Driveitaway Holdings Inc

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

During June 2022, the Company sold a total of $250,000 worth of Units to U.S. Escrow Services Corporation and Kevin Leach, two accredited investors, which resulted in the issuance of two secured promissory notes with an aggregate principal amount of $250,000 for cash proceeds of $230,000 (net of an original issuance discount of $20,000), and the issuance of 125,000 warrants (see Note 5). The $20,000 was recorded as a debt discount and the conversion option embedded in the notes was bifurcated and accounted for as a derivative liability resulting in the Company recording a debt discount and derivative liability of $50,491. 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 (see Note 8) and debt discount. The total debt discount of $78,627 is being amortized to interest expense over the term of the Note. Effective June 3, 2024 and June 16, 2024, these two secured promissory notes went into default, respectively.