AUTO PARTS 4LESS GROUP, INC.

FORMERLY THE 4LESS GROUP, INC.

Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended October 31, ~~2021~~2022 and October 31, ~~2020~~2021

(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 $ —

	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss)	$	(12,228,775	)	$	(4,886,380	)
Adjustments to reconcile net income (loss) to cash used by operating activities:
Depreciation		38,587			35,930
Inventory Provision		143,000			—
Reduction of Right of Use Asset		77,782			69,691
Accretion of Lease Liability		12,396			21,746
(Gain) loss in Fair Value on Derivative Liabilities		841,772			88,551
Amortization of Debt Discount		4,309,329			442,075
Debt Discount in Excess of Face Value of Note to Interest Expense		225,429			—
Loan Penalties Capitalized to Loan and Accrued Interest		600,000			28,000
Interest Expense on Penalty Warrants		798,450			—
Stock Based Compensation		1,998,000			1,097,500
Stock Based Payment of Consulting Fees and Shares		—			303,555
Gain on Sale of Property and Equipment		—			(20,345	)
PPP Loan Forgiveness		—			(209,447	)
Gain on Settlement of Debt		(19,539	)		(1,004,615	)
Change in Operating Assets and Liabilities:
(Increase) Decrease in Inventory		147,333			(78,033	)
Decrease in Prepaid Rent and Expenses		12,077			5,546
(Increase) in Other Current Assets		(17,779	)		(39,270	)
Decrease in Bank Overdraft		(11,055	)		—
Increase in Accounts Payable		95,931			230,225
Increase in Accrued Expenses		741,729			137,440
Operating Lease Payments		(90,178	)		(91,437	)
Decrease in Accrued Expenses -Related Party		(500	)		(60,000	)
Increase (Decrease) in Customer Deposits		(473,044	)		32,391
Decrease in Deferred Revenue		(598,990	)		(446,474	)
CASH FLOWS (USED IN) OPERATING ACTIVITIES		(3,398,045	)		(4,343,351	)

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds of Sales of Property and Equipment		—			25,060
Purchase of Property and Equipment		(1,142	)		(43,628	)
CASH FLOWS (USED IN) INVESTING ACTIVITIES		(1,142	)		(18,568	)

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
Proceeds from Convertible Notes Payable		4,006,714			699,525
Payments on Short Term Debt		(376,699	)		(449,386	)
Shareholder Loans Payable		20,000			—
Repayments on Shareholder Loans Payable		(33,561	)		—
Payments on Long Term Debt		(20,739	)		(14,857	)
Payments on Convertible Notes Payable		(228,000	)		(406,825	)
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES		3,367,715			4,434,554

NET INCREASE (DECREASE) IN CASH		(31,472	)		72,635

CASH AT BEGINNING OF PERIOD		77,498			277,664

CASH AT END OF PERIOD	$	46,026		$	350,299

Supplemental Disclosure of Cash Flows Information:
Cash Paid for Interest	$	75,038		$	345,868
Convertible Notes Interest and Derivatives Converted to Common Stock	$	—		$	237,085
Fair Value of Instruments Issued With Debt	$	2,427,336		$	487,284
Derivative Debt Discount	$	1,557,922		$	—
Debt Discount	$	772,796		$	—
Transfer of Short-term Loan , Shareholder Loan and Accounts payable to Convertible Note	$	210,740		$	—
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.

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AUTO PARTS 4LESS GROUP, INC.

FORMERLY 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~~Auto Parts 4Less Group, Inc., (the “Company”), formerly The 4Less Group, Inc., was incorporated under the laws of the State of Nevada on December 5, ~~2007~~.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~~The 4Less Group, Inc. is now a holding company operating through 4LESS and offers products including exhaust systems, suspension systems, wheels, tires, stereo systems, truck bed covers, and shocks. On December 30, 2019 4LESS changed its name to Auto Parts 4Less, Inc. On April 28, 2022 the Company changed its name from The 4Less Group, Inc. to Auto Parts 4Less Group, Inc.

Significant Accounting ~~Policies~~: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~~2022 and notes thereto contained in the Company’s Annual Report on Form 10-K filed on May ~~14, 2021.~~9, 2022.

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Principles of ~~Consolidation~~:Consolidation:

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

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Use of ~~Estimates~~: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, options and warrants.~~liabilities.

Reclassifications

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

Cash and Cash ~~Equivalents~~: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. At October 31, 2022 the provision for inventory obsolescence was $143,000. (January 31, 2022 - $0)

Concentrations

Cost of Goods Sold

For the nine months ended October 31, 2022 the Company purchased approximately 51% of its inventory and items available for sale from third parties from three vendors. As of October 31, 2022, the net amount due to the vendors included in accounts payable was $426,606. For the nine months ended October 31, 2021 the Company purchased approximately 58% of its inventory and items available for sale from third parties from three vendors. As of October 31, 2021, the net amount due to the vendors included in accounts payable was $~~440,977. For the nine months ended October 31, 2020 the Company purchased approximately~~ 55~~% of its inventory and items available for sale from third parties from three vendors. As of October 31, 2020, the net amount due to those vendors included in accounts payable was $393,729~~.$440,977. 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.

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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.

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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, 2023, but the Company does not expect the Tax Act to have a material impact on the Company’s consolidated financial statements.

Fair Value of Financial ~~Instruments~~: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 October 31, ~~2021~~:2022:

	October 31, 2021		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		October 31, 2022		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Liabilities:
Derivative Liabilities – embedded redemption feature	$	391,868	$	—	$	—	$	391,868	$	3,663,597	$	—	$	—	$	3,663,597
Totals	$	391,868	$	—	$	—	$	391,868	$	3,663,597	$	—	$	—	$	3,663,597

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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.

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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)~~9), the sensitivity required to change the liability by 1% as of October 31, ~~2021~~2022 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~~third-party website revenue for the three months ended October 31, 2022 and 2021:

					Change
	2022		2021		$			%
Proprietary website revenue	$	611,799	$	2,392,668	$	(1,780,869	)	(74%	)
Third party website revenue		406,187		721,394		(315,207	)	(44%	)
Total Revenue	$	1,017,986	$	3,114,062	$	(2,096,076	)	(67%	)

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The following table shows revenue split between proprietary and third-party website revenue for the nine months ended October 31, ~~2021~~2022 and ~~2020~~:2021:

					Change									Change
	2021		2020		$			%		2022		2021		$			%
Proprietary website revenue	$	6,339,478		3,704,215	$	2,635,263		71%		$	2,750,636	$	6,339,478	$	(3,588,842	)	(57%	)
Third party website revenue		3,090,041		3,557,891		(467,850	)	(13%	)		1,338,401		3,090,041		(1,751,640	)	(57%	)
Total Revenue	$	9,429,519	$	7,262,106	$	2,167,413		30%		$	4,089,037	$	9,429,519	$	(5,340,482	)	(57%	)

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.

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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 December 2019, the Financial Accounting Standards Board (FASB) issued amended guidance on the accounting and reporting of income taxes. The guidance is intended to simplify the accounting for income taxes by removing exceptions related to certain intra-period tax allocations and deferred tax liabilities; clarifying guidance primarily related to evaluating the step-up tax basis for goodwill in a business combination; and reflecting enacted changes in tax laws or rates in the annual effective tax rate. The Company adopted the new guidance effective February 1, 2021. There was no impact to the Company’s consolidated financial statements upon adoption.

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In January 2020, the FASB issued new guidance intended to clarify certain interactions between accounting standards related to equity securities, equity method investments and certain derivatives. The guidance addresses accounting for the transition into and out of the equity method of accounting and measuring certain purchased options and forward contracts to acquire investments. The Company adopted the new guidance effective February 1, 2021. There was no impact to the Company’s consolidated financial statements upon adoption.

In August 2020, the FASB issued amended guidance on the accounting for convertible instruments and contracts in an entity’s own equity. The guidance removes the separation model for convertible debt instruments and preferred stock, amends requirements for conversion options to be classified in equity as well as amends diluted earnings per share (EPS) calculations for certain convertible debt instruments. The amended guidance is effective for interim and annual periods in 2022. The application of the amendments in the new guidance are to be applied either on a modified retrospective or a retrospective basis. We are currently assessing the effect that the adoption of this standard will have on the Company’s consolidated financial statements upon adoption

In addition to the above, the Company has reviewed all other recently issued, but not yet effective, accounting pronouncements, and does not believe the future adoption of any such pronouncements will have a material impact on its financial condition or the results of its operations.

Recently Issued Accounting Standards Not Yet Adopted

In March 2020, the FASB issued optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting and subsequently issued clarifying amendments. The guidance provides optional expedients and exceptions for accounting for contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued because of reference rate reform. The optional guidance is effective upon issuance and can be applied on a prospective basis at any time between January 1, 2020 through December 31, 2022. The Company is currently evaluating the impact of adoption on its consolidated financial statements.

In October 2021, the FASB issued amended guidance that requires acquiring entities to recognize and measure contract assets and liabilities in a business combination in accordance with existing revenue recognition guidance. The amended guidance is effective for interim and annual periods in 2023 and is to be applied prospectively. Early adoption is permitted on a retrospective basis to the beginning of the fiscal year of adoption. The adoption of this guidance will not have a material impact on the Company’s consolidated financial statements for prior acquisitions; however, the impact in future periods will be dependent upon the contract assets and contract liabilities acquired in future business combinations.

In November 2021, the FASB issued new guidance to increase the transparency of transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. The guidance requires annual disclosures of such transactions to include the nature of the transactions and the significant terms and conditions, the accounting treatment and the impact to the company’s financial statements. The guidance is effective for annual periods beginning in 2022 and is to be applied on either a prospective or retrospective basis. The Company is currently evaluating the impact of adoption on its consolidated financial statements.

There were various other accounting standards and interpretations issued recently, none of which are expected to a have a material impact on our financial position, operations or cash flows.

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 $~~25,268,357~~$40,680,508 as of October 31, ~~2021~~2022 and has a working capital deficit at October 31, ~~2021~~2022 of $~~5,686,673~~.$15,279,670. As of October 31, ~~2021,~~2022, the Company only had cash and cash equivalents of $~~350,299~~$46,026 and approximately $~~1,836,000~~$6,111,000 of short-term debt in default. The short-term debt agreements provide legal remedies for satisfaction of defaults, none of the lenders of which to this point have pursued their legal remedies. ~~Our~~While the Company has plans to grow its revenues through the new website , at this time, our current liquidity position raises substantial doubt about the Company’s ability to continue as a going concern.

Management’s plan is to raise additional funds in the form of debt or equity in order to ~~(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~~continue to fund losses until such time as revenues can sustain the Company. However, there is no assurance that management will be successful in being able to continue to obtain additional funding. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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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 October 31, ~~2021~~2022 and January 31, ~~2021~~:2022:

	October 31, 2021			January 31, 2021			October 31, 2022			January 31, 2022
Office furniture, fixtures and equipment	$	94,042		$	85,413		$	95,183		$	94,041
Shop equipment		43,004			43,004			43,004			43,004
Vehicles		206,760			40,433			206,760			206,760
Sub-total		343,806			168,850			344,947			343,805
Less: Accumulated depreciation		(109,468	)		(88,823	)		(161,056	)		(122,469	)
Total Property	$	234,338		$	80,027		$	183,891		$	221,336

~~- 12 -~~

Additions to fixed assets for the nine months ended October 31, 2022 were $1,142. Additions to fixed assets for the nine months ended 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 ~~foe~~for vehicles and an additional $~~8,628~~$8,628 acquired in equipment. ~~Additions to fixed assets~~

There were ~~nil~~no disposals for the nine months ended October 31, ~~2020.~~

2022. 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~~$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~~$20,345 were recorded.

