Driveitaway Holdings Posts $548,868 Profit in Q1 2026 on Derivative Gain
Driveitaway Holdings, a vehicle logistics and technology company, swung to net income of $548,868 for the three months ended December 31, 2025, up 20% from $456,463 a year earlier. The profit came despite a wider operating loss, driven by a $981,354 gain on derivative liability revaluation.
Driveitaway Holdings, Inc. (OTC: DWAY), a vehicle logistics and technology company, reported net income of $548,868 for the three months ended December 31, 2025, compared to net income of $456,463 in the same period a year earlier, a 20% increase. The company remained profitable despite a deteriorating core operating performance, buoyed by non-cash accounting gains. Read more earnings reports.
Revenue for the quarter rose 17% to $282,242 from $241,946 in the prior-year period. However, cost of goods sold climbed 38% to $198,348, compressing gross margin to 30% from 41% a year earlier. Gross profit fell 15% to $83,894 from $98,691.
Operating expenses held essentially flat at $224,171 versus $224,303 in the prior year. The company recorded $40,625 in stock compensation during the current quarter, while software development costs dropped to $6,000 from $21,615. Professional fees increased to $32,117 from $20,257, and salaries declined to $84,754 from $95,750.
The operating loss widened 12% to $140,277 from $125,612 a year earlier, reflecting the margin pressure on the cost of goods sold side.
The company's profit stemmed entirely from other income, which totaled $689,145 versus $582,075 in the prior-year quarter. The largest component was a $981,354 gain on the change in fair value of derivative liability, up from $913,562 a year earlier. This non-cash gain reversed prior unrealized losses on derivative instruments tied to convertible notes and warrants.
Offsetting that gain were $149,944 in interest expense, $109,785 in amortization of debt discount, and $11,811 in amortization of deferred financing costs. The company also recorded a $19,447 loss on disposition of assets during the quarter.
Balance Sheet and Liquidity
As of December 31, 2025, Driveitaway held $89,743 in cash, up from $39,930 at September 30, 2025. Total current assets increased 29% to $106,427 from $82,462, driven by the cash increase and a decline in accounts receivable to $16,684 from $42,532.
Current liabilities declined 11% to $8.08 million from $9.07 million at the end of the prior quarter. The company reduced its derivative liability to $3.47 million from $4.45 million, and cut short-term notes payable to $94,756 from $150,253. Working capital deficiency improved to $7.97 million from $8.99 million.
Total stockholders' deficit narrowed to $7.65 million from $8.50 million at September 30, 2025, as the quarterly profit reduced the accumulated deficit to $9.91 million from $10.46 million.
The company's balance sheet showed multiple notes in default, including $450,000 in convertible notes payable, $20,000 in promissory notes, and $21,250 in related-party promissory notes, all unchanged from the prior quarter.
Cash Flow and Financing
Cash used in operating activities was $176,811 for the quarter, compared to $55,686 in the prior-year period. The deterioration reflected the wider operating loss and adjustments for the derivative gain, which was a non-cash item.
Investing activities generated $99,680 in cash from the sale of vehicles, versus a $137,289 cash outflow a year earlier when the company purchased vehicles. Fixed assets net of depreciation declined to $438,502 from $585,120 at September 30, 2025.
Financing activities provided $126,944 in cash during the quarter. The company raised $240,000 from the sale of warrants and $24,000 from convertible notes payable, while repaying $68,680 in promissory notes and $68,376 in short-term notes payable. In the prior-year quarter, financing activities generated $228,745, which included $50,000 from warrant sales, $57,458 from convertible notes, and $5,000 from common stock issuance.
During the quarter, Driveitaway issued 1.25 million shares of common stock to repay a $25,000 related-party loan, and issued 250,000 shares valued at $40,650 as stock compensation. The company also issued warrants valued at $240,000. Total shares outstanding increased to 121.5 million from 120.0 million at the end of the prior quarter.
| Three Months Ended December 31 | 2025 | 2024 | Change |
|---|---|---|---|
| Revenue | $282,242 | $241,946 | +17% |
| Cost of Goods Sold | $198,348 | $143,255 | +38% |
| Gross Profit | $83,894 | $98,691 | -15% |
| Operating Expenses | $224,171 | $224,303 | 0% |
| Operating Loss | ($140,277) | ($125,612) | -12% |
| Other Income | $689,145 | $582,075 | +18% |
| Net Income | $548,868 | $456,463 | +20% |
Basic net income per share was $0.00 for both periods due to rounding, based on 121.3 million weighted average shares outstanding in the current quarter versus 113.8 million a year earlier.