for the shareholder is c/o Creative Learning Corp., 1637 S. Main Street, Milpitas, CA 94035 38 EQUITY COMPENSATION PLAN INFORMATION The following table provides information as of September 30, 2021 about the securities issued, or authorized for future issuance, under our equity compensation plans. Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) Weighted- average exercise price of outstanding options, warrants and rights (b) Number of securities remaining available for future issuance (c) Equity compensation plans approved by security holders — — — Equity compensation plans not approved by security holders May 2017 Options Grants 1,764,000 0.30 — September 2017 Options Grants 118,793 0.18 — March 2019 Options Grants 294,778 0.17 — Total 2,177,571 0.23 — 39 Item 13. Certain Relationships and Related Transactions, and Director Independence On or about December 6, 2019, Christopher Rego and Rod Whiton (the “Solicitors”), prior to their appointments as officers or directors of the Company, commenced a consent solicitation to the shareholders of the Company and on February 5, 2020, the Company and the Solicitors entered into an agreement to settle their dispute over the consent solicitation. The settlement resulted in the Company paying $10,000 as reimbursement for certain costs that they incurred related to the consent solicitation, the Company agreeing to appoint Mr. Rego and Mr. Whiton to the board, and the Company’s agreeing to appoint Mr. Rego as chief executive officer, among other provisions. The Company ultimately paid a total of $20,000 in costs incurred by Messrs. Rego and Whiton in relation to the consent solicitation. Bart Mitchell resigned as President of the Company on June 8, 2020 at which time he received a severance package of $50,000. Additionally, during the year ended September 30, 2020, Mr. Mitchell no longer wanted his 279,406 shares, therefore, he returned them to the Company for no consideration and the Company cancelled them. Christopher Rego has been a director since February 5, 2020, and our Chief Executive Officer since May 1, 2020. Prior to his appointment, Mr. Rego purchased an active franchise in California. During the years ended September 30, 2021 and 2020, the Company recognized royalty revenues from the franchise of $6,750 and $16,650, respectively, recognized technology fee revenue from the franchise of $900 and $900, respectively, and recognized marketing fee revenues from the franchise of $0 and $829, respectively. Total payments made by the franchisee were $7,650 and $8,581, respectively. As of September 30, 2021 and 2020 the accounts receivable balance with the franchise was $1,897 and the Company had allowed for $1,334 and $1,116, respectively, for net AR balances of $563 and $781, respectively. Accordingly, during the year ended September 30, 2021 the Company increased their allowance for Mr. Rego’s franchise accounts by $218. As of September 30, 2021 and 2020 the franchises had deferred revenue balances of $0. John Simento has been a director of the Company since May 19, 2020. Prior to Mr. Rego’s and Mr. Simento’s appointments with the Company, they purchased a Company franchise in the United Arab Emirates (the “UAE”). The Company filed an arbitration complaint against them in December 2019 regarding issues related to opening the franchise. The complaint was resolved by a Settlement Agreement dated February 5, 2020. Under the Settlement Agreement, the Company forgave all back royalty fees through July 2019, equaling $18,825, and agreed to defer all other fees until the franchise was able to obtain a business license to operate in the UAE., which is currently delayed due to the Coronavirus pandemic. The franchise is currently non-operational as a result of an inability to obtain the issuance of a business license from the UAE due to the Coronavirus pandemic. If the franchise is not able to procure the necessary authorizations to operate, the franchisees would not owe any franchise fees. As a consequence, we have not realized any revenue from the franchise and no payments have been received on outstanding balances. As of September 30, 2021 and 2020 the accounts receivable balance with the franchise was $10,613 and the Company had allowed for $10,613 and $8,925, respectively, for net AR balances of $0 and $1,688, respectively. Accordingly, during the year ended September 30, 2021 the Company increased their allowance for the UAE franchise account by $1,688. Mr. Rego is also the CEO of Teknowland, a software development company, with which the Company entered into an agreement on March 10, 2020 to perform development and maintenance services in relation to the Company’s franchise management software. The term of the agreement was six months, subject to auto-renewal until Teknowland had completed its obligations under the agreement, but subject to each party’s right to terminate the agreement at any time on 30 days’ notice. Under the agreement, the Company was obligated to pay Teknowland a fee of $12,900 per month for development and maintenance services. Starting in November 2020, the Company and Teknowland orally agreed to reduce the monthly amount that the Company is obligated to pay to $3,000 per month. During the year ended September 30, 2020, the Company and Mr. Rego orally agreed that Mr. Rego and Teknowland would develop an eLearning program to enable the Company to offer educational programs over the internet. No agreement was reached regarding whether the Company or Teknowland would own the eLearning program, or the terms under which the Company would be entitled to use the program on a long-term basis, whether as owner or licensee. The Company orally agreed to pay Teknowland $10,000 per month for five months for hosting and content costs incurred by Teknowland. After testing the program, the Company’s board decided in December 2020 not to pursue the E-Learning program. 40 Beginning in January 2021, Teknowland began hosting the Company’s website at a cost of $5,000 per month pursuant to an oral agreement. On February 12, 2021, the Company, Chris Rego and Teknowland entered into an agreement under which the parties mutually agreed to terminate the March 10, 2020 agreement to develop and maintain the Company’s franchise management system, and the oral agreement under which Teknowland hosted the Company’s website. In both cases, the Company has engaged an independent firm to provide the services. Under the same agreement, the Company agreed to transfer and assign to Teknowland all of the Company’s rights in the E-Learning program developed by Teknowland for the Company. The Company evaluated the E-Learning program on a trial basis, and elected not to pursue it as a line of business. The Company agreed to pay Teknowland $50,000 to pay all invoices associated with the two agreements and the E-Learning program, of which $20,000 was payable at execution of the agreement, $20,000 was payable 30 days later and $10,000 was payable 60 days later. As of September 30, 2021 the entire amount had been paid. During the year ended September 30, 2021, JoyAnn Kenny-Charlton, a former director of the Company, agreed to relinquish 272,472 shares previously approved for issuance to her for director services for no consideration. On December 7, 2021, the Company entered into a Sale Agreement with StroomX, LLC (the “Purchaser”), under which the Company agreed to sell all of the Company’s subsidiaries (the “Learning Subsidiaries”) involved in its learning business (the “Learning Business”), as well as any assets of the Learning Business that are not owned by the Learning Subsidiaries, to the Purchaser. In connection with the sale, the Purchaser agreed to assume all liabilities of the Learning Business, and to indemnify and hold the Company harmless from any such liabilities. The Purchaser is controlled by Christopher Rego, the Company’s current chief executive officer. Closing of the sale will occur after the closing of the Share Exchange. An informal committee of independent directors determined that the sale price for the Learning Business was fair under the circumstances. Among the factors considered by the informal committee were the lack of any offers for the Learning Business generated from marketing the Learning Business in 2021, and the conclusions of a valuation consultant engaged by the board to determine the fair market value of the Learning Business in 2021. Director Independence Our current Board consists of Christopher Rego, Rod Whiton, John Simento and R. Gary Zell. Our common stock is currently quoted on the over the counter market. Since the over the counter market does not have its own rules for director independence, we use the definition of independence established by the NASDAQ Stock Market. Under applicable NASDAQ Stock Market rules, a director will only qualify as an “independent director” if the director at any time in the past three years (a) was employed by us, (b) received more than $120,000 in compensation from us, other than for board services, (c) had a family member who was employed as an executive officer of us, (d) was, or had a family member that was, a partner, controlling shareholder or executive officer of any organization that received payments for property or services that exceeded the greater of 5% of the recipient’s gross revenues or $200,000, (e) was, or had a family member that was, employed as an executive officer of another entity during the past three years where any of the executive officers of us serve on the compensation committee, or (f) was, or had a family member that was, a partner in our auditor at any time in the past three years. At this time, we have determined that we have two independent directors: John Simento and R. Gary Zell, II. The Board does not currently have any committees. The Board has approved the formation of an Audit Committee, and an Audit Committee charter, but no members currently serve on the Audit Committee. The independent directors perform the functions of the Audit Committee. Policies with Respect to Transactions with Related Persons The Board has adopted a Code of Ethics, which is available at www.creativelearningcorp.com, that sets forth various policies and procedures intended to promote the ethical behavior of the Company’s employees, officers and directors. The Code of Ethics describes our policy on conflicts of interest. 