United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~April 30,~~October 31, 2021

[_] TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF 1934

From the transition period ___________ to ____________.

Commission File Number 333-152444

THE 4LESS GROUP, ~~INC~~INC..

(Exact name of small business issuer as specified in its charter)

Nevada		7389		90-1494749
(State or jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(IRS Employer Identification No.)

106 W. Mayflower, Las Vegas, NV89030

(Address of principal executive offices)

(702)267-6100

(Issuer’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	FLES	OTCQB

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:

Yes [X] No [_]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [_].

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large Accelerated Filer [_] Accelerated Filer [_]

Non-Accelerated Filer [X] Smaller Reporting Company ~~[X]~~[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 a check mark whether the company is a shell company (as defined by Rule 12b-2 of the Exchange Act):

Yes [_] No [X].

As of ~~June 14,~~December 10, 2021, there were ~~2,584,413~~3,410,235 shares of Common Stock of the issuer outstanding.

TABLE OF CONTENTS

PART I.	FINANCIAL INFORMATION	3

ITEM 1.	Condensed Consolidated Financial Statements (Unaudited)	3

	Notes to Condensed Consolidated Financial Statements (Unaudited)	78

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	2224

ITEM 3.	Quantitative and Qualitative Disclosure About Market Risk	2630

ITEM 4.	Controls and Procedures	2630

PART II.	OTHER INFORMATION	2730

ITEM 1.	Legal Proceedings	2730

ITEM 1A.	Risk Factors	2730

ITEM 2.	Unregistered Sales of Securities and Use of Proceeds	2730

ITEM 3.	Default Upon Senior Securities	2731

ITEM 4.	Mine Safety Disclosures	2731

ITEM 5.	Other Information	2731

ITEM 6.	Exhibits	2732

- 2 -

PART 1: FINANCIAL INFORMATION

ITEM 1: CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THE 4LESS GROUP, INC.

Condensed Consolidated Balance Sheets


	October 31, 2021			January 31, 2021
	Unaudited			(*)
Assets
Current Assets
Cash and Cash Equivalents	$	350,299		$	277,664
Share Subscriptions Receivable		2,301			100,000
Inventory		401,444			323,411
Prepaid Expenses		10,848			11,859
Other Current Assets		41,419			2,149
Total Current Assets		806,311			715,083
Operating Lease Assets		270,187			344,413
Deferred Offering Costs		282,000			—
Property and Equipment, net of accumulated depreciation of $109,468, and $88,823		234,338			80,027

Total Assets	$	1,592,836		$	1,139,523

Liabilities and Stockholders’ Deficit
Current Liabilities
Accounts Payable	$	1,089,619		$	869,765
Accrued Liabilities		646,964			1,382,839
Accrued Expenses – Related Party		46,173			106,173
Customer Deposits		220,776			188,385
Deferred Revenue		241,292			687,766
Short-Term Debt		3,132,568			716,142
Current Operating Lease Liability		103,874			90,286
Short-Term Convertible Debt, net of debt discount of $354,526 and $309,317		594,774			336,683
Derivative Liabilities		391,868			213,741
PPP Loan-current portion		—			43,294
Current Portion – Long-Term Debt		25,076			424,064
Total Current Liabilities		6,492,984			5,059,138

Non-Current Lease Liability		160,770			244,049
PPP Loan -long term portion		—			166,153
Long-Term Debt		125,286			890,373

Total Liabilities		6,779,040			6,359,713

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		0			0
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, 7,250 and 7,250 shares issued and outstanding		7			7
Common Stock, $0.000001 par value, 15,000,000 shares authorized, 3,410,235 and 1,427,163 shares issued, issuable and outstanding		3			1
Additional Paid In Capital		19,212,123			14,291,759
Accumulated Deficit		(25,268,357	)		(20,381,977	)
Total Stockholders’ Deficit		(6,056,204	)		(6,090,190	)

Total Liabilities and Stockholders’ Deficit	$	1,592,836		$	1,139,523

April 30, 2021

January 31, 2021

Unaudited

(*)

Assets

Current Assets

Cash and Cash Equivalents

$
1,342,321

$
277,664

Share Subscriptions Receivable

94,817

100,000

Inventory

307,526

323,411

Prepaid Expenses

11,609

11,859

Other Current Assets

4,827

2,149

Total Current Assets

1,761,100

715,083

Operating Lease Assets

319,698

344,413

Property and Equipment, net of accumulated depreciation of $99,558, and $88,823

255,619

80,027

Total Assets

$
2,336,417

$
1,139,523

Liabilities and Stockholders’ Deficit

Current Liabilities

Accounts Payable

$
865,586

$
869,765

Accrued Expenses

560,934

1,382,839

Accrued Expenses – Related Party

81,173

106,173

Customer Deposits

268,932

188,385

Deferred Revenue

981,830

687,766

Short-Term Debt

446,404

716,142

Current Operating Lease Liability

99,937

90,286

Short-Term Convertible Debt, net of debt discount of $180,789 and $309,317

340,711

336,683

Derivative Liabilities

148,957

213,741

PPP Loan-current portion

79,362

43,294

Current Portion – Long-Term Debt

588,067

424,064

Total Current Liabilities

4,461,893

5,059,138

Non-Current Lease Liability

211,195

244,049

PPP Loan -long term portion

130,085

166,153

Long-Term Debt

1,018,990

890,373

Total Liabilities

5,822,163

6,359,713

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, 7,250 and 7,250 shares issued and outstanding

7

7

Common Stock, $0.000001 par value, 15,000,000 shares authorized, 2,574,413 and 1,427,163 shares issued, issuable and outstanding

3

1

Additional Paid In Capital

16,593,758

14,291,759

Accumulated Deficit

(20,949,534
)

(20,381,977
)
Total Stockholders’ Deficit

(4,355,746
)

(6,090,190
)

Total Liabilities and Stockholders’ Deficit

$
2,336,417

$
1,139,523

* Derived from audited information

Derived from audited information

The Accompanying Notes are an Integral Part of these Unaudited Condensed Consolidated Financial Statements.

- 3 -

THE 4LESS GROUP, INC.

Condensed Consolidated Statements of Operations

For the Three and Nine Months Ended ~~April 30,~~October 31, 2021 and ~~April 30,~~October 31, 2020

(Unaudited)


							Three Months Ended						Nine Months Ended
							October 31, 2021			October 31, 2020			October 31, 2021			October 31, 2020
	2021			2020
Revenue	$	3,728,784		$	2,000,071		$	3,114,062		$	2,334,826		$	9,429,519		$	7,262,106

Cost of Revenue		2,766,578			1,428,304			2,274,564			1,861,130			6,975,126			5,291,026

Gross Profit		962,206			571,767			839,498			473,696			2,454,393			1,971,080

Operating Expenses:
Depreciation		10,735			6,647			12,479			6,299			35,930			18,897
Postage, Shipping and Freight		193,187			113,138			94,356			113,702			430,105			378,595
Marketing and Advertising		608,034			18,068			609,252			25,497			1,876,576			49,347
E Commerce Services, Commissions and Fees		416,127			166,419			434,832			222,425			1,160,569			641,692
Operating lease cost and rent		30,479			34,079
Operating lease cost								30,478			23,279			91,437			91,437
Personnel Costs		297,493			266,735			319,256			330,184			1,078,449			829,788
PPP loan forgiveness								(209,447	)		—			(209,447	)		—
General and Administrative		648,509			175,642			1,569,721			263,619			2,682,866			598,484
Total Operating Expenses		2,204,564			780,728			2,860,927			985,005			7,146,485			2,608,240

Net Operating Loss		(1,242,358	)		(208,961	)
Net Operating Income (Loss)								(2,021,429	)		(511,309	)		(4,692,092	)		(637,160	)

Other Income (Expense)
Gain (Loss) on Sale of Property and Equipment								—			—			20,345			464
Gain (Loss) on Derivatives		4,187			(74,780	)		(76,444	)		(939,873	)		(88,551	)		(507,674	)
Gain on Settlement of Debt		914,049			2,172,646			41,249			2,845,742			1,004,615			5,018,388
Amortization of Debt Discount		(128,528	)		(578,913	)		(130,139	)		(67,357	)		(442,075	)		(694,168	)
Interest Expense		(114,907	)		(123,094	)		(379,811	)		(227,130	)		(688,622	)		(497,917	)
Total Other Income (Expense)		674,801			1,395,859			(545,145	)		1,611,382			(194,288	)		3,319,093

Net Income (Loss)	$	(567,557)		$	1,186,898		$	(2,566,574	)	$	1,100,073		$	(4,886,380	)	$	2,681,933

Basic Average Shares Outstanding		1,940,098			551,590
Basic Weighted Average Shares Outstanding;								3,198,658			1,067,074			2,572,772			797,126
Basic Income (Loss) per Share	$	(0.29)		$	2.15		$	(0.80	)	$	1.03		$	(1.90	)	$	3.36
Diluted Weighted Average Shares Outstanding		1,940,098			88,598,209

Diluted Average Shares Outstanding;								3,198,658			5,268,957			2,572,772			4,999,009
Diluted Income (Loss) per Share	$	(0.29)		$	0.01		$	(0.80	)	$	(0.13	)	$	(1.90	)	$	(0.13	)

The Accompanying Notes are an Integral Part of these Unaudited Condensed Consolidated Financial Statements.

- 4 -

THE 4LESS GROUP, INC.

Condensed Consolidated Statement of Changes in Stockholders’ Deficit

For the ~~Three~~Nine Months Ended ~~April 30,~~October 31, 2021 and ~~April 30,~~October 31, 2020

(Unaudited)

Preferred Series A

Preferred Series B

Preferred Series C

Common Stock

Paid in

Retained

Shares

Amount

Shares

Amount

Shares

Amount

Shares

Amount

Capital

Earnings

Total

January 31, 2020
—

$
—

20,000

$
20

6,750

$
7

538,464

$
1

$
13,449,336

$
(21,569,153
)
$
(8,119,789
)

Conversion of Notes Payable to Common Stock
—

—

—

—

—

—

82,361

—

3,399

—

3,399

Derivative Liability Reclassified as Equity Upon Conversion of notes
—

—

—

—

—

—

—

—

8,104

—

8,104

Exchange of Debt
—

—

—

—

250

—

—

—

9,105

—

9,105

Net Income
—

—

—

—

—

—

—

—

—

1,186,898

1,186,898

April 30, 2020
—

$
—

20,000

$
20

7,000

$
7

620,825

$
1

$
13,469,944

$
(20,382,255
)
$
(6,912,283
)

January 31, 2021
—

—

20,000

20

7,250

7

1,427,163

1

14,291,759

(20,381,977
)

(6,090,190
)

Common Stock Issued as Payment for Fees
—

—

—

—

—

—

50,000

—

107,500

—

107,500

Issuance of Common Stock as Part of REG A
Subscription
—

—

—

—

—

—

1,097,250

1

2,194,499

—

2,194,500

Rounding
—

—

—

—

—

—

—

1

—

—

1

Net (Loss)
—

—

—

—

—

—

—

—

—

(567,557
)

(567,557
)

April 30, 2021
—

$
—

20,000

$
20

7,250

$
7

2,574,413

$
3

$
16,593,758

$
(20,949,534
)
$
(4,355,746
)


	Preferred Series A			Preferred Series B			Preferred Series C			Common Stock			Paid in		Retained
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Capital		Earnings			Total

Balance at January 31, 2020	—	$	—	20,000	$	20	6,750	$	7	538,464	$	1	$	13,449,336	$	(21,569,153	)	$	(8,119,789	)

Conversion of Notes Payable to Common Stock	—		—	—		—	—		—	82,361		—		3,399		—			3,399

Derivative Liability Reclassified as Equity Upon Conversion of notes	—		—	—		—	—		—	—		—		8,104		—			8,104

Exchange of Debt	—		—	—		—	250		—	—		—		9,105		—			9,105

Net Income	—		—	—		—	—		—	—		—		—		1,186,898			1,186,898

Balance at April 30, 2020	—	$	—	20,000	$	20	7,000	$	7	620,825	$	1	$	13,469,944	$	(20,382,255	)	$	(6,912,283	)

Conversion of Notes Payable to Common Stock	—		—	—		—	—		—	284,147		—		7,656		—			7,656

Derivative Liability Reclassified as Equity Upon Conversion of notes	—		—	—		—	—		—	—		—		12,081		—			12,081

