What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-01-13 compared with 2022-01-11 · 250 added, 436 removed, 7 unchanged (99% of the section changed)

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

The following

discussion and analysis should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere

in this Form 10-K.

All information presented herein is based on the Company’s fiscal year, which ends September 30.

otherwise stated, references to particular years, quarters, months or periods refer to the Company’s fiscal years ended in

September and the associated quarters, months and periods of those fiscal years.

During 2021, the

Company experienced a year of significant decline in the number of active franchises, compared to fiscal year 2020, decreasing

from 451 franchise territories to 274, within the two brands.

The reduction in the overall number of franchises was to the termination

of franchises during the period is the result of the company working to discharge non-performing franchisees from the system and

the interruption of sales of new franchises as a result of the Coronavirus (“COVID-19”) pandemic.

The increased termination

of franchises in fiscal year 2021 resulted in a slight increase in initial franchise fees of approximately $19,000 in a year-to-year

comparison as a result of the acceleration of deferred franchise sale revenues.

The Company’s

royalty fees revenue decreased to approximately $774,000 in fiscal year 2021 from approximately $1,448,000 in the prior year, a

decrease of $674,000 (47%), primarily due to an increasing number of non-performing franchisees.

Marketing fund revenue decreased

approximately $130,000 in the year ended September 30, 2021 primarily due to the impact of COVID-19, as the Company elected not

to charge franchisees any marketing fund fees for fiscal 2021.

Technology fees decreased by 35% in the year ended September 30,

2021 primarily due to the impact of COVID-19 and the increasing number of non-performing franchises.

Operating expenses decreased overall

in fiscal year 2021 as compared to fiscal 2020 with a 24% decrease year over year.

The Company had net income of approximately $325,000

in fiscal year 2021, down from a net income of approximately $620,000 the prior year, a decrease of approximately $295,000.

in net income was primarily due to the decline in revenues in fiscal 2021 as compared to fiscal 2020, which was primarily due to the reduced

level of royalty revenues, marketing fund fees, and technology fees from active franchisees which were a direct result of the adverse

impact of the COVID-19 pandemic on our franchisees’ operations.

As a result of challenges

faced by our Learning Business, in December 2021, our board elected to change the business focus of the Company by entering into

the Share Exchange Agreement to acquire DIA and a separate agreement to dispose of our Learning Business if the acquisition of

See “ Item 1.

Business .” As a result, the following description of our operating results and liquidity

may not be representative of our future operating results and liquidity.

Management’s Discussion and Analysis of Financial Condition

and Results of Operations

The following discussion and analysis should be

read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this Form 10-K.

All information

presented herein is based on the Company’s fiscal year, which ends September 30.

Unless otherwise stated, references to particular

years, quarters, months or periods refer to the Company’s fiscal years ended in September and the associated quarters, months and

periods of those fiscal years.

Note on COVID- 19

The COVID-19 pandemic

is a highly fluid situation and it is not currently possible for us to reasonably estimate the impact it may have on our financial and

operating results.

We will continue to evaluate the impact of the COVID-19 pandemic on our business as we learn more and the impact of

COVID-19 on our industry becomes clearer.

We are complying with health guidelines regarding safety procedures, including, but are not

limited to, social distancing, remote working, and teleconferencing.

The extent of the future impact of the COVID-19 pandemic on our business

is uncertain and difficult to predict.

Adverse global economic and market conditions as a result of COVID-19 could also adversely affect

our business.

If the pandemic continues to cause significant negative impacts to economic conditions, our results of operations, financial

condition and liquidity could be adversely impacted.

The Company was formed in

Delaware on March 8, 2006 as B2 Health, Inc.

On July 2, 2010, the Company acquired BFK Franchise Company, LLC (“BFK”), a Nevada

limited liability company, and concurrently changed its name to Creative Learning Corporation.

On February 24, 2022, the Company acquired

DriveItAway, Inc., and on March 18, 2022, disposed of BFK and its other subsidiaries involved in the learning business.

On April 18, 2022,

the name was changed to DriveItAway Holdings, Inc.