41 The executive officers and the Board are also required to complete a questionnaire on an annual basis which requires them to disclose any related person transactions and potential conflicts of interest. The responses to these questionnaires are reviewed by outside corporate counsel, and, if a transaction is reported by an independent director or executive officer, the questionnaire is submitted to the Audit Committee, or the independent directors if there is no Audit Committee. If necessary, the Audit Committee or the independent directors, as applicable, will determine whether the relationship is material and will have any effect on the director’s independence. After making such determination, the Audit Committee or independent directors, as applicable, will report its recommendation on whether the transaction should be approved or ratified by the entire Board. Item 14. Principal Accountant Fees and Services. The following table presents fees for professional services provided by MAC Accounting Group LLP for the years September 30, 2021 and 2020, respectively: The following table shows the fees billed aggregate to the Company for the periods shown: Fiscal Year 2021 Fiscal Year 2020 Audit Fees (1) $ 72,500 $ 62,500 Audit-Related Fees (2) — — Tax Fees (3) — — All Other Fees (4) — — Total Fees $ 72,500 $ 62,500 (1) Audit Fees. Audit services include work performed for the audit of our financial statements and the review of financial statements included in our quarterly reports, as well as work that is normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings. (2) Audit-related services . Audit-related services are for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not covered above under “audit services.” (3) Tax services . Tax services include all services performed by the independent registered public accounting firm’s tax personnel for tax compliance, tax advice and tax planning. (4) All other Fees . All other fees are those services and/or travel expenses not described in the other categories. Audit fees represent amounts invoiced for professional services rendered for the audit of the Company’s annual financial statements, including the Form 10-K report, and the reviews of the quarter ending financial statements included in the Company’s Form 10-Q reports. Pre-Approval Policy and Procedures We have adopted an Audit Committee charter, which contains policies and procedures which set forth the manner in which the Audit Committee will review and approve all services to be provided by the independent auditor before the auditor is retained to provide such services. The policy requires Audit Committee pre-approval of the terms and fees of the annual audit services engagement, as well as any changes in terms and fees resulting from changes in audit scope or other items. The Audit Committee also pre-approves, on an annual basis, other audit services, and audit-related and tax services set forth in the policy, subject to estimated fee levels, on a project basis and aggregate annual basis, which have been pre-approved by the Audit Committee. All other services performed by the auditor that are not prohibited non-audit services under SEC or other regulatory authority rules must be separately pre-approved by the Audit Committee. Amounts in excess of pre-approved limits for audit services, audit-related services and tax services require separate pre-approval of the Audit Committee. All of the services reflected in the above table were approved by the Audit Committee. We have not engaged our auditor to perform any services other than audit services. Since May 2020, we have not had a separately constituted Audit Committee, and our independent board members have performed the duties of the Audit Committee as described in the Audit Committee charter. 42 PART IV Item 15. Exhibits, Financial Statement Schedules. The following documents are filed as part of this report: (1) Financial Statements Consolidated Financial Statements: ● Reports of Independent Registered Public Accounting Firms; ● Consolidated Balance Sheets as of September 30, 2021 and September 30, 2020; ● Consolidated Statements of Operations for the years ended September 30, 2021 and September 30, 2020; ● Consolidated Statements of Stockholders’ Equity for the years ended September 30, 2021 and September 30, 2020. ● Consolidated Statements of Cash Flows for the years ended September 30, 2021 and September 30, 2020; (3) Exhibits The accompanying Index to Exhibits is incorporated herein by reference. Item 16. 10-K Summary None. 43 INDEX TO EXHIBITS Exhibits Description 3.1 Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s registration statement on Form SB-2, File No. 333-145999). 3.2 Amendment to Certificate of Incorporation (incorporated by reference to Exhibit 3.1.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2010). 3.3 Amended and Restated Bylaws dated December 6, 2019 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K dated December 6, 2019). 10.1 Agreement relating to the acquisition of BFK Franchise Company (incorporated by reference to Exhibit 10.1 filed with the Company’s Current Report on Form 8-K dated July 2, 2010). 10.2 Settlement Agreement dated February 5, 2020 by and among Creative Learning Corporation, Bart Mitchell, Gary Herman, JoyAnn Kenny-Charlton, Christopher Rego, Rod Whiton, John Simento and R. Gary Zell, II (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K dated February 4, 2020). 10.3 Form of Indemnification Agreement for Directors and Officers (incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K dated September 30, 2019). 10.4 Non-Qualified Stock Option Plan (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-8 filed August 17, 2018, Registration No. 333-226921). 10.5* Form of Indemnification Agreement for Directors and Officers. 10.6 Agreement and Plan of Share Exchange dated December 7, 2021 by and among the Company, DriveItAway, Inc. and the DriveItAway shareholders signatory thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K dated December 7, 2021). 10.7 Sale Agreement dated December 7, 2021 by and between the Company and StroomX, LLC (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K dated December 7, 2021). 14 Code of Ethics (incorporated by reference to Exhibit 14 to the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2015) 21* Subsidiaries of the Company. 31.1* Rule 13a-14(a) Certification of Principal Executive Officer. 31.2* Rule 13a-14(a) Certification of Principal Accounting Officer. 32.1** Section 1350 Certification of Principal Executive Officer. 32.2** Section 1350 Certification of Principal Accounting Officer. 101.INS* XBRL Instance Document 101.SCH* XBRL Taxonomy Extension Schema Document 101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF* XBRL Taxonomy Extension Definition Linkbase Document 101.LAB* XBRL Taxonomy Extension Label Linkbase Document 101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document * Filed herewith. ** Furnished herewith. 44 Report of Independent Registered Public Accounting Firm Board of Directors and Shareholders Creative Learning Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Creative Learning Corporation and its subsidiaries (the “Company”) as of September 30, 2021 and 2020, the related consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows for each of the two years in the period ended September 30, 2021, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of Creative Learning Corporation and its subsidiaries as of September 30, 2021 and 2020, and the results of its operations and its cash flows for each of the two years in the period ended September 30, 2021, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the entity’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to Creative Learning Corporation in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Creative Learning Corporation is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee, or Board of Directors in lieu of an audit committee, and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Revenue Recognition The Company generates its revenue from long term contracts with customers and charges initial fees that are recognized over the contract term and monthly fees that are recognized when sales or usage occurs. As the Company terminates or transfers their long-term contracts, or customers are put on payment plans, detailed and manual tracking, along with manual accounting system updates to automatic billings, have to occur which causes auditing revenue and accounts receivable to be particularly challenging. Further, the collection of audit evidence and requirement to trace the activity on individual contracts was difficult and time consuming, increasing overall audit effort required. In order to audit the