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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Auto Parts 4Less Group Inc (PK) | USOTC:FLES | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.003 | -14.63% | 0.0175 | 0.014 | 0.0186 | 0.0209 | 0.01735 | 0.0209 | 1,246,231 | 21:01:25 |
United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period
ended
OR
From the transition period ___________ to ____________.
Commission File Number
(Exact name of small business issuer as specified in its charter)
|
|
7389 |
|
|
(State or jurisdiction of |
|
(Primary Standard Industrial |
|
(IRS Employer |
(Address of principal executive offices)
(
(Issuer’s telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class of Stock | Trading Symbol(s) | Name of each exchange on which registered |
N/A | N/A | N/A |
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large Accelerated Filer [_] Accelerated Filer [_]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [_]
Indicate by a check mark whether the company is a shell company (as defined by Rule 12b-2 of the Exchange Act):
Yes [_]
As of August 11, 2023, there were
shares of Common Stock of the issuer outstanding.
TABLE OF CONTENTS
PART I. |
FINANCIAL INFORMATION |
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ITEM 1. |
3 | |
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3 | |
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4 | |
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Condensed Consolidated Statement of Changes in Stockholders’ Deficit (Unaudited) |
5 - 6 |
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7 | |
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Notes to Condensed Consolidated Financial Statements (Unaudited) |
8 |
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ITEM 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
26 |
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ITEM 3. |
29 | |
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ITEM 4. |
29 | |
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PART II. |
OTHER INFORMATION |
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ITEM 2. |
30 | |
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ITEM 6. |
30 | |
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30 |
- 2 -
PART I — FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
AUTO PARTS 4LESS GROUP, INC.
Condensed Consolidated Balance Sheets
April 30, 2023 |
January 31, 2023 * |
||||||
Assets | |||||||
Current Assets | |||||||
Cash and Cash Equivalents | $ | $ | |||||
Inventory | |||||||
Prepaid Expenses | |||||||
Other Current Assets | |||||||
Total Current Assets | |||||||
Operating Lease Assets | |||||||
Property and Equipment, net of accumulated depreciation of $ |
|||||||
Total Assets | $ | $ | |||||
Liabilities and Stockholders’ Deficit | |||||||
Current Liabilities | |||||||
Accounts Payable | $ | $ | |||||
Accrued Expenses | |||||||
Accrued Expenses – Related Party | |||||||
Customer Deposits | |||||||
Deferred Revenue | |||||||
Short-Term Debt | |||||||
Current Operating Lease Liability | |||||||
Short-Term Convertible Debt, net of debt discount of $ |
|||||||
Derivative Liabilities | |||||||
Shareholder Loans Payable | |||||||
Current Portion – Long-Term Debt | |||||||
Total Current Liabilities | |||||||
Non-Current Lease Liability | |||||||
Long-Term Debt | |||||||
Total Liabilities | |||||||
Commitments and Contingencies | |||||||
Redeemable Preferred Stock | |||||||
Series D Preferred Stock, $ par value, shares authorized, and shares issued and outstanding | |||||||
Stockholders’ Deficit | |||||||
Preferred Stock – Series A, $ par value, shares authorized, and shares issued and outstanding | |||||||
Preferred Stock – Series B, $ par value, shares authorized, and shares issued and outstanding | |||||||
Preferred Stock – Series C, $ par value, shares authorized, and shares issued and outstanding | |||||||
Common Stock, $ par value, shares authorized, and shares issued, issuable and outstanding | |||||||
Additional Paid In Capital | |||||||
Accumulated Deficit | ( |
) | ( |
) | |||
Total Stockholders’ Deficit | ( |
) | ( |
) | |||
Total Liabilities and Stockholders’ Deficit | $ | $ |
* | Derived from audited information |
The Accompanying Notes are an Integral Part of these Unaudited Condensed Consolidated Financial Statements.
- 3 -
AUTO PARTS 4LESS GROUP, INC.
Condensed Consolidated Statements of Operations
For the Three Months Ended April 30, 2023 and April 30, 2022
(Unaudited)
2023 | 2022 | ||||||
Revenue | $ | $ | |||||
Cost of Revenue | |||||||
Gross Profit | |||||||
Operating Expenses: | |||||||
Depreciation | |||||||
Postage, Shipping and Freight | |||||||
Marketing and Advertising | |||||||
E Commerce Services, Commissions and Fees | |||||||
Operating lease cost and rent | |||||||
Personnel Costs | |||||||
General and Administrative | |||||||
Total Operating Expenses | |||||||
Net Operating Loss | ( |
) | ( |
) | |||
Other Income (Expense) | |||||||
Gain (Loss) on Change in Fair Value of Derivatives | ( |
) | ( |
) | |||
Gain on Settlement of Debt | ( |
) | |||||
Amortization of Debt Discount | ( |
) | ( |
) | |||
Interest Expense | ( |
) | ( |
) | |||
Total Other Income (Expense) | ( |
) | ( |
) | |||
Net Income (Loss) | $ | ( |
) | $ | ( |
) | |
Basic Average Shares Outstanding | |||||||
Basic Income (Loss) per Share | $ | ( |
) | $ | ( |
) | |
Diluted Weighted Average Shares Outstanding | |||||||
Diluted Income (Loss) per Share | $ | ( |
) | $ | ( |
) |
The Accompanying Notes are an Integral Part of these Unaudited Condensed Consolidated Financial Statements.
- 4 -
AUTO PARTS 4LESS GROUP, INC.
Condensed Consolidated Statement of Changes in Stockholders’ Deficit
For the Three Months Ended April 30, 2023 and April 30, 2022
(Unaudited)
Preferred Series A | Preferred Series B | Preferred Series C | Common Stock | Paid in | Accumulated | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Total | |||||||||||||||||||
January 31, 2022 | ( |
) | ( |
) | |||||||||||||||||||||||||
Conversion of Preferred Series C Shares into Shares Of Common Stock | — | — | ( |
) | ( |
) | |||||||||||||||||||||||
Relative Fair Value of Equity Issued with Debt | — | — | — | ||||||||||||||||||||||||||
Penalty Warrants Recorded as Interest | — | — | — | — | |||||||||||||||||||||||||
Rounding shares | — | — | — | ||||||||||||||||||||||||||
Net (Loss) | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||||
April 30, 2022 | $ | $ | — | $ | $ | $ | $ | ( |
) | $ | ( |
) |
- 5 -
Preferred Series A | Preferred Series B | Preferred Series C | Common Stock | Paid in | Accumulated | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Total | |||||||||||||||||||
January 31, 2023 | $ | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||||||||
Common Stock Issued as Payment for Accrued Expenses | — | — | — | ||||||||||||||||||||||||||
Conversion of Notes Payable and Accrued Interest into Shares Of Common Stock | — | — | — | ||||||||||||||||||||||||||
Derivative Liability Reclassified as Equity Upon Conversion of Common Shares | — | — | — | — | |||||||||||||||||||||||||
Penalty Warrants Expensed as Interest | — | — | — | — | — | ||||||||||||||||||||||||
Relative Fair Value of Equity Issued with Debt | — | — | — | ||||||||||||||||||||||||||
Net Income | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||||
April 30, 2023 | $ | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) |
The Accompanying Notes are an Integral Part of these Unaudited Condensed Consolidated Financial Statements.
- 6 -
AUTO PARTS 4LESS GROUP, INC.
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended April 30, 2023 and April 30, 2022
(Unaudited)
2023 | 2022 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
Net Income (Loss) | $ | ( |
) | $ | ( |
) | |
Adjustments to reconcile net loss to cash used by operating activities: | |||||||
Depreciation | |||||||
(Gain) loss in Fair Value on Derivative Liabilities | |||||||
Amortization of Debt Discount | |||||||
Interest Expense on Penalty Warrants | |||||||
Loan Penalties Capitalized to Loan | |||||||
Debt Discount Expensed | |||||||
Debt Discount in Excess of Face Value Charged as Interest | |||||||
Gain on Settlement of Debt | ( |
) | |||||
Reduction of Right of Use Asset | |||||||
Accretion of Lease Liability | |||||||
Deferred Salary for Former CEO | 20,000 | — | |||||
Change in Operating Assets and Liabilities: | |||||||
Decrease (Increase) in Inventory | |||||||
(Increase) Decrease in Prepaid Rent and Expenses | ( |
) | ( |
) | |||
(Increase) Decrease in Other Current Assets | |||||||
Increase (Decrease) in Accounts Payable | ( |
) | |||||
Increase in Accrued Expenses | |||||||
Increase (Decrease) in Accrued Expenses -Related Party | |||||||
Operating Lease Payments | ( |
) | ( |
) | |||
Increase (Decrease) in Customer Deposits | ( |
) | ( |
) | |||
Increase (Decrease) in Deferred Revenue | ( |
) | ( |
) | |||
CASH FLOWS (USED IN) OPERATING ACTIVITIES | ( |
) | ( |
) | |||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
Purchase of Property and Equipment | ( |
) | |||||
CASH FLOWS (USED IN) INVESTING ACTIVITIES | ( |
) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
Advances (Repayments) of Shareholder loans payable, net | ( |
) | |||||
Proceeds from Short Term Debt | |||||||
Payments on Short Term Debt | ( |
) | ( |
) | |||
Payments on Long Term Debt | ( |
) | ( |
) | |||
Proceeds from Issuance of Convertible Notes Payable | |||||||
Payments on Convertible Notes Payable | ( |
) | |||||
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES | |||||||
NET INCREASE IN CASH | |||||||
CASH AT BEGINNING OF PERIOD | |||||||
CASH AT END OF PERIOD |
$ | $ | |||||
Supplemental Disclosure of Cash Flows Information: | |||||||
Cash Paid for Interest | $ | $ | |||||
Derivative Debt Discount | $ | $ | |||||
Relative Fair Value of Warrants and Common Shares Issued with Debt and Applies as Discount | $ | $ | |||||
Debt discount | $ | $ | |||||
Conversion of Series C Preferred Stock Into Common Stock | $ | $ | |||||
Conversion of Notes Payable, Accrued Interest and Derivative Into Common Stock | $ | $ | |||||
Issuance of Common Shares as Payment for Accrued Expenses | $ | $ |
The Accompanying Notes are an Integral Part of these Unaudited Condensed Consolidated Financial Statements.
- 7 -
AUTO PARTS 4LESS GROUP, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
NOTE 1 – NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Business:
Nature of Business – Auto Parts 4Less
Group, Inc., (the “Company”), formerly The 4Less Group, Inc., was incorporated under the laws of the State of Nevada on
On November 29, 2018,
4LESS was formed as Vegas Suspension & Offroad, LLC on October 24, 2013 as a Nevada limited liability company and converted to a Nevada corporation with the same name on May 8, 2017. On April 2, 2018, the Company changed its name to The 4LESS Corp. The Corporation had S Corporation status. The Corporation operates as an e-commerce auto and truck parts sales company. As a result of the share exchange, The 4Less Group, Inc. is now a holding company operating through 4LESS and offers products including exhaust systems, suspension systems, wheels, tires, stereo systems, truck bed covers, and shocks. On December 30, 2019 4LESS changed its name to Auto Parts 4Less, Inc. On April 28, 2022 the Company changed its name from The 4Less Group, Inc. to Auto Parts 4Less Group, Inc.
Significant Accounting Policies:
The Company’s management selects accounting principles generally accepted in the United States of America and adopts methods for their application. The application of accounting principles requires the estimating, matching and timing of revenue and expense. The accounting policies used conform to generally accepted accounting principles which have been consistently applied in the preparation of these condensed financial statements.
Basis of Presentation:
The Company prepares its financial statements on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States.
The accompanying unaudited condensed consolidated financial statements and related notes have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim unaudited consolidated financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete consolidated financial statements. Certain information and footnote disclosure normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to instructions, rules, and regulations prescribed by the SEC. The unaudited consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended January 31, 2023 and notes thereto contained in the Company’s Annual Report on Form 10-K filed on August 11, 2023.
Principles of Consolidation:
The condensed financial statements include the accounts of Auto Parts 4Less Group, Inc. as well as The Auto Parts 4Less, Inc., and JBJ Wholesale LLC. All significant inter-company transactions have been eliminated. All amounts are presented in U.S. Dollars unless otherwise stated.
Use of Estimates:
In order to prepare financial statements in conformity with accounting principles generally accepted in the United States, management must make estimates, judgments and assumptions that affect the amounts reported in the financial statements and determine whether contingent assets and liabilities, if any, are disclosed in the financial statements. The ultimate resolution of issues requiring these estimates and assumptions could differ significantly from resolution currently anticipated by management and on which the financial statements are based. The most significant estimates included in these consolidated financial statements are those associated with the assumptions used to value derivative liabilities.
Reclassifications
Certain amounts in the Company’s condensed consolidated financial statements for prior periods have been reclassified to conform to the current period presentation. These reclassifications have not changed the results of operations of prior periods.
Cash and Cash Equivalents:
The Company considers all highly liquid instruments with a maturity of three months or less to be cash equivalents. At times, cash balances may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. The carrying amount of cash and cash equivalents approximates fair market value.
Inventory Valuation
Inventories are stated at the lower of cost or net realizable value. Inventories are valued on a first-in, first-out (FIFO) basis. Inventory is comprised of finished goods.
Concentrations
Cost of Goods Sold
For the three months ended April 30, 2023 the Company
purchased approximately
Leases
We elected the hindsight practical expedient to determine the lease term for existing leases. Our election of the hindsight practical expedient resulted in the shortening of lease terms for certain existing leases and the useful lives of corresponding leasehold improvements. In our application of hindsight, we evaluated the performance of the leased stores and the associated markets in relation to our overall real estate strategies, which resulted in the determination that most renewal options would not be reasonably certain in determining the expected lease term.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized when items of income and expense are recognized in the financial statements in different periods than when recognized in the tax return. Deferred tax assets arise when expenses are recognized in the financial statements before the tax returns or when income items are recognized in the tax return prior to the financial statements. Deferred tax assets also arise when operating losses or tax credits are available to offset tax payments due in future years. Deferred tax liabilities arise when income items are recognized in the financial statements before the tax returns or when expenses are recognized in the tax return prior to the financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was signed into law. ASC 740, Accounting for Income Taxes requires companies to recognize the effects of changes in tax laws and rates on deferred tax assets and liabilities and the retroactive effects of changes in tax laws in the period in which the new legislation is enacted. The Company’s gross deferred tax assets were revalued based on the reduction in the federal statutory tax rate from 35% to 21%. A corresponding offset has been made to the valuation allowance, and any potential other taxes arising due to the Tax Act will result in reductions to the Company’s net operating loss carryforward and valuation allowance. The Company will continue to analyze the Tax Act to assess its full effects on the Company’s financial results, including disclosures, for the Company’s fiscal year ending January 31, 2024, but the Company does not expect the Tax Act to have a material impact on the Company’s consolidated financial statements.
Fair Value of Financial Instruments:
The Company’s financial instruments consist of cash, accounts payable, advances and notes payable. The Company considers the carrying value of such amounts in the financial statements to approximate their fair value due to the short-term nature of these financial instruments. Derivatives are recorded at fair value at each period end. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date.
The ASC guidance for fair value measurements and disclosure establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:
Level 1 Inputs – Quoted prices for identical instruments in active markets.
Level 2 Inputs – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level 3 Inputs – Instruments with primarily unobservable value drivers.
The following table sets forth, by level within the fair value hierarchy, the Company’s financial liabilities that were accounted for at fair value on a recurring basis as of April 30, 2023:
April 30, 2023 | Quoted Prices in Active Markets For Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
||||||||||
Liabilities: | |||||||||||||
Derivative Liabilities – embedded redemption feature | $ | 4,493,374 | $ | — | $ | — | $ | 4,493,374 | |||||
Totals | $ | $ | $ | $ |
Related Party Transactions:
The Company has a verbal policy that includes procedures intended to ensure compliance with the related party provisions in common practice for public companies. For purposes of the policy, a “related party transaction” is a transaction in which the Company or any one of its subsidiaries participates and in which a related party has a direct or indirect material interest, other than ordinary course, arms-length transactions of less than 1% of the revenue of the counterparty. Any transaction exceeding the 1% threshold, and any transaction involving consulting, financial advisory, legal or accounting services that could impair a director’s independence, must be approved by the CEO. Any related party transaction in which an executive officer or a Director has a personal interest, or which could present a possible conflict under the Guide to Ethical Conduct, must be approved by Board of Directors, following appropriate disclosure of all material aspects of the transaction.
Derivative Liability
The derivative liabilities are valued as a level 3 input under the fair value hierarchy for valuing financial instruments. The derivatives arise from convertible debt where the debt and accrued interest is convertible into common stock at variable conversion prices and reclassification of equity instrument to liability due to insufficient shares for issuance. As the price of the common stock varies, it triggers a gain or loss based upon the discount to market assuming the debt was converted at the balance sheet date. When evaluating the effect of the issuance of new equity-linked or equity-settled instruments on previously issued instruments, the Company uses first-in, first-out method (“FIFO”) where authorized and unused shares would first be used to satisfy the earliest issued equity-linked instruments.
The fair value of the derivative liability is determined using a lattice model, is re-measured on the Company’s reporting dates, and is affected by changes in inputs to that model including our stock price, historical stock price volatility, the expected term, and both high risk and the risk-free interest rate. The most sensitive inputs to the model are for expected time for the holder to convert or be repaid and the estimated historical volatility of the Company’s common stock. However, because the historical volatility of the Company’s common stock is so high (see Note 9), the sensitivity required to change the liability by 1% as of April 30, 2023 is greater than 25% change in historical volatility as of that date. The other inputs, such as risk free rate, high yield cash rate and stock price all have a sensitivity for a 1% change in the input variable results in a significantly less than 1% change in the calculated derivative liability.
Revenue Recognition
The Company recognizes revenue under ASC 606, “Revenue from Contracts with Customers. The core principle of the revenue standard is that a company should recognize revenue when control is transferred over the promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods and services transferred to the customer. The following five steps are applied to achieve that core principle:
Step 1: Identify the contract with the customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when the company satisfies a performance obligation
Because the Company’s sales agreements generally have an expected duration of one year or less, the Company has elected the practical expedient in ASC 606-10-50-14(a) to not disclose information about its remaining performance obligations.