Company is a national dealer focused mobility platform that enables car dealers to sell more vehicles in a seamless way through eCommerce,

with its exclusive “Pay as You Go” app-based subscription program.

DIA provides a comprehensive turnkey, solutions driven

program with proprietary mobile technology and driver app, insurance coverages and training to get dealerships up and running quickly

and profitably in emerging online sales opportunities.

The company is planning to soon expand its easy and transparent consumer app ‘subscription

to ownership’ platform to enable entry level consumers to drive and acquire new Electric Vehicles.

RESULTS OF OPERATIONS

The following table

represents the Company’s franchise sales activity for the fiscal years ended September 30, 2021 and 2020:

Franchises Sold

Fiscal Years Ended

Franchise Activity

Creative Learning Corporation

BFK Franchise Company LLC

(a) US/Canada First Territories

(b) US/Canada Second Territories

Total US/Canada

International First Territories

International Second Territories

Master Agreements

Master Sub-franchise

Total International

SF Franchise Company LLC

US First Territories

International Territories

Total Franchises Sold

US First Territory refers to the original territory purchased with the Franchise Agreement.

Second Territory refers to a secondary territory purchased in addition to the territory purchased with the Franchise Agreement.

Material changes

of items in the Company’s Statement of Operations for the fiscal year ended September 30, 2021 as compared to the prior year

are discussed below .

Fiscal year Ended

For the year ended September 30, 2022, compared

to year ended September 30, 2021

Our operating results for the years ended September

30, 2022 and 2021 are summarized as follows:

September 30,

Cost of revenue

Operating expense

Operating loss

Other expense

$ (1,475,365 )

Revenues for the year ended September 30, 2022 was

$55,509, as compared to $118,591 for the year ended September 30, 2021, a decrease of $63,082, primarily due to the nation-wide used car

shortage resulting from supply chain disruptions due in part to the COVID-19 pandemic.

In addition, semiconductor chips, one of the main

components that run vehicle electronics, came in short supply, which affected both new and used car markets, causing significantly higher

prices and low inventory.

Operating expenses for the year ended September 30,

2022 were $1,201,767, as compared to $741,899 for the year ended September 30, 2021.

The increase of $459,868 was attributable to an increase

in professional fees of $236,207, salaries and payroll taxes of $204,343, general and administrative expense of $14,306 and selling expenses

of $24,627, reduced by a decrease in software development expenses of $19,615.

Operating loss was $1,185,156 for the year ended September

30, 2022, as compared to $661,140 for the year ended September 30, 2021.

The increase of $524,016 was largely attributable to an increase

in professional fees, salaries, payroll taxes, selling expenses and a decrease in revenues.

Other expenses for year ended September 30, 2022 were

$290,209, as compared to $14,544 for the year ended September 30, 2021.

The increase of $275,665 was attributable to amortization debt

discount of $677,561 and an increase in interest expenses of $58,097, offset by a gain on PPP loan forgiveness of $24,148 and gain on

change in fair value of derivative liability of $435,188.

Liquidity and Capital Resources:

The following table provides selected financial

data about our Company as of September 30,2022 and 2021.

Working Capital

September 30,

Item Description

Initial franchise fees

Marketing fund revenue

Technology fees

Merchandise sales

Total Revenue

The primary cause

of the slight increase in initial franchise fees was due to a higher level of acceleration of deferred revenues resulting from

an increase in the termination of non-performing franchisees in fiscal 2021, which was offset by a lower average level of deferred

revenues attributable to terminated franchise agreements in fiscal 2021.

The primary cause of the decrease in royalties and technology

fees was due to the fewer franchises paying royalties and technology fees as a result of the termination of non-performing franchisees

from the system, and the interruption of normal operation at remaining franchises because of the COVID-19 pandemic.

the impact of the COVID-19 pandemic on the business of our franchisees, we voluntarily elected to cease pursuing collections of

our marketing fees from our franchisees in March 2020, which continued for all of fiscal 2021.

