DWAY.OIDDriveitaway Holdings, INC
10-K: DriveItAway Holdings Reports Widening Losses Amid Growth
Sentiment:
Annual Report
DriveItAway Holdings, Inc. reported a substantial increase in net loss for fiscal year 2025, despite significant revenue growth and strategic partnerships, raising going concern doubts.
Capital raiseThe company intends to fund operations through equity financing arrangements and plans to raise additional funds through public or private placement offerings.Issued 250,000 shares of common stock for $5,000 to a private investor in November 2024.Issued 325,000 shares of common stock for $6,500 to accredited investors in July 2025.Issued 750,000 shares of common stock to an accredited investor for $15,000 in August 2025.Exchanged $25,000 in debt owed to the chief executive officer for 1,250,000 shares of common stock on October 31, 2025 (subsequent event).Exchanged a note payable in the amount of $5,000 for 250,000 shares of common stock on October 31, 2025 (subsequent event).Issued warrants to purchase 10,750,000 shares of common stock for $215,000 in October 2025 (subsequent event).Issued warrants to two advisory panel members to purchase 2,500,000 shares of common stock each in December 2025 (subsequent event).Generated $26,500 from the sale of common stock, $50,000 from the sale of warrants, $1,300 from related party advances, $248,888 from the issuance of convertible notes payable, and $379,600 from the issuance of promissory notes during 2025.Secured a credit line guarantee of $4 million from Menachem Light in February 2025.Closed a $2,000,000 line of credit facility with an investor in March 2024, with individual draws up to $250,000.
Worse than expectedNet loss increased by 118% to $4,902,480 in 2025, a substantial increase from the $2,248,243 loss in 2024.Operating loss increased by 53% to $868,503 in 2025, indicating worsening operational performance.Gross profit decreased by 2% in 2025, despite a 114% increase in revenue, due to a disproportionately higher 164% increase in cost of revenue, suggesting declining margins.The working capital deficiency more than doubled to $8,988,114 in 2025, highlighting severe liquidity issues.Cash used in operating activities increased to $477,743 in 2025, indicating continued negative cash flow from core operations.The company explicitly states 'substantial doubt about the Companys ability to continue as a going concern,' which is a critical negative indicator.
Summary
- DriveItAway Holdings, Inc. operates a national dealer-focused mobility platform offering a 'Pay as You Go' app-based subscription to ownership program for vehicles, including Electric Vehicles (EVs), primarily targeting subprime and deep subprime consumers.
- Revenue for the fiscal year ended September 30, 2025, increased by 114% to $987,937, up from $460,661 in 2024.
- The net loss significantly widened by 118% to $4,902,480 in 2025, compared to $2,248,243 in 2024.
- Operating loss increased by 53% to $868,503 in 2025 from $568,155 in 2024.
- Gross profit slightly decreased by 2% to $135,693 in 2025, down from $138,261 in 2024, primarily due to a 164% increase in cost of revenue.
- The working capital deficiency worsened to $8,988,114 in 2025 from $4,335,188 in 2024.
- The company had an accumulated deficit of $10,461,619 as of September 30, 2025.
- Substantial doubt exists about the company's ability to continue as a going concern.
- Key partnerships were formed in 2025, including a major national partnership with Free2move, the international mobility division of Stellantis, and a partnership with Fleet-Connection for commercial fleet customers.
- The company added 6 vehicles to its rental pool in 2025, contributing to a total of 32 vehicles added over the past twenty-four months.
- Cash used in operating activities increased to $477,743 in 2025 from $424,379 in 2024.
- As of September 30, 2025, the company had 0 employees and 7 independent contractors.
Sentiment
Score: 2
Explanation: While the company shows significant revenue growth and strategic partnerships, its financial health has deteriorated substantially, with a rapidly widening net loss, increasing operating loss, declining gross profit margin, and a growing working capital deficiency. The explicit 'going concern' doubt and identified material weaknesses in internal controls indicate severe operational and financial challenges, overshadowing positive business developments.
