UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 31, 2023
[_] TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________________
to _________________________
Commission file number: 000-55089
AUTO PARTS 4LESS GROUP, INC.
(Exact name of registrant as specified in its charter)
| Nevada |
|
90-1494749 |
| (State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification No.) |
| 106 W. Mayflower, Las Vegas, NV |
|
89030 |
| (Address of principal executive offices) |
|
(Zip Code) |
Registrant’s telephone number, including area
code: 702-267-6100
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 |
Securities registered pursuant to Section 12(g) of
the Act: Common Stock, par value $0.000001
Indicate by check mark if the registrant is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act.
Yes [_] No
[X]
Indicate by check mark if the registrant is not required
to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes [_] No
[X]
Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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.
Yes [_] No [X]
Indicate by check mark whether the registrant has
submitted electronically on its corporate Website, if any, 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).
Yes [ ] No [X]
Indicate by check mark whether the registrant is a
large accelerated filer, an accelerated filer, a non-accelerated filer, 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 |
[_] |
| |
|
|
|
|
| |
Non-Accelerated filer |
[X] |
Smaller reporting company |
[X] |
| |
|
|
|
|
| |
|
|
Emerging Growth Company |
[_] |
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 check mark whether
the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report. [_]
If securities are registered
pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing
reflect the correction of an error to previously issued financial statements. [_]
Indicate by check mark whether
any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). [_]
Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Act).
Yes [_] No
[X]
The aggregate market value of common stock, par value
$0.000001 per share, held by non-affiliates of the registrant, based on the average bid and asked prices of the common stock on July 31,
2022 (the last business day of the registrant’s most recently completed second quarter) was approximately $6,617,390.
Number of common shares outstanding at July 31, 2023:
2,723,499
AUTO PARTS 4LESS GROUP, INC.
FORM 10-K
TABLE OF CONTENTS
- 2 -
Table of Contents
FORWARD-LOOKING STATEMENTS
This annual report on Form 10-K includes forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as amended, which we refer to in this annual report as the
Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, which we refer to in this annual 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 annual report. Factors that can cause or contribute to these
differences include those described under the headings “Risk Factors” and “Management’s Discussion and Analysis
of Financial Condition and Results of Operations.”
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 annual 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 annual
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.
Auto Parts 4Less Group, Inc. formerly The 4Less Group,
Inc. is referred to hereinafter as “we”, “our”, or “us.
PART I
Item 1. Business.
Company
Auto Parts 4Less Group, Inc. formerly The 4LESS Group,
Inc., also previously known as MedCareers Group, Inc. (the “Company”, “MCGI”), was incorporated under the
laws of the State of Nevada on December 5, 2007. The Company 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, and was converted in December 2021 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 operated as
an e-commerce auto and truck parts sales company. As a result of the share exchange, the Company became a holding company operating through
4Less and offers products including exhaust systems, suspension systems, wheels, tires, stereo systems, truck bed covers, and shocks.
In early 2020, the company began developing AutoParts4Less.com
as a multi-seller enterprise-level marketplace dedicated to consolidating the $500 billion annual aftermarket automotive parts industry,
including cars, trucks, boats, motorcycles, and RVs, on a single platform. The company officially launched AutoParts4Less.com with around
2 million parts from over 25 parts sellers in November 2022. Later in the month of November 2022
the company made the decision to discontinue LiftKits4Less.com operations.
- 3 -
Table of Contents
Auto Parts 4Less Group, Inc. formerly The 4LESS Group,
Inc. (“4Less”, the “Company”, “we” or “us”), the Company described
herein, is a Nevada corporation, with offices located at 106 W Mayflower, Las Vegas, NV 89030. It can be reached by phone at (702) 267-6100.
History
The Company was formed as RX Scripted, LLC on December
30, 2004 as a North Carolina limited liability company and converted to a Nevada corporation as RX Scripted, Inc. on December 5, 2007.
On or around January 7, 2010 the Company’s name
was changed to MedCareers Group, Inc. Additionally, as a result of filing the Certificate, the Company’s symbol on the Over-The-Counter
Bulletin Board changed to “MCGI”, effective January 7, 2010.
On or around November 19, 2010, the Company entered
into a Share Exchange Agreement (the “Exchange”) with Nurses Lounge, Inc., a Texas corporation (“Nurses Lounge”)
and the nine shareholders of Nurses Lounge (the “Nurses Lounge Shareholders”). Pursuant to the Exchange, we agreed
to issue 24,000,000 restricted shares of our common stock to the Nurses Lounge Shareholders in exchange for 100% of the issued and outstanding
shares of common stock of Nurses Lounge. Although 24,000,000 restricted shares were issued in connection with the Exchange, certain
significant shareholders of the Company also agreed to cancel some of the shares they owned so that the net effect of the Exchange was
an increase to the outstanding shares by 7,175,000 shares rather than 24,000,000. Included in the shareholders receiving shares
in connection with the Exchange, was Timothy Armes founder and president of Nurses Lounge, Inc., who received 14,902,795 shares. In December
2019 Nurses Lounge was disposed of as more fully described elsewhere in this Form 10-K and in the Notes to the Financial Statements.
Auto Parts 4Less
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. 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 and the Autoparts4less.com marketplace was officially launched in early November 2022. Later in the month of November
2022 the company made the decision to discontinue LiftKits4Less.com operations. By doing so the company no longer needs to carry parts
inventory and maintain warehouse space thus greatly reducing the monthly operating costs in the process.
On April 28.
2022 the Company changed its name from The 4LESS Group, Inc. to Auto Parts 4Less Group, Inc.
- 4 -
Table of Contents
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.
Employees
As of August 9, 2023, we had 2 employees, 2 of which
were full-time.
Item 1A. Risk Factors
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 1B. Unresolved Staff Comments
Not applicable.
Item 2. Properties.
Executive Offices
We maintain offices at 106 W Mayflower, Las Vegas,
Nevada 89030. We pay monthly rent of $6,400 and our lease expires on June 30, 2022, with an additional one year renewal. The Company
exercised the renewal option to June 30, 2023 after which the lease will be month to month.
Item 3. Legal Proceedings.
None.
Item 4. Mine Safety Disclosures.
None.
- 5 -
Table of Contents
PART II
Item 5. Market for Registrant’s Common
Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
The Company’s common stock is traded on the
OTC Pink market (otherwise known as the “pink sheets”) maintained by OTC Markets under the symbol “FLES”. The
following table sets forth, for the periods indicated, the high and low sales prices, which set forth reflect inter-dealer prices, without
retail mark-up or mark-down and without commissions; and may not reflect actual transactions. The Company effected a 10:1 reverse split
on April 26, 2022, so the post reverse split prices are shown.
| Calendar Quarter Ending |
Low |
High |
| |
$ |
$ |
| January 31, 2023 |
1.13 |
7.20 |
| October 31, 2022 |
1.62 |
8.89 |
| July 31, 2022 |
4.75 |
11.99 |
| April 30, 2022 |
0.95 |
11.00 |
| |
|
|
| January 31, 2022 |
6.80 |
20.00 |
| October 31, 2021 |
9.50 |
23.90 |
| July 31, 2021 |
17.00 |
22.50 |
| April 30, 2021 |
20.60 |
34.50 |
No cash dividends on the Company common stock have
been declared or paid since the Company’s inception. The Company had approximately 124 shareholders at July 31, 2023. This does
not include shareholders that hold their shares in street name or with a broker.
Recent Sales of Unregistered Securities
Preferred Stock
On June 11, 2018, we filed with the state of Nevada
designations for Series C and D Preferred Stock of the Company, as well as amended designation for our Series A and B Preferred Stock.
Series A Preferred Stock consists of 330,000 authorized shares. Series A Preferred shares have no voting rights and carry conversion rights
into common stock of the Company at a rate equal to factor of total issued and outstanding common stock a the time of conversion divided
by 0.0152. Series B Preferred Stock consists of 20,000 shares. Series B shares in total shall have voting rights equal 66.7% of the total
voting rights (all common shares plus all other series of preferred stock as if they had converted on that date). Series C Preferred Stock
consists of 7,250 shares. The total of the Series C Preferred shares shall convert to our common stock by multiplying the number of issued
and outstanding shares of common stock by 2.63 on the conversion date. Conversion is automatic as of December 31, 2022, regardless of
the acts of the holders. Series D Preferred Stock consists of 870 shares. Series D Preferred shares have no voting rights and are redeemable
for $1,000 per share at the discretion of either the holder us. For more details regarding the right and obligations of the respective
series of preferred stock, please review the Exhibits 3.1-3.4. filed on Edgar on November 13, 2018 and incorporated herein by reference.
During the year ended January 31, 2022, there were
no transactions of Preferred stock.
During the year ended January 31, 2023 there was the
following transaction:
On February 1, 2022 all Series C shareholders holding
all 7,250 outstanding shares converted all of their shares for 905,111 common shares.
- 6 -
Table of Contents
Common Stock
| |
|
Consideration |
|
Date |
|
# Shares |
Number of shares outstanding,
January 31, 2017 |
|
|
|
|
|
2.3 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $6,050 of principal and $2,341 of accrued interest |
|
15-Nov-17 |
|
0.3 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $4,400 of principal and $1,743 of accrued interest |
|
29-Nov-17 |
|
0.3 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $4,400 of principal and $1,745 of accrued interest |
|
8-Dec-17 |
|
0.3 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $2,550 of principal |
|
19-Jan-18 |
|
0.1 |
| Accrued expenses converted to common stock – related party |
|
Convert a portion of accrued expense of $2,250 |
|
31-Jan-18 |
|
0.1 |
| Accrued expenses converted to common stock – related party |
|
Convert a portion of accrued expense of $1,125 |
|
31-Jan-18 |
|
0.1 |
| Accrued expenses converted to common stock |
|
Convert a portion of accrued expense of $750 |
|
31-Jan-18 |
|
— |
| Common stock issued for services |
|
Services valued at $3,000 |
|
31-Jan-18 |
|
— |
| Common stock issued for services |
|
Services valued at $300 |
|
31-Jan-18 |
|
— |
Number of shares outstanding,
January 31, 2018 |
|
|
|
|
|
3.5 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $2,200 of principal and $1,145 of accrued interest |
|
6-Jun-18 |
|
0.3 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $1,760 of principal and $978 of accrued interest |
|
30-Jul-18 |
|
0.2 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $1,650 of principal and $944 of accrued interest |
|
9-Oct-18 |
|
0.2 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $1,540 of principal and $941 of accrued interest |
|
22-Oct-18 |
|
0.2 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $6,373 of accrued interest |
|
9-Nov-18 |
|
0.1 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $2,750 of accrued interest |
|
9-Nov-18 |
|
0.2 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $2,950 of accrued interest |
|
15-Nov-18 |
|
0.2 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $13,863 of principal and $9,176 of accrued interest |
|
16-Nov-18 |
|
0.1 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,235 of accrued interest |
|
19-Nov-18 |
|
0.3 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,108 of principal and $1,890 of accrued interest |
|
21-Nov-18 |
|
0.4 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $1,322 of principal and $2,328 of accrued interest |
|
23-Nov-18 |
|
0.3 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $1,540 of principal and $941 of accrued interest |
|
30-Nov-18 |
|
0.4 |
| Cancelation of shares |
|
Cancellation in conjunction with acquisition |
|
30-Nov-18 |
|
(0.3) |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,717 of principal and $133 of accrued interest |
|
30-Nov-18 |
|
0.3 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,958 of principal and $92 of accrued interest |
|
3-Dec-18 |
|
0.3 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $4,216 of principal and $84 of accrued interest |
|
6-Dec-18 |
|
0.4 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,190 of principal and $1,981 of accrued interest |
|
10-Dec-18 |
|
0.4 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,843 of principal and $127 of accrued interest |
|
11-Dec-18 |
|
0.3 |
- 7 -
Table of Contents
Common Stock (continued)
| |
|
Consideration |
|
Date |
|
# Shares |
| Cancellation in conjunction with disposal of subsidiary |
|
Shares cancelled due to spinoff of subsidiary and discontinued operations |
|
12-Dec-18 |
|
(0.2) |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $4,885 of principal and $114 of accrued interest |
|
16-Nov-18 |
|
0.4 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $4,950 of principal and $3,096 of accrued interest |
|
16-Nov-18 |
|
0.7 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $5,191 of principal and $58 of accrued interest |
|
16-Nov-18 |
|
0.4 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $5,934 of principal and $16 of accrued interest |
|
16-Nov-18 |
|
0.5 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,088 of principal and $61 of accrued interest |
|
16-Nov-18 |
|
0.3 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $5,500 of principal and $3,480 of accrued interest |
|
16-Nov-18 |
|
0.7 |
| Convert a portion of accrued expense |
|
Convert a portion of accrued expense of $1,125 |
|
31-Dec-18 |
|
0.1 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $6,732 of principal and $158 of accrued interest |
|
10-Jan-19 |
|
0.6 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $5,500 of principal and $3,523 of accrued interest |
|
10-Jan-19 |
|
0.8 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $7,547 of principal and $48 of accrued interest |
|
17-Jan-19 |
|
0.6 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $8,000 of accrued interest |
|
18-Jan-19 |
|
0.7 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $9,240 of principal and $6,034 of accrued interest |
|
18-Jan-19 |
|
1.3 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $2,535 of accrued interest |
|
22-Jan-19 |
|
0.3 |
Number of shares outstanding,
January 31, 2019 |
|
|
|
|
|
15 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $7,952 of principal and 4,844 of accrued interest |
|
1-Feb-19 |
|
1 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $1,202 of principal and $42 of accrued interest |
|
15-Feb-19 |
|
— |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $4,527 of principal and $5,473 of accrued interest |
|
25-Feb-19 |
|
1 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $10,494 of principal and $56 of accrued interest |
|
26-Feb-19 |
|
1 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $10,945 of principal and $7,428 of accrued interest |
|
26-Feb-19 |
|
2 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $11,072 of principal and $45 of accrued interest |
|
27-Feb-19 |
|
1 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $12,534 of principal and $66 of accrued interest |
|
1-Mar-19 |
|
1 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $13,172 of principal and $78 of accrued interest |
|
5-Mar-19 |
|
1. |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $12,100 of principal and $8,179 of accrued interest |
|
5-Mar-19 |
|
2 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $9,265 of interest and $500 of fees |
|
5-Mar-19 |
|
1 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,887 of principal, $6,602 of interest and $500 of fees |
|
6-Mar-19 |
|
1 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $8,611 of principal, $59 of interest and $500 of fees |
|
7-Mar-19 |
|
1 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $11,321 of principal, $219 of interest and $500 of fees |
|
11-Mar-19 |
|
1 |
- 8 -
Table of Contents
Common Stock (continued)
| |
|
Consideration |
|
Date |
|
# Shares |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $17,600 of principal and $11,966 of accrued interest |
|
11-Mar-19 |
|
3 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $12,121 of principal, $49 of interest and $500 of fees |
|
12-Mar-19 |
|
2 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $8,592 of principal, $43 of interest and $500 of fees |
|
13-Mar-19 |
|
1 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $9,401 of principal, $39 of interest and $500 of fees |
|
14-Mar-19 |
|
1 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $8,743 of principal, $207 of interest and $500 of fees |
|
20-Mar-19 |
|
1 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $12,100 of principal and $8,357 of accrued interest |
|
5-Apr-19 |
|
3 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $1 of principal and $378 of accrued interest |
|
5-Apr-19 |
|
2 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $8,800 of principal and $6,223 of accrued interest |
|
30-Apr-19 |
|
1 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $432 of accrued interest |
|
30-Apr-19 |
|
2 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $469 of accrued interest |
|
2-May-19 |
|
2 |
| Common stock at issued 52% discount to market per note conversion agreement |
|
Convert a portion of note payable including $8,416 of principal, $196 of interest and $500 of fees |
|
2-May-19 |
|
3 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $22,000 of principal and $6,738 of accrued interest |
|
7-May-19 |
|
2 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $13,300 of principal, $202 of interest and $500 of fees |
|
10-May-19 |
|
3 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $11,051 of principal, $27 of interest and $500 of fees |
|
14-May-19 |
|
2 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $1,139 of principal |
|
16-May-19 |
|
3 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $2,613 of principal and $1,892 of accrued interest |
|
16-May-19 |
|
— |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $6,600 of principal and $4,428 of accrued interest |
|
16-May-19 |
|
1 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $1,196 of principal |
|
17-May-19 |
|
3 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $1,317 of principal |
|
20-May-19 |
|
3 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $854 of principal |
|
21-May-19 |
|
2 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $1,317 of principal |
|
22-May-19 |
|
3 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $739 of principal |
|
23-May-19 |
|
2 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $1,538 of principal |
|
28-May-19 |
|
4 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $1,538 of principal |
|
28-May-19 |
|
4 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $1,593 of principal |
|
30-May-19 |
|
4 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $1,799 of principal |
|
31-May-19 |
|
5 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $11,000 of principal and $8,320 of accrued interest |
|
31-May-19 |
|
5 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $1,879 of principal |
|
3-Jun-19 |
|
5 |
- 9 -
Table of Contents
Common Stock (continued)
| |
|
Consideration |
|
Date |
|
# Shares |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $15,362 of principal and $11,670 of accrued interest |
|
5-Jun-19 |
|
9 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $12,599 of interest |
|
5-Jun-19 |
|
5 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $12,798 of principal and $1,518 of accrued interest |
|
11-Jun-19 |
|
6 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including 3,300 of principal and $2,443 of accrued interest |
|
11-Jun-19 |
|
2 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $11,364 of principal and $62 of accrued interest |
|
13-Jun-19 |
|
6 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $12,016 of principal and $24 of accrued interest |
|
14-Jun-19 |
|
7 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $11,625 of principal and $47 of accrued interest |
|
17-Jun-19 |
|
7 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $6,780 of principal and $8 of accrued interest |
|
18-Jun-19 |
|
6 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $5,405 of principal and $671 of accrued interest |
|
19-Jun-19 |
|
5 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $6,165 of accrued interest |
|
20-Jun-19 |
|
5 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $1,985 of principal and $7,679 of accrued interest |
|
21-Jun-19 |
|
8 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $10,022 of principal and $114 of accrued interest |
|
24-Jun-19 |
|
9 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $5,064 of principal and $32 of accrued interest |
|
25-Jun-19 |
|
4 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $5,872 of principal and $56 of accrued interest |
|
27-Jun-19 |
|
5 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $7,376 of principal and $24 of accrued interest |
|
28-Jun-19 |
|
9 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,215 of principal and $59 of accrued interest |
|
1-Jul-19 |
|
4 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $8,057 of principal and $17 of accrued interest |
|
2-Jul-19 |
|
10 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $5,154 of principal and $12 of accrued interest |
|
3-Jul-19 |
|
8 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,807 of principal and $43 of accrued interest |
|
8-Jul-19 |
|
6 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,122 of principal |
|
8-Jul-19 |
|
6 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $5,922 of principal and $8 of accrued interest |
|
10-Jul-19 |
|
12 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $6,244 of accrued interest |
|
11-Jul-19 |
|
12 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $5,081 of accrued interest |
|
12-Jul-19 |
|
10 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $2,347 of principal and $4,133 of accrued interest |
|
15-Jul-19 |
|
14 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $4,147 of principal and $38 of accrued interest |
|
16-Jul-19 |
|
9 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $4,872 of principal and $106 of accrued interest |
|
19-Jul-19 |
|
15 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $5,095 of principal and $96 of accrued interest |
|
22-Jul-19 |
|
16 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $5,293 of principal and $29 of accrued interest |
|
23-Jul-19 |
|
16 |
- 10 -
Table of Contents
Common Stock (continued)
| |
|
Consideration |
|
Date |
|
# Shares |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $5,467 of principal and $25 of accrued interest |
|
24-Jul-19 |
|
17 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $5,722 of principal and $21 of accrued interest |
|
25-Jul-19 |
|
18 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $6,022 of principal and $18 of accrued interest |
|
26-Jul-19 |
|
19 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $5,389 of principal and $41 of accrued interest |
|
29-Jul-19 |
|
20 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,731 of principal and $10 of accrued interest |
|
30-Jul-19 |
|
20 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,855 of principal and $8 of accrued interest |
|
31-Jul-19 |
|
22 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $4,056 of principal and $5 of accrued interest |
|
1-Aug-19 |
|
23 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $4,033 of principal and $3 of accrued interest |
|
3-Aug-19 |
|
24 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $4,759 of accrued interest |
|
5-Aug-19 |
|
26 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $4,721 of accrued interest |
|
6-Aug-19 |
|
27 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,997 of accrued interest |
|
7-Aug-19 |
|
19 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $229 of principal and $3,529 of accrued interest |
