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Equity
12 Months Ended
Sep. 30, 2023
Equity [Abstract]  
Equity

Note 6 – Equity

 

Authorized

 

The Company has authorized one billion (1,000,000,000) shares of common stock having a par value of $0.0001 per share, and ten million (10,000,000) shares of preferred stock having a par value of $0.0001 per share. All or any part of the capital stock may be issued by the Corporation from time to time and for such consideration and on such terms as may be determined and fixed by the Board of Directors, without action of the stockholders, as provided by law, unless the Board of Directors deems it advisable to obtain the advice of the stockholders.

 

Series A Preferred Stock

 

The Company has authorized one series of preferred stock, which is known as the Series A Convertible Preferred Stock (the “Series A Preferred”). The Board has authorized the issuance of 5,000,000 shares of Series A Preferred. The Series A Preferred Stock has the following rights and preferences:

 

Dividends: The Series A Preferred Stock is entitled to receive non-cumulative dividends equal to the amount of dividends that the holder of such share would have received if such share of Series A Preferred Stock were converted into shares of Common Stock immediately prior to the record date of the dividend declared on the Common Stock.

 

Liquidation Preference: The Series A Preferred Stock is entitled to receive, prior to any distribution to any junior class of securities, an amount equal to $0.01 per share as a liquidation preference before any distribution may be made to the holders of any junior security, including the Common Stock.

 

Voting Rights: Each holder of Series A Preferred Stock shall vote with holders of the Common Stock upon any matter submitted to a vote of shareholders, in which event it shall have the number of votes equal to the number of shares of Common Stock into which such share of Series A Preferred Stock would be convertible on the record date for the vote or consent of shareholders. Each holder of Series A Preferred Stock shall also be entitled to one vote per share on each submitted to a class vote of the holders of Series A Preferred Stock.

 

Voluntary Conversion Rights: Each share of Series A Preferred Stock is convertible into 33.94971 shares of Common Stock at the option of the holder thereof.

 

Mandatory Conversion Right: The Company has the right to convert each share of Series A Preferred Stock into 33.94971 shares of Common Stock at any time that there are less than 200,000 shares of Series A Preferred Stock outstanding.

 

During the year ended September 30, 2021, the Company issued 300,000 shares of DIA common stock which was automatically converted into 300,000 shares of Series A Preferred at the closing of the Share Exchange on February 24, 2022. The shares were issued to a consulting firm pursuant to one year consulting agreement and valued at $692,308. Stock-based compensation expense related to this issuance for the years ended September 30, 2023 and 2022 was $0 and $288,461, respectively, and was included in general and administrative expense.

 

During the year ended September 30, 2022, the Company issued 294,593 shares of DIA common stock which were automatically converted into 294,593 shares of Series A Preferred at the closing of the Share Exchange on February 24, 2022. The preferred stock is reflected retroactively for all periods presented and included the following:

 

52,284 shares issued for conversion of debt – related party and accrued interest of $104,565.

 

129,809 shares issued for conversion of debt and accrued interest of $288,458.

 

112,500 shares issued for exercise of stock option - related party as stock-based compensation to related parties of $84,375.

 

On April 20, 2022, holders of 2,464,784 shares of Series A Preferred agreed to convert their Series A Preferred into common stock, which resulted in the issuance of 83,678,702 shares of common stock. On the same date, the board of directors approved a resolution to exercise the Company’s right to mandatorily convert the remaining 129,809 shares of Series A Preferred into common stock, which resulted in the issuance of an additional 4,406,979 shares of common stock.

 

During the year ended September 30, 2023 there were no issuances of the Series A Preferred shares.

 

As of September 30, 2023 and 2022, the Company had no shares of Series A Preferred stock outstanding, respectively.

 

Common Stock

 

Reorganization

 

On February 24, 2022, the Company recognized the equity of Driveitaway Holdings, Inc. as part of the reorganization which resulted in the Company recognizing the issuance of 13,716,041 shares of common stock and 15,100 shares of treasury stock, at a value of $130,381.

 

The following table summarizes the assets acquired, and liabilities assumed at the acquisition date of February 24, 2022:

 

     
Cash  $70,360 
Notes receivable (Note 4)   150,000 
Accounts payable and accrued liabilities   (89,979)
Net assets acquired and liabilities assumed  $130,381 

 

On February 24, 2022, the Company issued 4,000,000 shares of common stock valued at $65,274 for commitment fees in conjunction with the issuance of a promissory note of $750,000 (see Note 8).

 

On April 20, 2022, the Company issued 88,085,681 shares of common stock as a result of the conversion of 2,594,593 shares of Series A Preferred Stock, as discussed in more detail above.

 

In May 2022, 500,000 shares were returned for cancellation to satisfy a note receivable in the amount of $100,000 (see Note 4).

 

On October 17, 2022, 250,000 shares of common stock, valued at $15,000 based on the fair market value of the shares on the grant date, were issued for consulting services.