Disaggregation of Revenue: Channel Revenue
The following table shows revenue split between proprietary and third-party website revenue for the three months ended April 30, 2023 and 2022:
Change | ||||||||||||
2023 | 2022 | $ | % | |||||||||
Proprietary website and marketplace revenue | $ | $ | ( |
) | ( |
) | ||||||
Third-party website revenue | ( |
) | ( |
) | ||||||||
Total Revenue | $ | $ | $ | ( |
) | ( |
) |
The Company’s performance obligations are satisfied at the point in time when products are received by the customer, which is when the customer has title and obtained the significant risks and rewards of ownership. Therefore, the Company’s contracts have a single performance obligation (shipment of product). The Company primarily receives fixed consideration for sales of product and commissions on sales from the new consumer marketplace autopart4less.com. Shipping and handling amounts paid by customers are primarily for online orders, and are included in revenue. Sales tax and other similar taxes are excluded from revenue.
The Company accounts for stock options at fair value. The Company estimates the fair value of each stock option at the grant date by using the Black-Scholes option-pricing model and provides for expense recognition over the service period, if any, of the stock option.
Basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS give effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used to determine the number of shares assumed to be purchased from the exercise of stock options and/or warrants. Diluted EPS excluded all dilutive potential shares if their effect is anti-dilutive.
Basic loss per common share is computed based on the weighted average number of shares outstanding during the period. Diluted loss per share is computed in a manner similar to the basic loss per share, except the weighted-average number of shares outstanding is increased to include all common shares, including those with the potential to be issued by virtue of convertible debt and other such convertible instruments. Diluted loss per share contemplates a complete conversion to common shares of all convertible instruments only if they are dilutive in nature with regards to earnings per share.
Recently Issued Accounting Standards:
In August 2020, the FASB issued amended guidance on the accounting for convertible instruments and contracts in an entity’s own equity. The guidance removes the separation model for convertible debt instruments and preferred stock, amends requirements for conversion options to be classified in equity as well as amends diluted earnings per share (EPS) calculations for certain convertible debt instruments. The amended guidance is effective for interim and annual periods in 2022. The application of the amendments in the new guidance are to be applied either on a modified retrospective or a retrospective basis. We are currently assessing the effect that the adoption of this standard will have on the Company’s consolidated financial statements upon adoption.
In addition to the above, the Company has reviewed all other recently issued, but not yet effective, accounting pronouncements, and does not believe the future adoption of any such pronouncements will have a material impact on its financial condition or the results of its operations.
Recently Issued Accounting Standards Not Yet Adopted
In March 2020, the FASB issued optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting and subsequently issued clarifying amendments. The guidance provides optional expedients and exceptions for accounting for contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued because of reference rate reform. The optional guidance is effective upon issuance and can be applied on a prospective basis at any time between January 1, 2020 through December 31, 2022. The Company is currently evaluating the impact of adoption on its consolidated financial statements.
In October 2021, the FASB issued amended guidance that requires acquiring entities to recognize and measure contract assets and liabilities in a business combination in accordance with existing revenue recognition guidance. The amended guidance is effective for interim and annual periods in 2023 and is to be applied prospectively. Early adoption is permitted on a retrospective basis to the beginning of the fiscal year of adoption. The adoption of this guidance will not have a material impact on the Company’s consolidated financial statements for prior acquisitions; however, the impact in future periods will be dependent upon the contract assets and contract liabilities acquired in future business combinations.
In November 2021, the FASB issued new guidance to increase the transparency of transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. The guidance requires annual disclosures of such transactions to include the nature of the transactions and the significant terms and conditions, the accounting treatment and the impact to the company’s financial statements. The guidance is effective for annual periods beginning in 2022 and is to be applied on either a prospective or retrospective basis. The Company is currently evaluating the impact of adoption on its consolidated financial statements.
There were various other accounting standards and interpretations issued recently, none of which are expected to a have a material impact on our financial position, operations or cash flows.
- 12 -
NOTE 2 – GOING CONCERN AND FINANCIAL POSITION
The consolidated financial statements have been prepared
on a going concern basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.
The Company has an accumulated deficit of $ as of April 30, 2023 and has a working capital deficit at April 30, 2023 of $
Management’s plan is to raise additional funds in the form of debt or equity in order to continue to fund losses until such time as revenues can sustain the Company. However, there is no assurance that management will be successful in being able to continue to obtain additional funding. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 3 – PROPERTY
The Company capitalizes all property purchases over $1,000 and depreciates the assets on a straight-line basis over their useful lives of 3 years for computers and 7 years for all other assets. Property consists of the following at April 30, 2023 and January 31, 2023:
April 30, 2023 | January 31, 2023 | ||||||
Office furniture, fixtures and equipment | $ | $ | |||||
Shop equipment | |||||||
Vehicles | |||||||
Sub-total | |||||||
Less: Accumulated depreciation | ( |
) | ( |
) | |||
Total Property | $ | $ |
Additions to fixed assets for the three months ended
April 30, 2023 were $
Depreciation expense was $ and
- 13 -
NOTE 4 – LEASES
We lease certain warehouses and office space.
Most leases include one or more options to renew,
with renewal terms that can extend the lease term from
Below is a summary of our lease assets and liabilities at April 30, 2023 and January 31, 2023.
Leases | Classification | April 30, 2023 | January 31, 2023 | ||||||
Assets | |||||||||
Operating | Operating Lease Assets | $ | $ | ||||||
Liabilities | |||||||||
Current | |||||||||
Operating | Current Operating Lease Liability | $ | $ | ||||||
Noncurrent | |||||||||
Operating | Noncurrent Operating Lease Liabilities | ||||||||
Total lease liabilities | $ | $ |
Note: As most of our leases do not provide an implicit
rate, we use our incremental borrowing rate of
CAM charges were not included in operating lease expense and were expensed in general and administrative expenses as incurred.
Operating lease cost and rent was $
NOTE 5 – CUSTOMER DEPOSITS
The Company receives payments from customers on orders
prior to shipment and these customer deposits on cancelled orders were either returned to the customers subsequent to April 30, 2023 or
will remain as deposits until the item is either delivered and recorded as revenue or cancelled and refunded. At April 30, 2023 the Company
had received $
NOTE 6 – DEFERRED REVENUE
The Company receives payments from customers on orders
prior to shipment and orders that were unfulfilled at April 30, 2023 because of both normal order processing and fulfillment requirements,
and back orders are recorded as deferred revenue. At April 30, 2023 the Company had received $
- 14 -
NOTE 7 – SHORT-TERM AND LONG-TERM DEBT
The components of the Company’s debt as of April 30, 2023 and January 31, 2023 were as follows:
April 30, 2023 | January 31, 2023 | ||||||
Forklift Note Payable, original note of $ |
* | ||||||
Vehicle loan original loan of $ |
# | ||||||
Vehicle loan original loan of $ |
# | ||||||
Working Capital Note Payable - $ |
* | ||||||
Working Capital Note Payable - $ |
* | ||||||
Demand loan - $ |
* | ||||||
Demand loan - $ |
* | ||||||
Demand loan - $ |
* | ||||||
Promissory note - $ |
* | ||||||
Promissory note - $ |
* | ||||||
Promissory note - $ |
* | ||||||
Promissory note - $ |
* | ||||||
Promissory note - $ |
* | ||||||
Promissory note - $ |
* | ||||||
Demand loan, non-interest bearing. | * | ||||||
Promissory note - $ |
* | ||||||
Promissory note - $ |
* | ||||||
Promissory note - $ |
* | ||||||
Total | $ | $ |
April 30, 2023 | January 31, 2023 | ||||||
Short-Term Debt | $ | $ | |||||
Current Portion of Long-Term Debt | |||||||
Long-Term Debt | |||||||
Total | $ | $ |
__________
† | |
* | |
# | |
(1) | |
(2) | |
(3) | |
(4) | |
(5) | |
(6) | |
(7) | |
(8) | |
(9) | |
(10) | |
(11) |
The following are the minimum amounts due on the notes as of April 30, 2023:
Year Ended | Amount | |||
$ | ||||
Total | $ |
- 16 -
NOTE 8 – SHORT-TERM CONVERTIBLE DEBT
The components of the Company’s debt as of April 30, 2023 and January 31, 2023 were as follows:
Interest | Default Interest | Conversion | Outstanding Principal at | ||||||
Maturity Date | Rate | Rate | Price (a) | April 30, 2023 | January 31, 2023 | ||||
$ |
$ | $ | |||||||
$ |
|||||||||
$ |
|||||||||
$ |
|||||||||
(1) | |||||||||
(4) | |||||||||
(4) | |||||||||
(4) | |||||||||
(4) | |||||||||
(4) | |||||||||
(4) | |||||||||
(4) | |||||||||
(5) | |||||||||
(4) | |||||||||
(4) | |||||||||
(4)(b)(iv) | |||||||||
(4)(b)(iv) | |||||||||
(4)(b)(iv) | |||||||||
(4)(b)(iv) | |||||||||
(4)(b)iv) | |||||||||
(6)(b)(iii) | |||||||||
(2) | |||||||||
(2) | |||||||||
(2) | |||||||||
(4) | |||||||||
(3) | — | ||||||||
Sub-total | |||||||||
Debt Discount | ( |
) | ( |
) | |||||
$ | $ |
* | |
(1) | |
(2) | |
(3) | |
(4) | |
(5) | |
(6) | |
(a) | |
(b) | |
(i) | Penalty of 100% of the loan and accrued interest added to the principal and accrued interest, respectively. |
(ii) | Penalty of 25% of the loan and accrued interest added to the principal and accrued interest, respectively. |
(iii) | |
(iv) |
The Company had accrued interest payable of $
The Company analyzed the conversion option for derivative
accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that certain features in some instruments
should be classified as liabilities due to there being a variable number of shares to be delivered upon settlement of the above conversion
options. The derivative features are measured at fair value at the end of each reporting period or termination of the instrument with
the change in fair value recorded to earnings. The fair value of the embedded conversion option and attached warrants resulted in a discount
to the note on the debt modification date. For the three months ended April 30, 2023 and 2022, the Company recorded amortization expense
of $
For the three months ended April 30, 2023 and 2022
the Company added $
On April 20, 2023,
In April 2023,
As of April 30, 2023, the Company had $
NOTE 9 – DERIVATIVE LIABILITIES
As of April 30, 2023 and January 31, 2023, the Company
had derivative liabilities of $
The derivative liabilities are valued as a level 3 input for valuing financial instruments.
The following table presents changes in Level 3 liabilities measured at fair value for the three months ended April 30, 2022. Both observable and unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long- dated volatilities) inputs.
Level 3 | ||||
Derivatives | ||||
Balance, January 31, 2023 | $ | |||
Changes Due to Issuance of New Convertible Notes | ||||
Changes due to Conversions of Notes Payable | ( |
) | ||
Mark to Market Change in Derivatives | ||||
Balance, April 30, 2023 | $ |
The derivatives arise from convertible debt where the debt is convertible into common stock at variable conversion prices which are linked to the trading and/or bid prices of the Company’s common stock as traded on the OTC market.
The fair value of the derivative liability is determined using the lattice model, is re-measured on the Company’s reporting dates, and is affected by changes in inputs to that model including our stock price, expected stock price volatility, the expected term, and the risk-free interest rate. A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring the Company’s warrant liabilities and embedded conversion feature that are categorized within Level 3 of the fair value hierarchy as of April 30, 2023 is as follows:
Embedded Derivative Liability As of April 30, 2023 |
|||
Strike price | $ | -||
Contractual term (years) | - years | ||
Volatility (annual) | |||
Underlying fair market value | $ | ||
Risk-free rate | |||
Dividend yield (per share) |
NOTE 10 – STOCKHOLDERS’ DEFICIT
Preferred Stock:
The Series A Preferred Stock has an automatic forced conversion into common stock upon the completion of the repurchase or extinguishing of all “toxic” debt (notes having conversion features tied to the Company’s common stock), the extinguishing of all other existing dilutive debt or equity structures, and total recapitalization of the Company. As of both April 30, 2023, and January 31, 2023 the Company had
shares of Series A Preferred issued and outstanding and authorized with a par value of $0.001 per share.
At both April 30, 2023 and January 31, 2023, there were
and Series B preferred shares outstanding, respectively. The Series B Preferred Stock have voting rights equal to 51% of the total voting rights at any time. There are no conversion rights granted holders of Series B Preferred shares, they are not entitled to dividends, and the Company does not have the right of redemption. Currently, there are Series B preferred shares authorized and issued of the Series B Preferred Stock with a par-value of $ per share.
At both April 30, 2023 and January 31, 2023, there were
Series C preferred shares outstanding, respectively. The Series C Preferred Stock have the right to convert into the common stock of the Company by multiplying the number of issued and outstanding shares of common stock by 2.63 on the conversion date. The holders of Series C Preferred shares are not entitled to dividends, and the Company does not have the right of redemption. On February 1, 2022 the 7,250 Series C Preferred stockholders converted all of their outstanding shares for 905,110 shares of common stock. Currently, there are 0 Series C preferred shares authorized and issued with a par-value of $0.001 per share.
At both April 30, 2023 and January 31, 2023, there
were
OPTIONAL REDEMPTION.
(1) At any time, either the Corporation or the holder may redeem for cash out of funds legally available therefor, any or all of the outstanding Series D Preferred Stock (“Optional Redemption”) at $
per share.
(2) Should the Corporation exercise the right of Optional Redemption it shall provide each holder of Preferred Stock with at least 30 days’ notice of any proposed optional redemption pursuant this Section VI (an “Optional Redemption Notice”). Any optional redemption pursuant to this Section VI shall be made ratably among holders in proportion to the Liquidation Value of Preferred Stock then outstanding and held by such holders. The Optional Redemption Notice shall state the Liquidation Value of Preferred Stock to be redeemed and the date on which the Optional Redemption is to occur (which shall not be less than thirty (30) or more than sixty (60) Business Days after the date of delivery of the Optional Redemption Notice) and shall be delivered by the Corporation to the holders at the address of such holder appearing on the register of the Corporation for the Preferred Stock. Within seven (7) business days after the date of delivery of the Optional Redemption Notice, each holder shall provide the Corporation with instructions as to the account to which payments associated with such Optional Redemption should be deposited. On the date of the Optional Redemption, provided for in the relevant Optional Redemption Notice, (A) the Corporation will deliver the redemption amount via wire transfer to the account designated by the holders, and (B) the holders will deliver the certificates relating to that number of shares of Preferred Stock being redeemed, duly executed for transfer or accompanied by executed stock powers, in either case, transferring that number of shares to be redeemed. Upon the occurrence of the wire transfer (or, in the absence of a holder designating an account to which funds should be transferred, delivery of a certified or bank cashier’s check in the amount due such holder in connection with such Optional Redemption to the address of such holder appearing on the register of the Corporation for the Preferred Stock), that number of shares of Preferred Stock redeemed pursuant to such Optional Redemption as represented by the previously issued certificates will be deemed no longer outstanding. Notwithstanding anything to the contrary in this Designation, each holder may continue to convert Preferred Stock in accordance with the terms hereof until the date such Preferred Stock is actually redeemed pursuant to an Optional Redemption.
(3) Should the holder exercise the right of Optional Redemption it shall provide the Corporation with at least 30 days’ notice of any proposed optional redemption pursuant this Section VI (an “Optional Redemption Notice”). The Optional Redemption Notice shall state the value of the Preferred Stock to be redeemed and the date on which the Optional Redemption is to occur (which shall not be less than thirty (30) or more than sixty (60) Business Days after the date of delivery of the Optional Redemption Notice) and shall be delivered by the holder to the Corporation at the address of the Corporation for the Preferred Stock. Within seven (7) business days after the date of delivery of the Optional Redemption Notice, each holder shall provide the Corporation with instructions as to the account to which payments associated with such Optional Redemption should be deposited. On the date of the Optional Redemption, provided for in the relevant Optional Redemption Notice, (A) the Corporation will deliver the redemption amount via wire transfer to the account designated by the holder, and (B) the holder will deliver the certificates relating to that number of shares of Preferred Stock being redeemed, duly executed for transfer or accompanied by executed stock powers, in either case, transferring that number of shares to be redeemed. Upon the occurrence of the wire transfer (or, in the absence of a holder designating an account to which funds should be transferred, delivery of a certified or bank cashier’s check in the amount due such holder in connection with such Optional Redemption to the address of such holder appearing on the register of the Corporation for the Preferred Stock), that number of shares of Preferred Stock redeemed pursuant to such Optional Redemption as represented by the previously issued certificates will be deemed no longer outstanding. Notwithstanding anything to the contrary in this Designation, each holder may continue to convert Preferred Stock in accordance with the terms hereof until the date such Preferred Stock is actually redeemed pursuant to an Optional Redemption.
The Series D Preferred Stock is not entitled to any pre-emptive or subscription rights in respect of any securities of the Corporation.
Neither the Company nor any Series D preferred stockholders has given notice to exercise the redemption as of April 30, 2023 on the date of the financial statements.
Because the holders of the Series D preferred stock have the right to demand cash redemption, the cumulative amount of the redemption feature is included in Temporary Equity as of April 30, 2023 and January 31, 2023.
Common Stock
The Company is authorized to issue
common shares at a par value of $ per share. These shares have full voting rights. The Company undertook a 10-1 reverse stock split on April 28, 2022. The share capital has been retrospectively adjusted accordingly to reflect these reverse stock splits. At April 30, 2023 and January 31, 2023 there were and shares outstanding and issuable, respectively. No dividends were paid in the three months ended April 30, 2023 or 2022. The Company’s articles of incorporation include a provision that the Company is not allowed to issue fractional shares.
The Company issued the following shares of common stock in the three months ended April 30, 2023:
- | |
- | The Company issued | common shares at fair value of $ to settle $
- | The Company issued | shares and warrants to acquire common shares along with debt this quarter for a relative fair value of $ with an adjustment to paid -on capital and a corresponding adjustment to debt discount.