Depreciation expense was $~~12,479~~$12,743 and $~~6,299~~$12,479 for the three months ended October 31, ~~2021~~2022, and October 31, ~~2020,~~2021, respectively.

Depreciation expense was $~~35,930~~$38,587 and $~~18,897~~$35,930 for the six months ended October 31, ~~2021~~2022, and October 31, ~~2020,~~2021, respectively.

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 October 31, ~~2021~~2022 and January 31, ~~2021~~.2022.

Leases	Classification	October 31, 2021		January 31, 2021		Classification	October 31, 2022		January 31, 2022
Assets
Operating	Operating Lease Assets	$	270,187	$	344,413	Operating Lease Assets	$	160,770	$	242,583
Liabilities
Current
Operating	Current Operating Lease Liability	$	103,874	$	90,286	Current Operating Lease Liability	$	70,214	$	100,001
Noncurrent
Operating	Noncurrent Operating Lease Liabilities		160,770		244,049	Noncurrent Operating Lease Liabilities		90,556		138,551
Total lease liabilities		$	264,644	$	334,335		$	160,770	$	238,552

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

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 $~~30,478~~$29,219 and $~~23,279~~$30,478 for the three months ended October 31, ~~2021~~2022, and October 31, ~~2020,~~2021, respectively.

Operating lease cost and rent was $~~91,437~~$90,177 and $~~91,437~~$91,437 for the ~~six~~nine months ended October 31, ~~2021~~2022, and October 31, ~~2020,~~2021, respectively.

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NOTE 5 – CUSTOMER DEPOSITS

The Company receives payments from customers on orders prior to ~~shipment.~~shipment and these customer deposits on cancelled orders were either returned to the customers subsequent to October 31, 2022 or will remain as deposits until the item is either delivered and recorded as revenue or cancelled and refunded. At October 31, ~~2021~~2022 the Company had received $~~220,776~~$57,856 (January 31, ~~2021- $188,385~~)2022- $530,900) in customer deposits for orders that were unfulfilled at October 31, ~~2021~~2022 and either canceled subsequent to ~~quarter end. The orders were unfulfilled at October 31, 2021 because of supply chain issues due to supplier back-orders. The deposits were returned to the customers subsequent to October 31, 2021.~~year end or still awaiting shipment.

NOTE 6 – DEFERRED REVENUE

The Company receives payments from customers on orders prior to ~~shipment.~~shipment and orders that were unfulfilled at October 31, 2022 because of both normal order processing and fulfillment requirements, and back orders are recorded as deferred revenue. At October 31, ~~2021~~2022, the Company had received $~~241,292~~$66,153 (January 31, ~~2021- $687,766~~)2022- $665,143) in customer payments for orders that were unfulfilled at October 31, ~~2021~~2022 and delivered subsequent to October 31, 2021. The orders were unfulfilled at October 31, 2021 because of supply chain issues due to supplier back-orders as well as processing and delivery timing for those orders received close to quarter end.2022.

~~- 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~~ ~~at a fixed rate of~~ 1~~% per annum and a~~ ~~May 2, 2022~~ ~~maturity. The loan was repayable in monthly installments of $8,818~~ commencing September 2, 2021 and continuing on the second day of every month thereafter until maturity when any remaining principal and interest are due and payable. On September 22, 2021 the loan was forgiven and was recorded as a gain in operating expenses.

NOTE 87 – SHORT-TERM AND LONG-TERM DEBT

The components of the Company’s debt as of October 31, ~~2021~~2022 and January 31, ~~2021~~2022 were as follows:


	October 31, 2022			January 31, 2022
Loan dated October 8, 2019, and revised February 29, 2020 and November 10, 2020 repayable June 30, 2022 with an additional interest payment of $20,000⁽³⁾	$	—	^*	$	97,340
Forklift Note Payable, original note of $20,433 Sept 26, 2018, 6.23% interest, 60 monthly payments of $394.54 ending August 2023⁽¹⁾		4,947	^*		8,183
Vehicle loan original loan of $93,239 February 16, 2021, 2.90 % interest. 72 monthly payments of $1,414 beginning on July 2, 2021 and ending on March 2, 2027. Secured by vehicle having net book value of $72,977.		70,277	^#		81,346
Vehicle loan original loan of $59,711 March 20,2021, 7.89% interest. 72 monthly payments of $1,048 beginning on May 4, 2021 and ending on April 4, 2027. Secured by vehicle having net book value of $68,35.		47,675	^#		54,108
Working Capital Note Payable - $700,000, dated October 29, 2021, repayment of $17,904 per week until Oct 29, 2022, interest rate of approximately 31%^(2)(4)(7)		407,423	^{* ∞}		635,831
Working Capital Note Payable - $650,000, dated October 25, 2021, repayment of $15,875 per week until October 25, 2022, interest rate of approximately 26%^(2)(4)(8)		447,756	^{* ∞}		596,047
Demand loan - $5,000 dated February 1, 2020, 15% interest, 5% fee on outstanding balance		5,000	^*		5,000
Demand loan - $2,500, dated March 8, 2019, 25% interest, 5% fee on outstanding balance		2,500	^*		2,500
Demand loan - $65,500 dated February 27, 2019, 25% interest, 5% fee on outstanding balance, Secured by the general assets of the Company		12,415	^*		12,415
Promissory note - $60,000 dated September 18, 2020 maturing April 30, 2022⁽¹⁰⁾, including $5,000 original issue discount, 15% compounded interest payable monthly		60,000	^{* ∞}		60,000
Promissory note - $425,000 dated August 28, 2020, including $50,000 original issue discount, 15% compounded interest payable monthly. This note matures when the Company receives proceeds through a financing event of $825,000 plus accrued interest on the note.⁽⁵⁾		425,000	^{* ∞}		425,000
Promissory note - $1,200,000 dated August 28, 2020, maturing August 28, 2022, 12% interest payable monthly with the first six months interest deferred until the 6th month and added to principal.⁽⁶⁾		1,200,000	^{* ∞}		1,200,000
Promissory note - $420,000 dated December 27, 2021, including $20,000 original issue discount, maturing January 27, 2022, non-interest bearing⁽⁹⁾		420,000	^{* ∞}		420,000
Total	$	3,102,993		$	3,597,770

October 31, January 31,
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⁾ $ 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 $ 3,282,930 $ 2,030,579

	October 31,		January 31,
	2021		2021		October 31, 2022		January 31, 2022
Short-Term Debt	$	3,132,568	$	716,142	$	2,985,041	$	3,454,133
Current Portion Of Long-Term Debt		25,076		424,064
Current Portion of Long-Term Debt						22,149		27,737
Long-Term Debt		125,286		890,373		95,803		115,900
	$	3,282,930	$	2,030,579
Total					$	3,102,993	$	3,597,770

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~~____________________~~

^	~~In default~~
*	Short-term loans

#	Long-term loans of $~~9,227~~$47,675 including current portion ~~of $3,913~~$8,317; $70,277 including current portion $13,832
	$~~56,160~~ ~~including current portion $7,730~~
∞	In default $2,960,179.
	$~~84,975~~ ~~including current portion $13,433~~
(1)	Secured by equipment having a net book value of ~~$10,242~~$7,285.

(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. This loan and accrued interest are payable to a shareholder and were transferred to a convertible loan in August 2022.

(4)	The Company has pledged a security interest on all accounts receivable and banks accounts of the Company.

(5)	Financing event would be a sale or issuance of assets, debt, shares or any means of raising capital. As the Company ~~expects~~ has entered into such a transaction the loan has reached maturity and is treated as current. ~~No notice~~An extension was granted on December 13, 2021 amending the maturity date to April 30, 2022. The April 30, 2022 payment has not been ~~issued by~~made and the Company is working on another extension with the lender. .

(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. ~~The~~On December 13, 2021 the parties amended the maturity date for the first instalment to be April 30, 2022 with the second instalment date unchanged. The April 30, 2022 payment has not been ~~paid so under default~~made and the ~~loan has matured and~~Company is ~~now current. No notice has been issued by~~working on another extension with the lender.

(7)	This loan replaces $500,000 loan dated June 4, 2021, $~~422,009~~$422,009 proceeds were used to repay this loan, net cash received was $~~253,491~~$253,491 after payment of $~~26,500~~$26,500 in fees.

(8)	This loan replaces $500,000 loan dated June 4, 2021, $~~359,919~~$359,919 proceeds were used to repay this loan, net cash received was $~~267,606~~$267,606 after payment of $~~22,475~~$22,475 in fees.

(9)	Penalty of 10% of principal amount and 30,000 3 year warrants with an exercise price of $15.00 on initial default and 2% of principal amount and 15,000 3 year warrants with an exercise price of $15.00 for every 30 day default period thereafter. Initial default has been recorded at January 31, 2022 with an interest charge of $42,000 and another $276,000 which was the fair value of the warrants (see Note 11). The Company has defaulted on the February 26, 2022, through to July 26, 2022 and will issue an additional 15,000 warrants for each of those six defaults for a total of 90,000 warrants. The Company has recorded $798,450 based on the fair value of the warrants and $75,600 for the 2% fee as interest expense to October 31, 2022.

(10)	The April 30, 2022 payment has not been made and the Company is working on another extension with the lender.

The following are the minimum amounts due on the notes as of October 31, 2022:

Year Ended	Amount
October 31, 2023	$	3,007,190
October 31, 2024		25,174
October 31, 2025		26,443
October 31, 2026		27,792
October 31, 2027		16,394
Total	$	3,102,993

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NOTE 98 – SHORT-TERM CONVERTIBLE DEBT

The components of the Company’s debt as of October 31, ~~2021~~2022 and January 31, ~~2021~~2022 were as ~~follows:~~follows.

Interest Default Interest Conversion Outstanding Principal at
Maturity Date Rate Rate Price October 31, 2021 January 31, 2021
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⁾ — 230,000
Nov. 16, 2021 12% 16% ⁽¹⁾ — 100,000
Nov. 23, 2021 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 949,300 646,000
Debt Discount (354,526 ) (309,317 )
$ 594,774 $ 336,683

	Interest	Default Interest	Conversion	Outstanding Principal at
Maturity Date	Rate	Rate	Price ^(a)	October 31, 2022			January 31, 2022
Nov 4, 2013^*	12%	12%	$1,800,000	$	100,000		$	100,000
Jan 31, 2014^*	12%	18%	$2,400,000		16,000			16,000
July 31, 2013^*	12%	12%	$1,440,000		5,000			5,000
Jan 31, 2014^*	12%	12%	$2,400,000		30,000			30,000
Nov 12, 2022*	8%	12%	⁽¹⁾		3,000,000			2,400,000
Jan. 13, 2023	12%	22%	⁽²⁾		—			228,000
Aug. 11, 2022	10%	10%	⁽³⁾		—			—
Feb. 14, 2023	12%	20%	⁽⁴⁾		1,200,000			—
Feb 25, 2023	12%	20%	⁽⁴⁾		150,000			—
Feb. 25, 2023	12%	20%	⁽⁴⁾		350,000			—
Mar. 9 2023	12%	20%	⁽⁴⁾		200,000			—
Mar. 9, 2023	12%	20%	⁽⁴⁾		200,000			—
Apr. 22, 2023	12%	20%	⁽⁴⁾		440,000			—
Apr. 22, 2023	12%	20%	⁽⁴⁾		110,000			—
May 19,2023	12%	16%	⁽⁵⁾		400,000			—
Feb.11, 2023	12%	18%	⁽⁴⁾		275,000			—
Dec 27, 2022	12%	18%	⁽⁴⁾		275,000			—
Jan. 5, 2023	12%	18%	⁽⁴⁾		250,000			—
Jan.6 ,2023	12%	18%	⁽⁴⁾		125,000			—
Jan.6 ,2023	12%	18%	⁽⁴⁾		125,000			—
Jan.11 ,2023	12%	18%	⁽⁴⁾		138,890			—
Apr. 22, 2023	12%	18%	⁽⁴⁾		275,000			—
Apr. 22, 2023	12%	18%	⁽⁴⁾		275,000			—
Sept. 9, 2023	12%	22%	⁽⁶⁾		201,360			—
Sub-total					8,141,250			2,779,000
Debt Discount					(2,374,330	)		(2,131,034	)
				$	5,766,920		$	647,966

~~____________________~~

~~(a)~~*	In default at filing date $3,151,000

(1)	~~Closing~~lesser of $ 1.25 or 75 % of offering price if there is an uplisting to a national securities exchange.