Net Income	—		—	—		—	—		—	—		—		—		394,962			394,962

Balance at July 31, 2020	0	$	—	20,000	$	20	7,000	$	7	904,972	$	1	$	13,489,681	$	(19,987,293	)	$	(6,497,584	)

Conversion of Notes Payable and Accrued Interest to Common Stock	—		—	—		—	—		—	211,987		—		4,757		—			4,757

Issuance of Shares as Commitment Fee for Loan	—		—	—		—	—		—	19,685		—		50,000		—			50,000

Issuance of Shares to Repay Accrued Expense Related Party	—		—	—		—	—		—	45,000		—		18,900		—			18,900

Issuance of Class C Shares as Part of Debt Settlement	—		—	—		—	150		—	—		—		20,290		—			20,290

Issuance of Class C Shares Repay Accrued Expense Related Party	—		—	—		—	100		—	—		—		11,177		—			11,177

Issuance of 950,000 Warrants as Part of Debt Settlement	—		—	—		—	—		—	—		—		351,500		—			351,500

Net Income (Loss)	—		—	—		—	—		—	—		—		—		1,100,073			1,100,073

October 31, 2020	0	$	—	20,000	$	20	7,250	$	7	1,181,644	$	1	$	13,946,305	$	(18,887,220	)	$	(4,940,887	)

- 5 -


	Preferred Series A			Preferred Series B			Preferred Series C			Common Stock			Paid in		Retained
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Capital		Earnings			Total

Balance at January 31, 2021	—		—	20,000		20	7,250		7	1,427,163		1		14,291,759		(20,381,977	)		(6,090,190	)

Common Stock Issued as Payment for Fees	—		—	—		—	—		—	50,000		—		107,500		—			107,500

Issuance of Common Stock as Part of REG A Subscription	—		—	—		—	—		—	1,097,250		1		2,194,499		—			2,194,500

Rounding	—		—	—		—	—		—	—		1		—		—			1

Net (Loss)	—		—	—		—	—		—	—		—		—		(567,557	)		(567,557	)

Balance at April 30, 2021	—	$	—	20,000	$	20	7,250	$	7	2,574,413	$	3	$	16,593,758	$	(20,949,534	)	$	(4,355,746	)

Conversion of Notes Payable and Accrued Interest and Fees to Common Stock	—		—	—		—	—		—	30,000		—		59,100		—			59,100

Derivative Liability Reclassified as Equity Upon Conversion of Notes	—		—	—		—	—		—	—		—		17,640		—			17,640

Issuance of shares	—		—	��		—	—		—	104,750		—		200,500		—			200,500

Relative fair value of equity issued with debt	—		—	—		—	—		—	91,810		—		59,801		—			59,801

Issuance of warrants	—		—	—		—	—		—	—		—		600,000		—			600,000

Net (Loss)	—		—	—		—	—		—	—		—		—		(1,752,249	)		(1,752,249	)

Balance at July 31, 2021	—	$	—	20,000	$	20	7,250	$	7	2,800,973	$	3	$	17,530,799	$	(22,701,783	)	$	(5,170,954	)

Conversion of Notes Payable and Accrued Interest and Fees to Common Stock	—		—	—		—	—		—	59,771		—		102,341		—			102,341

Derivative Liability Reclassified as Equity Upon Conversion of Notes	—		—	—		—	—		—	—		—		58,504		—			58,504

Share Issuances, Net of Issuance Costs of $359,445	—		—	—		—	—		—	521,000		—		392,924		—			392,924

Share Issuance for fees	—		—	—		—	—		—	13,011		—		30,055		—			30,055

Additional Shares Issued as Part of Relative Fair Value for Debt	—		—	—		—	—		—	15,480		—		—		—			—

Options Issued to Director and CEO	—		—	—		—	—		—	—		—		585,000		—			585,000

Warrants Issued for Fees	—		—	—		—	—		—	—		—		512,500		—			512,500

Net (Loss)	—		—	—		—	—		—	—		—		—		(2,566,574	)		(2,566,574	)

Balance at October 31, 2021	—	$	—	20,000	$	20	7,250	$	7	3,410,235	$	3	$	19,212,123	$	(25,268,357	)	$	(6,056,204	)

The Accompanying Notes are an Integral Part of these Unaudited Condensed Consolidated Financial Statements.

- 6 -

THE 4LESS GROUP, INC.

Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended October 31, 2021 and October 31, 2020

(Unaudited)


	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss)	$	(4,886,380	)	$	2,681,933
Adjustments to reconcile net income (loss) to cash used by operating activities:
Depreciation		35,930			18,897
Reduction of Right of Use		69,691			—
Accretion of Lease		21,746			—
(Gain) loss in Fair Value on Derivative Liabilities		88,551			507,674
Amortization of Debt Discount		442,075			694,168
Original Issue Discount on Notes to Interest Expense		—			69,750
Loan Penalties Capitalized to Loan and Accrued Interest		28,000			3,394
Stock Based Payment of Consulting Fees and Shares		303,555			50,000
Stock Based Compensation on Options and Warrants		1,097,500			—
Gain on Sale of Property and Equipment		(20,345	)		(464	)
PPP Loan Forgiveness		(209,447	)		—
Gain on Settlement of Debt		(1,004,615	)		(5,018,388	)
Change in Operating Assets and Liabilities:
(Increase) Decrease in Inventory		(78,033	)		72,268
Decrease in Prepaid Rent and Expenses		5,546			21,606
(Increase) Decrease in Other Current Assets		(39,270	)		(2,853)
Increase in Accounts Payable		230,225			31,236
Increase in Accrued Expenses		137,440			293,289
Operating Lease Payments		(91,437	)		—
Decrease in Accrued Expenses -Related Party		(60,000	)		—
Increase in Customer Deposits		32,391			—
Decrease in Deferred Revenue		(446,474	)		—
CASH FLOWS (USED IN) OPERATING ACTIVITIES		(4,343,351	)		(577,490	)

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds of Sales of Property and Equipment		25,060			9,750
Purchase of Property and Equipment		(43,628	)		—
CASH FLOWS (USED IN) PROVIDED BY INVESTING ACTIVITIES		(18,568	)		9,750

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Issuance of Common Shares, Net of Issuance Costs		3,037,625			—
Proceeds from Short Term Debt		1,568,472			635,000
Proceeds from Convertible Notes Payable		699,525			210,250
Payments on Short Term Debt		(449,386	)		(370,824	)
Proceeds from PPP Loan		—			209,447
Payments on Long Term Debt		(14,857	)		(2,856	)
Payments on Convertible Notes Payable		(406,825	)		(14,329	)
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES		4,434,554			666,688

NET INCREASE IN CASH		72,635			98,948

CASH AT BEGINNING OF PERIOD		277,664			162,124

CASH AT END OF PERIOD	$	350,299		$	261,072

Supplemental Disclosure of Cash Flows Information:
Cash Paid for Interest	$	345,868		$	49,638
Convertible Notes Interest and Derivatives Converted to Common Stock	$	237,085		$	35,997
Stock Issued to Related Party in Payment of Accrued Expenses	$	—		$	30,077
Operating Lease Asset to Operating Lease Liability	$	—		$	39,494
Fair Value of Instruments Issued With Debt	$	487,284		$	—
Issuance of Warrants to Deferred Offering Costs	$	600,000		$	—
Deferred Offering Costs Against Share Proceeds	$	312,000		$	—
Loans to acquire Fixed Assets	$	151,327		$	—

The Accompanying Notes are an Integral Part of these Unaudited Condensed Consolidated Financial Statements.

- 57 -

~~THE 4LESS GROUP, INC.~~

~~Condensed Consolidated Statements of Cash Flows~~

~~For the Three Months Ended April 30, 2021 and April 30, 2020~~

~~(Unaudited)~~

2021 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ (567,557 ) $ 1,186,898
Adjustments to reconcile net loss to cash used by operating activities:
Depreciation 10,735 6,647
(Gain) loss in Fair Value on Derivative Liabilities (4,187 ) 74,780
Amortization of Debt Discount 128,528 578,913
Loan Penalties Capitalized to Loan and Accrued Interest 28,000 —
Stock Based Payment of Consulting Fees 107,500 —
Gain on Settlement of Debt (914,049 ) (2,172,646 )
Change in Operating Assets and Liabilities:
Decrease (Increase) in Inventory 15,886 (35,451 )
Decrease in Prepaid Rent and Expenses 1,762 3,156
(Increase) Decrease in Other Current Assets (2,677 ) (21,721 )
Increase (Decrease) in Accounts Payable (2,558 ) 175,430
Increase in Accrued Expenses 28,548 151,078
Decrease in Accrued Expenses -Related Party (25,000 ) —
Increase in Customer Deposits 80,547 —
Increase in Deferred Revenue 294,064 —
CASH FLOWS (USED IN) OPERATING ACTIVITIES (820,458 ) (52,916 )

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Property and Equipment (35,000 ) —
CASH FLOWS (USED IN) INVESTING ACTIVITIES (35,000 ) —

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Issuance of Common Shares 2,099,683 —
Proceeds from Share Subscriptions Receivable 100,000 —
Proceeds from Short Term Debt — 205,000
Payments on Short Term Debt (128,075 ) (124,716 )
Payments on Long Term Debt (1,993 ) (1,249 )
Payments on Convertible Notes Payable (149,500 ) —
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 1,920,115 79,035

NET INCREASE IN CASH 1,064,657 26,119

CASH AT BEGINNING OF PERIOD 277,664 162,124

CASH AT END OF PERIOD $ 1,342,321 $ 188,243

Supplemental Disclosure of Cash Flows Information:
Cash Paid for Interest $ 42,949 $ 13,210
Convertible Notes Interest and Derivatives Converted to Common Stock $ — $ 11,503
Short Term Debt and Interest Extinguished Through Issuance of Series C Preferred Stock $ — $ 144,076
Convertible Notes and Interest Extinguished Through Issuance of Series C Preferred Stock $ — $ 1,245,456
Issuance of Common Shares for Share Subscription Receivable $ 94,817 $ —
Loans to acquire Fixed Assets $ 151,327 $ —

~~The Accompanying Notes are an Integral Part of these Unaudited Condensed Consolidated Financial Statements.~~

~~- 6 -~~

THE 4LESS GROUP, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 1 – NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Business:

Nature of Business – The 4LESS Group, Inc., (the “Company”), was incorporated under the laws of the State of Nevada on December 5, ~~2007.~~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.~~date. The Share Exchange closed on November 29, 2018. As a result of the Share Exchange, the former shareholders of 4LESS became the controlling shareholders of the Company. The Share Exchange was accounted for as a reverse takeover/recapitalization effected by a share exchange, wherein 4LESS is considered the acquirer for accounting and financial reporting purposes. The capital, share price, and earnings per share amount in these consolidated financial statements for the period prior to the reverse merger were restated to reflect the recapitalization in accordance with the shares issued as a result of the reverse merger except otherwise noted.

4LESS was formed as Vegas Suspension & Offroad, LLC on October 24, 2013 as a Nevada limited liability company and converted to a Nevada corporation with the same name on May 8, 2017. On April 2, 2018, the Company changed its name to The 4LESS Corp. The Corporation had S Corporation status. The Corporation operates as an e-commerce auto and truck parts sales company. As a result of the share exchange, the 4LESS Group, Inc. is now a holding company operating through 4LESS and offers products including exhaust systems, suspension systems, wheels, tires, stereo systems, truck bed covers, and shocks. On December 30, 2019 4LESS changed its name to Auto Parts 4Less, Inc.

Significant Accounting ~~Policies:~~Policies:

The Company’s management selects accounting principles generally accepted in the United States of America and adopts methods for their application. The application of accounting principles requires the estimating, matching and timing of revenue and expense. The accounting policies used conform to generally accepted accounting principles which have been consistently applied in the preparation of these condensed financial statements.

Basis of ~~Presentation:~~Presentation:

The Company prepares its financial statements on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States.

The accompanying unaudited condensed consolidated financial statements and related notes have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim unaudited consolidated financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete consolidated financial statements. Certain information and footnote disclosure normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to instructions, rules, and regulations prescribed by the SEC. The unaudited consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended January 31, 2021 and notes thereto contained in the Company’s Annual Report on Form 10-K filed on May 14, 2021.

