DriveItAway Inc. (DWAY)

Executive Summary / Key Takeaways

• DriveItAway Holdings, Inc. (DWAY) is an innovative national dealer-focused mobility platform, leveraging a "Pay as You Go" app-based subscription model to enable car dealers to enhance vehicle sales through eCommerce, targeting subprime and deep subprime candidates.
• The company's proprietary mobile technology and a significant national partnership with Free2move, Stellantis's global mobility brand, represent core strategic differentiators aimed at transforming dealerships into next-generation mobility hubs and expanding into the electric vehicle (EV) acquisition market.
• DWAY has demonstrated substantial top-line growth, with revenues increasing by 93% and 122% for the three and nine months ended June 30, 2025, respectively, driven by increased vehicle availability.
• Despite revenue expansion, the company faces severe financial challenges, including widening net losses, a growing working capital deficiency of $8.60 million, and a "going concern" warning, underscoring a critical reliance on securing additional financing.
• Material weaknesses in internal controls over financial reporting, coupled with defaults on several promissory notes, highlight significant operational and financial risks that could impede DWAY's long-term stability and investor confidence.

Setting the Scene: Disrupting Automotive Mobility

DriveItAway Holdings, Inc. (DWAY) is carving out a niche in the evolving automotive landscape as a national dealer-focused mobility platform. The company's core offering is an exclusive "Pay as You Go" app-based subscription program, designed to empower car dealerships to streamline vehicle sales through eCommerce. This innovative model specifically addresses the needs of subprime and deep subprime candidates, providing them with flexible short-term rental or lease options, typically on a weekly or monthly basis. The platform also tracks vehicle values, allowing customer usage payments to reduce the vehicle's purchase price, thereby offering a pathway to ownership. DWAY's strategic vision extends to the burgeoning electric vehicle (EV) market, with plans to expand its consumer app subscription-to-ownership platform to facilitate entry-level consumers in acquiring new EVs. This approach positions DWAY at the forefront of a broader industry trend towards digital-first, flexible vehicle access solutions.

Technological Edge: The Power of the Proprietary Platform

At the heart of DWAY's strategy is its proprietary mobile technology and driver app, which forms the backbone of its "Pay as You Go" program. This technology provides a comprehensive, turnkey, and solutions-driven program for dealerships, encompassing mobile technology, insurance coverages, and training. The platform's design enables seamless eCommerce transactions, offering dealerships a competitive edge in emerging online sales opportunities.

The tangible benefits of this technology are evident in its operational impact. The app-based tools are designed to deliver notably lower implementation costs for dealer partners, fostering greater adoption. Furthermore, the platform facilitates materially greater efficiency in eCommerce transactions, from payment processing to customer management, which can lead to superior margins through recurring revenue streams. The system's ability to track vehicle values and integrate usage payments into a potential purchase price also demonstrates a notably better performance in transaction processing and customer engagement. DWAY's ongoing development includes the planned expansion of its consumer app subscription-to-ownership platform for new Electric Vehicles. This initiative aims to enable entry-level consumers to drive and acquire EVs, strategically positioning DWAY to capitalize on the accelerating shift towards electric mobility. For investors, this technological differentiation creates a competitive moat, drives recurring revenue potential, and enhances DWAY's market positioning for long-term growth in the dynamic mobility solutions sector.

Strategic Alliances and Market Positioning: A National Footprint with Free2move

A significant strategic milestone for DWAY is its national partnership with Free2move, the global mobility brand of Stellantis (STLA), one of the world's largest automakers. This collaboration, branded "Free2move Powered by DriveItAway," is poised to revolutionize vehicle access and transform dealerships into next-generation mobility hubs. This alliance not only validates DWAY's platform but also provides a substantial growth catalyst by integrating its technology with a major automotive player.

In the broader competitive landscape, DWAY operates alongside established automotive retail giants such as Carvana (CVNA), CarMax (KMX), and AutoNation (AN). DWAY's business-to-business (B2B), dealer-focused approach distinguishes it from Carvana's direct-to-consumer (D2C) model, potentially offering deeper integration and customized solutions for dealerships. Its app-driven subscription model provides greater digital agility compared to CarMax's hybrid physical-digital approach, which has historically shown slower adaptation to fully digital models. DWAY's tech-enabled disruption targets niche subscription needs, contrasting with AutoNation's reliance on its extensive traditional dealership network. However, DWAY's overall market positioning is secondary to these larger rivals, which generally exhibit stronger revenue expansion, profitability, and cash flow due to their scale and established brand recognition. DWAY's competitive advantages stem from its innovative subscription features and dealer-centric platform, which could lead to more adaptable payment options and efficient digital tools. Its disadvantages include a smaller operational scale, potentially resulting in higher customer acquisition costs and slower market share capture, along with possible technological gaps in broader eCommerce features compared to more diversified competitors. Barriers to entry, such as regulatory requirements for vehicle financing and the need for established dealer networks, both protect DWAY from new entrants and simultaneously favor larger, incumbent players with existing infrastructure and relationships.

Financial Performance: Growth Amidst Significant Headwinds

DriveItAway has demonstrated impressive top-line growth in its recent financial reporting. For the three months ended June 30, 2025, revenues surged by 93% to $206,212, primarily driven by an increase in rental and insurance revenue resulting from more vehicles available to rent. This growth trend was even more pronounced over the nine months ended June 30, 2025, with revenues increasing by 122% to $659,208.