The Company issued the following shares of common stock in the three months ended April 30, 2022:
The Company issued
shares upon conversion of Series C preferred shares. Along with associated debt, the Company issued shares and warrants to purchase 265,000 shares all with a relative fair value of $ .
Options and Warrants:
The Company has
and options outstanding as of April 30, 2023 and January 31, 2023, respectively.
The Company recorded option and warrant expense of
$
For the quarter ended April 30, 2023
Expected volatility | - % |
Exercise price | $ | - $
Stock price | $ | - $
Expected life | - years |
Risk-free interest rate | % - % |
Dividend yield | % |
The Company had the following warrants outstanding at April 30, 2023:
Issued To | # Warrants | Dated | Expire | Strike Price * | Expired | Exercised |
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$1 |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$1 |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N | ||||
$ |
N | N |
__________
* |
The following table summarizes the activity of options and warrants issued and outstanding as of and for the three months ended
April 30, 2023:
Options | Weighted Average Exercise Price |
Warrants | Weighted Average Exercise Price |
||||||||
Outstanding at January 31, 2023 | $ | $ | |||||||||
Granted | |||||||||||
Exercised | — | — | — | — | |||||||
Forfeited and canceled | — | — | — | — | |||||||
Outstanding at April 30, 2023 | $ | $ |
NOTE 11 – RELATED PARTY TRANSACTIONS
As of April 30, 2023 and January 31, 2023, the
Company had $
NOTE 12 – COMMITMENTS AND CONTINGENCIES
On August 30, 2016,
On July 1, 2018,
Maturity of Lease Liabilities | Operating Leases |
||
April 30 2024 | $ | ||
April 30, 2025 | |||
April 30, 2025 | |||
April 30, 2026 | |||
Total lease payments | |||
Less: Interest | ( |
) | |
Present value of lease liabilities | $ |
The Company had total operating lease and rent expense
of $
- 23 -
For the Three Months Ended | |||||||
April 30, | |||||||
2023 | 2022 | ||||||
Numerator: | |||||||
Net income (loss) available to common shareholders | $ | ( |
) | $ | ( |
||
Denominator: | |||||||
Weighted average shares – basic | |||||||
Net income (loss) per share – basic | $ | ( |
) | $ | ( |
) | |
Effect of common stock equivalents | |||||||
Add: interest expense on convertible debt | |||||||
Add: amortization of debt discount | |||||||
Add (less): (gain) loss on settlement of debt on convertible notes | |||||||
Add (Less): loss (gain) on change of derivative liabilities | |||||||
Net income (loss) adjusted for common stock equivalents | ( |
) | ( |
) | |||
Dilutive effect of common stock equivalents: | |||||||
Convertible notes and accrued interest | |||||||
Convertible Class C Preferred shares | |||||||
Warrants and options | |||||||
Denominator: | |||||||
Weighted average shares – diluted | |||||||
Net income (loss) per share – diluted | $ | ( |
) | $ | ( |
) |
For the Three Months Ended | |||||||
April 30, | |||||||
2023 | 2022 | ||||||
Convertible notes and accrued interest | |||||||
Options | |||||||
Warrants | |||||||
Total |
- 24 -
NOTE 14 – SUBSEQUENT EVENTS
Subsequent to April 30, 2023 through to August 10, 2023:
• The Company first entered
into a $
• On July 17, 2023, the Company
entered into a convertible note for $
• On May 17, 2023 the Company entered into a Debt
Forgiveness Agreement with its former CEO. Total debt owed to the CEO was $
- 25 -
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, which we refer to in this quarterly report as the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, which we refer to in this quarterly report as the Exchange Act. Forward-looking statements are not statements of historical fact but rather reflect our current expectations, estimates and predictions about future results and events. These statements may use words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “predict,” “project” and similar expressions as they relate to us or our management. When we make forward-looking statements, we are basing them on our management’s beliefs and assumptions, using information currently available to us. These forward-looking statements are subject to risks, uncertainties and assumptions, including but not limited to, risks, uncertainties and assumptions discussed in this quarterly report. Factors that can cause or contribute to these differences include those described under the headings “Risk Factors” and “Management Discussion and Analysis and Plan of Operation.”
If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from what we projected. Any forward-looking statement you read in this quarterly report reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. All subsequent written and oral forward-looking statements attributable to us or individuals acting on our behalf are expressly qualified in their entirety by this paragraph. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this quarterly report. The Company expressly disclaims any obligation to release publicly any updates or revisions to these forward-looking statements to reflect any change in its views or expectations. The Company can give no assurances that such forward-looking statements will prove to be correct.
Company
The Auto Parts 4Less Group Inc. (“FLES”, the “Company”, “we” or “us”), the Company described herein, was incorporated under the laws of the State of Nevada on December 5, 2007, with offices located at 106 W Mayflower, Las Vegas, Nevada 89030. Our phone number is (702) 267-7100.
Nature of Business – Auto Parts 4Less Group Inc., formerly known The 4Less Group, Inc. and as MedCareers Group, Inc. (the “Company”, “MCGI”), was incorporated under the laws of the State of Nevada on December 5, 2007.
On November 29, 2018, the Company entered into a transaction (the “Share Exchange”), pursuant to which the Company acquired 100% of the issued and outstanding equity securities of The 4Less Corp. (“4LESS”), in exchange for the issuance of (i) nineteen thousand (19,000) shares of Series B Preferred Stock, (ii) six thousand seven hundred fifty (6,750) shares of Series C Preferred Stock, and (iii) 870 shares of Series D Preferred Stock. The Series C Preferred Shares have a right to convert into common stock of the Company by multiplying the number of issued and outstanding shares of common stock by 2.63 on the conversion date. The Share Exchange closed on November 29, 2018. As a result of the Share Exchange, the former shareholders of 4LESS became the controlling shareholders of the Company. The Share Exchange was accounted for as a reverse takeover/recapitalization effected by a share exchange, wherein 4LESS is considered the acquirer for accounting and financial reporting purposes. The capital, share price, and earnings per share amount in these consolidated financial statements for the period prior to the reverse merger were restated to reflect the recapitalization in accordance with the shares issued as a result of the reverse merger except otherwise noted.
On November 19, 2019 The 4Less Group acquired the URL Autoparts4Less.com and changed the name of their wholly owned subsidiary from the 4Less Corp. to Auto Parts 4Less, Inc. On April 28, 2022 the Company changed its name from The 4LESS Group, Inc. to Auto Parts 4Less Group, Inc.
Our Business
Like many small businesses, Christopher Davenport, the founder of Auto Parts 4Less (“4Less”) previously named The 4less Corp., the wholly owned subsidiary of Auto Parts 4Less Group, Inc., began selling auto parts on eBay and shipping those items out of his garage in 2013. What started out as a hobby, quickly grew into a fully functioning ecommerce aftermarket auto parts company that required a significant technical staff and facilities to support their growth. In June of 2015, they leased their first office.
Originally the company listed their auto parts in the different marketplaces such as Amazon, eBay, Walmart and Jet.
- 26 -
Starting in 2016 the company began investing to become their own ecommerce platform thereby allowing their auto parts to be direct listed across marketplace and social media sites. Technical achievements including CRM system, warehouse integration API, warehouse inventory software to name a few.
In 2019, shortly after the share exchange with MedCareers Group, Inc., with technology upgrades in place, 4Less began successfully moving majority of sales from third party marketplaces direct to their proprietary ecommerce web site Liftkits4Less.com. By doing so the company saves 8%-10% in fees charged by the major marketplace’s such as e-Bay and Amazon as well as further building the 4less brand as a leading ecommerce site for auto parts.
On November 19, 2019 the Company acquired the URL Autoparts4Less.com and changed the name of their wholly owned subsidiary from the 4Less Corp. to Auto Parts 4Less, Inc. With the acquisition of the URL AutoParts4Less.com, the Company also began focusing all of their efforts and resources on building out a flagship automotive marketplace with the potential to offer buyers a wide range of automotive parts for cars, trucks, boats, motorcycles and RV’s on a single platform.
In August 2021 the Company launched a beta test version of Autoparts4less.com. In a short period of time after the beta launch the company realized that with the amount of interest received from numerous types of large sellers, which included not only ecommerce sites presently selling parts online, but also interest from other large parts sellers such as warehouse distributors, new car dealers with large inventories of parts as well as brick and mortar parts retailers looking to move sales online, the platform originally created would soon be inadequate. As such, the Company made the decision to upgrade to a larger and more advanced platform solution so they immediately began implementation of the AWS Fargate serverless platform solution.
The platform upgrade was completed in the 1st quarter FYE 2023, with marketplace sales expected to begin in 2nd quarter 2023.
On April 28, 2022 the Company changed its name from The 4Less Group, Inc. to Auto Parts 4Less Group, Inc.
Competition
We directly compete for buyers to use our web sites over current e-commerce sites as well as sellers that utilize major marketplaces such as Amazon and eBay. However, we believe our specialty ecommerce website liftkits4less.com offers substantial value-added content including installation guides, install videos, high impact photos, order customization and live chat with a technical expert.
Additionally, we believe that our automotive parts marketplace AutoParts4less.com, with no known large challengers presently in the space outside of “all things to all people” online marketplaces Amazon and eBay, has the opportunity to quickly be branded when launched as the auto part’s industry premier marketplace just as sites like Etsy, Wayfair, Uber and Chewey’s have been able to successfully do in their industries.
Results of Operations for the Three Months Ended April 30, 2023 Compared to the Three Months Ended April 30, 2022
The following table shows our results of operations for the three months ended April 30, 2023 and 2022. The historical results presented below are not necessarily indicative of the results that may be expected for any future period.
Change | ||||||||||||
2023 | 2022 | $ | % | |||||||||
Total Revenues | $ | 136,064 | $ | 1,729,930 | $ | (1,593,866 | ) | (92% | ) | |||
Gross Profit | 122,740 | 261,927 | (139,187 | ) | (53% | ) | ||||||
Total Operating Expenses | 529,260 | 1,282,955 | (753,695 | ) | (59% | ) | ||||||
Total Other Income (Expense) | (2,464,771 | ) | (1,573,130 | ) | (891,641 | ) | (57% | ) | ||||
Net Income (Loss) | $ | (2,871,291 | ) | $ | (2,594,158 | ) | $ | (277,133 | ) | (11% | ) |
Revenue
The following table shows revenue split between proprietary and third-party website revenue for the three months ended April 30, 2023 and 2022:
Change | ||||||||||||
2023 | 2022 | $ | % | |||||||||
Proprietary website and marketplace revenues | $ | 106,833 | $ | 1,236,243 | $ | (1,129,410 | ) | (91% | ) | |||
Third party website revenues | 29,231 | 493,687 | (464,456 | ) | (94% | ) | ||||||
Total Revenues | $ | 136,064 | $ | 1,729,930 | $ | (1,593,866 | ) | (92% | ) |
- 27 -
We had total revenue of $136,064 for the three months ended April 30, 2023, compared to $1,729,930 for the three months ended April 30, 2022. Sales decreased by $1,129,410. For the three months ended April 30, 2023, the Company began selling off its inventory and transitioning its business to the newly developed autoplarts4less.com marketplace. For the three months ended April 30, 2023, marketplace revenues were $13,516 ($2022 - $0). There are no associated cost of sales with these revenues as they represent fees earned on sales. However, sales fell dramatically since the Company is only concentrating on the new marketplace which is its future and continues cutting costs associated with its old business model.
Gross Profit
We had gross profit of $122,740 for the three months ended April 30, 2023, compared to gross profit of $261,927 for the three months ended April 30, 2022. Gross profit decreased by $139,187 as a result of the decreased revenues explained above. However in terms of gross profit % there was a large increase from 15% in 2022 to 90% in 2023. We saw this due to realizations of inventory sold that was written off and reversals of deferred revenue and deposits previously accrued. As well, the marketplace revenue are fees earned on sales and have no associated cost of sale.
Operating Expenses
The following table shows our operating expenses for the three months ended April 30, 2023 and 2022:
Change | ||||||||||||
2023 | 2022 | $ | % | |||||||||
Operating expenses | ||||||||||||
Depreciation | $ | 12,417 | $ | 12,938 | $ | (521 | ) | (4% | ) | |||
Postage, Shipping and Freight | 5,744 | 74,698 | (68,954 | ) | (92% | ) | ||||||
Marketing and Advertising | 74,889 | 274,427 | (199,538 | ) | (73% | ) | ||||||
E Commerce Services, Commissions and Fees | 180,929 | 330,697 | (149,768 | ) | (45% | ) | ||||||
Operating lease cost | 26,701 | 30,479 | (3,778 | ) | (12% | ) | ||||||
Personnel Costs | 81,484 | 205,299 | (123,815 | ) | (60% | ) | ||||||
General and Administrative | 147,096 | 354,417 | (207,321 | ) | (58% | ) | ||||||
Total Operating Expenses | $ | 529,260 | $ | 1,282,955 | $ | (753,695 | ) | (59% | ) |
• Depreciation decreased by $520.
• Postage shipping and freight decreased by $68,954 due to lower sales, fewer shipments as a result of new focus on marketplace.
• Marketing and advertising decreased by $199,539 due to cost cutting and limiting spend on new marketplace.
• E Commerce Services, Commissions and Fees decreased by $149,768 due to lower sales.
• Personnel Costs decreased by $123,815 due to staff reductions as a result of lower demand and CEO not taking a salary in 2023.
• General and Administrative decreased by $207,321 due to a decreases of the following: $121,830 due to lower legal and accounting costs, $49,478 lower sub-contractors due to less outside work being needed for new marketplace compared to websites $22,410 decreases in insurance costs due to lower health plan costs on fewer employees, with the remaining decrease to office expenses.
Other Income (Expense)
The following table shows our other income and expenses for the three months ended April 30, 2023 and 2022:
Change | ||||||||||||
2023 | 2022 | $ | % | |||||||||
Other Income (Expense) | ||||||||||||
Gain (Loss) on Derivatives | $ | (1,006,700 | ) | $ | (337,737 | ) | $ | (668,963 | ) | (198% | ) | |
Gain on Settlement of Debt | (53,756 | ) | 3,589 | (57,345 | ) | (1,598% | ) | |||||
Amortization of Debt Discount | (628,613 | ) | (725,280 | ) | (96,667 | ) | (13% | ) | ||||
Interest Expense | (775,702 | ) | (513,702 | ) | (262,000 | ) | (51% | ) | ||||
Total Other Income (Expense) | $ | (2,464,771 | ) | $ | (1,573,130 | ) | $ | (891,641 | ) | (57% | ) |
- 28 -
The changes above can be explained by the increases in loss on derivatives and interest expense this quarter ended April 30, 2023. Debt increases, yet many notes reaching maturity led to an increase in interest expenses and slight decrease in amortization. The penalties added to the loans increased the loss on the derivatives.
We had a net loss of $2,871,291 for three months ended April 30, 2023, compared to net loss of $2,594,158 for three months ended April 30, 2022. The increase in net loss was mainly due to the increase in other expense offset partially by the lower operating costs.
Liquidity and Capital Resources
Management believes that we will continue to incur losses for the immediate future. Therefore, we will need additional equity or debt financing until we can achieve profitability and positive cash flows from operating activities, if ever. These conditions raise substantial doubt about our ability to continue as a going concern. Our unaudited consolidated financial statements do not include any adjustments relating to the recovery of assets or the classification of liabilities that may be necessary should we be unable to continue as a going concern.
As of April 30, 2023, we had a cash balance of $53,713, inventory of $45,289 and $23,257,757 in current liabilities. At the current cash consumption rate, we will need to consider additional funding sources going forward. We are taking proactive measures to reduce operating expenses and drive growth in revenue.
The successful outcome of future activities cannot be determined at this time and there is no assurance that, if achieved, we will have sufficient funds to execute our intended business plan or generate positive operating results.
Capital Resources
The following table summarizes total current assets, liabilities and working capital (deficit) for the periods indicated:
April 30, 2023 | January 31, 2023 | ||||||
Current assets | $ | 121,104 | $ | 97,745 | |||
Current liabilities | 23,257,757 | 20,768,832 | |||||
Working capital (deficits) | $ | (23,136,653 | ) | $ | (20,671,087 | ) |
Net cash used in operations for the three months ended April 30, 2023 was $427,328 as compared to net cash used in operations of $1,725,709 for the three months ended April 30, 2022. Net cash used in investing activities for the three months ended April 30, 2023 was $0 as compared to $1,142 for the same period in 2022. Net cash provided by financing activities for the three months ended April 30, 2023 was $476,304 as compared to $2,110,413 for the three months ended April 30, 2022.
ITEM 3. Quantitative and Qualitative Disclosure about Market Risk.
Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), we are not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).
ITEM 4. Controls and Procedures
(a) Evaluation of disclosure controls and procedures. Our Chief Executive Officer and Principal Financial Officer, after evaluating the effectiveness of our “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”), has concluded that as of the Evaluation Date, our disclosure controls and procedures were not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Moving forward, we hope that our Chief Executive Officer and Principal Financial Officer will be able to devote the additional time and effort required so that our disclosure controls and procedures can become effective. Notwithstanding the assessment that our internal controls and procedures were not effective, we believe that our financial statements contained in this Quarterly Report for the quarter ended April 30, 2023 fairly present our financial position, results of operations and cash flows for the years and months covered thereby in all material respects.
(b) Changes in internal control over financial reporting. There were no changes in our internal control over financial reporting during our most recent fiscal quarter that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.
- 29 -
PART II — OTHER INFORMATION
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Recent Sales of Unregistered Securities
Common Stock
On March 16, 2023, we issued an aggregate of 100,000 shares of Common Stock to a supplier for $1.00 per share as payment for services.
On March 16, 2023, we issued an aggregate of 6,000 shares of Common Stock to a supplier for $1.00 per share as payment for services.
On April 13, 2023, we issued an aggregate of 61,958 shares of Common Stock to a supplier for $1.00 per share as payment for services.
On April 20, 2023, pursuant to the senior secured promissory note issued to Auctus Fund, LLC, we issued 50,000 shares of Common Stock to the lender.
Warrants
On April 20, 2023, pursuant to the senior secured promissory note issued to Auctus Fund, LLC, we issued warrants to purchase 388,884 shares of Common Stock to the lender.