During fiscal 2021 we were able to sell our Bricks 4 Kidz® supply kits

that were on hand (purchased and expensed in prior years), which resulted in an increase in merchandise sales with no related cost of

goods sold recorded.

Operating Expenses

Total operating expenses

for the comparable periods ended September 30, 2021 and 2020 were approximately $1,870,000 and $2,453,000, respectively, a decrease

of approximately $583,000.

Fiscal Year Ended September 30,

Item Description

Increase/ Decrease

Franchise commissions

Salaries, payroll taxes & stock-based compensation

General advertising

Franchisee marketing

Professional, legal & consulting fees

Bad debt expense

All other G&A expenses

Total Operating Expenses

The changes in significant operating expenses

are explained as follows:

Franchise commissions

remained relatively unchanged primarily as a result of flat franchise sales.

The Company incurred

salaries, payroll expenses and stock-based compensation for the fiscal years ended September 30, 2021 and 2020 of approximately

$452,000 and $614,000, respectively, a decrease of approximately $161,000, or 26%.

The decrease in total payroll expenses is primarily

due to the reduction of both employee headcount and remaining salaries.

The Company paid

general advertising expenses for the fiscal years ended September 30, 2021 and 2020 of approximately $46,000 and $81,000, respectively,

a decrease of approximately $35,000, or 43%.

The decrease related to lower levels of advertising due to cost cutting measures.

No franchisee marketing

was paid out of the marketing fund using funds collected from franchisees as per the terms of their franchise agreements.

was because the Company did not collect any marketing funds during the year as a result of the COVID-19 pandemic.

The Company paid

professional, legal and consulting fees for the fiscal years ended September 30, 2021 and 2020 of approximately $424,000 and $566,000,

respectively, a decrease of approximately $142,000, or 25%.

The decrease in professional, legal and consulting fees is primarily

due to the settlement of two legal disputes during fiscal 2021, and fact that the remaining material litigation matter was in an

inactive status as a result of COVID-19 and ongoing settlement discussions.

Bad debt expense for the fiscal

years ended September 30, 2021 and 2020 was approximately $(49,000) and $350,000, respectively, a decrease of approximately $398,000,

During the year ended September 30, 2021 several receivables deemed uncollectible in the prior year were collected causing a

credit to bad debt expense.

All other general

and administrative expenses for the fiscal years ended September 30, 2021 and 2020 were approximately $698,000 and $423,000, respectively,

an increase of approximately $276,000, or 65%.

The change in fiscal 2021 as compared to fiscal 2020 was primarily the result of

a loss on legal settlements of $290,000 incurred in fiscal 2021.

Absent the legal settlement, all other general and administrative

expenses were relatively flat year to year.

and Capital Resources

During the current year, the Company

had net income of approximately $325,000 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, 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 learning 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.

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 business.

We had cash flows

used in operating activities of approximately $75,000 for the year ended September 30, 2021 compared to cash flows used in operating

activities of approximately $306,000 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 the successful collection

of receivables in the current year that had been allowed for in the prior year and increases in accrued liabilities in fiscal 2021.

We had cash flows

used in investing activities of approximately $18,000 for the year ended September 30, 2021 compared to cash flows provided by

investing activities of approximately $94,000 for the year ended September 30, 2020.

The decrease in cash flows provided by investing

activities was primarily due to a reduction in assets held for sale as we completed the liquidation of unneeded real estate assets

in the 2020 fiscal year and the purchase of the intangible assets of Bricks4Schoolz, LLC in 2021.

During the fiscal years ended

September 30, 2021 and 2020, the Company purchased for cash property and equipment totaling approximately $3,100 and $0, respectively.

We had $0 cash flows

provided by financing activities for the year ended September 30, 2021 compared to cash flows provided by financing activities

of $120,000 for the year ended September 30, 2020.

The decrease in cash flows provided financing activities was primarily due to

receipt of a Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act, which was enacted

March 27, 2020 in the amount of $119,980 in fiscal 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,

The note may be prepaid by the Company 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.

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, and therefore has not recorded any accrued interest on the loan.