Positives
- Revenue increased by 114% to $987,937 for the fiscal year ended September 30, 2025, demonstrating significant top-line growth.
- A major national partnership was launched in July 2025 with Free2move, the international mobility division of Stellantis (the fifth largest vehicle manufacturer globally), which expanded to 9 new cities by December 2025.
- A partnership with Fleet-Connection was announced in April 2025 to offer flexible lease alternatives to commercial fleet customers through the new DriveItAway Business Preferred program.
- Industry leaders Mitch Fadel (former CEO of Upbound Group) and James JT Taylor (automotive retail and investment banking) joined the DriveItAway Holdings Board of Advisors in 2025, bringing significant experience to guide growth.
- The company's operations expanded to 15 cities across the US by December 2025, with plans for further expansion.
- The proprietary mobile technology and driver app enable a seamless 'Pay as You Go' subscription to ownership model, differentiating the company in the market.
- The business model addresses the growing market need for flexible vehicle access, particularly for subprime/deep subprime consumers and those interested in Electric Vehicle (EV) adoption.
Negatives
- Net loss increased by 118% to $4,902,480 in 2025, indicating a significant deterioration in profitability.
- Operating loss increased by 53% to $868,503 in 2025.
- Gross profit decreased by 2% in 2025, despite substantial revenue growth, due to a 164% increase in cost of revenue.
- The working capital deficiency more than doubled to $8,988,114 in 2025 from $4,335,188 in 2024.
- The company has an accumulated deficit of $10,461,619 as of September 30, 2025.
- Substantial doubt exists about the company's ability to continue as a going concern, as stated by management and the independent auditors.
- Other expenses increased significantly by $2,353,889, primarily due to a $2,877,466 loss from the change in fair value of derivative liability.
- The company defaulted on promissory notes payable with an aggregate outstanding principal of $42,500 and owed unpaid interest of $21,252 as of September 30, 2025.
- Other promissory notes payable with outstanding principal of $20,000 and $7,500 were also in default as of September 30, 2025.
- The AJB Notes were in default, although the lender waived all default provisions through January 31, 2026.
- Material weaknesses in internal control over financial reporting were identified, including an inadequate control environment, lack of risk assessment procedures, no formal information/communication process, no monitoring activities, and lack of policies for related party transactions.
- The company lacks adequately designed internal controls to prevent or detect material misstatements, including controls over financial data manipulation, the financial reporting close process, and segregation of duties.
- There is a lack of necessary accounting resources with sufficient SEC reporting experience, US GAAP knowledge, and experience in accounting for complex debt and equity transactions.
- No dividends have ever been declared, and none are anticipated in the foreseeable future.
- The common stock has a very limited market, being quoted on the OTC Pink under the symbol DWAY.
Risks
- Substantial doubt exists about the company's ability to continue as a going concern due to recurring net losses, negative cash flows from operating activities, and a significant working capital deficiency.
- The company's ability to continue operations is dependent on obtaining additional financing through equity sales or traditional loans, with no assurance of success.
- Failure to successfully implement the company's growth strategy could adversely impact financial results.
- Changing economic conditions, including tightening credit policies and increasing down payment requirements for subprime buyers, could limit market access and growth.
- The company faces potential litigation and regulatory issues.
- Failure to comply with current or future laws or regulations could have a material adverse effect.
- Material weaknesses in internal control over financial reporting, including an inadequate control environment, lack of risk assessment procedures, and insufficient segregation of duties, pose a risk of material misstatements.
- A lack of necessary accounting resources with sufficient SEC reporting experience and US GAAP knowledge for complex debt and equity transactions increases financial reporting risk.
- The very limited market for the company's common stock on the OTC Pink could impact liquidity and valuation for investors.
- Uncertainty regarding future federal EV new and used incentives could affect the company's EV strategy.
- The dramatic drop in used EV values could negatively impact the company's fleet value if it acts as principal in financing its own fleet.
