Cover
Cover - shares | 3 Months Ended | |
Apr. 30, 2020 | Jun. 08, 2020 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | 4Less Group, Inc. | |
Entity Central Index Key | 0001438901 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --01-31 | |
Document Type | 10-Q | |
Document Period End Date | Apr. 30, 2020 | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Shell Company | false | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | NV | |
Entity File Number | 333-152444 | |
Entity Small Business | true | |
Entity Common Stock, Shares Outstanding | 681,867 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2021 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Apr. 30, 2020 | Jan. 31, 2020 | |
Current Assets | |||
Cash and Cash Equivalents | $ 188,243 | $ 162,124 | [1] |
Inventory | 407,347 | 371,896 | [1] |
Prepaid Expenses | 32,158 | 8,106 | [1] |
Other Current Assets | 22,779 | 1,059 | [1] |
Total Current Assets | 650,527 | 543,185 | [1] |
Operating Lease Assets | 457,699 | 483,193 | [1] |
Property and Equipment, net of accumulated depreciation of $70,738, and $64,091 | 107,862 | 114,509 | [1] |
Total Assets | 1,216,088 | 1,140,887 | [1] |
Current Liabilities | |||
Accounts Payable | 701,864 | 534,442 | [1] |
Accrued Expenses | 1,662,879 | 1,709,797 | [1] |
Accrued Expenses - Related Party | 155,750 | 155,750 | [1] |
Short-Term Debt | 541,665 | 609,491 | [1] |
Current Operating Lease Liability | 101,191 | 101,984 | [1] |
Short-Term Convertible Debt, net of debt discount of $110,263 and $689,176 | 1,792,874 | 2,286,896 | [1] |
Derivative Liabilities | 1,885,583 | 2,611,125 | [1] |
Current Portion - Long-Term Debt | 3,899 | 4,166 | [1] |
Total Current Liabilities | 6,845,705 | 8,013,651 | [1] |
Non-Current Lease Liability | 341,894 | 365,085 | [1] |
Long-Term Debt | 70,772 | 11,940 | [1] |
Total Liabilities | 7,258,371 | 8,390,676 | [1] |
Commitments and Contingencies | [1] | ||
Series D Preferred Stock, $0.001 par value, 870 shares authorized, 870 and 870 shares issued and outstanding | 870,000 | 870,000 | [1] |
Stockholders' Deficit | |||
Common Stock, $0.000001 par value, 20,000,000,000 shares authorized, 620,825 and 538,464 shares issued, issuable and outstanding | 1 | 1 | [1] |
Additional Paid In Capital | 13,469,944 | 13,449,336 | [1] |
Accumulated Deficit | (20,382,255) | (21,569,153) | [1] |
Total Stockholders' Deficit | (6,912,283) | (8,119,789) | [1] |
Total Liabilities and Stockholders' Deficit | 1,216,088 | 1,140,887 | [1] |
Preferred Series A [Member] | |||
Stockholders' Deficit | |||
Preferred Stock | [1] | ||
Total Stockholders' Deficit | |||
Preferred Series B [Member] | |||
Stockholders' Deficit | |||
Preferred Stock | 20 | 20 | [1] |
Total Stockholders' Deficit | 20 | 20 | |
Series C Preferred Stock [Member] | |||
Stockholders' Deficit | |||
Preferred Stock | 7 | 7 | [1] |
Total Stockholders' Deficit | $ 7 | $ 7 | |
[1] | Derived from audited information |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) | Apr. 30, 2020 | Jan. 31, 2020 |
Net of accumulated depreciation | $ 70,738 | $ 64,091 |
Net of debt discount | $ 110,263 | $ 689,176 |
Common Stock, par value (in dollars per share) | $ 0.000001 | $ 0.000001 |
Common Stock, shares authorized | 20,000,000,000 | 20,000,000,000 |
Common Stock, shares issued | 620,825 | 538,464 |
Common Stock, shares outstanding | 620,825 | 538,464 |
Series D Preferred Stock [Member] | ||
Preferred Stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred Stock, shares authorized | 870 | 870 |
Preferred Stock, shares issued | 870 | 870 |
Preferred Stock, shares outstanding | 870 | 870 |
Preferred Series A [Member] | ||
Preferred Stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred Stock, shares authorized | 330,000 | 330,000 |
Preferred Stock, shares issued | 0 | 0 |
Preferred Stock, shares outstanding | 0 | 0 |
Preferred Series B [Member] | ||
Preferred Stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred Stock, shares authorized | 20,000 | 20,000 |
Preferred Stock, shares issued | 20,000 | 20,000 |
Preferred Stock, shares outstanding | 20,000 | 20,000 |
Series C Preferred Stock [Member] | ||
Preferred Stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred Stock, shares authorized | 7,250 | 7,250 |
Preferred Stock, shares issued | 7,000 | 6,750 |
Preferred Stock, shares outstanding | 7,000 | 6,750 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Apr. 30, 2020 | Apr. 30, 2019 | |
Income Statement [Abstract] | ||
Revenue | $ 2,000,071 | $ 2,268,225 |
Cost of Revenue | 1,428,304 | 1,592,463 |
Gross Profit | 571,767 | 675,762 |
Operating Expenses: | ||
Depreciation | 6,647 | 10,240 |
Postage, Shipping and Freight | 113,138 | 112,232 |
Marketing and Advertising | 18,068 | 46,613 |
E Commerce Services, Commissions and Fees | 166,419 | 199,519 |
Operating lease cost | 34,079 | 26,701 |
Personnel Costs | 266,735 | 348,553 |
General and Administrative | 175,642 | 254,158 |
Total Operating Expenses | 780,728 | 998,016 |
Net Operating Loss | (208,961) | (322,254) |
Other Income (Expense) | ||
Gain (Loss) on Derivatives | (74,780) | (910,442) |
Gain on Settlement of Debt | 2,172,646 | 67,623 |
Amortization of Debt Discount | (578,913) | (302,366) |
Interest Expense | (123,094) | (345,637) |
Total Other Income (Expense) | 1,395,859 | (1,490,822) |
Net Income (Loss) | $ 1,186,898 | $ (1,813,076) |
Basic Average Shares Outstanding (in shares) | 551,590 | 404 |
Basic Income (Loss) per Share (in dollars per share) | $ 2.34 | $ (4,487.81) |
Diluted Weighted Average Shares Outstanding (in shares) | 88,046,619 | 404 |
Diluted Income (Loss) per Share (in dollars per share) | $ 0.02 | $ (4,487.81) |
Condensed Consolidated Statem_2
Condensed Consolidated Statement of Changes in Stockholders' Deficit (Unaudited) - USD ($) | Preferred Series A [Member] | Preferred Series B [Member] | Series C Preferred Stock [Member] | Common Stock [Member] | Paid in Capital [Member] | Retained Earnings [Mmeber] | Total | |
Balance at Jan. 31, 2019 | $ 20 | $ 7 | $ 11,694,325 | $ (17,689,307) | $ (5,994,955) | |||
Balance, shares at Jan. 31, 2019 | 20,000 | 6,750 | 151 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Conversion of Notes Payable to Common Stock | 258,594 | 258,594 | ||||||
Conversion of Notes Payable to Common Stock, shares | 303 | |||||||
Derivative Liability Reclassified as Equity Upon Conversion of notes | 237,500 | 237,500 | ||||||
Common Stock Adjustments for Reverse Splits | 11,115 | 11,115 | ||||||
Common Stock Adjustments for Reverse Splits, shares | 1 | |||||||
Net (Loss) | (1,813,076) | (1,813,076) | ||||||
Balance at Apr. 30, 2019 | $ 20 | $ 7 | 12,201,534 | (19,502,383) | (7,300,822) | |||
Balance, shares at Apr. 30, 2019 | 20,000 | 6,750 | 455 | |||||
Balance at Jan. 31, 2020 | $ 20 | $ 7 | $ 1 | 13,449,336 | (21,569,153) | (8,119,789) | [1] | |
