EX-99.3 4 e3883_ex99-3.htm EXHIBIT 99.3

 

 

EXHIBIT 99.3

 

 DRIVEITAWAY HOLDINGS, INC.

PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (Unaudited)

 

Summary of Transaction

 

On December 7, 2021, Creative Learning Corporation (the “Company”), DriveItAway, Inc., a Delaware corporation (“DIA”), and the existing shareholders of DIA executed an Agreement and Plan of Share Exchange (the “Share Exchange Agreement”), under which the Company agreed to acquire all of the issued and outstanding common stock of DIA by issuing one share of Series A Convertible Preferred Stock (the “Series A Preferred”) of the Company for each outstanding share of DIA common stock (the “Share Exchange”). On February 24, 2022, closing of the Share Exchange occurred.

 

The foregoing description of the Share Exchange is qualified in its entirety by reference to the full text of the Share Exchange Agreement, which was filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K on December 14, 2021.

 

Pro Forma Information

 

The unaudited pro forma condensed combined statements of income for the fiscal year ended September 30, 2021 and the three months ended December 31, 2021 combine the historical consolidated statements of income of the Company and DIA, giving effect to the Share Exchange as if it had occurred on October 1, 2020 and October 1, 2021, respectively. The unaudited pro forma condensed combined balance sheets as of September 30, 2021 and December 31, 2021 combine the historical consolidated balance sheets of the Company and DIA, giving effect to the Share Exchange as if it had occurred on October 1, 2020 and October 1, 2021, respectively .

 

The unaudited pro forma condensed combined financial information (“pro forma information”) is based on, and should be read in conjunction with, the following historical consolidated financial statements and accompanying notes:

 

  ● audited consolidated financial statements of the Company as of and for the years ended September 30, 2021 and 2020, and the related notes included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2021;
     
  ● audited financial statements of DIA as of and for the years ended September 30, 2021 and 2020, and the related notes included in the Company’s Current Report on Form 8-K filed herewith;
     
  ● unaudited consolidated financial statements of the Company as of and for the three months ended December 31, 2021, and the related notes included in the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2021;
     
  ● unaudited financial statements of DIA as of and for the three months ended December 31, 2021, and the related notes filed herewith;

 

The Company and DIA have September 30 fiscal year-ends.

  

The historical financial information has been adjusted in the pro forma information to give effect to pro forma events that are directly attributable to the Share Exchange, factually supportable, and with respect to the unaudited pro forma condensed combined statements of income, expected to have a continuing impact on the combined results of operations of more than one year.

 

The pro forma information has been prepared using the acquisition method of accounting in accordance with accounting principles generally accepted in the United States of America. The acquisition method of accounting is dependent upon certain valuations that are provisional and subject to change. The pro forma adjustments are based on the assumptions and information available at the time of the filing of this Form 8-K/A. The Company will finalize the acquisition accounting within the required measurement period.

  

The integration-related costs will continue to be expensed as incurred in the appropriate accounting periods following completion of the Share Exchange. For a detailed discussion of these risk factors, please refer to the risk, uncertainties and other factors described in the Company’s filings with the Securities and Exchange Commission. There were no material transactions between the Company and DIA during the periods presented in the pro forma information.

 

The pro forma information should be read in conjunction with the accompanying notes to the pro forma information. The pro forma information is not necessarily indicative of what the financial position or results of operations would have been had the Share Exchange occurred as of the dates indicated nor does it project the future financial position or operating results of the combined company.

 

1

 

  

DRIVEITAWAY HOLDINGS, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF DECEMBER 31, 2021

 

               Pro Forma
   Company  DIA  Adjustments  Notes  As Adjusted
Assets                         
Cash and Restricted Cash  $281,989   $6,066   $—        $288,055 
Receivables, net   52,579    18,977    —         71,556 
Prepaid Commission Expense   155,517    —    —         155,517 
Marketing Fund   25,054    —    —         25,054 
Notes Receivable, net   5,847    —    —         5,847 
Total Current Assets   520,986    25,043    —         546,029 
                          
Security deposit   4,867    —    —         4,867 
Intangibles   154,000    —    —         154,000 
Right of Use Asset   96,376    —    —         96,376 
Prepaid Commission – net of current   229,670    —    —         229,670 
Property and equipment, net   7,543    —    —         7,543 
Total Assets  $1,013,442   $25,043   $—        $1,038,485 
                          