|
8-Aug-19 |
|
21 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $5,123 of principal and $157 of accrued interest |
|
12-Aug-19 |
|
30 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $5,552 of principal and $36 of accrued interest |
|
13-Aug-19 |
|
32 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $5,864 of principal and $32 of accrued interest |
|
14-Aug-19 |
|
34 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $6,132 of principal and $28 of accrued interest |
|
15-Aug-19 |
|
35 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,802 of principal and $98 of accrued interest |
|
19-Aug-19 |
|
24 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $2,674 of principal and $22 of accrued interest |
|
20-Aug-19 |
|
18 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $4,089 of principal and $20 of accrued interest |
|
21-Aug-19 |
|
27 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $6,127 of principal and $17 of accrued interest |
|
22-Aug-19 |
|
40 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $6,534 of principal and $13 of accrued interest |
|
23-Aug-19 |
|
43 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $6,846 of principal and $27 of accrued interest |
|
26-Aug-19 |
|
45 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $7,030 of principal and $209 of accrued interest |
|
27-Aug-19 |
|
47 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $7,603 of accrued interest |
|
28-Aug-19 |
|
50 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $7,987 of accrued interest |
|
29-Aug-19 |
|
52 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $6,503 of principal and $1,518 of accrued interest |
|
30-Aug-19 |
|
52 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $4,662 of principal and $141 of accrued interest |
|
3-Sep-19 |
|
40 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $4,997 of principal and $64 of accrued interest |
|
5-Sep-19 |
|
55 |
- 11 -
Table of Contents
Common Stock (continued)
| |
|
Consideration |
|
Date |
|
# Shares |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $5,064 of principal and $115 of accrued interest |
|
9-Sep-19 |
|
62 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,851 of principal and $25 of accrued interest |
|
10-Sep-19 |
|
48 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,549 of principal and $23 of accrued interest |
|
11-Sep-19 |
|
48 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,927 of principal and $21 of accrued interest |
|
12-Sep-19 |
|
53 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $2,802 of principal and $18 of accrued interest |
|
13-Sep-19 |
|
38 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $5,055 of principal and $49 of accrued interest |
|
16-Sep-19 |
|
73 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $5,531 of principal and $13 of accrued interest |
|
17-Sep-19 |
|
79 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,645 of principal and $18 of accrued interest |
|
19-Sep-19 |
|
82 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,647 of principal and $7 of accrued interest |
|
20-Sep-19 |
|
87 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,171 of principal and $13 of accrued interest |
|
23-Sep-19 |
|
91 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,347 of principal and $2 of accrued interest |
|
24-Sep-19 |
|
96 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $248 of principal and $1,546 of accrued interest |
|
25-Sep-19 |
|
65 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $2,633 of accrued interest |
|
26-Sep-19 |
|
104 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $1,853 of accrued interest |
|
27-Sep-19 |
|
81 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $2,599 of accrued interest |
|
1-Oct-19 |
|
114 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $1,777 of principal and $656 of accrued interest |
|
2-Oct-19 |
|
107 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $2,843 of principal and $19 of accrued interest |
|
3-Oct-19 |
|
126 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $2,543 of principal and $17 of accrued interest |
|
4-Oct-19 |
|
112 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,090 of principal and $45 of accrued interest |
|
7-Oct-19 |
|
137 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,287 of principal and $13 of accrued interest |
|
8-Oct-19 |
|
145 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,460 of principal and $11 of accrued interest |
|
9-Oct-19 |
|
152 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,639 of principal and $9 of accrued interest |
|
10-Oct-19 |
|
160 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,829 of principal and $6 of accrued interest |
|
11-Oct-19 |
|
168 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,186 of accrued interest |
|
14-Oct-19 |
|
177 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $2,160 of accrued interest |
|
15-Oct-19 |
|
120 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,212 of principal and $18 of accrued interest |
|
16-Oct-19 |
|
192 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $2,318 of principal and $1,079 of accrued interest |
|
17-Oct-19 |
|
202 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $1,562 of accrued interest |
|
18-Oct-19 |
|
93 |
- 12 -
Table of Contents
Common Stock (continued)
| |
|
Consideration |
|
Date |
|
# Shares |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $1,717 of principal and $1,676 of accrued interest |
|
21-Oct-19 |
|
218 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,374 of principal and $19 of accrued interest |
|
22-Oct-19 |
|
229 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,158 of principal and $16 of accrued interest |
|
23-Oct-19 |
|
241 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,319 of principal and $14 of accrued interest |
|
24-Oct-19 |
|
252 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,486 of principal and $12 of accrued interest |
|
25-Oct-19 |
|
265 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $2,989 of principal and $29 of accrued interest |
|
28-Oct-19 |
|
280 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,167 of principal and $8 of accrued interest |
|
29-Oct-19 |
|
294 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,331 of principal and $6 of accrued interest |
|
30-Oct-19 |
|
309 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,506 of principal and $4 of accrued interest |
|
31-Oct-19 |
|
325 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $1,952 of principal and $919 of accrued interest |
|
2-Nov-19 |
|
342 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,003 of accrued interest |
|
4-Nov-19 |
|
358 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $2,265 of accrued interest |
|
5-Nov-19 |
|
378 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $2,383 of accrued interest |
|
6-Nov-19 |
|
397 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $977 of principal and $1,528 of accrued interest |
|
14-Nov-19 |
|
417 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $2,084 of principal and $76 of accrued interest |
|
18-Nov-19 |
|
360 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $1,886 of principal and $35 of accrued interest |
|
20-Nov-19 |
|
457 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $392 of principal and $1,000 of fees |
|
20-Nov-19 |
|
435 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $1,999 of principal and $16 of accrued interest |
|
21-Nov-19 |
|
480 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $2,409 of principal and $15 of accrued interest |
|
22-Nov-19 |
|
505 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $1,476 of interest and $750 of fees |
|
25-Nov-19 |
|
530 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $1,591 of interest and $750 of fees |
|
26-Nov-19 |
|
557 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $840 of principal and $1,000 of fees |
|
26-Nov-19 |
|
575 |
| Common stock at issued 55% discount to market per note conversion agreement |
|
Convert a portion of note payable including $2,082 of principal and $750 of fees |
|
27-Nov-19 |
|
590 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $6,765 of principal and $2,177 of accrued interest |
|
27-Nov-19 |
|
1,177 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $1,812 of interest and $750 of fees |
|
29-Nov-19 |
|
610 |
| Common stock at issued 55% discount to market per note conversion agreement |
|
Convert a portion of note payable including $2,646 of principal and $750 of fees |
|
2-Dec-19 |
|
707 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $1,213 of interest and $750 of fees |
|
2-Dec-19 |
|
467 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $2,148 of interest and $750 of fees |
|
3-Dec-19 |
|
690 |
- 13 -
Table of Contents
Common Stock (continued)
| |
|
Consideration |
|
Date |
|
# Shares |
| Common stock at issued 55% discount to market per note conversion agreement |
|
Convert a portion of note payable including $2,958 of principal and $750 of fees |
|
3-Dec-19 |
|
772 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $6,567 of principal and $2,144 of accrued interest |
|
4-Dec-19 |
|
1,452 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $2,820 of interest and $750 of fees |
|
4-Dec-19 |
|
850 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $920 of interest and $1,000 of fees |
|
4-Dec-19 |
|
800 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $670 of principal, $2,990 of interest and $750 of fees |
|
5-Dec-19 |
|
1,050 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,859 of principal, $53 of interest and $750 of fees |
|
6-Dec-19 |
|
1,110 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $2,690 of principal and $750 of fees |
|
6-Dec-19 |
|
1,075 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $112 of principal and $1,000 of fees |
|
9-Dec-19 |
|
445 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $4,002 of principal, $151 of interest and $750 of fees |
|
9-Dec-19 |
|
1,167 |
| Common stock at issued 55% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,298 of principal and $750 of fees |
|
10-Dec-19 |
|
1,265 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $3,591 of principal, $48 of interest and $750 of fees |
|
10-Dec-19 |
|
1,045 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $5,190 of principal, $45 of interest and $750 of fees |
|
10-Dec-19 |
|
1,425 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $7,282 of principal and $2,401 of accrued interest |
|
12-Dec-19 |
|
2,423 |
| Common stock at issued 55% discount to market per note conversion agreement |
|
Convert a portion of note payable including $4,282 of principal and $750 of fees |
|
12-Dec-19 |
|
1,572 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $2,176 of principal, $84 of interest and $750 of fees |
|
13-Dec-19 |
|
1,075 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $4,028 of principal, $122 of interest and $750 of fees |
|
16-Dec-19 |
|
1,750 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $4,392 of principal, $38 of interest and $750 of fees |
|
17-Dec-19 |
|
1,850 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $1,938 of principal, $35 of interest and $750 of fees |
|
18-Dec-19 |
|
1,945 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $4,386 of principal and $1,472 of accrued interest |
|
18-Dec-19 |
|
1,464 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $2,052 of principal, $169 of interest and $750 of fees |
|
23-Dec-19 |
|
2,122 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $6,380 of principal and $714 of accrued interest |
|
23-Dec-19 |
|
3,547 |
| Common stock at issued 55% discount to market per note conversion agreement |
|
Convert a portion of note payable including $2,530 of principal and $750 of fees |
|
23-Dec-19 |
|
2,050 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $1,844 of principal, $519 of interest and $750 of fees |
|
8-Jan-20 |
|
2,252 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $2,500 of principal, $250 of interest and $750 of fees |
|
16-Jan-20 |
|
2,500 |
| Common shares issuable upon rounding of shares on reverse split |
|
|
|
31-Jan 20 |
|
170 |
Number of shares outstanding,
January 31, 2020 |
|
|
|
|
|
53,846 |
- 14 -
Table of Contents
Common Stock (continued)
| |
|
Consideration |
|
Date |
|
# Shares |
| Common stock at issued 55% discount to market per note conversion agreement |
|
Convert a portion of note payable including $316 of principal |
|
30-Mar-20 |
|
2,630 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $2,585 of principal and $498 of accrued interest |
|
24-Apr-20 |
|
5,606 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $1,793 of principal and $374 of accrued interest |
|
18-May-20 |
|
6,104 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $412 of principal. |
|
10-Jun-20 |
|
3,320 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $1,782 of principal and $405 of accrued interest |
|
17-Jun-20 |
|
7,045 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $2,035 of principal and $474 of accrued interest |
|
25-Jun-20 |
|
7,720 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $380 of principal. |
|
6-Jul-20 |
|
4,225 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $2,001 of accrued interest |
|
28-Aug-20 |
|
8,894 |
| Common stock at issued 55% discount to market per note conversion agreement |
|
Convert a portion of note payable including $557 of accrued interest |
|
3-Sep-20 |
|
2,485 |
| Common stock at issued 55% discount to market per note conversion agreement |
|
Convert a portion of note payable including $358 of interest and $750 of fees |
|
10-Sep-20 |
|
4,950 |
| Common stock issued |
|
Repayment of accrued expenses for $18,900 |
|
21-Sep-20 |
|
4,500 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Payment of commitment fee on loan for $50,000 |
|
13-Oct-20 |
|
1,969 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $1,091 of accrued interest |
|
3-Nov-20 |
|
4,870 |
| Common stock issued |
|
Payment of commitment fee on loan for $20,001 |
|
17-Nov-20 |
|
667 |
| Common stock issued |
|
Payment of commitment fee on loan for $43,750 |
|
24-Nov-20 |
|
1,750 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $5,000 of principal and $4,397 of accrued interest |
|
31-Dec-20 |
|
1,506 |
| Common stock at issued 50% discount to market per note conversion agreement |
|
Convert a portion of note payable including $10,500 of principal and $9,027 of accrued interest |
|
31-Dec-20 |
|
3,129 |
| Common stock issued pursuant to REG A subscription |
|
$2.00 per share for gross proceeds of $50,000 |
|
15-Jan-21 |
|
2,500 |
| Common stock issued pursuant to REG A subscription |
|
$2.00 per share for gross proceeds of $50,000 |
|
15-Jan-21 |
|
2,500 |
| Common stock issued pursuant to REG A subscription |
|
$2.00 per share for gross proceeds of $100,000 |
|
15-Jan-21 |
|
5,000 |
| Common stock issued pursuant to REG A subscription |
|
$2.00 per share for gross proceeds of $100,000 |
|
15-Jan-21 |
|
5,000 |
| Common stock issued pursuant to REG A subscription |
|
$2.00 per share for gross proceeds of $50,000 |
|
31-Jan-21 |
|
2,500 |
Number of shares outstanding,
January 31, 2021 |
|
|
|
|
|
142,716 |
| Common stock issued pursuant to REG A subscription |
|
$2.00 per share for gross proceeds of $100,000 |
|
17-Feb-21 |
|
5,000 |
| Common stock issued pursuant to REG A subscription |
|
$2.00 per share for gross proceeds of $150,000 |
|
18-Feb-21 |
|
7,500 |
| Common stock issued pursuant to REG A subscription |
|
$2.00 per share for gross proceeds of $100,000 |
|
19-Feb-21 |
|
5,000 |
| Common stock issued pursuant to REG A subscription |
|
$2.00 per share for gross proceeds of $200,000 |
|
19-Feb-21 |
|
10,000 |
| Common stock issued pursuant to REG A subscription |
|
$2.00 per share for gross proceeds of $120,000 |
|
2-Mar-21 |
|
6,000 |
| Common stock issued pursuant to REG A subscription |
|
$2.00 per share for gross proceeds of $200,000 |
|
2-Mar-21 |
|
10,000 |
- 15 -
Table of Contents
Common Stock (continued)
| |
|
Consideration |
|
Date |
|
# Shares |
| Common stock issued pursuant to REG A subscription |
|
$2.00 per share for gross proceeds of $282,500 |
|
10-Mar-21 |
|
14,125 |
| Common stock issued for consulting fees |
|
Fair value of $107,500 |
|
15-Mar-21 |
|
5,000 |
| Common stock issued pursuant to REG A subscription |
|
$2.00 per share for gross proceeds of $25,000 |
|
18-Mar-21 |
|
1,250 |
| Common stock issued pursuant to REG A subscription |
|
$2.00 per share for gross proceeds of $100,000 |
|
1-Apr-21 |
|
5,000 |
| Common stock issued pursuant to REG A subscription |
|
$2.00 per share for gross proceeds of $50,000 |
|
4-Apr-21 |
|
2,500 |
| Common stock issued pursuant to REG A subscription |
|
$2.00 per share for gross proceeds of $100,000 |
|
14-Apr-21 |
|
5,000 |
| Common stock issued pursuant to REG A subscription |
|
$2.00 per share for gross proceeds of $200,000 |
|
20-Apr-21 |
|
10,000 |
| Common stock issued pursuant to REG A subscription |
|
$2.00 per share for gross proceeds of $7,500 |
|
20-Apr-21 |
|
375 |
| Common stock issued pursuant to REG A subscription |
|
$2.00 per share for gross proceeds of $99,500 |
|
20-Apr-21 |
|
4,975 |
| Common stock issued pursuant to REG A subscription |
|
$2.00 per share for gross proceeds of $200,000 |
|
22-Apr-21 |
|
10,000 |
| Common stock issued pursuant to REG A subscription |
|
$2.00 per share for gross proceeds of $100,000 |
|
23-Apr-21 |
|
5,000 |
| Common stock issued pursuant to REG A subscription |
|
$$2.00 per share for gross proceeds of $50,000 |
|
28-Apr-21 |
|
2,500 |
| Common stock issued pursuant to REG A subscription |
|
$2.00 per share for gross proceeds of $110,000 |
|
28-Apr-21 |
|
5,500 |
| Common stock issued at previous day bid price per note conversion agreement |
|
Convert a portion of note payable including $18,750 of principal, and $1,750 of fees |
|
27-May-21 |
|
1,000 |
| Common stock issued at previous day bid price per note conversion agreement |
|
Convert a portion of note payable including $36,850 of principal, and $1,750 of fees |
|
21-Jun-21 |
|
2,000 |
| Common stock issued with debt |
|
Relative fair value of $31,006 |
|
8-Jul-21 |
|
3,096 |
| Common stock issued with debt |
|
Relative fair value of $28,975 |
|
21-Jul-21 |
|
6,085 |
| Common stock issued |
|
Fair value of $191,000 |
|
22-Jul-21 |
|
10,000 |
| Common stock issued at previous day bid price per note conversion agreement |
|
Convert a portion of note payable including $25,000 of principal, $13,250 of interest, and $1,750 of fees |
|
9-Aug-21 |
|
2,000 |
| Common stock issued with debt |
|
Value included with 8-Jul-21 transaction above |
|
11-Aug-21 |
|
1,548 |
| Common stock issued pursuant to REG A subscription |
|
$2.00 per share for gross proceeds of $75,000 |
|
12-Aug-21 |
|
3,750 |
| Common stock issued pursuant to REG A subscription |
|
$2.00 per share for gross proceeds of $5,000 |
|
13-Aug-21 |
|
250 |
| Common stock issued pursuant to REG A subscription |
|
$2.00 per share for gross proceeds of $47,000 |
|
16-Aug-21 |
|
2,350 |
| Common stock issued pursuant to REG A subscription |
|
$2.00 per share for gross proceeds of $100,000 |
|
17-Aug-21 |
|
5,000 |
| Common stock issued to broker as fees |
|
Fair value of $30,055. |
|
19-Aug-21 |
|
1,301 |
| Common stock issued pursuant to share purchase agreement |
|
$1.53 per share for gross proceeds of $306,000 |
|
24-Aug-21 |
|
20,000 |
| Common stock issued pursuant to REG A subscription |
|
$2.00 per share for gross proceeds of $4,500 |
|
7-Sep-21 |
|
225 |
| Common stock issued pursuant to share purchase agreement |
|
$1.16 per share for gross proceeds of $139,320 |
|
8-Sep-21 |
|
12,000 |
| Common stock issued at previous day bid price per note conversion agreement |
|
Convert a portion of note payable including $25,000 of principal, $13,250 of interest, and $1,750 of fees |
|
9-Sep-21 |
|
2,000 |
| Common stock issued at previous day bid price per note conversion agreement |
|
Convert a portion of note payable including $25,000 of principal, $13,250 of interest, and $1,750 of fees |
|
10-Sep-21 |
|
1,977 |
| Common stock issued pursuant to share purchase agreement |
|
$0.95 per share for gross proceeds of $85,050 |
|
7-Oct-21 |
|
9,000 |
Number of shares outstanding,
January 31, 2022 |
|
|
|
|
|
341,023 |
- 16 -
Table of Contents
Common Stock (continued)
| |
|
Consideration |
|
Date |
|
# Shares |
| Conversion of Series C Preferred Shares |
|
6,075 Series C Preferred Shares |
|
1-Feb-22 |
|
758,420 |
| Conversion of Series C Preferred Shares |
|
100 Series C Preferred Shares |
|
1-Feb-22 |
|
12,484 |
| Conversion of Series C Preferred Shares |
|
675 Series C Preferred Shares |
|
1-Feb-22 |
|
84,269 |
| Conversion of Series C Preferred Shares |
|
400 Series C Preferred Shares |
|
1-Feb-22 |
|
49,937 |
| Common stock issued with debt |
|
$6.80 per share, part of relative fair value of $484,032 |
|
14-Feb-22 |
|
63,889 |
| Common stock issued with debt |
|
$5.40 per share, part of relative fair value of $132,255 |
|
18-Feb-22 |
|
5,105 |
| Common stock issued with debt |
|
$5.40 per share, part of relative fair value of $132,255 |
|
28-Feb-22 |
|
18,634 |
| Common stock issued with debt |
|
$5.40 per share, part of relative fair value of $52,613 |
|
28-Feb-22 |
|
7,986 |
| Common stock issued with debt |
|
$7.20 per share, part of relative fair value of $85,728 |
|
16-Mar-22 |
|
12,308 |
| Common stock issued with debt |
|
$7.20 per share, part of relative fair value of $85,515 |
|
16-Mar-22 |
|
12,308 |
| Common stock issued with debt |
|
$6.80 per share, part of relative fair value of $484,032 |
|
13-Apr-22 |
|
51,111 |
| Common stock issued with debt |
|
$5.40 per share, part of relative fair value of $132,255 |
|
13-Apr-22 |
|
14,907 |
| Common stock issued with debt |
|
$5.40 per share, part of relative fair value of $52,613 |
|
13-Apr-22 |
|
1,309 |
| Common stock issued with debt |
|
$7.20 per share, part of relative fair value of $85,728 |
|
13-Apr-22 |
|
6,892 |
| Common stock issued with debt |
|
$7.20 per share, part of relative fair value of $85,515 |
|
13-Apr-22 |
|
6,892 |
| Common stock issued with debt |
|
$7.00 per share, part of relative fair value of $201,420 |
|
26-Apr-22 |
|
42,240 |
| Common stock issued with debt |
|
$7.00 per share, part of relative fair value of $46,977 |
|
26-Apr-22 |
|
10,560 |
| Common shares issued as part of reverse stock split to compensate for partial shares |
|
Corresponding adjustment to paid-in capital |
|
30-Apr-22 |
|
87 |
| Common shares issued as part of reverse stock split to compensate for partial shares |
|
Corresponding adjustment to paid-in capital |
|
6-May-22 |
|
2,587 |
| Common stock issued with debt |
|
$7.75 per share, part of relative fair value of $192,341 |
|
16-May-22 |
|
41,500 |
| Common stock issued with debt |
|
$7.40 per share, part of relative fair value of $197,559 |
|
27-Jun-22 |
|
40,000 |
| Common stock issued with debt |
|
$8.00 per share, part of relative fair value of $139,638 |
|
6-Jul-22 |
|
40,000 |
| Common stock issued with debt |
|
$8.00 per share, part of relative fair value of $83,796 |
|
8-Jul-22 |
|
20,000 |
| Common stock issued with debt |
|
$8.00 per share, part of relative fair value of $83,796 |
|
8-Jul-22 |
|
20,000 |
| Warrant exercise |
|
cashless exercise of 14,000 warrants |
|
14-Jul-22 |
|
10,000 |
| Common stock issued with debt |
|
$9.99 per share for gross proceeds of $97,336 |
|
14-Jul-22 |
|
20,000 |
| Warrant exercise |
|
cashless exercise of 15,155 warrants |
|
14-Jul-22 |
|
10,000 |
| Common stock issued with debt |
|
$7.40 per share, part of relative fair value of $195,219 |
|
11-Aug-22 |
|
40,000 |
| Common stock issued with debt |
|
$5.75 per share for gross proceeds of $372,686 |
|
22-Aug-22 |
|
80,000 |
| Cancellation of shares |
|
|
|
19-Sep-22 |
|
(741) |
| Common stock issued at previous day bid price per note conversion agreement |
|
Convert a portion of note payable including $25,000 of principal, and $1,541 of interest, |
|
3-Nov-22 |
|
16,434 |
| Common stock issued at close price |
|
Repay accounts payable of $10,980 |
|
15-Nov-22 |
|
3,600 |
| Common stock issued with debt |
|
$2.99 per share for gross proceeds of $108,933 |
|
16-Nov-22 |
|
27,120 |
| Common stock issued with debt |
|
$2.99 per share for gross proceeds of $108,933 |
|
16-Nov-22 |
|
27,120 |
| Common stock issued with debt |
|
$2.15 per share for gross proceeds of $20,777 |
|
21-Nov-22 |
|
20,000 |
| |
|
|
|
|
|
|
Number of shares outstanding,
January 31, 2023 |
|
|
|
|
|
1,917,982 |
Summary of Common Stock Shares Issued in the Year
ended January 31, 2023
During the year ended January 31, 2023, all Class
C Preferred stock holders converted all outstanding 7,250 Class C Preferred shares into 905,100 common shares, a lender converted $25,000
of convertible notes, and $1,541of accrued interest into 16,434 common shares. The Company issued 629,881 shares along with warrants to
purchase 1,098,333 shares as part of debt issuances with a relative fair value of $2,451,982. The Company issued 20,000 shares to a lender
on cashless exercise of 29,155 warrants. The Company issued 3,600 shares as payment of accounts payable of $10,780. The Company cancelled
741 common shares pursuant to an SEC enforcement action against a lender. As part of the reverse split on April 28, 2022 the Company issued
2,675 shares to round up those shareholders for partial shares.
- 17 -
Table of Contents
Summary of Common Stock Shares Issued in the Year
ended January 31, 2022
During the year ended January 31, 2022, the Company
issued 172,300 shares for cash proceeds of $3,039,925. A lender converted $125,000 of the convertible notes, $27,691 of accrued interest
and $8,750 of fees into 8,977 common shares. The Company issued 6,301 shares with a fair value of $137,555 as payment for fees to consultants.
The Company issued 10,729 shares to lenders as commitment fee with a relative fair value of $234,237.
Summary of Class C Preferred Stock Issued in the
year ended January 31, 2023:
On February 1, 2022 all Class C Preferred stock holders
converted all outstanding 7,250 Class C Preferred shares into 905,110 common shares.
Summary of Class C Preferred Stock Issued in the
year ended January 31, 2022:
No transactions.
Options and Warrants
We had the following options and warrants outstanding
at January 31, 2023:
| Issued To |
# Warrants and Options |
Dated |
Expire |
Strike Price* |
Expired |
Exercised |
| Lender |
95,000 |
08/28/2020 |
08/28/2023 |
$4.00 per share |
N |
N |
| Broker |
250 |
10/11/2020 |
10/11/2025 |
$45.00 per share |
N |
N |
| Broker |
300 |
11/25/2020 |
11/25/2025 |
$30.00 per share |
N |
N |
| Triton |
30,000 |
07/27/2021 |
07/27/2024 |
$21.11 per share |
N |
N |
| Consultant |
25,000 |
08/26/2021 |
08/26/2024 |
$15.00 per share |
N |
N |
| T. Armes |
250,000 |
5/5/2022 |
10/14/2023 |
$4.00 per share |
N |
N |
| Lender |
60,845 |
11/12/2021 |
11/12/2026 |
$15.00 per share |
N |
N |
| Lender |
90,000 |
11/12/2021 |
11/12/2026 |
$15.00 per share |
N |
N |
| Lender |
30,000 |
01/27/2022 |
01/27/2025 |
$15.00 per share |
N |
N |
| Lender |
120,000 |
2/14/2022 |
2/14/2027 |
$15.00 per share |
N |
N |
| Lender |
15,000 |
2/26/22 |
2/276/25 |
$5.40 per share |
N |
N |
| Lender |
35,000 |
2/25/2022 |
2/25/2027 |
$15.00 per share |
N |
N |
| Lender |
15,000 |
2/25/2022 |
2/25/2027 |
$15.00 per share |
N |
N |
| Lender |
20,000 |
3/9/22 |
3/9/27 |
$15.00 per share |
N |
N |
| Lender |
20,000 |
3/9/22 |
3/9/27 |
$15.00 per share |
N |
N |
| Lender |
11,000 |
4/22/22 |
4/22/27 |
$15.00 per share |
N |
N |
| Lender |
44,000 |
4/22/22 |
4/22/27 |
$15.00 per share |
N |
N |
| Lender |
15,000 |
3/28/22 |
3/28/25 |
$7.50 per share |
N |
N |
| Lender |
15,000 |
4/27/22 |
4/27/25 |
$6.99 per share |
N |
N |
| Lender |
33,333 |
5/19/22 |
5/19/27 |
$15.00 per share |
N |
N |
| Lender |
15,000 |
5/27/22 |
5/27/25 |
$5.12 per share |
N |
N |
| Lender |
15,000 |
6/26/22 |
6/26/25 |
$7.00 per share |
N |
N |
| Lender |
100,000 |
6/27/22 |
7/27/27 |
$15.00 per share |
N |
N |
| Lender |
100,000 |
7/5/22 |
7/5/27 |
$15.00 per share |
N |
N |
| Lender |
50,000 |
7/6/22 |
7/6/27 |
$15.00 per share |
N |
N |
| Lender |
50,000 |
7/11/22 |
7/11/27 |
$15.00 per share |
N |
N |
| Lender |
15,000 |
7/26/22 |
7/26/27 |
$15.00 per share |
N |
N |
| Lender |
100,000 |
8/11/22 |
8/11/27 |
$15.00 per share |
N |
N |
| Lender |
100,000 |
8/22/22 |
8/22/27 |
$15.00 per share |
N |
N |
| Lender |
100,000 |
8/22/22 |
8/22/27 |
$15.00 per share |
N |
N |
| Lender |
15,000 |
9/24/22 |
9/24/25 |
$5.10 per share |
N |
N |
| Lender |
15,000 |
10/24/22 |
10/24/25 |
$4.00 per share |
N |
N |
| Lender |
75,000 |
11/10/22 |
11/10/27 |
$15.00 per share |
N |
N |
| Lender |
75,000 |
11/10/22 |
11/10/27 |
$15.00 per share |
N |
N |
| Lender |
15,000 |
11/23/22 |
11/23/25 |
$3.30 per share |
N |
N |
| Lender |
15,000 |
12/23/22 |
12/23/25 |
$1.65 per share |
N |
N |
| Lender |
15,000 |
1/22/23 |
1/22/26 |
$1.55 per share |
N |
N |
__________
* All Strike Prices above are subject to price adjustment
clauses due to dilutive issuances.
- 18 -
Table of Contents
All of the above transactions our exempt from registration
afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Act”) since the foregoing issuances and grants did
not involve a public offering, the recipients took the shares and options for investment and not resale, the Company took appropriate
measures to restrict transfer, and the recipients were either (a) “accredited investors” and/or (b) had access to similar
documentation and information as would be required in a Registration Statement under the Act. No underwriters or agents were involved
in the foregoing issuances and the Company paid no underwriting discounts or commissions.
EQUITY COMPENSATION PLAN INFORMATION
The Company has no shareholder approved compensation
plans.
Item 6. [Reserved].
Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of Operations.
Results of Operations For the Year Ended January
31, 2023 compared to the year ended January 31, 2022
The following table shows our results of operations
for the years ended January 31, 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 |
|
$ |
4,202,880 |
|
$ |
11,018,751 |
|
$ |
(6,815,871 |
) |
(62% |
) |
| Gross Profit |
|
|
740,443 |
|
|
1,547,447 |
|
|
(807,004 |
) |
(52% |
) |
| Total Operating Expenses |
|
|
6,120,360 |
|
|
9,005,439 |
|
|
(2,885,079 |
) |
(32% |
) |
| Total Other Income (Expense) |
|
|
(12,404,608 |
) |
|
(611,764 |
) |
|
(11,792,844 |
) |
(1,928% |
) |
| Net Income (Loss) |
|
$ |
(17,784,525 |
) |
$ |
(8,069,756 |
) |
$ |
(9,714,769 |
) |
(120% |
) |
Revenue
The following table shows revenue split between proprietary
and third-party website revenue for the years ended January 31, 2023 and 2022:
| |
|
|
|
|
|
Change |
|
| |
|
2023 |
|
2022 |
|
$ |
|
% |
|
| Proprietary website revenue |
|
$ |
2,793,961 |
|
$ |
7,576,068 |
|
$ |
(4,782,107 |
) |
(63% |
) |
| Third party website revenue |
|
|
1,408,919 |
|
|
3,442,683 |
|
|
(2,033,764 |
) |
(59% |
) |
| Total Revenue |
|
$ |
4,202,880 |
|
$ |
11,018,751 |
|
$ |
(6,815,871 |
) |
(62% |
) |
We had total revenue of 4,202,880 for the year ended
January 31, 2023, compared to $11,018,751 for the year ended January 31, 2022. Revenue decreased by $6,815,871 or 62%. This large decrease
can be attributed to the Company winding down it’s online store activities during to be replaced by the online marketplace autoparts4less.com.
In it’s previous business model the company operated as a traditional online store, carrying inventories, fulfilling orders as well
as sales and marketing costs. The Company’s revenues going forward will be based on transactional charges earned within the marketplace.
As autoparts4less.com grows, we presently have eighty vendors, and expect to be shortly at 100 vendors, and during the next fiscal year
will become the Company’s primary focus and revenue generator .The Company at January 31, 2021 had $66,153 (2022- $665,143) of deferred
revenue which represents orders received before January 31, 2023 but delivered after. This will be revenue that the Company recognizes
in the first quarter ended April 30, 2023. Also, the Company had $38,448 (2022- $530,900) in customer deposits which represents
orders received before January 31, 2023 but either cancelled or still unfulfilled after. For the prior year ended January 31, 2022, both
deferred revenues and deposits were a result of inventory shortages and supplier back-order issues as well as normal order fulfillment
delays.
Gross Profit
We had gross profit of $740,443 for the year ended
January 31, 2023, compared to gross profit of $1,547,447 for the year ended January 31, 2022. Gross profit decreased by $807,004, a 52%
reduction, yet gross profit % increased to 18% in fiscal 2023 from 14% in fiscal 2022.
- 19 -
Table of Contents
Gross profit decreased because of the 62% decrease
in sales. This was partially offset by the increase in gross profit % which was because of the remaining pandemic issues in fiscal 2022
relating to cost of revenue where the Company had to purchase goods at higher product costs from distributers rather than the usual manufacturers
for many of the new available products or some of the products that were not available from the usual manufacturers due to supply chain
issues. In fiscal 2023 the Company focused more on available products that were more profitable.
Operating Expenses
The following table shows our operating expenses for
the years ended January 31, 2023 and 2022. Operating expenses decreased to $6,120,360 for the year ended January 31, 2023 from $9,005,439
for the year ended January 31, 2022:
| |
|
|
|
|
|
Change |
|
| |
|
2023 |
|
2022 |
|
$ |
|
% |
|
| Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation |
|
$ |
51,006 |
|
$ |
48,931 |
|
$ |
2,075 |
|
4% |
|
| Postage, Shipping and Freight |
|
|
166,332 |
|
|
531,954 |
|
|
(365,622 |
) |
(69% |
) |
| Marketing and Advertising |
|
|
717,887 |
|
|
2,430,905 |
|
|
(1,713,018 |
) |
(70% |
) |
| E Commerce Services, Commissions and Fees |
|
|
1,249,655 |
|
|
1,569,825 |
|
|
(320,170 |
) |
(20% |
) |
| Operating lease cost |
|
|
116,879 |
|
|
121,917 |
|
|
(5,038 |
) |
(4% |
) |
| Personnel Costs |
|
|
618,066 |
|
|
1,482,448 |
|
|
(864,382 |
) |
(58% |
) |
| PPP Loan Forgiveness |
|
|
— |
|
|
(209,447 |
) |
|
209,447 |
|
100% |
|
| General and Administrative |
|
|
3,200,535 |
|
|
3,028,906 |
|
|
171,629 |
|
6% |
|
| Total Operating Expenses |
|
$ |
6,120,360 |
|
$ |
9,005,439 |
|
$ |
(2,885,079 |
) |
(33% |
) |
• Depreciation increased by
$2,075 as there were only $1,142 in asset additions in fiscal 2023 so there was no significant change in depreciation expense.
• Postage shipping and freight
decreased by $365,622 due to 62% decrease in sales.
• Marketing and advertising
decreased by $1,713,018 due to only minimal advertising done in anticipation of soon transitioning revenues to autoparts4less.com marketplace.
• E Commerce Services, Commissions
and Fees decreased by $320,170 with $444,026 due to decreased sales offset by an increase of approximately $124,000 on the new marketplace
website.
• Personnel Costs decreased
by $864,382 due to staff reductions as a result of lower volumes due to the business transition. The President of the subsidiary, Autoparts4less
Inc. reduced his salary in fiscal 2023 by approximately $611,000 to $2,071.
• General and Administrative
increased by $171,629. This increase is attributed to a non cash increase charge of $596,945 to stock based compensation. The $1,998,000
charge on 250,000 options issued to the CEO (which replaced 50,000 options previously issued and now cancelled) was offset by fees to
consultants paid in warrants and shares that were charged and issued in the prior year. This increase was offset by the following changes:
$312,484 decrease in professional fees (which comprise of accounting, legal, reporting and transfer agent costs), and $182,190 decrease
in investor relations. Reporting and investor relations charges decreased to S-1 and shares issuances done in the prior year.
Other Income (Expense)
The following table shows our other income and expenses
for the years ended January 31, 2023 and 2022:
| |
|
|
|
|
|
Change |
|
| |
|
2023 |
|
2022 |
|
$ |
|
% |
|
| Other Income (Expense) |
|
|
|
|
|
|
|
|
|
|
|
|
| Gain (Loss) on Sale of Property and Equipment |
|
$ |
— |
|
$ |
20,345 |
|
$ |
(20,345 |
) |
(100% |
) |
| Gain (Loss) on Derivatives |
|
|
(665,949 |
) |
|
235,703 |
|
|
(901,652 |
) |
(383% |
) |
| Gain on Settlement of Debt |
|
|
42,527 |
|
|
1,410,113 |
|
|
(1,367,586 |
) |
(97% |
) |
| Amortization of Debt Discount |
|
|
(5,691,122 |
) |
|
(918,463 |
) |
|
(4,772,659 |
) |
520% |
|
| Interest Expense |
|
|
(6,090,064 |
) |
|
(1,359,462 |
) |
|
(4,730,602 |
) |
348% |
|
| Total Other Income (Expense) |
|
$ |
(12,404,608 |
) |
$ |
(611,764 |
) |
$ |
(11,792,844 |
) |
1,928% |
|
- 20 -
Table of Contents
The results of the year ended January 31, 2023 resulted
in other expense of $12,404,608 vs other expense of $611,764 for the year ended January 31, 2022. For the year ended January 31, 2023
the Company acquired approximately $6 million in short term convertible debt which resulted in higher interest costs and debt amortization.
The convertible debt also included added warrants and shares which increased the discount and resultant amortization as well. Penalty
interest of $3,782,814 was charged in the year ending January 31, 2023 compared with $ 28,000 charged the prior year.
We had net loss of $17,784,525 for the year ended
January 31, 2023, compared to net loss of $8,069,756 for the year ended January 31, 2022 due mainly, the higher interest and debt amortization,
the lower gain on settlement of debt, increased share based compensation and the other factors mentioned above.
Liquidity and Capital Resources
As of January 31, 2023, we had cash and cash equivalents
of $4,737 of cash, $50,000 of inventory and total current liabilities of $20,768,832. We had negative working capital of $20,671,087 as
of January 31, 2023.
Net cash used in operations for the year ended
January 31, 2023 was $3,837,380 compared to $6,340,468 for the year ended January 31, 2022. The use of cash in operations was caused
by the net loss offset by non-cash adjustments.
Net cash used in investing activities for the
year ended January 31, 2023 was $1,142 compared to $18,568 for the year ended January 31, 2022. In both years net cash used in
investing activities was for fixed asset additions.
Cash provided by financing activities for the year
ended January 31, 2023 was $3,765,761 compared to $6,158,870 for the year ended January 31, 2022. For the year ended January 31, 2023
cash provided from financing activities was from the proceeds from convertible notes payable. For the prior year, cash provided from financing
activities was from the net proceeds from the issuance of common shares and the proceeds from convertible notes payable.
Subsequent to year end, through the date of
filing of this Form 10-K, the company issued loans totaling $204,500 for cash proceeds of $75,800. In addition the Company amended
an existing loan with a lender increasing the loan by $233,502 and receiving additional proceeds of $192,652. In addition as part of
these amendments, the company issued 100,000 shares of common stock, warrants to acquire 97,221 shares with a 5 year term and a
$1.00 exercise price and additional warrants to acquire 1,000,000 shares of common stock with an exercise price of $0.00001 and
matures upon issuance of these share. The maturity date was amended to July 5, 2023.
We borrowed funds and/or sold stock for working capital.
These transactions are detailed in the section “Recent Sales of Unregistered Securities”.
Currently, we don’t have sufficient cash reserves
to meet its contractual obligations and its ongoing monthly expenses, which we anticipate totaling approximately $6,000,000 over the next
12 months. Historically, revenues have not been sufficient to cover operating costs that would permit us to continue as a going
concern. These conditions raise substantial doubt about our ability to continue as a going concern. We have been able to continue operating
to date largely from loans made by its shareholders, other debt financings and sale of common stock. We are currently looking at
both short-term and more permanent financing opportunities, including debt or equity funding, bridge or short-term loans, and/or traditional
bank funding, but we have not decided on any specific path moving forward. Until we have raised sufficient funding to pay our ongoing
expenses associated with being a public company, and we have sufficient funds to support our planned operations, we can provide no assurances
that it will be able to meet its short and long-term liquidity needs, until necessary financing is secured.
We do not currently have any additional formal commitments
or identified sources of additional capital from third parties or from our officers, director or significant shareholders. We can provide
no assurance that additional financing will be available on favorable terms, if at all. If we are not able to raise the capital necessary
to continue our business operations, we may be forced to abandon or curtail our business plan.
In the future, we may be required to seek additional
capital by selling additional debt or equity securities, selling assets, if any, or otherwise be required to bring cash flows in balance
when we approach a condition of cash insufficiency. The sale of additional equity or debt securities, if accomplished, may result in dilution
to our then shareholders. We provide no assurance that financing will be available in amounts or on terms acceptable to us, or at all.
- 21 -
Table of Contents
Critical Accounting Policies
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 years ended January 31, 2023 and 2022:
| |
|
|
|
|
|
Change |
|
| |
|
2023 |
|
2022 |
|
$ |
|
% |
|
| Proprietary website revenue |
|
$ |
2,793,961 |
|
$ |
7,576,068 |
|
$ |
(4,782,107 |
) |
(63% |
) |
| Third party website revenue |
|
|
1,408,919 |
|
|
3,442,683 |
|
|
(2,033,764 |
) |
(59% |
) |
| Total Revenue |
|
$ |
4,202,880 |
|
$ |
11,018,751 |
|
$ |
(6,815,871 |
) |
(62% |
) |
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. 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.
Revenue is recorded net of provisions for discounts
and promotion allowances, which are typically agreed to upfront with the customer and do not represent variable consideration. Discounts
and promotional allowances vary the consideration the Company is entitled to in exchange for the sale of products to customers. The Company
recognizes these discounts and promotional allowances in the same period that the revenue is recognized for products sales to customers.
The amount of revenue recognized represents the amount that will not be subject to a significant future reversal of revenue. The customer
pays the Company by credit card prior to delivery.