Company’s revenue and accounts receivable, we had to obtain an understanding of individual customer contracts or special arrangements, as applicable, collect audit evidence to support that understanding, trace activity within each customer’s account to audit support, and ensure revenue was accurately recognized and accounts receivable balances were accurately stated. Allowance for Doubtful Accounts The Company estimates their allowance for doubtful accounts 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. Accordingly, in order to audit management’s estimate there is a significant amount of subjective auditor judgment that is required. Further, there is significant audit effort required to review the details of individual customer accounts. In order to audit the Company’s allowance for doubtful accounts, we completed a detailed analysis of arrangements made with individual customers, as well as analyzed collection activity historically, for the year under audit, and subsequent to the audit date. /s/ Mac Accounting Group, LLP We have served as the Company’s auditor since 2019. Midvale, Utah January 11, 2022 F- 1 CREATIVE LEARNING CORPORATION Consolidated Balance Sheets September 30, September 30, 2021 2020 Current Assets: Cash $ 349,923 $ 427,659 Restricted Cash (marketing fund) 4,951 20,194 Accounts receivable, less allowance for doubtful accounts of approximately $ 873,000 and $ 942,000 , respectively 103,704 269,211 Prepaid commission expense 162,817 212,122 Prepaid expense — 10,452 Marketing Fund 23,886 — Notes receivables - current portion, less allowance for doubtful accounts of approximately $ 91,000 and $ 91,000 , respectively 5,847 9,159 Total Current Assets 651,128 948,797 Prepaid commission expense- net of current portion 263,672 512,756 Notes receivables - net of current portion — — Property and equipment, net of accumulated depreciation of approximately $ 556,000 and $ 416,000 , respectively 25,830 131,618 Intangibles 162,400 — Deposits — 833 Total Assets $ 1,103,030 $ 1,594,004 Liabilities and Stockholders’ Equity (Deficit) Current Liabilities: Accounts payable $ 168,848 $ 69,527 Notes payable 119,980 119,980 Deferred revenue 697,675 915,103 Accrued liabilities 246,747 8,743 Accrued marketing fund — — Total Current Liabilities 1,233,250 1,113,353 Deferred revenue - net of current portion 1,271,803 2,297,576 Total Liabilities 2,505,053 3,410,929 Commitments and Contingencies (Note 10) — — Stockholders’ Equity (Deficit) Preferred stock, $ .0001 par value; 10,000,000 shares authorized; - 0 - shares issued and outstanding — — Common stock, $ .0001 par value; 50,000,000 shares authorized 13,540,938 shares issued and 13,525,838 shares outstanding as of September 30, 2021; 13,363,410 shares issued and 13,298,310 shares outstanding as of September 30, 2020 1,352 1,334 Additional paid in capital 3,063,562 2,990,080 Treasury Stock, 15,100 and 65,100 shares at September 30, 2021 and 2020, respectfully, at cost ( 18,126 ) ( 34,626 ) Accumulated Deficit ( 4,448,811 ) ( 4,773,713 ) Total Stockholders’ Equity (Deficit) ( 1,402,023 ) ( 1,816,925 ) Total Liabilities and Stockholders’ Equity (Deficit) $ 1,103,030 $ 1,594,004 The accompanying notes are an integral part of the consolidated financial statements. F- 2 CREATIVE LEARNING CORPORATION Consolidated Statements of Operations September 30, September 30, 2021 2020 REVENUES Royalties fees $ 773,592 $ 1,448,228 Initial franchise fees 1,257,217 1,237,994 Marketing fund revenue — 130,496 Technology fees 143,614 221,722 Merchandise sales 20,771 — TOTAL REVENUES 2,195,194 3,038,440 COST OF GOODS SOLD — — GROSS PROFIT 2,195,194 3,038,440 OPERATING EXPENSES Salaries, payroll taxes and stock-based compensation 452,258 613,683 Professional, legal and consulting fees 423,631 565,996 Loss on Legal Settlements 290,000 — Bad debt expense ( 48,621 ) 349,794 Other general and administrative expenses 293,831 306,945 Franchise commissions 298,389 288,734 Franchise training and expenses — 3,381 Depreciation and amortization 114,543 112,543 General advertising 45,997 81,413 Franchisee marketing fund expense — 130,496 TOTAL OPERATING EXPENSES 1,870,028 2,452,985 OPERATING INCOME (LOSS) 325,166 585,455 OTHER INCOME (EXPENSE) ( 264 ) 34,706 INCOME (LOSS) BEFORE INCOME TAXES 324,902 620,161 PROVISION FOR INCOME TAXES — — NET INCOME (LOSS) $ 324,902 $ 620,161 NET INCOME (LOSS) PER SHARE Basic $ 0.02 $ 0.05 Diluted $ 0.02 $ 0.04 Basic weighted average number of common shares outstanding 13,278,388 13,402,981 Diluted weighted average number of common shares outstanding 13,503,269 13,784,990 The accompanying notes are an integral part of the consolidated financial statements. F- 3 Creative Learning Corporation Consolidated Statement of Changes in Stockholders’ Equity (Deficit) Additional Total Stockholder’s Treasury Stock Common stock Paid-in Accumulated Equity Shares Value Shares Amount Capital Deficit (Deficit) Balance October 1, 2019 ( 65,100 ) $ ( 34,626 ) 13,607,102 $ 1,360 $ 2,987,554 $ ( 5,393,874 ) $ ( 2,439,586 ) Stock-based compensation 35,714 2 2,498 — 2,500 Shares cancelled — ( 279,406 ) ( 28 ) 28 — — Net Income — — — — — 620,161 620,161 Balance September 30, 2020 ( 65,100 ) ( 34,626 ) 13,363,410 1,334 2,990,080 ( 4,773,713 ) ( 1,816,925 ) Shares issued for services — — 150,000 15 29,985 — 30,000 Shares issued for intangible assets acquired — — 300,000 30 59,970 — 60,000 Shares cancelled — — ( 272,472 ) ( 27 ) 27 — — Reclassification of treasury shares 50,000 16,500 — — ( 16,500 ) — — Net Income — — — — — 324,902 324,902 Balance, September 30, 2021 ( 15,100 ) $ ( 18,126 ) 13,540,938 $ 1,352 $ 3,063,562 $ ( 4,448,811 ) $ ( 1,402,023 ) The accompanying notes are an integral part of the consolidated financial statements. F- 4 CREATIVE LEARNING CORPORATION Consolidated Statements of Cash Flows For the Fiscal Years ended September 30, 2021 2020 Cash flows from operating activities: Net Income/(Loss) $ 324,902 $ 620,161 Adjustments to reconcile net loss to net cash provided by/(used in) operating activities: Depreciation and amortization 114,543 112,543 Gain on sale of assets held for sale — ( 20,603 ) Bad debt expense ( 48,621 ) 349,794 Stock issued for services and compensation 30,000 2,500 Changes in operating assets and liabilities: Accounts receivable 214,128 ( 339,896 ) Prepaid expenses 10,452 ( 2,585 ) Prepaid commission expense 298,389 283,313 Deposits 833 ( 833 ) Accounts payable 9,321 ( 38,170 ) Accrued liabilities 238,004 ( 116,977 ) Deferred revenue ( 1,243,201 ) ( 1,155,467 ) Accrued marketing fund ( 23,886 ) — Net cash provided by (used in) operating activities ( 75,136 ) ( 306,220 ) Cash flows from investing activities: Acquisition of property and equipment ( 3,155 ) — Acquisition of intangible assets ( 18,000 ) — Proceeds from the sale of assets — 100,231 (Issuance)/Collection of notes receivable 3,312 ( 6,159 ) Net cash provided by (used in) investing activities ( 17,843 ) 94,072 Cash flows from financing activities: Proceeds from notes payable — 119,980 Net cash provided by financing activities — 119,980 Net change in cash, cash equivalents and restricted cash ( 92,979 ) ( 92,168 ) Cash, cash equivalents and restricted cash at beginning of period 447,853 540,021 Cash, cash equivalents and restricted cash at end of period $ 354,874 $ 447,853 Noncash financing activity: Shares cancelled $ 27 $ 28 Shares issued for intangible assets acquired $ 60,000 $ — Accounts payable recorded for intangible assets acquired $ 90,000 $ — Treasury shares reclassified $ 16,500 $ — The accompanying notes are an integral part of the consolidated financial statements. F- 5 CREATIVE LEARNING CORPORATION Notes to Consolidated Financial Statements September 30, 2021 and 2020 (1) Nature of Organization and Summary of Significant Accounting Policies Nature of Organization Creative Learning Corporation (“CLC”), formerly B2 Health, Inc., was incorporated March 8, 2006 in the State of Delaware. BFK Franchise Company LLC (“BFK”) was formed in the State of Nevada on May 19, 2009. Effective July 2, 2010, CLC was acquired by BFK in a transaction classified as a reverse acquisition. CLC concurrently changed its name from B2 Health, Inc. to Creative Learning Corporation. During fiscal year 2020, BFK eLearning LLC was formed in the State of Delaware. In addition to the accounts of CLC and BFK, the accompanying consolidated financial statements include the accounts of CLC’s subsidiaries, BFK Development Company LLC (“BFKD”), BFK eLearning LLC (“B4KEL”) and SF LLC (“Sew Fun Studios”). In 2020, the Company decided to put on hold the Sew Fun Studios business. The organizational documents for BFK Development Company LLC, B4KEL and SF LLC do not specify a termination date. Each of the above listed LLCs has a single member, controlled 100% by CLC. Prior to July 20, 2021, the Company also owned a 49 % non-controlling interest in Bricks4Schoolz, LLC, which was accounted for under the cost method. On July 20, 2021, the Company acquired the remaining 51 % interest in Bricks4Schoolz, LLC (“B4S”), which is now a wholly-owned subsidiary. B4S had no operational activity in fiscal year 2021 and simply owns rights to proprietary software used by the Company. CLC operates wholly-owned subsidiaries BFK and SF under the trade names Bricks 4 Kidz® and Sew Fun Studios™ respectively, that offer children’s enrichment and education franchises. CLC and its wholly owned subsidiaries BFK, BFKD, B4KEL, SF LLC, and B4S are hereinafter referred to collectively as the “Company”. Basis of Presentation The Company financial statements are presented