Liabilities                         
Accounts Payable  $57,862   $104,330   $—        $162,192 
SBA Loan - PPP   119,980    7,679    —         127,659 
Deferred Revenue   708,172    —    —         708,172 
Related Party Convertible Notes Payable   —    95,000    —         95,000 
Convertible Debt   —    250,000    —         250,000 
Lease liability   101,219    —    —         101,219 
Accrued Liabilities   327,003    16,323    —         343,326 
Accrued Liabilities - related party   —    8,705    —         8,705 
Total Current Liabilities   1,314,236    482,037    —         1,796,273 
                          
SBA Loan   —    107,021    —         107,021 
Deferred Revenue – net of current   1,110,401    —    —         1,110,401 
Total liabilities   2,424,637    589,058    —         3,013,695 
                          
Stockholders’ Deficit)                         
Preferred stock, $.0001 par value; 10,000,000 shares authorized;
0 shares issued and outstanding, 2,592,791 shares issued and outstanding as adjusted		   —    —    259         259 
Common Stock, $.0001 par value; 50,000,000 shares authorized
13,716,041 shares issued and 13,700,941 shares outstanding as of December 31, 2021;		   1,369    230    (230)    (a)    1,369 
Additional Paid-in Capital   3,066,745    592,870    (1,157,144)    (a)    2,502,471 
Treasury Stock   (18,126)   —    —         (18,126)
Accumulated Deficit   (4,461,183)   (1,157,115)   1,157,115     (a)    (4,461,183)
Total stockholders’ deficit   (1,411,195)   (564,015)   —         (1,975,210)
Total Liabilities and Stockholders’ Deficit  $1,013,442   $25,043   $—        $1,038,485 

 

See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Statements .

 

2

 

 

DRIVEITAWAY HOLDINGS, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

FOR THE THREE MONTHS ENDED DECEMBER 31, 2021

 

               Pro Forma
   Company  DIA  Adjustment  Notes  As Adjusted
Operating Revenues                         
Royalty Fees  $189,147   $—   $—        $189,147 
Initial Franchise Fees   150,905    —    —         150,905 
Technology Fees   33,938    —    —         33,938 
Insurance Revenue   —    23,883    —         23,883 
Rental Revenue   —    34,498    —         34,498 
Initial Fee Revenue   —    4,126    —         4,126 
Miscellaneous Revenue   —    2,900    —         2,900 
Vehicle Own Share   —    (38,790)   —         (38,790)
Driver and Dealer Insurance Cost   —    (16,000)   —         (16,000)
Total operating revenues   373,990    10,617    —         384,607 
Cost of Goods Sold   —    5,686    —         5,686 
Gross Profit   373,990    4,931    —         378,921 
Operating Expenses                         
Salaries, payroll taxes and compensation   134,780    70,125    —         204,905 
Professional, legal and consulting   67,543    —    —         67,543 
Loss on Legal Settlements   41,302    —    —         41,302 
Bad Debt Expense   6,161    —    —         6,161 
Other General and Administrative   80,408    185,599    —         266,007 
Depreciation and Amortization   27,321    —    —         27,321 
General Advertising   28,544    —    —         28,544 
Software Development   —    15,679    —         15,679 
Selling Expenses   —    2,501              2,501 
Total operating expenses   386,059    273,904    —         659,963 
Operating Loss   (12,069)   (268,973)   —         (281,042)
Other Income (Expenses)                         
Other Income (Expenses), net   (303)   17,252    —         16,949 
Net Loss  $(12,372)  $(251,721)  $—        $(264,093)
                          
Net loss per Share                         
Basic  $(0.00)  $(0.11)            $(0.02)
Diluted  $(0.00)  $(0.11)            $(0.02)
                          
Weighted average shares outstanding                         
Basic   13,175,838    2,300,000    (2,300,000)    (a)    13,175,838 
Diluted   13,415,151    2,300,000    (2,300,000)    (a)    13,415,151 

  

See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Statements.