Future Outlook
The company anticipates further rapid growth in 2025 by strengthening its relationship with Free2move to enhance national visibility and expansion, with a goal to add at least 8 more cities in the first quarter of 2026. It plans to partner with dealers for co-op marketing programs to increase showroom exposure and local interest. The company also intends to leverage its newly formed Board of Advisors to scale sales rapidly, continue to forge strong industry alliances, and work towards a NASDAQ listing in the future. Additionally, DriveItAway expects to capitalize on the dramatic drop in used EV values by acting as principal in financing its own fleet of used EV vehicles, offering them at affordable rates to customers.
Management Comments
- "We believe it is important to communicate our expectations to our stockholders. However, there may be events in the future that we are not able to accurately predict or over which we have no control."
- "We see our unique flexible lease to ownership model as the best subscription program for all consumers, as it offers the best of both the walk away ability of a turnkey monthly rental, but with the advantage of benefiting from the monthly usage payment reduction, should the driver choose to buy."
- "Our entire program is focused on keeping our subscribers who want to buy on the rails and that is made clear at inception. We work with our subscribers to help each achieve their goal of vehicle ownership."
- "The DriveItAway program is uniquely designed to help alleviate the two biggest impediments to a mainstream or subprime EV sale, the higher cost (spread out over as long a period of time as required for our subscriber), and the suitability or anxiety of plunging into an EV sale."
- "As macro developments of oversupply and affordability continue to create the automotive retail environment problems that the DriveItAway technology and platform was created to solve, and after creating the foundational relationships and technologies to scale, we look forward to further rapid growth and achievements in 2025."
- "We look to add at least another 8 more in the first quarter of 2026."
- "We will work with our Board of Advisors to guide longer-term strategy and growth, to fully leverage the massive opportunity we see before us."
Industry Context
The automotive retail market in 2025 experienced a shift back to more normal conditions, characterized by an oversupply of vehicles and decades-high interest rates, which significantly increased floor plan carrying costs for dealers. Concurrently, average new and used vehicle sales prices remained at historic highs, and finance institutions tightened credit and increased down payment requirements, particularly for subprime and deep subprime buyers, due to a substantial rise in auto loan delinquencies. This environment has squeezed many buyers out of the traditional market, creating a significant opportunity for alternative vehicle acquisition models like DriveItAway's flexible lease-to-ownership program. Young buyers (18-34) are increasingly considering vehicle subscriptions as an alternative to traditional purchase or lease options. The ongoing transition to electric vehicles (EVs), albeit at a slower pace, combined with a dramatic drop in used EV values, presents a unique opportunity for DriveItAway to provide a turnkey, profitable solution for dealers' used EV inventory and offer affordable EV access to consumers.
Comparison to Industry Standards
- The company differentiates its vehicle subscription program from traditional rental car companies and other subscription services by offering drivers the option to buy the vehicle, with rental fees reducing the ultimate purchase price.
- The company likens its model to Divvy Homes, which revolutionized the rent-to-own market for houses, aiming to revolutionize how new and used vehicles are sold by starting with a commitment-free rental or subscription.
- DriveItAway positions itself as 'true digital retailing for the automotive industry' because its rental/subscription documents can be legally signed digitally, unlike traditional vehicle sales or leases in the U.S. which require wet ink signatures.
- The company's program is designed to appeal to subprime and deep subprime consumers, offering an alternative to limited and often disadvantageous choices in the traditional market, while avoiding the 'victimizing enterprise' model of 'Buy Here/Pay Here' operations.