on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”). International franchise fees vary and are set relative to the potential of the franchised territories. In addition, the Company awards master agreements outside of the United States and Canada. The royalty structure is the same for both our US and International franchisees. Contracts are structured such that the Company collects revenue from foreign franchises in US dollars. We do not have international subsidiaries. The Company has multiple franchise concepts, but all concepts are managed centrally as one segment and are reviewed by the Company in total. Accordingly, decision-making regarding the Company’s overall operating performance and allocation of Company resources are assessed on a consolidated basis. As such, the Company operates as one reporting segment. Principles of Consolidation The accompanying consolidated financial statements include the accounts of CLC and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. F- 6 The accompanying financial statements do not include the accounts of Bricks4Schoolz, LLC prior to July 20, 2021, when it was a 49 % owned entity accounted for under the cost method. Fiscal year The Company operates on a September 30 fiscal year-end. Use of Estimates The preparation of financial statements in accordance with generally accepted accounting principles 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 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, depreciation of property and equipment, recoverability of long-lived 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, Restricted 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. The Company records restricted cash for marketing funds collected from the franchisees in excess of amounts spent for marketing. Per the franchise agreements, a marketing fund of 2 % of franchisees’ gross cash receipts is collected by the Company and held to be spent on the promotion of the brand (see Note 9). Amounts recorded as cash, cash equivalents, and restricted cash in the statement of cash flows is as follows: Schedule of Cash and Cash Equivalents September 30, 2021 2020 Cash $ 349,923 $ 427,659 Cash Equivalents — — Restricted Cash 4,951 20,194 Total $ 354,874 $ 447,853 The Company maintains cash balances which at times exceed the federally insured limit of $ 250,000 . The Company believes there is no significant risk with respect to these deposits. The Company had no cash in excess of the federally insured limit at September 30, 2021 and September 30, 2020. 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 at September 30, 2021 and 2020 are adequate, but actual write-offs could exceed the recorded allowance. During the years ended September 30, 2021 and 2020 the balance in the allowance for doubtful accounts was approximately $ 873,000 and $ 942,000 , respectively. F- 7 Notes Receivable Accounting Standards Codification (“ASC”) 310, Receivables, provides guidance for receivables and notes that arise from credit sales, loans or other transactions. Financing receivable includes loans and notes receivable. Originated loans we hold for which we have the intent and ability to hold for the foreseeable future or to maturity (or payoff) are classified as held for investment. Financing receivables held for investment are reported in our consolidated balance sheets at the outstanding principal balance adjusted for any write -offs, allowance for loan losses, deferred fees or costs, and any unamortized premiums or discounts. Interest income is accrued on outstanding principal as earned. Unamortized discounts and premiums are amortized using the interest method with the amortization recognized as part of interest income in the consolidated statements of operations. During the years ended September 30, 2021 and 2020 the balance in the allowance for doubtful notes receivable was approximately $ 91,000 and $ 91,000 , respectively. Long-Lived Assets The Company’s long-lived assets currently consist of property and equipment, and intangible assets. The Company tests for impairment losses on long-lived assets used in operations whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Impairment evaluations involve management’s estimates of asset useful lives and future cash flows. Actual useful lives and cash flows could be different from those estimated by management which could have a material effect on our reporting results and financial positions. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. Property, Equipment and Depreciation Property and equipment are stated at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets. Expenditures for additions and improvements are capitalized, while repairs and maintenance costs are expensed as incurred. The cost and related accumulated depreciation of property and equipment sold or otherwise disposed of are removed from the accounts and any gain or loss is recorded in the year of disposal. Property and Equipment Useful Lifes Property and Equipment Useful Life Equipment 5 years Furniture and Fixtures 5 years Property Improvements 15 - 40 years Software 3 years Intangible Asset The Company records intangible assets at cost and then amortizes the intangible asset over its useful life. Costs incurred to renew or extend the term of any intangible assets will be expensed as incurred. During the year ended September 30, 2021 the Company acquired intellectual property consisting of software and content for $ 168,000 (see Note 5). The intangible asset is being amortized over its useful life of 5 years and the Company recognized $ 5,600 worth of amortization expense during the year ended September 30, 2021, which resulted in an intangible asset balance of $ 162,400 as of September 30, 2021. Amortization expense of $ 33,600 is expected annually through September 30, 2025 with amortization expense of $ 28,000 expected for the year ended September 30, 2026. F- 8 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. Fair Value of Financial Instruments The carrying amounts of cash, accounts receivable, and accounts payable approximate fair value because of the relative short-term maturity of these items and current payment expected. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment, and therefore cannot be determined with precision. Changes in assumptions could significantly affect these estimates. The Company does not hold or issue financial instruments for trading purposes, nor does it utilize derivative instruments. Notes receivable are recorded at par value less allowance for doubtful accounts. The carrying amount is consistent with fair value based upon similar notes issued to other franchisees. ASC 825, Financial Instruments, clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. It also requires disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy for which these assets and liabilities must be grouped, based on significant levels of inputs as follows: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Quoted prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability. Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. The Company had no financial assets or liabilities carried and measured on a recurring basis during the reporting periods. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. Revenue Recognition The Company generates almost all of its revenue from contracts with customers. The Company’s franchise agreements enter the parties into a contractual agreement, typically over a ten years term, and include performance obligations as follows: protected territory designation, access to proprietary manuals and handbooks, initial training and on-going assistance, consulting, promotion of goodwill, administration of marketing fund, marketing and promotion items, initial marketing program development assistance, company website access, Franchise Management Tool access, lessons and model plans, project kits, Duplo bricks, frames stop motion animation software, and use of the franchisor’s intellectual property (IP) (e.g., trade name – Bricks for Kidz). Upon entering into a franchise agreement, the Company charges an initial franchise fee, which is fully collectible and nonrefundable as of the date of the signing of the franchise agreement. Further, because the Company’s franchises are primarily a mobile concept and do not require finding locations or construction, the franchisees can begin operations as soon as they complete training. Per the terms of the franchise agreements, the Company charges for royalty fees on a monthly basis, generally set at a fixed amount, but in some cases are based on a percentage of franchisee’s monthly gross revenues. The Company also charges fees for a marketing fund, generally based on 2% of franchisee’s monthly gross revenues, which is managed by the Company, to allocate towards national branding of the Company’s concepts to benefit the franchisees. Lastly, the Company charges for technology fees on a monthly basis, generally at a fixed amount, for the use of the company Franchise Management tool as well as company emails, etc. F- 9 The Company adopted the new revenue standard (ASC 606) on October 1, 2018 for contracts with remaining performance obligations as of October 1, 2018. The Company elected to apply the new standard retrospectively with an adjustment to the opening balance of retained earnings as of the date of adoption. Under ASC 606, the Company considers initial franchise fees to be a part of the license of symbolic intellectual property (“IP”), therefore the performance obligation related to these fees is satisfied over time