During the first

half of fiscal 2020, the Company temporarily suspended domestic franchise offers and sales of Bricks 4 Kidz® and Sew Fun Studios®

franchises in compliance with FTC Franchise Rule, Section 436.7(a) due to delays in completion of the Company’s fiscal year

2018 and 2019 consolidated audited financial statements.

In addition, in the second half of fiscal 2020 the Company’s sales

of new franchises were hindered by the COVID-19 pandemic.

The Company obtained approval to offer and sell new franchises in

many jurisdictions in fiscal 2021;

however, new sales continued to be hampered by the COVID-19 pandemic.

The Company is dependent

upon both franchise sales and royalty fees to continue current business operations and liquidity.

Contractual Obligations

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

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.

Off-Balance Sheet Arrangements

The Company does

not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on the

Company’s financial condition, changes in financial condition, and results of operations, liquidity or capital resources.

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

Whiton to the board, and the Company’s agreeing to appoint Mr.

Rego as chief executive officer, among other

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 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.

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.

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

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.

Critical Accounting Policies

Discussion and Analysis of Financial Condition and Results of Operations is based upon our consolidated financial statements, which

have been prepared in accordance with U.S.

generally accepted accounting principles.

The preparation of our consolidated financial

statements requires management to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities,

net sales and expenses and related disclosure of contingent assets and liabilities.

Management bases its estimates on historical

experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form

the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Actual results may differ from these estimates under different assumptions or conditions.

describe in this section certain critical accounting policies that require us to make significant estimates, assumptions and judgments.

An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters

that are uncertain at the time the estimate is made and if different estimates that reasonably could have been used, or changes

in the accounting estimates that are reasonably likely to occur periodically, could materially impact the consolidated financial

Management believes the following critical accounting policies reflect its most significant estimates and assumptions

used in the preparation of the consolidated financial statements.

For further information on the critical accounting policies,

see Note 1 of the Consolidated Financial Statements.

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.

September 30,

Current assets

Current liabilities

Working capital (deficiency)

As of September 30, 2022, and September 30, 2021,

our total current assets were $143,689 and $31,229 which were comprised of $127,109 and $9,774 in cash, $6,082 and $21,455 in accounts

receivable and $10,498 and $0 in prepaid expenses, respectively.

As of September 30, 2022, our current liabilities

were $1,100,139 which were comprised of $198,065 in accounts payable, $29,044 in accrued liabilities, $5,840 in SBA loan, $2,101 in deferred

revenue, $750,000 in convertible notes payable, $115,009 in derivative liability and $80 in due to related party.

As of September 30,

2021, our current liabilities were $229,228 which were comprised of $132,696 in accounts payable, $29,386 in accrued liabilities, $29,878

in SBA and PPP loans, $7,268 in due to related party and $30,000 in convertible note-related parties.

As of September 30, 2022, and September 30, 2021,

our working capital deficiency was $956,450 and $197,999, respectively.

Cash Flow Data:

September 30,

Cash used in operating activities

Cash used in investing activities

Cash provided by financing activities

Net Change in Cash for period

Cash Flows from Operating Activities

During the year ended September 30, 2022, we

did not generate positive cash flows from operating activities.

For the year ended September 30, 2022, net cash flows used in operating

activities was $827,611, consisting of a net loss of $1,475,365, reduced by stock-based compensation expenses of $288,461, amortization

debt discount of $677,561, depreciation of $8,436, a change in operating assets and liabilities of $132,632 and increased by gain

on PPP loan forgiveness of $24,148 and gain on change in fair value of derivative liability of $435,188.

During the nine months ended September 30, 2021, we

did not generate positive cash flows from operating activities.

For the year end September 30, 2021, net cash flows used in operating

activities was $239,767, consisting of a net loss of $675,684, reduced by an increase in stock -based compensation expenses of $403,847

and a change in operating assets and liabilities of $32,070.

Cash Flows from Investing Activities

During the year ended September 30, 2022, the Company

generated cash of $70,360 from the acquisition of a subsidiary and purchased three vehicles for $157,864.