On April 27, 2023, pursuant to the amended and restated promissory note issued to AJB Capital Investment LLC, we issued warrants to purchase 97,221 shares of Common Stock to the lender.
Convertible Promissory Notes
On April 20, 2023, we issued a senior secured promissory note in the principal amount of $77,000 to Auctus Fund, LLC.
On April 27, 2023, we issued an amended and restated promissory note to AJB Capital Investments LLC in the principal amount of $327,000.
The sales of the securities above were made in reliance on Section 4(a)(2) under the Securities Act and were made without general solicitation or advertising. The securities offered have not been registered under the Securities Act, and may not be offered or sold in the United States without registration or an applicable exemption from the registration requirements of the Securities Act. There were no sales commissions paid in connection with the sales of these securities.
Item 6. Exhibits
See the Exhibit Index immediately following the signature page of this Report on Form 10-Q.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
Auto Parts 4Less Group, Inc.
By: /s/ Christopher Davenport
Christopher Davenport
Chief Executive Officer and Chief Financial Officer
(Principal Executive Officer and Principal Financial and Accounting Officer)
Date: August 14, 2023
- 30 -
EXHIBIT INDEX
Exhibit | ||
Number | Exhibit Description | |
31.1 | Rule 13a-14(a) Certification of Principal Executive Officer and Principal Financial/Accounting Officer * | |
32.1 | Section 1350 Certification of Principal Executive Officer and Principal Financial/Accounting Officer * | |
101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. ** | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document* | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document ** | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document ** | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document ** | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document ** | |
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) ** |
__________
* Filed herewith.
** In accordance with Regulation S-T, the Interactive Data Files in Exhibit 101 to the Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed.”
- 31 -
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Christopher Davenport, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Auto Parts 4Less Group, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;
4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 14, 2023
By: /s/ Christopher Davenport
Christopher Davenport
Chief Executive Officer and Chief Financial Officer
(Principal Executive Officer and Principal Financial/Accounting Officer)
Exhibit 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Christopher Davenport, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Auto Parts 4Less Group, Inc. on Form 10-Q for the period ended April 30, 2023 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents in all material respects the financial condition and results of operations of The 4Less Group, Inc.
Date: August 14, 2023
By: /s/ Christopher Davenport
Christopher Davenport
Chief Executive Officer and Chief Financial Officer
(Principal Executive Officer and Principal Financial/Accounting Officer)
Cover - shares |
3 Months Ended | |
---|---|---|
Apr. 30, 2023 |
Aug. 11, 2023 |
|
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Apr. 30, 2023 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2024 | |
Current Fiscal Year End Date | --01-31 | |
Entity File Number | 000-55089 | |
Entity Registrant Name | AUTO PARTS 4LESS GROUP, INC. | |
Entity Central Index Key | 0001438901 | |
Entity Tax Identification Number | 90-1494749 | |
Entity Incorporation, State or Country Code | NV | |
Entity Address, Address Line One | 106 W. Mayflower | |
Entity Address, City or Town | Las Vegas | |
Entity Address, State or Province | NV | |
Entity Address, Postal Zip Code | 89030 | |
City Area Code | 702 | |
Local Phone Number | 267-6100 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 2,723,499 |
NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 – NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Business:
Nature of Business – Auto Parts 4Less Group, Inc., (the “Company”), formerly The 4Less Group, Inc., was incorporated under the laws of the State of Nevada on December 5, 2007. The Company, under the name MedCareers Group, Inc. (“MCGI”) formally operated a website for nurses, nursing schools and nurses’ organizations designed for better communication between nurses and the nursing profession.
On November 29, 2018, the Company entered into a transaction (the “Share Exchange”), pursuant to which the Company acquired 100% of the issued and outstanding equity securities of The 4LESS Corp. (“4LESS”), in exchange for the issuance of (i) nineteen thousand (19,000) shares of Series B Preferred Stock, (ii) six thousand seven hundred fifty (6,750) shares of Series C Preferred Stock, and (iii) 870 shares of Series D Preferred Stock. The Series C Preferred Shares have a right to convert into common stock of the Company by multiplying the number of issued and outstanding shares of common stock by 2.63 on the conversion date. The Share Exchange closed on November 29, 2018. As a result of the Share Exchange, the former shareholders of 4LESS became the controlling shareholders of the Company. The Share Exchange was accounted for as a reverse takeover/recapitalization effected by a share exchange, wherein 4LESS is considered the acquirer for accounting and financial reporting purposes. The capital, share price, and earnings per share amount in these consolidated financial statements for the period prior to the reverse merger were restated to reflect the recapitalization in accordance with the shares issued as a result of the reverse merger except otherwise noted.
4LESS was formed as Vegas Suspension & Offroad, LLC on October 24, 2013 as a Nevada limited liability company and converted to a Nevada corporation with the same name on May 8, 2017. On April 2, 2018, the Company changed its name to The 4LESS Corp. The Corporation had S Corporation status. The Corporation operates as an e-commerce auto and truck parts sales company. As a result of the share exchange, The 4Less Group, Inc. is now a holding company operating through 4LESS and offers products including exhaust systems, suspension systems, wheels, tires, stereo systems, truck bed covers, and shocks. On December 30, 2019 4LESS changed its name to Auto Parts 4Less, Inc. On April 28, 2022 the Company changed its name from The 4Less Group, Inc. to Auto Parts 4Less Group, Inc.
Significant Accounting Policies:
The Company’s management selects accounting principles generally accepted in the United States of America and adopts methods for their application. The application of accounting principles requires the estimating, matching and timing of revenue and expense. The accounting policies used conform to generally accepted accounting principles which have been consistently applied in the preparation of these condensed financial statements.
Basis of Presentation:
The Company prepares its financial statements on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States.
The accompanying unaudited condensed consolidated financial statements and related notes have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim unaudited consolidated financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete consolidated financial statements. Certain information and footnote disclosure normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to instructions, rules, and regulations prescribed by the SEC. The unaudited consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended January 31, 2023 and notes thereto contained in the Company’s Annual Report on Form 10-K filed on August 11, 2023.
Principles of Consolidation:
The condensed financial statements include the accounts of Auto Parts 4Less Group, Inc. as well as The Auto Parts 4Less, Inc., and JBJ Wholesale LLC. All significant inter-company transactions have been eliminated. All amounts are presented in U.S. Dollars unless otherwise stated.
Use of Estimates:
In order to prepare financial statements in conformity with accounting principles generally accepted in the United States, management must make estimates, judgments and assumptions that affect the amounts reported in the financial statements and determine whether contingent assets and liabilities, if any, are disclosed in the financial statements. The ultimate resolution of issues requiring these estimates and assumptions could differ significantly from resolution currently anticipated by management and on which the financial statements are based. The most significant estimates included in these consolidated financial statements are those associated with the assumptions used to value derivative liabilities.
Reclassifications
Certain amounts in the Company’s condensed consolidated financial statements for prior periods have been reclassified to conform to the current period presentation. These reclassifications have not changed the results of operations of prior periods.
Cash and Cash Equivalents:
The Company considers all highly liquid instruments with a maturity of three months or less to be cash equivalents. At times, cash balances may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. The carrying amount of cash and cash equivalents approximates fair market value.
Inventory Valuation
Inventories are stated at the lower of cost or net realizable value. Inventories are valued on a first-in, first-out (FIFO) basis. Inventory is comprised of finished goods.
Concentrations
Cost of Goods Sold
For the three months ended April 30, 2023 the Company purchased approximately 50% of its inventory and items available for sale from third parties from one vendors. As of April 30, 2023, the net amount due to one vendors included in accounts payable was $322,392. For the three months ended April 30, 2022, the Company purchased from three vendors approximately 52% of its inventory and items available for sale from third parties. As of April 30, 2022, the net amount due to these vendors included in accounts payable was $433,897. The Company believes there are numerous other suppliers that could be substituted should a supplier become unavailable or non-competitive.
Leases
We elected the hindsight practical expedient to determine the lease term for existing leases. Our election of the hindsight practical expedient resulted in the shortening of lease terms for certain existing leases and the useful lives of corresponding leasehold improvements. In our application of hindsight, we evaluated the performance of the leased stores and the associated markets in relation to our overall real estate strategies, which resulted in the determination that most renewal options would not be reasonably certain in determining the expected lease term.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized when items of income and expense are recognized in the financial statements in different periods than when recognized in the tax return. Deferred tax assets arise when expenses are recognized in the financial statements before the tax returns or when income items are recognized in the tax return prior to the financial statements. Deferred tax assets also arise when operating losses or tax credits are available to offset tax payments due in future years. Deferred tax liabilities arise when income items are recognized in the financial statements before the tax returns or when expenses are recognized in the tax return prior to the financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was signed into law. ASC 740, Accounting for Income Taxes requires companies to recognize the effects of changes in tax laws and rates on deferred tax assets and liabilities and the retroactive effects of changes in tax laws in the period in which the new legislation is enacted. The Company’s gross deferred tax assets were revalued based on the reduction in the federal statutory tax rate from 35% to 21%. A corresponding offset has been made to the valuation allowance, and any potential other taxes arising due to the Tax Act will result in reductions to the Company’s net operating loss carryforward and valuation allowance. The Company will continue to analyze the Tax Act to assess its full effects on the Company’s financial results, including disclosures, for the Company’s fiscal year ending January 31, 2024, but the Company does not expect the Tax Act to have a material impact on the Company’s consolidated financial statements.
Fair Value of Financial Instruments:
The Company’s financial instruments consist of cash, accounts payable, advances and notes payable. The Company considers the carrying value of such amounts in the financial statements to approximate their fair value due to the short-term nature of these financial instruments. Derivatives are recorded at fair value at each period end. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date.
The ASC guidance for fair value measurements and disclosure establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:
Level 1 Inputs – Quoted prices for identical instruments in active markets.
Level 2 Inputs – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level 3 Inputs – Instruments with primarily unobservable value drivers.
The following table sets forth, by level within the fair value hierarchy, the Company’s financial liabilities that were accounted for at fair value on a recurring basis as of April 30, 2023:
Related Party Transactions:
The Company has a verbal policy that includes procedures intended to ensure compliance with the related party provisions in common practice for public companies. For purposes of the policy, a “related party transaction” is a transaction in which the Company or any one of its subsidiaries participates and in which a related party has a direct or indirect material interest, other than ordinary course, arms-length transactions of less than 1% of the revenue of the counterparty. Any transaction exceeding the 1% threshold, and any transaction involving consulting, financial advisory, legal or accounting services that could impair a director’s independence, must be approved by the CEO. Any related party transaction in which an executive officer or a Director has a personal interest, or which could present a possible conflict under the Guide to Ethical Conduct, must be approved by Board of Directors, following appropriate disclosure of all material aspects of the transaction.
Derivative Liability
The derivative liabilities are valued as a level 3 input under the fair value hierarchy for valuing financial instruments. The derivatives arise from convertible debt where the debt and accrued interest is convertible into common stock at variable conversion prices and reclassification of equity instrument to liability due to insufficient shares for issuance. As the price of the common stock varies, it triggers a gain or loss based upon the discount to market assuming the debt was converted at the balance sheet date. When evaluating the effect of the issuance of new equity-linked or equity-settled instruments on previously issued instruments, the Company uses first-in, first-out method (“FIFO”) where authorized and unused shares would first be used to satisfy the earliest issued equity-linked instruments.
The fair value of the derivative liability is determined using a lattice model, is re-measured on the Company’s reporting dates, and is affected by changes in inputs to that model including our stock price, historical stock price volatility, the expected term, and both high risk and the risk-free interest rate. The most sensitive inputs to the model are for expected time for the holder to convert or be repaid and the estimated historical volatility of the Company’s common stock. However, because the historical volatility of the Company’s common stock is so high (see Note 9), the sensitivity required to change the liability by 1% as of April 30, 2023 is greater than 25% change in historical volatility as of that date. The other inputs, such as risk free rate, high yield cash rate and stock price all have a sensitivity for a 1% change in the input variable results in a significantly less than 1% change in the calculated derivative liability.
Revenue Recognition
The Company recognizes revenue under ASC 606, “Revenue from Contracts with Customers. The core principle of the revenue standard is that a company should recognize revenue when control is transferred over the promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods and services transferred to the customer. The following five steps are applied to achieve that core principle:
Step 1: Identify the contract with the customer Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognize revenue when the company satisfies a performance obligation
Because the Company’s sales agreements generally have an expected duration of one year or less, the Company has elected the practical expedient in ASC 606-10-50-14(a) to not disclose information about its remaining performance obligations.
Disaggregation of Revenue: Channel Revenue
The following table shows revenue split between proprietary and third-party website revenue for the three months ended April 30, 2023 and 2022:
The Company’s performance obligations are satisfied at the point in time when products are received by the customer, which is when the customer has title and obtained the significant risks and rewards of ownership. Therefore, the Company’s contracts have a single performance obligation (shipment of product). The Company primarily receives fixed consideration for sales of product and commissions on sales from the new consumer marketplace autopart4less.com. Shipping and handling amounts paid by customers are primarily for online orders, and are included in revenue. Sales tax and other similar taxes are excluded from revenue.
The Company accounts for stock options at fair value. The Company estimates the fair value of each stock option at the grant date by using the Black-Scholes option-pricing model and provides for expense recognition over the service period, if any, of the stock option.
Basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS give effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used to determine the number of shares assumed to be purchased from the exercise of stock options and/or warrants. Diluted EPS excluded all dilutive potential shares if their effect is anti-dilutive.
Basic loss per common share is computed based on the weighted average number of shares outstanding during the period. Diluted loss per share is computed in a manner similar to the basic loss per share, except the weighted-average number of shares outstanding is increased to include all common shares, including those with the potential to be issued by virtue of convertible debt and other such convertible instruments. Diluted loss per share contemplates a complete conversion to common shares of all convertible instruments only if they are dilutive in nature with regards to earnings per share.
Recently Issued Accounting Standards:
In August 2020, the FASB issued amended guidance on the accounting for convertible instruments and contracts in an entity’s own equity. The guidance removes the separation model for convertible debt instruments and preferred stock, amends requirements for conversion options to be classified in equity as well as amends diluted earnings per share (EPS) calculations for certain convertible debt instruments. The amended guidance is effective for interim and annual periods in 2022. The application of the amendments in the new guidance are to be applied either on a modified retrospective or a retrospective basis. We are currently assessing the effect that the adoption of this standard will have on the Company’s consolidated financial statements upon adoption.
In addition to the above, the Company has reviewed all other recently issued, but not yet effective, accounting pronouncements, and does not believe the future adoption of any such pronouncements will have a material impact on its financial condition or the results of its operations.
Recently Issued Accounting Standards Not Yet Adopted
In March 2020, the FASB issued optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting and subsequently issued clarifying amendments. The guidance provides optional expedients and exceptions for accounting for contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued because of reference rate reform. The optional guidance is effective upon issuance and can be applied on a prospective basis at any time between January 1, 2020 through December 31, 2022. The Company is currently evaluating the impact of adoption on its consolidated financial statements.
In October 2021, the FASB issued amended guidance that requires acquiring entities to recognize and measure contract assets and liabilities in a business combination in accordance with existing revenue recognition guidance. The amended guidance is effective for interim and annual periods in 2023 and is to be applied prospectively. Early adoption is permitted on a retrospective basis to the beginning of the fiscal year of adoption. The adoption of this guidance will not have a material impact on the Company’s consolidated financial statements for prior acquisitions; however, the impact in future periods will be dependent upon the contract assets and contract liabilities acquired in future business combinations.
In November 2021, the FASB issued new guidance to increase the transparency of transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. The guidance requires annual disclosures of such transactions to include the nature of the transactions and the significant terms and conditions, the accounting treatment and the impact to the company’s financial statements. The guidance is effective for annual periods beginning in 2022 and is to be applied on either a prospective or retrospective basis. The Company is currently evaluating the impact of adoption on its consolidated financial statements.
There were various other accounting standards and interpretations issued recently, none of which are expected to a have a material impact on our financial position, operations or cash flows. |
GOING CONCERN AND FINANCIAL POSITION |
3 Months Ended |
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Apr. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
GOING CONCERN AND FINANCIAL POSITION | NOTE 2 – GOING CONCERN AND FINANCIAL POSITION
The consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has an accumulated deficit of $ as of April 30, 2023 and has a working capital deficit at April 30, 2023 of $23,136,653. As of April 30, 2023, the Company only had cash and cash equivalents of $53,713 and approximately $14,085,000 of short-term loans and convertible debt in default. The short-term loans and debt and convertible debt agreements provide legal remedies for satisfaction of defaults, none of the lenders to this point have pursued their legal remedies. While the Company has plans to grow its revenues through the new website, at this time, our current liquidity position raises substantial doubt about the Company’s ability to continue as a going concern.
Management’s plan is to raise additional funds in the form of debt or equity in order to continue to fund losses until such time as revenues can sustain the Company. However, there is no assurance that management will be successful in being able to continue to obtain additional funding. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. |
PROPERTY |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY | NOTE 3 – PROPERTY
The Company capitalizes all property purchases over $1,000 and depreciates the assets on a straight-line basis over their useful lives of 3 years for computers and 7 years for all other assets. Property consists of the following at April 30, 2023 and January 31, 2023:
Additions to fixed assets for the three months ended April 30, 2023 were $0. Additions to fixed assets for the three months ended April 30, 2022 were $1,142.
Depreciation expense was $ and 12,938 for the three months ended April 30, 2023 and April 30, 2022, respectively. |
LEASES |
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Leases | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES | NOTE 4 – LEASES
We lease certain warehouses and office space. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. For lease agreements entered into or reassessed after the adoption of Topic 842, we did not combine lease and non-lease components.
Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to 17 years or more. The exercise of lease renewal options is at our sole discretion. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.
Below is a summary of our lease assets and liabilities at April 30, 2023 and January 31, 2023.
Note: As most of our leases do not provide an implicit rate, we use our incremental borrowing rate of 8% based on the information available at commencement date in determining the present value of lease payments.
CAM charges were not included in operating lease expense and were expensed in general and administrative expenses as incurred.