Principles of ~~Consolidation:~~Consolidation:

The condensed financial statements include the accounts of The 4LESS Group, Inc. as well as The Auto Parts 4Less, Inc., and JBJ Wholesale LLC. All significant inter-company transactions have been eliminated. All amounts are presented in U.S. Dollars unless otherwise stated.

- 78 -

Use of ~~Estimates:~~Estimates:

In order to prepare financial statements in conformity with accounting principles generally accepted in the United States, management must make estimates, judgments and assumptions that affect the amounts reported in the financial statements and determine whether contingent assets and liabilities, if any, are disclosed in the financial statements. The ultimate resolution of issues requiring these estimates and assumptions could differ significantly from resolution currently anticipated by management and on which the financial statements are based. The most significant estimates included in these consolidated financial statements are those associated with the assumptions used to value derivative ~~liabilities.~~liabilities, options and warrants.

Reclassifications

Certain amounts in the Company’s condensed consolidated financial statements for prior periods have been reclassified to conform to the current period presentation. These reclassifications have not changed the results of operations of prior periods.

Cash and Cash ~~Equivalents:~~Equivalents:

The Company considers all highly liquid instruments with a maturity of three months or less to be cash equivalents. At times, cash balances may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. The carrying amount of cash and cash equivalents approximates fair market value.

Inventory Valuation

Inventories are stated at the lower of cost or net realizable value. Inventories are valued on a first-in, first-out (FIFO) basis. Inventory is comprised of finished goods.

Concentrations

Cost of Goods Sold

For the ~~three~~nine months ended ~~April 30,~~October 31, 2021 the Company purchased approximately ~~54%~~58% of its inventory and items available for sale from third parties from three vendors. As of ~~April 30,~~October 31, 2021, the net amount due to the vendors included in accounts payable was ~~$462,991.~~$440,977. For the ~~three~~nine months ended ~~April 30,~~October 31, 2020 the Company purchased ~~from three vendors~~ approximately ~~53%~~55% of its inventory and items available for sale from third ~~parties.~~parties from three vendors. As of ~~April 30,~~October 31, 2020, the net amount due to ~~these~~those vendors included in accounts payable was ~~$434,528.~~$393,729. The Company believes there are numerous other suppliers that could be substituted should a 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.

Adoption of the new standard resulted in the recording of additional net lease assets and lease liabilities of $454,087 and $454,087 respectively, as of February 1, 2019. The standard did not materially impact our consolidated net earnings, retained earnings and had no impact on cash flows.

~~- 8 -~~

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized when items of income and expense are recognized in the financial statements in different periods than when recognized in the tax return. Deferred tax assets arise when expenses are recognized in the financial statements before the tax returns or when income items are recognized in the tax return prior to the financial statements. Deferred tax assets also arise when operating losses or tax credits are available to offset tax payments due in future years. Deferred tax liabilities arise when income items are recognized in the financial statements before the tax returns or when expenses are recognized in the tax return prior to the financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was signed into law. ASC 740, Accounting for Income Taxes requires companies to recognize the effects of changes in tax laws and rates on deferred tax assets and liabilities and the retroactive effects of changes in tax laws in the period in which the new legislation is enacted. The Company’s gross deferred tax assets were revalued based on the reduction in the federal statutory tax rate from 35% to 21%. A corresponding offset has been made to the valuation allowance, and any potential other taxes arising due to the Tax Act will result in reductions to the Company’s net operating loss carryforward and valuation allowance. The Company will continue to analyze the Tax Act to assess its full effects on the Company’s financial results, including disclosures, for the Company’s fiscal year ending January 31, 2022, but the Company does not expect the Tax Act to have a material impact on the Company’s consolidated financial statements.- 9 -

Fair Value of Financial ~~Instruments:~~Instruments:

The Company’s financial instruments consist of cash, accounts payable, advances and notes payable. The Company considers the carrying value of such amounts in the financial statements to approximate their fair value due to the short-term nature of these financial instruments. Derivatives are recorded at fair value at each period end. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date.

The ASC guidance for fair value measurements and disclosure establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

Level 1 Inputs – Quoted prices for identical instruments in active markets.

Level 2 Inputs – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 Inputs – Instruments with primarily unobservable value drivers.

The following table sets forth, by level within the fair value hierarchy, the Company’s financial liabilities that were accounted for at fair value on a recurring basis as of ~~April 30, 2021:~~October 31, 2021:


	April 30, 2021		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		October 31, 2021		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	$	148,957	$	—	$	—	$	148,957	$	391,868	$	—	$	—	$	391,868
Totals	$	148,957	$	—	$	—	$	148,957	$	391,868	$	—	$	—	$	391,868

~~- 9 -~~

Related Party ~~Transactions:~~Transactions:

The Company has a verbal policy that includes procedures intended to ensure compliance with the related party provisions in common practice for public companies. For purposes of the policy, a “related party transaction” is a transaction in which the Company or any one of its subsidiaries participates and in which a related party has a direct or indirect material interest, other than ordinary course, arms-length transactions of less than 1% of the revenue of the counterparty. Any transaction exceeding the 1% threshold, and any transaction involving consulting, financial advisory, legal or accounting services that could impair a director’s independence, must be approved by the CEO. Any related party transaction in which an executive officer or a Director has a personal interest, or which could present a possible conflict under the Guide to Ethical Conduct, must be approved by Board of Directors, following appropriate disclosure of all material aspects of the transaction.

Derivative Liability

The derivative liabilities are valued as a level 3 input under the fair value hierarchy for valuing financial instruments. The derivatives arise from convertible debt where the debt and accrued interest is convertible into common stock at variable conversion prices and reclassification of equity instrument to liability due to insufficient shares for issuance. As the price of the common stock varies, it triggers a gain or loss based upon the discount to market assuming the debt was converted at the balance sheet date. When evaluating the effect of the issuance of new equity-linked or equity-settled instruments on previously issued instruments, the Company uses first-in, first-out method (“FIFO”) where authorized and unused shares would first be used to satisfy the earliest issued equity-linked instruments.

- 10 -

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 ~~April 30,~~October 31, 2021 is greater than 25% change in historical volatility as of that date. The other inputs, such as risk free rate, high yield cash rate and stock price all have a sensitivity for a 1% change in the input variable results in a significantly less than 1% change in the calculated derivative liability.

Revenue Recognition

The Company recognizes revenue under ASC 606, “Revenue from Contracts with Customers. The core principle of the revenue standard is that a company should recognize revenue when control is transferred over the promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods and services transferred to the customer. The following five steps are applied to achieve that core principle:

Step 1: Identify the contract with the customer

Step 2: Identify the performance obligations in the contract

Step 3: Determine the transaction price

Step 4: Allocate the transaction price to the performance obligations in the contract

Step 5: Recognize revenue when the company satisfies a performance obligation

Because the Company’s sales agreements generally have an expected duration of one year or less, the Company has elected the practical expedient in ASC 606-10-50-14(a) to not disclose information about its remaining performance obligations.

Disaggregation of Revenue: Channel Revenue

The following table shows revenue split between proprietary and third party website revenue for the ~~three~~nine months ended ~~April 30,~~October 31, 2021 and ~~2020:~~2020:

					Change							Change
	2021		2020		$		%	2021		2020		$			%
Proprietary website revenue	$	2,123,101		1,109,106	$	1,013,995	91%	$	6,339,478		3,704,215	$	2,635,263		71%
Third party website revenue		1,605,683		890,965		714,718	80%		3,090,041		3,557,891		(467,850	)	(13%	)
Total Revenue	$	3,728,784	$	2,000,071	$	1,728,713	86%	$	9,429,519	$	7,262,106	$	2,167,413		30%

~~- 10 -~~

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.

Stock-Based ~~Compensation:~~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:~~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.

- 11 -

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:~~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 June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvement to Nonemployee Share-Based Payment Accounting, which is part of the FASB’s simplification initiative to maintain or improve the usefulness of the information provided to the users of financial statements while reducing cost and complexity in financial reporting. This update provides consistency in the accounting for share-based payments to nonemployees with that of employees. The updated guidance had no impact on the Company’s consolidated financial position, results of operations or cash flows.

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.

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.

~~- 11 -~~

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 ~~$20,949,534~~$25,268,357 as of ~~April 30,~~October 31, 2021 and has a working capital deficit at ~~April 30,~~October 31, 2021 of ~~$2,700,793.~~$5,686,673. As of ~~April 30,~~October 31, 2021, the Company only had cash and cash equivalents of ~~$1,342,321~~$350,299 and approximately ~~$151,000~~$1,836,000 of short-term debt in default. The short-term debt agreements provide legal remedies for satisfaction of defaults, none of the lenders to this point have pursued their legal remedies. While the Company has continued to grow its revenues, at this time, the three months ended July 31, 2020 was only the first quarter the Company was able to achieve profitability from operations prior to interest and other expenses. While the Company believes it will continue to build on the results achieved in this quarter, ourOur 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 (a) grow the business through building up brand awareness and developing and launching a potentially much larger auto parts e-commerce web site, autoparts4less.com while (b) continuing to fund losses until such time as revenues can sustain the Company. However, there is no assurance that management will be successful in being able to continue to obtain additional funding. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

NOTE 3 – PROPERTY

The Company capitalizes all property purchases over ~~$1,000~~$1,000 and depreciates the assets on a straight-line basis over their useful lives of 3 years for computers and 7 years for all other assets. Property consists of the following at ~~April 30,~~October 31, 2021 and January 31, ~~2021:~~ 2021:

April 30, 2021

January 31, 2021

Office furniture, fixtures and equipment

$
85,413

$
85,413

Shop equipment

43,004

43,004

Vehicles

226,760

40,433

Sub-total

355,177

168,850

Less: Accumulated depreciation

(99,558
)

(88,823
)
Total Property

$
255,619

$
80,027

	October 31, 2021			January 31, 2021
Office furniture, fixtures and equipment	$	94,042		$	85,413
Shop equipment		43,004			43,004
Vehicles		206,760			40,433
Sub-total		343,806			168,850
Less: Accumulated depreciation		(109,468	)		(88,823	)
Total Property	$	234,338		$	80,027

- 12 -

Additions to fixed assets for the ~~three~~nine months ended ~~April 30,~~October 31, 2021 and were ~~$186,327~~$186,327 with ~~$35,000~~$35,000 paid in cash and ~~$151,327~~$151,327 financed through vehicle ~~loans.~~loans foe vehicles and an additional $8,628 acquired in equipment. Additions to fixed assets were nil for the nine months ended October 31, 2020.

For the nine months ended October 31, 2021, 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.

Office equipment having a cost of $9,750 and a net book value of $9,286 was disposed of during the nine months ended October 31, 2020. Proceeds received of $9,750 and a gain on sale of property and equipment of $464 were recorded.

Depreciation expense was $12,479 and $6,299 for the three months ended ~~April 30, 2020.~~October 31, 2021 and October 31, 2020, respectively.

Depreciation expense was ~~$10,735~~$35,930 and ~~$6,647~~$18,897 for the ~~three~~six months ended ~~April 30,~~October 31, 2021 and ~~April 30,~~October 31, 2020, respectively.

~~- 12 -~~

NOTE 4 – LEASES

We lease certain warehouses and office space. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease ~~term.~~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.~~more. The exercise of lease renewal options is at our sole discretion. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

Below is a summary of our lease assets and liabilities at ~~April 30,~~October 31, 2021 and January 31, ~~2021.~~2021.

Leases

Classification

April 30, 2021

January 31, 2021

Assets

Operating

Operating Lease Assets

$
319,698

$
344,413

Liabilities

Current

Operating

Current Operating Lease Liability

$
99,937

$
90,286

Noncurrent

Operating

Noncurrent Operating Lease Liabilities

211,195

244,049

Total lease liabilities

$
311,132

$
334,335

Leases	Classification	October 31, 2021		January 31, 2021
Assets
Operating	Operating Lease Assets	$	270,187	$	344,413
Liabilities
Current
Operating	Current Operating Lease Liability	$	103,874	$	90,286
Noncurrent
Operating	Noncurrent Operating Lease Liabilities		160,770		244,049
Total lease liabilities		$	264,644	$	334,335

Note: As most of our leases do not provide an implicit rate, we use our incremental borrowing rate of 8% based on the information available at commencement date in determining the present value of lease payments.