The Company did not use any funds for investing activities

during the year ended September 30, 2021.

Cash Flows from Financing Activities

During the year ended September 30, 2022, the Company

generated $1,125,000 from the issuance of convertible notes and $36,200 from an SBA loan, offset by $128,750 of debt issuance costs.

During the year ended September 30, 2021, the Company

generated $150,000 from issuance of convertible notes, $65,000 from related party convertible debt and $5,566 contribution from related

party as additional paid-in-capital.

Going Concern

As of September 30, 2022, the Company had a net loss

of $1,475,365, accumulated deficit of $2,380,759 and did not have sufficient cash on hand to cover expenses for the next twelve (12) months.

The Company intends to convert its convertible debt into common stock and to fund operations through equity financing arrangements, which

may be insufficient to fund its capital expenditures, working capital and other cash requirements for the year ending September 30, 2023.

The ability of our Company to emerge from the development

stage is dependent upon, among other things, obtaining additional financing to continue operations, and development of our business plan.

In response to these requirements, management intends to raise additional funds through public or private placement offerings.

These factors,

among others, raise substantial doubt about the Company’s ability to continue as a going concern.

The accompanying financial statements

do not include any adjustments that might result from the outcome of this uncertainty.

Critical Accounting Policies and

Our consolidated financial

statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), which require

management to make estimates, judgments and assumptions that affect the amounts reported in our consolidated financial statements and

accompanying notes.

We believe our most critical accounting policies and estimates relate to the following:

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.

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.

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.

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

Stock-Based Compensation

Financial Instruments

Derivative Financial Instruments

While our estimates and assumptions

are based on our knowledge of current events and actions we may undertake in the future, actual results may ultimately differ from these

estimates and assumptions.

For a discussion of the Company’s significant accounting policies, refer to Note 2 of Notes to the Consolidated

Financial Statements.

Revenue Recognition

The Company’s revenue is recognized in

accordance with Accounting Standards Codification(“ASC”) 606, Revenue from Contracts with Customers, for all periods presented.

The Company, through its DriveItAway online/app-based platform, operates in the retail automotive industry.

The Company assists subprime

and deep subprime candidates, with little or no down payment, in purchasing the used vehicle of his/her choice by first starting in an

app based, turnkey rental, through participating franchise and independent car dealers.

During the years ended September 30, 2022 and

2021, the Company derived its rental revenue from contract revenue share for rentals between participating franchise and independent car

dealers and individual car rental customers (“customers”).

In conjunction with the rental revenue, the Company generates revenue

by providing driver and vehicle insurance through a third party, included in the rental contract with each customer.

The Company’s performance obligation for rental

revenue is to provide an application to track car rental arrangements and to collect cash from car rental customers and remit those payments

to participating franchise and independent car dealers, net of the Company’s revenue share.

The car rental arrangements are over

a fixed contracted period;

therefore, the Company recognizes revenue ratably during the contract term.

The Company’s performance

obligation for insurance revenue is to collect insurance fees from the customer and provide the third-party provider payment for the insurance

provided to the customer.

The insurance is offered over a fixed contracted period;

therefore, the Company recognizes revenue ratably during

the contract term.

Rental and insurance transactions are prepaid at the

beginning of the rental cycle (typically a one-week rental that has an automatic renewal) with an automatic charge to the customer’s

credit card on file through the DIA system.

The DIA system then distributes the vehicle owner share (typically 85% of rental revenue)

to the vehicle owner’s bank account from the Stripe Account.

This amount is shown as a deduction to Revenues (“Vehicle Owner

Share”) on the Company’s Statements of Operations.

The net amount is then transferred from the Company’s Stripe Account

to the DIA operating bank account.

DIA also distributes insurance amounts due to the third - party insurance provider on a monthly

This amount is shown as a deduction to revenues (“Driver & Dealer Insurance Cost”) on the Company’s Statements

of Operations.

DIA also generates miscellaneous revenue in a number

At the end of the rental term, the DIA software system checks for any excess usage and charges, based on the terms of the rental

contract, and will automatically charge a customer’s credit card.