Operating lease cost and rent was $26,701 and $30,479 for the three months ended April 30, 2023 and April 30, 2022, respectively. |
CUSTOMER DEPOSITS |
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Apr. 30, 2023 | |
Disclosure Customer Deposits Abstract | |
CUSTOMER DEPOSITS | NOTE 5 – CUSTOMER DEPOSITS
The Company receives payments from customers on orders prior to shipment and these customer deposits on cancelled orders were either returned to the customers subsequent to April 30, 2023 or will remain as deposits until the item is either delivered and recorded as revenue or cancelled and refunded. At April 30, 2023 the Company had received $16,250 (January 31, 2023- $38,448) in customer deposits for orders that were unfulfilled at April 30, 2023 and either canceled subsequent to year end or still awaiting shipment. |
DEFERRED REVENUE |
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Apr. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
DEFERRED REVENUE | NOTE 6 – DEFERRED REVENUE
The Company receives payments from customers on orders prior to shipment and orders that were unfulfilled at April 30, 2023 because of both normal order processing and fulfillment requirements, and back orders are recorded as deferred revenue. At April 30, 2023 the Company had received $609 (January 31, 2023 - $66,153) in customer payments for orders that were unfulfilled at April 30, 2023 and delivered subsequent to April 30, 2023. |
SHORT-TERM AND LONG-TERM DEBT |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHORT-TERM AND LONG-TERM DEBT | NOTE 7 – SHORT-TERM AND LONG-TERM DEBT
The components of the Company’s debt as of April 30, 2023 and January 31, 2023 were as follows:
__________
The following are the minimum amounts due on the notes as of April 30, 2023:
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SHORT-TERM CONVERTIBLE DEBT |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHORT-TERM CONVERTIBLE DEBT | NOTE 8 – SHORT-TERM CONVERTIBLE DEBT
The components of the Company’s debt as of April 30, 2023 and January 31, 2023 were as follows:
The Company had accrued interest payable of $1,810,560 and $1,342,097 on the notes at April 30, 2023 and January 31, 2023, respectively.
The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that certain features in some instruments should be classified as liabilities due to there being a variable number of shares to be delivered upon settlement of the above conversion options. The derivative features are measured at fair value at the end of each reporting period or termination of the instrument with the change in fair value recorded to earnings. The fair value of the embedded conversion option and attached warrants resulted in a discount to the note on the debt modification date. For the three months ended April 30, 2023 and 2022, the Company recorded amortization expense of $628,613 and $725,280, respectively.
For the three months ended April 30, 2023 and 2022 the Company added $90,028 and $0 in penalty interest to the loans, respectively. For the three months ended April 30, 2023, lenders converted $95,256 of principal, $7,965 of interest, derivative of $ 81,429 and $2,600 of fees all totaling $187,249 into 434,434 common shares.
On April 20, 2023, the Company entered into a convertible note for $77,000 with a one year maturity, interest rate of 12% with a warrant to purchase 388,884 common shares with a five year maturity and an exercise price of $0.25, and 50,000 common shares. The Company will receive $60,800 and recorded an original issue discount of $7,000 along with fees of $9,200, a derivative discount of 60,800 for the conversion feature, recognized $27,541 based on a relative fair value calculation as debt discount with a corresponding adjustment to paid-in capital for the attached warrants and shares. The Company expensed $13,428 as interest which was the amount of the derivative discount that exceeded the face value of the loan. The discount is amortized over the term of the loan. The note has certain default provisions such as failure to pay any principal or interest when due and failure to issue shares upon conversion. In the event of these or any other default provisions, the note becomes due and payable at 150%. The note is secured on all assets of the Company subordinated to a prior security.
In April 2023, the Company issued an amended and restated note replacing the July 5, 2022 $250,000 note with a January 5, 2023 maturity. In addition, the Company issued a warrant to acquire 97,221 shares with a $1.00 exercise price and a 5 year maturity, and the maturity of the note was revised to July 5, 2023. The terms of the amended note are that the Company received $70,000 with an original issue discount of $7,000 a derivative discount of $76,212 for the conversion feature, recognized $5,443 based on a relative fair value calculation as debt discount with a corresponding adjustment to paid-in capital for the attached warrants. The original note had cash proceeds of $225,000 and an original issue discount of $25,000, a derivative discount of $33,860 for the conversion feature, recognized $139,638 based on a relative fair value calculation as debt discount with a corresponding adjustment to paid-in capital for the attached warrants and shares, and transaction fees of $35,000. When combined with the original note, the total new note will now be for $327,000 having total cash proceeds of $295,000 and total original issue discount of $32,000 a derivative discount of $110,072 for the conversion feature, recognized $145,101 based on a relative fair value calculation as debt discount with a corresponding adjustment to paid-in capital for the attached warrants and shares and transaction fees of $35,000. The discount is amortized over the term of the loan. The note has certain default provisions such as failure to pay any principal or interest when due and failure to issue shares upon conversion.
As of April 30, 2023, the Company had $11,024,323 of convertible debt in default. The agreements provide legal remedies for satisfaction of defaults, none of the lenders to this point have pursued their legal remedies. The Company continues to accrue interest at the listed rates, and plans to seek their conversion or payoff within the next twelve months. |
DERIVATIVE LIABILITIES |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE LIABILITIES | NOTE 9 – DERIVATIVE LIABILITIES
As of April 30, 2023 and January 31, 2023, the Company had derivative liabilities of $4,493,374 and $3,271,058, respectively. During the three months ended April 30, 2023 and 2022, the Company recorded a loss of $1,006,700 and a loss of $337,737, respectively, from the change in the fair value of derivative liabilities. Any liabilities resulting from the warrants outstanding are immaterial.
The derivative liabilities are valued as a level 3 input for valuing financial instruments.
The following table presents changes in Level 3 liabilities measured at fair value for the three months ended April 30, 2022. Both observable and unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long- dated volatilities) inputs.
The derivatives arise from convertible debt where the debt is convertible into common stock at variable conversion prices which are linked to the trading and/or bid prices of the Company’s common stock as traded on the OTC market.
The fair value of the derivative liability is determined using the lattice model, is re-measured on the Company’s reporting dates, and is affected by changes in inputs to that model including our stock price, expected stock price volatility, the expected term, and the risk-free interest rate. A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring the Company’s warrant liabilities and embedded conversion feature that are categorized within Level 3 of the fair value hierarchy as of April 30, 2023 is as follows:
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STOCKHOLDERS’ DEFICIT |
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STOCKHOLDERS’ DEFICIT | NOTE 10 – STOCKHOLDERS’ DEFICIT
Preferred Stock:
The Series A Preferred Stock has an automatic forced conversion into common stock upon the completion of the repurchase or extinguishing of all “toxic” debt (notes having conversion features tied to the Company’s common stock), the extinguishing of all other existing dilutive debt or equity structures, and total recapitalization of the Company. As of both April 30, 2023, and January 31, 2023 the Company had shares of Series A Preferred issued and outstanding and authorized with a par value of $0.001 per share.
At both April 30, 2023 and January 31, 2023, there were and Series B preferred shares outstanding, respectively. The Series B Preferred Stock have voting rights equal to 51% of the total voting rights at any time. There are no conversion rights granted holders of Series B Preferred shares, they are not entitled to dividends, and the Company does not have the right of redemption. Currently, there are Series B preferred shares authorized and issued of the Series B Preferred Stock with a par-value of $ per share.
At both April 30, 2023 and January 31, 2023, there were Series C preferred shares outstanding, respectively. The Series C Preferred Stock have the right to convert into the common stock of the Company by multiplying the number of issued and outstanding shares of common stock by 2.63 on the conversion date. The holders of Series C Preferred shares are not entitled to dividends, and the Company does not have the right of redemption. On February 1, 2022 the 7,250 Series C Preferred stockholders converted all of their outstanding shares for 905,110 shares of common stock. Currently, there are 0 Series C preferred shares authorized and issued with a par-value of $0.001 per share.
At both April 30, 2023 and January 31, 2023, there were These shares are non-voting, do not receive dividends and are redeemable according to the terms set out as follows: Series D preferred shares authorized and outstanding, respectively which with a par value $ . All shares of Series D Preferred Stock will rank subordinate and junior to all shares of Series A, B and C of Preferred Stock of the Corporation and pari passu with any of the Corporation’s preferred stock hereafter created as to distributions of assets upon dissolution or winding up of the Corporation, whether voluntary or involuntary.
OPTIONAL REDEMPTION.
(1) At any time, either the Corporation or the holder may redeem for cash out of funds legally available therefor, any or all of the outstanding Series D Preferred Stock (“Optional Redemption”) at $ per share.
(2) Should the Corporation exercise the right of Optional Redemption it shall provide each holder of Preferred Stock with at least 30 days’ notice of any proposed optional redemption pursuant this Section VI (an “Optional Redemption Notice”). Any optional redemption pursuant to this Section VI shall be made ratably among holders in proportion to the Liquidation Value of Preferred Stock then outstanding and held by such holders. The Optional Redemption Notice shall state the Liquidation Value of Preferred Stock to be redeemed and the date on which the Optional Redemption is to occur (which shall not be less than thirty (30) or more than sixty (60) Business Days after the date of delivery of the Optional Redemption Notice) and shall be delivered by the Corporation to the holders at the address of such holder appearing on the register of the Corporation for the Preferred Stock. Within seven (7) business days after the date of delivery of the Optional Redemption Notice, each holder shall provide the Corporation with instructions as to the account to which payments associated with such Optional Redemption should be deposited. On the date of the Optional Redemption, provided for in the relevant Optional Redemption Notice, (A) the Corporation will deliver the redemption amount via wire transfer to the account designated by the holders, and (B) the holders will deliver the certificates relating to that number of shares of Preferred Stock being redeemed, duly executed for transfer or accompanied by executed stock powers, in either case, transferring that number of shares to be redeemed. Upon the occurrence of the wire transfer (or, in the absence of a holder designating an account to which funds should be transferred, delivery of a certified or bank cashier’s check in the amount due such holder in connection with such Optional Redemption to the address of such holder appearing on the register of the Corporation for the Preferred Stock), that number of shares of Preferred Stock redeemed pursuant to such Optional Redemption as represented by the previously issued certificates will be deemed no longer outstanding. Notwithstanding anything to the contrary in this Designation, each holder may continue to convert Preferred Stock in accordance with the terms hereof until the date such Preferred Stock is actually redeemed pursuant to an Optional Redemption.
(3) Should the holder exercise the right of Optional Redemption it shall provide the Corporation with at least 30 days’ notice of any proposed optional redemption pursuant this Section VI (an “Optional Redemption Notice”). The Optional Redemption Notice shall state the value of the Preferred Stock to be redeemed and the date on which the Optional Redemption is to occur (which shall not be less than thirty (30) or more than sixty (60) Business Days after the date of delivery of the Optional Redemption Notice) and shall be delivered by the holder to the Corporation at the address of the Corporation for the Preferred Stock. Within seven (7) business days after the date of delivery of the Optional Redemption Notice, each holder shall provide the Corporation with instructions as to the account to which payments associated with such Optional Redemption should be deposited. On the date of the Optional Redemption, provided for in the relevant Optional Redemption Notice, (A) the Corporation will deliver the redemption amount via wire transfer to the account designated by the holder, and (B) the holder will deliver the certificates relating to that number of shares of Preferred Stock being redeemed, duly executed for transfer or accompanied by executed stock powers, in either case, transferring that number of shares to be redeemed. Upon the occurrence of the wire transfer (or, in the absence of a holder designating an account to which funds should be transferred, delivery of a certified or bank cashier’s check in the amount due such holder in connection with such Optional Redemption to the address of such holder appearing on the register of the Corporation for the Preferred Stock), that number of shares of Preferred Stock redeemed pursuant to such Optional Redemption as represented by the previously issued certificates will be deemed no longer outstanding. Notwithstanding anything to the contrary in this Designation, each holder may continue to convert Preferred Stock in accordance with the terms hereof until the date such Preferred Stock is actually redeemed pursuant to an Optional Redemption.
The Series D Preferred Stock is not entitled to any pre-emptive or subscription rights in respect of any securities of the Corporation.
Neither the Company nor any Series D preferred stockholders has given notice to exercise the redemption as of April 30, 2023 on the date of the financial statements.
Because the holders of the Series D preferred stock have the right to demand cash redemption, the cumulative amount of the redemption feature is included in Temporary Equity as of April 30, 2023 and January 31, 2023.
Common Stock
The Company is authorized to issue common shares at a par value of $ per share. These shares have full voting rights. The Company undertook a 10-1 reverse stock split on April 28, 2022. The share capital has been retrospectively adjusted accordingly to reflect these reverse stock splits. At April 30, 2023 and January 31, 2023 there were and shares outstanding and issuable, respectively. No dividends were paid in the three months ended April 30, 2023 or 2022. The Company’s articles of incorporation include a provision that the Company is not allowed to issue fractional shares.
The Company issued the following shares of common stock in the three months ended April 30, 2023:
The Company issued the following shares of common stock in the three months ended April 30, 2022:
The Company issued shares upon conversion of Series C preferred shares. Along with associated debt, the Company issued shares and warrants to purchase 265,000 shares all with a relative fair value of $ .
Options and Warrants:
The Company has and options outstanding as of April 30, 2023 and January 31, 2023, respectively.
The Company recorded option and warrant expense of $0 and $0 for the three months ended April 30, 2023 and 2022, respectively.
For the quarter ended April 30, 2023 the Company issued warrants to purchase 486,105 common shares along with debt to various lenders as well as warrants to acquire 125,000 common shares as penalty interest. The table below provides the significant estimates used that resulted in the Company determining the relative fair value of the 486,105 warrants (and 50,000 common shares mentioned above) at $32,984, which has been recorded as a debt discount and the 125,000 warrants at $34,500 which has been recorded as interest both with corresponding adjustments to paid-in capital.
The Company had the following warrants outstanding at April 30, 2023:
__________
The following table summarizes the activity of options and warrants issued and outstanding as of and for the three months ended April 30, 2023:
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RELATED PARTY TRANSACTIONS |
3 Months Ended |
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Apr. 30, 2023 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 11 – RELATED PARTY TRANSACTIONS
As of April 30, 2023 and January 31, 2023, the Company had $94,291 and $74,111, respectively of related party accrued expenses related to accrued compensation for employees and consultants. |
COMMITMENTS AND CONTINGENCIES |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | NOTE 12 – COMMITMENTS AND CONTINGENCIES
On August 30, 2016, the Company entered into a 60-month lease agreement for its 3,554 sf warehouse facility starting in December 2016 with a minimum base rent of $2,132 and estimated monthly CAM charges of $1,017 per month. This lease is with a shareholder.
On July 1, 2018, the Company entered into a 60-month lease agreement with its minority shareholder for its 8,800 sf warehouse facility with a minimum base rent of $6,400 per month.
The Company had total operating lease and rent expense of $26,701 and $30,479 for the three months ended April 30, 2023 and 2022 respectively. |
EARNINGS (LOSS) PER SHARE |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS (LOSS) PER SHARE |
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SUBSEQUENT EVENTS |
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Apr. 30, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 14 – SUBSEQUENT EVENTS
Subsequent to April 30, 2023 through to August 10, 2023:
• The Company first entered into a $250,000 note with a lender on July 5, 2022 with a January 5, 2023 maturity. That note was amended on April 27, 2023 bringing it to $327,000 now with a July 6, 2023 maturity. On June 1, 2023 the Company further amended this note with a second amendment. The Company received $72,652 with an original issue discount of $8,850 bringing the value of the new note to $408,502 having total cash proceeds of $367,6523 with a total original issue discount of $40,850. In addition, the Company issued 100,000 common shares and a warrant to acquire up to 1,000,000 common shares at an exercise price of $0.00001 and a maturity upon full exercise of this warrant. On July 12, 2023, the Company again amended the above note with a third amendment. The Company received $50,000 with an original issue discount of $25,000. The principal value of this amended note is now $483,502.37 with total cash proceeds of $417,652.13 and total original issue discount of $65,850.24. All other terms and conditions remain the same. Default interest is 18%.
• On July 17, 2023, the Company entered into a convertible note for $127,500 with a January 17, 2024, maturity, interest rate of 10% with common shares. The Company will receive $115,000 and recorded an original issue discount of $11,500 along with fees of $1,000. The discount is amortized over the term of the loan. The note is convertible at a price lower of $ or 80% of closing market price prior to conversion date. The note has certain default provisions such as failure to pay any principal or interest when due and failure to issue shares upon conversion. In the event of these or any other default provisions, default interest is 18%. Penalty shares of 16.67% of the outstanding loan balance is due if the note is not paid at maturity.
• On May 17, 2023 the Company entered into a Debt Forgiveness Agreement with its former CEO. Total debt owed to the CEO was $99,110 and was forgiven in exchange for the Company's 2021 Ram Truck. |
NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Accounting Policies: | Significant Accounting Policies:
The Company’s management selects accounting principles generally accepted in the United States of America and adopts methods for their application. The application of accounting principles requires the estimating, matching and timing of revenue and expense. The accounting policies used conform to generally accepted accounting principles which have been consistently applied in the preparation of these condensed financial statements. |
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Basis of Presentation: | Basis of Presentation:
The Company prepares its financial statements on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States.
