What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-10-30 compared with 2023-06-20 · 272 added, 271 removed, 50 unchanged (92% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF OPERATIONS

Special Note Regarding Forward-Looking Information

The following discussion and analysis of the results

of operations and financial condition of DriveItAway Holdings, Inc., and its wholly owned subsidiary, DriveItAway, Inc., should be read

in conjunction with the financial statements of the Company.

and the notes to those financial statements that are included elsewhere in

this Form 10-Q.

References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to “us”,

“we”, “our” and similar terms refer to the Company.

This Quarterly Report contains forward-looking statements

as that term is defined in the federal securities laws.

The events described in forward-looking statements contained in this Quarterly

Report may not occur.

Generally, these statements relate to business plans or strategies, projected or anticipated benefits or other consequences

of our plans or strategies, projected or anticipated benefits from acquisitions to be made by us, or projections involving anticipated

revenues, earnings or other aspects of our operating results.

The words “may,” “will,” “expect,” “believe,”

“anticipate,” “project,” “plan,” “intend,” “estimate,” and “continue,”

and their opposites and similar expressions, are intended to identify forward-looking statements.

We caution you that these statements

are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which

are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF OPERATIONS

Note Regarding Forward-Looking Information

The following discussion and analysis of

the results of operations and financial condition of DriveItAway Holdings, Inc., and its wholly owned subsidiary, DriveItAway,

Inc., should be read in conjunction with the financial statements of the Company.

and the notes to those financial statements that

are included elsewhere in this Form 10-Q.

References in this Management’s Discussion and Analysis of Financial Condition

and Results of Operations to “us”, “we”, “our” and similar terms refer to the Company.

Quarterly Report contains forward-looking statements as that term is defined in the federal securities laws.

The events described

in forward-looking statements contained in this Quarterly Report may not occur.

Generally, these statements relate to business

plans or strategies, projected or anticipated benefits or other consequences of our plans or strategies, projected or anticipated

benefits from acquisitions to be made by us, or projections involving anticipated revenues, earnings or other aspects of our operating

The words “may,” “will,” “expect,” “believe,” “anticipate,”

“project,” “plan,” “intend,” “estimate,” and “continue,” and their

opposites and similar expressions, are intended to identify forward-looking statements.

We caution you that these statements are

not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of

which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements

Our actual results, performance and achievements

1 unchanged sentence

Except as required by federal securities

laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether from new information, future events

or otherwise.

laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether from new information, future

events or otherwise.

Dollars are denoted herein by “USD,” “$”

and “dollars”.

DIA is the first

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

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

DIA provides a comprehensive turnkey, solutions driven program with

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

in emerging online sales opportunities.

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

to ownership’ platform to enable entry level consumers to drive and acquire new electric vehicles.

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

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

DIA provides a comprehensive turnkey, solutions

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

quickly and profitably in emerging online sales opportunities.

The company is planning to soon to expand its easy and transparent

consumer app ‘subscription to ownership’ platform to enable entry level consumers to drive and acquire new electric

RESULTS OF OPERATIONS

For the six months

ended March 31, 2023, compared to the six months ended March 31, 2022

Our operating results for

the six months ended March 31, 2023, and 2022 are summarized as follows:

Six Months Ended

months ended June 30, 2023, compared to the nine months ended June 30, 2022

Our operating results

for the nine months ended June 30, 2023, and 2022 are summarized as follows:

Nine months ended

Cost of revenue

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$ (1,735,166 )

Revenues for the six months

ended March 31, 2023, increased $93,437, from $21,646 for the period ending March 31, 2022, to $115,083 for the period ending March 31,

This was primarily due to the somewhat greater availability of the supply of vehicles on our platform through a sublease arrangement,

a derivative of the lessoning effect of the nation-wide car shortage resulting from supply chain disruptions due in part to the COVID-19

pandemic, and the gradual increase in supply of, semiconductor chips, one of the main components that run vehicle electronics.

We anticipate that, in 2023

automotive supply and demand will return to a more historically normal levels which should translate into greater vehicle availability

for vehicles on our platform, leading to a further increase in revenues.