(2)	75% of 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.

(3)	convertible at 20% discount of the offering price on Company’s uplist to NASDAQ.

(4)	convertible upon default at conversion price lower of i) lowest price 20 days prior to Issuance ii) lowest price 20 days prior to conversion.

(5)	lesser of $ 5.00 or 75 % of offering price if there is an uplisting to a national securities exchange.

(6)	75% of lowest closing bid price ten days preceding conversion date in event of default.

(a)	Note all conversions are subject to dilutive issuance clauses where the conversion price will revert to the lowest transacted share price.

OnThe Company had accrued interest payable of $478,271 and $231,412 on the notes at 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,31, 2022 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 entered into a convertible note for $355,000 with a one year maturity, interest rate of 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 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 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 transaction fees of $3,750. ~~The discount is amortized over the term of the loan.~~January 31, 2022, respectively.

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 ~~nine~~three months ended October 31, ~~2021~~2022 and ~~2020,~~2021, the Company recorded amortization of debt discount expense of $~~442,075~~$1,932,722 and $~~694,168~~,$130,139, respectively. For the ~~three~~nine months ended October 31, ~~2021~~2022 and ~~2020,~~2021, the Company recorded amortization of debt discount expense of $~~130,139~~$4,309,329 and $~~67,357~~$442,075, respectively.

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On February 11, 2022, the Company entered into an unsecured convertible note for $220,000 with a one year maturity, interest rate of 10%, ~~respectively.~~the Company received $200,000 in cash proceeds, recorded, an original issue discount of $20,000, and a derivative discount of $117,676 related to a conversion feature. The discount is amortized over the term of the loan. The note is repayable August 11, 2022.

On February 14, 2022, the Company entered into a new convertible note for $1,200,000 with a six month maturity, interest rate of 12%, with a warrant to purchase 120,000 common shares with a five year maturity and an exercise price of $15.00, and 115,000 common shares. If the loan is not in default the company may extend the term to February 14, 2023 with 10 days’ notice. The Company has extended the loan term. On April 7, 2022 the parties agreed to not have the shares returnable in exchange for a waiver on the Company’s breach of certain provisions. The Company received $979,000 in cash proceeds, recorded an original issue discount of $120,000, a derivative discount of $131,489 for the conversion feature, recognized $484,032 based on a relative fair value calculation as debt discount with a corresponding adjustment to paid-in capital for the attached warrants, and transaction fees of $101,000. The discount is amortized over the term of the loan. The note has certain default provisions such as failure to pay any principal or interest when due and failure to issue shares upon conversion. In the event of these or any other default provisions, the note becomes due and payable at 200%.

On February 25, 2022, the Company entered into a new convertible note for $350,000 with a six month maturity, interest rate of 12%, with a warrant to purchase 35,000 common shares with a five year maturity and an exercise price of $15.00, and 33,542 common shares. If the loan is not in default the company may extend the term to February 25, 2023 with 10 days’ notice. The Company has extended the loan term. The Company received $294,000 in cash proceeds, recorded an original issue discount of $35,000, a derivative discount of $37,784 for the conversion feature, recognized $132,255 based on a relative fair value calculation as debt discount with a corresponding adjustment to paid-in capital for the attached warrants, and transaction fees of $21,000. The discount is amortized over the term of the loan. The note has certain default provisions such as failure to pay any principal or interest when due and failure to issue shares upon conversion. In the event of these or any other default provisions, the note becomes due and payable at 200%.

On February 25, 2022, the Company entered into a new convertible note for $150,000 with a six month maturity, interest rate of 12%, with a warrant to purchase 15,000 common shares with a five year maturity and an exercise price of $15.00, and 14,400 common shares. If the loan is not in default the company may extend the term to February 25, 2023 with 10 days’ notice. The Company has extended the loan term. The Company received $119,250 in cash proceeds, recorded an original issue discount of $15,000, a derivative discount of $16,193 for the conversion feature, recognized $52,613 based on a relative fair value calculation as debt discount with a corresponding adjustment to paid-in capital for the attached warrants, and transaction fees of $15,750. The discount is amortized over the term of the loan. The note has certain default provisions such as failure to pay any principal or interest when due and failure to issue shares upon conversion. In the event of these or any other default provisions, the note becomes due and payable at 200%.

On March 9, 2022, the Company entered into a new convertible note for $200,000 with a six month maturity, interest rate of 12%, with a warrant to purchase 20,000 common shares with a five year maturity and an exercise price of $15.00, and 19,200 common shares. If the loan is not in default the company may extend the term to March 9, 2023 with 10 days’ notice. The Company has extended the loan term. The Company received $168,000 in cash proceeds, recorded an original issue discount of $20,000, a derivative discount of $22,533 for the conversion feature, recognized $85,815 based on a relative fair value calculation as debt discount with a corresponding adjustment to paid-in capital for the attached warrants, and transaction fees of $12,000. The discount is amortized over the term of the loan. The note has certain default provisions such as failure to pay any principal or interest when due and failure to issue shares upon conversion. In the event of these or any other default provisions, the note becomes due and payable at 200%.

On March 9, 2022, the Company entered into a new convertible note for $200,000 with a six month maturity, interest rate of 12%, with a warrant to purchase 20,000 common shares with a five year maturity and an exercise price of $15.00, and 9,200 common shares. If the loan is not in default the company may extend the term to March 9, 2023 with 10 days’ notice. The Company has extended the loan term. The Company received $168,000 in cash proceeds, recorded an original issue discount of $20,000, a derivative discount of $22,533 for the conversion feature, recognized $85,728 based on a relative fair value calculation as debt discount with a corresponding adjustment to paid-in capital for the attached warrants, and transaction fees of $12,000. The discount is amortized over the term of the loan. The note has certain default provisions such as failure to pay any principal or interest when due and failure to issue shares upon conversion. In the event of these or any other default provisions, the note becomes due and payable at 200%.

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On April 22, 2022, the Company entered into a new convertible note for $440,000 with a six month maturity, interest rate of 12%, with a warrant to purchase 44,000 common shares with a five year maturity and an exercise price of $15.00, and 42,240 common shares. If the loan is not in default the company may extend the term to April 22, 2023 with 10 days’ notice. The Company has extended the loan term. The Company received $373,600 in cash proceeds, recorded an original issue discount of $40,000, a derivative discount of $36,796 for the conversion feature, recognized $161,815 based on a relative fair value calculation as debt discount with a corresponding adjustment to paid-in capital for the attached warrants, and transaction fees of $26,400. The discount is amortized over the term of the loan. The note has certain default provisions such as failure to pay any principal or interest when due and failure to issue shares upon conversion. In the event of these or any other default provisions, the note becomes due and payable at 200%.

On April 22, 2022, the Company entered into a new convertible note for $110,000 with a six month maturity, interest rate of 12%, with a warrant to purchase 11,000 common shares with a five year maturity and an exercise price of $15.00, and 10,560 common shares. If the loan is not in default the company may extend the term to April 22, 2023 with 10 days’ notice. The Company has extended the loan term. The Company received $93,400 in cash proceeds, recorded an original issue discount of $10,000, a derivative discount of $9,199 for the conversion feature, recognized $62,707 based on a relative fair value calculation as debt discount with a corresponding adjustment to paid-in capital for the attached warrants, and transaction fees of $6,600. The discount is amortized over the term of the loan. The note has certain default provisions such as failure to pay any principal or interest when due and failure to issue shares upon conversion. In the event of these or any other default provisions, the note becomes due and payable at 200%.

On May 18, 2022, the lender and Company amended the November 12, 2021 $2,400,000 note whereby the $432,000 amortization payments due on June 12, 2022, July 12, 2022 and August 12, 2022 all totaling $1,296,000 are now payable on October 25, 2022. In exchange the second warrant to acquire 90,000 common shares can no longer be cancelled. The Company has accrued the loan penalty of $600,000 with a corresponding charge to interest as the loan was not repaid. The Company recognized a debt discount of $570,195 on this amount. The discount is amortized over the term of the loan.

On May 19, 2022 the Company entered into a new convertible note for $400,000 with a one year maturity, interest rate of 12%, with a warrant to purchase 33,333 common shares with a five year maturity and an exercise price of $15.00, and 41,500 common shares.. The Company received $325,400 in cash proceeds, recorded an original issue discount of $40,000, a derivative discount of $358,088 for the conversion feature, recognized $192,341 based on a relative fair value calculation as debt discount with a corresponding adjustment to paid-in capital for the attached warrants and shares, and transaction fees of $35,000. The discount is amortized over the term of the loan. The excess discount over the face value of the note of $ $225,429 was expensed to interest. The note has certain default provisions such as failure to pay any principal or interest when due and failure to issue shares upon conversion. In the event of these or any other default provisions, the note becomes due and payable at 125%.

In June 2022, the Company received $50,000 cash proceeds and recorded an original issue discount of $5,000 from the lender of February 11, 2022 maturing August 11, 2022 and on that date the old note of $220,000 plus the accrued interest matures on February 11, 2023 along with new advances of $55,000 forming a combined new note of $275,000 dated August 11, 2022. The new note bears interest at 12% and came with 100,000 warrants with an exercise price of $ 15.00 and a 5 year term and 40,000 common shares . The Company received $50,000 in cash proceeds (in June), recorded an original issue discount of $5,000, a derivative discount of $37,261 for the conversion feature, and recognized $195,219 based on a relative fair value calculation as debt discount with a corresponding adjustment to paid-in capital for the attached warrants and shares. The discount is amortized over the term of the loan.

On June 27, 2022, the Company entered into a new convertible note for $275,000 with a six month maturity, interest rate of 12%, with a warrant to purchase 100,000 common shares with a five year maturity and an exercise price of $15.00, and 40,000 common shares. The Company received $250,000 in cash proceeds, recorded an original issue discount of $25,000, a derivative discount of $34,488 for the conversion feature, and recognized $197,559 based on a relative fair value calculation as debt discount with a corresponding adjustment to paid-in capital for the attached warrants and shares. The discount is amortized over the term of the loan. The note has certain default provisions such as failure to pay any principal or interest when due and failure to issue shares upon conversion. In the event of these or any other default provisions, the note becomes due and payable at 200%.