CAM charges were not included in operating lease expense and were expensed in general and administrative expenses as incurred.

Operating lease cost and rent was ~~$30,479~~$30,478 and ~~$34,079~~$23,279 for the three months ended ~~April 30,~~October 31, 2021 and ~~April 30,~~October 31, 2020, respectively.

Operating lease cost and rent was $91,437 and $91,437 for the six months ended October 31, 2021 and October 31, 2020, respectively.

NOTE 5 – CUSTOMER DEPOSITS

The Company receives payments from customers on orders prior to shipment. At ~~April 30,~~October 31, 2021 the Company had received ~~$268,932~~$220,776 (January 31, 2021- ~~$188,385)~~$188,385) in customer deposits for orders that were unfulfilled at ~~April 30,~~October 31, 2021 and canceled subsequent to ~~year~~quarter end. The orders were unfulfilled at ~~April 30,~~October 31, 2021 because of supply chain issues due to supplier ~~back-orders because of the Covid-19 pandemic.~~back-orders. The deposits were returned to the customers subsequent to ~~April 30,~~October 31, 2021.

NOTE 6 – DEFERRED REVENUE

The Company receives payments from customers on orders prior to shipment. At ~~April 30,~~October 31, 2021 the Company had received ~~$981,830~~$241,292 (January 31, 2021- ~~$687,766)~~$687,766) in customer payments for orders that were unfulfilled at ~~April 30,~~October 31, 2021 and delivered subsequent to ~~April 30,~~October 31, 2021. The orders were unfulfilled at ~~April 30,~~October 31, 2021 because of supply chain issues due to supplier back-orders ~~because of the Covid-19 pandemic~~ as well as processing and delivery ~~timing.~~timing for those orders received close to quarter end.

- 13 -

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~~$209,447 at a fixed rate of 1%1% per annum and a May 2, 2022 maturity. The loan iswas repayable in monthly installments of ~~$8,818~~$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. ~~At April 30,~~On September 22, 2021 the loan ~~is classified~~was forgiven and was recorded as ~~$79,362 current and $130,085 long-term. The Company used the proceeds of this loans for working capital and the Company intends to use these proceeds~~a gain in a manner consistent with obtaining loan forgiveness, which the Company is currently in the process of gathering the required information to file its forgiveness application and expects to have filed its application before the end of its second fiscal quarter. operating expenses.

~~- 13 -~~

NOTE 8 – SHORT-TERM AND LONG-TERM DEBT

The components of the Company’s debt as of ~~April 30,~~October 31, 2021 and January 31, 2021 were as follows:

	April 30,			January 31,			October 31,			January 31,
	2021					2021			2021

Loan dated October 8, 2019, and revised February 29, 2020 and November 10, 2010 repayable June 30, 2022 with an additional interest payment of $20,000⁽³⁾		102,168	#		102,168

SFS Funding Loan, original loan of $389,980 January 8, 2020, 24% interest, weekly payments of $6,006, maturing July 28, 2021⁽²⁾		83,152	*		161,227

Forklift Note Payable, original note of $20,433 Sept 26, 2018, 6.23% interest, 60 monthly payments of $394.54 ending August 2023⁽¹⁾		11,269	#		12,269

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 $94,316.		92,246	#

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 $87,575.		59,711	#

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 September 18, 2021, 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 notes matures when the Company receives proceeds through a financing event of $825,000 plus accrued interest on the note. (4)		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. (5)		1,200,000	#		1,200,000

Promissory note -$50,000 dated August 31, 2020,maturing February 28, 2021, 10% interest payable accrued monthly payable at maturity Fully repaid at April 30, 2021		—	*		50,000

Loan dated October 8, 2019, and revised February 29, 2020 and November 10, 2010 repayable June 30, 2022 with an additional interest payment of $20,000⁽³⁾							$	97,340	*	$	102,168
SFS Funding Loan, original loan of $389,980 January 8, 2020, 24% interest, weekly payments of $6,006, maturing July 28, 2021⁽²⁾, fully repaid								—	*		161,227
Forklift Note Payable, original note of $20,433 Sept 26, 2018, 6.23% interest, 60 monthly payments of $394.54 ending August 2023⁽¹⁾								9,227	#		12,269
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 $94,316.								84,975	#		—
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 $87,575.								56,160	#		—
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)								690,053	*		—
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)								640,260	*		—
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 September 18, 2021, 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 notes 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 -$50,000 dated August 31, 2020, maturing February 28, 2021, 10% interest payable accrued monthly payable at maturity Fully repaid at April 30, 2021								—	*		50,000
Total	$	2,053,461		$	2,030,579		$	3,282,930		$	2,030,579

	October 31,		January 31,
	2021		2021
Short-Term Debt	$	3,132,568	$	716,142
Current Portion Of Long-Term Debt		25,076		424,064
Long-Term Debt		125,286		890,373
	$	3,282,930	$	2,030,579

- 14 -

30-Apr-21

31-Jan-21

Short-Term Debt

$
446,404

$
716,142

Current Portion Of Long-Term Debt

588,067

424,064

Long-Term Debt

1,018,990

890,373

$
2,053,461

$
2,030,579

____________________

*Short-term loans ^	In default
~~#Long-term~~*	Short-term loans
#	Long-term loans of ~~$11,269~~$9,227 including current portion of ~~$3,812~~ $3,913
	$~~102,168~~56,160 including current portion ~~of $0~~ $7,730
	$ ~~59,711~~84,975 including current portion ~~$8,077~~ $13,433
~~$ 92,246 including current portion $14,515~~ (1)
~~$1,200,000 including current portion of $420,000~~
~~(1)~~ Secured by equipment having a net book value of ~~$11,650~~ $10,242
(2)	The amounts due under the note are personally guaranteed by an officer or a director of the Company.
(3)	On November 10, 2020 the Company amended the agreement extending the maturity to June 30, 2022 from April 8, 2021 and changing monthly payments to $0 from ~~$5,705~~$5,705 and interest rate from ~~13%~~13% to a ~~$20,000~~$20,000 lump sum payable at maturity.
~~(3)~~ (4)	The Company has pledged a security interest on all accounts receivable and banks accounts of the Company.
~~(4)~~ (5)	Financing event would be a sale or issuance of assets, debt, shares or any means of raising capital. As the Company expects ~~to enter~~has entered into such a transaction ~~within~~ the ~~calendar year this~~ loan has reached maturity and is treated as current. No notice has been issued by the lender. .
~~(5)~~ (6)	Secured by all assets of the Company. Loan payable in 2 instalments, ~~$445,200~~$445,200 payable August 28, 2021 and ~~$826,800~~$826,800 payable August 28, ~~2022~~ 2022. The first instalment has not been paid so under default the loan has matured and is now current. No notice has been issued by the lender.
(7)	This loan replaces $500,000 loan dated June 4, 2021, $422,009 proceeds were used to repay this loan, net cash received was $253,491 after payment of $26,500 in fees.
(8)	This loan replaces $500,000 loan dated June 4, 2021, $359,919 proceeds were used to repay this loan, net cash received was $267,606 after payment of $22,475 in fees.

NOTE 9 – SHORT-TERM CONVERTIBLE DEBT

The components of the Company’s debt as of ~~April 30,~~October 31, 2021 and January 31, 2021 were as follows:

	Interest	Default Interest	Conversion	Outstanding Principal at						Interest	Default Interest	Conversion	Outstanding Principal at
Maturity Date	Rate	Rate	Price	April 30, 2021			January 31, 2021			Rate	Rate	Price	October 31, 2021			January 31, 2021
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 4, 2013(a)										12%	12%	$1,800,000	$	100,000		$	100,000
Jan 31, 2014(a)										12%	18%	$2,400,000		16,000			16,000
July 31, 2013(a)										12%	12%	$1,440,000		5,000			5,000
Jan 31, 2014(a)										12%	12%	$2,400,000		30,000			30,000
Oct. 12, 2021	12%	16%	(1)		130,000			230,000		12%	16%	⁽¹⁾		—			230,000
Nov. 16, 2021	12%	16%	(1)		125,000			100,000		12%	16%	⁽¹⁾		—			100,000
Nov. 23, 2021	12%	16%	(1)		115,500			165,000		12%	16%	⁽¹⁾		33,000			165,000
July 7, 2022										12%	16%	⁽²⁾		231,000			—
July 12, 2022										12%	16%	$2.00		355,000			—
July 23, 2022										10%	22%	⁽²⁾		179,300			—
Sub-total					521,500			646,000						949,300			646,000
Debt Discount					(180,789	)		(309,317	)					(354,526	)		(309,317	)
				$	340,711		$	336,683					$	594,774		$	336,683

* In default.____________________

~~(1)~~ (a)	~~closing~~In default
(1)	Closing bid price on the day preceding the conversion date.
(2)	Closing bid price on the day preceding the conversion date in the event of default.

On July 7, 2021 the Company entered into a convertible note for $231,000 with a one year maturity, interest rate of 12%, the Company received $199,500 in cash proceeds, recorded an original issue discount of $21,000, a derivative discount of $39,261 related to a conversion feature, and transaction fees of $10,500. As part of the loan the Company issued 30,960 shares as a commitment fee and recognized $31,005 based on a relative fair value calculation as debt discount with a corresponding adjustment to paid-in capital.The discount is amortized over the term of the loan.

On July 12, 2021 the Company ~~had accrued~~entered into a convertible note for $355,000 with a one year maturity, interest ~~payable~~rate of ~~$222,667~~12%, the Company received $300,025 in cash proceeds, recorded an original issue discount of $35,500, a derivative discount of $171,250 related to a conversion feature, and ~~$240,713~~transaction fees of $19,475. As part of the loan the Company issued 60,850 shares as a commitment fee and recognized $28,795 based on a relative fair value calculation as debt discount with a corresponding adjustment to paid-in capital. The discount is amortized over the ~~notes at April 31,~~term of the loan.

- 15 -

On July 20, 2021 the Company entered into a new convertible note for $224,125 with a one year maturity, interest rate of 10%, the Company received $200,000 in cash proceeds, recorded an original issue discount of $20,375, a derivative discount of $106,364 related to a conversion feature, and ~~January 31, 2021, respectively.~~transaction fees of $3,750. The discount is amortized over the term of the loan.

The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that 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 instruments 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 resulted in a discount to the note on the debt modification date. For the ~~three~~nine months ended ~~April 30,~~October 31, 2021 and 2020, the Company recorded amortization of debt discount expense of ~~$128,538~~$442,075 and ~~$578,913,~~$694,168, respectively. ~~See more information in Note 10.~~

~~- 15 -~~

~~During~~For the three months ended ~~April 30,~~October 31, 2021 and ~~April 30,~~2020, the Company recorded amortization of debt discount expense of $130,139 and $67,357, respectively.

During the nine months ended October 31, 2021, the Company converted a total of $125,000 of the convertible notes, $27,691 of accrued interest and $7,500 of fees into 89,771 common shares.

During the nine months ended October 31, 2021 and October 31, 2020 the Company added ~~$28,000~~$28,000 and ~~nil~~$3,394 in penalty interest to the loan, respectively.

The Company had accrued interest payable of $223,298 and $240,713 on the notes at October 31, 2021 and January 31, 2021, respectively.

As of ~~April 30,~~October 31, 2021, the Company had ~~$151,000~~$151,000 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.

NOTE 10 – DERIVATIVE LIABILITIES

As of ~~April 30,~~October 31, 2021 and January 31, 2021, the Company had derivative liabilities of ~~$148,957~~$391,868 and ~~$213,741,~~$213,741, respectively. During the three months ended ~~April 30,~~October 31, 2021 and 2020, the Company recorded ~~a gain~~losses of ~~$4,187~~$76,444 and ~~a loss~~$939,873, respectively, from the change in the fair value of ~~$74,780,~~derivative liabilities. During the nine months ended October 31, 2021 and 2020, the Company recorded losses of $88,551 and $507,764, respectively, from the change in the fair value of derivative liabilities. Any liabilities resulting from the warrants outstanding are immaterial.

The derivative liabilities are valued as a level 3 input for valuing financial instruments.

The following table presents changes in Level 3 liabilities measured at fair value for the three months ended ~~April 30,~~October 31, 2021. Both observable and unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long- dated volatilities) inputs.