Cost of revenue for the six months ended March 31, 2023, increased $75,455,

from $11,095 for the period ending March 31, 2022, to $86,550 for the period ending March 31, 2023.

This was primarily due to one-time

fees in preparing a sublease car for rental, including telematics product and installation fees, pick up and transport fees, etc.

each time a new vehicle is introduced on our platform, there are fees associated with the initial preparation.

Operating expenses for the

six months ended March 31, 2023, decreased $176,938 as compared to the six months ended March 31, 2022.

The decrease was primarily attributable

to a decrease in professional fees of $187,214 and salaries and payroll taxes of $32,575, however, we had an increase in selling expenses

of $33,562 and other operating expenses of $9,289.

Loss from operations was

$415,121 for the six months ended March 31, 2023, as compared to $610,041 for the six months ended March 31, 2022.

The decrease of $194,920

was largely attributable to the change in operating expenses of $176,938 and an increase in gross profit of $17,982.

Other expenses for the six

months ended March 31, 2023, were $125,266, as compared to $482,766 for the six months ended March 31, 2022.

For the six months ended

March 31, 2023, we incurred a loss on change in fair value of derivative of $3,196, amortization of debt discounts on our convertible

notes of $41,975, interest expense of $79,469 and interest expenses -related parties of $626.

For six months ended March 31, 2022, we

incurred a loss on contingency liability of $400,000, amortization debt discount on our convertible notes of $87,683, interest expenses

of $16,940, interest expenses -related parties of $2,296 and a gain on forgiveness of the Paycheck Protection (PPP) loan of $24,148 and

interest income of $5.

For the three months

ended March 31, 2023, compared to the three months ended March 31, 2022

Our operating results for

the three months ended March 31, 2023, and 2022 are summarized as follows:

Revenues for the nine

months ended June 30, 2023, increased $164,358, from $28,730 for the period ending June 30, 2022, to $193,088 for the period ending

June 30, 2023.

This was primarily due to the somewhat greater availability of the supply of vehicles on our platform through a

sublease arrangement, a derivative of the lessoning effect of the nation-wide car shortage resulting from supply chain disruptions

due in part to the COVID-19 pandemic, and the gradual increase in supply of, semiconductor chips, one of the main components that

run vehicle electronics.

We anticipate that,

in 2024 automotive supply and demand will return to a more historically normal levels which should translate into greater vehicle

availability for vehicles on our platform, leading to a further increase in revenues.

Cost of revenue for the nine months ended June 30, 2023, increased

$128,875, from $21,789 for the period ending June 30, 2022, to $150,664 for the period ending June 30, 2023.

This was primarily

due to one-time fees in preparing a sublease car for rental, including telematics product and installation fees, pick up and transport

In general, each time a new vehicle is introduced on our platform, there are fees associated with the initial preparation.

Operating expenses

for the nine months ended June 30, 2023, decreased $372,907 as compared to the nine months ended June 30, 2022.

The decrease was

primarily attributable to a decrease in professional fees of $307,674 and salaries and payroll taxes of $92,475, however, we had

an increase in selling expenses of $24,683 and other operating expenses of $2,559.

Loss from operations

was $535,805 for the nine months ended June 30, 2023, as compared to $944,195 for the nine months ended June 30, 2022.

of $408,390 was largely attributable to the change in operating expenses of $372,907 and an increase in gross profit of $35,483.

Other expenses for

the nine months ended June 30, 2023, were $161,677, as compared to $790,971 for the nine months ended June 30, 2022.

months ended June 30, 2023, we incurred a gain on change in fair value of derivative of $44,529, amortization of debt discounts

on our convertible notes of $72,551 interest expense of $131,133 and interest expenses -related parties of $2,522.

For nine months

ended June 30, 2022, we incurred a loss on contingency liability of $460,000, amortization debt discount on our convertible notes

of $315,865, interest expenses of $36,970, interest expenses -related parties of $2,296 and a gain on forgiveness of the Paycheck

Protection (PPP) loan of $24,148 and interest income of $12.