On July 5, 2022 the Company entered into a new convertible note for $250,000 with a six month maturity, interest rate of 12%, with a warrant to purchase 100,000 common shares with a five year maturity and an exercise price of $15.00, and 40,000 common shares. The Company received $200,000 in cash proceeds, recorded an original issue discount of $25,000, a derivative discount of $33,860 for the conversion feature, recognized $139,638 based on a relative fair value calculation as debt discount with a corresponding adjustment to paid-in capital for the attached warrants and shares, and transaction fees of $35,000. The discount is amortized over the term of the loan. The note has certain default provisions such as failure to pay any principal or interest when due and failure to issue shares upon conversion. In the event of these or any other default provisions, the note becomes due and payable at 200%.

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On July 6, 2022, the Company entered into a new convertible note for $125,000 with a six month maturity, interest rate of 12%, with a warrant to purchase 50,000 common shares with a five year maturity and an exercise price of $15.00, and 20,000 common shares. The Company received $102,000 in cash proceeds, recorded an original issue discount of $12,000, a derivative discount of $16,484 for the conversion feature, recognized $83,796 based on a relative fair value calculation as debt discount with a corresponding adjustment to paid-in capital for the attached warrants and shares, and transaction fees of $10,000. The discount is amortized over the term of the loan. The note has certain default provisions such as failure to pay any principal or interest when due and failure to issue shares upon conversion. In the event of these or any other default provisions, the note becomes due and payable at 200%.

On July 6, 2022, the Company entered into another new convertible note for $125,000 with a six month maturity, interest rate of 12%, with a warrant to purchase 50,000 common shares with a five year maturity and an exercise price of $15.00, and 20,000 common shares. The Company received $102,000 in cash proceeds, recorded an original issue discount of $12,500, a derivative discount of $16,388 for the conversion feature, recognized $83,796 based on a relative fair value calculation as debt discount with a corresponding adjustment to paid-in capital for the attached warrants and shares, and transaction fees of $10,000. The discount is amortized over the term of the loan. The note has certain default provisions such as failure to pay any principal or interest when due and failure to issue shares upon conversion. In the event of these or any other default provisions, the note becomes due and payable at 200%.

On July 11, 2022, the Company entered into another new convertible note for $138,890 with a six month maturity, interest rate of 12%,with a warrant to purchase 50,000 common shares with a five year maturity and an exercise price of $15.00, and 20,000 common shares. The Company received $116,668 in cash proceeds, recorded an original issue discount of $13,889, a derivative discount of $18,735 for the conversion feature, recognized $97,336 based on a relative fair value calculation as debt discount with a corresponding adjustment to paid-in capital for the attached warrants and shares, and transaction fees of $8,333. The discount is amortized over the term of the loan. The note has certain default provisions such as failure to pay any principal or interest when due and failure to issue shares upon conversion. In the event of these or any other default provisions, the note becomes due and payable at 200%.

On August 22, 2022, the Company entered into a new convertible note with a shareholder for $275,000 with a six month maturity, interest rate of 12%,with a warrant to purchase 100,000 common shares with a five year maturity and an exercise price of $15.00, and 40,000 common shares. The Company received $39,260 in cash proceeds, and transferred the following to the note holder : a short term loan of $97,340, a shareholder loan of $50,000, accrued interest of $25,000,and accounts payable for unpaid rent of $38,400. The Company recorded an original issue discount of $25,000, a derivative discount of $36,947 for the conversion feature, recognized $186,343 based on a relative fair value calculation as debt discount with a corresponding adjustment to paid-in capital for the attached warrants and shares. The discount is amortized over the term of the loan. The note has certain default provisions such as failure to pay any principal or interest when due and failure to issue shares upon conversion.

On August 22, 2022, the Company entered into another new convertible note with a shareholder for $275,000 with a six month maturity, interest rate of 12%,with a warrant to purchase 100,000 common shares with a five year maturity and an exercise price of $15.00, and 40,000 common shares. The Company received $250,000 in cash proceeds, recorded an original issue discount of $25,000, a derivative discount of $37,070 for the conversion feature, recognized $186,343 based on a relative fair value calculation as debt discount with a corresponding adjustment to paid-in capital for the attached warrants and shares. The discount is amortized over the term of the loan. The note has certain default provisions such as failure to pay any principal or interest when due and failure to issue shares upon conversion.

On September 29, 2022, the Company entered into another new convertible note for $201,360 with a six month maturity, interest rate of 12%. The Company received $175,536 in cash proceeds, recorded an original issue discount of $21,574, a derivative discount of $17,736 for the conversion feature, and transaction fees of $4,250. The discount is amortized over the term of the loan. The note has certain default provisions such as failure to pay any principal or interest when due and failure to issue shares upon conversion. In the event of these or any other default provisions, the note becomes due and payable at 150%.

During the three and nine months ended October 31, 2022 and October 31, 2021 the Company ~~converted a total of $125,000~~ ~~of the convertible notes, $27,691~~ ~~of accrued interest~~added $600,000 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~~ ~~and $3,394~~$28,000 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,~~these loans, respectively.

As of October 31, ~~2021,~~2022, the Company had $~~151,000~~$3,151,000 of aggregate convertible debt in default. The agreements provide legal remedies for satisfaction of defaults, none of the lenders to this point have pursued their legal remedies. The Company continues to accrue interest at the listed rates, and plans to seek their conversion or payoff within the next twelve months.

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NOTE 109 – DERIVATIVE LIABILITIES

As of October 31, ~~2021~~2022, and January 31, ~~2021,~~2022, the Company had derivative liabilities of $~~391,868~~$3,663,597 and $~~213,741~~,$1,263,442, respectively. During the three months ended October 31, ~~2021~~2022, and ~~2020,~~2021, the Company recorded ~~losses~~a loss of $~~76,444~~$184,146 and $~~939,873~~,a loss of $76,444, respectively, from the change in the fair value of derivative liabilities. During the nine months ended October 31, ~~2021~~2022, and ~~2020,~~2021, the Company recorded ~~losses~~a loss of $~~88,551~~$841,772 and $~~507,764~~,a loss of $88,551, 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 October 31, ~~2021.~~2022. Both observable and unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long- dated volatilities) inputs.

Level 3
Derivatives
Balance, January 31, 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

	Level 3
	Derivatives
Balance, January 31, 2022	$	1,263,442
Changes Due to Issuance of New Convertible Notes		1,577,922
Settlement Due to Repayment of Debt		(19,539	)
Mark to Market Change in Derivatives		841,772
Balance, October31, 2022	$	3,663,597

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.~~

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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 October 31, ~~2021~~2022, is as follows:

		Embedded Derivative Liability As of October 31, ~~2021~~2022
Strike price		$~~1.24~~ ~~- $2.25~~5.20 – 5.55
Contractual term (years)		0.25 - ~~0.72~~1.00 years
Volatility (annual)		~~59.8~~%182.9% - ~~125.2~~%
~~High yield cash rate~~		~~21.79% -~~ ~~22.80~~%213.76
Underlying fair market value		$~~1.24~~5.20
Risk-free rate		~~0.28~~%7.11% - ~~0.33~~%8.46
Dividend yield (per share)		0%

NOTE 1110 – 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 ~~October 31, 2021,~~October31, 2022, and January 31, ~~2021~~2022, 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 October 31, ~~2021~~2022, and January 31, ~~2021,~~2022, 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.

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At both October 31, ~~2021~~2022, and January 31, ~~2021,~~2022, there were ~~7,250~~0 and 7,250 Series C preferred shares outstanding, respectively. The Series C Preferred Stock have the right to convert into the common stock of the Company by multiplying the number of issued and outstanding shares of common stock by 2.63 on the conversion date. The holders of Series C Preferred shares are not entitled to dividends, and the Company does not have the right of redemption. On February 1, 2022 the 7,250 Series C Preferred stockholders converted all of their outstanding shares for 905,110 shares of common stock. Currently, there are ~~7,250~~0 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 October 31, ~~2021~~2022, and January 31, ~~2021,~~2022, there were 870 Series D preferred shares authorized and outstanding, respectively which with a par value $~~.001~~.$0.001. 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.

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

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

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

Neither the Company nor any Series D preferred stockholders has given notice to exercise the redemption as of October 31, ~~2021~~2022, 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 October 31, ~~2021~~2022, and January 31, ~~2021.~~2022.

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Common Stock

The Company is authorized to issue ~~15,000,000~~75,000,000 common shares at a par value of $~~0.000001~~$0.000001 per share. These shares have full voting rights. The Company undertook a 10-1 reverse stock split on April 28, 2022. The share capital has been retrospectively adjusted accordingly to reflect these reverse stock splits. At October 31, ~~2021~~2022 and January 31, ~~2021~~2022 there were ~~3,410,235~~1,823,708 and ~~1,427,163~~341,023 shares outstanding and issuable, respectively. No dividends were paid in the ~~nine~~three months ended October 31, ~~2021~~2022 or ~~2020.~~2021. 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 nine months ended October 31, ~~2021:~~2022:

The Company issued ~~1,723,000~~905,110 shares ~~for $3,037,625. The company received $2,224,805~~ ~~in cash proceeds with the remaining $2,301~~ ~~recorded as share proceeds receivable. A lender converted $125,000~~upon conversion of ~~the convertible notes, $27,691 of accrued interest and $7,500 of fees into~~ ~~89,771~~ ~~common~~7,250 Series C preferred shares.

The Company issued ~~63,011~~555,641 common shares along with ~~a fair value of $137,555~~ ~~as payment~~warrants to purchase 948,333 common shares (see below) along with debt for ~~fees to consultants. The Company issued~~ ~~107,290~~ ~~shares to lenders as commitment fee with a~~ relative fair value of $~~59,801~~.$2,427,336.

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A lender exercised on a cash-free basis warrants to acquire 29,155 shares and received 20,000 shares.

The Company cancelled 741 common shares pursuant to an SEC enforcement action against a lender.

As part of the reverse split on April 28, 2022 the Company issued 2,675 shares to round up those shareholders for partial shares.

Options and Warrants:

The Company has ~~500,000~~250,000 and 50,000 options outstanding as of both October 31, ~~2021~~2022, and ~~nil~~ ~~as of~~or January 31, ~~2021.~~2022.

The Company recorded option and warrant expense of $~~1,097,500~~$0 and $~~1,263,500~~$0 for ~~both~~ the ~~three and nine~~six months ended ~~October 31,~~October31, 2022, and 2021, respectively.

The Company cancelled the options to acquire 50,000 shares issued to the CEO on July 14, 2021 and issued new options on October11, 2022 to acquire 250,000 shares with a 5 year term and an exercise price of $4.00. The Company recorded ~~option~~stock-based compensation of $1,998,000 with a corresponding adjustment to paid-in capital. This amount is the incremental value between the new options of $2,497,500 and ~~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~~revalued cancelled options if $499,500 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 provideswere determined by using 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~~estimated determined below:

Expected volatility	~~2181~~%753 - 1,735%
Exercise price	$~~2.11~~4.00 - $15.00
Stock price	$~~2.00~~9.99
Expected life	31.5 - 5 years
Risk-free interest rate	~~0.37~~%3.05% - 3.07%
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%0%

For the ~~three and~~ nine months ended October 31, ~~2020,~~2022 the Company issued ~~a warrant~~555,641 common shares and warrants to purchase 948,333 common shares along with debt to various lenders as well as warrants to acquire ~~950,000~~135,000 common 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%

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

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

~~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.~~penalty interest. The table below provides the significant estimates used that resulted in the Company determining the relative fair value of the ~~option~~555,641 common shares and 948,333 warrants at ~~$585,000,~~$2,427,336, which has been recorded as ~~stock based compensation~~a debt discount and the 135,000 warrants at $798,450 which has been recorded as interest both with a corresponding ~~increase in additional~~adjustments to paid-in ~~capital valued using the Black-Scholes option pricing model according to the following assumptions:~~capital.