Balance, shares at Jan. 31, 2020 | 20,000 | 6,750 | 538,464 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Conversion of Notes Payable and Accrued Interest to Common Stock | 3,399 | 3,399 | ||||||
Conversion of Notes Payable and Accrued Interest to Common Stock, shares | 82,361 | |||||||
Derivative Liability Reclassified as Equity Upon Conversion of notes | 8,104 | 8,104 | ||||||
Exchange of Debt | 9,105 | 9,105 | ||||||
Exchange of Debt (in shares) | 250 | |||||||
Net (Loss) | 1,186,898 | 1,186,898 | ||||||
Balance at Apr. 30, 2020 | $ 20 | $ 7 | $ 1 | $ 13,469,944 | $ (20,382,255) | $ (6,912,283) | ||
Balance, shares at Apr. 30, 2020 | 20,000 | 7,000 | 620,825 | |||||
[1] | Derived from audited information |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | ||
Apr. 30, 2020 | Apr. 30, 2019 | ||
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net Income (Loss) | $ 1,186,898 | $ (1,813,076) | |
Adjustments to reconcile net loss to cash used by operating activities: | |||
Depreciation | 6,647 | 10,240 | |
Change in Fair Value of Derivative Liabilities | 74,780 | 910,442 | |
Amortization of Debt Discount | 578,913 | 302,366 | |
Interest Expense related to Derivative Liability in Excess of Fair Value | 84,940 | ||
Loan Penalties Capitalized to Loan Included in Interest Expense | 75,599 | ||
Original Issue Discount on Convertible Notes Expensed to Interest | |||
Gain on Settlement of Debt | (2,172,646) | (67,623) | |
Change in Operating Assets and Liabilities: | |||
(Increase) in Inventory | (35,451) | (10,037) | |
(Increase) Decrease in Prepaid Rent | 3,156 | ||
(Increase) Decrease in Other Current Assets | (21,721) | 1,658 | |
Increase in Accounts Payable | 175,430 | 35,244 | |
Increase in Accrued Expenses | 151,078 | 523,896 | |
CASH FLOWS (USED IN) PROVIDED BY OPERATING ACTIVITIES | (52,916) | 53,649 | |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Proceeds from Short Term Debt | 205,000 | 235,500 | |
Payments on Short-Term Debt | (124,716) | (429,545) | |
Proceeds from Notes Payable | |||
Payments on Notes Payable | |||
Payments on Long-Term Debt | (1,249) | (3,827) | |
Proceeds from Convertible Notes Payable | 226,750 | ||
CASH FLOWS (USED IN) PROVIDED BY FINANCING ACTIVITIES | 79,035 | 28,878 | |
NET INCREASE (DECREASE) IN CASH | 26,119 | 82,527 | |
CASH AT BEGINNING OF PERIOD | [1] | 162,124 | 59,401 |
CASH AT END OF PERIOD | 188,243 | 141,928 | |
Supplemental Disclosure of Cash Flows Information: | |||
Cash Paid for Interest | 13,210 | 21,577 | |
Cash Paid for Income Taxes | |||
Convertible Notes Interest and Derivatives Converted to Common Stock | 11,503 | 589,486 | |
Short Term Debt and Interest Extinguished Through Issuance of Series C Preferred Stock | 144,076 | ||
Convertible Notes and Interest Extinguished Through Issuance of Series C Preferred Stock | $ 1,245,456 | ||
[1] | Derived from audited information |
NATURE OF BUSINESS AND SIGNIFIC
NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Apr. 30, 2020 | |
Accounting Policies [Abstract] | |
NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 – NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES Business: Nature of Business – On November 29, 2018, the Company entered into a transaction (the “Share Exchange”), pursuant to which the Company acquired 100% of the issued and outstanding equity securities of The 4LESS Corp. (“4LESS”), in exchange for the issuance of (i) nineteen thousand (19,000) shares of Series B Preferred Stock, (ii) six thousand seven hundred fifty (6,750) shares of Series C Preferred Stock, and (iii) 870 shares of Series D Preferred Stock. The Series C Preferred Shares have a right to convert into common stock of the Company by multiplying the number of issued and outstanding shares of common stock by 2.63 on the conversion date. The Share Exchange closed on November 29, 2018. As a result of the Share Exchange, the former shareholders of 4LESS became the controlling shareholders of the Company. The Share Exchange was accounted for as a reverse takeover/recapitalization effected by a share exchange, wherein 4LESS is considered the acquirer for accounting and financial reporting purposes. The capital, share price, and earnings per share amount in these consolidated financial statements for the period prior to the reverse merger were restated to reflect the recapitalization in accordance with the shares issued as a result of the reverse merger except otherwise noted. 4LESS was formed as Vegas Suspension & Offroad, LLC on October 24, 2013 as a Nevada limited liability company and converted to a Nevada corporation with the same name on May 8, 2017. On April 2, 2018, the Company changed its name to The 4LESS Corp. The Corporation had S Corporation status. The Corporation operates as an e-commerce auto and truck parts sales company. As a result of the share exchange, the 4LESS Group, Inc. is now a holding company operating through 4LESS and offers products including exhaust systems, suspension systems, wheels, tires, stereo systems, truck bed covers, and shocks. On December 30, 2019 4LESS changed its name to Auto Parts 4Less, Inc. Significant Accounting Policies: The Company’s management selects accounting principles generally accepted in the United States of America and adopts methods for their application. The application of accounting principles requires the estimating, matching and timing of revenue and expense. The accounting policies used conform to generally accepted accounting principles which have been consistently applied in the preparation of these condensed financial statements. Basis of Presentation: The Company prepares its financial statements on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States. The accompanying unaudited condensed consolidated financial statements and related notes have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim unaudited consolidated financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete consolidated financial statements. Certain information and footnote disclosure normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to instructions, rules, and regulations prescribed by the SEC. The unaudited consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended January 31, 2020 and notes thereto contained in the Company’s Annual Report on Form 10-K. Principles of Consolidation: The condensed financial statements include the accounts of The 4LESS Group, Inc. as well as The Auto Parts 4Less, Inc., and JBJ Wholesale LLC. All significant inter-company transactions have been eliminated. All amounts are presented in U.S. Dollars unless otherwise stated. Use of Estimates: In order to prepare financial statements in conformity with accounting principles generally accepted in the United States, management must make estimates, judgments and assumptions that affect the amounts