For the three

months ended June 30, 2023, compared to the three months ended June 30, 2022

Our operating results

for the three months ended June 30, 2023, and 2022 are summarized as follows:

Three Months Ended

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Net income (loss)

Revenues for the three months

ended March 31, 2023, increased $55,971, from $11,029, for the period ending March 31, 2022, to $67,000 for the period ending March 31,

This was primarily due to the somewhat greater availability of the supply of vehicles on our platform through a sublease arrangement,

a derivative of the lessoning effect of the nation-wide car shortage resulting from supply chain disruptions due in part to the COVID-19

pandemic, and the gradual increase in supply of, semiconductor chips, one of the main components that run vehicle electronics.

We anticipate that, in 2023

automotive supply and demand will return to a more historically normal levels which should translate into greater vehicle availability

for vehicles on our platform, leading to a further increase in revenues.

Cost of revenue for the three months ended March 31, 2023, increased $41,269,

from $5,409 for the period ending March 31, 2022, to $46,678 for the period ending March 31, 2023.

This was primarily due to one-time

fees in preparing a sublease car for rental, including telematics product and installation fees, pick up and transport fees, etc.

each time a new vehicle is introduced on our platform, there are fees associated with the initial preparation.

Operating expenses for the

three months ended March 31, 2023, decreased $126,678 as compared to the three months ended March 31, 2022.

The decrease was primarily

attributable to a decrease in professional fees of $114,567 and salaries and payroll taxes of $44.325, however, we had an increase in

other operating expenses of $32,214.

Loss from operations was

$199,688 for the three months ended March 31, 2023, as compared to $341,068 for the three months ended March 31, 2022.

The decrease of

$141,380 was largely attributable to the change in operating expenses of $126,678 and an increase in gross profit of $14,702.

Other income for the three

months ended March 31, 2023, was $380,309, as compared to other expenses of $500,018 for the three months ended March 31, 2022.

three months ended March 31, 2023, we incurred a gain on change in fair value of derivative of $451,459, amortization of debt discounts

on our convertible notes of $28,555, interest expense of $41,969 and interest expenses - related parties of $626.

For the three months

ended March 31, 2022, we incurred a loss on contingency liability of $400,000, amortization debt discount on our convertible notes of

$87,683, interest expenses of $11,481, interest expenses - related parties of $859 and interest income of $5.

Liquidity and Capital

The following table provides

selected financial data about our Company as of March 31, 2023, and September 30, 2022.

Revenues for the three

months ended June 30, 2023, increased $70,921, from $7,084, for the period ending June 30, 2022, to $78,005 for the period ending

June 30, 2023.

This was primarily due to the somewhat greater availability of the supply of vehicles on our platform through a

sublease arrangement, a derivative of the lessoning effect of the nation-wide car shortage resulting from supply chain disruptions

due in part to the COVID-19 pandemic, and the gradual increase in supply of, semiconductor chips, one of the main components that

run vehicle electronics.

We anticipate that,

in 2023 automotive supply and demand will return to a more historically normal levels which should translate into greater vehicle

availability for vehicles on our platform, leading to a further increase in revenues.

Cost of revenue for the three months ended June 30, 2023, increased

$53,420, from $10,694 for the period ending June 30, 2022, to $64,114 for the period ending June 30, 2023.

This was primarily due

to one-time fees in preparing a sublease car for rental, including telematics product and installation fees, pick up and transport

In general, each time a new vehicle is introduced on our platform, there are fees associated with the initial preparation.

Operating expenses

for the three months ended June 30, 2023, decreased $194,341 as compared to the three months ended June 30, 2022.

was primarily attributable to a decrease in professional fees of $120,460, salaries and payroll taxes of $59,900, and in other

operating expenses of $13,981.

Loss from operations

was $122,312 for the three months ended June 30, 2023, as compared to $334,154 for the three months ended June 30, 2022.

of $211,842 was largely attributable to the change in operating expenses of $194,341 and an increase in gross profit of $17,501.

Other expenses for

the three months ended June 30, 2023, was $34,783 as compared to other expenses of $308,205 for the three months ended June 30,

For the three months ended June 30, 2023, we incurred a gain on change in fair value of derivative of $47,725, amortization

of debt discounts on our convertible notes of $30,576, interest expense of $50,036 and interest expenses - related parties of $1,896.