Expected volatility	~~2644~~%1,686 - 2,227%
Exercise price	$~~1.50~~4.45 - $15.00
Stock price	$~~1.17~~0.95 - $11.99
Expected life	23 - 5 years
Risk-free interest rate	~~0.36~~%1.76% - 4.45%
Dividend yield	0%0%

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Table of Contents

The Company had the following fully vested warrants outstanding at October 31,2022:

Issued To	# Warrants	Dated	Expire	Strike Price ^*	Expired	Exercised
Lender	95,000	08/28/2020	08/28/2023	$4.00 per share	N	N
Broker	250	10/11/2020	10/11/2025	$45.00 per share	N	N
Broker	300	11/25/2020	11/25/2025	$30.00 per share	N	N
Triton	30,000	07/27/2021	07/27/2024	$21.10 per share	N	N
Consultant	25,000	08/26/2021	08/26/2024	$15.00 per share	N	N
Lender	60,845	11/12/2021	11/12/2026	$15.00 per share	N	N
Lender	90,000	11/12/2021	11/12/2026	$15.00 per share	N	N
Lender	30,000	1/27/2022	1/27/2025	$15.00 per share	N	N
Lender	120,000	2/14/2022	2/14/2027	$15.00 per share	N	N
Lender	35,000	2/25/2022	2/25/2027	$15.00 per share	N	N
Lender	15,000	2/25/2022	2/25/2027	$15.00 per share	N	N
Lender	20,000	3/9/2022	3/9/2027	$15.00 per share	N	N
Lender	20,000	3/9/2022	3/9/2027	$15.00 per share	N	N
Lender	11,000	4/22/2022	4/22/2027	$15.00 per share	N	N
Lender	44,000	4/22/2022	4/22/2027	$15.00 per share	N	N
Lender	15,000	2/26/2022	2/26/2025	$5.40 per share	N	N
Lender	15,000	3/28/2022	3/28/2025	$7.50 per share	N	N
Lender	15,000	4/27/2022	4/27/2025	$6.99 per share	N	N
Lender	15,000	5/27/2022	5/27/2025	$5.12 per share	N	N
Lender	33,333	5/19/2022	5/19/2027	$15.00 per share	N	N
Lender	100,000	6/27/2022	6/27/2027	$15.00 per share	N	N
Lender	15,000	6/26/2022	6/26/2025	$5.12 per share	N	N
Lender	15,000	7/26/2022	7/26/2025	$5.12 per share	N	N
Lender	100,000	7/5/2022	7/5/2027	$15.00 per share	N	N
Lender	50,000	7/6/2022	7/6/2027	$15.00 per share	N	N
Lender	50,000	7/6/2022	7/6/2027	$15.00 per share	N	N
Lender	50,000	7/11/2022	7/11/2027	$15.00 per share	N	N
Lender	100,000	8/11/2022	8/11/2027	$15.00 per share	N	N
Lender	100,000	8/22/2022	8/22/2027	$15.00 per share	N	N
Lender	100,000	8/22/2022	8/22/2027	$15.00 per share	N	N
Lender	15,000	8/25/2022	8/25/2025	$5.10 per share	N	N
Lender	15,000	9/24/2022	9/24/2025	$4.00 per share	N	N
Lender	15,000	10/24/2022	10/24/2025	$3.30 per share	N	N

*	The strike price is subject to price adjustments due to dilutive issuance clauses.

The Company had the following fully vested options outstanding at October 31, ~~2021~~:2022:

Issued To	# Options	Dated	Expire	Strike Price	Expired	Exercised
T. Armes	~~500,000~~50,000	10/14/2021	~~10/14/2023~~7/11/2022	$~~1.50~~15.00 per share	Y	N
T. Armes	250,000	7/11/2022	7/11/2027	$4.00 per share	N	N

~~Schedule~~The following table summarizes the activity of options and warrants issued and outstanding as of and for the three months ended October 31, 2022:

	Options	Weighted Average Exercise Price		Warrants	Weighted Average Exercise Price		Options		Weighted Average Exercise Price			Warrants		Weighted Average Exercise Price
Outstanding at January 31, 2021	—	$	—	955,500	$	0.42
Outstanding at January 31, 2022							50,000		$	15.00		360,550		$	12.64
Granted	500,000		1.50	550,000		1.83	250,000			4.00		1,083,333			15.00
Exercised	—		—	—		—	—			—		(29,155	)		5.00
Forfeited and canceled	—		—	—		—	(50,000	)		(15.00	)	—			—
Outstanding at October 31, 2021	500,000	$	1.50	1,505,500	$	0.58
Outstanding at October 31, 2022							250,000		$	4.00		1,414,728		$	13.70

NOTE 1211 – RELATED PARTY TRANSACTIONS

As of October 31, ~~2021~~2022 and January 31, 2021, the Company had $~~46,173~~$45,673 and $~~106,173~~,$46,173, 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~~

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Table 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.~~Contents

NOTE 1312 – 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 ~~October1,~~July 1, 2018, the Company entered into a 60-month lease agreement with its minority shareholder for its 8,800 sf warehouse facility with a minimum base rent of $~~6,400~~$6,400 per month.

In October 2019 thethe 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.

~~- 20 -~~

~~Schedule of minimum lease obligations~~


Maturity of Lease Liabilities	Operating Leases			Operating Leases
October 31 2022	$	120,657
October 31, 2023		81,203
October 31 2023				$	81,203
October 31, 2024		30,003			30,003
October 31, 2025		30,003			30,003
October 31, 2026		30,003			30,003
After October 31, 2026		2,501
October 31, 2027					2,501
Total lease payments		294,370			173,713
Less: Interest		(29,726	)		(12,943	)
Present value of lease liabilities	$	264,644		$	160,770

The Company had total operating lease and rent expense of $~~30,478~~$29,219 and $~~23,279~~$30,478 for the three months ended October 31, ~~2021~~2022, and ~~2020~~2021 respectively. The Company had total operating lease and rent expense of $~~91,437~~$90,177 and $~~91,437~~$91,437 for the nine months ended October 31, ~~2021~~2022, and ~~2020~~2021 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.

NOTE 1413 – 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 Three Months Ended
	October 31,
	2022			2021
Numerator:
Net income (loss) available to common shareholders	$	(4,131,691	)	$	(2,566,574	)

Denominator:
Weighted average shares – basic		1,805,316			319,866

Net income (loss) per share – basic	$	(2.29	)	$	(8.02	)

Effect of common stock equivalents
Add: interest expense on convertible debt		166,046			19,247
Add: amortization of debt discount		1,932,722			130,139
Less: gain on settlement of debt on convertible notes		(10,128	)		(41,249	)
Add (Less): loss (gain) on change of derivative liabilities		186,146			76,444
Net income (loss) adjusted for common stock equivalents		(1,856,905	)		(2,381,993	)
Dilutive effect of common stock equivalents:
Convertible notes and accrued interest		—			—
Convertible Class C Preferred shares		—			—
Warrants and options		—			—

Denominator:
Weighted average shares – diluted		1,805,316			319,866

Net income (loss) per share – diluted	$	(2.29	)	$	(8.02	)

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Table of Contents

For the Nine Months Ended
October 31,
2021 2020
Numerator:
Net income (loss) available to common shareholders $ (4,886,380 ) $ 2,681,933

Denominator:
Weighted average shares – basic 2,575,772 797,126

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

Effect of common stock equivalents
Add: interest expense on convertible debt 35,237 253,691
Add: amortization of debt discount 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 88,551 507,674
Net income (loss) adjusted for common stock equivalents (5,325,132 ) (655,647 )

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

Denominator:
Weighted average shares – diluted 2,575,772 4,999,009

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

NOTE 13 – EARNINGS (LOSS) PER SHARE

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


	For the Nine Months Ended
	October 31,
	2022			2021
Numerator:
Net income (loss) available to common shareholders	$	(12,228,775	)	$	(4,886,380	)

Denominator:
Weighted average shares – basic		1,576,024			257,577

Net income (loss) per share – basic	$	(7.76	)	$	(18.97	)

Effect of common stock equivalents
Add: interest expense on convertible debt		278,788			35,237
Add: amortization of debt discount		4,309,329			442,075
Less: gain on settlement of debt on convertible notes		(19,539	)		(1,004,615	)
Add (Less): loss (gain) on change of derivative liabilities		841,772			88,551
Net income (loss) adjusted for common stock equivalents		(6,818,425	)		(5,325,132	)
Dilutive effect of common stock equivalents:
Convertible notes and accrued interest		—			—
Convertible Class C Preferred shares		—			—
Warrants and options		—			—

Denominator:
Weighted average shares – diluted		1,576,024			257,577

Net income (loss) per share – diluted	$	(7.76	)	$	(18.97	)

The anti-dilutive shares of common stock equivalents for the three and nine months ended October 31, ~~2021~~2022 and October 31, ~~2020~~2021 were as follows:

For the Nine 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 —

	For the Three and Nine Months Ended
	October 31,
	2022		2021

Convertible notes and accrued interest		7,093,733		94,564
Convertible Class C Preferred shares		4,796,352		896,892
Options		250,000		50,000
Warrants		1,414,728		150,550
Total		13,554,813		1,192,006

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~~NOTE 15 –~~ ~~GAIN ON SETTLEMENT OF DEBT~~

~~For the three months ended October 31, 2021 the gain on settlement~~Table of ~~debt of $41,249~~ ~~which resulted from the reduction in the derivative liability due to cash repayments on convertible debt. For the three months ended October 31, 2020 the gain on settlement of debt of $2,845,742~~ ~~resulted from a settlement of notes payable and accrued interest and the associated derivative liability (see below).~~Contents

~~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 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~~ ~~in accrued interest, as well as $122,000~~ ~~in short-term debt and $22,076~~ ~~in accrued interest, and the associated derivative liability of $792,218~~ ~~all totaling $2,181,751~~ ~~in exchange for~~ ~~250~~ ~~Class C shares having a fair-value of $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 1614 – SUBSEQUENT EVENTS

Subsequent to ~~quarter year end up~~October 31, 2022 through to December ~~10, 2021:~~26, 2022:

• a lender converted $25,000 in debt and $1,541 in interest into 6434 common shares

• the Company issued 3,600 shares for marketing services of $18,000

• On November ~~12, 2021~~11, 2022. the Company entered into a new convertible note for $~~2,4000,000~~$186,450 with a six month maturity, interest rate of 12% with a warrant to purchase 75,000 common shares with a five year maturity and an exercise price of $15.00, and 27,120 common shares. The Company will receive $169,500 in cash proceeds in 3 monthly instalments of $56,500 each starting in November and recorded an original issue discount of $16,950. The note is convertible at a 20% discount in the event of an uplisting to NASDAQ exchange as well as in any event of default. The discount is amortized over the term of the loan. The note is secured on all assets of the Company.

• On November 11, 2022, the Company entered into a similar convertible note with another lender for $186,450 with a six month maturity, interest rate of 12% with a warrant to purchase 75,000 common shares with a five year maturity and an exercise price of $15.00, and 27,120 common shares. The Company will receive $169,500 in cash proceeds in 3 monthly instalments of $56,500 each starting in November and recorded an original issue discount of $16,950. The note is convertible at a 20% discount in the event of an uplisting to NASDAQ exchange as well as in any event of default. The discount is amortized over the term of the loan. The note is secured on all assets of the Company.