as the Company fulfills its promise to grant the customer rights to use, and benefit from, the Company’s IP, as well as support and maintain the IP. The initial franchise fee, then, is recorded as deferred revenue at inception and recognized on a straight-line basis over the contract term. In accordance with ASC 606-10-55-65, the Company has determined that the royalty fees, marketing fees, and technology fees are subject to a sales and usage-based royalties’ constraint on licenses of IP. Accordingly, these fees are recognized as revenue at the later of when the sales or usage occurs or the related performance obligation is satisfied. Technology fees are recorded net of processing fees. Marketing fees are limited to marketing amounts expensed; therefore, the Company will recognize amounts received in excess of amounts spent on the balance sheet in the accrued marketing fund liability. The Company collects transfer fees when contracts are transferred between parties and accounts for the transfer as a contract modification under ASC 606. Because the transfer does not increase the scope of the contract or promise any additional goods or services and there are no new distinct services that will be provided after the transfer the Company considers the transfer fee part of the existing contract. Transfer fees, then, are recorded as deferred revenue at inception and recognized on a straight-line basis over the remaining contract term. When contracts are terminated due to default, or in conjunction with an early termination agreement, the Company accounts for the early termination as a contract modification under ASC 606. Because the termination eliminates any future performance obligations of the Company any deferred revenue associated with the terminated contract is recognized into revenue at the time of termination, along with any early termination fees, in the initial franchise fee line on the Company’s Statement of Operations. The Company generates revenue from sales of merchandise where the performance obligation is met, and therefore revenue recognized, upon the delivery of merchandise to the customer. Contract Liability – Deferred Revenue In conjunction with the adoption of ASC 606, effective October 1, 2018 the Company recorded deferred revenue as a contract liability for its initial franchise fees collected and related to contracts with remaining performance obligations. During the years ended September 30, 2021 and 2020 the activity in the deferred revenue account was as follows: Summary of deferred revenue activity Balance, September 30, 2019 $ 4,368,146 Deferred revenue recognized upon adoption of ASC 606 — Initial franchise fees collected 82,527 Revenue recognized into revenue ( 1,237,994 ) Balance, September 30, 2020 3,212,679 Initial franchise fees collected for franchise renewals and deposits 14,015 Revenue recognized into revenue ( 1,257,217 ) Balance, September 30, 2021 1,969,478 Current portion ( 697,675 ) Deferred revenue, net of current portion $ 1,271,803 F- 10 Amounts expected to be recognized into revenue related to performance obligations that are unsatisfied (or partially unsatisfied) as of September 30, 2021 were as follows: Summary of performance obligations Year ended September 30, 2022 $ 697,675 Year ended September 30, 2023 589,126 Year ended September 30, 2024 355,366 Year ended September 30, 2025 172,030 Year ended September 30, 2026 and thereafter 155,281 Total $ 1,969,478 Contract Liability / Asset – Accrued Marketing Fund / Marketing Fund Receivable Per the terms of the franchise agreements, the Company collects 2% of franchisee’s gross revenues for a marketing fund, managed by the Company, to allocate toward national branding of the Company’s concepts to benefit the franchisees. The marketing fund amounts owed to the Company are accounted for as a liability on the balance sheet and the actual collections are deposited into a marketing fund bank account, presented as restricted cash on the balance sheet. Expenses pertaining to the marketing fund activities are paid from the marketing fund and reduce the liability account. Upon adoption of FASB 606 on October 1, 2018, the Company presents these marketing fund revenues and expenses on a gross basis on its statement of operations. Any unused funds at the end of the period are recorded as accrued marketing fees or any funds used in excess of funds collected are recorded as a marketing fund receivable. The Company expects to collect this advance in future periods from the 2% fees collected on future franchisee gross revenues. During the years ended September 30, 2020 and 2021 the activity in the accrued marketing fund liability account was as follows: Summary of accrued marketing fund for advertising fund revenue accounts Marketing fund liability (receivable), September 30, 2019 $ — Marketing fund billings recognized into income 130,496 Marketing funds recognized into expense ( 130,496 ) Marketing fund liability (receivable), September 30, 2020 — Marketing fund billings recognized into income — Marketing funds recognized into expense — Marketing funds advanced by the Company ( 23,886 ) Marketing fund liability (receivable), September 30, 2021 $ ( 23,886 ) Contract Asset – Prepaid Commission Expense In accordance with ASC 606 the costs related to obtaining a contract are to be capitalized as long as the costs are recoverable and incremental. Effective October 1, 2019, the date the Company adopted ASC 606, they capitalized the value of sales commissions as a contract asset and is amortizing those costs straight-line over the contract life of the franchise agreement to which they relate. During the year ended September 30, 2020 and 2021 the activity in the contract asset account was as follows: Summary of contract asset activity Balance, September 30, 2019 $ 1,008,191 Commissions paid 5,421 Commissions recognized into expense ( 288,734 ) Balance, September 30, 2020 724,878 Commissions paid — Commissions recognized into expense ( 298,389 ) Balance, September 30, 2021 426,489 Current portion ( 162,817 ) Prepaid commission expense, net of current portion $ 263,672 F- 11 General Advertising Costs General Advertising costs are expensed as incurred. The Company incurred general advertising costs for the years ended September 30, 2021 and 2020 of approximately $ 46,000 and $ 81,000 , 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. The Company reviews its filing positions for all open tax years in all U.S. federal and state jurisdictions where the Company is required to file. When there are uncertainties related to potential income tax benefits, in order to qualify for recognition, the position the Company takes has to have at least a “more likely than not” chance of being sustained (based on the position’s technical merits) upon challenge by the respective authorities. The term “more likely than not” means a likelihood of more than 50 percent. Otherwise, the Company may not recognize any of the potential tax benefit associated with the position. The Company recognizes a benefit for a tax position that meets the “more likely than not” criterion at the largest amount of tax benefit that is greater than 50 percent likely of being realized upon its effective resolution. Unrecognized tax benefits involve management’s judgment regarding the likelihood of the benefit being sustained. The final resolution of uncertain tax positions could result in adjustments to recorded amounts and may affect our results of operations, financial position and cash flows. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accrual for interest or penalties at September 30, 2021 and 2020, respectively, and has not recognized interest and/or penalties during the years ended September 30, 2021 and 2020, respectively, since there are no material unrecognized tax benefits. Management believes no material change to the amount of unrecognized tax benefits will occur within the next twelve months. The tax years subject to examination by major tax jurisdictions include the years 2017 and forward by the U.S. Internal Revenue Service, and the years 2016 and forward for various states. Net earnings (loss) per share Basic earnings (loss) per share are computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur if stock options or other contracts to issue common stock were exercised or converted during the period. FASB ASC 260, Earnings per Share , requires a dual presentation of basic and diluted earnings per share. Any stock options or warrants that would have anti-dilutive effect have been excluded from the computation of earnings per share. The number of such shares excluded from the computations of diluted loss per share totaled 1,795,562 at September 30, 2020 and 1,795,562 at September 30, 2021. Stock-based compensation The Company accounts for employee stock awards for services based on the grant date fair value of the instrument issued and those issued to non-employees are recorded based on the grant date fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable. Stock Awards are expensed over the service period. Forfeitures are recognized as they occur. F- 12 Reclassifications Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. Recent accounting pronouncements The Company has reviewed all newly issued accounting pronouncements, including those that are not yet effective, and all have been deemed either immaterial or not applicable. (2) Liquidity During the current year, the Company had net income of approximately $325,000 324,902 and has sufficient cash on hand to cover expenses for the next 12 months, provided