reported in the financial statements and determine whether contingent assets and liabilities, if any, are disclosed in the financial statements. The ultimate resolution of issues requiring these estimates and assumptions could differ significantly from resolution currently anticipated by management and on which the financial statements are based. The most significant estimates included in these consolidated financial statements are those associated with the assumptions used to value derivative liabilities. Reclassifications Certain amounts in the Company’s condensed consolidated financial statements for prior periods have been reclassified to conform to the current period presentation. These reclassifications have not changed the results of operations of prior periods. Cash and Cash Equivalents: The Company considers all highly liquid instruments with a maturity of three months or less to be cash equivalents. At times, cash balances may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. The carrying amount of cash and cash equivalents approximates fair market value. Inventory Valuation Inventories are stated at the lower of cost or net realizable value. Inventories are valued on a first-in, first-out (FIFO) basis. Inventory is comprised of finished goods. Concentrations Cost of Goods Sold For the three months ended April 30, 2020 the Company purchased approximately 53% of its inventory and items available for sale from third parties from three vendors. As of April 30, 2020, the net amount due to the vendors included in accounts payable was $434,528. For the three months ended April 30, 2020, the Company purchased from three vendors approximately 62% of its inventory and items available for sale from third parties. As of April 30, 2019, the net amount due to theses vendors included in accounts payable was $161,204. 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) In addition, we elected the hindsight practical expedient to determine the lease term for existing leases. Our election of the hindsight practical expedient resulted in the shortening of lease terms for certain existing leases and the useful lives of corresponding leasehold improvements. In our application of hindsight, we evaluated the performance of the leased stores and the associated markets in relation to our overall real estate strategies, which resulted in the determination that most renewal options would not be reasonably certain in determining the expected lease term. Adoption of the new standard resulted in the recording of additional net lease assets and lease liabilities of $454,087 and $454,087 respectively, as of February 1, 2019. The standard did not materially impact our consolidated net earnings, retained earnings and had no impact on cash flows. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized when items of income and expense are recognized in the financial statements in different periods than when recognized in the tax return. Deferred tax assets arise when expenses are recognized in the financial statements before the tax returns or when income items are recognized in the tax return prior to the financial statements. Deferred tax assets also arise when operating losses or tax credits are available to offset tax payments due in future years. Deferred tax liabilities arise when income items are recognized in the financial statements before the tax returns or when expenses are recognized in the tax return prior to the financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was signed into law. ASC 740, Accounting for Income Taxes requires companies to recognize the effects of changes in tax laws and rates on deferred tax assets and liabilities and the retroactive effects of changes in tax laws in the period in which the new legislation is enacted. The Company’s gross deferred tax assets were revalued based on the reduction in the federal statutory tax rate from 35% to 21%. A corresponding offset has been made to the valuation allowance, and any potential other taxes arising due to the Tax Act will result in reductions to the Company’s net operating loss carryforward and valuation allowance. The Company will continue to analyze the Tax Act to assess its full effects on the Company’s financial results, including disclosures, for the Company’s fiscal year ending January 31, 2020, but the Company does not expect the Tax Act to have a material impact on the Company’s consolidated financial statements. On November 29, 2018, the Company completed a reverse merger with The 4 Less Corp. At such time that there was a change in control, all net operating losses for tax purposes of the parent were no longer available for carry-forward and the parent started to accumulate profits or losses from that point forward. Fair Value of Financial Instruments: The Company’s financial instruments consist of cash, accounts payable, advances and notes payable. The Company considers the carrying value of such amounts in the financial statements to approximate their fair value due to the short-term nature of these financial instruments. Derivatives are recorded at fair value at each period end. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The ASC guidance for fair value measurements and disclosure establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below: Level 1 Inputs Level 2 Inputs Level 3 Inputs The following table sets forth, by level within the fair value hierarchy, the Company’s financial liabilities that were accounted for at fair value on a recurring basis as of April 30, 2020: April 30, 2020 Quoted Prices in Significant Significant Liabilities: Derivative Liabilities – embedded redemption feature $ 1,885,583 $ — $ — $ 1,885,583 Totals $ 1,885,583 $ — $ — $ 1,885,583 Related Party Transactions: The Company has a verbal policy that includes procedures intended to ensure compliance with the related party provisions in common practice for public companies. For purposes of the policy, a “related party transaction” is a transaction in which the Company or any one of its subsidiaries participates and in which a related party has a direct or indirect material interest, other than ordinary course, arms-length transactions of less than 1% of the revenue of the counterparty. Any transaction exceeding the 1% threshold, and any transaction involving consulting, financial advisory, legal or accounting services that could impair a director’s independence, must be approved by the CEO. Any related party transaction in which an executive officer or a Director has a personal interest, or which could present a possible conflict under the Guide to Ethical Conduct, must be approved by Board of Directors, following appropriate disclosure of all material aspects of the transaction. Derivative Liability The derivative liabilities are valued as a level 3 input under