Level 3

Derivatives

Balance, January 31, 2021

$
213,741

Settlement due to Repayment of Debt

(60,597
)
Mark to Market Change in Derivatives

(4,187)

Balance, April 30, 2021

$
148,957

	Level 3
	Derivatives
Balance, January 31, 2021	$	213,741
Settlement due to Repayment of Debt		(151,163	)
Changes due to Issuance of New Convertible Notes		316,883
Changes due to Conversion of Notes Payable		(76,144	)
Mark to Market Change in Derivatives		88,551
Balance, October 31, 2021	$	391,868

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.

- 16 -

The fair value of the derivative liability is determined using the lattice model, is re-measured on the Company’s reporting dates, and is affected by changes in inputs to that model including our stock price, expected stock price volatility, the expected term, and the risk-free interest rate. A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring the Company’s warrant liabilities and embedded conversion feature that are categorized within Level 3 of the fair value hierarchy as of ~~April 30,~~October 31, 2021 is as follows:

Embedded

Derivative Liability

As of
April 30, 2021

Strike price

$
2.10 - 4.30

Contractual term (years)

0.25 - 1.00 years

Volatility (annual)

116.5% - 537.3
%
High yield cash rate

24.90% - 29.42
%
Underlying fair market value

$
2.10

Risk-free rate

0.07% - 0.17
%
Dividend yield (per share)

0
%

~~- 16 -~~

		Embedded Derivative Liability As of October 31, 2021
Strike price		$1.24 - $2.25
Contractual term (years)		0.25 - 0.72 years
Volatility (annual)		59.8% - 125.2%
High yield cash rate		21.79% - 22.80%
Underlying fair market value		$1.24
Risk-free rate		0.28% - 0.33%
Dividend yield (per share)		0%

NOTE 11 – STOCKHOLDERS’ DEFICIT

Preferred Stock:

The Series A Preferred Stock has an automatic forced conversion into common stock upon the completion of the repurchase or extinguishing of all “toxic” debt (notes having conversion features tied to the Company’s common stock), the extinguishing of all other existing dilutive debt or equity structures, and total recapitalization of the Company. As of both ~~April 30,~~October 31, 2021, and January 31, 2021 the Company had 0 shares of Series A Preferred issued and outstanding and 330,000 authorized with a par value of ~~$0.001~~$0.001 per share.

At both ~~April 30,~~October 31, 2021 and January 31, 2021, there were 20,000 and 20,000 Series B preferred shares outstanding, respectively. The Series B Preferred Stock have voting rights equal to 51% of the total voting rights at any time. There are no conversion rights granted holders of Series B Preferred shares, they are not entitled to dividends, and the Company does not have the right of redemption. Currently, there are 20,000 Series B preferred shares authorized and issued of the Series B Preferred Stock with a par-value of ~~$0.001~~$0.001 per share.

At both ~~April 30,~~October 31, 2021 and January 31, 2021, there were 7,250 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 issued with a par-value of ~~$0.001~~$0.001 per share. The Series C Preferred Stock shall eventually convert on December 31, 2024.

At both ~~April 30,~~October 31, 2021 and January 31, 2021, there were 870 Series D preferred shares authorized and outstanding, respectively which with a par value ~~$.001.~~$.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 as follows:

OPTIONAL REDEMPTION.

(1) At any time, either the Corporation or the holder may redeem for cash out of funds legally available therefor, any or all of the outstanding Series D Preferred Stock (“Optional Redemption”) at ~~$1,000~~$1,000 per share.

- 17 -

(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.

~~- 17 -~~

(3) Should the holder exercise the right of Optional Redemption it shall provide the Corporation with at least 30 days’ notice of any proposed optional redemption pursuant this Section VI (an “Optional Redemption Notice”). The Optional Redemption Notice shall state the value of the Preferred Stock to be redeemed and the date on which the Optional Redemption is to occur (which shall not be less than thirty (30) or more than sixty (60) Business Days after the date of delivery of the Optional Redemption Notice) and shall be delivered by the holder to the Corporation at the address of the Corporation for the Preferred Stock. Within seven (7) business days after the date of delivery of the Optional Redemption Notice, each holder shall provide the Corporation with instructions as to the account to which payments associated with such Optional Redemption should be deposited. On the date of the Optional Redemption, provided for in the relevant Optional Redemption Notice, (A) the Corporation will deliver the redemption amount via wire transfer to the account designated by the holder, and (B) the holder will deliver the certificates relating to that number of shares of Preferred Stock being redeemed, duly executed for transfer or accompanied by executed stock powers, in either case, transferring that number of shares to be redeemed. Upon the occurrence of the wire transfer (or, in the absence of a holder designating an account to which funds should be transferred, delivery of a certified or bank cashier’s check in the amount due such holder in connection with such Optional Redemption to the address of such holder appearing on the register of the Corporation for the Preferred Stock), that number of shares of Preferred Stock redeemed pursuant to such Optional Redemption as represented by the previously issued certificates will be deemed no longer outstanding. Notwithstanding anything to the contrary in this Designation, each holder may continue to convert Preferred Stock in accordance with the terms hereof until the date such Preferred Stock is actually redeemed pursuant to an Optional Redemption.

The Series D Preferred Stock is not entitled to any pre-emptive or subscription rights in respect of any securities of the Corporation.

Neither the Company nor any Series D preferred stockholders has given notice to exercise the redemption as of ~~April 30,~~October 31, 2021 on the date of the financial statements.

Because the holders of the Series D preferred stock have the right to demand cash redemption, the cumulative amount of the redemption feature is included in Temporary Equity as of ~~April 30,~~October 31, 2021 and January 31, 2021.

Common Stock

The Company is authorized to issue 15,000,000 common shares at a par value of ~~$0.000001~~$0.000001 per share. These shares have full voting rights. The share capital has been retrospectively adjusted accordingly to reflect these reverse stock splits. At ~~April 30,~~October 31, 2021 and January 31, 2021 there were ~~2,574,413~~3,410,235 and 1,427,163 shares outstanding and issuable, respectively. No dividends were paid in the ~~three~~nine months ended ~~April 30,~~October 31, 2021 or 2020. The Company’s articles of incorporation include a provision that the Company is not allowed to issue fractional shares.

The Company issued the following shares of common stock in the ~~three~~nine months ended ~~April 30,~~October 31, 2021:

The Company issued ~~1,097,250~~1,723,000 shares for ~~$2,194,500 as part of Regulation A filing.~~$3,037,625. The company received ~~$2,099,683~~$2,224,805 in cash proceeds with the remaining ~~$94,817~~$2,301 recorded as share proceeds receivable.

~~Issuance~~ A lender converted $125,000 of ~~50,000~~the convertible notes, $27,691 of accrued interest and $7,500 of fees into 89,771 common shares. The Company issued 63,011 shares with a fair value of ~~$107,500~~$137,555 as payment for fees to consultants. The Company issued 107,290 shares to lenders as commitment fee with a ~~consultant.~~relative fair value of $59,801.

- 18 -

Options and Warrants:

The Company has no500,000 options outstanding as of ~~April 30,~~October 31, 2021 orand nil as of January 31, 2021.

The Company recorded option and warrant expense of $0$1,097,500 and $0$1,263,500 for both the three and nine months ended ~~April 30,~~October 31, 2021, respectively. The Company recorded option and ~~2020, respectively.~~warrant expense of nil for both the three and nine months ended October 31, 2020.

For the three and nine months ended October 31 ,2021 the Company issued the following warrants:

On July 27, 2021, the Company issued a warrant to Triton Funds LP (“Triton”) to acquire 300,000 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 (see Note 16). 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. In the event that Triton requests purchases of the Company’s common stock that total less than $600,000, the deferred offering costs will be expenses as professional fees.

Table A

Expected volatility	2181%
Exercise price	$2.11
Stock price	$2.00
Expected life	3 years
Risk-free interest rate	0.37%
Dividend yield	0%

On August 26, 2021, the Company issued a warrant to consultant to acquire 250,000 shares of the Company’s common stock. The table B below provides the significant estimates used that resulted in the Company determining the fair value of the warrant at $512,500, which has been recorded as consulting fees.

Table B

Expected volatility	2174%
Exercise price	$1.50
Stock price	$2.05
Expected life	3 years
Risk-free interest rate	0.46%
Dividend yield	0%

For the three and nine months ended October 31, 2020, the Company issued a warrant to acquire 950,000 shares of stock as part of a debt settlement transaction describe in Note 7. The Warrant gives the holder the right to cash settle the warrants if a fundamental transaction as defined in the warrants occurs. However, a member of management and shareholder of the Company who controls approximately 60% of all voting shares would decide if a fundamental transaction would occur. The Company currently is not considering any fundamental transactions. Based on the above the Company used a Black Scholes model to record the value of the warrant. The warrants having a fair value of $351,500 with a corresponding increase in additional paid-in capital valued using the Black-Scholes option pricing model according to the following assumptions:

Expected volatility	506.8%
Exercise price	$0.40
Stock price	$0.37
Expected life	3 years
Risk-free interest rate	0.19%
Dividend yield	0%

- 19 -

The Company had the following fully vested warrants outstanding at ~~April 30,2021:~~October 31, 2021:

Issued To	# Warrants	Dated	Expire	Strike Price		Expired	Exercised
~~Issued To~~ Lender	~~# Warrants~~ 950,000	~~Dated~~ 08/28/2020	~~Expire~~ 08/28/2023	~~Strike Price~~ $0.40 per share	~~Expired~~	~~Exercised~~ N	N
~~Lender~~ Broker	~~950,000~~ 2,500	~~08/28/~~10/11/2020	~~08/28/2023~~ 10/11/2025	$~~0.40~~4.50 per share	N	N	N
Broker	~~2,500~~ 3,000	~~10/~~11/25/2020	~~10/~~11/25/2025	$~~4.50~~3.00 per share	N	N	N
~~Broker~~ Triton	~~3,000~~ 300,000	~~11/25/2020~~ 07/27/2021	~~11/25/2025~~ 07/27/2024	$~~3.00~~2.11 per share	N	N	N
Consultant	250,000	08/26/2021	08/26/2024	$1.50 per share		N	N

~~- 18 -~~For the three and nine months ended October 31, 2020, the Company issued a stock option to CEO and director T. Armes to acquire 500,000 shares of stock. The table 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 stock based compensation with a corresponding increase in additional paid-in capital valued using the Black-Scholes option pricing model according to the following assumptions:

Options

Weighted Average
Exercise Price

Warrants

Weighted Average
Exercise Price

Outstanding at January 31, 2021

—

$
—

955,000

$
0.42

Granted

—

—

—

—

Exercised

—

—

—

—

Forfeited and canceled

—

—

—

—

Outstanding at April 30, 2021

—

$
—

955,000

$
0.42

Expected volatility	2644%
Exercise price	$1.50
Stock price	$1.17
Expected life	2 years
Risk-free interest rate	0.36%
Dividend yield	0%

The Company had the following fully vested options outstanding at October 31, 2021:

Issued To	# Options	Dated	Expire	Strike Price		Expired	Exercised
T. Armes	500,000	10/14/2021	10/14/2023	$1.50 per share		N	N

Schedule of warrants outstanding

	Options	Weighted Average Exercise Price		Warrants	Weighted Average Exercise Price
Outstanding at January 31, 2021	—	$	—	955,500	$	0.42
Granted	500,000		1.50	550,000		1.83
Exercised	—		—	—		—
Forfeited and canceled	—		—	—		—
Outstanding at October 31, 2021	500,000	$	1.50	1,505,500	$	0.58

NOTE 12 – RELATED PARTY TRANSACTIONS

As of ~~April 30,~~October 31, 2021 and January 31, 2021, the Company had ~~$81,173~~$46,173 and ~~$106,173,~~$106,173, respectively of related party accrued expenses related to accrued compensation for employees and consultants. On October 14, 2021 the Company issued an option to acquire CEO and director T. Armes to acquire 500,000 shares of stock with an exercise price of $1.50 and a two year term having a fair value of $585,000 using the assumptions described in Note 11.

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~~$2,132 and estimated monthly CAM charges of $1,017 per month. This lease is with a shareholder.

On ~~July 1,~~October1, 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~~$6,400 per month.

In October 2019 ~~the~~the Company entered into an operating lease for a vehicle with an annual cost of ~~$9,067~~$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.