The accompanying unaudited condensed consolidated financial statements and related notes have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim unaudited consolidated financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete consolidated financial statements. Certain information and footnote disclosure normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to instructions, rules, and regulations prescribed by the SEC. The unaudited consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended January 31, 2023 and notes thereto contained in the Company’s Annual Report on Form 10-K filed on August 11, 2023. |
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Principles of Consolidation: | Principles of Consolidation:
The condensed financial statements include the accounts of Auto Parts 4Less Group, Inc. as well as The Auto Parts 4Less, Inc., and JBJ Wholesale LLC. All significant inter-company transactions have been eliminated. All amounts are presented in U.S. Dollars unless otherwise stated. |
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Use of Estimates: | Use of Estimates:
In order to prepare financial statements in conformity with accounting principles generally accepted in the United States, management must make estimates, judgments and assumptions that affect the amounts reported in the financial statements and determine whether contingent assets and liabilities, if any, are disclosed in the financial statements. The ultimate resolution of issues requiring these estimates and assumptions could differ significantly from resolution currently anticipated by management and on which the financial statements are based. The most significant estimates included in these consolidated financial statements are those associated with the assumptions used to value derivative liabilities. |
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Reclassifications | Reclassifications
Certain amounts in the Company’s condensed consolidated financial statements for prior periods have been reclassified to conform to the current period presentation. These reclassifications have not changed the results of operations of prior periods. |
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Cash and Cash Equivalents: | Cash and Cash Equivalents:
The Company considers all highly liquid instruments with a maturity of three months or less to be cash equivalents. At times, cash balances may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. The carrying amount of cash and cash equivalents approximates fair market value. |
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Inventory Valuation | Inventory Valuation
Inventories are stated at the lower of cost or net realizable value. Inventories are valued on a first-in, first-out (FIFO) basis. Inventory is comprised of finished goods. |
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Concentrations | Concentrations
Cost of Goods Sold
For the three months ended April 30, 2023 the Company purchased approximately 50% of its inventory and items available for sale from third parties from one vendors. As of April 30, 2023, the net amount due to one vendors included in accounts payable was $322,392. For the three months ended April 30, 2022, the Company purchased from three vendors approximately 52% of its inventory and items available for sale from third parties. As of April 30, 2022, the net amount due to these vendors included in accounts payable was $433,897. The Company believes there are numerous other suppliers that could be substituted should a supplier become unavailable or non-competitive. |
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Leases | Leases
We elected the hindsight practical expedient to determine the lease term for existing leases. Our election of the hindsight practical expedient resulted in the shortening of lease terms for certain existing leases and the useful lives of corresponding leasehold improvements. In our application of hindsight, we evaluated the performance of the leased stores and the associated markets in relation to our overall real estate strategies, which resulted in the determination that most renewal options would not be reasonably certain in determining the expected lease term. |
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Income Taxes | Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized when items of income and expense are recognized in the financial statements in different periods than when recognized in the tax return. Deferred tax assets arise when expenses are recognized in the financial statements before the tax returns or when income items are recognized in the tax return prior to the financial statements. Deferred tax assets also arise when operating losses or tax credits are available to offset tax payments due in future years. Deferred tax liabilities arise when income items are recognized in the financial statements before the tax returns or when expenses are recognized in the tax return prior to the financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was signed into law. ASC 740, Accounting for Income Taxes requires companies to recognize the effects of changes in tax laws and rates on deferred tax assets and liabilities and the retroactive effects of changes in tax laws in the period in which the new legislation is enacted. The Company’s gross deferred tax assets were revalued based on the reduction in the federal statutory tax rate from 35% to 21%. A corresponding offset has been made to the valuation allowance, and any potential other taxes arising due to the Tax Act will result in reductions to the Company’s net operating loss carryforward and valuation allowance. The Company will continue to analyze the Tax Act to assess its full effects on the Company’s financial results, including disclosures, for the Company’s fiscal year ending January 31, 2024, but the Company does not expect the Tax Act to have a material impact on the Company’s consolidated financial statements. |
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Fair Value of Financial Instruments: | Fair Value of Financial Instruments:
The Company’s financial instruments consist of cash, accounts payable, advances and notes payable. The Company considers the carrying value of such amounts in the financial statements to approximate their fair value due to the short-term nature of these financial instruments. Derivatives are recorded at fair value at each period end. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date.
The ASC guidance for fair value measurements and disclosure establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:
Level 1 Inputs – Quoted prices for identical instruments in active markets.
Level 2 Inputs – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level 3 Inputs – Instruments with primarily unobservable value drivers.
The following table sets forth, by level within the fair value hierarchy, the Company’s financial liabilities that were accounted for at fair value on a recurring basis as of April 30, 2023:
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Related Party Transactions: | Related Party Transactions:
The Company has a verbal policy that includes procedures intended to ensure compliance with the related party provisions in common practice for public companies. For purposes of the policy, a “related party transaction” is a transaction in which the Company or any one of its subsidiaries participates and in which a related party has a direct or indirect material interest, other than ordinary course, arms-length transactions of less than 1% of the revenue of the counterparty. Any transaction exceeding the 1% threshold, and any transaction involving consulting, financial advisory, legal or accounting services that could impair a director’s independence, must be approved by the CEO. Any related party transaction in which an executive officer or a Director has a personal interest, or which could present a possible conflict under the Guide to Ethical Conduct, must be approved by Board of Directors, following appropriate disclosure of all material aspects of the transaction. |
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Derivative Liability | Derivative Liability
The derivative liabilities are valued as a level 3 input under the fair value hierarchy for valuing financial instruments. The derivatives arise from convertible debt where the debt and accrued interest is convertible into common stock at variable conversion prices and reclassification of equity instrument to liability due to insufficient shares for issuance. As the price of the common stock varies, it triggers a gain or loss based upon the discount to market assuming the debt was converted at the balance sheet date. When evaluating the effect of the issuance of new equity-linked or equity-settled instruments on previously issued instruments, the Company uses first-in, first-out method (“FIFO”) where authorized and unused shares would first be used to satisfy the earliest issued equity-linked instruments.
The fair value of the derivative liability is determined using a lattice model, is re-measured on the Company’s reporting dates, and is affected by changes in inputs to that model including our stock price, historical stock price volatility, the expected term, and both high risk and the risk-free interest rate. The most sensitive inputs to the model are for expected time for the holder to convert or be repaid and the estimated historical volatility of the Company’s common stock. However, because the historical volatility of the Company’s common stock is so high (see Note 9), the sensitivity required to change the liability by 1% as of April 30, 2023 is greater than 25% change in historical volatility as of that date. The other inputs, such as risk free rate, high yield cash rate and stock price all have a sensitivity for a 1% change in the input variable results in a significantly less than 1% change in the calculated derivative liability. |
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Revenue Recognition | Revenue Recognition
The Company recognizes revenue under ASC 606, “Revenue from Contracts with Customers. The core principle of the revenue standard is that a company should recognize revenue when control is transferred over the promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods and services transferred to the customer. The following five steps are applied to achieve that core principle:
Step 1: Identify the contract with the customer Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognize revenue when the company satisfies a performance obligation
Because the Company’s sales agreements generally have an expected duration of one year or less, the Company has elected the practical expedient in ASC 606-10-50-14(a) to not disclose information about its remaining performance obligations.
Disaggregation of Revenue: Channel Revenue
The following table shows revenue split between proprietary and third-party website revenue for the three months ended April 30, 2023 and 2022:
The Company’s performance obligations are satisfied at the point in time when products are received by the customer, which is when the customer has title and obtained the significant risks and rewards of ownership. Therefore, the Company’s contracts have a single performance obligation (shipment of product). The Company primarily receives fixed consideration for sales of product and commissions on sales from the new consumer marketplace autopart4less.com. Shipping and handling amounts paid by customers are primarily for online orders, and are included in revenue. Sales tax and other similar taxes are excluded from revenue. |
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Stock-Based Compensation: |
The Company accounts for stock options at fair value. The Company estimates the fair value of each stock option at the grant date by using the Black-Scholes option-pricing model and provides for expense recognition over the service period, if any, of the stock option. |
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Earnings (Loss) Per Common Share: |
Basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS give effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used to determine the number of shares assumed to be purchased from the exercise of stock options and/or warrants. Diluted EPS excluded all dilutive potential shares if their effect is anti-dilutive.
Basic loss per common share is computed based on the weighted average number of shares outstanding during the period. Diluted loss per share is computed in a manner similar to the basic loss per share, except the weighted-average number of shares outstanding is increased to include all common shares, including those with the potential to be issued by virtue of convertible debt and other such convertible instruments. Diluted loss per share contemplates a complete conversion to common shares of all convertible instruments only if they are dilutive in nature with regards to earnings per share. |
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Recently Issued Accounting Standards: | Recently Issued Accounting Standards:
In August 2020, the FASB issued amended guidance on the accounting for convertible instruments and contracts in an entity’s own equity. The guidance removes the separation model for convertible debt instruments and preferred stock, amends requirements for conversion options to be classified in equity as well as amends diluted earnings per share (EPS) calculations for certain convertible debt instruments. The amended guidance is effective for interim and annual periods in 2022. The application of the amendments in the new guidance are to be applied either on a modified retrospective or a retrospective basis. We are currently assessing the effect that the adoption of this standard will have on the Company’s consolidated financial statements upon adoption.
In addition to the above, the Company has reviewed all other recently issued, but not yet effective, accounting pronouncements, and does not believe the future adoption of any such pronouncements will have a material impact on its financial condition or the results of its operations.
Recently Issued Accounting Standards Not Yet Adopted
In March 2020, the FASB issued optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting and subsequently issued clarifying amendments. The guidance provides optional expedients and exceptions for accounting for contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued because of reference rate reform. The optional guidance is effective upon issuance and can be applied on a prospective basis at any time between January 1, 2020 through December 31, 2022. The Company is currently evaluating the impact of adoption on its consolidated financial statements.
In October 2021, the FASB issued amended guidance that requires acquiring entities to recognize and measure contract assets and liabilities in a business combination in accordance with existing revenue recognition guidance. The amended guidance is effective for interim and annual periods in 2023 and is to be applied prospectively. Early adoption is permitted on a retrospective basis to the beginning of the fiscal year of adoption. The adoption of this guidance will not have a material impact on the Company’s consolidated financial statements for prior acquisitions; however, the impact in future periods will be dependent upon the contract assets and contract liabilities acquired in future business combinations.
In November 2021, the FASB issued new guidance to increase the transparency of transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. The guidance requires annual disclosures of such transactions to include the nature of the transactions and the significant terms and conditions, the accounting treatment and the impact to the company’s financial statements. The guidance is effective for annual periods beginning in 2022 and is to be applied on either a prospective or retrospective basis. The Company is currently evaluating the impact of adoption on its consolidated financial statements.
There were various other accounting standards and interpretations issued recently, none of which are expected to a have a material impact on our financial position, operations or cash flows. |
NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The following table sets forth, by level within the fair value hierarchy, the Company’s financial liabilities that were accounted for at fair value on a recurring basis as of April 30, 2023: | The following table sets forth, by level within the fair value hierarchy, the Company’s financial liabilities that were accounted for at fair value on a recurring basis as of April 30, 2023:
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The following table shows revenue split between proprietary and third-party website revenue for the three months ended April 30, 2023 and 2022: | The following table shows revenue split between proprietary and third-party website revenue for the three months ended April 30, 2023 and 2022:
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PROPERTY (Tables) |
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Property consists of the following at April 30, 2023 and January 31, 2023: | The Company capitalizes all property purchases over $1,000 and depreciates the assets on a straight-line basis over their useful lives of 3 years for computers and 7 years for all other assets. Property consists of the following at April 30, 2023 and January 31, 2023:
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LEASES (Tables) |
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Below is a summary of our lease assets and liabilities at April 30, 2023 and January 31, 2023. | Below is a summary of our lease assets and liabilities at April 30, 2023 and January 31, 2023.
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SHORT-TERM AND LONG-TERM DEBT (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of the components of the Company’s debt | The components of the Company’s debt as of April 30, 2023 and January 31, 2023 were as follows:
__________
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The following are the minimum amounts due on the notes as of April 30, 2023: | The following are the minimum amounts due on the notes as of April 30, 2023:
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SHORT-TERM CONVERTIBLE DEBT (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The components of the Company’s debt as of April 30, 2023 and January 31, 2023 were as follows: | The components of the Company’s debt as of April 30, 2023 and January 31, 2023 were as follows:
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DERIVATIVE LIABILITIES (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||
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Apr. 30, 2023 | ||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||
The following table presents changes in Level 3 liabilities measured at fair value for the three months ended April 30, 2022. | The following table presents changes in Level 3 liabilities measured at fair value for the three months ended April 30, 2022. Both observable and unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long- dated volatilities) inputs.
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A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring the Company’s warrant liabilities and embedded conversion feature that are categorized within Level 3 of the fair value hierarchy as of April 30, 2023 is as follows: | The fair value of the derivative liability is determined using the lattice model, is re-measured on the Company’s reporting dates, and is affected by changes in inputs to that model including our stock price, expected stock price volatility, the expected term, and the risk-free interest rate. A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring the Company’s warrant liabilities and embedded conversion feature that are categorized within Level 3 of the fair value hierarchy as of April 30, 2023 is as follows:
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STOCKHOLDERS’ DEFICIT (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of warrants fair value |