- The company observes that vehicle subscriptions are on a similar growth trajectory today as consumer vehicle leasing was 25-30 years ago, suggesting significant future market expansion.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| Chief Financial Officer | NA | Steven M. Plumb | 2024-04-04 | Appointment |
| Chair of Board of Advisors | NA | Menachem Light | 2025-02-28 | Appointment to newly created Board of Advisors |
| Board of Advisors Member | NA | Mitch Fadel | 2025-09-30 | Appointment |
| Board of Advisors Member | NA | James JT Taylor | 2025-11-30 | Appointment |
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Committee Structure | The Board of Directors has no separately designated committees; board members carry out the functions of both an audit committee and a compensation committee. | NA | Indicates a lack of specialized oversight and potential for conflicts of interest, contributing to material weaknesses in internal controls. |
| Audit Committee Financial Expert | The Board has determined it does not have an audit committee financial expert within the meaning of SEC rules, citing limited financial resources. | NA | Increases risk of financial reporting errors and reduces the effectiveness of financial oversight. |
| Internal Control Over Financial Reporting | Management concluded that internal controls over financial reporting were not effective as of September 30, 2025, due to material weaknesses. | 2025-09-30 | Significantly increases the risk of material misstatements in financial statements not being prevented or detected on a timely basis. |
| Control Environment Deficiency | Inadequate control environment, including no risk assessment procedures, no formal information or communication process, no monitoring activities, and lack of policies for formal written approval for related party transactions. | 2025-09-30 | Creates a weak foundation for internal controls, increasing the likelihood of financial and operational risks. |
| Internal Control Design Deficiency | Lack of adequately designed internal controls to prevent or detect and correct material misstatements, including no controls to prevent manipulation of financial data, no controls over the financial reporting close process, and lack of segregation of duties. | 2025-09-30 | Directly contributes to the risk of inaccurate financial reporting and potential fraud. |
| Accounting Resources Deficiency | Lack of necessary accounting resources with sufficient SEC reporting experience, US GAAP knowledge, and experience to properly account for complex debt and equity transactions. | 2025-09-30 | Hinders accurate and timely financial reporting, especially for complex transactions, and contributes to the material weaknesses. |
Legal Proceedings
- The company is not currently involved in any litigation that it believes could have a material adverse effect on its financial condition or results of operations.
Related Party Transactions
- As of September 30, 2025, the company had defaulted on promissory notes payable with three related parties (including CEO John Possumato and COO Adam Potash) with an aggregate outstanding principal of $42,500 and owed unpaid interest of $21,252.
- During 2025, related parties made payments on the company's behalf or provided short-term advances totaling $1,300.
- As of September 30, 2025, the company owed related parties $26,380 for advances.
- On October 31, 2025 (subsequent event), the company exchanged $25,000 in debt owed to the chief executive officer for 1,250,000 shares of the company's common stock.
Stakeholder Impact
- Shareholders face significant dilution risk due to ongoing equity financing and warrant issuances, high financial risk due to substantial losses and going concern doubt, and no anticipated dividends. The limited market for common stock further impacts liquidity.
- Customers, particularly subprime/deep subprime individuals and those seeking EV access, benefit from the flexible lease-to-ownership model. However, the company's going concern issues could pose a risk to service continuity.
- Creditors face significant risk due to the company's defaults on promissory notes and overall financial distress, despite some waivers from lenders.
- Employees and independent contractors (0 employees, 7 independent contractors) operate within a lean structure, but the company's financial instability could impact their engagement and future prospects.
Next Steps
- Strengthen the relationship with Free2move to continue national visibility and expansion.
- Add at least another 8 cities to operations in the first quarter of 2026.
- Partner with dealers to market the program, including co-op marketing dollars integrated into dealership marketing programs.
- Work with the Board of Advisors to rapidly scale sales, continue to make strong industry alliances, and work towards a NASDAQ listing.
- Leverage the dramatic drop in used EV values by acting as principal in financing its own fleet of used EV vehicles.
- Obtain additional capital resources through sales of equity instruments, traditional financing (loans), and capital from management and significant stockholders.
- Convert convertible debt into common stock.
- Address and remediate the identified material weaknesses in internal control over financial reporting.