 

On October 31, 2022, the Company issued 1,000,000 shares of common stock valued at $60,000 for commitment fees in conjunction with the amendment of a promissory note of $750,000 (see Note 8).

 

As of September 30, 2023, and 2022, the Company had 106,551,722 and 105,301,722 common shares issued, respectively.

 

Treasury Stock

 

The Company records treasury stock at cost. Treasury stock is comprised of shares of common stock purchased by the Company in the secondary market. As of September 30, 2023, and 2022, the Company had 15,100 shares of treasury stock valued at $18,126.

 

Stock Options

 

On June 12, 2020, DIA’s Board of Directors and its shareholders approved its 2020 Equity Compensation Plan (“Equity Plan”). The Equity Plan permits DIA to issue awards or options to the employees, directors, consultants and advisors who provide services to the Company or a subsidiary. Pursuant to the Equity Plan, 400,000 shares of DIA’s common stock were reserved for issuance. The Equity Plan allows DIA’s board or a committee of the board to issue grants of incentive stock options, nonqualified stock options, stock awards, stock units, stock appreciation rights and other equity-based awards.

 

As of September 30, 2021, DIA had 300,000 stock options outstanding under the Equity Plan to Messrs. Possumato, CEO, and Potash, COO in equal amounts, of which 93,750 had vested. At the closing of the Share Exchange on February 24, 2022, 112,500 of the stock options had vested and Messrs. Possumato and Potash each agreed to each exercise their 56,250 vested stock options issued to them. The options were converted into 112,500 shares of DIA common stock, which was automatically converted into 112,500 shares of Series A Preferred. The balance of the stock options issued to Messrs. Possumato and Potash were cancelled. The stock options had an exercise price of $0.75 per share. In lieu of paying the exercise price in cash, the exercise price was offset against accrued wages of $42,188 owed to each of Messrs. Possumato and Potash.

 

Also, at the closing of the Share Exchange, DIA’s board cancelled the Equity Plan and all outstanding options were cancelled.

 

As of September 30, 2021, DIAH had 2,177,571 options outstanding, of which 1,882,793 expired during the year ended September 30, 2022 and 294,778 were exercised in a cashless exchange for 155,103 common shares.

 

Accordingly, as of September 30, 2023 and September 30, 2022 the Company had no options outstanding.

 

Warrants

 

On February 24, 2022, in conjunction with the issuance of a promissory note of $750,000, the Company issued 1,000,000 warrants for $0.30 per share. The transaction led to no explicit limit to the number of shares to be delivered upon future settlement of the conversion options (see Note 8), therefore the equity environment became tainted and the warrants qualified for derivative accounting and were assigned a value of $107,283 which was recorded as a derivative liability and debt discount. The warrants expire on February 24, 2027.

 

In June 2022, in conjunction with a private offering and the issuance of secured promissory notes of $250,000 (see Note 8), the Company issued 125,000 warrants for $0.30 per share. As a result of the Company’s equity environment being tainted the warrants qualified for derivative accounting and were assigned a value of $8,136 which was recorded as a derivative liability and debt discount. The warrants expire in June 2027.

 

In November 2022, in conjunction with a private offering and the issuance of secured promissory notes of $200,000, the Company issued 100,000 warrants for $0.30 per share. As a result of the Company’s equity environment being tainted the warrants qualified for derivative accounting and were assigned a value of $4,074 which was recorded as a derivative liability and debt discount. The warrants expire in November 2027.

 

In February 2023, in conjunction with a promissory note amendment which was recognized as debt extinguishment, 2,000,000 warrants with exercise price of $0.05 were issued that expire on February 24, 2027 (4 year), which replaced the original 1,000,000 warrants issued with an exercise price of $0.30 previously issued with the original promissory note. As a result of the Company’s equity environment being tainted the warrants qualified for derivative accounting and were assigned a value of $21,469 which was recorded as a derivative liability and debt discount.

 

In March 2023, 125,000 warrants with exercise price of $0.05 were issued that expire on March 1, 2028 (5 year). As a result of the Company’s equity environment being tainted the warrants qualified for derivative accounting and were assigned a value of $3,837 which was recorded as a derivative liability and debt discount.

 

All derivative liabilities recognized for the warrants issued were valued using the Black-Scholes pricing model. The Black-Scholes model requires six basic data inputs: the exercise or strike price, time to expiration, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement (see Note 9).

 

A summary of warrant activity during the years ended September 30, 2023 and 2022 is as follows:

  

                
   Warrants  Weighted-Average  Weighted-Average
   Outstanding  Exercise Price  Life (years)
Balance as of September 30, 2021            
Issuance    1,125,000   0.30     
Exercised            
Expired/Cancelled            
Balance as of September 30, 2022    1,125,000   $0.30    4.44 
Issuance    2,225,000   $0.06      
Exercised       $      
Expired/Cancelled    (1,000,000)  $0.30      
Balance as of September 30, 2023    2,350,000   $0.07    3.51 

 

The intrinsic value of the warrants as of September 30, 2023 and 2022 is $0. All of the outstanding warrants are exercisable as of September 30, 2022.