the Company only operates the Learning Business for the next 12 months. However, the Company has entered into agreements to acquire DIA and dispose of the Learning Business (see Note 12), and if those agreements are consummated the Company’s liquidity will be determined in reference to DIA’s profitability and capital needs instead. The COVID-19 outbreak has been declared a pandemic by the World Health Organization, has spread to the United States and many other parts of the world and has adversely affected our business operations, employee availability, financial condition, liquidity and cash flow and the length of such impacts are uncertain. The outbreak of COVID-19 continues to affect the United States and globally, and related government and private sector responsive actions have and will continue to adversely affect our business operations. It is impossible to predict the effect and ultimate impact of the COVID-19 pandemic as the situation continues to evolve. The spread of COVID-19 has caused public health officials to recommend precautions to mitigate the spread of the virus, including warning against congregating in heavily populated areas without masks, vaccinations and testing, such as malls and shopping centers. Among the precautions was the cessation of in-person leaning at a substantial portion of the schools in the United States, which has adversely impacted our royalty revenue from franchisees and our ability to sell new franchises. There is significant uncertainty around the breadth and duration of these school closures and other business disruptions related to COVID-19, as well as its impact on the U.S. and global economy. Many public schools resumed some or all in person learning in the Fall of 2021, but many have since reverted back to remote learning with the advent of the Omicron strain of COVID-19 in December 2021. The extent to which COVID-19 impacts our results will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of COVID-19 and the actions taken to contain it or treat its impact. We have asked some of our corporate employees whose jobs allow them to work remotely to do so a few days a week for the foreseeable future. Such precautionary measures could create operational challenges, as we adjust to a remote workforce, which could adversely impact our bustiness. We had cash flows used in operating activities of approximately $75,000 75,136 for the year ended September 30, 2021 compared to approximately $306,000 306,220 for the year ended September 30, 2020. The decrease in cash flows used in operating activities for the year ended September 30, 2021 compared to the year ended September 30, 2020 relates primarily to accounts receivable being collected as well as amounts previously allowed for being recouped in the current year. We had cash flows used in investing activities of approximately $17,000 ( 17,843 ) for the year ended September 30, 2021 compared to cash flows provided by investing activities of approximately $94,000 94,072 for the year ended September 30, 2020. The decrease in cash flows provided by investing activities was primarily due to the acquisition of intangible assets, as further described in Note 5 during the year ended September 30, 2021 as compared to the sale of assets during the year ended September 30, 2020. F- 13 We had cash flows provided by financing activities of $ 0 for the year ended September 30, 2021, compared to $120,000 119,980 for the year ended September 30, 2020. This was due to the Company receiving proceeds from a loan from the Small Business Administration as further described in Note 11. The Company is currently dependent upon royalty and technology fee revenue from existing franchises to continue current business operations and liquidity, since new franchise sales are currently minimal due to the impact of COVID-19 and other factors which make new sales difficult. While those revenue sources are generally sufficient to enable to the Company to operate, as a result of challenges faced by the Company’s existing business, in December 2021, its board elected to change the business focus of the Company by entering into the Share Exchange Agreement to acquire DriveItAway, Inc. and a separate agreement to dispose of our learning business if the acquisition of DriveItAway, Inc. closes. See Note 12. (3) Related Party Transactions On or about December 6, 2019, Christopher Rego and Rod Whiton (the “Solicitors”), prior to their appointments as officers or directors of the Company, commenced a consent solicitation to the shareholders of the Company and on February 5, 2020, the Company and the Solicitors entered into an agreement to settle their dispute over the consent solicitation. The settlement resulted in the Company paying $ 10,000 as reimbursement for certain costs that they incurred related to the consent solicitation, the Company agreeing to appoint Mr. Rego and Mr. Whiton to the board, and the Company’s agreeing to appoint Mr. Rego as chief executive officer, among other provisions. The Company ultimately paid a total of $20,000 in costs incurred by Messrs. Rego and Whiton in relation to the consent solicitation. Bart Mitchell resigned as President of the Company on June 8, 2020 at which time he received a severance package of $ 50,000 . Additionally, during the year ended September 30, 2020, Mr. Mitchell no longer wanted his 279,406 shares, therefore, he returned them to the Company for no consideration and the Company cancelled them. Christopher Rego has been a director since February 5, 2020, and our Chief Executive Officer since May 1, 2020. Prior to his appointment, Mr. Rego purchased an active franchise in California. During the years ended September 30, 2021 and 2020, the Company recognized royalty revenues from the franchise of $ 6,750 and $ 16,650 , respectively, recognized technology fee revenues from the franchise of $ 900 and $ 900 , respectively, and recognized marketing fee revenues from the franchise of $ 0 and $ 829 , respectively. Total payments made by the franchisee were $ 7,650 and $ 8,581 , respectively. As of September 30, 2021 and 2020 the accounts receivable balance with the franchise was $ 1,897 and $ 11,894 , respectively, and the Company had allowed for $ 1,334 and $ 11,113 , respectively, for net accounts receivable balances of $ 563 and $ 781 , respectively. Accordingly, during the year ended September 30, 2021 the Company increased its allowance for Mr. Rego’s franchise accounts by $ 218 . As of September 30, 2021 and 2020 the franchises had deferred revenue balances of $ 0 . John Simento has been a director of the Company since May 19, 2020. Prior to Mr. Rego’s and Mr. Simento’s appointments with the Company, they purchased a Company franchise in the United Arab Emirates (the “UAE”). The Company filed an arbitration complaint against them in December 2019 regarding issues related to opening the franchise. The complaint was resolved by a Settlement Agreement dated February 5, 2020. Under the Settlement Agreement, the Company forgave all back royalty fees through July 2019, equaling $ 18,825 , and agreed to defer all other fees until the franchise was able to obtain a business license to operate in the UAE., which is currently delayed due to the Coronavirus pandemic. The franchise is currently non-operational as a result of an inability to obtain the issuance of a business license from the UAE due to the Coronavirus pandemic. If the franchise is not able to procure the necessary authorizations to operate, the franchisees would not owe any franchise fees. As a consequence, we have not realized any revenue from the franchise and no payments have been received on outstanding balances. As of September 30, 2021 and 2020 the accounts receivable balance with the franchise was $ 10,613 and the Company had allowed for $ 10,613 and $ 8,925 , respectively, for net AR balances of $ 0 and $ 1,688 , respectively. Accordingly, during the year ended September 30, 2021 the Company increased their allowance for the UAE franchise account by $ 1,688 . F- 14 Mr. Rego is also the CEO of Teknowland, a software development company, with which the Company entered into an agreement on March 10, 2020 to perform development and maintenance services in relation to the Company’s franchise management software. The term of the agreement was six months, subject to auto-renewal until Teknowland had completed its obligations under the agreement, but subject to each party’s right to terminate the agreement at any time on 30 days’ notice. Under the agreement, the Company was obligated to pay Teknowland a fee of $ 12,900 per month for development and maintenance services. Starting in November 2020, the Company and Teknowland orally agreed to reduce the monthly amount that the Company is obligated to pay to $3,000 per month. During the year ended September 30, 2020, the Company and Mr. Rego orally agreed that Mr. Rego and Teknowland would develop an eLearning program to enable the Company to offer educational programs over the internet. No agreement was reached regarding whether the Company or Teknowland would own the eLearning program, or the terms under which the Company would be entitled to use the program on a long-term basis, whether as owner or licensee. The Company orally agreed to pay Teknowland $10,000 per month for five months for hosting and content costs incurred by Teknowland. After testing the program, the Company’s board decided in December 2020 not to pursue the E-Learning program. Beginning in January 2021, Teknowland began hosting the Company’s website at a cost of $ 