the fair value hierarchy for valuing financial instruments. The derivatives arise from convertible debt where the debt and accrued interest is convertible into common stock at variable conversion prices and reclassification of equity instrument to liability due to insufficient shares for issuance. As the price of the common stock varies, it triggers a gain or loss based upon the discount to market assuming the debt was converted at the balance sheet date. When evaluating the effect of the issuance of new equity-linked or equity-settled instruments on previously issued instruments, the Company uses first-in, first-out method (“FIFO”) where authorized and unused shares would first be used to satisfy the earliest issued equity-linked instruments. As of April 30, 2020, warrants to purchase 0 common shares (583 shares before the reverse split of 2/25/2020 referred to in Note 6) issued in July 2014 were not classified as derivative liability while the remaining warrants outstanding were classified as derivative liability based on the FIFO method. 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 7), the sensitivity required to change the liability by 1% as of April 30, 2020 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 Step 1: Identify the contract with the customer Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognize revenue when the company satisfies a performance obligation Because the Company’s sales agreements generally have an expected duration of one year or less, the Company has elected the practical expedient in ASC 606-10-50-14(a) to not disclose information about its remaining performance obligations. Disaggregation of Revenue: Channel Revenue The following table shows revenue split between proprietary and third party website revenue for the three months ended April 30, 2020 and 2019: Change 2020 2019 $ % Proprietary website revenue $ 1,109,106 $ 793,649 $ 315,467 40% Third party website revenue 890,965 1,474,576 (583,611 ) (40% ) Total Revenue $ 2,000,071 $ 2,268,225 $ (268,154 ) (12% ) 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: The Company accounts for stock options at fair value. The Company estimates the fair value of each stock option at the grant date by using the Black-Scholes option-pricing model and provides for expense recognition over the service period, if any, of the stock option. Earnings (Loss) Per Common Share: Basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS give effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used to determine the number of shares assumed to be purchased from the exercise of stock options and/or warrants. Diluted EPS excluded all dilutive potential shares if their effect is anti-dilutive. Basic loss per common share is computed based on the weighted average number of shares outstanding during the period. Diluted loss per share is computed in a manner similar to the basic loss per share, except the weighted-average number of shares outstanding is increased to include all common shares, including those with the potential to be issued by virtue of convertible debt and other such convertible instruments. Diluted loss per share contemplates a complete conversion to common shares of all convertible instruments only if they are dilutive in nature with regards to earnings per share. Recently Issued Accounting Standards: In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350) which simplifies goodwill impairment testing by requiring that such periodic testing be performed by comparing the fair value of a reporting unit with its carrying amount and recognizing an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The Company is currently evaluating the impact of Topic 350 on its consolidated financial statements and related disclosures, which is effective for fiscal years, including interim periods, beginning after December 15, 2019. We will adopt on February 1, 2020 and expect no impact. Fair Value Measurement In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvement to Nonemployee Share-Based Payment Accounting, which is part of the FASB’s simplification initiative to maintain or improve the usefulness of the information provided to the users of financial statements while reducing cost and complexity in financial reporting. This update provides consistency in the accounting for share-based payments to nonemployees with that of employees. The updated guidance had no impact on the Company’s consolidated financial position, results of operations or cash flows. In addition to the above, the Company has reviewed all other recently issued, but not yet effective, accounting pronouncements, and does not believe the future adoption of any such pronouncements will have a material impact on its financial condition or the results of its operations. There were various other accounting standards and interpretations issued recently, none of which are expected to a have a material impact on our financial position, operations or cash flows. |
GOING CONCERN AND FINANCIAL POS
GOING CONCERN AND FINANCIAL POSITION | 3 Months Ended |
Apr. 30, 2020 | |
Going Concern and Financial Position [Abstract] | |
GOING CONCERN AND FINANCIAL POSITION | NOTE 2 – GOING CONCERN AND FINANCIAL POSITION The consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has incurred cumulative losses through April 30, 2020 of $20,382,256 and has a working capital deficit at April 30, 2020 of $6,195,178. As of April 30, 2020, the Company only had cash and cash equivalents of $188,243 and had a significant amount of short-term debt in default. The short-term debt agreements provide legal remedies for satisfaction of defaults, none of the lenders to this point have pursued their legal remedies. While the Company has continued to grow its revenues, at this time, revenues still do not cover all of its operating costs. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plan is to raise additional funds in the form of debt or equity in order to continue to fund losses until such time as revenues are able to sustain the Company. To date, the main source of funding has been through the issuance of convertible notes with provisions that allow the holder to convert the debt and accrued and unpaid interest at substantial discounts to the trading the price of our common stock and through factored promissory notes secured by substantially all of the assets of our operating subsidiary. The effect of the conversions for the three months ended April 30, 2020 and 2019, respectively, for the convertible notes has been to substantially dilute existing holders of common stock of our Company. However, there is no assurance that management will be successful in being able to continue to obtain additional funding. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. |
PROPERTY
PROPERTY | 3 Months Ended |