These charges are recognized when the credit card charge goes

through and recorded as miscellaneous revenue on the Company’s Statements of Operations.

Additional miscellaneous revenue represents

amounts earned on telematics equipment and telematics software services related to each rental vehicle used to track excess usage and

DIA performance obligation is to provide the equipment to the vehicle owner for self-installation and allow access to the software

throughout the rental term.

The Company recognizes revenue when the equipment is delivered to the vehicle owner.

Miscellaneous revenue

associated with use of the telematics software is recognized on a monthly basis.

The Company’s Cost of Goods sold consists of

credit card fees incurred from the cash collections and cash remittance process, as a significant portion of its performance obligation

is to collect and remit payments through its credit card processors.

Stock-Based Compensation

The Company recognizes compensation expense for all

restricted stock awards and stock options.

The fair value of restricted stock awards is measured using the grant date fair value of our

stock, as determined by the Board of Directors.

The fair value of stock options is estimated at the grant date using the Black-Scholes

option-pricing model, and the portion that is ultimately expected to vest is recognized as compensation cost over the requisite service

We have elected to recognize compensation expense for all options with graded vesting on a straight-line basis over the vesting

period of the entire option.

The determination of fair value using the Black-Scholes pricing model is affected by our stock value as well

as assumptions regarding a number of complex and subjective variables, including expected stock price volatility and the risk-free interest

follows ASC 820, “Fair Value Measurements and Disclosures”, which defines fair value as the exchange price that would

be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset

or liability in an orderly transaction between market participants on the measurement date.

ASC 820 also establishes a fair value

hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent

sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the

best information available in the circumstances (unobservable inputs).

The fair value hierarchy consists of three broad levels,

which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and

the lowest priority to unobservable inputs (Level 3).

The three levels of the fair value hierarchy are described below:

1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability

such as quoted prices for similar assets or liabilities in active markets;

quoted prices for identical assets or liabilities in

markets with insufficient volume or infrequent transactions (less active markets);

or model-derived valuations in which significant

inputs are observable or can be derived principally from, or corroborated by, observable market data.

3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to

the measurement of the fair value of the assets or liabilities.

amounts shown of the Company’s financial instruments including cash, accounts receivable, prepaid expense, accounts

payable, and accrued liabilities approximate fair value due to their short-term nature.

Derivative Financial Instruments

The fair value of an embedded conversion option that

is convertible into a variable amount of shares and warrants that include price protection reset provision features are deemed to be “down-round

protection” and, therefore, do not meet the scope exception for treatment as a derivative under ASC 815 “Derivatives and Hedging”,

since “down-round protection” is not an input into the calculation of the fair value of the conversion option and warrants

and cannot be considered “indexed to the Company’s own stock” which is a requirement for the scope exception as outlined

under ASC 815.

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.

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.

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.

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.

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.

The accounting treatment of derivative financial instruments

requires that the Company record embedded conversion options and warrants at their fair values as of the inception date of the agreement

and at fair value as of each subsequent balance sheet date.

Any change in fair value is recorded as non-operating, non-cash income or

expense for each reporting period at each balance sheet date.

The Company reassesses the classification of its derivative instruments

at each balance sheet date.

If the classification changes as a result of events during the period, the contract is reclassified as of

the date of the event that caused the reclassification.

The Black-Scholes option valuation model was used

to estimate the fair value of the embedded conversion options and warrants.

The model includes subjective input assumptions that can materially

affect the fair value estimates.

The expected volatility is estimated based on the most recent historical period of time, of our common

stock, equal to the weighted average life of the options.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Quantitative and Qualitative

Disclosures about Market Risk

As a smaller reporting company, we are

not required to provide the information required by this Item.

Financial Statements and

Supplementary Data

Our consolidated

financial statements and related notes required by this item are set forth as a separate section of this Report.

Item 15 of this Form 10-K.

Changes in and

Disagreements with Accountants on Accounting and Financial Disclosure

As a smaller reporting company, we are not required to provide the information

required by this Item.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis