Driveitaway Holdings, Inc. (DWAY), an innovative automotive retail company, has reported a net loss of $540,387 for the six months ended March 31, 2023. Accumulated deficit stands at $2,921,146. According to the company’s recent SEC report, Driveitaway does not have sufficient cash on hand to cover expenses for the next 12 months.
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The company’s financing plans
The company plans to convert its convertible debt into common stock and fund operations through equity financing arrangements for the year ending September 30, 2023. However, these may be insufficient to cover capital expenditures, working capital, and other cash requirements. This raises substantial doubt about the company’s ability to continue as a going concern.
Recent cash activities
During the six months ended March 31, 2023, Driveitaway Holdings used cash for the purchase of two vehicles amounting to $67,039 and website development costs of $5,833. In the same period, it generated $261,500 from the issuance of convertible notes, $50,000 from the issuance of promissory notes—related parties, and $12,500 from the issuance of promissory notes. It also repaid $1,648 on the SBA loan.
Revenue generation
Regarding revenue, the company recognized revenue from its DriveItAway online/app-based platform, assisting subprime and deep subprime candidates in purchasing used vehicles through participating franchise and independent car dealers. It also generated revenue from providing driver and vehicle insurance through a third party.
Cash flow from financing activities
Cash flow from financing activities reached $766,250 from the issuance of convertible notes and $36,200 from the SBA loan during the six months ended March 31, 2022. Nevertheless, the ability of Driveitaway Holdings to emerge from the development stage depends on obtaining additional financing and developing its business plan. The company aims to raise additional funds through public or private placement offerings, but the accompanying financial statements do not include any adjustments related to this uncertainty.
Accounting policies
The report notes that the company’s financial statements are prepared according to GAAP, which needs management to make estimates, judgments, and assumptions affecting the amounts reported. Driveitaway Holdings’ significant accounting policies include revenue recognition, stock-based compensation, income taxes, financial instruments, and derivative financial instruments.
Conclusion
In conclusion, the financial situation of Driveitaway Holdings remains uncertain due to the net loss and accumulated deficit reported. The company’s ability to continue as a going concern depends on obtaining additional financing and successfully developing its business plan. The management is exploring options like convertible debt conversion, equity financing arrangements, and raising funds through public or private offerings to address these concerns.
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