Apr. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY | NOTE 3 – PROPERTY The Company capitalizes all property purchases over $1,000 and depreciates the assets on a straight-line basis over their useful lives of 3 years for computers and 7 years for all other assets. Property consists of the following at April 30, 2020 and January 31, 2020: April 30, 2020 January 31, 2020 Office furniture, fixtures and equipment $ 95,163 $ 95,163 Shop equipment 43,004 43,004 Vehicles 40,433 40,433 Sub-total 178,600 178,600 Less: Accumulated depreciation (70,738 ) (64,091 ) Total Property $ 107,862 $ 114,509 Additions to fixed assets were nil for both the three months ended April 30, 2020 and April 30, 2019. Depreciation expense was $6,467 and $10,240 for the three months ended April 30, 2020 and April 30, 2019, respectively. |
LEASES
LEASES | 3 Months Ended |
Apr. 30, 2020 | |
Leases [Abstract] | |
LEASES | NOTE 4 – LEASES We lease certain warehouses and office space. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. For lease agreements entered into or reassessed after the adoption of Topic 842, we did not combine lease and non-lease components. Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to 17 years or more. The exercise of lease renewal options is at our sole discretion. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Below is a summary of our lease assets and liabilities at April 30, 2020 and January 31, 2020. Leases Classification April 30, 2020 January 31, 2020 Assets Operating Operating Lease Assets $ 457,699 $ 483,193 Liabilities Current Operating Current Operating Lease Liability $ 101,191 $ 101,984 Noncurrent Operating Noncurrent Operating Lease Liabilities 341,894 365,085 Total lease liabilities $ 443,085 $ 467,069 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 was $34,079 and 26,701 for the three months ended April 30, 2020 and April 30,2019, respectively. In September 2019 the Company entered into an operating lease for premises with an annual rent of $15,480, a three year term commencing September 1, 2019 to August 31, 2022 and a one year renewal option. |
SHORT-TERM AND LONG-TERM DEBT
SHORT-TERM AND LONG-TERM DEBT | 3 Months Ended |
Apr. 30, 2020 | |
Debt Disclosure [Abstract] | |
SHORT-TERM AND LONG-TERM DEBT | NOTE 5 – SHORT-TERM AND LONG-TERM DEBT The components of the Company’s debt as of April 30, 2020 and January 31 ,2020 were as follows: April 30, 2020 January 31, 2020 Working Capital Note Payable - $ 200,000 dated October 25, 2019, repayment of 10% of all eBay sales proceeds until paid in full, minimum payment of $20,417, fees of $4,173 effective interest rate of 7% (4) (4) $ — * $ 6,978 Loan dated October 8, 2019, and revised February 29, 2020 repayable at $5,704 per month commencing on July 1, 2020, maturing June 1, 2022, interest at 13% per annum (2) 97,340 # 63,635 Loan dated October 14, 2019, repayable in average monthly installments of $11,200, maturing April 14, 2020, interest and fees $7,200, effective interest 35.50% per annum (4)(5) — 30,000 Working Capital Note Payable - $ 200,000 dated July 19, 2019, repayment of 10% of all eBay sales proceeds until paid in full, minimum payment of $20,334, fees of $3,343 effective interest rate of 7% (4) — — Working Capital Note Payable - $200,000, dated March 5, 2020, repayment of 10% of all eBay sales proceeds until paid in full, minimum payments of $20,695 per quarter until paid, interest rate of 7% (3) 160,307 — SFS Funding Loan, original loan of $389,980 January 8, 2020, 24% interest, weekly payments of $6,006, maturing April 7, 2021 (5) 323,917 * 371,963 Forklift Note Payable, original note of $20,432.59 Sept 26,2018, 6.23% interest, 60 monthly payments of $394.54 ending August 2023 (1) 14,857 # 16,106 Demand loan - $122,000 dated August 19, 2019 25% interest, 5% fee on outstanding balance (4)(6) — * 122,000 Demand loan - $5,000 dated February 1, 2020, 15% interest, 5% fee on outstanding balance 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 Total $ 616,336 $ 625,597 * Short-term notes of $504,139 # Long-term loan of $ 14,857 including current portion of $3,899 and $97,340 including current portion of $37,526 (1) Secured by equipment having a net book value of $18,243 (2) On February 29, 2020 the Company amended the agreement extending the maturity to June 1, 2022 from April 8, 2021 and changing monthly payments to $5,705 from $4,679 and interest rate from 15% to 13%.In addition prepaid rent and interest of $27,500 and $8,005 were added to the loan’s principal amount and the 1st monthly payment commence July 1, 2020. (3) The Company has pledged a security interest on all accounts receivable and banks accounts of the Company. (4) The Company has pledged a security interest on all assets of the Company. (5) The amounts due under the note are personally guaranteed by an officer or a director of the Company. (6) On February 26 ,2020 the lender exchanged the $122,000 note along with $22,076 for 26 Class C preferred shares as part of a larger debt exchange transaction as described in Note 7. The Company had accrued interest payable of $0 and $0 interest on the notes at April 30, 2020 and January 31, 2020, respectively. |
SHORT-TERM CONVERTIBLE DEBT
SHORT-TERM CONVERTIBLE DEBT | 3 Months Ended |
Apr. 30, 2020 | |
Debt Disclosure [Abstract] | |
SHORT-TERM CONVERTIBLE DEBT | NOTE 6 – SHORT-TERM CONVERTIBLE DEBT The components of the Company’s debt as of April 30, 2020 and January 31, 2020 were as follows: Interest Default Interest Conversion Outstanding Principal at Maturity Date Rate Rate Price April 30, 2020 January 31, 2020 Nov 4, 2013* 12% 12% $1,800,000 $ 100,000 $ 100,000 Jan 31, 2014* 12% 18% $2,400,000 16,000 16,000 Apr 24, 2020* (ii) 12% 24% (3) 69,730 69,730 July 31, 2013* 12% 12% $1,440,000 5,000 5,000 Jan 31, 2014* 12% 12% $2,400,000 30,000 30,000 Dec 24, 2015* (v) 8% 24% (1) 5,000 5,000 Feb 3, 2017* (ii)(iv) 8% 24% (4) 2,500 2,500 Mar 3, 2017* (ii)(iv) 8% 24% (5) — — Mar 3, 2017* (ii)(iv) 8% 24% (5) 33,000 33,000 Mar 24, 2017* (ii)(iv) 8% 24% (5) 27,500 27,500 Apr 24, 2020* (ii)(iv)(vi) 12% 24% (3) 517,787 517,787 July 8, 2015* (v) 8% 24% (1) 5,500 5,500 Apr 24, 2020 (ii)(iv)(vi)X 8% 24% (3) — 4,500 Apr 24, 2020 X 8% 24% (3) — 23,297 Apr 24, 2020 X 8% 24% (3) — 7,703 Apr 24, 2020 X 8% 24% (3) — 26,500 July 19, 2016* (v) 8% 24% (1) 5,000 5,000 Mar 23, 2019* (ii)(iv)(vi)X 15% 24% (3) — 4,444 Feb 20, 2019* (ix)X 10% 10% (6) — 343,047 Jun 6, 2019* (viii)X 12% 18% (7) — 43,577 Oct 24, 2019* (ii)(iv) 8% 24% (5) 43,010 45,595 Nov 14, 2019* (ii)(iv) 8% 24% (5) 86,625 86,625 Dec 14, 2019* (ii)(iv) 8% 24% (5) 143,000 143,000 Dec 28, 2019* (i)(iv)(vi) 12% 18% (6) 133,333 133,333 Jan 9, 2020* (ii)(iv) 8% 24% (2) 68,750 68,750 March 1, 2020* (x) 10% 15% (8) 40,939 40,939 March 14, 2020 (iv)(vi)X 15% 24% (9) — 44,967 April 3, 2020* (iv) 8% 24% (2) 172,148 