What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-03-08 compared with 2023-10-30 · 202 added, 215 removed, 107 unchanged (80% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF OPERATIONS

Note Regarding Forward-Looking Information

MANAGEMENT’S DISCUSSION AND

ANALYSIS OF OPERATIONS

Special Note Regarding Forward-Looking Information

The following discussion and analysis of

32 unchanged sentences

RESULTS OF OPERATIONS

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

Gross Profit Percentage

Operating expense

Other expense

$ (1,735,166 )

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

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

Our operating results

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

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

Three months ended

2 unchanged sentences

Operating expense

Other (income) expense

Net income (loss)

Operating loss

Other expense

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.

months ended December 31, 2023, increased $48,420 from $48,083 for the period ending December 31, 2022, to $96,503 for the period

ending December 31, 2023.

This was due to a $63,696 increase in rental revenue and $22,373 increase in insurance revenue, offset

by an increase of $37,649 in insurance lender payback costs.

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.

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

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

Cost of revenue for the three months ended December 31, 2023, increased

$45,807, from $39,872 for the period ending December 31, 2022, to $85,679 for the period ending December 31, 2023.

This was primarily

due to DIA fleet payments which increased alongside an increase in revenue.

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.

for the three months ended December 31, 2023, decreased $17,634 as compared to the three months ended December 31, 2022.

was primarily attributable to a decrease in salaries and payroll taxes of $15,250 and advertising and marketing expenses of $8,375,

offset by an increase in professional fees of $6,585.

Loss from operations was $195,186 for the three months ended December 31, 2023,

as compared to $215,433 for the three months ended December 31, 2022.

The decrease of $20,247 was largely attributable to the change in

operating expenses of $17,634 and an increase in gross profit of $2,613.

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.

the three months ended December 31, 2023, were $520,243, as compared to $505,575 for the three months ended December 31, 2022.

The increase of $14,668 is primarily attributable to increases in amortization of debt discount and interest expense of $21,987

and $112,059, respectively.

The increases are partially offset by a decrease in loss on change in fair value of derivative liabilities

Liquidity and Capital Resources:

The following table provides selected financial data about

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

The following table provides selected financial data about our Company

as of December 31, 2023, and September 30, 2023.

Working Capital

September 30,

Cash and restricted cash

Current assets

Current assets, net of restricted cash

Current liabilities

1 unchanged sentence

$ (2,737,299 )

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 $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 used in investing activities

Cash provided by financing activities

$ (1,861,864 )

As of December 31,

2023, our working capital deficiency increased $875,435 as compared to September 30, 2023.

This was primarily attributable to a

$584,229 increase in derivative liabilities, a $230,093 increase in convertible notes payable, and a $129,791 increase to accounts

payable and accrued liabilities.

Cash Flow Data:

Three months ended

Cash provided by (used in) operating activities

Cash provided by (used in) investing activities

Cash provided by (used in) financing activities

Net Change in Cash and Restricted Cash

1 unchanged sentence

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.

During the three months

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

For the three months ended December

31, 2023, net cash flows used in operating activities was $104,496, consisting of a net loss of $715,429, reduced by a loss on

change in fair value of derivative liability of $335,277, amortization debt discount of $35,407, depreciation and amortization

of $9,471, a financing fee of $98,202, and a change in operating assets and liabilities of 132,576.

During the three months ended December 31, 2022, we did not generate

positive cash flows from operating activities.

For the three months ended December 31, 2022, net cash flows used in operating activities

was $193,541, consisting of a net loss of $721,008, reduced by a loss on change in derivative liability of $454,655, stock-based

compensation expenses of $15,000, amortization debt discount of $13,420, depreciation and amortization of $7,653, a change in operating

assets and liabilities of $36,739.

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.

During the three months

ended December 31, 2023, the Company did not use or generate any cash from investing activities.

the three months ended December 31, 2022, the Company used cash of $72,872 for intangible asset purchases of $5,833 and fixed asset

acquisition costs of $67,039.

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.

During the three months

ended December 31, 2023, the Company generated $22,222 from the issuance of convertible notes, and $195,000 from the issuance of

promissory notes, this was partially offset by $28,278 for repayment of promissory notes payable and payment for debt issuance

costs of $46,472.

During the three months

ended December 31, 2022, the Company generated $200,000 from the issuance of convertible notes, repaid $566 on their SBA loan,

and paid debt issuance costs of $20,000.

Going Concern

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.

As of December 31,

2023, the Company had a net loss of $715,429, accumulated deficit of $4,026,325 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 December 31, 2024.

The ability of our

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Revenue Recognition

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.

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.

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.

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.

Stock-Based Compensation

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 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

The Company’s revenue is recognized in

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

The Company, through its DriveItAway online/app-based platform (“platform”), operates in the automotive

rental industry.

The Company assists subprime and deep subprime candidates to rent/lease vehicles on a short-term basis, generally

on a weekly or, in some cases monthly, basis under a Pay-As You-Go program.

Through its platform the Company will track vehicle

values and reduce vehicle pricing through the customers usage payments to show drivers a vehicle purchase price should they be

interested in buying the vehicle, at which time the customer would procure financing if the Company determined they wanted to sell

the vehicle at the listed purchase price.

During the periods ended December 31, 2023,

and 2022, the Company derived its revenue from signed contracts for vehicle rentals between the Company, other leasing companies,

or car dealerships and individual car rental customers (“customers”).