5,000 per month pursuant to an oral agreement. On February 12, 2021, the Company, Chris Rego and Teknowland entered into an agreement under which the parties mutually agreed to terminate the March 10, 2020 agreement to develop and maintain the Company’s franchise management system, and the oral agreement under which Teknowland hosted the Company’s website. In both cases, the Company has engaged an independent firm to provide the services. Under the same agreement, the Company agreed to transfer and assign to Teknowland all of the Company’s rights in the E-Learning program developed by Teknowland for the Company. The Company evaluated the E-Learning program on a trial basis, and elected not to pursue it as a line of business. The Company agreed to pay Teknowland $50,000 to pay all invoices associated with the two agreements and the E-Learning program, of which $20,000 was payable at execution of the agreement, $20,000 was payable 30 days later and $10,000 was payable 60 days later. As of September 30, 2021 the entire amount had been paid. During the year ended September 30, 2021, JoyAnn Kenny-Charlton, a former director of the Company, agreed to relinquish 272,472 shares previously approved for issuance to her for director services for no consideration. (4) Property and Equipment Property and equipment consisted of the following: Schedule of Property and Equipment September 30, Description 2021 2020 Depreciable Property and Equipment: Equipment $ 79,260 $ 76,434 Furniture and Fixtures 83,427 83,427 Software 418,899 418,570 Total Depreciable Property and Equipment 581,586 578,431 Accumulated Depreciation ( 555,756 ) ( 446,813 ) Total Net Property and Equipment $ 25,830 $ 131,618 Depreciation expense totaled approximately $ 109,000 and $ 113,000 , respectively, for the years ended September 30, 2021 and 2020. F- 15 (5) Acquisition of Intangible Asset s Prior to July 20, 2021, the Company owned a 49 % non-controlling interest in Bricks4Schoolz, LLC, which was accounted for under the cost method. On July 21, 2021, the Company acquired the remaining 51 % of Bricks4Schoolz, LLC, including the proprietary software and content developed for the entity by the other joint venture party, in consideration for the issuance of 300,000 shares of common stock, valued at $ 60,000 based on the market value of the shares on the agreement date, and an agreement to pay cash of $ 108,000 in twelve monthly payments of $9,000 each. In accordance with ASC 805, Bricks4Schoolz, LLC was recorded as an asset acquisition because Bricks4Schoolz, LLC did not meet the definition of a business, in that it only has a single asset (rights to proprietary software used in the Company’s operations) and it does not have operations that include an input and a substantive process that together significantly contribute to the ability to create outputs. Accordingly, the total purchase price of $ 168,000 was recorded as an intangible asset that is being amortized over five years. (6) Notes and Other Receivables At September 30, 2021 and 2020, respectively, the Company held certain notes receivable totaling approximately $ 97,000 and $ 100,000 respectively for extended payment terms of franchise fees. The Company had an allowance on notes receivable of $ 91,000 and $ 91,000 as of September 30, 2021 and 2020, respectively. The net notes receivable was approximately $ 6,000 and $ 9,000 and was included in the consolidated balance sheet as of September 30, 2021 and 2020 respectively. The notes were generally non-interest-bearing notes with monthly payments, payable within one year, or currently in default. Accordingly, the full balance was recorded as a current asset as of September 30, 2021 and 2020. (7) Accrued Liabilities The Company had accrued liabilities at September 30, 2021, and September 30, 2020 as follows: Schedule of Accrued Liabilities Accrued Liabilities September 30, 2021 September 30, 2020 Accrued board compensation $ — $ 5,000 Accrued compensation and payroll taxes 3,269 3,743 Accrued settlement agreements 224,000 — Other accrued liabilities 19,478 — Accrued Liabilities $ 246,747 $ 8,743 (8) Stockholders’ Equity (Deficit) As of September 30, 2021 the Company has 10,000,000 shares of Preferred Stock authorized with no shares issued and outstanding and has 50,000,000 shares of Common Stock authorized with 13,540,938 shares issued and 13,525,838 shares outstanding. During the year ended September 30, 2021 the Company issued 150,000 shares of common stock for services to a consultant that was valued at $0.20 per share, which was the market price of the Company’s shares on the grant date. The Company also issued 300,000 shares of common stock to acquire intangible assets that were valued at $ 0.20 per share, which was the market price of the Company’s shares on the grant date. During the year ended September 30, 2021, JoyAnn Kenny-Charlton, a former director of the Company, agreed to relinquish 272,472 shares previously approved for issuance to her for director services for no consideration and the Company cancelled those shares. The Company also reclassified 50,000 shares of common stock out of treasury due to the shares owed to them never being returned by the holder. F- 16 During the year ended September 30, 2020 the Company issued 35,714 shares of common stock for compensation to Gary Herman, who was a director at the time of the issuance, valued at $ 0.07 per share, which approximated the market value of the Company’s stock on the grant date. Also, during the year ended September 30, 2020, Mr. Mitchell, who was the Company’s president at the time, returned 279,406 shares of common stock previously issued to him for compensation for no consideration and the Company cancelled them. The following table represents option activity during the years ended September 30, 2021 and 2020: Schedule of Stock Option Activity Weighted Weighted Average Weighted Number of Average Exercise Remaining Life Average Grant Date Options Price (years) Fair Value Vested and Exercisable at September 30, 2019 2,177,571 $ 0.26 2.89 $ 0.15 Cancelled options — $ — — — Options granted — $ — — $ — Vested and Exercisable at September 30, 2020 2,177,571 $ 0.27 1.89 $ 0.15 Cancelled options — $ — — — Options granted — $ — — $ — Vested and Exercisable at September 30, 2021 2,177,571 $ 0.27 0.89 $ 0.15 The following table represents all outstanding options as of September 30, 2020: Schedule of Options Outstanding Weighted Average Average Average Number of Exercise Expiration Remaining Grant Date Options Price Date Life (years) Fair Value Granted May 13, 2017 1,764,000 $ 0.30 05/13/22 0.62 $ 0.17 Granted September 30, 2017 118,793 $ 0.18 09/30/22 1.00 $ 0.13 Granted March 21, 2019 294,778 $ 0.17 03/19/24 2.47 $ 0.05 Vested and Exercisable at September 30, 2021 2,177,571 $ 0.23 $ 0.15 (9) Commitments and Contingencies Litigation The Company is subject to litigation claims arising in the ordinary course of business. The Company believes that it has adequately accrued for legal matters in accordance with the requirements of GAAP. The Company records litigation accruals for legal matters which are both probable and estimable and for related legal costs as incurred. The Company does not reduce these liabilities for potential insurance or third-party recoveries. On October 2, 2015, the Company filed suit in the state court in St. John’s County, Florida, Case No. CA 15-1076, against its former Chief Executive Officer Brian Pappas, Christine Pappas, its former Human Resources officer, and an independent company controlled by Mr. Pappas named Franventures, LLC (“Franventures”). The lawsuit sought return of Company emails and other electronic materials in the possession of the defendants, Company control over the process by which the Company’s documents are identified, and a court judgment that the property is the Company’s. Mr. and Mrs. Pappas had returned certain Company documents that they have identified, but other issues remained. On December 11, 2017, Brian Pappas filed a counterclaim alleging the Company is required to indemnify him for a multitude of matters. On October 8, 2020 the Court dismissed Brian Pappas’ indemnity counterclaim without prejudice. F- 17 In a separate suit, filed on March 7, 2016 in the state court in St. John’s County, Florida (Case No. CA 16-236), Franventures filed suit against the Company alleging that it is due an unstated amount of money from the Company pursuant to a contract the Company had previously terminated. On June 23, 2016, the Company filed a counterclaim against Franventures, which also included a complaint against former Chairman of the Board and Chief Executive Officer Brian Pappas. The counterclaim seeks redress for losses and expenditures caused by alleged fraud, conversion of company assets, and breaches of fiduciary duty that the Company alleges that defendants perpetrated upon CLC, including assertions regarding actions by Brian Pappas that the Company alleges occurred while Mr. Pappas was serving as the Chief Executive Officer of CLC and as a member of its board of directors. On October 27, 2016, Brian Pappas filed a motion to amend the complaint in Case No. CA 16-236 to add a claim alleging that the Company slandered him by virtue of a press release issued on or about August 1, 2016, in which the Company reported to shareholders on steps it had taken and improvements it had implemented. The Company’s complaint against Mr. Pappas and Franventures (Case No. CA 15-1076) was consolidated with Mr. Pappas’ and Franventures’ complaint against the Company (Case No. CA 16-236) for