172,148 April 12, 2020* (xi) 10% 24% (3) 184,815 185,130 May 13, 2020 (iv)(vi)X 15% 24% (9) — 55,000 May 14, 2020 (iv)(vi) 8% 24% (2) 52,500 52,500 May 24, 2020 (iv)(vi)X 15% 24% (9) — 40,000 June 11, 2020 (iv)(vi)X 15% 24% (9) — 85,000 June 26, 2020 (iv)(vi) 15% 24% (9) 76,000 76,000 July 11, 2020 (iv)(vii)X 15% 24% (9) — 60,000 Aug 29, 2020 (iv)(vii)X 15% 24% (9) — 45,000 Sep 16, 2020 (iv)(vii)X 15% 24% (9) — 34,000 Sep 27, 2020 (iv)(vii)X 15% 24% (9) — 34,000 Oct 24, 2020 (iv)(vii)X 15% 24% (9) — 122,000 Nov 7, 2020 (iv)(vii)X 15% 24% (10) — 42,000 Nov 22, 2020 (ii)(iv)(vi) 8% 24% (2) 55,000 55,000 Dec 10, 2020 (iv)(vii)X 15% 24% (9) — 55,000 Dec 23, 2020 (ii)(iv)(vi) 8% 24% (2) 30,000 30,000 Sub-total 1,903,137 2,976,072 Debt Discount (110,263 ) (689,176 ) $ 1,792,874 $ 2,286,896 (1) 52% of the lowest trading price for the fifteen trading days prior to conversion day. (2) 50% of the lowest trading price for the fifteen trading days prior to conversion day. (3) 50% of the lowest trading price for the twenty trading days prior to conversion day. (4) 50% of the lowest trading price for the fifteen trading days prior to conversion day, but not higher than $0.001. (5) 50% of the lowest trading price for the fifteen trading days prior to conversion day, but not higher than $0.005. (6) 60% of the lowest trading price for the twenty trading days prior to conversion day. (7) 52% of the lowest trading price for the twenty trading days prior to conversion day. (8) 55% of the lowest trading price for the twenty-five trading days prior to conversion day. (9) 50% of the lowest bid price for the twenty-five trading days prior to conversion day. (10) 45% of the lowest bid price for the fifteen trading days prior to conversion day * In default. X On February 26 ,2020 the company exchanged convertible and short term notes and accrued interest for 250 Class C shares (transaction described further below). (i) If the Company fails to maintain its status as “DTC Eligible” for any reason, or, if the effective Conversion Price as calculated in Section 4(a) is less than $0.0001 at any time (regardless of whether or not a Conversion Notice has been submitted to the Company), the Principal Amount of the Note shall increase by ten thousand dollars ($10,000) (under Holder’s and Company’s expectation that any Principal Amount increase will tack back to the Issuance Date). In addition, the Conversion Price shall be permanently redefined to equal the lesser of (a) $0.00001 or (b) 50% of the lowest traded price during the twenty five (25) consecutive Trading Days immediately preceding the applicable Conversion Date on which the Holder elects to convert all or part of this Note, subject to adjustment as provided in this Note. If at any time while this Note is outstanding, an Event of Default (as defined herein) occurs, then an additional discount of 15% shall be factored into the Variable Conversion Price until this Note is no longer outstanding (resulting in a discount rate of 65% assuming no other adjustments are triggered hereunder). These above contingencies have not occurred. (ii) In the event the Company experiences a DTC ” Chill” on its shares, the conversion price shall be decreased to 40% instead of 50% while that “Chill” is in effect. If the Company fails to maintain the share reserve at the 4x discount of the note 60 days after the issuance of the note, the conversion discount shall be increased by 10%. (iii) The share purchase agreements ancillary to the convertible note agreements do not allow the lender to engage in short sales. (iv) If the Company becomes delinquent or continues its delinquency in its periodic filings with the SEC after the 6-months anniversary of the note, then the holder is entitled to use the lowest closing bid price during the delinquency period as a base price for the conversion. (v) In the event the Company experiences a DTC ” Chill” on its shares, the conversion price shall be decreased to 42% instead of 52% while that “Chill” is in effect. (vi) If the Company fails to maintain the share reserve at the 4x discount of the note 60 days after the issuance of the note, the conversion discount shall be increased by 10%. (vii) If the Company fails to maintain the share reserve at the 3x discount of the note 60 days after the issuance of the note, the conversion discount shall be increased by 10%. (viii) If at any time while this Note is outstanding, an event of default occurs, then an additional discount of 15% shall be factored into the Variable Conversion Price until this Note is no longer outstanding (resulting in a discount rate of 65% assuming no other adjustments are triggered hereunder). If at any time while this Note is outstanding, the Borrower’s Common Stock are not deliverable via DWAC, an additional 10% discount shall be factored into the Variable Conversion Price until this Note is no longer outstanding. (ix) If the Company fails to maintain its status as “DTC Eligible” for any reason, or, if the effective Conversion Price is less than $0.01 at any time, the Principal Amount of the Note shall increase by ten thousand dollars ($10,000). In addition, the Conversion price shall be permanently redefined to equal the lesser of (a) $0.001 or (b) 50% of the lowest traded price during the twenty five (25) consecutive Trading Days immediately preceding the applicable Conversion Date on which the Holder elects to convert all or part of this Note, subject to adjustment as provided in this Note. (x) In the event that shares of the Borrower’s Common Stock are not deliverable via DWAC following the conversion of any amount hereunder, an additional ten percent (10%) discount shall be factored into the Variable Conversion Price until this Note is no longer outstanding (resulting in a discount rate of 55% assuming no other adjustments are triggered hereunder). Additionally, if the Borrower fails to comply with the reporting requirements of the Exchange Act (including but not limited to becoming late or delinquent in its filings, even if the Borrower subsequently cures such delinquency) at any time while after the Issue Date, and/or the Borrower shall cease to be subject to the reporting requirements of the exchange Act, an additional fifteen percent (15%) discount shall be factored into the Variable Conversion Price until this Note is no longer outstanding (resulting in a discount rate of 60% assuming no other adjustments are triggered hereunder). (xi) If the Borrower’s Common stock is chilled for deposit at DTC, becomes chilled at any point while this Note remains outstanding or deposit or other additional fees are payable due to a Yield Sign, Stop Sign or other trading restrictions, or if the closing price at any time falls below $0.01 (as appropriately and equitably adjusted for stock splits, stock dividends, stock contributions