Maturity of Lease Liabilities
Operating
Leases

April 30 2022
$
121,917

April 30, 2023

113,100

April 30, 2024

42,803

April 30, 2025

30,003

April 30, 2026

30,003

After April 30, 2026

17,503

Total lease payments

355,329

Less: Interest

(44,197
)
Present value of lease liabilities
$
311,132

- 20 -

Schedule of minimum lease obligations


Maturity of Lease Liabilities	Operating Leases
October 31 2022	$	120,657
October 31, 2023		81,203
October 31, 2024		30,003
October 31, 2025		30,003
October 31, 2026		30,003
After October 31, 2026		2,501
Total lease payments		294,370
Less: Interest		(29,726	)
Present value of lease liabilities	$	264,644

The Company had total operating lease and rent expense of ~~$30,479~~$30,478 and ~~$34,079~~$23,279 for the three months ended ~~April 30,~~October 31, 2021 and 2020 respectively. The Company had total operating lease and rent expense of $91,437 and $91,437 for the nine months ended October 31, 2021 and 2020 respectively.

There is pending litigation initiated by the Company around the validity of a $100,000 note which the Company signed based upon representations of funding from the maker which were never received. The Company initiated litigation to dispute the note and the 1,692 shares that have been issued. There was no consideration for the issuance of the shares and the shares have been accounted for as if they were returned and cancelled although they have not been returned.

~~- 19 -~~

NOTE 14 – EARNINGS (LOSS) PER SHARE

The net income (loss) per common share amounts were determined as follows:


	For the Three Months Ended
	October 31,
	2021			2020
Numerator:
Net income (loss) available to common shareholders	$	(2,566,574	)	$	1,100,073

Denominator:
Weighted average shares – basic		3,198,658			1,067,074

Net income (loss) per share – basic	$	(0.80	)	$	1.03

Effect of common stock equivalents
Add: interest expense on convertible debt		19,247			44,110
Add: amortization of debt discount		130,139			67,357
Less: gain on settlement of debt on convertible notes		(41,249	)		(2,845,742	)
Add (Less): loss (gain) on change of derivative liabilities		76,444			939,873
Net income (loss) adjusted for common stock equivalents		(2,381,993	)		(694,329	)

Dilutive effect of common stock equivalents:
Convertible notes and accrued interest		—			144,158
Convertible Class C Preferred shares		—			3,107,724
Warrants (1)		—			950,001

Denominator:
Weighted average shares – diluted		3,198,658			5,268,957

Net income (loss) per share – diluted	$	(0.80	)	$	(0.13	)

- 21 -

The anti-dilutive shares of common stock equivalents for the three months ended October 31, 2021 and October 31, 2020 were as follows:

	For the Three Months Ended
	October 31,
	2021		2020

Convertible notes and accrued interest		945,643		—
Convertible Class C Preferred shares		8,968,918		—
Warrants and options		2,005,500		—
Total		11,920,061		—

The net income (loss) per common share amounts were determined as follows:


	For the Years Ended					For the Nine Months Ended
	April 30,					October 31,
	2021			2020		2021			2020
Numerator:
Net income (loss) available to common shareholders	$	(567,557	)	$	1,186,898	$	(4,886,380	)	$	2,681,933

Denominator:
Weighted average shares – basic		1,940,098			551,590		2,575,772			797,126

Net income (loss) per share – basic	$	(0.29	)	$	2.15	$	(1.90	)	$	3.36

Effect of common stock equivalents
Add: interest expense on convertible debt		34,652			103,540		35,237			253,691
Add: amortization of debt discount		128,528			—		442,075			694,168
Less: gain on settlement of debt on convertible notes							(1,004,615	)		(4,793,113	)
Add (Less): loss (gain) on change of derivative liabilities		(4,187	)		—		88,551			507,674
Net income (loss) adjusted for common stock equivalents		(408,564	)		1,290,438		(5,325,132	)		(655,647	)


Dilutive effect of common stock equivalents:
Convertible notes and accrued interest		—			86,413,848		—			144,158
Convertible Class C Preferred shares		—			1,632,770		—			3,107,724
Warrants (1)		—			1
Warrants							—			950,001

Denominator:
Weighted average shares – diluted		1,940,098			88,598,209		2,575,772			4,999,009

Net income (loss) per share – diluted	$	(0.29	)	$	0.01	$	(1.90	)	$	(0.13	)

The anti-dilutive shares of common stock equivalents for the ~~three~~nine months ended ~~April 30,~~October 31, 2021 and ~~April 30,~~October 31, 2020 were as follows:

					For the Nine Months Ended
	For the Years Ended				October 31,
	April 30,				2021		2020
	2021		2020
Convertible notes and accrued interest		354,365		—		945,643		—
Convertible Class C Preferred shares		6,770,706		—		8,968,918		—
Warrants		955,500		—
Warrants and options						2,005,500		—
Total		8,080,571		—		11,920,061		—

- 2022 -

NOTE 15 – GAIN ON SETTLEMENT OF DEBT

For the three months ended ~~April 30,~~October 31, 2021 the gain on settlement of debt of ~~$914,049 consisted of a $853,452 gain that resulted from the settlement of accounts payable totaling $950,151 that was settled for $96,699, and a $60,597 gain that~~$41,249 which resulted from the reduction in the derivative liability due to cash repayments on convertible debt. For the three months ended ~~April 30,~~October 31, 2020 the gain on settlement of debt of ~~$2,172,646~~$2,845,742 resulted from a settlement of notes payable and accrued interest and the associated derivative liability (see below).

For the nine months ended October 31, 2021 the gain on settlement of debt of $1,004,615 consisted of a $853,452 gain that resulted from the settlement of ~~$1,070,035~~accounts payable totaling $950,151 that was settled for $96,699, and a $151,162 gain that resulted from the reduction in the derivative liability due to cash repayments on convertible debt.

For the nine months ended October 31, 2020 the gain on settlement of debt of $5,018,388 consisted of the following:

- A $2,172,646 gain that resulted from the settlement of $1,070,035 in convertible notes, and ~~$175,422~~$175,422 in accrued interest, as well as ~~$122,000~~$122,000 in short-term debt and ~~$22,076~~$22,076 in accrued interest, and the associated derivative liability of ~~$792,218~~$792,218 all totaling ~~$2,181,751~~$2,181,751 in exchange for 250 Class C shares having a fair-value of ~~$9,105.~~$9,105.

- A $2,820,147 gain that resulted from the settlement of $1,692,690 in convertible notes and $571,454 in accrued interest as well as the associated derivative liability of $2,177,794 all totaling $4,441,938 in exchange for a promissory note of $1,200,000 bearing interest at 12% and maturing August 28, 2022, 950,000 Warrants with a 3 year maturity and an exercise price of $0.40 having a fair value of $351,500 and 150 Class C shares having a fair-value of $20,290.

- A $25,595 gain that resulted from the settlement of $40,939 in convertible notes, and $20,111 in accrued interest and default interest as well as $31,320 all totaling $92,370 in exchange for cash payments totaling $66,795.

NOTE 16 – SUBSEQUENT EVENTS

Subsequent to quarter year end up to December 10, 2021:

On November 12, 2021 the Company entered into a new convertible note for $2,4000,000 with a one year maturity and interest rate of 8%. The Company received $1,966,000 in cash proceeds, recorded an original issue discount of $240,000 and transaction fees of $194,000. Six months after the issue date, the principal and interest are convertible into Common Stock of the Company at a conversion price of the lesser of $1.25 per share or 75% of the share price. Included are two warrants issued on November 12, 2021, each to acquire 900,000 common shares at an exercise price of $1.50 per share, (subject to adjustment as a result of dilutive issuances), and a 5 year maturity. The second warrant (to acquire 900,000 shares) is subject to cancellation by the Company should the note and accrued interest be repaid without default on or prior to maturity. The Company used a part of the proceeds from the note to repay three investor notes that originated in July totaling $894,480.

On June 8,4, 2021 ~~a lender converted $18,750~~the Company’s shareholders consented to an amendment to the Articles of Incorporation of the Company wherein the name of the Company will be changed to “Auto Parts 4Less Group, Inc.”. The Company expects this name change to become effective, subject to FINRA approval, in ~~principal for 10,000 shares~~the fourth quarter of ~~common stock~~fiscal 2022.

- 2123 -

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, which we refer to in this quarterly report as the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, which we refer to in this quarterly report as the Exchange Act. Forward-looking statements are not statements of historical fact but rather reflect our current expectations, estimates and predictions about future results and events. These statements may use words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “predict,” “project” and similar expressions as they relate to us or our management. When we make forward-looking statements, we are basing them on our management’s beliefs and assumptions, using information currently available to us. These forward-looking statements are subject to risks, uncertainties and assumptions, including but not limited to, risks, uncertainties and assumptions discussed in this quarterly report. Factors that can cause or contribute to these differences include those described under the headings “Risk Factors” and “Management Discussion and Analysis and Plan of Operation.”

If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from what we projected. Any forward-looking statement you read in this quarterly report reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. All subsequent written and oral forward-looking statements attributable to us or individuals acting on our behalf are expressly qualified in their entirety by this paragraph. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this quarterly report. The Company expressly disclaims any obligation to release publicly any updates or revisions to these forward-looking statements to reflect any change in its views or expectations. The Company can give no assurances that such forward-looking statements will prove to be correct.

Company

The 4LESS Group Inc. (“FLES”, the “Company”, “we” or “us”), the Company described herein, was incorporated under the laws of the State of Nevada on December 5, 2007, with offices located at 106 W Mayflower, Las Vegas, Nevada 89030. Our phone number is (702) 267-7100.

Nature of Business –The 4LESS Group, Inc., formerly known as MedCareers Group, Inc. (the “Company”, “MCGI”), was incorporated under the laws of the State of Nevada on December 5, 2007.

On November 29, 2018, the Company entered into a transaction (the “Share Exchange”), pursuant to which the Company acquired 100% of the issued and outstanding equity securities of The 4Less Corp. (“4LESS”), in exchange for the issuance of (i) nineteen thousand (19,000) shares of Series B Preferred Stock, (ii) six thousand seven hundred fifty (6,750) shares of Series C Preferred Stock, and (iii) 870 shares of Series D Preferred Stock. The Series C Preferred Shares have a right to convert into common stock of the Company by multiplying the number of issued and outstanding shares of common stock by 2.63 on the conversion date. The Share Exchange closed on November 29, 2018. As a result of the Share Exchange, the former shareholders of 4LESS became the controlling shareholders of the Company. The Share Exchange was accounted for as a reverse takeover/recapitalization effected by a share exchange, wherein 4LESS is considered the acquirer for accounting and financial reporting purposes. The capital, share price, and earnings per share amount in these consolidated financial statements for the period prior to the reverse merger were restated to reflect the recapitalization in accordance with the shares issued as a result of the reverse merger except otherwise noted.

On November 19, 2019 The 4Less Group acquired the URL Autoparts4Less.com and changed the name of their wholly owned subsidiary from the 4Less Corp. to Auto Parts 4Less, Inc.

Our Business

Along with our website currently under development, autoparts4less.com (as described below), that we are developing into our flagship website, we operate 3 niche websites through which we sell auto parts that are direct listed across marketplace and social media sites, including marketing products through online marketplaces and social media platforms, such as Facebook, Instagram, YouTube and Google:

	•	LiftKits4LESS.com*
	•	Bumpers4LESS.com*
	•	TruckBedCovers4LESS.com*

- 2224 -

We target online consumers’ buying habits by shifting away from “all things to all people” web sites to highly targeted niche websites to quickly respond to market forces.

Our LiftKit4Less.com web site, represents:

	•	Approximately 179,000 Parts
	•	From 46 Manufacturers

Can Search Products Listed

	•	9 Categories Including Lights & Exterior Accessories
	•	66 Subcategories Including Wheels, Electronics & Interior Parts

Select Parts for Over

	•	28 Makes of Vehicles Such as Ford, Chevy and Land Rover
	•	100 Models Including Trucks, SUVs and Jeeps

~~AutoParts4Less.com Launch Expected Timeline~~

~~4Less plans to finish development and beta testing with goal to launch AutoParts4Less.com for aftermarket auto parts manufacturers to sell their parts direct to the public.~~

	•	~~Development Team~~
		~~March 2020 India Development Team is hired.~~

	•	~~Platform~~
		~~Amazon Web Services (AWS) cloud computing platform chosen to operate AutoParts4Less.com~~

	•	~~Marketing~~
		~~Begin marketing marketplace services to aftermarket manufacturers in December 2020~~

	•	~~Data Input~~
		~~Manufacturers start loading their parts info 1~~^st ~~quarter 2021~~

Auto Parts 4less Marketplace Functionality for Manufacturers

Our Auto Parts 4less website will have the following elements:

	•	Manufacturers create an account allowing easy onboarding of products.
	•	Offer premium placement in search results.
	•	Ratings and reviews can be responded to.
	•	Ability to answer basic questions from purchasers.
	•	How-to video galleries.
	•	Keyword advertising.
	•	Promote discounts on products.
	•	4Less can push product lines to other marketplaces such as eBay and Amazon.