For the three months ended June 30, 2022, we incurred a loss on contingency liability of $60,000, amortization debt discount on

our convertible notes of $228,182, interest expenses of $20,030, and interest income of $7.

Liquidity and Capital Resources:

The following table provides selected financial data about

our Company as of June 30, 2023, and September 30, 2022.

Working Capital

5 unchanged sentences

$ (1,487,691 )

As of March 31, 2023, our

working capital decreased $404,662 as compared to September 30, 2022.

This was primarily attributable to a reduction in cash of $85,198,

reduction in current assets of $73,969, and an increase in current liabilities of $330,693 as of March 31, 2023, as compared to September

Our current liabilities increased as a result of derivative liabilities increasing $51,624, convertible notes payable increasing

As of June 30, 2023,

our working capital decreased $531,241 as compared to September 30, 2022.

This was primarily attributable to a reduction in cash

of $96,326, reduction in current assets of $96,666, and an increase in current liabilities of $434,575 as of June 30, 2023, as

compared to September 30, 2022.

Our current liabilities increased as a result of convertible notes payable increasing $84,423,

promissory notes payable - related parties increasing $50,000, promissory notes payable increasing $12,500, due to related parties

increasing $25,000, deferred revenue increasing $4,268, accounts payable and accrued liabilities increasing $119,536, and accrued interest

– related parties increasing $626, all of which was offset by a decrease in the SBA loan of $1,885.

Cash Flow Data:

Six Months Ended

increasing $25,000, deferred revenue increasing $6,051, accounts payable and accrued liabilities increasing $237,376, notes payable

increasing $14,539, derivative liability increasing $3,899 and accrued interest – related parties increasing $2,522, all

of which was offset by a decrease in the SBA loan of $1,555.

Nine months ended

Cash used in operating activities

Cash provided by (used in) investing activities

Cash used in investing activities

Cash provided by financing activities

Net Change in Cash and Restricted Cash

Cash Flows from Operating

During the six months ended

March 31, 2023, we did not generate positive cash flows from operating activities.

For the six months ended March 31, 2023, net cash flows

used in operating activities was $334,678, consisting of a net loss of $540,387, reduced by a loss on change in derivative liability of

$3,196, stock-based compensation expenses of $15,000, amortization debt discount of $41,975, depreciation and amortization of $17,836,

a change in operating assets and liabilities of $127,703.

During the six months ended

March 31, 2022, we did not generate positive cash flows from operating activities.

For the six months end March 31, 2022, net cash flows

used in operating activities was $289,526, consisting of a net loss of $1,092,807, reduced by an increase in stock - based compensation

expenses of $372,836, loss on contingency liability of $400,000, amortization of debt discount of $87,683 and increased by gain on PPP

loan of $24,148, and a change in operating assets and liabilities of $33,090.

Cash Flows from Investing

During the six months ended

March 31, 2023, the Company used cash for the purchased two vehicles for $67,039 and website development costs of $5,833.

the six months ended March 31, 2022, the Company received $70,361 of cash for an acquisition of a subsidiary.

Cash Flows from Financing

During the six months ended

March 31, 2023, the Company generated $261,500 from the issuance of convertible notes, $50,000 from the issuance of promissory notes -

related parties, $12,500 from issuance of promissory notes and repaid $1,648 on the SBA loan.

During the six months ended

March 31, 2022, the Company generated $766,250 from issuance of convertible notes and $36,200 from the SBA loan.

Cash Flows from

Operating Activities

During the nine months

ended June 30, 2023, we did not generate positive cash flows from operating activities.

For the nine months ended June 30, 2023,

net cash flows used in operating activities was $366,356, consisting of a net loss of $697,482, increased by a gain on change in

derivative liability of $44,529, and reduced by stock-based compensation expenses of $15,000, amortization debt discount of $72,551,

depreciation and amortization of $27,313, a change in operating assets and liabilities of $260,791.

During the nine months

ended June 30, 2022, we did not generate positive cash flows from operating activities.