The Company offers a 30 day satisfaction guaranteed
return policy however the customer must pay for the return shipment. The return must be previously authorized, cannot be either damaged
or previously installed and must be in saleable condition. In the Company’s experience this amount is immaterial and therefore no
provision has been recorded on the Company’s books. Any defective merchandise falls under the manufacturer’s limited warranty
and is subject to the manufacturer’s inspection. The manufacturer has the option to repair or replace the item.
All sales to customers are generally final. However,
the Company accepts returned product due to quality or issues relating to product description or incorrect product orders and in such
instances the Company would replace the product or refund the customers funds The Company’s customers generally pre-pay for the
products.
- 22 -
Table of Contents
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 estimate deferred revenue and customer deposits
and value derivative liabilities.
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.
As of January 31, 2023 and 2022, the Company’s
derivative liabilities were measured at fair value using Level 3 inputs. See Note 8.
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 January
31, 2023:
| |
|
January 31, 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 |
|
$ |
3,271,058 |
|
$ |
— |
|
$ |
— |
|
$ |
3,271,058 |
|
| Totals |
|
$ |
3,271,058 |
|
$ |
— |
|
$ |
— |
|
$ |
3,271,058 |
|
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. 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.
As of January 31, 2023, the Company had warrants to purchase 1,609,728 common shares and stock options to purchase 250,000 common shares.
- 23 -
Table of Contents
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, the sensitivity required
to change the liability by 1% as of January 31, 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.
Item 7A. Quantitative and Qualitative Disclosures
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 8. Financial Statements and Supplementary
Data.
The Company’s consolidated financial statements,
together with the report of the independent registered public accounting firm thereon and the notes thereto, are presented beginning at
page F-1. The Company’s balance sheets as of January 31, 2023 and 2022 and the related statements of operations, changes in stockholders’
deficit and cash flows for the years then ended have been audited by independent registered public accounting firm L J Soldinger Associates,
LLC. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of
America and pursuant to Regulation S-K as promulgated by the Securities and Exchange Commission and are included herein pursuant to Part
II, Item 8 of this Form 10-K. The financial statements have been prepared assuming the Company will continue as a going concern.
Table of Contents of Financial Statements
Item 9. Change in and Disagreements with
Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Evaluation of Disclosure on Controls and Procedures
We carried out an evaluation of the effectiveness
of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of
January 31, 2023. This evaluation was accomplished under the supervision and with the participation of our Chief Executive Officer (Principal
Executive Officer) and Chief Financial Officer (Principal Financial Officer) who concluded that 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 (Principal
Executive Officer) and Chief Financial Officer (Principal Financial Officer), as appropriate, to allow timely decisions regarding required
disclosure.
- 24 -
Table of Contents
We have identified the following material weaknesses
and significant deficiencies:
Material weaknesses
| • |
The failure of the Company to adequately invest the resources necessary to properly account for and report upon its financial position and results of operations under the requirements of US GAAP. |
| |
|
| • |
The Company filed its third quarter October 31, 2022 10-Q and its annual January 31, 2023 10-K late. |
In order to remedy our existing internal control deficiencies,
as our finances allow, we will hire additional accounting staff.
Management’s Annual Report on Internal Control
Over Financial Reporting
Our management is responsible for establishing and
maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange
Act. Our internal control system was designed 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 in the United States
of America. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance records
that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in
accordance with authorizations of management of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.
Because of inherent limitations, a system of internal
control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate due to change in conditions, or that the degree of compliance with
the policies or procedures may deteriorate.
Our management conducted an evaluation of the effectiveness
of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in Internal Control—Integrated Framework (2013 Internal Control—Integrated Framework) at January 31, 2023.
Based on its evaluation, our management concluded that, as of January 31, 2023, our internal control over financial reporting was not
effective because of limited staff and a need for a full time chief financial officer and the identification of the material weaknesses
described above. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial
reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial
statements will not be prevented or detected on a timely basis.
This annual report does not include an attestation
report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s
report was not subject to the attestation by the Company’s registered public accounting firm pursuant to rules of the SEC that permit
the Company to provide only management’s report in this annual report.
Changes in Internal Controls 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.
Item 9B. Other Information.
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
- 25 -
Table of Contents
PART III
Item 10. Directors, Executive Officers and
Corporate Governance.
The following table lists the names and ages of the
executive officers and director of the Company. The director(s) will continue to serve until the next annual shareholders meeting,
or until their successors are elected and qualified. All officers serve at the discretion of the Board of Directors.
| Name |
|
Age |
|
Position |
|
Date First Appointed/ Elected To the Company |
| Chris Davenport |
|
53 |
|
President of Autoparts4less |
|
October 2013 |
| |
|
|
|
Chairman, Chief Executive Officer, Chief Financial Officer of Auto Parts 4Less Group, Inc. |
|
May 19, 2023 |
| |
|
|
|
|
|
|
| Timothy Armes |
|
67 |
|
Chairman, Chief Executive Officer, President, Secretary and Treasurer and Chief Financial Officer of Auto Parts 4Less Group, Inc. |
|
August 2011
resigned May 19, 2023 |
Christopher Davenport: Mr. Davenport
received his MBA from the University of California in September 2005 where he was recognized by his classmates as “the Most Innovative
Thinker”. Before founding The 4Less Corp, Mr. Davenports’ previous business provided mobile dental services to the employees
of the largest gaming corporations in the world. These contracts covered the lives of several hundred thousand employees on the
Las Vegas strip. Due to the nature of the mobile facilities, Mr. Davenport implemented several new technologies at the time such
as: filmless radiography, virtual patient charts and VPN networks to make for seamless quality health care. Soon after, Mr. Davenport
expanded his mobile dental company to the military where he won several multiyear, multi-million dollars medical/dental National Guard
Medical Readiness contracts. Mr. Davenport has a proven history of implementing innovative technologies that demonstrates his ability
to lead The 4Less Corp into the future. Mr. Davenport was appointed sole director and Chairman, Chief Executive Officer and Chief Financial
Officer of Auto Parts 4Less Group, Inc. on May 19, 2023.
Timothy Armes: Mr. Armes has served
as President and Chief Executive Officer of Auto Parts 4Less Group, Inc. (formerly The 4Less Group, Inc. and MedCareers Group, Inc.) since
August 2011. From February 2011 to August 2011, Mr. Armes served as the Chief Operating Officer of the Company. Since August
2011, Mr. Armes has served as the Chairman, Chief Executive Officer, President, Secretary and Treasurer of the Company. In 1992 Mr. Armes
launched one of the first online job bulletin boards which eventually grew into jobs.com. As CEO of Jobs.com he raised over 100 million
dollars and grew it into one of the top employment web sites before leaving the company in May of 2000. Mr. Armes began his career as
an auditor for Ernst and Young and then as a real estate workout specialist with different firms in the mid 1980’s. Mr. Armes obtained
a Bachelor of Business Administration degree in Accounting from the University of Texas in 1980 and passed the Certified Public Accountant
exam.
Corporate Governance
We promote accountability for adherence to honest
and ethical conduct; endeavors to provide full, fair, accurate, timely and understandable disclosure in reports and documents that we
file with the Securities and Exchange Commission (the “SEC”) and in other public communications made by the Company; and strives
to be compliant with applicable governmental laws, rules and regulations.
In lieu of an Audit Committee, our Board of Directors
(currently consisting solely of Timothy Armes), is responsible for reviewing and making recommendations concerning the selection of outside
auditors, reviewing the scope, results and effectiveness of the annual audit of our financial statements and other services provided by
our independent public accountants. The Board of Directors reviews our internal accounting controls, practices and policies.
Committees of the Board
We do not currently does not have nominating, compensation,
or audit committees or committees performing similar functions nor do we have a written nominating, compensation or audit committee charter.
The Board of Directors believes that it is not necessary to have such committees, at this time, because the functions of such committees
can be adequately performed by the sole director.
- 26 -
Table of Contents
Audit Committee Financial Expert
Our Board of Directors has determined that we do not
have an independent board member that qualifies as an “audit committee financial expert” as defined in Item 407(D)(5) of Regulation
S-K, nor do we have a Board member that qualifies as “independent” as the term is used in Item 7(d)(3)(iv)(B) of Schedule
14A under the Exchange Act.
We believe that our sole director is capable of analyzing
and evaluating our financial statements and understanding internal controls and procedures for financial reporting. The sole director
does not believe that it is necessary to have an audit committee because management believes that the functions of an audit committee
can be adequately performed by the sole director. In addition, we believe that retaining an independent director who would qualify as
an “audit committee financial expert” would be overly costly and burdensome and is not warranted in our circumstances
given the stage of our development and the fact that we have not generated any positive cash flows from operations to date.
Involvement in Certain Legal Proceedings
Our sole director and our executive officer has not
been involved in any of the following events during the past ten years:
| 1. |
any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; |
| |
|
| 2. |
any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); |
| |
|
| 3. |
being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or |
| |
|
| 4. |
being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated. |
Code of Ethics
We have not adopted a formal Code of Ethics. The Board
of Directors evaluated the business of the Company and the number of employees and determined that since the business is operated by a
small number of persons, general rules of fiduciary duty and federal and state criminal, business conduct and securities laws are adequate
ethical guidelines. In the event our operations, employees and/or directors expand in the future, we may take actions to adopt a
formal Code of Ethics.
Shareholder Proposals
We do have any defined policy or procedural requirements
for shareholders to submit recommendations or nominations for directors. The sole director believes that, given the stage of our development,
a specific nominating policy would be premature and of little assistance until our business operations develop to a more advanced level.
We do not currently have any specific or minimum criteria for the election of nominees to the Board of Directors and we do not have any
specific process or procedure for evaluating such nominees. The Board of Directors will assess all candidates, whether submitted by management
or shareholders, and make recommendations for election or appointment.
A shareholder who wishes to communicate with our Board
of Directors may do so by directing a written request addressed to our Chief Executive Officer, at the address appearing on the first
page of this report.
Delinquent Section 16(a) Reports
Under U.S. securities laws, directors, certain
officers and persons holding more than 10% of our common stock must report their initial ownership of our common stock and any
changes in their ownership to the SEC. The SEC has designated specific due dates for these reports and we must identify in this
Annual Report those persons who did not file these reports when due. Based solely on our review of copies of the reports filed with
the SEC and the written representations of our directors and executive officers, we believe that no director or an executive officer
or holder of more than 10% of our common stock has met the reporting requirements and filed such reports with the SEC.
- 27 -
Table of Contents
Item 11. Executive Compensation.
Summary Compensation Table
The table below summarizes the total compensation
paid or earned by our Chief Executive Officer and Chief Financial Officer during the fiscal years ended January 31, 2023 and 2022. We
did not have any executive officers who received total compensation in excess of $100,000 during the fiscal years disclosed below, other
than disclosed below.
| Name and principal position (1)(2) |
|
Year |
|
Salary* |
|
Bonus |
|
Stock Awards |
|
Option Awards |
|
All other compensation* |
|
Total compensation |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Timothy Armes |
|
2023 |
|
$ |
151,250 |
|
|
— |
|
|
— |
|
$ |
1,998,000 |
|
|
— |
|
$ |
2,149,250 |
|
| CEO, President, Treasurer, Secretary and Director (1) |
|
2022 |
|
$ |
150,000 |
|
|
— |
|
|
— |
|
$ |
585,000 |
|
|
— |
|
$ |
735,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Christopher Davenport |
|
2023 |
|
$ |
2,071 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
$ |
2,071 |
|
| President Autoparts4Less |
|
2022 |
|
$ |
612,790 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
$ |
612,790 |
|
__________
| * |
Does not include any accruals not paid in cash or perquisites and other personal benefits in amounts less than 10% of the total annual salary and other compensation. No executive officer earned any non-equity incentive plan compensation or nonqualified deferred compensation during the periods reported above. The value of the Stock Awards and Option Awards in the table above, if any, was calculated based on the fair value of such securities calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. |
| |
|
| (1) |
No executive or director received any consideration, separate from the compensation they received as an executive officer, for service on the Board of Directors of the Company during the periods disclosed. |
| |
|
| (2) |
On May 19, 2023 Timothy Armes resigned as director and all offices for Auto Parts 4Less Group, Inc.
Also, Christopher Davenport was appointed sole director, Chief Executive Officer and Chief Financial Officer of Auto Parts 4Less
Group, Inc. |
Grants of Plan-Based Awards. None.
Outstanding Equity Awards at Fiscal Year End. Stock
option to purchase 250,000 common shares held by CEO.
Potential Payments upon Termination or Change in
Control
We do not have any contract, agreement, plan or arrangement
with its named executive officers that provides for payments to a named executive officer at, following, or in connection with the resignation,
retirement or other termination of a named executive officer, or a change in our control, or a change in the named executive officer’s
responsibilities following a change in control.
Per termination or resignation Mr. Armes has agreed
to take over any monthly debt payments and thereby ownership of 2021 vehicle bought by the Company for his use in March 2021 as an incentive
to stay employed with the company past his three year employment commitment he made in 2018.
Retirement Plans
We do not have any plan that provides for the payment
of retirement benefits, or benefits that will be paid primarily following retirement.
Compensation of Directors
In the past, we have not instituted a policy of compensating
non-management directors. However, we plans to use stock-based compensation to attract and retain qualified candidates to serve on its
Board of Directors. In setting director compensation, we will consider the significant amount of time that directors expend in fulfilling
their duties to us, as well as the skill-level that we require.
- 28 -
Table of Contents
Item 12. Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters.
The following table sets forth information regarding
the beneficial ownership of our voting common stock, as of April 25, 2023, by: (i) each person known by us to be the beneficial owner
of more than 5% of our outstanding shares of common stock; (ii) each of our officers and directors (provided that Mr. Armes currently
serves as our sole director); and (iii) all of our officers and directors as a group.
Based on information available to us, all persons
named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them, unless
otherwise indicated. Beneficial ownership is determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended.
In computing the number of shares beneficially owned by a person or a group and the percentage ownership of that person or group, shares
of our common stock subject to options or warrants currently exercisable or exercisable within 60 days after the date of this filing are
deemed outstanding, but are not deemed outstanding for the purpose of computing the percentage of ownership of any other person. The following
table is based on 2,360,598 common shares issued and outstanding as of April 25, 2023 reflecting the reverse splits.
COMMON STOCK
| |
Beneficial Owner |
|
Address |
|
Shares |
|
Percent Ownership |
| |
|
|
|
|
|
|
|
| Common Stock |
Timothy Armes(1)
Chairman / CEO
President, Secretary, CFO |
|
106 W Mayflower,
Las Vegas, Nevada 89030 |
|
16,986 |
|
0.72% |
| |
|
|
|
|
|
|
|
| Common Stock |
Chris Davenport(1)
Founder and President Autoparts4Less |
|
106 W Mayflower,
Las Vegas, Nevada 89030 |
|
758,421 |
|
32.13% |
| |
|
|
|
|
|
|
|
| |
All Officers and Directors as a Group
(2 Persons) |
|
|
|
775,407 |
|
32.85% |
| |
|
|
|
|
|
|
|
| |
Greater than 5% Shareholders |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| |
Chris Davenport |
|
|
|
758,421 |
|
32.13% |
| |
|
|
|
|
|
|
|
| |
Sergio Salzano |
|
|
|
84,269 |
|
3.57% |
| |
|
|
|
|
|
|
|
| |
All 5% Shareholders as a Group |
|
|
|
842,690 |
|
35.70% |
__________
(1) On May 19, 2023 Timothy Armes resigned as director
and all offices for Auto Parts4Less Group, Inc. Also,Christopher Davenport was appointed sole director, Chief Executive Officer and Chief
Financial Officer of Auto Parts4Less Group, Inc.
- 29 -
Table of Contents
The following table is based on 0 shares of Series
A Preferred Shares outstanding, 20,000 of Series B Preferred Shares outstanding, 0 shares of Series C Preferred Shares outstanding and
870 shares of Series D Preferred shares outstanding as of April 25, 2023:
PREFERRED STOCK
| |
Beneficial Owner |
|
Address |
|
Class |
|
Shares |
|
Percent Ownership |
| |
|
|
|
|
|
|
|
|
|
| Preferred Stock |
Timothy Armes(1)
Chairman / CEO
President, Secretary, CFO |
|
106 W Mayflower,
Las Vegas, Nevada 89030 |
|
Pref A
Pref B
Pref C
Pref D |
|
0
1,000
0
120 |
|
0.00%
5.00%
0.00%
13.79% |
| |
|
|
|
|
|
|
|
|
|
| Preferred Stock |
Chris Davenport(1)
Founder and President of Autoparrts4Less |
|
106 W Mayflower,
Las Vegas, Nevada 89030 |
|
Pref A
Pref B
Pref C
Pref D |
|
0
17,100
0
675 |
|
0.00%
90.00%
0.00%
77.58% |
| |
|
|
|
|
|
|
|
|
|
| |
All Officers and Directors as a Group
(2 Persons) |
|
|
|
Pref A
Pref B
Pref C
Pref D |
|
0
18,100
0
795 |
|
0.00%
90.50%
0.00%
91.38% |
| |
|
|
|
|
|
|
|
|
|
| |
Greater than 5% Shareholders |
|
|
|
Pref A
Pref B
Pref C
Pref D |
|
0
1,900
0
75 |
|
0.00%
9.50%
0.00%
8.62% |
__________
(1) On May 19, 2023 Timothy Armes resigned as director
and all offices for Auto Parts4Less Group, Inc. Also,Christopher Davenport was appointed sole director, Chief Executive Officer and Chief
Financial Officer of Auto Parts4Less Group, Inc.
Item 13. Certain Relationships and Related
Transactions, and Director Independence.
As a result of the acquisition of the 4Less Corp in
November 2018 and disposition of Nurses Lounge in December of 2018, Mr. Armes canceled 100 million shares (1,666 post split) of his approximate
129,628,000 common shares he owned (2,160 post split). Along with the cancellation of his common stock and a verbal agreement to stay
on as our President, CEO and Chairman of the Board. Mr. Armes received 120 shares of Series D Preferred stock, maintained his 1,000 shares
of Series B Preferred stock, received 100 Class C preferred shares (during the year ended January 31, 2021) and a payable to Mr. Armes
representing $180,000 of deferred income of which a balance of $ 46,173 remains payable at January 31, 2022. On February 1, 2022, Mr. Armes
converted his 100 Class C preferred shares for 12,484 common shares.
As part of the acquisition of The 4Less Corp., Christopher
Davenport, the founder and president of The 4Less Corp, received 17,100 shares of Series B Preferred Stock representing approximately
89% of the 20,000 Series B Preferred stock outstanding, 6,075 shares of Series C Preferred stock outstanding which can be converted into
approximately 60% of our outstanding common stock and 675 shares of Series D Preferred stock. On February 1, 2022, Mr. Davenport converted his 6075 Class C preferred shares for 758,420 common shares.
Review, Approval and Ratification of Related Party
Transactions
Given our small size and limited financial resources,
we had not adopted formal policies and procedures for the review, approval or ratification of transactions, such as those described above,
with our executive officers, director(s) and significant stockholders. However, we make it a practice of having our Board of Directors
(currently consisting solely of Mr. Armes) approve and ratify all related party transactions. In connection with such approval and ratification,
our Board of Directors takes into account several factors, including their fiduciary duties to us; the relationships of the related parties
to us; the material facts underlying each transaction; the anticipated benefits to us and related costs associated with such benefits;
whether comparable products or services are available; and the terms we could receive from an unrelated third party.
- 30 -
Table of Contents
We intend to establish formal policies and procedures
in the future, once we have sufficient resources and have appointed additional directors, so that such transactions will be subject to
the review, approval or ratification of our Board of Directors, or an appropriate committee thereof. On a moving forward basis, the Board
of Directors will continue to approve any related party transaction based on the criteria set forth above.
Director Independence
We currently only have one director, Christopher Davenport
, who is not independent.
Item 14. Principal Accounting Fees and Services.
(1) Audit Fees
The aggregate fees billed for professional services
rendered by our auditors, for the audit of the registrant’s annual financial statements and review of the financial statements included
in the registrant’s Form 10-K and Form 10-Q(s) for services that are normally provided by the accountant in connection with statutory
and regulatory filings or engagements, for fiscal year 2023 was approximately $295,900, for audit and 10-Q fees.
(2) Audit Related Fees
None.
(3) Tax Fees
$12,215.
(4) All Other Fees
None.
PART IV
Item 15. Exhibits and Financial Statement
Schedules.
1. Consolidated Financial Statements
2. Financial Statement Schedules
Schedules have been omitted because they are not required,
not applicable, or the required information is otherwise included.
3. Exhibits
See the Exhibit Index immediately following the signature
page of this Annual Report on Form 10-K.
Item 16. Form 10-K Summary.
None.
- 31 -
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d)
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 Davenports, Chairman (Director), Chief
Executive Officer, Chief Financial Officer
(Principal Executive Officer and Principal Financial/Accounting
Officer)
Date: August 11, 2023
- 32 -
Table of Contents
EXHIBIT INDEX
The following exhibits are included with this Annual
Report:
| |
|
|
|
Incorporated by Reference |
| |
|
|
|
|
|
|
|
|
|
|
|
Filed |
| Exhibit |
|
|
|
|
|
|
|
|
|
Filing |
|
Here- |
| Number |
|
Exhibit Description |
|
Form |
|
File No. |
|
Exhibit |
|
Date |
|
with |
| 3.1 |
|
Articles of Incorporation dated November 27, 2007, filed with the State of Nevada on December 5, 2007 |
|
S-1 |
|
333-152444 |
|
3.1 |
|
7/22/08 |
|
|
| 3.2 |
|
Certificate of Amendment to Articles of Incorporation effective date January 15, 2010, filed with the State of Nevada on December 16, 2009 |
|
8-K |
|
333-152444 |
|
3.1 |
|
1/7/10 |
|
|
| 3.3 |
|
Certificate of Correction dated January 4, 2010, filed with the State of Nevada on January 4, 2010 |
|
8-K |
|
333-152444 |
|
3.2 |
|
1/7/10 |
|
|
| 3.4 |
|
Bylaws of the Company dated November 27, 2007, filed with the State of Nevada on December 5, 2007 |
|
S-1 |
|
333-152444 |
|
3.2 |
|
7/22/08 |
|
|
| 3.5 |
|
Certificate of Amendment to Articles of Incorporation dated October 15, 2020, filed with the State of Nevada on October 15, 2020 |
|
8-K |
|
000-55089 |
|
3.1 |
|
10/19/20 |
|
|
| 3.6 |
|
Amended and Restated Articles of Incorporation dated January 27, 2022, filed with the State of Nevada on January 27, 2022 |
|
8-K |
|
000-55089 |
|
3.1 |
|
02/08/22 |
|
|
| 3.7 |
|
Certificate of Amendment to Articles of Incorporation dated April 26, 2022, filed with the State of Nevada on April 26, 2022 |
|
8-K |
|
000-55089 |
|
3.1 |
|
04/29/22 |
|
|
| 3.8 |
|
Certificate of Change dated April 26, 2022, filed with the State of Nevada on April 26, 2022 |
|
8-K |
|
000-55089 |
|
3.2 |
|
04/29/22 |
|
|
| 4.1 |
|
Amended and Restated and Restated Certificate – Preferred C Stock |
|
8-K |
|
000-55089 |
|
4.1 |
|
7/15/21 |
|
|
| 4.2 |
|
Certificate of Rights and Preferences – Preferred A Stock |
|
8-K |
|
000-55089 |
|
3.1 |
|
11/13/18 |
|
|
| 4.3 |
|
Certificate of Rights and Preferences – Preferred B Stock |
|
8-K |
|
000-55089 |
|
3.2 |
|
11/13/18 |
|
|
| 4.4 |
|
Certificate of Rights and Preferences – Preferred C Stock |
|
8-K |
|
000-55089 |
|
3.3 |
|
11/13/18 |
|
|
| 4.5 |
|
Certificate of Rights and Preferences – Preferred D Stock |
|
8-K |
|
000-55089 |
|
3.4 |
|
11/13/18 |
|
|
| 14.1 |
|
Code of Ethics |
|
S-1/A |
|
333-262261 |
|
14.1 |
|
8/30/22 |
|
|
| 21.1 |
|
List of Subsidiaries |
|
S-1 |
|
333-258521 |
|
21 |
|
8/5/21 |
|
|
| 31.1 |
|
Rule 13a-14(a) Certification by Principal Executive Officer and Principal Financial and Accounting Officer |
|
|
|
|
|
|
|
|
|
X |
| 32.1 |
|
Section 1350 Certification of Principal Executive Officer and Principal Financial and Accounting Officer |
|
|
|
|
|
|
|
|
|
X |
| 99.1 |
|
Consent of Sheldon Reinhart |
|
S-1/A |
|
333-262261 |
|
99.1 |
|
8/30/22 |
|
|
| 99.2 |
|
Consent of Roger P. Schrum |
|
S-1/A |
|
333-262261 |
|
99.2 |
|
8/30/22 |
|
|
| 99.3 |
|
Consent of Danny Johnson, Jr. |
|
S-1/A |
|
333-262261 |
|
99.3 |
|
8/30/22 |
|
|
| 99.4 |
|
Consent of Ken Kaufman |
|
S-1/A |
|
333-262261 |
|
99.4 |
|
8/30/22 |
|
|
| 99.5 |
|
Audit Committee Charter |
|
S-1/A |
|
333-262261 |
|
99.5 |
|
8/30/22 |
|
|
| 99.6 |
|
Nominating Committee Charter |
|
S-1/A |
|
333-262261 |
|
99.6 |
|
8/30/22 |
|
|
| 99.7 |
|
Compensation Committee Charter |
|
S-1/A |
|
333-262261 |
|
99.7 |
|
8/30/22 |
|
|
| 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. |
|
|
|
|
|
|
|
|
|
X |
| 101.SCH |
|
Inline XBRL Taxonomy Extension Schema Document |
|
|
|
|
|
|
|
|
|
X |
| 101.CAL |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
|
|
|
|
|
|
|
X |
| 101.DEF |
|
Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
|
|
|
|
|
|
|
|
X |
| 101.LAB |
|
Inline XBRL Taxonomy Extension Label Linkbase Document |
|
|
|
|
|
|
|
|
|
X |
| 101.PRE |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
|
|
|
|
|
|
|
|
X |
| 104 |
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
|
|
|
|
|
|
|
|
|
X |
- 33 -
Index to Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the Shareholders and the
Board of Directors of Auto Parts 4Less Group, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance
sheets of Auto Parts 4Less Group, Inc. (the “Company”) as of January 31, 2023 and 2022, and the related consolidated statements
of loss from operations, stockholders’ deficit, and cash flows for each of the years in the two years ended January 31, 2023, and
the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in
all material respects, the financial position of the Company as of January 31, 2023 and 2022, and the results of its operations and its
cash flows for each of the years in the two years ended January 31, 2023, in conformity with accounting principles generally accepted
in the United States of America.
Explanatory Paragraph – Going Concern
The accompanying consolidated financial statements
have been prepared assuming that the Company will continue as a going concern. As more fully explained in Note 2, which includes management’s
plans in regards to this uncertainty, the Company has a negative working capital of approximately $20.7 million and an accumulated deficit
of approximately $46.2 million and stockholders’ deficit of approximately $21.4 million as of the year ended January 31, 2023,
and therefore there is substantial doubt about the ability of the Company to continue as a going concern. The financial statements do
not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards
of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation
of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are
matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the
Audit Committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially
challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the
financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions
on the critical audit matters or on the accounts or disclosures to which they relate.
Critical Audit Matter Description – Embedded
Conversion Feature
The Company has numerous notes payable from prior
years and several new notes and warrants in the current year with conversions or exercise features that resulted in derivatives. This
and other factors require the embedded conversion feature to be bifurcated and the fair value of the feature to be remeasured at each
reporting period. Calculations and accounting for the notes payable and warrants and exercise features require management’s
judgments related to initial and subsequent recognition of the debt and related conversions features, exercise rights use of a valuation
model, and determination of the appropriate inputs used in the selected valuation model.
F-1
Index to Financial Statements
Critical Audit Matter Determination
The embedded conversion features, warrants, and resulting
derivative liability is a highly complex area of accounting with significant impact on the liabilities, additional paid in capital and
statement of operations of the Company. It takes a high degree of training to understand and recognize the accounting implications
of the conversion features and exercise rights and to understand the assumptions and impact of the specific assumptions on the valuation
model used in the calculation of the derivative liability.
Critical Audit Matter Audit Procedures
Our audit procedures related to evaluating the Company’s
accounting for the convertible note payables with embedded derivatives, warrants issued with the debt, accrued interest and the related
derivative liability were as follows:
| |
- |
We read the various instruments, identified the embedded conversion feature, confirmed the amount of the outstanding debt, and recalculated the accrued interest. |
| |
|
|
| |
- |
We assessed the credentials and reputation of the outside firm retained by the Company who performed the calculation of the derivative liabilities. |
| |
|
|
| |
- |
We reviewed the assumptions used to calculate the derivative liabilities at the balance sheet date and various conversion and settlement dates and the related accounting entries. |
| |
|
|
| |
- |
We performed independent calculations on a test basis of specific derivatives to evaluate the model used in calculating the derivatives at various measurement dates. |
Critical Audit Matter Relevant Financial Statement
Disclosures
| |
- |
We read the Company’s disclosures related to the derivative liabilities and changes during the year as a result of mark to market, conversion of debt and settlement of debt activity to ensure the changes were properly accounted for and fully disclosed in the financial statements. |
/s/ L J Soldinger Associates, LLC
We have served as the Company’s auditor since 2019.
Deer Park, Illinois
August 11, 2023
PCAOB Audit ID #00318
F-2
Index to Financial Statements
AUTO PARTS 4LESS GROUP, INC.
FORMERLY THE 4 LESS GROUP, INC
Consolidated Balance Sheets
January 31, 2023 and 2022
| |
|
|
|
|
|
|
|
| |
|
January 31, 2023 |
|
January 31, 2022 |
|
| Assets |
|
|
|
|
|
|
|
| Current Assets |
|
|
|
|
|
|
|
| Cash and Cash Equivalents |
|
$ |
4,737 |
|
$ |
77,498 |
|
| Inventory |
|
|
50,000 |
|
|
432,583 |
|
| Prepaid Expenses |
|
|
8,019 |
|
|
16,065 |
|
| Deferred Offering Costs |
|
|
— |
|
|
23,000 |
|
| Other Current Assets |
|
|
34,989 |
|
|
15,469 |
|
| Total Current Assets |
|
|
97,745 |
|
|
564,615 |
|
| Operating Lease Assets |
|
|
138,551 |
|
|
242,583 |
|
| Property and Equipment, net of accumulated depreciation of $173,475 and $122,469 |
|
|
171,472 |
|
|
221,336 |
|
| |
|
|
|
|
|
|
|
| Total Assets |
|
$ |
407,768 |
|
$ |
1,028,534 |
|
| |
|
|
|
|
|
|
|
| Liabilities and Stockholders’ Deficit |
|
|
|
|
|
|
|
| Current Liabilities |
|
|
|
|
|
|
|
| Bank Overdraft |
|
$ |
— |
|
$ |
11,055 |
|
| Accounts Payable |
|
|
1,378,637 |
|
|
1,228,039 |
|
| Accrued Expenses |
|
|
2,334,368 |
|
|
796,397 |
|
| Accrued Expenses – Related Party |
|
|
74,111 |
|
|
46,173 |
|
| Customer Deposits |
|
|
38,448 |
|
|
530,900 |
|
| Deferred Revenue |
|
|
66,153 |
|
|
665,143 |
|
| Short-Term Debt |
|
|
3,088,993 |
|
|
3,454,133 |
|
| Current Operating Lease Liability |
|
|
53,912 |
|
|
100,001 |
|
| Short-Term Convertible Debt, net of debt discount of $840,067 and $2,131,034 |
|
|
10,438,583 |
|
|
647,966 |
|
| Derivative Liabilities |
|
|
3,271,058 |
|
|
1,263,442 |
|
| Shareholder Loans Payable |
|
|
— |
|
|
119,476 |
|
| Current Portion – Long-Term Debt |
|
|
24,569 |
|
|
27,737 |
|
| Total Current Liabilities |
|
|
20,768,832 |
|
|
8,890,462 |
|
| |
|
|
|
|
|
|
|
| Non-Current Lease Liability |
|
|
84,639 |
|
|
138,551 |
|
| Long-Term Debt |
|
|
87,423 |
|
|
115,900 |
|
| |
|
|
|
|
|
|
|
| Total Liabilities |
|
|
20,940,894 |
|
|
9,144,913 |
|
| |
|
|
|
|
|
|
|
| Commitments and Contingencies |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| Redeemable Preferred Stock |
|
|
|
|
|
|
|
| Series D Preferred Stock, $0.001 par value, 870 shares authorized, 870 and 870 shares issued and outstanding |
|
|
870,000 |
|
|
870,000 |
|
| |
|
|
|
|
|
|
|
| Stockholders’ Deficit |
|
|
|
|
|
|
|
| Preferred Stock – Series A, $0.001 par value, 330,000 shares authorized, 0 and 0 shares issued and outstanding |
|
|
— |
|
|
— |
|
| Preferred Stock – Series B, $0.001 par value, 20,000 shares authorized, 20,000 and 20,000 shares issued and outstanding |
|
|
20 |
|
|
20 |
|
| Preferred Stock – Series C, $0.001 par value, 7,250 shares authorized, 0 and 7,250 shares issued and outstanding |
|
|
— |
|
|
7 |
|
| Common Stock, $0.000001 par value, 75,000,000 shares authorized, 1,917,982 and 341,023 shares issued, issuable and outstanding |
|
|
2 |
|
|
— |
|
| Additional Paid In Capital |
|
|
24,833,110 |
|
|
19,465,327 |
|
| Accumulated Deficit |
|
|
(46,236,258 |
) |
|
(28,451,733 |
) |
| Total Stockholders’ Deficit |
|
|
(21,403,126 |
) |
|
(8,986,379 |
) |
| |
|
|
|
|
|
|
|
| Total Liabilities and Stockholders’ Deficit |
|
$ |
407,768 |
|
$ |
1,028,534 |
|
The Accompanying Notes are an Integral Part of these
Consolidated Financial Statements.
F-3
Index to Financial Statements
AUTO PARTS 4LESS GROUP, INC.
FORMERLY THE 4 LESS GROUP, INC
Consolidated Statements of Operations
For the Years Ended January 31, 2023 and 2022
| |
|
|
|
|
|
|
|
| |
|
2023 |
|
2022 |
|
| Revenue, net |
|
$ |
4,202,880 |
|
$ |
11,018,751 |
|
| |
|
|
|
|
|
|
|
| Cost of Revenue |
|
|
3,462,437 |
|
|
9,471,304 |
|
| |
|
|
|
|
|
|
|
| Gross Profit |
|
|
740,443 |
|
|
1,547,447 |
|
| |
|
|
|
|
|
|
|
| Operating Expenses: |
|
|
|
|
|
|
|
| Depreciation |
|
|
51,006 |
|
|
48,931 |
|
| Postage, Shipping and Freight |
|
|
166,332 |
|
|
531,954 |
|
| Marketing and Advertising |
|
|
717,887 |
|
|
2,430,905 |
|
| E Commerce Services, Commissions and Fees |
|
|
1,249,655 |
|
|
1,569,825 |
|
| Operating lease cost |
|
|
116,879 |
|
|
121,917 |
|
| Personnel Costs |
|
|
618,066 |
|
|
1,482,448 |
|
| PPP Loan Forgiveness |
|
|
— |
|
|
(209,447 |
) |
| General and Administrative |
|
|
3,200,535 |
|
|
3,028,906 |
|
| Total Operating Expenses |
|
|
6,120,360 |
|
|
9,005,439 |
|
| |
|
|
|
|
|
|
|
| Net Operating Loss |
|
|
(5,379,917 |
) |
|
(7,457,992 |
) |
| |
|
|
|
|
|
|
|
| Other Income (Expense) |
|
|
|
|
|
|
|
| Gain (loss) on Sale of Property and Equipment |
|
|
— |
|
|
20,345 |
|
| Gain (Loss) on Change in Fair Value of Derivatives |
|
|
(665,949) |
|
|
235,703 |
|
| Gain on Settlement of Debt |
|
|
42,527 |
|
|
1,410,113 |
|
| Amortization of Debt Discount |
|
|
(5,691,122 |
) |
|
(918,463 |
) |
| Interest Expense |
|
|
(6,090,064 |
) |
|
(1,359,462 |
) |
| Total Other Income (Expense) |
|
|
(12,404,608 |
) |
|
(611,764 |
) |
| |
|
|
|
|
|
|
|
| Net Income (Loss) |
|
$ |
(17,784,525 |
) |
$ |
(8,069,756 |
) |
| |
|
|
|
|
|
|
|
| Basic Weighted Average Shares Outstanding |
|
|
1,658,405 |
|
|
279,745 |
|
| Basic Income (Loss) per Share |
|
$ |
(10.72 |
) |
$ |
(28.85 |
) |
| Diluted Weighted Average Shares Outstanding |
|
|
1,658,405 |
|
|
279,745 |
|
| Diluted (Loss) per Share |
|
$ |
(10.72 |
) |
$ |
(28.85 |
) |
The Accompanying Notes are an Integral Part of these
Consolidated Financial Statements.
F-4
Index to Financial Statements
AUTO PARTS 4LESS GROUP, INC.
FORMERLY THE 4LESS GROUP, INC.
Consolidated Statements of Cash Flows
For the Years Ended January 31, 2023 and 2022
| |
|
|
|
|
|
|
| |
2023 |
|
2022 |
|
| CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
| Net Income (Loss) |
$ |
(17,784,525 |
) |
$ |
(8,069,756 |
) |
| Adjustments to reconcile net income (loss) to cash used by operating activities: |
|
|
|
|
|
|
| Depreciation |
|
51,006 |
|
|
48,931 |
|
| Inventory Provision |
|
270,634 |
|
|
— |
|
| Reduction of Right of Use Asset |
|
100,001 |
|
|
95,784 |
|
| Accretion of Lease Liability |
|
16,878 |
|
|
26,133 |
|
| Loss (Gain ) in Fair Value on Derivative Liabilities |
|
665,949 |
|
|
(235,703 |
) |
| Amortization of Debt Discount |
|
5,691,122 |
|
|
918,463 |
|
| Interest Expense Related to Excess of Deferred Offering Cost Over Share Proceeds |
|
— |
|
|
69,630 |
|
| Interest Expense on Penalty Warrants |
|
880,275 |
|
|
— |
|
| Loan Penalties Capitalized to Loan |
|
3,782,814 |
|
|
28,000 |
|
| Original Issue Discount on Short-Term Convertible Notes Expensed to Interest |
|
22,000 |
|
|
20,000 |
|
| Debt Discount in Excess of Face Value Expensed to Interest |
|
246,179 |
|
|
— |
|
| Deferred Salary to CEO included in Accrued Expenses Related Party |
|
28,438 |
|
|
— |
|
| Deferred Offering Costs Expensed |
|
23,000 |
|
|
— |
|
| Stock Based Compensation |
|
1,998,000 |
|
|
1,401,055 |
|
| Interest Expense Related to Warrants Issued for Debt Extension |
|
— |
|
|
276,000 |
|
| Gain on Settlement of Debt |
|
(42,527 |
) |
|
(1,410,113 |
) |
| PPP Loan Forgiveness |
|
— |
|
|
(209,447 |
) |
| Gain on sale of Property |
|
— |
|
|
(20,345 |
) |
| Change in Operating Assets and Liabilities: |
|
|
|
|
|
|
| Decrease (Increase) in Inventory |
|
111,949 |
|
|
(109,173 |
) |
| Decrease in Prepaid Rent and Expenses |
|
12,077 |
|
|
1,841 |
|
| (Increase) in Other Current Assets |
|
(19,520 |
) |
|
(13,320 |
) |
| Increase in Bank Overdraft |
|
(11,055 |
) |
|
11,055 |
|
| Increase in Accounts Payable |
|
166,440 |
|
|
365,649 |
|
| Increase in Accrued Expenses |
|
1,161,806 |
|
|
266,873 |
|
| Operating Lease Liability Payments |
|
(116,879 |
) |
|
(121,917 |
) |
| Increase (Decrease) in Customer Deposits |
|
(492,452 |
) |
|
342,515 |
|
| Increase (Decrease) in Deferred Revenue |
|
(598,990 |
) |
|
(22,623 |
) |
| CASH FLOWS (USED IN) OPERATING ACTIVITIES |
|
(3,837,380 |
) |
|
(6,340,468 |
) |
| |
|
|
|
|
|
|
| CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
| Purchase of Property and Equipment |
|
(1,142 |
) |
|
(43,628 |
) |
| Disposal of Property and Equipment |
|
— |
|
|
25,060 |
|
| CASH FLOWS (USED IN) INVESTING ACTIVITIES |
|
(1,142 |
) |
|
(18,568 |
) |
| |
|
|
|
|
|
|
| CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
| Proceeds from Issuances of Common Shares, net of Issuance Costs |
|
— |
|
|
3,039,925 |
|
| Proceeds from Short Term Debt |
|
142,510 |
|
|
1,968,472 |
|
| Payments on Short Term Debt |
|
(436,136 |
) |
|
(547,821 |
) |
| Payments on Long Term Debt |
|
(27,810 |
) |
|
(21,582 |
) |
| Proceeds on Shareholder Loans Payable |
|
20,000 |
|
|
119,476 |
|
| Repayment on Shareholder Loans Payable |
|
(33,561 |
) |
|
— |
|
| Payments on Accrued Expenses – Related Party |
|
(500 |
) |
|
(60,000 |
) |
| Proceeds from Convertible Notes Payable |
|
4,395,714 |
|
|
2,865,525 |
|
| Payments on Convertible Notes Payable |
|
(294,456 |
) |
|
(1,205,125 |
) |
| CASH FLOWS PROVIDED BY FINANCING ACTIVITIES |
|
3,765,761 |
|
|
6,158,870 |
|
| |
|
|
|
|
|
|
| NET DECREASE IN CASH |
|
(72,761 |
) |
|
(200,166 |
) |
| |
|
|
|
|
|
|
| CASH AT BEGINNING OF PERIOD |
|
77,498 |
|
|
277,664 |
|
| |
|
|
|
|
|
|
| CASH AT END OF PERIOD |
$ |
4,737 |
|
$ |
77,498 |
|
| |
|
|
|
|
|
|
| Supplemental Disclosure of Cash Flows Information: |
|
|
|
|
|
|
| Cash Paid for Interest |
$ |
108,290 |
|
$ |
649,234 |
|
| Derivative Debt Discount |
$ |
1,949,917 |
|
$ |
1,933,343 |
|
| Convertible Notes Interest and Derivatives Converted to Common Stock |
$ |
26,541 |
|
$ |
237,085 |
|
| Relative Fair Value of Shares and Warrants as Debt Discount $ |
$ |
817,176 |
|
$ |
— |
|
| Transfer of Short-Term Loan, Shareholder Loan and Accounts Payable to Convertible Notes Payable |
$ |
210,740 |
|
$ |
— |
|
| Issuance of Warrants to Deferred Offering Costs |
$ |
— |
|
$ |
600,000 |
|
| Deferred Offering Costs Against Share Proceeds |
$ |
— |
|
$ |
530,370 |
|
| Fixed Assets financed through vehicle loans |
$ |
— |
|
$ |
152,950 |
|
| Original Issue Discount |
$ |
22,000 |
|
$ |
20,000 |
|
The Accompanying Notes are an Integral Part of these
Consolidated Financial Statements.
F-7
Index to Financial Statements
AUTO PARTS 4LESS GROUP, INC.
FORMERLY THE 4LESS GROUP, INC.
Notes to Consolidated Financial Statements
January 31, 2023 and 2022
Note 1 – Description of Business and
Summary of Significant Accounting Policies
Nature of Business – Auto Parts
4Less Group, Inc. formerly The 4LESS Group, Inc., (the “Company”), 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 Company 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 through
their web site LiftKits4Less.com. On December 30, 2019 4LESS changed its name to Auto Parts 4Less, Inc. On April 28, 2022 The 4Less Group
, Inc changed its name to Auto Parts 4less Group, Inc.
Additionally, in early 2020, the company began developing their web site,
AutoParts4Less.com, as a multi-seller enterprise-level marketplace dedicated to consolidating the $500 billion annual aftermarket automotive
parts industry, including cars, trucks, boats, motorcycles, and RVs, on a single platform. AutoParts4Less.com officially launched with
approximately 2 million parts from over 25 parts sellers in November 2022. With the launch of their automotive marketplace the company
discontinued the operations of Liftkits4Less.com in order to substantially reduce their fixed monthly operating cost.
Significant Accounting Policies
The Company’s management selects accounting
principles generally accepted in the United States of America (“U.S. GAAP”) 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 financial statements.
Basis of Presentation
The Company prepares its financial statements on the
accrual basis of accounting in conformity with U.S. GAAP.
Principles of Consolidation
The financial statements include the accounts of Auto
Parts 4Less Group, Inc. (formerly The 4Less Group, Inc.) as well as Auto Parts 4Less, Inc. (formerly The 4LESS Corp.) 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 estimate deferred revenue and customer deposits
and value derivative liabilities, options and warrants.
Reclassifications
Certain amounts in the Company’s 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 year ended January 31, 2023, the Company purchased
approximately 52% of its inventory and items available for sale from third parties from three vendors. As of January 31, 2023, the net
amount due to the vendors included in accounts payable was $416,629. For the year ended January 31, 2022, the Company purchased approximately
54% of its inventory and items available for sale from third parties from three vendors. As of January 31, 2022, the net amount due to
the vendors included in accounts payable was $349,839. The Company believes there are numerous other suppliers that could be substituted
should the supplier become unavailable or non-competitive.
Leases
We adopted ASU No. 2016-02—Leases (Topic
842), as amended, as of February 1, 2019, using the full retrospective approach. The full retrospective approach provides a method
for recording existing leases at adoption and in comparative periods. In addition, we elected the package of practical expedients permitted
under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification.
In addition, 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.
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.
As of January 31, 2023 and 2022, the Company’s
derivative liabilities were measured at fair value using Level 3 inputs. See Note 10.
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 January
31, 2023 and January 31, 2022:
| |
|
January 31, 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 |
|
$ |
3,271,058 |
|
$ |
— |
|
$ |
— |
|
$ |
3,271,058 |
|
| Totals |
|
$ |
3,271,058 |
|
$ |
— |
|
$ |
— |
|
$ |
3,271,058 |
|
| |
|
January 31, 2022 |
|
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 |
|
$ |
1,263,442 |
|
$ |
— |
|
$ |
— |
|
$ |
1,263,442 |
|
| Totals |
|
$ |
1,263,442 |
|
$ |
— |
|
$ |
— |
|
$ |
1,263,442 |
|
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. 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 10), the sensitivity
required to change the liability by 1% as of January 31, 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 years ended January 31, 2023 and 2022:
| |
|
|
|
|
|
Change |
|
| |
|
2023 |
|
2022 |
|
$ |
|
% |
|
| Proprietary website revenue |
|
$ |
2,793,961 |
|
$ |
7,576,068 |
|
$ |
(4,782,107 |
) |
(63% |
) |
| Third party website revenue |
|
|
1,408,919 |
|
|
3,442,683 |
|
|
(2,033,764 |
) |
(59% |
) |
| Total Revenue |
|
$ |
4,202,880 |
|
$ |
11,018,751 |
|
$ |
(6,815,871 |
) |
(62% |
) |
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 (delivery of product). The Company
primarily receives fixed consideration for sales of product with variability entering into consideration due to returns on shipped products.
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.
Revenue is recorded net of provisions for discounts
and promotion allowances, which are typically agreed to upfront with the customer and do not represent variable consideration. Discounts
and promotional allowances vary the consideration the Company is entitled to in exchange for the sale of products to customers. The Company
recognizes these discounts and promotional allowances in the same period that the revenue is recognized for products sales to customers.
The amount of revenue recognized represents the amount that will not be subject to a significant future reversal of revenue. The customer
pays the Company by credit card prior to delivery.
Prior to the discontinuance of LiftKits4Less the Company
offered a 30 day satisfaction guaranteed return policy however the customer must pay for the return shipment. The return must be previously
authorized, cannot be either damaged or previously installed and must be in saleable condition. In the Company’s experience this
amount is immaterial and therefore no provision has been recorded on the Company’s books. Any defective merchandise falls under
the manufacturer’s limited warranty and is subject to the manufacturer’s inspection. The manufacturer has the option to repair
or replace the item.
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.
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.
Recently Issued Accounting Standards
In January 2017, the FASB issued ASU 2017-04, Intangibles
- Goodwill and Other (Topic 350) which simplifies goodwill impairment testing by requiring that such periodic testing be performed by
comparing the fair value of a reporting unit with its carrying amount and recognizing an impairment charge for the amount by which the
carrying amount exceeds the reporting unit’s fair value. The policy is effective for fiscal years, including interim periods, beginning
after December 15, 2019. We adopted on February 1, 2020 and the adoption had no impact.
Fair Value Measurement: In 2018, the FASB issued
amended guidance to remove, modify and add disclosure requirements for fair value measurements. This amendment is effective for fiscal
years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted for any removed
or modified disclosure requirements. Transition is on a prospective basis for the new and modified disclosures, and on a retrospective
basis for disclosures that have been eliminated. The adoption of this guidance on February 1, 2020 did not have a material impact on our
consolidated financial statements.
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.
In December 2019, the Financial Accounting Standards
Board (FASB) issued amended guidance on the accounting and reporting of income taxes. The guidance is intended to simplify the accounting
for income taxes by removing exceptions related to certain intra-period tax allocations and deferred tax liabilities; clarifying guidance
primarily related to evaluating the step-up tax basis for goodwill in a business combination; and reflecting enacted changes in tax laws
or rates in the annual effective tax rate. The Company adopted the new guidance effective February 1, 2021. There was no impact to the
Company’s consolidated financial statements upon adoption.
In January 2020, the FASB issued new guidance intended
to clarify certain interactions between accounting standards related to equity securities, equity method investments and certain derivatives.
The guidance addresses accounting for the transition into and out of the equity method of accounting and measuring certain purchased options
and forward contracts to acquire investments. The Company adopted the new guidance effective February 1, 2021. There was no impact to
the Company’s consolidated financial statements upon adoption.
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.
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.
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 $46,236,258 as of January 31, 2023 and has a working capital deficit at January 31, 2023 of
$20,671,087. As of January 31, 2023, the Company only had cash and cash equivalents of $4,737 and $2,922,742 of short-term debt in default
and $10,301,318 of convertible debt in default.. The debt agreements provide legal remedies for satisfaction of defaults, none of the
lenders of which 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.
F-13
Index to Financial Statements
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 January 31, 2023 and 2022:
| |
|
2023 |
|
2022 |
|
| Office furniture, fixtures and equipment |
|
$ |
95,183 |
|
$ |
94,041 |
|
| Shop equipment |
|
|
43,004 |
|
|
43,004 |
|
| Vehicles |
|
|
206,760 |
|
|
206,760 |
|
| Sub-total |
|
|
344,947 |
|
|
343,805 |
|
| Less: Accumulated depreciation |
|
|
(173,475 |
) |
|
(122,469 |
) |
| Total Property |
|
$ |
171,472 |
|
$ |
221,336 |
|
Additions to fixed assets were $1,142 for the year ended January 31, 2023.
Additions to fixed assets for the year ended January 31, 2022 were $196,578 with $35,000 paid in cash and $152,950 financed through vehicle
loans for vehicles and an additional $8,628 acquired in equipment.
For the year ended January 31, 2023, there were no
fixed asset disposals. For the year ended January 31, 2022, vehicles having a cost of $20,000 and a net book value of $4,715 was disposed
of. Proceeds received of $25,060 and a gain on sale of property and equipment of $20,345 were recorded.
Depreciation expense was $51,006 and $48,931 for the
twelve months ended January 31, 2023 and January 2022, respectively.
NOTE 4 – LEASES
We lease certain warehouses, vehicles 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 January 31, 2023 and January 31, 2022.
| Leases |
|
Classification |
|
January 31, 2023 |
|
January 31, 2022 |
|
| Assets |
|
|
|
|
|
|
|
|
|
| Operating |
|
Operating Lease Assets |
|
$ |
138,551 |
|
$ |
242,583 |
|
| Liabilities |
|
|
|
|
|
|
|
|
|
| Current |
|
|
|
|
|
|
|
|
|
| Operating |
|
Current Operating Lease Liability |
|
$ |
53,912 |
|
$ |
100,001 |
|
| Noncurrent |
|
|
|
|
|
|
|
|
|
| Operating |
|
Noncurrent Operating Lease Liabilities |
|
|
84,639 |
|
|
138,551 |
|
| Total lease liabilities |
|
|
|
$ |
138,551 |
|
$ |
238,552 |
|
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. We compare against loans we obtain to acquire physical assets and not loans we obtain for financing. The loans we obtain
for financing are generally at significantly higher rates and we believe that physical space or vehicle rental agreements are in line
with physical asset financing agreements. CAM charges were not included in operating lease expense and were expensed in general and administrative
expenses as incurred.
Effective February 29 ,2020 the Company and landlord
terminated the September 2019 lease with an annual rent of $15,480, a 3 year term an 1 year renewal. There were no costs associated with
the termination. The Company eliminated the operating lease asset and operating lease liability at termination which was $45,032. (see
Note 13)
Operating lease cost was $116,879 and $121,917 for
the twelve months ended January 31, 2023 and January 31, 2022, respectively.
F-14
Index to Financial Statements
NOTE 5 – CUSTOMER DEPOSITS
The Company receives payments from customers on orders
prior to shipment. At January 31, 2023 the Company had received $38,448 (January 31, 2022- $530,900) in customer deposits for orders that
were unfulfilled at January 31, 2023 and either canceled subsequent to year end or still awaiting shipment. The deposits on cancelled
orders were either returned to the customers subsequent to January 31, 2023 or will remain as deposits until the item is either delivered
and recorded as revenue or cancelled and refunded.
NOTE 6 – DEFERRED REVENUE
The Company receives payments from customers on orders
prior to shipment. At January 31, 2023 the Company had received $66,153 (January 31, 2022- $665,143) in customer payments for orders that
were unfulfilled at January 31, 2023 and delivered subsequent to year end. The orders were unfulfilled at January 31, 2022 because of
both normal order processing and fulfillment requirements, and back orders.
NOTE 7 – PPP LOAN
On May 2, 2020 the Company entered into a Paycheck
Protection Promissory (PPP) Note Agreement whereby the lender would advance proceeds of $209,447 at a fixed rate of 1% per annum and a
May 2, 2022 maturity. The loan was repayable in monthly installments of $8,818 commencing September 2, 2021 and continuing on the second
day of every month thereafter until maturity when any remaining principal and interest are due and payable. On September 22, 2021 the
loan was forgiven and $209,447 was recorded as a gain and is included in operating expenses.
F-15
Index to Financial Statements
NOTE 8 – SHORT-TERM AND LONG-TERM DEBT
The components of the Company’s short-term and
long term debt as of January 31, 2022 and 2021 were as follows:
| |
|
|
|
|
|
| |
|
January 31, 2023 |
|
January 31, 2022 |
|
| Loan dated October 8, 2019, and revised February 29, 2020 and November 10, 2020 repayable June 30, 2022 with an additional interest payment of $20,000.(3) |
|
$ |
— |
|
$ |
97,340 |
|
| Forklift Note Payable, original note of $20,433 Sept 26, 2018, 6.23% interest, 60 monthly payments of $394.54 ending August 2023.(1) |
|
|
3,836 |
* |
|
8,183 |
|
| Vehicle loan original loan of $93,239 February 16, 2021, 2.90% interest. 72 monthly payments of $1,414 beginning on April 2, 2021 and ending on March 2, 2027. Secured by vehicle having net book value of $69,947.† |
|
|
66,538 |
# |
|
81,346 |
|
| Vehicle loan original loan of $59,711 March 20,2021, 7.89% interest. 72 monthly payments of $1,048 beginning on May 4, 2021 and ending on April 4, 2027. Secured by vehicle having net book value of $65,147.† |
|
|
45,454 |
# |
|
54,108 |
|
| Working Capital Note Payable - $700,000,
dated October
29, 2021, repayment of $17,904
per week until Oct
29, 2022, interest rate of approximately 31%.(2,4,7) |
|
|
351,923 |
* |
|
635,831 |
|
| Working Capital Note Payable - $650,000,
dated October
25, 2021, repayment of $15,875
per week until October
25, 2022, interest rate of approximately 26%.(2,4,8) |
|
|
443,819 |
* |
|
596,047 |
|
| Demand loan - $5,000 dated February 1, 2020, 15% interest, 5% fee on outstanding balance. |
|
|
5,000 |
* |
|
5,000 |
|
| Demand loan - $2,500, dated March 8, 2019, 25% interest, 5% fee on outstanding balance. |
|
|
2,500 |
* |
|
2,500 |
|
| Demand loan - $65,500 dated February 27, 2019, 25% interest, 5% fee on outstanding balance, Secured by the general assets of the Company. |
|
|
12,415 |
* |
|
12,415 |
|
| Promissory note - $60,000
dated September
18, 2020 maturing April
30, 2022(10), including $5,000
original issue discount, 15%
compounded interest payable monthly.† |
|
|
60,000 |
* |
|
60,000 |
|
| Promissory note - $425,000 dated August 28, 2020, including $50,000 original issue discount, 15% compounded interest payable monthly. This note matures when the Company receives proceeds through a financing event of $825,000 plus accrued interest on the note.(5)† |
|
|
425,000 |
* |
|
425,000 |
|
| Promissory note - $1,200,000 dated August 28, 2020, maturing August 28, 2022, 12% interest payable monthly with the first six months interest deferred until the 6th month and added to principal.(6)† |
|
|
1,200,000 |
* |
|
1,200,000 |
|
| Promissory note - $420,000
dated December
27, 2021, including $20,000
original issue discount, maturing January
27, 2022, non-interest bearing.(9)† |
|
|
420,000 |
* |
|
420,000 |
|
| Promissory note - $30,000 dated November 4, 2022, including $5,000 original issue discount, maturing April 30, 2023, non-interest bearing.(10)† |
|
|
30,000 |
* |
|
— |
|
| Promissory note - $90,000
dated November
7, 2022, including $15,000
original issue discount, maturing April
30, 2023, non-interest bearing.(11)† |
|
|
90,000 |
* |
|
— |
|
| Demand loan, non-interest bearing |
|
|
22,500 |
* |
|
— |
|
| Promissory note - $22,000
dated December
27, 2022, including $2,000
original issue discount maturing January
6, 2023, non-interest bearing.(12)† |
|
|
22,000 |
* |
|
— |
|
| Total |
|
$ |
3,200,985 |
|
$ |
3,597,770 |
|
| |
|
January 31, 2023 |
|
January 31, 2022 |
|
| Short-Term Debt |
|
$ |
3,088,993 |
|
$ |
3,454,133 |
|
| Current Portion of Long-Term Debt |
|
|
24,569 |
|
|
27,737 |
|
| Long-Term Debt |
|
|
87,423 |
|
|
115,900 |
|
| Total |
|
$ |
3,200,985 |
|
$ |
3,597,770 |
|
__________
| † |
|
| * |
|
| # |
|
| (1) |
|
| (2) |
|
| (3) |
|
| (4) |
|
| (5) |
|
| (6) |
|
| (7) |
|
| (8) |
|
| (9) |
|
| (10) |
|
| (11) |
|
| (12) |
|
The following are the minimum amounts due on the notes as of January 31,
2023:
| Year Ended |
|
Amount |
|
| January 31, 2024 |
|
$ |
3,113,562 |
|
| January 31, 2025 |
|
|
25,799 |
|
| January 31, 2026 |
|
|
27,107 |
|
| January 31, 2027 |
|
|
28,498 |
|
| January 31, 2028 |
|
|
6,019 |
|
| Total |
|
$ |
3,200,985 |
|
F-17
Index to Financial Statements
NOTE 9 – SHORT-TERM CONVERTIBLE DEBT
The components of the Company’s convertible
debt as of January 31, 2023 and 2022 were as follows:
| |
Interest |
Default Interest |
Conversion |
Outstanding Principal at |
|
| Maturity Date |
Rate |
Rate |
Price (a) |
January 31, 2023 |
|
January 31, 2022 |
|
| Nov 4, 2013* |
12% |
12% |
$1,800,000 |
$ |
100,000 |
|
$ |
100,000 |
|
| Jan 31, 2014* |
12% |
18% |
$2,400,000 |
|
16,000 |
|
|
16,000 |
|
| July 31, 2013* |
12% |
12% |
$1,440,000 |
|
5,000 |
|
|
5,000 |
|
| Jan 31, 2014* |
12% |
12% |
$2,400,000 |
|
30,000 |
|
|
30,000 |
|
| Nov 12, 2022* |
8% |
12% |
(1) |
|
3,000,000 |
|
|
2,400,000 |
|
| Jan. 13, 2023* |
12% |
22% |
(2) |
|
— |
|
|
228,000 |
|
| Aug. 11, 2022* |
10% |
10% |
(3) |
|
— |
|
|
— |
|
| Feb. 14, 2023* |
12% |
20% |
(4)(b)(i) |
|
2,400,000 |
|
|
— |
|
| Feb 25, 2023* |
12% |
20% |
(4)(b)(i) |
|
250,000 |
|
|
— |
|
| Feb. 25, 2023* |
12% |
20% |
(4)(b)(i) |
|
700,000 |
|
|
— |
|
| Mar. 9 2023* |
12% |
20% |
(4)(b)(i) |
|
400,000 |
|
|
— |
|
| Mar. 9, 2023* |
12% |
20% |
(4)(b)(i) |
|
400,000 |
|
|
— |
|
| Apr. 22, 2023* |
12% |
20% |
(4)(b)(i) |
|
880,000 |
|
|
— |
|
| Apr. 22, 2023* |
12% |
20% |
(4)(b)(i) |
|
220,000 |
|
|
— |
|
| May 19,2023* |
12% |
16% |
(5)(b)(ii) |
|
500,000 |
|
|
— |
|
| Feb.11, 2023* |
12% |
18% |
(4) |
|
275,000 |
|
|
— |
|
| Dec 27, 2022* |
12% |
18% |
(4) |
|
275,000 |
|
|
— |
|
| Jan. 5, 2023* |
12% |
18% |
(4) |
|
250,000 |
|
|
— |
|
| Jan.6 ,2023* |
12% |
18% |
(4) |
|
125,000 |
|
|
— |
|
| Jan.6 ,2023* |
12% |
18% |
(4) |
|
125,000 |
|
|
— |
|
| Jan.11 ,2023* |
12% |
18% |
(4) |
|
138,890 |
|
|
— |
|
| Apr. 22, 2023 |
12% |
18% |
(4) |
|
275,000 |
|
|
— |
|
| Apr. 22, 2023 |
12% |
18% |
(4) |
|
275,000 |
|
|
— |
|
| Sept.29, 2023* |
12% |
22% |
(6)(b)(iii) |
|
211,428 |
|
|
— |
|
| May 10, 2023 |
12% |
18% |
(7) |
|
186,450 |
|
|
— |
|
| May 10, 2023 |
12% |
18% |
(7) |
|
186,450 |
|
|
— |
|
| Nov. 21, 2023 |
12% |
22% |
(7) |
|
54,432 |
|
|
— |
|
| Sub-total |
|
|
|
|
11,278,650 |
|
|
2,779,000 |
|
| Debt Discount |
|
|
|
|
(840,067 |
) |
|
(2,131,034 |
) |
| |
|
|
|
$ |
10,438,583 |
|
$ |
647,966 |
|
__________
| * |
|
| (1) |
|
| (2) |
|
| (3) |
|
| (4) |
|
| (5) |
|
| (6) |
|
| (7) |
|
| (a) |
|
| (b) |
|
| (i) |
|
| (ii) |
|
| (iii) |
|
The Company had accrued interest payable of $1,342,097
and $231,412 on the notes at January 31, 2023 and January 31, 2022, 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 years ended January 31, 2023 and 2022, the Company recorded amortization expense of
$5,691,122 and $918,463, respectively.
During the years ended January 31, 2023 and 2022 the
Company added $3,782,814 and $28,000 in penalty interest to the loans, respectively.
On February 11, 2022, the Company entered into an
unsecured convertible note for $220,000 with a one year maturity, interest rate of 10%, the Company received $200,000 in cash proceeds,
recorded, an original issue discount of $20,000, and a derivative discount of $117,676 related to a conversion feature. The discount is
amortized over the term of the loan. The note is repayable August 11, 2022. This note was paid in full.
On February 14, 2022, the Company entered into a new
convertible note for $1,200,000 with a six month maturity, interest rate of 12%, with a warrant to purchase 120,000 common shares with
a five year maturity and an exercise price of $15.00, and 115,000 common shares. If the loan is not in default the company may extend
the term to February 14, 2023 with 10 days’ notice. The Company has extended the loan term. On April 7, 2022 the parties agreed
to not have the shares returnable in exchange for a waiver on the Company’s breach of certain provisions.
The Company received $979,000 in cash proceeds, recorded an original issue discount of $120,000, a derivative discount of $131,489 for
the conversion feature, recognized $484,032 based on a relative fair value calculation as debt discount with a corresponding adjustment
to paid-in capital for the attached warrants, and transaction fees of $101,000. 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.
In the event of these or any other default provisions, the note becomes due and payable at 200%. As the Company failed to issue the October 31,2023 10-Q within the prescribed filing deadline, the Company recorded a $1,200,000 penalty increasing the principal of the loan
and an additional $120,777 adjustment to accrued interest with corresponding adjustments to interest expense.
On February 25, 2022, the Company entered into a new
convertible note for $350,000 with a six month maturity, interest rate of 12%, with a warrant to purchase 35,000 common shares with a
five year maturity and an exercise price of $15.00, and 33,542 common shares. If the loan is not in default the company may extend the
term to February 25, 2023 with 10 days’ notice. The Company has extended the loan term. The Company received $294,000 in cash proceeds,
recorded an original issue discount of $35,000, a derivative discount of $37,784 for the conversion feature, recognized $132,255 based
on a relative fair value calculation as debt discount with a corresponding adjustment to paid-in capital for the attached warrants, and
transaction fees of $21,000. 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. In the event of these or any other default provisions,
the note becomes due and payable at 200%.. As the Company failed to issue the October 31,2023 10-Q within the prescribed filing deadline,
the Company recorded a $350,000 penalty increasing the principal of the loan and an additional $48,196 adjustment to accrued interest,
with corresponding adjustments to interest expense.
On February 25, 2022, the Company entered into a new
convertible note for $150,000 with a six month maturity, interest rate of 12%, with a warrant to purchase 15,000 common shares with a
five year maturity and an exercise price of $15.00, and 14,400 common shares. If the loan is not in default the company may extend the
term to February 25, 2023 with 10 days’ notice. The Company has extended the loan term. The Company received $119,250 in cash proceeds,
recorded an original issue discount of $15,000, a derivative discount of $16,193 for the conversion feature, recognized $52,613 based
on a relative fair value calculation as debt discount with a corresponding adjustment to paid-in capital for the attached warrants, and
transaction fees of $15,750. 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 200%. As the Company failed to issue the October 31,2023 10-Q within the prescribed filing deadline,
the Company recorded a $125,000 penalty increasing the principal of the loan and an additional $14,470 adjustment to accrued interest,
with corresponding adjustments to interest expense.
On March 9, 2022, the Company entered into a new convertible
note for $200,000 with a six month maturity, interest rate of 12%, with a warrant to purchase 20,000 common shares with a five year maturity
and an exercise price of $15.00, and 19,200 common shares. If the loan is not in default the company may extend the term to March 9, 2023
with 10 days’ notice. The Company has extended the loan term. The Company received $168,000 in cash proceeds, recorded an original
issue discount of $20,000, a derivative discount of $22,533 for the conversion feature, recognized $85,815 based on a relative fair value
calculation as debt discount with a corresponding adjustment to paid-in capital for the attached warrants, and transaction fees of $12,000.
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. In the event of these or any other default provisions, the note becomes due and
payable at 200%. As the Company failed to issue the October 31,2023 10-Q within the prescribed filing deadline, the Company recorded
a $200,000 penalty increasing the principal of the loan and an additional $27,616 adjustment to accrued interest, with corresponding adjustments
to interest expense.
On March 9, 2022, the Company entered into a new convertible
note for $200,000 with a six month maturity, interest rate of 12%, with a warrant to purchase 20,000 common shares with a five year maturity
and an exercise price of $15.00, and 9,200 common shares. If the loan is not in default the company may extend the term to March 9, 2023
with 10 days’ notice. The Company has extended the loan term. The Company received $168,000 in cash proceeds, recorded an original
issue discount of $20,000, a derivative discount of $22,533 for the conversion feature, recognized $85,728 based on a relative fair value
calculation as debt discount with a corresponding adjustment to paid-in capital for the attached warrants, and transaction fees of $12,000.
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. In the event of these or any other default provisions, the note becomes due and
payable at 200%.As the Company failed to issue the October 31,2023 10-Q within the prescribed filing deadline, the Company recorded
a $200,000 penalty increasing the principal of the loan and an additional $27,616 adjustment to accrued interest, with corresponding adjustments
to interest expense.
On April 22, 2022, the Company entered into a new
convertible note for $440,000 with a six month maturity, interest rate of 12%, with a warrant to purchase 44,000 common shares with a
five year maturity and an exercise price of $15.00, and 42,240 common shares. If the loan is not in default the company may extend the
term to April 22, 2023 with 10 days’ notice. The Company has extended the loan term. The Company received $373,600 in cash proceeds,
recorded an original issue discount of $40,000, a derivative discount of $36,796 for the conversion feature, recognized $161,815 based
on a relative fair value calculation as debt discount with a corresponding adjustment to paid-in capital for the attached warrants, and
transaction fees of $26,400. 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 200%.As the Company failed to issue the October 31,2023 10-Q within the prescribed filing deadline,
the Company recorded a $440,000 penalty increasing the principal of the loan and an additional $54,390 adjustment to accrued interest,
with corresponding adjustments to interest expense.
On April 22, 2022, the Company entered into a new
convertible note for $110,000 with a six month maturity, interest rate of 12%, with a warrant to purchase 11,000 common shares with a
five year maturity and an exercise price of $15.00, and 10,560 common shares. If the loan is not in default the company may extend the
term to April 22, 2023 with 10 days’ notice. The Company has extended the loan term. The Company received $93,400 in cash proceeds,
recorded an original issue discount of $10,000, a derivative discount of $9,199 for the conversion feature, recognized $62,707 based on
a relative fair value calculation as debt discount with a corresponding adjustment to paid-in capital for the attached warrants, and transaction
fees of $6,600. 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 200%.As the Company failed to issue the October 31,2023 10-Q within the prescribed filing deadline, the
Company recorded a $110,000 penalty increasing the principal of the loan and an additional $13,597 adjustment to accrued interest, with
corresponding adjustments to interest expense.
On May 18, 2022, the lender and Company amended the
November 12, 2021 $2,400,000 note whereby the $432,000 amortization payments due on June 12, 2022, July 12, 2022 and August 12, 2022 all
totaling $1,296,000 are now payable on October 25, 2022. In exchange the second warrant to acquire 90,000 common shares can no longer
be cancelled. The Company has accrued the loan penalty of $600,000 with a corresponding charge to interest as the loan was not repaid.
The Company recognized a debt discount of $570,195 on this amount. The discount is amortized over the term of the loan.
On May 19, 2022 the Company entered into a new convertible
note for $400,000 with a one year maturity, interest rate of 12%, with a warrant to purchase 33,333 common shares with a five year maturity
and an exercise price of $15.00, and 41,500 common shares. The Company received $325,400 in cash proceeds, recorded an original issue
discount of $40,000, a derivative discount of $358,088 for the conversion feature, recognized $192,341 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 excess discount over the face value of the note of $ $225,429
was expensed to interest. 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 125%. As the
Company failed to issue the October 31,2023 10-Q within the prescribed filing deadline, the Company recorded a $100,000 penalty increasing
the principal of the loan and an additional $8,450 adjustment to accrued interest, with corresponding adjustments to interest expense.
In June 2022, the Company received $50,000 cash proceeds
and recorded an original issue discount of $5,000 from the lender of February 11, 2022 maturing August 11, 2022 and on that date the old
note of $220,000 plus the accrued interest matures on February 11, 2023 along with new advances of $55,000 forming a combined new note
of $275,000 dated August 11, 2022. The new note bears interest at 12% and came with 100,000 warrants with an exercise price of $ 15.00
and a 5 year term and 40,000 common shares. The Company received $50,000 in cash proceeds (in June), recorded an original issue discount
of $5,000, a derivative discount of $37,261 for the conversion feature, and recognized $195,219 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 discount is amortized over
the term of the loan.
On June 27, 2022, the Company entered into a new convertible
note for $275,000 with a six month maturity, interest rate of 12%, with a warrant to purchase 100,000 common shares with a five year maturity
and an exercise price of $15.00, and 40,000 common shares. The Company received $250,000 in cash proceeds, recorded an original issue
discount of $25,000, a derivative discount of $34,488 for the conversion feature, and recognized $197,559 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 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 with
a $15,000 penalty.
On July 5, 2022 the Company entered into a new convertible
note for $250,000 with a six month maturity, interest rate of 12%, with a warrant to purchase 100,000 common shares with a five year maturity
and an exercise price of $15.00, and 40,000 common shares. The Company received $200,000 in cash proceeds, recorded 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.
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 with a $15,000 penalty.
On July 6, 2022, the Company entered into a new convertible
note for $125,000 with a six month maturity, interest rate of 12%, with a warrant to purchase 50,000 common shares with a five year maturity
and an exercise price of $15.00, and 20,000 common shares. The Company received $102,000 in cash proceeds, recorded an original issue
discount of $12,000, a derivative discount of $16,484 for the conversion feature, recognized $83,796 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 $10,000.
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. In the event of these or any other default provisions the note becomes due and payable
with a $15,000 penalty..On July 6, 2022, the Company entered into a new convertible note for $125,000 with a six month maturity, interest
rate of 12%, with a warrant to purchase 50,000 common shares with a five year maturity and an exercise price of $15.00, and 20,000 common
shares. The Company received $102,000 in cash proceeds, recorded an original issue discount of $12,500, a derivative discount of $16,388
for the conversion feature, recognized $83,796 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 $10,000. 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. In the event of these or any other default provisions, the note becomes due and payable with a $15,000 penalty.
On July 11, 2022, the Company entered into a new convertible
note for $138,890 with a six month maturity, interest rate of 12%,with a warrant to purchase 50,000 common shares with a five year maturity
and an exercise price of $15.00, and 20,000 common shares. The Company received $116,668 in cash proceeds, recorded an original issue
discount of $13,889, a derivative discount of $18,735 for the conversion feature, recognized $97,336 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 $8,333.
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 with a $15,000 penalty.
On August 22, 2022, the Company entered into a new
convertible note with a shareholder for $275,000 with a six month maturity, interest rate of 12%,with a warrant to purchase 100,000 common
shares with a five year maturity and an exercise price of $15.00, and 40,000 common shares. The Company received $39,260 in cash proceeds,
and transferred the following to the note holder : a short term loan of $97,340, a shareholder loan of $50,000, accrued interest of $25,000,and
accounts payable for unpaid rent of $38,400. The Company recorded an original issue discount of $25,000, a derivative discount of $36,947
for the conversion feature, recognized $186,343 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 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.
On August 22, 2022, the Company entered into another
new convertible note with a shareholder for $275,000 with a six month maturity, interest rate of 12%,with a warrant to purchase 100,000
common shares with a five year maturity and an exercise price of $15.00, and 40,000 common shares. The Company received $250,000 in cash
proceeds, recorded an original issue discount of $25,000, a derivative discount of $37,070 for the conversion feature, recognized $186,343
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 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.
On September 29, 2022, the
Company entered into a new convertible note for $201,360 with a six month maturity, interest rate of 12%. The Company received
$175,536 in cash proceeds, recorded an original issue discount of $21,574, a derivative discount of $17,736 for the conversion
feature, and transaction fees of $4,250. The discount is amortized over the term of the loan. The loan is repayable in ten
instalments of $22,532 of principal and interest which commenced November 15, 2022. 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%. As the Company failed to issue the October 31, 2023 10-Q within
the prescribed filing deadline, the Company recorded a $70,576 penalty increasing the principal of the loan and an additional $8,457
adjustment to accrued interest, with corresponding adjustments to interest expense.
On November 11, 2022, the Company entered into a new
convertible note for $186,450 with a six month maturity, interest rate of 12% with a warrant to purchase 75,000 common shares with a five
year maturity and an exercise price of $15.00, and 27,120 common shares.. The Company received $169,500 in cash proceeds, recorded an
original issue discount of $16,950, a derivative discount of $156,496 for the conversion feature, and recognized $9,439 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 discount
is amortized over the term of the loan.
On November 11, 2022, the Company entered into another
new convertible note for $186,450 with a six month maturity, interest rate of 12% with a warrant to purchase 75,000 common shares with
a five year maturity and an exercise price of $15.00, and 27,120 common shares.. The Company received $169,500 in cash proceeds, recorded
an original issue discount of $16,950, a derivative discount of $148,419 for the conversion feature, and recognized $15,216 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 discount is amortized over the term of the loan.
On November 21, 2022, the Company entered into a new
convertible note for $60,480 with one year maturity, interest rate of 12%. The Company received $50,000 in cash proceeds, recorded
an original issue discount of $21,574, a derivative discount of $17,736 for the conversion feature, and transaction fees of $4,250. The
discount is amortized over the term of the loan. The loan is repayable in ten instalments of $6,774 of principal and interest which commenced
January 6, 2023. 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%.
During the year ended January 31, 2023, the Company
converted a total of $25,000 of the convertible notes, and $1,541 of accrued interest into 16,434 common shares. During the year ended
January 31, 2022, the Company converted a total of $125,000 of the convertible notes, $27,691 of accrued interest and $8,750 of fees into
89,771 common shares.
As of January 31, 2023, the Company had $10,301,318
of aggregate 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.
F-22
Index to Financial Statements
NOTE 10 – DERIVATIVE LIABILITIES
As of January 31, 2023 and January 31, 2022, the Company
had derivative liabilities of $3,271,058 and $1,263,442, respectively. During the years ended January 31, 2023 and 2022 the Company recorded
(gains) losses of $665,949 and ($235,703) from the change in the fair value of derivative liabilities, respectively.
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 years ended January 31, 2023 and January 31, 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 (in thousands).
| |
|
Level 3 |
| |
|
Derivatives |
| Balance, January 31, 2021 |
|
$ |
213,741 |
|
| Changes due to Issuance of New Convertible Notes |
|
|
1,933,343 |
|
| Reduction of derivative due to extinguishment or repayment |
|
|
(556,661 |
) |
| Reinstatement of Derivative to Equity |
|
|
(15,134 |
) |
| Changes due to Conversion of Notes Payable |
|
|
(76,144 |
) |
| Mark to Market Change in Derivatives |
|
|
(235,703 |
) |
| |
|
|
|
|
| Balance, January 31, 2022 |
|
|
1,263,442 |
|
| Changes due to Issuance of New Convertible Notes |
|
|
1,943,780 |
|
| Reduction of derivative due to extinguishment or repayment |
|
|
(28,370 |
) |
| Changes due to Conversion of Notes Payable |
|
|
(3,548 |
) |
| Mark to Market Change Reclassification of Debt Discount |
|
|
(570,195 |
) |
| Mark to Market Change in Derivatives |
|
|
665,949 |
|
| Balance, January 31, 2023 |
|
$ |
3,271,058 |
|
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.
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.
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 embedded conversion features that
are categorized within Level 3 of the fair value hierarchy as of January 31, 2023, is as follows:
| |
|
Embedded |
|
| |
|
Derivative Liability |
|
| |
|
As of
January 31, 2023 |
|
| Strike price |
|
|
$7.38 - $8.46 |
|
| Contractual term (years) |
|
|
0.03 - 1.0 years |
|
| Volatility (annual) |
|
|
132.50% - 238.3% |
|
| Underlying fair market value |
|
|
$1.68 |
|
| Risk-free rate |
|
|
7.11% - 8.46% |
|
| Dividend yield (per share) |
|
|
0% |
|
F-23
Index to Financial Statements
NOTE 11 – STOCKHOLDERS’ DEFICIT
Preferred Stock
The Company is authorized to issue 20,000,000 shares
of Preferred Stock, having a par value of $0.001 per share.
Series A 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 January 31, 2023, and January 31, 2022 the Company had 0 shares of Series A Preferred issued
and outstanding and 330,000 authorized with a par value of $0.001 per share.
At both January 31, 2023 and January 31, 2022, respectively,
there were 20,000 and 20,000 Series B preferred shares outstanding. The Series B Preferred Stock have voting rights equal to 66.7% 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 20,000 Series B preferred shares authorized
and issued of the Series B Preferred Stock with a par-value of $0.001 per share.
At both January 31, 2023 and January 31, 2022, there
were 0 and 7,250 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. Currently,
there are 7,250 Series C preferred shares authorized and 0 shares issued with a par-value of $0.001 per share. The 7,250 Series C Preferred
shares were converted into 905,110 common shares on February 1, 2022.
At both January 31, 2023 and January 31, 2022, there
were 870 Series D preferred shares authorized and outstanding, respectively which with a par value $.001. 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. These shares are non-voting, do not receive dividends and are redeemable according to the terms set
out below:
OPTIONAL REDEMPTION.
(1) At any time, either the Corporation
or the holder may redeem for cash out of funds legally available therefore, any or all of the outstanding Series D Preferred Stock (“Optional
Redemption”) at $1,000 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 January 31, 2023 or by the date the financial statements were issued.
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 January
31, 2023 and 2022.
Common Stock
The Company is authorized to issue 75,000,000 common
shares at a par value of $0.000001 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 January 31,
2023 and January 31, 2022 there were 1,917,982 and 341,023 shares outstanding and issuable, respectively. No dividends were paid
in the years ended January 31, 2023 or 2022. The Company’s articles of incorporation include a provision that the Company is not
allowed to issue fractional shares. Included in the shares outstanding at January 31, 2023 and January 31, 2022 are 148,995 and 1,875
issuable shares. Subsequent to January 31, 2023 67,120 of these issuable shares were issued.
The Company issued the following shares of common
stock in the year ended January 31, 2023:
● The Company issued 905,110
shares upon conversion of 7,250 Series C preferred shares.
● The Company issued 629,881
common shares along with warrants to purchase 1,098,333 common shares (see below) along with debt for relative fair value of $2,451,982.
● The Company issued 3,600
shares for a fair value of $10,980 to settle accounts payable of $18,000. A gain of $7,020 was recorded.
● Conversion of $25,000 notes
payable, $1,541 accrued interest to 16,434 shares of common stock.
● A lender exercised on a cash-free
basis warrants to acquire 29,155 shares and received 20,000 shares.
● The Company cancelled 741
common shares pursuant to an SEC enforcement action against a lender.
● As part of the reverse split
on April 28, 2022 the Company issued 2,675 shares to round up those shareholders for partial shares.
The Company issued the following shares of common
stock in the year ended January 31, 2022:
● Conversion of $125,000 notes
payable, $27,691 accrued interest, $8,750 of fees and $76,144 of derivative liability to 8,977 shares of common stock.
● The Company issued 172,300
shares for gross proceeds $3,039,925.
● The Company issued 6,301
shares with a fair value of $137,555 as payment for fees to consultants.
● The Company issued 10,729
shares to lenders as commitment fee with a relative fair value of $234,237.
Options and Warrants:
The Company has 250,000 options outstanding as of
January 31, 2023 and 50,000 as of January 31, 2022.
The Company recorded option and warrant expense of
$1,998,000 and $1,263,500 for the years ended January 31, 2023 and January 31, 2022, respectively.
For the year ended January 31 ,2023 the Company issued
the following options and warrants:
The Company cancelled the options to acquire 50,000
shares issued to the CEO on July 14, 2021 and issued new options on October11, 2022 to acquire 250,000 shares with a 5 year term and an
exercise price of $4.00. The Company recorded stock-based compensation of $1,998,000 with a corresponding adjustment to paid-in capital.
This amount is the incremental value between the new options of $2,497,500 and the revalued cancelled options if $499,500 which were determined
by using the significant estimated determined below:
Schedule of warrants fair value
| Expected volatility |
753 - 1,735% |
| Exercise price |
$4.00 - $15.00 |
| Stock price |
$9.99 |
| Expected life |
1.5 - 5 years |
| Risk-free interest rate |
3.05% - 3.07% |
| Dividend yield |
0% |
For the year ended January 31, 2023, the Company issued
629,881 common shares and warrants to purchase 1,098,333 common shares along with debt to various lenders as well as warrants to acquire
180,000 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 629,881 common shares and 1,098,333 warrants at $2,451,982, which has been recorded as a debt discount
and the 180,000 warrants at $880,275 which has been recorded as interest both with corresponding adjustments to paid-in capital.
| Expected volatility |
1,686 - 2,227% |
| Exercise price |
$4.45 - $15.00 |
| Stock price |
$0.95 - $11.99 |
| Expected life |
3 - 5 years |
| Risk-free interest rate |
1.76% - 4.45% |
| Dividend yield |
0% |
For the year ended January 31 ,2022 the Company issued
the following warrants:
On July 27, 2021, the Company issued a warrant to
Triton Funds LP (“Triton”) to acquire 30,000 shares of the Company’s common stock as part of the Common Stock Purchase
Agreement with Triton which allows Triton to purchase shares of our common stock and which was included in the Registration Statement
on Form S-1 the Company filed on August 5, 2021 and which went effective on August 18, 2021. The table A below provides the significant
estimates used that resulted in the Company determining the fair value of the warrant at $600,000, which has been recorded as a deferred
offering cost. At January 31,2022 the Company recorded $530,370 of the deferred offering costs against the total net proceeds received
in paid-in capital, with the remaining $69,630 charged as interest expense.
At January 31, 2022 deferred offering cost are $23,000,
related to an upcoming registration statement.
Table A
| Expected volatility |
2181% |
| Exercise price |
$21.10 |
| Stock price |
$20.00 |
| Expected life |
3 years |
| Risk-free interest rate |
0.37% |
| Dividend yield |
0% |
On August 26, 2021, the Company issued an option to
a consultant to acquire 25,000 shares of the Company’s common stock. The table B-1 below provides the significant estimates used
that resulted in the Company determining the fair value of the option at $512,500, which has been recorded as consulting fees.
Table B-1
| Expected volatility |
2,174% |
| Exercise price |
$15.00 |
| Stock price |
$20.50 |
| Expected life |
3 years |
| Risk-free interest rate |
0.46% |
| Dividend yield |
0% |
On October 14, 2021, the Company issued an option
to the CEO to acquire 50,000 shares of the Company’s common stock. The table B-2 below provides the significant estimates used that
resulted in the Company determining the fair value of the option at $585,000, which has been recorded as consulting fees.
Table B-2
| Expected volatility |
2,644% |
| Exercise price |
$15.00 |
| Stock price |
$11.70 |
| Expected life |
2 years |
| Risk-free interest rate |
0.36% |
| Dividend yield |
0% |
On January 27,2022, the Company issued a warrant to
a lender to acquire 30,000 shares of the Company’s common stock. The table C below provides the significant estimates used that
resulted in the Company determining the fair value of the warrant at $276,000, which has been recorded as interest.
Table C
| Expected volatility |
1,885% |
| Exercise price |
$15.00 |
| Stock price |
$9.20 |
| Expected life |
3 years |
| Risk-free interest rate |
1.43% |
| Dividend yield |
0% |
On November 12, 2021 as part of a loan agreement referred
to in Note 9 issued warrant to purchase 90,000 common shares with a five year maturity and an exercise price of $15.00, and an additional
warrant to purchase 90,000 common shares with a five year maturity and an exercise price of $15.00 to be cancelled and extinguished if
the note is repaid on or prior to maturity.
The table D below provides the significant estimates
used that resulted in the Company determining the fair value of the warrant at $2,073,053.
Table D
| Expected volatility |
304% - 311% |
| Exercise price |
$15.00 |
| Stock price |
$9.00 - $18.80 |
| Expected life |
5 years |
| Risk-free interest rate |
1.43% |
| Dividend yield |
0% |
The Company had the following options and warrants
outstanding at January 31, 2023:
| Issued To |
# Warrants |
Dated |
Expire |
Strike Price * |
Expired |
Exercised |
| Lender |
95,000 |
08/28/2020 |
08/28/2023 |
$4.00 per share |
N |
N |
| Broker |
250 |
10/11/2020 |
10/11/2025 |
$45.00 per share |
N |
N |
| Broker |
300 |
11/25/2020 |
11/25/2025 |
$30.00 per share |
N |
N |
| Triton |
30,000 |
07/27/2021 |
07/27/2024 |
$21.10 per share |
N |
N |
| Consultant |
25,000 |
08/26/2021 |
08/26/2024 |
$15.00 per share |
N |
N |
| Lender |
60,845 |
11/12/2021 |
11/12/2026 |
$15.00 per share |
N |
N |
| Lender |
90,000 |
11/12/2021 |
11/12/2026 |
$15.00 per share |
N |
N |
| Lender |
30,000 |
1/27/2022 |
1/27/2025 |
$15.00 per share |
N |
N |
| Lender |
120,000 |
2/14/2022 |
2/14/2027 |
$15.00 per share |
N |
N |
| Lender |
35,000 |
2/25/2022 |
2/25/2027 |
$15.00 per share |
N |
N |
| Lender |
15,000 |
2/25/2022 |
2/25/2027 |
$15.00 per share |
N |
N |
| Lender |
20,000 |
3/9/2022 |
3/9/2027 |
$15.00 per share |
N |
N |
| Lender |
20,000 |
3/9/2022 |
3/9/2027 |
$15.00 per share |
N |
N |
| Lender |
11,000 |
4/22/2022 |
4/22/2027 |
$15.00 per share |
N |
N |
| Lender |
44,000 |
4/22/2022 |
4/22/2027 |
$15.00 per share |
N |
N |
| Lender |
15,000 |
2/26/2022 |
2/26/2025 |
$5.40 per share |
N |
N |
| Lender |
15,000 |
3/28/2022 |
3/28/2025 |
$7.50 per share |
N |
N |
| Lender |
15,000 |
4/27/2022 |
4/27/2025 |
$6.99 per share |
N |
N |
| Lender |
15,000 |
5/27/2022 |
5/27/2025 |
$5.12 per share |
N |
N |
| Lender |
33,333 |
5/19/2022 |
5/19/2027 |
$15.00 per share |
N |
N |
| Lender |
100,000 |
6/27/2022 |
6/27/2027 |
$15.00 per share |
N |
N |
| Lender |
15,000 |
6/26/2022 |
6/26/2025 |
$5.12 per share |
N |
N |
| Lender |
15,000 |
7/26/2022 |
7/26/2025 |
$5.12 per share |
N |
N |
| Lender |
100,000 |
7/5/2022 |
7/5/2027 |
$15.00 per share |
N |
N |
| Lender |
50,000 |
7/6/2022 |
7/6/2027 |
$15.00 per share |
N |
N |
| Lender |
50,000 |
7/6/2022 |
7/6/2027 |
$15.00 per share |
N |
N |
| Lender |
50,000 |
7/11/2022 |
7/11/2027 |
$15.00 per share |
N |
N |
| Lender |
100,000 |
8/11/2022 |
8/11/2027 |
$15.00 per share |
N |
N |
| Lender |
100,000 |
8/22/2022 |
8/22/2027 |
$15.00 per share |
N |
N |
| Lender |
100,000 |
8/22/2022 |
8/22/2027 |
$15.00 per share |
N |
N |
| Lender |
15,000 |
8/25/2022 |
8/25/2025 |
$5.10 per share |
N |
N |
| Lender |
15,000 |
9/24/2022 |
9/24/2025 |
$4.00 per share |
N |
N |
| Lender |
15,000 |
10/24/2022 |
10/24/2025 |
$3.30 per share |
N |
N |
| Lender |
75,000 |
11/10/2022 |
11/10/2027 |
$15.00 per share |
N |
N |
| Lender |
75,000 |
11/10/2022 |
11/10/2027 |
$15.00 per share |
N |
N |
| Lender |
15,000 |
11/23/2022 |
11/23/2025 |
$2.20 per share |
N |
N |
| Lender |
15,000 |
12/23/2022 |
12/23/2025 |
$3.30 per share |
N |
N |
| Lender |
15,000 |
1/22/2023 |
1/22/2026 |
$3.30 per share |
N |
N |
__________
The Company had the following fully vested options
outstanding at January 31, 2023:
| Issued To |
# Options |
Dated |
Expire |
Strike Price |
Expired |
Exercised |
| T. Armes |
50,000 |
10/14/2021 |
7/11/2022 |
$15.00 per share |
Y |
N |
| T. Armes |
250,000 |
7/11/2022 |
7/11/2027 |
$4.00 per share |
N |
N |
The following table summarizes the activity of options and warrants issued
and outstanding as of and for the year ended January 31, 2023 and 2022:
Schedule of warrants issued
and outstanding
| |
|
Options |
|
Weighted Average
Exercise Price |
|
Warrants |
|
Weighted Average
Exercise Price * |
|
| Outstanding at January 31, 2021 |
|
— |
|
$ |
— |
|
95,550 |
|
$ |
4.20 |
|
| Granted |
|
50,000 |
|
|
15.00 |
|
265,000 |
|
|
15.70 |
|
| Exercised |
|
— |
|
|
— |
|
— |
|
|
— |
|
| Forfeited and canceled |
|
— |
|
|
— |
|
— |
|
|
— |
|
| Outstanding at January 31, 2022 |
|
50,000 |
|
$ |
— |
|
360,550 |
|
$ |
12.64 |
|
| Granted |
|
250,000 |
|
|
4.00 |
|
1,278,333 |
|
|
13.52 |
|
| Exercised |
|
— |
|
|
— |
|
(29,155 |
) |
|
(15.00 |
) |
| Forfeited and canceled |
|
(50,000 |
) |
|
(15.00 |
) |
— |
|
|
— |
|
| Outstanding at January 31, 2023 |
|
250,000 |
|
$ |
4.00 |
|
1,609,728 |
|
$ |
13.49 |
|
__________
NOTE 12 – INCOME TAXES
The Company has adopted ASC 740-10, “Income
Taxes”, which requires the use of the liability method in the computation of income tax expense and the current and deferred
income taxes payable (deferred tax liability) or benefit (deferred tax asset). Valuation allowances are established when necessary
to reduce deferred tax assets to the amount expected to be realized.
The income tax expense (benefit) consisted of the
following for the fiscal year ended January 31, 2023 and 2022:
Schedule of income tax expense (benefit)
| |
|
January 31, 2023 |
|
January 31, 2022 |
|
| Total current |
|
$ |
— |
|
$ |
— |
|
| Total deferred |
|
|
— |
|
|
— |
|
| Income tax expense (benefit) |
|
$ |
— |
|
$ |
— |
|
Deferred income taxes reflect the net tax effects
of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for
income tax purposes.
The following is a reconciliation of the expected
statutory federal income tax provision to the actual income tax benefit for the fiscal year ended January 31, 2023(in thousands):
Schedule of statutory federal income tax provision
| |
|
January 31, 2023 |
|
| Federal statutory (benefit) |
|
$ |
(3,528 |
) |
| Permanent timing differences |
|
|
1,602 |
|
| Other |
|
|
(305 |
) |
| Change in valuation allowance |
|
|
2,231 |
|
| Total |
|
$ |
— |
|
For the year ended January 31, 2023, the expected
tax benefit is calculated at the 2019 statutory rate of 21%.
For the year ended January 31, 2023, the expected
tax benefit, temporary timing differences and long-term timing differences are calculated at the 21% statutory rate.
Significant components of the Company’s deferred
tax assets and liabilities were as follows for the fiscal year ended January 31, 2023 and 2022:
Schedule of deferred tax asset and liabilities
| |
|
January 31, 2023 |
|
January 31, 2022 |
|
| Deferred tax assets: |
|
|
|
|
|
|
|
| Net operating loss carryforwards |
|
$ |
4,091,000 |
|
$ |
1,860,000 |
|
| Total deferred tax assets |
|
|
4,091,000 |
|
|
1,860,000 |
|
| |
|
|
|
|
|
|
|
| Deferred tax liabilities: |
|
|
|
|
|
|
|
| Depreciation |
|
|
— |
|
|
— |
|
| Deferred revenue |
|
|
— |
|
|
— |
|
| Total deferred tax liabilities |
|
|
— |
|
|
— |
|
| |
|
|
|
|
|
|
|
| Net deferred tax assets: |
|
|
|
|
|
|
|
| Less valuation allowance |
|
|
(4,091,000 |
) |
|
(1,860,000 |
) |
| Net deferred tax assets (liabilities) |
|
$ |
— |
|
$ |
— |
|
The Company has incurred losses since inception, therefore,
the Company has no federal tax liability. Additionally there are limitations imposed by certain transactions which are deemed to
be ownership changes which occurred in the Company on November 29, 2018. The net deferred tax asset generated by the loss carryforward
has been fully reserved. The cumulative net operating loss carryforward was approximately $19,485,000 at January 31, 2023. The
net operating loss carryforward that is available for carryforward for federal income tax purposes and begin to expire in 2039.
Although the Company has tax loss carry-forwards,
there is uncertainty as to utilization prior to their expiration. Accordingly, the future income tax asset amounts have been fully
reserved by a valuation allowance.
The Company has maintained a full valuation allowance
against its deferred tax assets at January 31, 2023 and 2022. A valuation allowance is required to be recorded when it is more likely
than not that some portion or all of the net deferred tax assets will not be realized. Since the Company cannot be assured of realizing
the net deferred tax asset, a full valuation allowance has been provided.
The Company does not have any uncertain tax positions
at January 31, 2023 and 2022 that would affect its effective tax rate. The Company does not anticipate a significant change in the amount
of unrecognized tax benefits over the next twelve months. Because the Company is in a loss carryforward position, the Company is generally
subject to US federal and state income tax examinations by tax authorities for all years for which a loss carryforward is available. If
and when applicable, the Company will recognize interest and penalties as part of income tax expense.
During the fiscal year ended January 31, 2023 and
2022, the Company recognized no amounts related to tax interest or penalties related to uncertain tax positions. The Company is subject
to taxation in the United States and various state jurisdictions. The Company currently has no years under examination by any jurisdiction.
On November 29, 2018, the Company consummated a share
exchange agreement whereby there was a change of control and any net operating losses up to the date of the transaction were forfeited.
The Company’s tax returns for the years ended
January 31, 2023, 2022, and 2021 are open for examination under Federal statute of limitations.
NOTE 13 – 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.
In October 2019 the Company entered into an operating
lease for a vehicle with an annual cost of $9,067 and a three year term. The company paid initial fees of $17,744 and will pay fees on
lease termination of $395. On a straight-line basis these costs amount to $1,259 per month.
Schedule of minimum lease obligations
| Maturity of Lease Liabilities |
Operating
Leases |
|
| January 31, 2024 |
$ |
62,003 |
|
| January 31, 2025 |
|
30,003 |
|
| January 31, 2026 |
|
30,003 |
|
| January 31, 2027 |
|
25,004 |
|
| Total lease payments |
|
147,013 |
|
| Less: Interest |
|
(8,462 |
) |
| Present value of lease liabilities |
$ |
138,551 |
|
The Company had total rent expense and operating lease
cost of $135,864 and $133,562 for the years ended January 31, 2023 and 2022, respectively.
NOTE 14 – EARNINGS (LOSS) PER SHARE
The net income (loss) per common share amounts for
the years ended January 31, 2023 and January 31, 2022 were determined as follows:
| |
|
|
|
|
|
|
|
| |
|
For the Years Ended |
|
| |
|
January 31, |
|
| |
|
2023 |
|
2022 |
|
| Numerator: |
|
|
|
|
|
|
|
| Net income (loss) available to common shareholders |
|
$ |
(17,784,524 |
) |
$ |
(8,069,756 |
) |
| |
|
|
|
|
|
|
|
| Denominator: |
|
|
|
|
|
|
|
| Weighted average shares – basic |
|
|
1,658,405 |
|
|
279,745 |
|
| |
|
|
|
|
|
|
|
| Net income (loss) per share – basic |
|
$ |
(10.72 |
) |
$ |
(28.85 |
) |
| |
|
|
|
|
|
|
|
| Effect of common stock equivalents |
|
|
|
|
|
|
|
| Add: interest expense on convertible debt |
|
|
731,169 |
|
|
83,502 |
|
| Add: penalty interest |
|
|
3,782,814 |
|
|
28,000 |
|
| Add: amortization of debt discount |
|
|
5,691,122 |
|
|
918,462 |
|
| Less: gain on settlement of debt on convertible notes |
|
|
(28,370 |
) |
|
(556,661 |
) |
| Add (Less): loss (gain) on change of derivative liabilities |
|
|
665,949 |
|
|
(235,703 |
) |
| Net income (loss) adjusted for common stock equivalents |
|
|
(6,941,841 |
) |
|
(7,832,156 |
) |
| |
|
|
|
|
|
|
|
| Dilutive effect of common stock equivalents: |
|
|
|
|
|
|
|
| Convertible notes and accrued interest |
|
|
— |
|
|
— |
|
| Convertible Class C Preferred shares |
|
|
— |
|
|
— |
|
| Warrants and options |
|
|
— |
|
|
— |
|
| |
|
|
|
|
|
|
|
| Denominator: |
|
|
|
|
|
|
|
| Weighted average shares – diluted |
|
|
1,658,405 |
|
|
279,745 |
|
| |
|
|
|
|
|
|
|
| Net income (loss) per share – diluted |
|
$ |
(10.72 |
) |
$ |
(28.85 |
) |
The anti-dilutive shares of common stock equivalents
for the years ended January 31, 2023 and January 31, 2022 were as follows:
| |
|
For the Years Ended |
|
| |
|
January 31, |
|
| |
|
2023 |
|
2022 |
|
| Convertible notes and accrued interest |
|
|
11,343,439 |
|
|
290,374 |
|
| Convertible Class C Preferred shares |
|
|
— |
|
|
896,892 |
|
| Options |
|
|
250,000 |
|
|
50,000 |
|
| Warrants |
|
|
1,609.278 |
|
|
360,550 |
|
| Total |
|
|
13,202,717 |
|
|
1,597,816 |
|
F-31
Index to Financial Statements
NOTE 15 – RELATED PARTY TRANSACTIONS
As of January 31, 2023 and 2022, the Company had $74,111
and $46,173, respectively, of related party accrued expenses related to accrued compensation for employees and consultants. During the
year ended January 31,2023 deferred salary of $28,438 was added and $500 was repaid.
During the year ended January 31,2023 shareholder
loans, accrued interest and accounts payable totaling $210,740 were transferred to convertible notes payable. In addition, a shareholder
advanced $20,000 and there were repayments of $33,561. During the year ended January 31, 2022 shareholders loaned $119,476 to the Company.
The loans are non-interest-bearing and have no specified repayment terms.
NOTE 16 – SUBSEQUENT EVENTS
Subsequent to January 31, 2023 through to August 5,
2023 the Company entered into the following transactions:
• 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. The discount is amortized over the term of the loan. The note is convertible at a
price lower of $0.25 or 75% of offering price. 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. The terms of the amended
note are that the Company received $70,000 with an original issue discount of $7,000. When combined the original with the original note
having cash proceeds of $225,000 and an original issue discount of $25,000 the new note will now be $327,000 having total cash proceeds
of $295,000 and total original issue discount of $32,000. In addition, the maturity of the note was revised to July 5, 2023 and the company
issued a warrant to acquire 97,221 shares with a $1.00 exercise price and a 5 year 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. Al l 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 255,000 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 $0.20 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.
• The Company issued 167,598
common shares at fair value of $122,109 to settle accounts payable totaling $176,958. A gain of $54,849 was recorded.
• Lenders converted $95,256
in debt, $7,964 in accrued interest and $2,600 in fees into 434,434 common shares.
F-32