Distribution

Our distribution is accomplished as follows:

	•	Direct drop ship from manufacturers to consumers – Approximately 80%
	•	Direct drop ship from Warehouse Inventory Companies to consumers – Approximately 15%
	•	Consumer Purchases directly through our own warehouses – Approximately 5%

~~- 23 -~~Company has launched website in Q3 2021.

Sales

Our sales are derived from the following:

~~Proprietary websites. 57% of our sales are currently generated through our own websites. We intend to build and launch additional niche websites~~

~~Third Party Websites (such as eBay and Walmart)– We sell our products on third party websites and pay fees to these websites in connection with each sale.~~

	•	Proprietary websites. 67% of our sales are currently generated through our own websites. We intend to build and launch additional niche websites

	•	Third Party Websites (such as eBay and Walmart)– We sell our products on third party websites and pay fees to these websites in connection with each sale.

Business Strategies

	•	Continually develop best in class technological modules to increase visitor conversions.
	•
	•	Work to ~~develop and launch~~finalize the website www.autoparts4less.com by approximately ~~mid-to-late FY2022~~first or second quarter FY2023 into what we believe will be the first standalone multi-vendor automotive parts marketplace.

- 25 -

Results of Operations ~~for~~For the ~~Three~~Nine Months Ended ~~April 30,~~October 31, 2021 Compared to the ~~Three~~Nine Months ~~Ended April 30,~~ended October 31, 2020

The following table shows our results of operations for the ~~three~~nine months ended ~~April 30,~~October 31, 2021 and 2020. The historical results presented below are not necessarily indicative of the results that may be expected for any future period.

						Change											Change
	2021			2020		$			%			2021			2020		$			%
Total Revenues		3,728,784			2,000,071		1,728,713			86	%	$	9,429,519			7,262,106	$	2,167,413		30%
Gross Profit		962,206			571,767		390,439			68	%		2,454,393			1,971,080		483,313		25%
Total Operating Expenses		2,204,564			780,728		1,423,836			182	%		7,146,485			2,608,240		4,538,245		174%
Total Other Income (Expense)		674,801			1,395,859		(721,058	)		(52	%)		(194,288	)		3,319,093		(3,513,381	)	(106%	)
Net Income (Loss)		(567,557	)		1,186,898		(1,754,455	)		(148	%)	$	(4,886,380	)	$	2,681,933	$	(7,568,314	)	(282%	)

Revenue

The following table shows revenue split between proprietary and third party website revenue for the nine months ended October 31, 2021 and 2020:

					Change
	2021		2020		$			%
Proprietary website revenues	$	6,339,478		3,704,215	$	2,635,263		71%
Third party website revenues		3,090,041		3,557,891		(467,850	)	(13%	)
Total Revenues	$	9,429,519	$	7,262,106	$	2,167,413		30%

We had total revenue of $9,425,519 for the nine months ended October 31, 2021, compared to $7,262,106 for the nine months ended October 31, 2020. Sales increased by $2,167,413 due to aggressive advertising and increased consumer demand, mostly experienced in the first quarter ended April 30, 2021. The Company also recorded $241,292 in deferred revenue, which will be recognized as revenue next quarter and recognized $687,666 of deferred revenue recorded January 31, 2021. The deferred revenue represents orders paid by customers this period but delivered in the following period due to back orders and processing and delivery times. The Company also recorded $220,776 in customer deposits and recognized $188,385 recorded January 31, 2021. The customer deposits are orders paid by customers and canceled in the following period due to back orders or other reasons. There was neither deferred revenue nor customer deposits for the nine months ended October 31, 2020.

The Company’s focus continues in growing its proprietary website revenues and the Company was successful in that, increasing its proprietary website revenue by 71%. The company believes this strategy will lead to higher revenues and lower overall costs in the future. Third party website revenue fell by 13% due to listing removals which were a result of unfulfilled orders due to manufacturers failure to provide products in a timely basis.

Gross Profit

We had gross profit of $2,454,393 for the nine months ended October 31, 2021, compared to gross profit of $1,971,080 for the nine months ended October 31, 2020. Gross profit increased by $483,313 as a result of the increased revenues explained above and partly offset by an increase in cost of revenue due to a change in product mix.

Operating Expenses

The following table shows our operating expenses for the nine months ended October 31, 2021 and 2020:

						Change
Operating expenses	2021			2020		$			%
Depreciation	$	35,930		$	18,897		17,033		90%
Postage, Shipping and Freight		430,105			378,595		51,510		14%
Marketing and Advertising		1,876,576			49,347		1,827,229		3,703%
E Commerce Services, Commissions and Fees		1,160,569			641,692		518,877		81%
Operating lease cost		91,437			91,437		—		0%
Personnel Costs		1,078,449			829,788		248,661		30%
PPP Loan Forgiveness		(209,447	)		—		(209,447	)	—
General and Administrative		2,682,866			598,484		2,084,382		348%
Total Operating Expenses	$	7,146,485		$	2,608,240		4,538,245		174%

- 26 -

• Depreciation increased by $17,033 due to asset additions in 2021, thus a higher asset value is being depreciated.

• Postage shipping and freight increased slightly by $51,510 due to higher sales.

• Marketing and advertising increased by $1,827,229 due to aggressive promotional efforts in 2021 to drive sales to our proprietary websites and build our brands. The Company also made efforts to reduce spending in 2020 on non-essential expenditures as a result of the economic uncertainty presented by the global Covid-19 pandemic.

• E Commerce Services, Commissions and Fees increased by $518,877 due to higher sales and website development for new website. (AutoParts4Less.com)

• No change in Operating Lease Cost.

• Personnel Costs increased by $248,661 mostly due to the lower costs in 2020 which were a result of temporary layoffs because of the Covid-19 pandemic which began in March 2020 and three new employees in 2021.

• PPP loan forgiveness occurred in September 2021 and is non recurring.

• General and Administrative increased by $2,084,382 mainly due to 1,097,500 in share based compensation. There was also higher professional fees, investor relations because of REG A filings and stock based compensation in 2021. In addition in the prior year’s period, the Company reduced expenditures as a result of the Covid-19 pandemic.

Other Income (Expense)

The following table shows our other income and expenses for the six months ended October 31, 2021 and 2020:

							Change
Other Income (Expense)	2021			2020			$			%
Gain (Loss) on Sale of Property and Equipment	$	20,345		$	464			19,881		4,285%
Gain (Loss) on Derivatives		(88,551	)		(507,674	)		419,123		83%
Gain on Settlement of Debt		1,004,615			5,018,388			(4,013,773	)	(80%	)
Amortization of Debt Discount		(442,075	)		(694,168	)		252,093		36%
Interest Expense		(688,622	)		(497,917	)		(190,705	)	(38%	)
Total Other Income (Expense)	$	(194,288	)	$	3,319,093			(3,513,381	)	(106%	)

The changes above can be explained by the reduction in convertible debt that started in the prior year’s quarter ended October 31,2020. As a result of the debt exchanges and settlements, the gain on settlement of debt was higher and there were reductions in amortization expense and due to the lower debt. Interest expense increased as a result of new loans in the current year’s quarter. The higher loss on derivatives in 2020 is a function of the market factors in the valuation of the derivative liability described in Note 10.

We had net loss of $4,886,380 for the nine months ended October 31, 2021, compared to net income of $2,681,933 for the nine months ended October 31, 2020. The decrease in net income was mainly due to the smaller gain on settlement of debt as well as the large increase in operating expenses for the nine months ended October 31, 2021as explained in the discussion above.

- 27 -

Results of Operations for the Three Months Ended October 31, 2021 Compared to the Three Months Ended October 31, 2020

The following table shows our results of operations for the three months ended October 31, 2021 and 2020. The historical results presented below are not necessarily indicative of the results that may be expected for any future period.

						Change
	2021			2020		$			%
Total Revenues	$	3,114,062			2,334,826	$	779,236		33%
Gross Profit		839,498			473,696		365,802		77%
Total Operating Expenses		2,860,927			985,005		1,875,922		190%
Total Other Income (Expense)		(545,145	)		1,611,382		(2,156,527	)	(134%	)
Net Income (Loss)	$	(2,566,574	)	$	1,100,073	$	(3,666,647	)	(333%	)

Revenue

The following table shows revenue split between proprietary and third-party website revenue for the three months ended ~~April 30,~~October 31, 2021 and 2020:

Change
2021 2020 $ %
Proprietary website revenue $ 2,123,101 1,109,106 $ 1,013,995 91 %
Third party website revenue 1,605,683 890,965 714,718 80 %
Total Revenue $ 3,728,784 $ 2,000,071 $ 1,728,713 86 %

					Change
	2021		2020		$			%
Proprietary website revenues	$	2,392,668		1,301,095	$	1,091,573		84%
Third party website revenues		721,394		1,033,731		(312,337	)	(30%	)
Total Revenues	$	3,114,062	$	2,334,826	$	779,236		33%

We had total revenue of ~~$3,728,784~~$3,114,062 for the three months ended ~~April 30,~~October 31, 2021, compared to ~~$2,000,071~~$2,334,826 for the three months ended ~~April 30,~~October 31, 2020. Sales increased by ~~$1,728,713~~$779,236 due to ~~aggressive advertising and increased consumer demand.~~strong proprietary sales. The Company also recorded ~~$981,830~~$241,292 in deferred revenue, which will be recognized as revenue next quarter and recognized ~~$687,766~~$298,711 from last quarter. The deferred revenue represents orders paid by customers this period but delivered in the following period due to back orders and processing and delivery times. The Company also recorded ~~$268,932~~$220,776 in customer deposits for the three months ended ~~April 30,~~October 31, 2021 and recognized ~~$188,385~~$164,900 from the prior quarter. The customer deposits are orders paid by customers and canceled in the following period due to back orders or other reasons.

The Company’s focus continues in growing its proprietary website revenues and the Company was successful in that, increasing its proprietary website revenue by ~~91%~~84%. Third party website revenue fell by 30% due to listing removals which were a result of unfulfilled orders due to manufacturers failure to provide products in a timely basis.

~~- 24 -~~

Gross Profit

We had gross profit of ~~$962,206~~$839,498 for the three months ended ~~April 30,~~October 31, 2021, compared to gross profit of ~~$571,767~~$473,696 for the three months ended ~~April 30,~~October 31, 2020. Gross profit increased by ~~$390.439~~$365,802 as a result of the increased revenues explained above and partly offset by an increase in cost of revenue due to the Company having to purchase goods at higher product costs from distributers rather than the usual manufacturers due to higher than anticipated demand which manufacturers were not able to meet.above.

Operating Expenses

The following table shows our operating expenses for the three months ended ~~April 30,~~October 31, 2021 and 2020:

																Change
Operating expenses					Change						2021			2020		$			%
	2021		2020		$			%
Depreciation		10,735		6,647		4,088			62	%	$	12,479		$	6,299		6,180		98%
Postage, Shipping and Freight		193,187		113,138		80,049			71	%		94,356			113,702		(19,346	)	(17%	)
Marketing and Advertising		608,034		18,068		589,966			3265	%		609,252			25,497		583,755		2,290%
E Commerce Services, Commissions and Fees		416,127		166,419		249,708			150	%		434,832			222,425		212,407		95%
Operating lease cost		30,479		34,079		(3,600	)		(11	%)		30,478			23,279		7,199		31%
Personnel Costs		297,493		266,735		30,758			12	%		319,256			330,184		(10,928	)	(3%	)
PPP Loan Forgiveness												(209,447	)		—		(209,447	)	—
General and Administrative		648,509		175,642		472,867			269	%		1,569,721			263,619		1,306,102		495%
Total Operating Expenses		2,204,564		780,728		1,423,836			182	%	$	2,860,927		$	985,005		1,875,922		190%

- 28 -

• Depreciation increased by ~~$4,088~~$6,180 due to two new vehicles acquired ~~this quarter..~~last quarter.