Customers book a vehicle through the Company’s

platform, starting first with a rental contract with the vehicle.

When the customer books the vehicle, per the terms of the individual

rental agreements, the customer shall pay a stated rental rate, a stated insurance amount, an initial non-refundable fee, and,

in some cases, a refundable deposit.

At the end of the usage cycle, the system calculates miles driven and if the customer has

driven more than the prorated, included amount, they pay extra usage/mileage fees.

In instances when a customer pays late, they

pay a late fee and in cases of incurring charges for tolls they pay for the toll costs incurred.

Additionally, contracts may be

extended (a new contract is signed) at which time the credit card on file for the customer will be charged at the beginning of

the contract extension period for rental rate and insurance amount for the new extension period.

Vehicles available in the platform can be owned

or leased by the Company or made available through arrangements with independent car dealerships (“dealerships”).

vehicles owned or leased by the Company, the Company’s performance obligation for rental revenue is to provide customers

with a vehicle and an application to track vehicle rental arrangements.

For vehicles made available through dealerships the Company’s

performance obligation for rental revenue is to provide an application to track vehicle rental arrangements and to collect cash

from customers and remit those amounts to dealerships net of the Company’s revenue share.

The vehicle rental arrangements

are over a fixed contracted period;

therefore, the Company recognizes rental revenue ratably over the contract term.

Costs related

to rental revenue include depreciation for Company owned vehicles and monthly lease payments when the vehicles are leased from

a leasing company.

The amount of revenue transferred to dealerships is treated as contra-revenue because the Company acts as an

agent in these transactions resulting in only the Company’s revenue share being recognized.

The Pay-As-You-Go program manages or includes

Fleet insurance is sometimes provided where the Company has a fleet policy and the driver is added to it when needed.

In this case, the driver pays the cost of insurance as a separate payment in the system.

This payment is a type of revenue.

Company pays the insurance company providing the coverage.

This is a cost of goods sold.

The Company also allows for drivers to

bring their own insurance.

The Company works with associated insurance brokers to write a policy for the customer for that vehicle

and a separate finance company that pays for the policy in full.

The Company acts as trustee in collecting installments and transferring

them to the finance company.

Collected payments are treated as a revenue and transfers to the finance company are treated as contra-revenue

because the Company acts as an agent in these transactions.

Lastly, in markets where the Company cannot support this program, drivers

are allowed to bring their own insurance and pay it directly themselves with no involvement of the Company.

No revenue is collected

or recognized in this instance.

Because any insurance revenue is collected at contract inception and covers the fixed contract

period the Company recognizes insurance revenue ratably over the contract term.

Initial non-refundable fees are recognized

when payment is received as the Company has no obligation to provide additional services at that point.

Miscellaneous charges for

extra mileage, late fees, or toll charges calculated and charged to the customer credit card at the end of the usage cycle are

recognized when the credit card charge goes through.

Refundable deposits are recorded on the balance sheet until deposits are returned

to customers or applied to their account for fees incurred.

Deferred revenue includes rental and insurance amounts that are paid

for contracts that overlap a reporting date and relate to usages after that date.

As of December 31, 2023 and September 30, 2023

refundable deposits were $1,339 and $2,234 and deferred revenue was $4,967 and $7,233, respectively.

In addition to the costs associated with rental

revenue and insurance revenue, within the Cost of Goods Sold account the Company also records credit card fees incurred from the

cash collections and cash remittance process, as a significant portion of its performance obligation is to collect and remit payments

through its credit card processors.

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

The fair value of restricted stock awards is

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

The fair value of stock options

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

is recognized as compensation cost over the requisite service period.

We have elected to recognize compensation expense for all

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

The determination of fair value

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

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

The provision for income taxes and deferred

income taxes are determined using the asset and liability method.

Deferred tax assets and liabilities are determined based on temporary

differences between the financial carrying amounts and the tax basis of assets and liabilities using enacted tax rates in effect

in the years in which the temporary differences are expected to reverse.

On a periodic basis, the Company assesses the probability

that its net deferred tax assets, if any, will be recovered.

If after evaluating all of the positive and negative evidence, a conclusion

is made that it is more likely than not that some portion or all of the net deferred tax assets will not be recovered, a valuation

allowance is provided by a charge to tax expense to reserve the portion of the deferred tax assets which are not expected to be

Value Measurements

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.

9 unchanged sentences

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

All financial assets and liabilities are approximate to their fair

Derivative liabilities are valued at Level 3.

Fair Value Measurements as of December 31, 2023 using:

December 31, 2023

Quoted Prices in Active Markets for Identical Assets (Level 1)

Significant Other Observable Inputs (Level 2)

Significant Unobservable Inputs (Level

Derivative Liabilities

Fair Value Measurements as of September 30, 2023 using:

September 30, 2023

Quoted Prices in Active Markets for Identical Assets (Level 1)

Significant Other Observable Inputs (Level 2)

Significant Unobservable Inputs (Level

Derivative Liabilities

Derivative Financial Instruments

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.

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 Company accounts for their derivative financial instruments in accordance with ASC 815

“Derivatives and Hedging” therefore any embedded conversion options and warrants accounted for as derivatives are

to be recorded at their fair values as of the inception date of the agreement and at fair value as of each subsequent balance

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.

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

7 unchanged sentences

sheet arrangements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK.

AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are a smaller reporting company as defined

1 unchanged sentence

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