For the nine months ended June 30, 2022,

net cash flows used in operating activities was $616,515, consisting of a net loss of $1,735,166, reduced by stock-based compensation

expenses of $372,836, loss on contingency liability of $460,000, amortization debt discount of $315,865, depreciation of $4,645,

and increased by gain on PPP loan forgiveness of $24,148 and a change in working capital of $10,547.

Cash Flows from

Investing Activities

During the nine months

ended June 30, 2023, the Company used cash for the purchased two vehicles for $67,039 and website development costs of $5,833.

the nine months ended June 30, 2022, the Company generated cash of $70,361 from the acquisition of a subsidiary and purchased three

vehicles for $126,406.

Cash Flows from

Financing Activities

During the nine months

ended June 30, 2023, the Company generated $261,500 from the issuance of convertible notes, $50,000 from the issuance of promissory

notes - related parties, $12,500 from issuance of promissory notes, $35,982 from the issuance of notes payable, repaid $14,443

on the notes payable and repaid $2,637 on the SBA loan.

During the nine months

ended June 30, 2022, the Company generated $1,016,250 from issuance convertible notes and $36,200 from SBA loan.

Going Concern

As of March 31, 2023, the

Company had a net loss of $540,387, accumulated deficit of $2,921,146 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

As of June 30, 2023,

the Company had a net loss of $697,482, accumulated deficit of $3,078,241 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 Estimates

Our consolidated financial

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

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

accompanying notes.

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:

3 unchanged sentences

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.

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.

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.

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

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.

car rental arrangements are over a fixed contracted period;

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.

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

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.

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 basis.

This amount is shown as a deduction

to revenues (“Driver & Dealer Insurance Cost”) on the Company’s Statements of Operations.

generates miscellaneous revenue in a number of ways.

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.

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 charges.

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.

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 of ways.

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.

miscellaneous revenue represents amounts earned on telematics equipment and telematics software services related to each rental vehicle

used to track excess usage and charges.

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

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

The Company’s

Cost of Goods sold consists of direct expenses, such as roadside assistance or telematics service fees, and 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.

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

recognizes compensation expenses for all restricted stock awards and stock options.

The fair value of restricted stock awards is measured

using the grant date fair value of our stock, as determined by the Board of Directors.

The fair value of stock options is estimated at

the grant date using the Black-Scholes option-pricing model, and the portion that is ultimately expected to vest is recognized as compensation

cost over the requisite service period.

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

basis over the vesting period of the entire option.

The determination of fair value using the Black-Scholes pricing model is affected

by our stock value as well as assumptions regarding a number of complex and subjective variables, including expected stock price volatility

and the risk-free interest rate.

Company recognizes compensation expenses for all restricted stock awards and stock options.

The fair value of restricted stock

awards is measured using the grant date fair value of our stock, as determined by the Board of Directors.

The fair value of stock

options is estimated at the grant date using the Black-Scholes option-pricing model, and the portion that is ultimately expected

to vest is recognized as compensation cost over the requisite service period.

We have elected to recognize compensation expense

for all options with graded vesting on a straight-line basis over the vesting period of the entire option.

The determination of

fair value using the Black-Scholes pricing model is affected by our stock value as well as assumptions regarding a number of complex

and subjective variables, including expected stock price volatility and the risk-free interest rate.

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

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).

levels of the fair value hierarchy are described below:

Level 1 applies

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

Level 2 applies

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

prices for similar assets or liabilities in active markets;

quoted prices for identical assets or liabilities in markets with insufficient

volume or infrequent transactions (less active markets);

or model-derived valuations in which significant inputs are observable or can

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

Level 3 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 are approximate fair value due to their short-term nature.

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.

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

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

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

ASC 820 also establishes

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

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

based on the best information available in the circumstances (unobservable inputs).

The fair value hierarchy consists of three

broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities

(Level 1) and the lowest priority to unobservable inputs (Level 3).

The three levels of the fair value hierarchy are described

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 are 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.

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.

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.

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.

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.

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

We have no off-balance

sheet arrangements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK.

We are a smaller reporting company as defined by Rule

12b-2 of the Exchange Act and are not required to provide the information under this item.

We are a smaller reporting company as defined

by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

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-Q

Item 2. Management’s Discussion and Analysis