purposes of discovery, but not for any other purpose. On May 22, 2021, the Company, Brian Pappas, Christine Pappas and Franventures entered into an agreement under which the parties agreed to mutually release all parties from any claims or causes of action that they have against the other, including without limitation any claims asserted in Case No. CA 15-1076 and Case No. CA 16-236. The Company agreed to pay Brian Pappas and his assigns 60 consecutive, monthly payments of $4,000 commencing on June 1, 2021 and continuing through June 1, 2026. As of September 30, 2021 the Company had made four of the monthly payments and the unpaid balance of $ 224,000 has been recorded in the balance sheet under accrued liabilities. On February 24, 2017, franchisee, Team Kasa, LLC, along with its three owners, filed suit in the Eastern District of New York (Case No. 2:17-cv-01074) against former CEO Brian Pappas and Franventures, as well as four other defendants seeking damages under the New York Franchise Sales Act. The same Plaintiffs also initiated an arbitration proceeding against the Company on the same issues (American Arbitration Association, Case No. 01-17-0001-1968), alleging the Company is jointly and severally liable for damages resulting from the allegations against Mr. Pappas and Franventures. The Company is contesting the allegations and its liability for any damages in the arbitration case. Both cases have been held in abeyance as the parties seek a resolution. On November 8, 2017, franchisee, Indy Bricks, LLC, along with its two owners, Ben and Kate Schreiber, initiated arbitration against the Company (American Arbitration Association, Case No. 01-17-0006-8120). The Plaintiffs allege breach of contract, fraud, misrepresentations and omissions, violations of the Indiana Franchise Act, and violations of the Indiana Deceptive Franchise Practices Act. On April 23, 2020, a settlement agreement was entered into between the Plaintiffs and the Company under which the arbitration was dismissed. Pursuant to the settlement agreement, Indy Bricks, LLC agreed to pay the Company an agreed amount of past due franchise fees, monthly marketing and royalty fees, and monthly fees to utilize the Company’s franchise management software. F- 18 (10) Income Taxes The components of the deferred tax assets at September 30, 2021 and September 30, 2020 were as follows: Schedule of Components of Deferred Taxes 2021 2020 Deferred tax assets: Allowance for bad debt $ ( 165,028 ) $ 79,399 Charitable contributions 127 127 Stock-based compensation 87,675 87,675 Foreign tax credit 171,314 149,238 Net operating loss 895,972 463,512 Total gross deferred tax asset 990,060 779,951 Deferred tax liabilities: Depreciation timing difference ( 44,081 ) ( 16,614 ) ASC 606 Adjustment ( 797,356 ) ( 797,356 ) Total deferred tax liability ( 841,437 ) ( 813,970 ) Gross net deferred tax asset 148,623 ( 34,019 ) Less: Valuation allowances ( 148,623 ) 34,019 Net deferred tax asset $ — $ — The Company has recorded various deferred tax assets and liabilities as reflected above. In assessing the ability to realize the deferred tax assets, management considers, whether it is more likely than not, that some portion, or all of the deferred tax assets and liabilities will be realized. The ultimate realization is dependent on generating sufficient taxable income in future years. The valuation allowance is equal to 100% of the net deferred tax asset. Given recurring losses, the Company cannot conclude that it is more likely than not that such assets will be realized, therefore a full valuation allowance has been recorded. The components of the provisions for income taxes for the fiscal years ended September 30, 2021 and 2020 are as follows: Schedule of Components of Provision For Income Taxess 2021 2020 Current: Federal $ — $ — State — — Total — — Deferred: Additional deferred tax related to book tax differences ( 431,807 ) ( 179,955 ) Valuation allowance 431,807 179,955 Total tax provision $ — $ — F- 19 A reconciliation of the provisions for income taxes for the fiscal years ended September 2021 and 2020 as compared to statutory rates is as follows: Schedule of Reconciliation of Income Tax Provision 2021 2020 Amount % Amount % Provision at statutory rates $ ( 338,614 ) 19.85 % $ ( 141,072 ) 19.85 % State income tax, net of federal benefit ( 93,846 ) 5.50 % ( 39,098 ) 5.50 % Penalties — 0.00 % — 0.00 % Meals & entertainment 653 - 0.04 % 215 - 0.03 % Stock-based compensation — 0.00 % — 0.00 % Tax credits — 0.00 % — 0.00 % Other tax differences — 0.00 % — 0.00 % Change in rate — 0.00 % — 0.00 % Valuation allowance on deferred tax assets 431,807 - 25.31 % 179,955 - 25.3 % Total income tax provision $ — 0.00 % $ — 0.00 % ( 11) Note Payable On April 28, 2020, the Company was granted a loan (the “Loan”) from First Bank of the Lake in aggregate amount of $ 119,980 , pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act, which was enacted March 27, 2020. The Loan, which was in the form of a Note dated April 24, 2020 issued by the Company, matures on April 23, 2022 and bears interest at a rate of 1 % per annum, payable monthly commencing on October 23, 2020. The Note may be prepaid by the Borrower at any time prior to maturity with no prepayment penalties. Funds from the Loan may only be used for payroll costs, cost used to continue group health care benefits, mortgage payments, rent, utilities and interest on other debt obligations incurred before February 15, 2020. The Company used the entire Loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. The Company used the entire loan amount for qualifying expenses, and expects the loan to be forgiven therefore has not recorded any accrued interest on the loan. (12) Subsequent Events On October 21, 2021, the Company leased approximately 2,480 square feet of office space at 1637 S. Main Street, Milpitas, CA 94035 for its corporate offices. The lease has a term of two years and one month. The Company is obligated to pay base rent of $4,588 per month in the first year, $4,726 per month in the second year, and $4,867 per month in the last month, plus a pro rata share of common area expenses. On November 1, 2021, the Company relocated its corporate offices to the Milpitas, California location. On December 7, 2021, the Company, DriveItAway, Inc., a Delaware corporation (“DIA”), and the existing shareholders of DIA executed an Agreement and Plan of Share Exchange (the “Share Exchange Agreement”), under which the Company would acquire all of the issued and outstanding common stock of DIA by issuing one share of Series A Convertible Preferred Stock (the “Series A Preferred”) of the Company for each outstanding share of DIA common stock (the “Share Exchange”). As a result of the Share Exchange, DIA will become a wholly-owned subsidiary of the Company. Each share of Series A Preferred will be convertible into that number of shares of common stock of the Company which would entitle the Series A Preferred holders to 85% of the Company’s common stock, determined on a fully-diluted basis, but prior to any shares issued or issuable as a result of the Financing (as defined below). The exact conversion rate of the Series A Preferred will be determined at closing of the Share Exchange. In addition, each share of Series A Preferred will be entitled to dividends and voting rights on an “as converted” basis with the common stockholders. Upon closing of the Share Exchange, all of the existing members of the board of directors (the “Board”) of the Company have agreed to resign, and John Possumato, Adam Potash and Paul Patrizio will be appointed to the Company’s Board. Upon closing of the Share Exchange, Christopher Rego and Rod Whiton have agreed to resign as officers, and upon their resignation John Possumato will be appointed chief executive officer and Adam Potash will be appointed chief operating officer. Mike Elkin has agreed to remain as chief financial officer of the Company. Closing of the Share Exchange Agreement is subject to a number of conditions, and is expected to occur in the first quarter of 2022, provided that the closing conditions are satisfied or waived. F- 20 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 turn-key, 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. On December 7, 2021, the Company entered into a Sale Agreement with StroomX, LLC (the “Purchaser”), under which the Company agreed to sell all of the Company’s subsidiaries (the “Learning Subsidiaries”) involved in its learning business (the “Learning Business”), as well as any assets of the Learning Business that are not owned by the Learning Subsidiaries, to the Purchaser. In connection with the sale, the Purchaser agreed to assume all liabilities of the Learning Business, and to indemnify and hold the Company harmless from any such liabilities. The Purchaser is controlled by Christopher Rego, the Company’s current Chief Executive Officer. Closing of the sale will occur after the closing of the Share Exchange. F- 21 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. CREATIVE LEARNING CORPORATION Dated: January 11, 2022 By: /s/ Rod Whiton Rod Whiton, President (Principal Executive Officer) Dated: January 11, 2022 By: /s/ Mike Elkin Mike Elkin, Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated. Signature Title Date /s/ Christopher Rego Director and Chief Executive Officer January 11, 2022 Christopher Rego /s/ Rod Whiton President and Director January 11, 2022 Rod Whiton /s/ John Simento Director January 11, 2022 John Simento /s/ R. Gary Zell, II Director January 11, 2022 R. Gary Zell, II 45