• On November 21, 2022, the Company entered into a new convertible note for $60,480 with a one year maturity and interest rate of 8%12%. The Company received $~~1,966,000~~$54,000 in cash proceeds and recorded an original issue discount of ~~$240,000 and transaction fees~~$16,950. The discount is amortized over the term of ~~$194,000. Six months after~~ the ~~issue date, the principal~~loan. The loan and interest are repayable in 10 monthly instalments of $6,774 , starting January 5, 2023. The note is convertible ~~into Common Stock~~in any event of default. The note has certain default provisions such as failure to pay any principal or interest when due and failure to issue shares upon conversion. In the ~~Company at a conversion price~~event of ~~the lesser of $1.25 per share~~these 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 shouldany other default provisions, the note becomes due 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~~payable at 150%.

• On ~~June 4, 2021~~December 27, 2022, the ~~Company’s shareholders consented to an amendment to the Articles of Incorporation~~Company entered into a promissory note for $22,000 maturing January 6, 2023. The loan bears no interest and is secured on all assets of the ~~Company wherein~~Company. The note is also guaranteed by the ~~name~~CEO of the ~~Company will be changed to “Auto Parts 4Less Group, Inc.”.~~Company. The Company ~~expects this name change to become effective, subject to FINRA approval,~~received $20,000 in cash proceeds and recorded an original issue discount of $2,000. The discount is expensed as interest. If the ~~fourth quarter of fiscal 2022.~~note is not repaid at maturity there is an initial 15% penalty , followed by a 1.5 % penalty for every subsequent default every seven day period thereafter.

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

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

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

On November 19, 2019 The 4Less Group acquired the URL Autoparts4Less.com and changed the name of their wholly owned subsidiary from the 4Less Corp. to Auto Parts 4Less, Inc.On April 28, 2022 the Company changed its name from The 4LESS Group, Inc. to Auto Parts 4Less Group, Inc.

Our Business

~~Along with our website currently under development, autoparts4less.com (as described below)~~Like many small businesses, Christopher Davenport, the founder of Auto Parts 4Less (“4Less”) previously named The 4less Corp., ~~that we are developing into our flagship website, we operate 3 niche websites through which we sell~~the wholly owned subsidiary of Auto Parts 4Less Group, Inc., began selling auto parts on eBay and shipping those items out of his garage in 2013. What started out as a hobby, quickly grew into a fully functioning ecommerce aftermarket auto parts company that ~~are~~required a significant technical staff and facilities to support their growth. In June of 2015, they leased their first office.

Originally the company listed their auto parts in the different marketplaces such as Amazon, eBay, Walmart and Jet.

Starting in 2016 the company began investing to become their own ecommerce platform thereby allowing their auto parts to be direct listed across marketplace and social media ~~sites,~~sites. Technical achievements including ~~marketing products through online marketplaces and social media platforms, such as Facebook, Instagram, YouTube and Google:~~CRM system, warehouse integration API, warehouse inventory software to name a few.

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

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In 2019, shortly after the share exchange with MedCareers Group, Inc., with technology upgrades in place, 4Less began successfully moving majority of sales from third party marketplaces direct to their proprietary ecommerce web site Liftkits4Less.com. By doing so the company saves 8%-10% in fees charged by the major marketplace’s such as e-Bay and Amazon as well as further building the 4less brand as a leading ecommerce site for auto parts.

On November 19, 2019 the Company acquired the URL Autoparts4Less.com and changed the name of their wholly owned subsidiary from the 4Less Corp. to Auto Parts 4Less, Inc. With the acquisition of the URL AutoParts4Less.com, the Company also began focusing all of their efforts and resources on building out a flagship automotive marketplace with the potential to offer buyers a wide range of automotive parts for cars, trucks, boats, motorcycles and RV’s on a single platform.

In August 2021 the Company launched a beta test version of Autoparts4less.com. In a short period of time after the beta launch the company realized that with the amount of interest received from numerous types of larges sellers, which included not only ecommerce sites presently selling parts online, but also interest from other large parts sellers such as warehouse distributors, new car dealers with large inventories of parts as well as brick and mortar parts retailers looking to move sales online, the platform originally created would soon be inadequate. As such, the Company made the decision to upgrade to a larger and more advanced platform solution so they immediately began implementation of the AWS Fargate serverless platform solution.

The platform upgrade was completed in the 1^st quarter FYE 2023, with marketplace sales expected to begin in 3^rd quarter 2023.

On November 2, 2022 the Company announced that it had officially launched what is believed to be the industry’s first pure-play automotive parts-only marketplace, AutoParts4Less.com, with approximately 2 million parts listed from over 25 parts sellers. Additionally, with the slowdown of the economy including purchases of auto parts accessories such as lift kits, exclusively designed for trucks and SUV’s, the company decided to discontinue operations of their ecommerce website Liftkits4less.com in mid-November to focus entirely on growing their parts marketplace, AutoParts4Less.com. By doing so they also expect to reduce monthly operating costs to under 300k a month for the foreseeable future.

On April 28. 2022 the Company changed its name from The 4Less Group, Inc. to Auto Parts 4Less Group, Inc.

Competition

We ~~target online consumers’ buying habits by shifting away from~~believe that our automotive parts marketplace AutoParts4less.com, with no known large challengers presently in the space outside of “all things to all people” ~~web sites to highly targeted niche websites~~online marketplaces Amazon and eBay, has the opportunity to quickly ~~respond~~be branded when launched as the auto part’s industry premier marketplace just as sites like Etsy, Wayfair, Uber and Chewey’s have been able to ~~market forces.~~successfully do in their industries.

~~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~~

~~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%~~

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

~~Sales~~

~~Our sales are derived from the following:~~

	•	~~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 finalize the website www.autoparts4less.com by approximately first or second quarter FY2023 into what we believe will be the first standalone multi-vendor automotive parts marketplace.~~

~~- 25 -~~

Results of Operations For the Nine Months Ended October 31, ~~2021~~2022 Compared to the Nine Months ~~ended~~Ended October 31, ~~2020~~2021

The following table shows our results of operations for the nine months ended October 31, ~~2021~~2022, and ~~2020.~~2021. The historical results presented below are not necessarily indicative of the results that may be expected for any future period.

						Change											Change
	2021			2020		$			%		2022			2021			$			%
Total Revenues	$	9,429,519			7,262,106	$	2,167,413		30%		$	4,089,037		$	9,429,519		$	(5,340,482	)	(57%	)
Gross Profit		2,454,393			1,971,080		483,313		25%			792,491			2,454,393			(1,661,902	)	(68%	)
Total Operating Expenses		7,146,485			2,608,240		4,538,245		174%			5,378,156			7,146,485			(1,768,329	)	(25%	)
Total Other Income (Expense)		(194,288	)		3,319,093		(3,513,381	)	(106%	)		(7,643,110	)		(194,288	)		(7,448,822	)	(3,834%	)
Net Income (Loss)	$	(4,886,380	)	$	2,681,933	$	(7,568,314	)	(282%	)	$	(12,228,775	)	$	(4,886,380	)	$	(7,342,395	)	(150%	)

Revenue

The following table shows revenue split between proprietary and ~~third party~~third-party website revenue for the nine months ended October 31, ~~2021~~2022, and ~~2020:~~2021:

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%

					Change
	2022		2021		$			%
Proprietary website revenue	$	2,750,636	$	6,339,478	$	(3,588,842	)	(57%	)
Third party website revenue		1,338,401		3,090,041		(1,751,640	)	(57%	)
Total Revenue	$	4,089,037	$	9,429,519	$	(5,340,482	)	(57%	)

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We had total revenue of $4,089,037 for the nine months ended October 31, 2022, compared to $9,425,519 for the nine months ended October 31, ~~2021, compared to $7,262,106 for the nine months ended October 31, 2020.~~2021. Sales ~~increased~~decreased by ~~$2,167,413~~$5,340,482 primarily due to ~~aggressive advertising and increased~~present economic conditions reducing consumer demand ~~mostly experienced~~as well as supply chain issues. In the prior year’s quarter, sales were driven by high consumer demand as a result of economic stimulus packages provided during the pandemic and an aggressive marketing push by the Company. In current Q3 the Company began winding its website Liftkits4less in anticipation of the ~~first quarter ended April 30, 2021.~~November 2022 launch of its new automotive parts marketplace AutoParts4Less.com. The Company also recorded ~~$241,292~~$66,153 in deferred revenue, which will be recognized as revenue next quarter and recognized ~~$687,666~~$665,143 of deferred revenue recorded January 31, ~~2021.~~2022. 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~~$57,856 in customer deposits and recognized ~~$188,385~~$530,900 recorded January 31, ~~2021.~~2022. The customer deposits are orders paid by customers and canceled in the following period due to back orders or other reasons. ~~There was neither~~For the prior year period, the Company recorded $241,292 in deferred revenue, ~~nor customer deposits for~~which was recognized as revenue the next quarter and recognized $687,766 of deferred revenue that was recorded January 31, 2021. For the nine months ended October 31, ~~2020.~~2022, the Company also recorded $220,776 in customer deposits and recognized $188,385 recorded January 31, 2021.

~~The Company’s focus continues in growing its~~Both proprietary website revenues and third party website revenues fell by 57% as the Company ~~was successful in that, increasing its proprietary website revenue by 71%. The company believes this strategy will lead~~transitions from a seller of accessories 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.~~pure-play automotive parts-only marketplace.

Gross Profit

We had gross profit of $792,491 for the nine months ended October 31, 2022, compared to 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.~~2021. Gross profit ~~increased~~decreased by ~~$483,313~~$1,661,902 as a result of the ~~increased~~decreased revenues explained above and ~~partly offset by~~also due to an increase in cost because the Company had to purchase goods at higher product costs from distributers rather than the usual manufacturers for many of ~~revenue~~the new available products or some of the products that were not available from the usual manufacturers due to still existing supply chain issues. The 2022 gross profit was further reduced by a ~~change~~$143,000 provision on inventory which will be sold off in ~~product mix.~~the coming quarter on transitioning to the new AutoParts4Less.com website.

Operating Expenses

The following table shows our operating expenses for the nine months ended October 31, ~~2021~~2022, and ~~2020:~~2021:

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 -~~

						Change
Operating Expenses	2022		2021			$			%
Depreciation	$	38,587	$	35,930			2,657		7%
Postage, Shipping and Freight		146,962		430,105			(283,143	)	(66%	)
Marketing and Advertising		671,348		1,876,576			(1,205,228	)	(64%	)
E Commerce Services, Commissions and Fees		1,076,787		1,160,569			(83,782	)	(7%	)
Operating lease cost		90,177		91,437			(1,260	)	(1%	)
Personnel Costs		505,253		1,078,449			(573,196	)	(53%	)
PPP Loan Forgiveness		—		(209,447	)		209,447		—
General and Administrative		2,849,042		2,682,866			166,176		6%
Total Operating Expenses	$	5,378,156	$	7,146,485			(1,768,329	)	(25%	)

• Depreciation increased by ~~$17,033~~$2,657 due to asset additions ~~in 2021,~~at the end of fiscal 2022, thus a higher asset value is being depreciated.

• Postage shipping and freight ~~increased slightly~~decreased by ~~$51,510~~$283,143 due to ~~higher~~lower sales.