Key Dates
| Date | Description |
|---|---|
| 2006-03-08 | Company formed in Delaware as B2 Health, Inc. |
| 2010-07-02 | Acquired BFK Franchise Company, LLC and changed name to Creative Learning Corporation. |
| 2019-09-13 | Issued Convertible Promissory Note to Driveitaway, LLC (controlled by CEO John Possumato) for $30,000. |
| 2020-10-14 | Issued Convertible Promissory Notes to Driveitaway, LLC and Adam Potash (COO) for $25,000 each. |
| 2020-12-24 | Issued Convertible Promissory Note to Adam Potash for $15,000. |
| 2021-12-07 | Executed Agreement and Plan of Share Exchange with DriveItAway, Inc. and its shareholders, and entered into a Sale Agreement with StroomX, LLC. |
| 2022-02-24 | Closing of the Share Exchange, acquisition of DriveItAway, Inc., designation of Series A Convertible Preferred Stock, appointment of John Possumato as CEO and Adam Potash as COO, and Mike Elkin as CFO. Issued a promissory note of $750,000 and 1,000,000 warrants to AJB Capital Investments, LLC. |
| 2022-03-18 | Sale of the Learning Business to StroomX, LLC closed. |
| 2022-04-01 | Leased virtual office space at 3201 Market Street, Suite 200/201, Philadelphia, PA 19104. |
| 2022-04-18 | Name changed to DriveItAway Holdings, Inc. and authorized common stock increased to 1,000,000,000 shares. |
| 2022-04-20 | Holders of 2,464,784 shares of Series A Preferred converted to common stock (83,678,702 shares), and the remaining 129,809 shares were mandatorily converted (4,406,979 shares). |
| 2022-06-30 | Company sold $250,000 worth of Units to two accredited investors, resulting in two secured promissory notes and 125,000 warrants. |
| 2022-11-30 | Company sold $200,000 worth of Units to two accredited investors, resulting in two secured promissory notes and 100,000 warrants. |
| 2023-02-10 | Second amendment with AJB Capital Investments, LLC, increasing original principal by $85,000, replacing 1,000,000 warrants with 2,000,000 warrants, and extending maturity date to May 24, 2023. |
| 2023-03-01 | Entered into three promissory note agreements with three related parties for a total of $50,000 and issued 100,000 warrants. Entered into a promissory note agreement with an investor for $12,500 and issued 25,000 warrants. |
| 2023-05-01 | Executed a note payable with a face amount of $35,982. |
| 2023-08-15 | Executed a second note payable with a face amount of $64,206. |
| 2023-09-27 | Second amendment with AJB Capital Investments, LLC, increasing original principal by $25,000. |
| 2023-11-28 | Third amendment with AJB Capital Investments, LLC, increasing original principal by $22,222. |
| 2023-12-15 | Entered into a Securities Purchase Agreement with AJB Capital Investments, LLC, issuing a promissory note in the principal amount of $195,000 and warrants to purchase 5,000,000 shares. |
| 2024-02-22 | Executed a third note payable with a face amount of $57,474. |
| 2024-02-23 | Entered into a Securities Purchase Agreement with AJB Capital Investments, LLC, issuing a promissory note in the principal amount of $140,000. |
| 2024-03-01 | DIA Leasing, LLC closed a $2,000,000 line of credit facility with an investor. |
| 2024-04-04 | Steven M. Plumb appointed Chief Financial Officer. |
| 2024-04-12 | DIA Leasing, LLC, a wholly owned subsidiary, was formed. |
| 2024-05-01 | Promissory Note for $2,000,000 line of credit facility dated. |
| 2024-05-28 | Entered into a Securities Purchase Agreement with AJB Capital Investments, LLC, issuing a promissory note in the amount of $63,000 and warrants to purchase 5,000,000 shares. |
| 2024-06-14 | Entered into a Securities Purchase Agreement with AJB Capital Investments, LLC, issuing a promissory note with a face amount of $250,000 and warrants to purchase 5,000,000 shares. |
| 2024-07-03 | Executed a fourth note payable with a face amount of $88,800. |
| 2024-07-12 | Sold a warrant to purchase 5,000,000 shares of common stock for $50,000. |
| 2024-08-19 | Received funding for the second tranche of the investor warrant agreement and issued a cash warrant. |
| 2024-08-31 | Corporate office closed. |