 

3

 

  

DRIVEITAWAY HOLDINGS, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2021

 

               Pro Forma
   Company  DIA  Adjustment  Notes  As Adjusted
Operating Revenues                         
Royalty Fees  $773,592   $—   $—        $773,592 
Initial Franchise Fees   1,257,217    —    —         1,257,217 
Technology Fees   143,614    —    —         143,614 
Merchandise Sales   20,771    —    —         20,771 
Insurance Revenue   —    252,341    —         252,341 
Rental Revenue   —    535,928    —         535,928 
Initial Fee Revenue   —    25,181    —         25,181 
Miscellaneous Revenue   —    11,859    —         11,859 
Vehicle Own Share   —    (481,215)   —         (481,215)
Driver and Dealer Insurance Cost        (225,503)             (225,503)
Total operating revenues   2,195,194    118,591    —         2,313,785 
Cost of Goods Sold   —    37,832    —         37,832 
Gross Profit   2,195,194    80,759    —         2,275,953 
Operating Expenses                         
Salaries, payroll taxes and compensation   452,258    183,757    —         636,015 
Professional, legal and consulting   423,631    —    —         423,631 
Loss on Legal Settlements   290,000    —    —         290,000 
Bad Debt Expense   (48,621)   —    —         (48,621)
Other General and Administrative   293,831    467,729    —         761,560 
Franchise commissions   298,389    —    —         298,389 
Depreciation and Amortization   114,543    —    —         114,543 
General Advertising   45,997    —    —         45,997 
Software Development   —    81,157    —         81,157 
Selling Expenses   —    9,256              9,256 
Total operating expenses   1,870,028    741,899    —         2,611,927 
Operating Income (Loss)   325,166    (661,140)   —         (335,974)
Other Income (Expenses)                         
Other Expenses, net   (264)   (14,544)   —         (14,808)
Net Income (Loss)  $324,902   $(675,684)  $—        $(350,782)
                          
Earnings (Loss) per Share                         
Basic  $0.02   $(0.31)            $(0.03)
Diluted  $0.02   $(0.31)            $(0.03)
                          
Weighted average shares outstanding                         
Basic   13,278,388    2,175,068    (2,175,068)   (a)    13,278,388 
Diluted   13,503,269    2,175,068    (2,175,068)   (a)    13,503,269 

  

See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Statements.

 

4

 

  

DRIVEITAWAY HOLDINGS, INC.

 

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

 

Note 1 – Description of Transaction

 

On December 7, 2021, Company, DriveItAway, Inc., a Delaware corporation (“DIA”), and the existing shareholders of DIA executed an Agreement and Plan of Share Exchange (the “Share Exchange Agreement”), under which the Company would acquire all of the issued and outstanding common stock of DIA by issuing one share of Series A Convertible Preferred Stock (the “Series A Preferred”) of the Company for each outstanding share of DIA common stock (the “Share Exchange”). On February 24, 2022, closing of the Share Exchange occurred.

 

Each share of Series A Preferred is convertible into 33.94971 shares of common stock of the Company, which entitles the holders thereof to 85% of the Company’s common stock upon a conversion of all shares of Series A Preferred, determined on a fully-diluted basis, but prior to any shares issued or issuable as a result of any capital raising transaction occurring at or following the closing. In addition, each share of Series A Preferred is entitled to dividends and voting rights on an “as converted” basis with the common stockholders.

 

Upon closing of the Share Exchange, all of the existing members of the board of directors (the “Board”) of the Company resigned, except that Rod Whiton’s resignation was not effective until ten days after an information statement pursuant to Rule 14f-1 was mailed to shareholders. John Possumato, Adam Potash and Paul Patrizio were appointed to the Company’s Board, provided that the appointments of Messrs. Potash and Patrizio were not effective until ten days after an information statement pursuant to Rule 14f-1 was mailed to shareholders. Upon closing of the Share Exchange, Christopher Rego and Rod Whiton resigned as officers, and John Possumato was appointed chief executive officer and Adam Potash was appointed chief operating officer. Mike Elkin agreed to remain as chief financial officer of the Company.

 

DIA is the first national dealer focused mobility platform that enables car dealers to sell more vehicles in a seamless way through eCommerce, with its exclusive “Pay as You Go” app-based subscription program. DIA provides a comprehensive turn-key, solutions driven program with proprietary mobile technology and driver app, insurance coverages and training to get dealerships up and running quickly and profitably in emerging online sales opportunities. The company is planning to soon to expand its easy and transparent consumer app ‘subscription to ownership’ platform to enable entry level consumers to drive and acquire new Electric Vehicles. For further information, please see www.driveitaway.com.