• Postage shipping and freight ~~increased~~decreased by ~~$80,049~~$19,346 due to more drop shipments via the higher % of proprietary sales.

• Marketing and advertising increased by ~~$589,966~~$583,755 due to aggressive promotional efforts in 2021 to drive sales to our proprietary websites and build our brands. Note for the three months ended ~~April 30,~~October 31, 2020 the Company had reduced spending due to the Covid 19 pandemic.

• E Commerce Services, Commissions and Fees increased by ~~$249,708~~$212,407 due to ~~higher sales.~~website development for new website. (AutoParts4Less.com)

• Operating Lease Cost decreased by ~~$3,600~~$7,199 due to one less operating lease in 2021.

• Personnel Costs ~~increased~~decreased by ~~$30,758 due to temporary layoffs in the prior year’s quarter commencing March 2020 as a result of the Covid-19 pandemic.~~3% or $10,928.

• General and Administrative in increased by ~~$472,867~~$1,306,102 mainly due to 1,097,500 in share based compensation. We also had increases ~~of $273,720~~ in investor relations costs as a result of the REG A subscription offering, ~~and $173,543 in~~ professional fees due to reporting and business ~~requirements.~~requirements, and stock based compensation on warrants issued this current quarter. Note for the three months ended ~~April 30,~~October 31, 2020, the Company had reduced spending significantly due to the Covid 19 pandemic.

Other Income (Expense)

The following table shows our other income and expenses for the three months ended ~~April 30,~~October 31, 2021 and 2020:

							Change												Change
Other Income (Expense)	2021			2020			$			%			2021			2020			$			%
Gain (Loss) on Derivatives		4,187			(74,780	)		78,967			(106	%)	$	(76,444	)	$	(939,873	)		863,429		92%
Gain on Settlement of Debt		914,049			2,172,646			(1,258,597	)		(58	%)		41,249			2,845,742			(2,804,493	)	(99%	)
Amortization of Debt Discount		(128,528	)		(578,913	)		450,385			(78	%)		(130,139	)		(67,357	)		(62,782	)	(93%	)
Interest Expense		(114,907	)		(123,094	)		8,187			(7	%)		(379,811	)		(227,130	)		(152,681	)	(67%	)
Total Other Income (Expense)		674,801			1,395,859			(721,058	)		(52	%)	$	(545,145	)	$	1,611,382			(2,156,527	)	(134%	)

~~- 25 -~~

The changes above can be explained by the reduction in convertible debt that started in the prior year’s quarter ended April 30,2020. As a result of the debt exchanges and settlements, the gain on settlement of debt was higher and there were reductions in amortization expense and interest expense due to the lower debt. The higher loss on derivatives is a function of the market factors in the valuation of the derivative liability described in Note 8.10. Amortization expense and interest increased due to new notes this current year.

We had a net loss of ~~$567,557~~$2,566,574 for three months ended ~~April 30,~~October 31, 2021, compared to net income of ~~$1,186,898~~$1,100,073 for three months ended ~~April 30,~~October 31, 2021. The decrease in net income was mainly due to the gain on ~~settlement in debt~~derivatives that occurred in the three months ended ~~April 30,~~October 31, 2020 and the higher operating expenses, specifically marketing, share based compensation, investor relations and professional fees in the three months ended ~~April 30, 2021 which were partly offset by the 86% increase in revenues.~~October 31, 2021.

Liquidity and Capital Resources

Management believes that we will continue to incur losses for the immediate future. Therefore, we will need additional equity or debt financing until we can achieve profitability and positive cash flows from operating activities, if ever. These conditions raise substantial doubt about our ability to continue as a going concern. Our unaudited consolidated financial statements do not include any adjustments relating to the recovery of assets or the classification of liabilities that may be necessary should we be unable to continue as a going concern. For the three months ended ~~April 30,~~October 31, 2021, we have increased revenue and are working to achieve positive cash flows from operations.

As of ~~April 30,~~October 31, 2021, we had a cash balance of ~~$1,342,321,~~$350,299, share subscription receivable of ~~$94,817,~~$2,301, inventory of ~~$307,526~~$401,444 and ~~$4,461,893~~$6,492,984 in current liabilities. At the current cash consumption rate, we will need to consider additional funding sources going forward. We are taking proactive measures to reduce operating expenses and drive growth in revenue.

The successful outcome of future activities cannot be determined at this time and there is no assurance that, if achieved, we will have sufficient funds to execute our intended business plan or generate positive operating results.

- 29 -

Capital Resources

The following table summarizes total current assets, liabilities and working capital (deficit) for the periods indicated:

April 30, 2021

January 31, 2021

Current assets

$
1,761,100

$
715,083

Current liabilities

4,461,893

5,059,138

Working capital (deficits)

$
(2,700,783
)
$
(4,344,055
)

	October 31, 2021			January 31, 2021
Current assets	$	806,311		$	715,083
Current liabilities		6,492,984			5,059,138
Working capital (deficits)	$	(5,686,673	)	$	(4,344,055	)

Net cash used in operations for the ~~three~~nine months ended ~~April 30,~~October 31, 2021 was ~~$820,458~~$4,343,351 as compared to net cash used in operations of ~~$52,916~~$577,490 for the ~~three~~nine months ended ~~April 30,~~October 31, 2020. Net cash used in investing activities for the ~~three~~nine months ended ~~April 30,~~October 31, 2021 was ~~$35,000~~$18,568 as compared to $0cash flows provided in investing activities of $9,750 for the same period in 2020. Net cash provided by financing activities for the ~~three~~nine months ended ~~April 30,~~October 31, 2021 was ~~$1,920,115~~$4,434,554 as compared to ~~$79,035~~$666,888 for the ~~three~~nine months ended ~~April 30,~~October 31, 2020.

ITEM 3. Quantitative and Qualitative Disclosure about Market Risk.

Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), we are not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

ITEM 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures. Our Chief Executive Officer and Principal Financial Officer, after evaluating the effectiveness of our “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”), has concluded that as of the Evaluation Date, our disclosure controls and procedures were not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Moving forward, we hope that our Chief Executive Officer and Principal Financial Officer will be able to devote the additional time and effort required so that our disclosure controls and procedures can become effective. Notwithstanding the assessment that our internal controls and procedures were not effective, we believe that our financial statements contained in this Quarterly Report for the quarter ended ~~April 30,~~October 31, 2021 fairly present our financial position, results of operations and cash flows for the years and months covered thereby in all material respects.

~~- 26 -~~

(b) Changes in internal control over financial reporting. There were no changes in our internal control over financial reporting during our most recent fiscal quarter that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.

PART II OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Recent Sales of Unregistered Securities

None.

- 30 -

Item 3. Default Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

See the Exhibit Index immediately following the signature page of this Report on Form 10-Q.

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

The 4Less Group, Inc.

By:/s/ Timothy Armes	~~/s/ Timothy Armes~~
Timothy Armes
Chairman (Director), Chief Executive Officer, President, Secretary and Treasurer

Date: ~~June 14,~~December 15, 2021

- 2731 -

EXHIBIT INDEX

Exhibit Number		Description of Exhibit

31.1*31.1		Certificate of the Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *

32.1*32.1		Certificate of the Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *

101**101.INS		Inline XBRL ~~data files of Financial Statement~~Instance Document - the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. **

101.SCH		Inline XBRL Taxonomy Extension Schema Document **

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document **

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document **

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document **

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document **

104		Cover Page Interactive Data File (formatted as Inline XBRL and ~~Notes~~ contained in ~~this Quarterly Report on Form 10-Q.~~Exhibit 101) **

__________

* Filed herewith.

** In accordance with Regulation S-T, the Interactive Data Files in Exhibit 101 to the Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed.”

- 2832 -

	April 30, 2021			January 31, 2021
	Unaudited			(*)
Assets
Current Assets
Cash and Cash Equivalents	$	1,342,321		$	277,664
Share Subscriptions Receivable		94,817			100,000
Inventory		307,526			323,411
Prepaid Expenses		11,609			11,859
Other Current Assets		4,827			2,149
Total Current Assets		1,761,100			715,083
Operating Lease Assets		319,698			344,413
Property and Equipment, net of accumulated depreciation of $99,558, and $88,823		255,619			80,027

Total Assets	$	2,336,417		$	1,139,523

Liabilities and Stockholders’ Deficit
Current Liabilities
Accounts Payable	$	865,586		$	869,765
Accrued Expenses		560,934			1,382,839
Accrued Expenses – Related Party		81,173			106,173
Customer Deposits		268,932			188,385
Deferred Revenue		981,830			687,766
Short-Term Debt		446,404			716,142
Current Operating Lease Liability		99,937			90,286
Short-Term Convertible Debt, net of debt discount of $180,789 and $309,317		340,711			336,683
Derivative Liabilities		148,957			213,741
PPP Loan-current portion		79,362			43,294
Current Portion – Long-Term Debt		588,067			424,064
Total Current Liabilities		4,461,893			5,059,138

Non-Current Lease Liability		211,195			244,049
PPP Loan -long term portion		130,085			166,153
Long-Term Debt		1,018,990			890,373

Total Liabilities		5,822,163			6,359,713

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, 7,250 and 7,250 shares issued and outstanding		7			7
Common Stock, $0.000001 par value, 15,000,000 shares authorized, 2,574,413 and 1,427,163 shares issued, issuable and outstanding		3			1
Additional Paid In Capital		16,593,758			14,291,759
Accumulated Deficit		(20,949,534	)		(20,381,977	)
Total Stockholders’ Deficit		(4,355,746	)		(6,090,190	)

Total Liabilities and Stockholders’ Deficit	$	2,336,417		$	1,139,523

	Preferred Series A			Preferred Series B			Preferred Series C			Common Stock			Paid in		Retained
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Capital		Earnings			Total
January 31, 2020	—	$	—	20,000	$	20	6,750	$	7	538,464	$	1	$	13,449,336	$	(21,569,153	)	$	(8,119,789	)

Conversion of Notes Payable to Common Stock	—		—	—		—	—		—	82,361		—		3,399		—			3,399

Derivative Liability Reclassified as Equity Upon Conversion of notes	—		—	—		—	—		—	—		—		8,104		—			8,104

Exchange of Debt	—		—	—		—	250		—	—		—		9,105		—			9,105

Net Income	—		—	—		—	—		—	—		—		—		1,186,898			1,186,898

April 30, 2020	—	$	—	20,000	$	20	7,000	$	7	620,825	$	1	$	13,469,944	$	(20,382,255	)	$	(6,912,283	)

January 31, 2021	—		—	20,000		20	7,250		7	1,427,163		1		14,291,759		(20,381,977	)		(6,090,190	)

Common Stock Issued as Payment for Fees	—		—	—		—	—		—	50,000		—		107,500		—			107,500

Issuance of Common Stock as Part of REG A Subscription	—		—	—		—	—		—	1,097,250		1		2,194,499		—			2,194,500

Rounding	—		—	—		—	—		—	—		1		—		—			1

Net (Loss)	—		—	—		—	—		—	—		—		—		(567,557	)		(567,557	)

April 30, 2021	—	$	—	20,000	$	20	7,250	$	7	2,574,413	$	3	$	16,593,758	$	(20,949,534	)	$	(4,355,746	)

	30-Apr-21		31-Jan-21
Short-Term Debt	$	446,404	$	716,142
Current Portion Of Long-Term Debt		588,067		424,064
Long-Term Debt		1,018,990		890,373
	$	2,053,461	$	2,030,579

	Embedded
	Derivative Liability
	As of April 30, 2021
Strike price	$	2.10 - 4.30
Contractual term (years)		0.25 - 1.00 years
Volatility (annual)		116.5% - 537.3	%
High yield cash rate		24.90% - 29.42	%
Underlying fair market value	$	2.10
Risk-free rate		0.07% - 0.17	%
Dividend yield (per share)		0	%


Maturity of Lease Liabilities	Operating Leases
April 30 2022	$	121,917
April 30, 2023		113,100
April 30, 2024		42,803
April 30, 2025		30,003
April 30, 2026		30,003
After April 30, 2026		17,503
Total lease payments		355,329
Less: Interest		(44,197	)
Present value of lease liabilities	$	311,132