However, this revenue expansion was accompanied by a substantial increase in the cost of revenue, which rose by 224% to $204,452 for the three-month period and 198% to $484,809 for the nine-month period. A significant portion of this increase was attributed to a $82,937 rise in depreciation expense. Consequently, gross profit for the three months ended June 30, 2025, sharply declined by 96% to $1,760, leading to a gross profit percentage of just 1% compared to 41% in the prior year. For the nine-month period, gross profit increased by 155% to $174,399, with the gross profit percentage improving to 26% from 23%, highlighting quarterly volatility in profitability.

Operating expenses also escalated significantly, increasing by 141% to $335,229 for the three-month period and 94% to $865,736 for the nine-month period. These increases were primarily attributable to higher general and administrative costs, professional fees, software development, and stock compensation. As a result, the operating loss widened by 251% to $333,469 for the three months and by 83% to $691,337 for the nine months ended June 30, 2025. The company reported a net loss of $3.99 million for the three months and $3.98 million for the nine months ended June 30, 2025.

A substantial "other expense" of $3.66 million for the quarter and $3.29 million for the nine months was primarily driven by a $3.58 million (quarter) and $2.16 million (nine months) loss on the change in fair value of derivative liabilities.

DWAY's TTM financial ratios, including a Gross Profit Margin of 24.32%, Operating Profit Margin of -86.08%, and Net Profit Margin of -547.56%, underscore the company's current unprofitability. This contrasts sharply with competitors like Carvana (CVNA), CarMax (KMX), and AutoNation (AN), which, based on their positive P/E and P/B ratios, generally demonstrate profitability, reflecting their more mature and scaled operations.

Liquidity and Capital Structure: A Precarious Balance

DriveItAway's liquidity and capital structure present significant concerns for investors. As of June 30, 2025, the company's working capital deficiency substantially increased by $4.21 million from September 30, 2024, reaching $8.60 million. This deterioration was predominantly due to a $4.19 million increase in current liabilities. The company utilized $260,973 in net cash from operating activities during the nine months ended June 30, 2025, indicating that its core operations are not yet self-funding. While financing activities generated $383,067 during the same period through various notes, warrants, and common stock issuances, this was partially offset by promissory note repayments.

A critical "going concern" warning has been issued by management, citing a net loss of $3.98 million and an accumulated deficit of $9.54 million as of June 30, 2025, coupled with insufficient cash to cover expenses for the next twelve months. Management's plan to address this includes converting convertible debt into common stock, pursuing equity financing arrangements, and obtaining capital from management and significant stockholders. However, management explicitly states that there is no assurance of success in accomplishing this plan. The company has also defaulted on several promissory notes, including secured convertible notes from June and November 2022, and two promissory notes from March 2023. Although a waiver on the AJB Note default extends through August 31, 2025, the prevalence of defaults highlights a precarious capital structure and a high reliance on external financing.

Outlook and Risks: The Road Ahead

Management anticipates a "continuing return to more historically normal levels" in automotive supply and demand in 2025, which is expected to translate into "greater vehicle availability for vehicles on our platform, leading to a further increase in revenues." This outlook, while positive for top-line growth, hinges on broader market recovery and DWAY's ability to effectively scale its operations to meet this anticipated demand.

However, significant risks cloud this forward view. The "going concern" warning remains paramount, indicating a fundamental challenge in achieving self-sustaining operations without additional capital. The reliance on external financing, particularly through equity instruments and debt conversion, exposes investors to potential dilution and the inherent uncertainty of securing funds on favorable terms. Operational risks are also pronounced, with management identifying "material weaknesses" in internal control over financial reporting as of June 30, 2025. These include an inadequate control environment, a lack of risk assessment procedures, the absence of formal information and communication processes, and insufficient monitoring activities. Furthermore, DWAY lacks policies requiring formal written approval for related party transactions, controls to prevent financial data manipulation, and adequate review procedures to ensure financial data accuracy. While management believes the financial statements are fairly stated despite these weaknesses, they pose a significant risk to financial reliability and investor confidence. Broader industry trends, such as the increasing power demands of AI-driven data centers, could indirectly impact DWAY by potentially increasing cloud infrastructure costs, affecting its profitability more than competitors with diversified models.

Conclusion

DriveItAway Holdings (DWAY) stands at a critical juncture, embodying the high-growth potential of digital transformation in automotive mobility. Its innovative "Pay as You Go" platform and strategic alliance with Free2move position it to capture a growing share of the market, particularly among subprime consumers and in the burgeoning EV sector. The substantial revenue growth demonstrates early market traction and the appeal of its unique offering, driven by its proprietary technology that promises enhanced operational efficiency and lower implementation costs for dealers.

However, the company's financial foundation remains fragile. Persistent net losses, a widening working capital deficiency, and a "going concern" warning underscore the urgent need for successful capital infusion and rigorous operational improvements. The identified material weaknesses in internal controls further highlight the challenges in establishing a robust and scalable financial infrastructure. For investors, DWAY represents a speculative opportunity, where the promise of its technological differentiation and strategic partnerships must be carefully weighed against the significant financial and operational hurdles that lie ahead, making successful execution of its financing and control improvement plans paramount for long-term viability.