| 2024-11-01 | Investor Warrant agreement amended to allow the purchase of warrants for up to 2,500,000 shares in a third tranche. |
| 2024-11-19 | Executed a fifth note payable with a face amount of $85,314. |
| 2024-11-20 | Issued 250,000 shares of common stock to a private investor for $5,000. |
| 2025-02-28 | DriveItAway announced a credit line guarantee of $4 million from Menachem Light, who also became Chair of the newly created Board of Advisors. |
| 2025-03-17 | Executed a sixth note payable with a face amount of $113,600. |
| 2025-04-30 | DriveItAway announced a partnership with Fleet-Connection. |
| 2025-05-08 | Executed a note agreement with AJB Capital with a principal balance of $80,000 and issued a warrant to purchase 5,000,000 shares. |
| 2025-05-31 | Issued an additional warrant to an investor to purchase up to 500,000 shares of common stock. |
| 2025-06-11 | Issued a warrant to the chief financial officer to purchase up to 375,000 shares of common stock. |
| 2025-06-16 | Executed a note agreement with AJB Capital with a principal balance of $45,000 and issued a warrant to purchase 15,000,000 shares. |
| 2025-07-31 | DriveItAway and Stellantis mobility division Free2move launched a national partnership. |
| 2025-07-31 | Issued 325,000 shares of common stock to accredited investors for $6,500. |
| 2025-07-18 | Executed a note agreement with AJB Capital with a principal balance of $60,000 and issued a warrant to purchase 18,000,000 shares. |
| 2025-08-31 | Issued 750,000 shares of common stock to an accredited investor for $15,000. |
| 2025-08-25 | Executed a seventh note payable with a face amount of $188,300. |
| 2025-09-02 | Executed a note agreement with AJB Capital with a principal balance of $41,000 and issued a warrant to purchase 25,000,000 shares. |
| 2025-09-18 | Entered into an advisory agreement with a consultant, issuing warrants to purchase 5,000,000 shares and another 5,000,000 shares. |
| 2025-09-30 | Fiscal year ended. |
| 2025-09-30 | An investor exercised a warrant for 4,998,360 shares of common stock, with 300,000 shares delivered. |
| 2025-10-31 | Issued warrants to purchase 10,750,000 shares of common stock for $215,000 (subsequent event). |
| 2025-10-31 | Exchanged $25,000 in debt owed to the chief executive officer for 1,250,000 shares of common stock (subsequent event). |
| 2025-10-31 | Exchanged a note payable in the amount of $5,000 for 250,000 shares of common stock (subsequent event). |
| 2025-11-30 | Automotive retail and investment banking leader James JT Taylor joined the DriveItAway Holdings Board of Advisors. |
| 2025-12-31 | DriveItAway and Free2move launched in 9 new cities (Miami, Fort Lauderdale, Orlando, Tampa, Key West, Minneapolis/St. Paul, Denver, St. Louis, and Los Angeles). |
| 2025-12-31 | Issued warrants to two advisory panel members to purchase 2,500,000 shares of common stock each (subsequent event). |
| 2026-01-13 | Filing date of the Annual Report on Form 10-K. |
Recommendation
strong sellThe company exhibits severe financial distress, marked by a rapidly widening net loss, increasing operating loss, declining gross profit, and a substantial working capital deficiency. The explicit 'going concern' warning from both management and auditors, coupled with identified material weaknesses in internal controls and a history of defaulting on debt, indicates a high probability of further financial deterioration or potential failure. While strategic partnerships and revenue growth are positive, they are insufficient to offset the fundamental financial instability. The reliance on continuous dilutive equity financing and debt conversions, often at significant discounts, will likely continue to erode shareholder value. The limited market for its common stock further exacerbates liquidity concerns for investors, making it a high-risk investment with significant downside potential.
Keywords
automotive mobility, vehicle subscription, lease-to-own, subprime auto finance, electric vehicles, EVs, dealer platform, Pay as You Go, Stellantis, Free2move, telematics, fintech, transportation, car rental, auto retail, going concern
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