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The Company had the following warrants outstanding at April 30, 2023: | The Company had the following warrants outstanding at April 30, 2023:
__________
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Schedule of warrants issued and outstanding | The following table summarizes the activity of options and warrants issued and outstanding as of and for the three months ended April 30, 2023:
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COMMITMENTS AND CONTINGENCIES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||
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Apr. 30, 2023 | |||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||
Schedule of minimum lease obligations |
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EARNINGS (LOSS) PER SHARE (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The net income (loss) per common share amounts were determined as follows: |
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The anti-dilutive shares of common stock equivalents for the three months ended April 30, 2023 and April 30, 2022 were as follows: |
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The following table sets forth, by level within the fair value hierarchy, the Company’s financial liabilities that were accounted for at fair value on a recurring basis as of April 30, 2023: (Details) - USD ($) |
Apr. 30, 2023 |
Jan. 31, 2023 |
---|---|---|
Derivative Liabilities – embedded redemption feature | ||
Totals | $ 4,493,374 | $ 3,271,058 |
Fair Value, Inputs, Level 1 [Member] | ||
Derivative Liabilities – embedded redemption feature | ||
Totals | ||
Fair Value, Inputs, Level 2 [Member] | ||
Derivative Liabilities – embedded redemption feature | ||
Totals | ||
Fair Value, Inputs, Level 3 [Member] | ||
Derivative Liabilities – embedded redemption feature | ||
Totals | $ 4,493,374 |
The following table shows revenue split between proprietary and third-party website revenue for the three months ended April 30, 2023 and 2022: (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Apr. 30, 2023 |
Apr. 30, 2022 |
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Product Information [Line Items] | ||
Total revenue | $ 136,064 | $ 1,729,930 |
Change in revenue | $ (1,593,866) | |
Percentage change in revenue | 92.00% | |
Proprietary Website Revenue [Member] | ||
Product Information [Line Items] | ||
Total revenue | $ 106,833 | 1,236,243 |
Change in revenue | $ (1,129,410) | |
Percentage change in revenue | 91.00% | |
Third Party Website Revenue [Member] | ||
Product Information [Line Items] | ||
Total revenue | $ 29,231 | $ 493,687 |
Change in revenue | $ (464,456) | |
Percentage change in revenue | 94.00% |
NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) |
1 Months Ended | 3 Months Ended | |
---|---|---|---|
Nov. 29, 2018 |
Apr. 30, 2023 |
Apr. 30, 2022 |
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Accounting Policies [Abstract] | |||
Date of incorporation | Dec. 05, 2007 | ||
Business acquisition transaction of equity securities, description | the Company entered into a transaction (the “Share Exchange”), pursuant to which the Company acquired 100% of the issued and outstanding equity securities of The 4LESS Corp. (“4LESS”), in exchange for the issuance of (i) nineteen thousand (19,000) shares of Series B Preferred Stock, (ii) six thousand seven hundred fifty (6,750) shares of Series C Preferred Stock, and (iii) 870 shares of Series D Preferred Stock. The Series C Preferred Shares have a right to convert into common stock of the Company by multiplying the number of issued and outstanding shares of common stock by 2.63 on the conversion date. | ||
Percentage of inventory | 50.00% | 52.00% | |
Accounts payable | $ 322,392 | $ 433,897 |
GOING CONCERN AND FINANCIAL POSITION (Details Narrative) - USD ($) |
Apr. 30, 2023 |
Jan. 31, 2023 |
Apr. 30, 2022 |
Jan. 31, 2022 |
---|---|---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Accumulated deficit | $ (49,107,549) | $ (46,236,258) | ||
Working capital deficit | 23,136,653 | |||
Cash and cash equivalents | 53,713 | $ 4,737 | $ 461,060 | $ 77,498 |
Short-term debt in default | $ 14,085,000 |
Property consists of the following at April 30, 2023 and January 31, 2023: (Details) - USD ($) |
Apr. 30, 2023 |
Jan. 31, 2023 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Sub-total | $ 344,947 | $ 344,947 |
Less: Accumulated depreciation | (185,892) | (173,475) |
Total Property | 159,055 | 171,472 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Sub-total | 95,183 | 95,183 |
Shop Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Sub-total | 43,004 | 43,004 |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Sub-total | $ 206,760 | $ 206,760 |
PROPERTY (Details Narrative) - USD ($) |
3 Months Ended | |
---|---|---|
Apr. 30, 2023 |
Apr. 30, 2022 |
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Property, Plant and Equipment [Abstract] | ||
Addition to fixed assets | $ 0 | $ 1,142 |
Depreciation expense | $ 12,417 | $ 12,938 |
Below is a summary of our lease assets and liabilities at April 30, 2023 and January 31, 2023. (Details) - USD ($) |
Apr. 30, 2023 |
Jan. 31, 2023 |
---|---|---|
Leases | ||
Operating lease assets | $ 114,423 | $ 138,551 |
Current operating lease liability | 29,784 | 53,912 |
Noncurrent operating lease liabilities | 84,639 | 84,639 |
Total lease liabilities | $ 114,423 | $ 138,551 |
LEASES (Details Narrative) - USD ($) |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Apr. 30, 2023 |
Apr. 30, 2022 |
Jan. 31, 2023 |
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Leases | |||
Leases, description | Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. | ||
Description of renewal lease term | one to 17 years or more. | ||
Incremental borrowing rate | 8.00% | ||
Operating lease cost | $ 26,701 | $ 30,479 |
CUSTOMER DEPOSITS (Details Narrative) - USD ($) |
Apr. 30, 2023 |
Jan. 31, 2023 |
---|---|---|
Disclosure Customer Deposits Abstract | ||
Customer deposits | $ 16,250 | $ 38,448 |
DEFERRED REVENUE (Details Narrative) - USD ($) |
Apr. 30, 2023 |
Jan. 31, 2023 |
---|---|---|
Revenue from Contract with Customer [Abstract] | ||
Deferred revenue | $ 609 | $ 66,153 |
Schedule of the components of the Company’s debt (Details) - USD ($) |
3 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 04, 2021 |
Apr. 30, 2023 |
Jan. 31, 2023 |
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Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||
Total | $ 3,301,573 | $ 3,200,985 | ||||||||||||||||||||||||||||||
Short-Term Debt | 3,196,905 | 3,088,993 | ||||||||||||||||||||||||||||||
Current Portion of Long-Term Debt | 24,907 | 24,569 | ||||||||||||||||||||||||||||||
Long-term loan | 79,761 | 87,423 | ||||||||||||||||||||||||||||||
Total | 3,301,573 | 3,200,985 | ||||||||||||||||||||||||||||||
Long term debt, current maturities | 24,907 | 24,569 | ||||||||||||||||||||||||||||||
Forklift Note Payable [Member] | ||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||
Debt | $ 20,433 | |||||||||||||||||||||||||||||||
Debt issuance date | Sep. 26, 2018 | |||||||||||||||||||||||||||||||
Note payable percentage | 6.23% | |||||||||||||||||||||||||||||||
Description of payment terms | 60 | |||||||||||||||||||||||||||||||
Debt instrument periodic payment | $ 39,454 | |||||||||||||||||||||||||||||||
Total | [1] | 2,705 | [2] | $ 3,836 | ||||||||||||||||||||||||||||
Vehicle Loan [Member] | ||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||
Debt | $ 93,239 | |||||||||||||||||||||||||||||||
Debt issuance date | Feb. 16, 2021 | |||||||||||||||||||||||||||||||
Note payable percentage | 2.90% | |||||||||||||||||||||||||||||||
Description of payment terms | 72 | |||||||||||||||||||||||||||||||
Debt instrument periodic payment | $ 1,414 | |||||||||||||||||||||||||||||||
Total | [3] | 61,499 | [4] | $ 66,538 | ||||||||||||||||||||||||||||
Secured equipment net book value | 66,096 | |||||||||||||||||||||||||||||||
Vehicle Loan One [Member] | ||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||
Debt | $ 59,711 | |||||||||||||||||||||||||||||||
Debt issuance date | Mar. 20, 2021 | |||||||||||||||||||||||||||||||
Note payable percentage | 7.89% | |||||||||||||||||||||||||||||||
Description of payment terms | 72 monthly payments | |||||||||||||||||||||||||||||||
Debt instrument periodic payment | $ 1,048 | |||||||||||||||||||||||||||||||
Total | [3] | 43,169 | [4] | 45,454 | ||||||||||||||||||||||||||||
Secured equipment net book value | 61,943 | |||||||||||||||||||||||||||||||
Working Capital Note Payable [Member] | ||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||
Debt | $ 700,000 | |||||||||||||||||||||||||||||||
Debt issuance date | Oct. 29, 2021 | |||||||||||||||||||||||||||||||
Note payable percentage | 31.00% | |||||||||||||||||||||||||||||||
Debt instrument periodic payment | $ 17,904 | |||||||||||||||||||||||||||||||
Total | [5],[6],[7] | $ 351,923 | [2] | 351,923 | ||||||||||||||||||||||||||||
Debt instrument, maturity date | Oct. 29, 2022 | |||||||||||||||||||||||||||||||
Working Capital Note Payable One [Member] | ||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||
Debt | $ 650,000 | |||||||||||||||||||||||||||||||
Debt issuance date | Oct. 25, 2021 | |||||||||||||||||||||||||||||||
Note payable percentage | 26.00% | |||||||||||||||||||||||||||||||
Debt instrument periodic payment | $ 15,875 | |||||||||||||||||||||||||||||||
Total | [5],[6],[8] | $ 439,882 | [2] | 443,819 | ||||||||||||||||||||||||||||
Debt instrument, maturity date | Oct. 25, 2022 | |||||||||||||||||||||||||||||||
Demand Loan [Member] | ||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||
Debt | $ 5,000 | |||||||||||||||||||||||||||||||
Debt issuance date | Feb. 01, 2020 | |||||||||||||||||||||||||||||||
Note payable percentage | 15.00% | |||||||||||||||||||||||||||||||
Total | $ 5,000 | [2] | 5,000 | |||||||||||||||||||||||||||||
Debt Instrument, Maturity Date, Description | 5 | |||||||||||||||||||||||||||||||
Demand Loan One [Member] | ||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||
Debt | $ 2,500 | |||||||||||||||||||||||||||||||
Debt issuance date | Mar. 08, 2019 | |||||||||||||||||||||||||||||||
Note payable percentage | 25.00% | |||||||||||||||||||||||||||||||
Total | $ 2,500 | [2] | 2,500 | |||||||||||||||||||||||||||||
Debt Instrument, Maturity Date, Description | 5 | |||||||||||||||||||||||||||||||
Demand Loan Two [Member] | ||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||
Debt | $ 65,500 | |||||||||||||||||||||||||||||||
Debt issuance date | Feb. 27, 2019 | |||||||||||||||||||||||||||||||
Note payable percentage | 25.00% | |||||||||||||||||||||||||||||||
Total | $ 12,415 | [2] | 12,415 | |||||||||||||||||||||||||||||
Debt Instrument, Maturity Date, Description | 5 | |||||||||||||||||||||||||||||||
Promissory Note [Member] | ||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||
Debt issuance date | Sep. 18, 2020 | |||||||||||||||||||||||||||||||
Total | [3],[9] | $ 60,000 | [2] | 60,000 | ||||||||||||||||||||||||||||
Debt instrument, maturity date | Apr. 30, 2022 | |||||||||||||||||||||||||||||||
Debt instrument, unamortized discount (premium) and debt issuance costs, net | $ 5,000 | |||||||||||||||||||||||||||||||
Debt instrument, interest rate, effective percentage | 15.00% | |||||||||||||||||||||||||||||||
Promissory Note One [Member] | ||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||
Debt issuance date | Aug. 28, 2020 | |||||||||||||||||||||||||||||||
Total | [3],[10] | $ 425,000 | [2] | 425,000 | ||||||||||||||||||||||||||||
Debt instrument, unamortized discount (premium) and debt issuance costs, net | $ 50,000 | |||||||||||||||||||||||||||||||
Debt instrument, interest rate, effective percentage | 15.00% | |||||||||||||||||||||||||||||||
Interest Payable | $ 825,000 | |||||||||||||||||||||||||||||||
Promissory Note Two [Member] | ||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||
Debt issuance date | Aug. 28, 2020 | |||||||||||||||||||||||||||||||
Total | [3],[11] | $ 1,200,000 | [2] | 1,200,000 | ||||||||||||||||||||||||||||
Debt instrument, maturity date | Aug. 28, 2022 | |||||||||||||||||||||||||||||||
Debt instrument, interest rate, effective percentage | 12.00% | |||||||||||||||||||||||||||||||
Promissory Note Three [Member] | ||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||
Debt issuance date | Dec. 27, 2021 | |||||||||||||||||||||||||||||||
Total | [3],[12] | $ 420,000 | [2] | 420,000 | ||||||||||||||||||||||||||||
Debt instrument, maturity date | Jan. 27, 2022 | |||||||||||||||||||||||||||||||
Debt instrument, unamortized discount (premium) and debt issuance costs, net | $ 20,000 | |||||||||||||||||||||||||||||||
Promissory Note Four [Member] | ||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||
Debt | $ 30,000 | |||||||||||||||||||||||||||||||
Debt issuance date | Nov. 04, 2022 | |||||||||||||||||||||||||||||||
Total | [13] | $ 30,000 | [2] | 30,000 | ||||||||||||||||||||||||||||
Debt instrument, maturity date | Apr. 30, 2023 | |||||||||||||||||||||||||||||||
Debt instrument, unamortized discount (premium) and debt issuance costs, net | $ 5,000 | |||||||||||||||||||||||||||||||
Promissory Note Five [Member] | ||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||
Debt | $ 90,000 | |||||||||||||||||||||||||||||||
Debt issuance date | Nov. 07, 2022 | |||||||||||||||||||||||||||||||
Total | [14] | $ 90,000 | [2] | 90,000 | ||||||||||||||||||||||||||||
Debt instrument, maturity date | Apr. 30, 2023 | |||||||||||||||||||||||||||||||
Debt instrument, unamortized discount (premium) and debt issuance costs, net | $ 15,000 | |||||||||||||||||||||||||||||||
Demand Loan Three [Member] | ||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||
Total | 80,480 | [2] | 22,500 | |||||||||||||||||||||||||||||
Promissory Note Six [Member] | ||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||
Debt | $ 22,000 | |||||||||||||||||||||||||||||||
Debt issuance date | Dec. 27, 2022 | |||||||||||||||||||||||||||||||
Total | [3],[9] | $ 22,000 | [2] | 22,000 | ||||||||||||||||||||||||||||
Debt instrument, maturity date | Jan. 06, 2023 | |||||||||||||||||||||||||||||||
Debt instrument, unamortized discount (premium) and debt issuance costs, net | $ 2,000 | |||||||||||||||||||||||||||||||
Promissory Note Seven [Member] | ||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||
Debt | $ 22,000 | |||||||||||||||||||||||||||||||
Debt issuance date | Feb. 21, 2023 | |||||||||||||||||||||||||||||||
Total | [3],[9] | $ 22,000 | [2] | |||||||||||||||||||||||||||||
Debt instrument, maturity date | Apr. 01, 2023 | |||||||||||||||||||||||||||||||
Debt instrument, unamortized discount (premium) and debt issuance costs, net | $ 2,000 | |||||||||||||||||||||||||||||||
Promissory Note Eight [Member] | ||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||
Debt | $ 30,000 | |||||||||||||||||||||||||||||||
Debt issuance date | Apr. 21, 2023 | |||||||||||||||||||||||||||||||
Total | [9] | $ 33,000 | [2] | |||||||||||||||||||||||||||||
Debt instrument, maturity date | Sep. 30, 2023 | |||||||||||||||||||||||||||||||
Debt instrument, unamortized discount (premium) and debt issuance costs, net | $ 3,000 | |||||||||||||||||||||||||||||||
Long Term Loans One [Member] | ||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||
Long-term loan | 9,538 | |||||||||||||||||||||||||||||||
Long term debt, current maturities | 43,169 | |||||||||||||||||||||||||||||||
Long Term Loans Two [Member] | ||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||
Long-term loan | 15,369 | |||||||||||||||||||||||||||||||
Long term debt, current maturities | $ 61,499 | |||||||||||||||||||||||||||||||
Loan Two [Member] | ||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||
Net proceeds | $ 422,009 | |||||||||||||||||||||||||||||||
Payment fees | 26,500 | |||||||||||||||||||||||||||||||
Loan Four [Member] | ||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||
Net proceeds | 359,919 | |||||||||||||||||||||||||||||||
Payment fees | $ 22,475 | |||||||||||||||||||||||||||||||
|
The following are the minimum amounts due on the notes as of April 30, 2023: (Details) |
3 Months Ended |
---|---|
Apr. 30, 2023
USD ($)
| |
Short-Term Debt [Line Items] | |
Minimum amount due | $ 3,301,573 |
Loans Payable [Member] | |
Short-Term Debt [Line Items] | |
Short term debt terms | April 30, 2024 |
Minimum amount due | $ 3,221,812 |
Loans Payable1 [Member] | |
Short-Term Debt [Line Items] | |
Short term debt terms | April 30, 2025 |
Minimum amount due | $ 26,118 |
Loans Payable 2 [Member] | |
Short-Term Debt [Line Items] | |
Short term debt terms | April 30, 2026 |
Minimum amount due | $ 27,447 |
Loans Payable 3 [Member] | |
Short-Term Debt [Line Items] | |
Short term debt terms | April 30, 2027 |
Minimum amount due | $ 26,196 |
The components of the Company’s debt as of April 30, 2023 and January 31, 2023 were as follows: (Details) - USD ($) |
3 Months Ended | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Apr. 30, 2023 |
Jan. 31, 2023 |
||||||||||||||||||||||||
Extinguishment of Debt [Line Items] | |||||||||||||||||||||||||
Sub-total | $ 11,428,323 | $ 11,278,650 | |||||||||||||||||||||||
Debt discount | (404,664) | (840,067) | |||||||||||||||||||||||
Total | $ 11,023,659 | ||||||||||||||||||||||||
Total | 10,438,583 | ||||||||||||||||||||||||
Debt 1 [Member] | |||||||||||||||||||||||||
Extinguishment of Debt [Line Items] | |||||||||||||||||||||||||
Maturity date | [1] | Nov. 04, 2013 | |||||||||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||||||||||
Default interest rate | 12.00% | ||||||||||||||||||||||||
Conversion price | [2] | $ 1,800,000 | |||||||||||||||||||||||
Sub-total | $ 100,000 | 100,000 | |||||||||||||||||||||||
Debt 2 [Member] | |||||||||||||||||||||||||
Extinguishment of Debt [Line Items] | |||||||||||||||||||||||||
Maturity date | [1] | Jan. 31, 2014 | |||||||||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||||||||||
Default interest rate | 18.00% | ||||||||||||||||||||||||
Conversion price | [2] | $ 2,400,000 | |||||||||||||||||||||||
Sub-total | $ 16,000 | 16,000 | |||||||||||||||||||||||
Debt 3 [Member] | |||||||||||||||||||||||||
Extinguishment of Debt [Line Items] | |||||||||||||||||||||||||
Maturity date | [1] | Jul. 31, 2013 | |||||||||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||||||||||
Default interest rate | 12.00% | ||||||||||||||||||||||||
Conversion price | [2] | $ 1,440,000 | |||||||||||||||||||||||
Sub-total | $ 5,000 | 5,000 | |||||||||||||||||||||||
Debt 4 [Member] | |||||||||||||||||||||||||
Extinguishment of Debt [Line Items] | |||||||||||||||||||||||||
Maturity date | [1] | Jan. 31, 2014 | |||||||||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||||||||||
Default interest rate | 12.00% | ||||||||||||||||||||||||
Conversion price | [2] | $ 2,400,000 | |||||||||||||||||||||||
Sub-total | $ 30,000 | 30,000 | |||||||||||||||||||||||
Debt 5 [Member] | |||||||||||||||||||||||||
Extinguishment of Debt [Line Items] | |||||||||||||||||||||||||
Maturity date | [1] | Nov. 12, 2022 | |||||||||||||||||||||||
Interest rate | 8.00% | ||||||||||||||||||||||||
Default interest rate | 12.00% | ||||||||||||||||||||||||
Sub-total | $ 3,000,000 | [3] | 3,000,000 | ||||||||||||||||||||||
Debt 6 [Member] | |||||||||||||||||||||||||
Extinguishment of Debt [Line Items] | |||||||||||||||||||||||||
Maturity date | [1] | Feb. 14, 2023 | |||||||||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||||||||||
Default interest rate | 20.00% | ||||||||||||||||||||||||
Sub-total | $ 2,400,000 | [4] | 2,400,000 | ||||||||||||||||||||||
Debt 7 [Member] | |||||||||||||||||||||||||
Extinguishment of Debt [Line Items] | |||||||||||||||||||||||||
Maturity date | [1] | Feb. 25, 2023 | |||||||||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||||||||||
Default interest rate | 20.00% | ||||||||||||||||||||||||
Sub-total | $ 195,000 | [4] | 250,000 | ||||||||||||||||||||||
Debt 8 [Member] | |||||||||||||||||||||||||
Extinguishment of Debt [Line Items] | |||||||||||||||||||||||||
Maturity date | [1] | Feb. 25, 2023 | |||||||||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||||||||||