• Marketing and advertising ~~increased~~decreased by ~~$1,827,229~~$1,205,228 due to aggressive promotional efforts in ~~2021~~the prior period to drive sales to our proprietary websites and build our brands. ~~The Company also made efforts~~For the nine months ended October 31, 2022, the spending has resumed to ~~reduce spending~~usual levels and in ~~2020~~Q32022 we reduced advertising in anticipation on ~~non-essential expenditures as a result of the economic uncertainty presented by the global Covid-19 pandemic.~~new website launch in November.

• E Commerce Services, Commissions and Fees ~~increased~~decreased by ~~$518,877~~$83,782 due to ~~higher sales and website development for new website.~~ ~~(AutoParts4Less.com)~~lower sales.

• ~~No change in~~ Operating ~~Lease Cost.~~

~~• Personnel Costs increased~~lease cost decreased 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.~~$1,260.

• PPP loan forgiveness ~~occurred~~ in ~~September~~ 2021 ~~and is non recurring.~~was a non-recurring item.

• Personnel Costs decreased by $573,196 due to staff reductions as a result of lower demand.

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Table of Contents

• General and Administrative increased by ~~$2,084,382~~$166,176 mainly due to ~~1,097,500 in share based compensation. There~~stock-based compensation of $1,998,000 on the CEO’s 250,000 options. This was ~~also higher professional fees, investor relations because~~partially reduced by reductions of ~~REG A filings~~1,831,823 across all other general and ~~stock based compensation in 2021. In addition in the prior year’s period,~~administrative accounts as the Company ~~reduced expenditures~~focused on reducing its costs in a declining market. Investor relations were lower as a result of the ~~Covid-19 pandemic.~~REG A subscription offering in the prior year and there was also a reduction in professional fees due to associated reporting and business requirements of the afore-mentioned REG A subscription from the prior year’s quarter.

Other Income (Expense)

The following table shows our other income and expenses for the ~~six~~nine months ended October 31, ~~2021~~2022, and ~~2020:~~2021:

							Change											Change
Other Income (Expense)	2021			2020			$			%		2022			2022			$			%
Gain (Loss) on Sale of Property and Equipment	$	20,345		$	464			19,881		4,285%		$	—		$	20,345			(20,345	)	—
Gain (Loss) on Derivatives		(88,551	)		(507,674	)		419,123		83%			(841,772	)		(88,551	)		(753,221	)	851%
Gain on Settlement of Debt		1,004,615			5,018,388			(4,013,773	)	(80%	)		19,539			1,004,615			(985,076	)	(98%	)
Amortization of Debt Discount		(442,075	)		(694,168	)		252,093		36%			(4,309,329	)		(442,075	)		(3,867,254	)	(875%	)
Interest Expense		(688,622	)		(497,917	)		(190,705	)	(38%	)		(2,511,548	)		(688,622	)		(1,822,926	)	(265%	)
Total Other Income (Expense)	$	(194,288	)	$	3,319,093			(3,513,381	)	(106%	)	$	(7,643,110	)	$	(194,288	)		(7,448,822	)	(3,834%	)

The changes above can be explained by the ~~reduction~~increase in convertible debt that started inat the ~~prior year’s quarter~~end of last fiscal year and continued for the nine months ended October ~~31,2020.~~31, 2022. Convertible debt increased from $949,300 at October 31, 2021 to $8,141,250 at October 31, 2022. As a result ~~of the~~all debt ~~exchanges and settlements, the gain on settlement~~related items such as amortization of debt ~~was higher~~discount and ~~there were reductions in amortization expense and due to the lower debt. Interest~~interest expense increased ~~as a result of new loans in the current year’s quarter.~~significantly. The higher loss on derivatives in ~~2020~~2022 is a function of the market factors in the valuation of the derivative liability described in Note ~~10.~~9 of the included financial statements as well as the derivative discounts acquired with the new debt.

We had net loss of $12,228,775 for the nine months ended October 31, 2022, compared to net income 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.~~2021. The ~~decrease~~increase in net ~~income~~loss was mainly due to the ~~smaller gain on settlement of debt as well as the~~ large increase in ~~operating~~other expenses, ~~for~~ the ~~nine months ended October 31, 2021as~~lower sales and the increase in stock-based compensation as explained in the discussion above.

~~- 27 -~~

Results of Operations for the Three Months Ended October 31, ~~2021~~2022, Compared to the Three Months Ended October 31, ~~2020~~2021

The following table shows our results of operations for the three months ended October 31, ~~2021~~2022, and ~~2020.~~2021. The historical results presented below are not necessarily indicative of the results that may be expected for any future period.

						Change											Change
	2021			2020		$			%		2022			2021			$			%
Total Revenues	$	3,114,062			2,334,826	$	779,236		33%		$	1,017,986		$	3,114,062		$	(2,096,074	)	(67%	)
Gross Profit		839,498			473,696		365,802		77%			171,088			839,498			(668,410	)	(80%	)
Total Operating Expenses		2,860,927			985,005		1,875,922		190%			1,009,907			2,860,927			(1,851,020	)	(65%	)
Total Other Income (Expense)		(545,145	)		1,611,382		(2,156,527	)	(134%	)		(3,292,872	)		(545,145	)		(2,747,727	)	(504%	)
Net Income (Loss)	$	(2,566,574	)	$	1,100,073	$	(3,666,647	)	(333%	)	$	(4,131,691	)	$	(2,566,574	)	$	(1,565,117	)	(61%	)

Revenue

The following table shows revenue split between proprietary and third-party website revenue for the three months ended October 31, ~~2021~~2022 and ~~2020:~~2021:

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%

					Change
	2022		2021		$			%
Proprietary website revenue	$	611,799	$	2,392,668	$	(1,780,869	)	(74%	)
Third party website revenue		406,187		721,394		(315,207	)	(44%	)
Total Revenue	$	1,017,986	$	3,114,062	$	(2,096,076	)	(67%	)

We had total revenue of $1,017,986 for the three months ended October 31, 2022, compared to $3,114,062 for the three months ended October 31, ~~2021, compared to $2,334,826 for the three months ended October 31, 2020.~~2021. Sales ~~increased~~decreased by ~~$779,236~~$2,096,074 primarily due to ~~strong proprietary sales. The Company also recorded $241,292 in deferred revenue, which will be recognized~~present economic conditions reducing consumer demand as revenue next quarter and recognized $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 $220,776 in customer deposits for the three months ended October 31, 2021 and recognized $164,900 fromwell as supply chain issues. In the prior ~~quarter. The customer deposits are orders paid~~year’s quarter, sales were driven 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 84%. Third party website revenue fell by 30% due to listing removals which werehigh consumer demand as a result of ~~unfulfilled orders due to manufacturers failure to provide products~~economic stimulus packages provided during the pandemic and an aggressive marketing push by the Company. In current Q3 the Company began winding its website Liftkits4less in ~~a timely basis.~~anticipation of the November 2022 launch of its new automotive parts marketplace AutoParts4Less.com.

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Gross Profit

We had gross profit of $171,088 for the three months ended October 31, 2022, compared to gross profit of $839,498 for the three months ended October 31, ~~2021, compared to gross profit of $473,696 for the three months ended October 31, 2020.~~2022. Gross profit ~~increased~~decreased by ~~$365,802~~$668,411 as a result of the ~~increased~~decreased revenues explained above. The 2022 gross profit was further reduced by a $143,000 provision on inventory which will be sold off in the coming quarter on transitioning to the new AutoParts4Less.com website.

Operating Expenses

The following table shows our operating expenses for the three months ended October 31, ~~2021~~2022 and ~~2020:~~2021:

Change
Operating expenses 2021 2020 $ %
Depreciation $ 12,479 $ 6,299 6,180 98%
Postage, Shipping and Freight 94,356 113,702 (19,346 ) (17% )
Marketing and Advertising 609,252 25,497 583,755 2,290%
E Commerce Services, Commissions and Fees 434,832 222,425 212,407 95%
Operating lease cost 30,478 23,279 7,199 31%
Personnel Costs 319,256 330,184 (10,928 ) (3% )
PPP Loan Forgiveness (209,447 ) — (209,447 ) —
General and Administrative 1,569,721 263,619 1,306,102 495%
Total Operating Expenses $ 2,860,927 $ 985,005 1,875,922 190%

~~- 28 -~~

						Change
Operating Expenses	2022		2021			$			%
Depreciation	$	12,743	$	12,479			264		2%
Postage, Shipping and Freight		32,013		94,356			(62,343	)	(66%	)
Marketing and Advertising		156,522		609,252			(452,730	)	(74%	)
E Commerce Services, Commissions and Fees		396,065		434,832			(38,767	)	(9%	)
Operating lease cost		29,219		30,478			(1,259	)	(4%	)
Personnel Costs		131,937		319,256			(187,319	)	(59%	)
PPP Loan Forgiveness		—		(209,447	)		209,447		(100%	)
General and Administrative		251,408		1,569,721			(1,318,313	)	(84%	)
Total Operating Expenses	$	1,009,907	$	2,860,927			(1,851,020	)	(65%	)

• Depreciation increased by ~~$6,180 due to two new vehicles acquired last quarter.~~$264.

• Postage shipping and freight decreased by ~~$19,346~~$62,343 due to ~~more drop shipments via the higher % of proprietary~~lower sales.

• Marketing and advertising ~~increased~~decreased by ~~$583,755~~$452,730 due to aggressive promotional efforts in 2021 to drive sales to our proprietary websites and build our brands. ~~Note for~~For the ~~three months~~quarter ended October 31, ~~2020 the Company had reduced spending due to the Covid 19 pandemic.~~2022 minimal advertising was done in anticipation on new website launch in November.

• E Commerce Services, Commissions and Fees ~~increased~~decreased by ~~$212,407~~$38,767 due to ~~website development for new website.~~ ~~(AutoParts4Less.com)~~lower sales.

• Operating ~~Lease Cost~~lease cost decreased by ~~$7,199 due to one less operating lease in 2021.~~$1,259.

• Personnel Costs decreased by ~~3% or $10,928.~~$187,319 due to staff reductions as a result of lower demand.

• PPP loan forgiveness in Q3 2021 was a non-recurring item.

• General and Administrative ~~in increased~~decreased by ~~$1,306,102 mainly~~$1,338,313 due to ~~1,097,500~~the Company reducing its expenses in ~~share based compensation. We also had increases in investor~~a declining market. Investor relations ~~costs~~were lower as a result of the REG A subscription offering in the prior year and there was also a reduction in professional fees due to associated reporting and business requirements ~~and stock based compensation on warrants issued this current~~of the afore-mentioned REG A subscription from the prior year’s quarter. ~~Note for the three months ended 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 October 31, ~~2021~~2022, and ~~2020:~~2021:

							Change											Change
Other Income (Expense)	2021			2020			$			%		2022			2022			$			%
Gain (Loss) on Derivatives	$	(76,444	)	$	(939,873	)		863,429		92%		$	(184,146	)	$	(76,444	)		(107,702	)	(141%	)
Gain on Settlement of Debt		41,249			2,845,742			(2,804,493	)	(99%	)		10,128			41,249			(31,121	)	(75%	)
Amortization of Debt Discount		(130,139	)		(67,357	)		(62,782	)	(93%	)		(1,932,722	)		(130,139	)		(1,802,583	)	(1,385%	)
Interest Expense		(379,811	)		(227,130	)		(152,681	)	(67%	)		(1,186,132	)		(379,811	)		(806,321	)	(212%	)
Total Other Income (Expense)	$	(545,145	)	$	1,611,382			(2,156,527	)	(134%	)	$	(3,292,872	)	$	(545,145	)		(2,747,727	)	(504%	)

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The changes above can be explained by the increase in convertible debt this quarter ended October 31, 2022. Convertible debt increased from $949,300 at October 31, 2021 to $8,141,250 at October 31, 2022. so accordingly there were large increases in amortization expense and interest expense. The higher loss on derivatives is a function of the market factors in the valuation of the derivative liability described in Note ~~10. Amortization expense and interest increased due to~~9 as well as the increase in derivative discount resulting from the new ~~notes this current year.~~debt issuances.