and similar events), then an additional 15% discount will be attributed to the Conversion Price for any and all Conversions submitted thereafter. The Company had accrued interest payable of $610,988 and $703,270 on the notes at April 30, 2020 and January 31, 2020, 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 three months ended April 30, 2020 and 2019, the Company recorded amortization expense of $578,913 and $302,366, respectively. See more information in Note 7. On February 26, 2020 a lender exchanged $1,070,035 in convertible notes and $175,421 in accrued interest (as denoted by X in the above schedule) as well as $122,000 in short-term debt and $22,076 in accrued interest (as described in Note 5), and the associated derivative liability of $792,218 all totaling $2,181,750 in exchange for 250 Class C shares having a fair-value of $9,105. A gain of $2,172,646 was recorded. During the three months ended April 30, 2020, the Company converted a total of $2,901 of the convertible notes and $498 accrued interest into 82,361 common shares. As of April 30, 2020, the Company had $1,689,637 of aggregate debt in default. The agreements provide legal remedies for satisfaction of defaults, none of the lenders to this point have pursued their legal remedies. The Company continues to accrue interest at the listed rates, and plans to seek their conversion or payoff within the next twelve months. |
DERIVATIVE LIABILITIES
DERIVATIVE LIABILITIES | 3 Months Ended |
Apr. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE LIABILITIES | NOTE 7 – DERIVATIVE LIABILITIES As of April 30, 2020 and January 31, 2020, the Company had derivative liabilities of $1,792,874 and $2,286,896, respectively. During the three months ended April 30, 2020 and 2019, the Company recorded a loss of $74,780 and $910,442 from the change in the fair value of derivative liabilities, respectively. Any liabilities resulting from the warrants outstanding are immaterial. The derivative liabilities are valued as a level 3 input for valuing financial instruments. The following table presents changes in Level 3 liabilities measured at fair value for the three months ended April 30, 2020. 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, 2020 $ 2,611,125 Change due to Settlement of Debt (792,218 ) Changes due to Conversion of Notes Payable (8,104 ) Mark to Market Change in Derivatives 74,780 Balance, April 30, 2020 $ 1,885,583 The derivatives arise from convertible debt where the debt is convertible into common stock at variable conversion prices which are linked to the trading and/or bid prices of the Company’s common stock as traded on the OTC market. As the price of the common stock varies it triggers a gain or loss based upon the discount to market assuming the debt was converted at the balance sheet date. The fair value of the derivative liability is determined using the lattice model, is re-measured on the Company’s reporting dates, and is affected by changes in inputs to that model including our stock price, expected stock price volatility, the expected term, and the risk-free interest rate. A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring the Company’s warrant liabilities and embedded conversion feature that are categorized within Level 3 of the fair value hierarchy as of April 30, 2020 is as follows: Embedded Derivative Liability As of Strike price $ 0.0198 - 0.40 Contractual term (years) 0.08 - 4.25 years Volatility (annual) 450.80% - 680.56% High yield cash rate 36.25% - 37.90% Underlying fair market value .0001 - 3.59 Risk-free rate 0.12% - 2.64% Dividend yield (per share) 0% |
STOCKHOLDERS' DEFICIT
STOCKHOLDERS' DEFICIT | 3 Months Ended |
Apr. 30, 2020 | |
Equity [Abstract] | |
STOCKHOLDERS' DEFICIT | NOTE 8 – STOCKHOLDERS’ DEFICIT Preferred Stock: The Series A Preferred Stock has an automatic forced conversion into common stock upon the completion of the repurchase or extinguishing of all “toxic” debt (notes having conversion features tied to the Company’s common stock), the extinguishing of all other existing dilutive debt or equity structures, and total recapitalization of the Company. As of both April 30, 2020, and January 31, 2020 the Company had 0 shares of Series A Preferred issued and outstanding and 330,000 authorized with a par value of $0.001 per share. At both April 30, 2020 and January 31, 2020, 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 per share. At both April 30, 2020 and January 31, 2020, there were 7,000 and 6,750 Series C preferred shares outstanding, respectively. The Series C Preferred Stock have the right to convert into the common stock of the Company by multiplying the number of issued and outstanding shares of common stock by 2.63 on the conversion date. The holders of Series C Preferred shares are not entitled to dividends, and the Company does not have the right of redemption. Currently, there are 7,250 Series C preferred shares authorized and 7,000 shares issued with a par-value of $0.001 per share. At both April 30, 2020 and January 31, 2020, there were 870 Series D preferred shares authorized and outstanding, respectively which with a par value $.001. All shares of Series D Preferred Stock will rank subordinate and junior to all shares of Series A, B and C of Preferred Stock of the Corporation and pari passu with any of the Corporation’s preferred stock hereafter created as to distributions of assets upon dissolution or winding up of the Corporation, whether voluntary or involuntary. These shares are non-voting, do not receive dividends and are redeemable according to the terms set out 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 per share. (2) Should the Corporation exercise the right of Optional Redemption it shall provide each holder of Preferred Stock with at least 30 days’ notice of any proposed optional redemption pursuant this Section VI (an “Optional Redemption Notice”). Any optional redemption pursuant to this Section VI shall be made rateably among holders in proportion to the Liquidation Value of Preferred Stock then outstanding and held by such holders. The Optional Redemption Notice shall state the Liquidation Value of Preferred Stock to be redeemed and the date on which the Optional Redemption is to occur (which shall not be less than thirty (30) or more than sixty (60) Business Days after the date of delivery of the Optional Redemption Notice) and shall be delivered by the Corporation to the holders at the address of such holder appearing on the register of the Corporation for the Preferred Stock. Within seven (7) business days after the date of delivery of the Optional Redemption Notice, each holder shall provide the Corporation with instructions as to the account to which payments associated with such Optional Redemption should be deposited. On the date of the Optional