 

The foregoing description of the Share Exchange does not purport to be complete and is qualified in its entirety by reference to the full text of the Share Exchange Agreement, which was filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K on December 14, 2021.

 

Note 2 – Basis of Presentation

 

Pro Forma Presentation

 

The unaudited pro forma condensed combined financial information (“pro forma information”) has been prepared in accordance with Article 11, Pro Forma Financial Information, under Regulation S-X of the Securities and Exchange Act of 1934 (the “Exchange Act”), and is for informational purposes only. Certain reclassifications have been made to the historical statements of DIA to conform to the Company’s presentation, which are discussed in more detail in Note 5 – Reclassifications.

 

The unaudited pro forma condensed combined balance sheets as of September 30, 2021 and December 31, 2021 combine the historical consolidated balance sheets of the Company and DIA, giving effect to the Share Exchange as if it had occurred on October 1, 2020 and September 30, 2021, respectively. The unaudited pro forma condensed combined statements of income for the fiscal year ended September 30, 2021 and the three months ended December 31, 2021 combine the historical consolidated statements of income of the Company and DIA, giving effect to the Share Exchange as if it had occurred on October 1, 2020 and October 1, 2021, respectively.  

 

The historical consolidated financial information has been adjusted in the pro forma information to give effect to pro forma events that are directly attributable to the Share Exchange, factually supportable, and with respect to the unaudited pro forma condensed combined statements of income, expected to have a continuing impact on the results of operations of the combined company of more than one year.

 

5

 

  

The pro forma information has been prepared using the acquisition method of accounting in accordance with accounting principles generally accepted in the United States of America. Under the acquisition method of accounting, the Share Exchange is accounted for by recognizing the acquired assets, including separately identifiable intangible assets, and assumed liabilities at their acquisition-date fair values. Any excess of the purchase consideration over the acquisition-date fair values of these identifiable assets and liabilities is recognized as goodwill. The pro forma adjustments are based upon the assumptions and information available at the time of the preparation of this Form 8-K/A and may be subject to change. The Company will finalize the acquisition accounting within the required measurement period. Differences between these estimates of fair value and the final acquisition accounting may occur, and those differences could have a material impact on the pro forma information and the combined company’s future results of operations and financial position. At the time of the filing of this Form 8-K/A, the Company does not expect material changes to the assets acquired or liabilities assumed, with the exception of deferred tax assets and liabilities which were valued using preliminary assumptions.

 

The unaudited pro forma condensed combined statements of income do not reflect any potential cost savings or synergies that may be realized as a result of the Share Exchange and also do not reflect any integration-related costs to achieve those potential cost savings or synergies. Integration-related costs will continue to be expensed as incurred in the appropriate accounting periods following completion of the Share Exchange. Although the Company projects that cost savings and synergies will result from the Share Exchange, there can be no assurance that they will be achieved and such potential cost savings or synergies are subject to risks, uncertainties and other factors. For a detailed discussion of these risk factors, please refer to the risk, uncertainties and other factors described in the Company’s filings with the Securities and Exchange Commission. There were no material transactions between the Company and DIA during the periods presented in the pro forma information.

 

Accounting policies

 

The Company has completed the review of DIA’s detailed accounting policies and concluded that the differences between the accounting policies of the two companies are not material. The accounting policies used in the presentation of the pro forma information are those disclosed in the Company’s audited consolidated financial statements for the fiscal year ended September 30, 2021. Certain reclassifications of amounts contained in DIA’s historical financial statements have been made to conform to this presentation.

 

Recapitalization

  

The unaudited pro forma condensed balance sheets present what-if scenarios as if the Company and DIA had merged at the end of September 30, 2020. The adjusted shown in the equity section of the condensed balance sheets includes the Company’s eliminate the equity section of DIA in consolidation.

 

Note 3 – Pro Forma Adjustments

 

The pro forma adjustments are based on our preliminary estimates and assumptions that are subject to change. The following adjustments have been reflected in the unaudited pro forma condensed combined financial information:

 

a)To adjust for the share exchange and elimination of DIA’s equity. 

 

6