We had a net loss of ~~$2,566,574~~$4,131,691 for three months ended October 31, ~~2021,~~2022, compared to a net ~~income~~loss of ~~$1,100,073~~$2,566,574 for three months ended October 31, 2021. The decrease in net income was mainly due to the ~~gain on derivatives that occurred~~large increase in other expenses and the lower sales as explained in the three months ended October 31, 2020 and the higher operating expenses, specifically marketing, share based compensation, investor relations and professional fees in the three months ended October 31, 2021.discussion above.

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 October 31, 2021, we have increased revenue and are working to achieve positive cash flows from operations.~~

As of October 31, ~~2021,~~2022, we had a cash balance of ~~$350,299, share subscription receivable of $2,301,~~$46,026, net inventory of ~~$401,444~~$142,251 and ~~$6,492,984~~$15,532,213 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:

	October 31, 2021			January 31, 2021			October 31, 2022			January 31, 2022
Current assets	$	806,311		$	715,083		$	252,543		$	564,615
Current liabilities		6,492,984			5,059,138			15,532,213			8,890,462
Working capital (deficits)	$	(5,686,673	)	$	(4,344,055	)	$	(15,279,670	)	$	(8,325,847	)

Net cash used in operations for the nine months ended October 31, ~~2021~~2022 was ~~$4,343,351~~$3,398,045 as compared to net cash used in operations of ~~$577,490~~$4,343,351 for the nine months ended October 31, ~~2020.~~2021. Net cash used in investing activities for the nine months ended October 31, ~~2021~~2022 was ~~$18,568~~$1,142 as compared to cash flows ~~provided~~used in investing activities of ~~$9,750~~$18,568 for the same period in ~~2020.~~2021. Net cash provided by financing activities for the nine months ended October 31, ~~2021~~2022 was ~~$4,434,554~~$3,367,715 as compared to ~~$666,888~~$4.434,554 for the nine months ended October 31, ~~2020.~~2021.

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 October 31, ~~2021~~2022 fairly present our financial position, results of operations and cash flows for the years and months covered thereby in all material respects.

- 33 -

Table of Contents

(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.

- 34 -

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~~Auto Parts 4Less Group, Inc.

By: ~~/s/~~/s/ Timothy Armes

Timothy Armes

Chairman (Director), Chief Executive Officer, President, Secretary and Treasurer

Date: ~~December 15, 2021~~January 6, 2023

- 3135 -

EXHIBIT INDEX

Exhibit Number		Description of Exhibit

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

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

101.SCH		Inline XBRL Taxonomy Extension Schema Document **

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

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

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

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

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) **

__________

* Filed herewith.

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

- 3236 -

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

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

PART I.	FINANCIAL INFORMATION	3

ITEM 1.	Condensed Consolidated Financial Statements (Unaudited)	3

	~~Notes to~~ Condensed Consolidated ~~Financial Statements~~Balance Sheets (Unaudited)	83

~~ITEM 2.~~	~~Management’s Discussion and Analysis~~Condensed Consolidated Statements of ~~Financial Condition and Results of Operations.~~Operations (Unaudited)	244

~~ITEM 3.~~	~~Quantitative and Qualitative Disclosure About Market Risk~~Condensed Consolidated Statement of Changes in Stockholders’ Deficit (Unaudited)	305 - 6

~~ITEM 4.~~	~~Controls and Procedures~~Condensed Consolidated Statements of Cash Flows (Unaudited)	307

~~PART II.~~	~~OTHER INFORMATION~~Notes to Condensed Consolidated Financial Statements (Unaudited)	308

ITEM 1.2.	~~Legal Proceedings~~Management’s Discussion and Analysis of Financial Condition and Results of Operations.	3028

ITEM ~~1A.~~3.	Quantitative and Qualitative Disclosure About Market Risk ~~Factors~~	3033

ITEM 2.4.	~~Unregistered Sales of Securities~~Controls and ~~Use of Proceeds~~Procedures	3033

~~ITEM 3.~~PART II.	~~Default Upon Senior Securities~~OTHER INFORMATION	3134

ITEM 4.1.	~~Mine Safety Disclosures~~Legal Proceedings	3134

ITEM 5.1A.	~~Other Information~~Risk Factors	3134

ITEM 6.2.	~~Exhibits~~Unregistered Sales of Securities and Use of Proceeds	3234

ITEM 3.	Default Upon Senior Securities	34

ITEM 4.	Mine Safety Disclosures	34

ITEM 5.	Other Information	34

ITEM 6.	Exhibits	34

SIGNATURES		35


	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


	October 31, 2022			January 31, 2022
	Unaudited			^(*)
Assets
Current Assets
Cash and Cash Equivalents	$	46,026		$	77,498
Inventory		142,251			432,583
Prepaid Expenses		8,018			16,065
Deferred Offering Costs		23,000			23,000
Other Current Assets		33,248			15,469
Total Current Assets		252,543			564,615
Operating Lease Assets		160,770			242,583
Property and Equipment, net of accumulated depreciation of $161,056, and $122,469		183,891			221,336

Total Assets	$	597,204		$	1,028,534

Liabilities and Stockholders’ Deficit
Current Liabilities
Bank overdraft	$	—		$	11,055
Accounts Payable		1,317,984			1,228,039
Accrued Expenses		1,536,626			796,397
Accrued Expenses – Related Party		45,673			46,173
Customer Deposits		57,856			530,900
Deferred Revenue		66,153			665,143
Short-Term Debt		2,985,041			3,454,133
Current Operating Lease Liability		70,214			100,001
Short-Term Convertible Debt, net of debt discount of $2,374,330 and $2,131,034		5,766,920			647,966
Derivative Liabilities		3,663,597			1,263,442
Shareholder Loans Payable		—			119,476
Current Portion – Long-Term Debt		22,149			27,737
Total Current Liabilities		15,532,213			8,890,462

Non-Current Lease Liability		90,556			138,551
Long-Term Debt		95,803			115,900

Total Liabilities		15,718,572			9,144,913

Commitments and Contingencies		—			—
Redeemable Preferred Stock
Series D Preferred Stock, $0.001 par value, 870 shares authorized, 870 and 870 shares issued and outstanding		870,000			870,000

Stockholders’ Deficit
Preferred Stock – Series A, $0.001 par value, 330,000 shares authorized, 0 and 0 shares issued and outstanding		—			—
Preferred Stock – Series B, $0.001 par value, 20,000 shares authorized, 20,000 and 20,000 shares issued and outstanding		20			20
Preferred Stock – Series C, $0.001 par value, 7,250 shares authorized, 0 and 7,250 shares issued and outstanding		—			7
Common Stock, $0.000001 par value, 75,000,000 shares authorized, 1,823,708 and 341,023 shares issued, issuable and outstanding		2			—
Additional Paid In Capital		24,689,118			19,465,327
Accumulated Deficit		(40,680,508	)		(28,451,733	)
Total Stockholders’ Deficit		(15,991,368	)		(8,986,379	)

Total Liabilities and Stockholders’ Deficit	$	597,204		$	1,028,534


	Three Months Ended						Nine Months Ended
	October 31, 2021			October 31, 2020			October 31, 2021			October 31, 2020

Revenue	$	3,114,062		$	2,334,826		$	9,429,519		$	7,262,106

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

Gross Profit		839,498			473,696			2,454,393			1,971,080

Operating Expenses:
Depreciation		12,479			6,299			35,930			18,897
Postage, Shipping and Freight		94,356			113,702			430,105			378,595
Marketing and Advertising		609,252			25,497			1,876,576			49,347
E Commerce Services, Commissions and Fees		434,832			222,425			1,160,569			641,692
Operating lease cost		30,478			23,279			91,437			91,437
Personnel Costs		319,256			330,184			1,078,449			829,788
PPP loan forgiveness		(209,447	)		—			(209,447	)		—
General and Administrative		1,569,721			263,619			2,682,866			598,484
Total Operating Expenses		2,860,927			985,005			7,146,485			2,608,240

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		(76,444	)		(939,873	)		(88,551	)		(507,674	)
Gain on Settlement of Debt		41,249			2,845,742			1,004,615			5,018,388
Amortization of Debt Discount		(130,139	)		(67,357	)		(442,075	)		(694,168	)
Interest Expense		(379,811	)		(227,130	)		(688,622	)		(497,917	)
Total Other Income (Expense)		(545,145	)		1,611,382			(194,288	)		3,319,093

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

Basic Weighted Average Shares Outstanding;		3,198,658			1,067,074			2,572,772			797,126
Basic Income (Loss) per Share	$	(0.80	)	$	1.03		$	(1.90	)	$	3.36

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


	Three Months Ended						Nine Months Ended
	October 31, 2022			October 31, 2021			October 31, 2022			October 31, 2021

Revenue	$	1,017,986		$	3,114,062		$	4,089,037		$	9,429,519

Cost of Revenue		846,898			2,274,564			3,296,546			6,975,126

Gross Profit		171,088			839,498			792,491			2,454,393

Operating Expenses:
Depreciation		12,743			12,479			38,587			35,930
Postage, Shipping and Freight		32,013			94,356			146,962			430,105
Marketing and Advertising		156,522			609,252			671,348			1,876,576
E Commerce Services, Commissions and Fees		396,065			434,832			1,076,787			1,160,569
Operating lease cost		29,219			30,478			90,177			91,437
Personnel Costs		131,937			319,256			505,253			1,078,449
PPP Loan Forgiveness		—			(209,447	)		—			(209,447	)
General and Administrative		251,408			1,569,721			2,849,042			2,682,866
Total Operating Expenses		1,009,907			2,860,927			5,378,156			7,146,485

Net Operating Loss		(838,819	)		(2,021,429	)		(4,585,665	)		(4,692.092	)

Other Income (Expense)
Gain (Loss) on Sale of Property and Equipment		—			—			—			20,345
Gain (Loss) on Derivatives		(184,146	)		(76,444	)		(841,772	)		(88,551	)
Gain on Settlement of Debt		10,128			41,249			19,539			1,004,615
Amortization of Debt Discount		(1,932,722	)		(130,139	)		(4,309,329	)		(442,075	)
Interest Expense		(1,186,132	)		(379,811	)		(2,511,548	)		(688,622	)
Total Other Income (Expense)		(3,292,872	)		(545,145	)		(7,643,110	)		(194,288)

Net (Loss)	$	(4,131,691	)	$	(2,566,574	)	$	(12,228,775	)	$	(4,886,380	)

Basic Weighted Average Shares Outstanding;		1,805,316			319,866			1,576,024			257,277
Basic (Loss) per Share	$	(2.29	)	$	(8.02	)	$	(7.76	)	$	(18.99	)

Diluted Average Shares Outstanding;		1,805,316			319,866			1,576,024			257,277
Diluted (Loss) per Share	$	(2.29	)	$	(8.02	)	$	(7.76	)	$	(18.99	)


	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	)


	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		$	—

	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