Default interest rate | 20.00% | ||||||||||||||||||||||||
Sub-total | $ 700,000 | [4] | 700,000 | ||||||||||||||||||||||
Debt 9 [Member] | |||||||||||||||||||||||||
Extinguishment of Debt [Line Items] | |||||||||||||||||||||||||
Maturity date | [1] | Mar. 09, 2023 | |||||||||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||||||||||
Default interest rate | 20.00% | ||||||||||||||||||||||||
Sub-total | $ 400,000 | [4] | 400,000 | ||||||||||||||||||||||
Debt 10 [Member] | |||||||||||||||||||||||||
Extinguishment of Debt [Line Items] | |||||||||||||||||||||||||
Maturity date | [1] | Mar. 09, 2023 | |||||||||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||||||||||
Default interest rate | 20.00% | ||||||||||||||||||||||||
Sub-total | $ 400,000 | [4] | 400,000 | ||||||||||||||||||||||
Debt 11 [Member] | |||||||||||||||||||||||||
Extinguishment of Debt [Line Items] | |||||||||||||||||||||||||
Maturity date | [1] | Apr. 22, 2023 | |||||||||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||||||||||
Default interest rate | 20.00% | ||||||||||||||||||||||||
Sub-total | $ 880,000 | [4] | 880,000 | ||||||||||||||||||||||
Debt 12 [Member] | |||||||||||||||||||||||||
Extinguishment of Debt [Line Items] | |||||||||||||||||||||||||
Maturity date | [1] | Apr. 22, 2023 | |||||||||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||||||||||
Default interest rate | 20.00% | ||||||||||||||||||||||||
Sub-total | $ 220,000 | [4] | 220,000 | ||||||||||||||||||||||
Debt 13 [Member] | |||||||||||||||||||||||||
Extinguishment of Debt [Line Items] | |||||||||||||||||||||||||
Maturity date | [1] | May 19, 2023 | |||||||||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||||||||||
Default interest rate | 16.00% | ||||||||||||||||||||||||
Sub-total | $ 500,000 | [5] | 500,000 | ||||||||||||||||||||||
Debt 14 [Member] | |||||||||||||||||||||||||
Extinguishment of Debt [Line Items] | |||||||||||||||||||||||||
Maturity date | [1] | Feb. 11, 2023 | |||||||||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||||||||||
Default interest rate | 18.00% | ||||||||||||||||||||||||
Sub-total | $ 275,000 | [4] | 275,000 | ||||||||||||||||||||||
Debt 15 [Member] | |||||||||||||||||||||||||
Extinguishment of Debt [Line Items] | |||||||||||||||||||||||||
Maturity date | [1] | Dec. 27, 2022 | |||||||||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||||||||||
Default interest rate | 18.00% | ||||||||||||||||||||||||
Sub-total | $ 275,000 | [4] | 275,000 | ||||||||||||||||||||||
Debt 17 [Member] | |||||||||||||||||||||||||
Extinguishment of Debt [Line Items] | |||||||||||||||||||||||||
Maturity date | [1] | Jan. 06, 2023 | |||||||||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||||||||||
Default interest rate | 18.00% | ||||||||||||||||||||||||
Sub-total | $ 140,000 | [4],[6],[7] | 125,000 | ||||||||||||||||||||||
Debt 18 [Member] | |||||||||||||||||||||||||
Extinguishment of Debt [Line Items] | |||||||||||||||||||||||||
Maturity date | [1] | Jan. 06, 2023 | |||||||||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||||||||||
Default interest rate | 18.00% | ||||||||||||||||||||||||
Sub-total | $ 140,000 | [4],[6],[7] | 125,000 | ||||||||||||||||||||||
Debt 19 [Member] | |||||||||||||||||||||||||
Extinguishment of Debt [Line Items] | |||||||||||||||||||||||||
Maturity date | [1] | Jan. 11, 2023 | |||||||||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||||||||||
Default interest rate | 18.00% | ||||||||||||||||||||||||
Sub-total | $ 153,890 | [4],[6],[7] | 138,890 | ||||||||||||||||||||||
Debt 20 [Member] | |||||||||||||||||||||||||
Extinguishment of Debt [Line Items] | |||||||||||||||||||||||||
Maturity date | Apr. 22, 2023 | ||||||||||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||||||||||
Default interest rate | 18.00% | ||||||||||||||||||||||||
Sub-total | $ 290,000 | [4],[6],[7] | 275,000 | ||||||||||||||||||||||
Debt 21 [Member] | |||||||||||||||||||||||||
Extinguishment of Debt [Line Items] | |||||||||||||||||||||||||
Maturity date | Apr. 22, 2023 | ||||||||||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||||||||||
Default interest rate | 18.00% | ||||||||||||||||||||||||
Sub-total | $ 290,000 | [4],[6],[7] | 275,000 | ||||||||||||||||||||||
Debt 22 [Member] | |||||||||||||||||||||||||
Extinguishment of Debt [Line Items] | |||||||||||||||||||||||||
Maturity date | [1] | Sep. 29, 2023 | |||||||||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||||||||||
Default interest rate | 22.00% | ||||||||||||||||||||||||
Sub-total | $ 187,101 | [6],[8],[9] | 211,428 | ||||||||||||||||||||||
Debt 23 [Member] | |||||||||||||||||||||||||
Extinguishment of Debt [Line Items] | |||||||||||||||||||||||||
Maturity date | May 10, 2023 | ||||||||||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||||||||||
Default interest rate | 18.00% | ||||||||||||||||||||||||
Sub-total | $ 186,450 | [10] | 186,450 | ||||||||||||||||||||||
Debt 24 [Member] | |||||||||||||||||||||||||
Extinguishment of Debt [Line Items] | |||||||||||||||||||||||||
Maturity date | May 10, 2023 | ||||||||||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||||||||||
Default interest rate | 18.00% | ||||||||||||||||||||||||
Sub-total | $ 186,450 | [10] | 186,450 | ||||||||||||||||||||||
Debt 25 [Member] | |||||||||||||||||||||||||
Extinguishment of Debt [Line Items] | |||||||||||||||||||||||||
Maturity date | Nov. 21, 2023 | ||||||||||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||||||||||
Default interest rate | 22.00% | ||||||||||||||||||||||||
Sub-total | $ 54,432 | [3] | 54,432 | ||||||||||||||||||||||
Debt 26 [Member] | |||||||||||||||||||||||||
Extinguishment of Debt [Line Items] | |||||||||||||||||||||||||
Maturity date | Jul. 05, 2024 | ||||||||||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||||||||||
Default interest rate | 18.00% | ||||||||||||||||||||||||
Sub-total | $ 327,000 | [4] | $ 250,000 | ||||||||||||||||||||||
Debt 27 [Member] | |||||||||||||||||||||||||
Extinguishment of Debt [Line Items] | |||||||||||||||||||||||||
Maturity date | Apr. 20, 2024 | ||||||||||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||||||||||
Default interest rate | 18.00% | ||||||||||||||||||||||||
Sub-total | [11] | $ 77,000 | |||||||||||||||||||||||
|
SHORT-TERM CONVERTIBLE DEBT (Details Narrative) - USD ($) |
1 Months Ended | 3 Months Ended | |||
---|---|---|---|---|---|
Apr. 20, 2023 |
Apr. 30, 2023 |
Apr. 30, 2023 |
Apr. 30, 2022 |
Jan. 31, 2023 |
|
Short-Term Debt [Line Items] | |||||
Accrued interest payable | $ 1,810,560 | $ 1,810,560 | $ 1,342,097 | ||
Amortization | 628,613 | $ 725,280 | |||
Penalty interest to the loans | 90,028 | $ 0 | |||
Short-term debt in default | $ 11,024,323 | $ 11,024,323 | |||
Promissory Convertible Notes [Member] | |||||
Short-Term Debt [Line Items] | |||||
Convertible debt, description | the Company entered into a convertible note for $77,000 with a one year maturity, interest rate of 12% with a warrant to purchase 388,884 common shares with a five year maturity and an exercise price of $0.25, and 50,000 common shares. The Company will receive $60,800 and recorded an original issue discount of $7,000 along with fees of $9,200, a derivative discount of 60,800 for the conversion feature, recognized $27,541 based on a relative fair value calculation as debt discount with a corresponding adjustment to paid-in capital for the attached warrants and shares. The Company expensed $13,428 as interest which was the amount of the derivative discount that exceeded the face value of the loan. The discount is amortized over the term of the loan. The note has certain default provisions such as failure to pay any principal or interest when due and failure to issue shares upon conversion. In the event of these or any other default provisions, the note becomes due and payable at 150%. The note is secured on all assets of the Company subordinated to a prior security. | ||||
Promissory Convertible Notes 3 [Member] | |||||
Short-Term Debt [Line Items] | |||||
Convertible debt, description | the Company issued an amended and restated note replacing the July 5, 2022 $250,000 note with a January 5, 2023 maturity. In addition, the Company issued a warrant to acquire 97,221 shares with a $1.00 exercise price and a 5 year maturity, and the maturity of the note was revised to July 5, 2023. The terms of the amended note are that the Company received $70,000 with an original issue discount of $7,000 a derivative discount of $76,212 for the conversion feature, recognized $5,443 based on a relative fair value calculation as debt discount with a corresponding adjustment to paid-in capital for the attached warrants. The original note had cash proceeds of $225,000 and an original issue discount of $25,000, a derivative discount of $33,860 for the conversion feature, recognized $139,638 based on a relative fair value calculation as debt discount with a corresponding adjustment to paid-in capital for the attached warrants and shares, and transaction fees of $35,000. When combined with the original note, the total new note will now be for $327,000 having total cash proceeds of $295,000 and total original issue discount of $32,000 a derivative discount of $110,072 for the conversion feature, recognized $145,101 based on a relative fair value calculation as debt discount with a corresponding adjustment to paid-in capital for the attached warrants and shares and transaction fees of $35,000. |
The following table presents changes in Level 3 liabilities measured at fair value for the three months ended April 30, 2022. (Details) |
3 Months Ended |
---|---|
Apr. 30, 2023
USD ($)
| |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Balance at beginning | $ 3,271,058 |
Changes due to issuance of new convertible notes | 297,045 |
Changes due to conversions of notes payable | (81,429) |
Mark to market change in derivatives | 1,006,700 |
Balance at ending | $ 4,493,374 |
DERIVATIVE LIABILITIES (Details Narrative) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Apr. 30, 2023 |
Apr. 30, 2022 |
Jan. 31, 2023 |
|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||
Derivative liabilities | $ 4,493,374 | $ 3,271,058 | |
Gain (loss) fair value of derivative liabilities | $ 1,006,700 | $ 337,737 |
Schedule of warrants fair value (Details) |
3 Months Ended |
---|---|
Apr. 30, 2023
$ / shares
| |
Dividend yield | 0.00% |
Minimum [Member] | |
Expected volatility | 588.00% |
Exercise price | $ 0.15 |
Stock price | $ 0.15 |
Expected life | 3 years |
Risk-free interest rate | 3.57% |
Maximum [Member] | |
Expected volatility | 2224.00% |
Exercise price | $ 1.03 |
Stock price | $ 1.10 |
Expected life | 5 years |
Risk-free interest rate | 4.44% |
Schedule of warrants issued and outstanding (Details) - Warrant [Member] |
3 Months Ended |
---|---|
Apr. 30, 2023
$ / shares
shares
| |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Beginning balance (in shares) | shares | 250,000 |
Beginning balance | $ / shares | $ 4.00 |
Beginning balance (in shares) | shares | 1,609,728 |
Beginning balance | $ / shares | $ 13.49 |
Granted | shares | |
Granted | $ / shares | |
Granted | shares | 611,105 |
Granted | $ / shares | $ 0.75 |
Ending balance (in shares) | shares | 250,000 |
Ending balance | $ / shares | $ 4.00 |
Ending balance (in shares) | shares | 2,220,833 |
Ending balance | $ / shares | $ 9.98 |
STOCKHOLDERS’ DEFICIT (Details Narrative) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Apr. 30, 2023 |
Apr. 30, 2022 |
Jan. 31, 2023 |
|
Class of Stock [Line Items] | |||
Common stock shares authorized | 75,000,000 | 75,000,000 | |
Common stock, par value (in dollars per share) | $ 0.000001 | $ 0.000001 | |
Common stock, shares outstanding | 2,570,374 | 1,917,982 | |
Description of comman shares converted by lenders | Lenders converted $95,256 of principal, $7,965 of interest and $2,600 of fees all totaling $105,820 into 434,434 common shares. | ||
Number of shares issued | 167,958 | ||
Fair value of shares | $ 122,109 | $ 1,064,965 | |
Accued expenses | 196,958 | ||
Gain on settlement | 74,489 | ||
Fair value of shares converted | $ 32,984 | ||
Number of shares and warrent issued | 254,141 | ||
Option outstanding | 250,000 | 250,000 | |
Option and warrant expense | $ 0 | $ 0 | |
Description of warrants | the Company issued warrants to purchase 486,105 common shares along with debt to various lenders as well as warrants to acquire 125,000 common shares as penalty interest. The table below provides the significant estimates used that resulted in the Company determining the relative fair value of the 486,105 warrants (and 50,000 common shares mentioned above) at $32,984, which has been recorded as a debt discount and the 125,000 warrants at $34,500 which has been recorded as interest both with corresponding adjustments to paid-in capital. | ||
Warrant [Member] | |||
Class of Stock [Line Items] | |||
Number of shares issued | 50,000 | ||
Common Stock [Member] | |||
Class of Stock [Line Items] | |||
Number of shares issued | 486,105 | ||
Preferred stock converted into common stock ( in shares) | 905,110 | ||
Series A Preferred Stock [Member] | |||
Class of Stock [Line Items] | |||
Preferred stock, shares outstanding | 0 | 0 | |
Preferred stock, shares authorized | 330,000 | 330,000 | |
Preferred stock, shares issued | 0 | 0 | |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | |
Series B Preferred Stock [Member] | |||
Class of Stock [Line Items] | |||
Preferred stock, shares outstanding | 20,000 | 20,000 | |
Preferred stock, shares authorized | 20,000 | 20,000 | |
Preferred stock, shares issued | 20,000 | 20,000 | |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | |
Series C Preferred Stock [Member] | |||
Class of Stock [Line Items] | |||
Preferred stock, shares outstanding | 0 | 0 | |
Preferred stock, shares authorized | 7,250 | 7,250 | |
Preferred stock, shares issued | 0 | 0 | |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | |
Preferred stock converted into common stock ( in shares) | 7,250 | ||
Series D Preferred Stock [Member] | |||
Class of Stock [Line Items] | |||
Preferred stock, shares outstanding | 870 | 870 | |
Preferred stock, shares authorized | 870 | 870 | |
Preferred stock, shares issued | 870 | 870 | |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | |
Preferred stock, voting ights | These shares are non-voting | ||
Redemption price | $ 1,000 |
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) |
Apr. 30, 2023 |
Jan. 31, 2023 |
---|---|---|
Related Party Transactions [Abstract] | ||
Related party accrued expenses | $ 94,291 | $ 74,111 |
Schedule of minimum lease obligations (Details) |
Apr. 30, 2023
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
April 30 2024 | $ 42,803 |
April 30, 2025 | 30,003 |
April 30, 2025 | 30,003 |
April 30, 2026 | 17,503 |
Total lease payments | 120,312 |
Less: Interest | (5,889) |
Present value of lease liabilities | $ 114,423 |
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Jul. 01, 2018 |
Aug. 30, 2016 |
Apr. 30, 2023 |
Jan. 31, 2022 |
|
Lessee, Lease, Description [Line Items] | ||||
Operating leases, rent expense | $ 26,701 | $ 30,479 | ||
Warehouse Lease Facility Two [Member] | ||||
Lessee, Lease, Description [Line Items] | ||||
Operating lease description | the Company entered into a 60-month lease agreement for its 3,554 sf warehouse facility starting in December 2016 with a minimum base rent of $2,132 and estimated monthly CAM charges of $1,017 per month. | |||
Operating leases, rent expense | $ 2,132 | |||
Warehouse Lease Facility Three [Member] | ||||
Lessee, Lease, Description [Line Items] | ||||
Operating lease description | the Company entered into a 60-month lease agreement with its minority shareholder for its 8,800 sf warehouse facility with a minimum base rent of $6,400 per month. | |||
Operating leases, rent expense | $ 6,400 |
The net income (loss) per common share amounts were determined as follows: (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Apr. 30, 2023 |
Apr. 30, 2022 |
|
Numerator: | ||
Net income (loss) available to common shareholders | $ (2,871,291) | $ (2,594,158) |
Denominator: | ||
Weighted average shares - basic | 2,060,429 | 1,342,433 |
Weighted average shares - basic | $ (1.39) | $ (1.93) |
Effect of common stock equivalents | ||
Add: interest expense on convertible debt | $ 476,428 | $ 112,742 |
Add: amortization of debt discount | 628,613 | 725,280 |
Add (less): (gain) loss on settlement of debt on convertible notes | 54,756 | |
Add (Less): loss (gain) on change of derivative liabilities | 1,006,700 | 337,737 |
Net income (loss) adjusted for common stock equivalents | (704,794) | (1,418,399) |
Dilutive effect of common stock equivalents: | ||
Convertible class c preferred shares | ||
Denominator: | ||
Weighted average shares – diluted | 2,060,429 | 1,342,433 |
Net income (loss) per share - diluted | $ (1.39) | $ (1.93) |
Warrant [Member] | ||
Dilutive effect of common stock equivalents: | ||
Convertible class c preferred shares | ||
Convertible Class C Preferred Shares [Member] | ||
Dilutive effect of common stock equivalents: | ||
Convertible class c preferred shares |
The anti-dilutive shares of common stock equivalents for the three months ended April 30, 2023 and April 30, 2022 were as follows: (Details) - shares |
3 Months Ended | |
---|---|---|
Apr. 30, 2023 |
Apr. 30, 2022 |
|
Short-Term Debt [Line Items] | ||
Anti-dilutive shares | 82,777,628 | 1,421,831 |
Convertible Notes and Accrued interest [Member] | ||
Short-Term Debt [Line Items] | ||
Anti-dilutive shares | 65,499,076 | 701,281 |
Options Held [Member] | ||
Short-Term Debt [Line Items] | ||
Anti-dilutive shares | 1,666,667 | 50,000 |
Warrant [Member] | ||
Short-Term Debt [Line Items] | ||
Anti-dilutive shares | 15,611,885 | 670,550 |
SUBSEQUENT EVENTS (Details Narrative) - USD ($) |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Aug. 10, 2023 |
Jul. 17, 2023 |
Jun. 01, 2023 |
Aug. 10, 2023 |
May 17, 2023 |
Apr. 30, 2023 |
|
Subsequent Event [Line Items] | ||||||
Total debt owed | $ 11,023,659 | |||||
Subsequent Event [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Description of conversion | In addition, the Company issued 100,000 common shares and a warrant to acquire up to 1,000,000 common shares at an exercise price of $0.00001 and a maturity upon full exercise of this warrant. On July 12, 2023, the Company again amended the above note with a third amendment. The Company received $50,000 with an original issue discount of $25,000. The principal value of this amended note is now $483,502.37 with total cash proceeds of $417,652.13 and total original issue discount of $65,850.24. All other terms and conditions remain the same. Default interest is 18%. | |||||
Total debt owed | $ 99,110 | |||||
Convertible Debt 2 [Member] | Subsequent Event [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Principal amount | $ 250,000 | $ 250,000 | ||||
Maturiet date | Jan. 05, 2023 | |||||
Proceeds from issuance of common stock | $ 72,652 | |||||
Original issue discount | 8,850 | |||||
Convertible Debt 3 [Member] | Subsequent Event [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Principal amount | $ 327,000 | $ 327,000 | ||||
Convertible Debt 4 [Member] | Subsequent Event [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Principal amount | $ 408,502 | |||||
Convertible Debt [Member] | Subsequent Event [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Principal amount | $ 127,500 | |||||
Maturiet date | Jan. 17, 2024 | |||||
Proceeds from issuance of common stock | $ 115,000 | |||||
Original issue discount | $ 11,500 | |||||
Description of conversion | The note has certain default provisions such as failure to pay any principal or interest when due and failure to issue shares upon conversion. In the event of these or any other default provisions, default interest is 18%. Penalty shares of 16.67% of the outstanding loan balance is due if the note is not paid at maturity. | |||||
Investment interest rate | 10.00% | |||||
Conversion of shares | 255,000 | |||||
Fees | $ 1,000 | |||||
Exercise price of shares | $ 0.20 |
1 Year Auto Parts 4Less (PK) Chart |
1 Month Auto Parts 4Less (PK) Chart |
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