Redemption, provided for in the relevant Optional Redemption Notice, (A) the Corporation will deliver the redemption amount via wire transfer to the account designated by the holders, and (B) the holders will deliver the certificates relating to that number of shares of Preferred Stock being redeemed, duly executed for transfer or accompanied by executed stock powers, in either case, transferring that number of shares to be redeemed. Upon the occurrence of the wire transfer (or, in the absence of a holder designating an account to which funds should be transferred, delivery of a certified or bank cashier’s check in the amount due such holder in connection with such Optional Redemption to the address of such holder appearing on the register of the Corporation for the Preferred Stock), that number of shares of Preferred Stock redeemed pursuant to such Optional Redemption as represented by the previously issued certificates will be deemed no longer outstanding. Notwithstanding anything to the contrary in this Designation, each holder may continue to convert Preferred Stock in accordance with the terms hereof until the date such Preferred Stock is actually redeemed pursuant to an Optional Redemption. (3) Should the holder exercise the right of Optional Redemption it shall provide the Corporation with at least 30 days’ notice of any proposed optional redemption pursuant this Section VI (an “Optional Redemption Notice”). The Optional Redemption Notice shall state the value of the Preferred Stock to be redeemed and the date on which the Optional Redemption is to occur (which shall not be less than thirty (30) or more than sixty (60) Business Days after the date of delivery of the Optional Redemption Notice) and shall be delivered by the holder to the Corporation at the address of the Corporation for the Preferred Stock. Within seven (7) business days after the date of delivery of the Optional Redemption Notice, each holder shall provide the Corporation with instructions as to the account to which payments associated with such Optional Redemption should be deposited. On the date of the Optional Redemption, provided for in the relevant Optional Redemption Notice, (A) the Corporation will deliver the redemption amount via wire transfer to the account designated by the holder, and (B) the holder will deliver the certificates relating to that number of shares of Preferred Stock being redeemed, duly executed for transfer or accompanied by executed stock powers, in either case, transferring that number of shares to be redeemed. Upon the occurrence of the wire transfer (or, in the absence of a holder designating an account to which funds should be transferred, delivery of a certified or bank cashier’s check in the amount due such holder in connection with such Optional Redemption to the address of such holder appearing on the register of the Corporation for the Preferred Stock), that number of shares of Preferred Stock redeemed pursuant to such Optional Redemption as represented by the previously issued certificates will be deemed no longer outstanding. Notwithstanding anything to the contrary in this Designation, each holder may continue to convert Preferred Stock in accordance with the terms hereof until the date such Preferred Stock is actually redeemed pursuant to an Optional Redemption. The Series D Preferred Stock is not entitled to any pre-emptive or subscription rights in respect of any securities of the Corporation. Neither the Company nor any Series D preferred stockholders has given notice to exercise the redemption as of April 30, 2020 on the date of the financial statements. On February 26, 2020, the Company issued 250 Class C preferred shares in a debt exchange transaction described in Note 6. Because the holders of the Series D preferred stock have the right to demand cash redemption, the cumulative amount of the redemption feature is included in Temporary Equity as of April 30, 2020 and January 31, 2020. Common Stock The Company is authorized to issue 20,000,000,000 common shares at a par value of $0.000001 per share (see Note 12). These shares have full voting rights. On March 29, 2019 the Company undertook a 6000:1 reverse stock. On February 25, 2020, the Company undertook a 4000:1 reverse stock split. The share capital has been retrospectively adjusted accordingly to reflect these reverse stock splits. At April 30, 2020 and January 31, 2020 there were 620,825 and 538,464 shares outstanding, respectively. No dividends were paid in the three months ended April 30, 2020 or 2019. The Company’s articles of incorporation include a provision that the Company is not allowed to issue fractional shares. As a result, as part of the reverse split described above, the Company issued an additional 1,699 shares in March 2020 and these shares were included in the shares outstanding as of January 31, 2020 as issuable . The Company issued the following shares of common stock in the three months ended April 30, 2020: Conversion of $2,901 Notes Payable and $498 Interest to 82,361 shares of Common Stock. Options and Warrants: The Company recorded option and warrant expense of $0 and $0 for the three months ended April 30, 2020 and 2019, respectively. The Company issued no warrants for the three months ended April 30, 2020. The Company had the following options and warrants outstanding at April 30, 2020: Issued To # Warrants Dated Expire Strike Price Expired Exercised Lender 1.4 01/08/2018 01/08/2021 $1,800 per share N N Options Weighted Average Warrants Weighted Average Outstanding at January 31, 2020 — $ — 1.4 $ 225,520 Granted — — — — Exercised — — — — Forfeited and canceled — — — — Outstanding at April 30, 2020 — $ — 1.5 $ 225,520 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Apr. 30, 2020 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 9 – RELATED PARTY TRANSACTIONS As of both April 30, 2020 and January 31, 2020, the Company had $155,750 of related party accrued expenses related to accrued compensation for employees and consultants. In February 2020, a shareholder and landlord of 4Less, agreed to renegotiate a loan (as described in Note 5) by providing $25,700 in rent concessions over a 4 month period which increased the loan and prepaid rent by that amount. As of April 30, 2020, and January 31, 2020 the balance of prepaid rent totaled $15,980 and $0, respectively. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Apr. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 10 – COMMITMENTS AND CONTINGENCIES On June 1, 2015, the Company entered into a 36-month lease agreement for its 2,590 sf office facility with a minimum base rent of $2,720 per month. The Company paid base rent and their share of maintenance expense of $43,200 and $43,200 related to this lease for the periods ended January 31, 2019 and 2018, respectively. The lease is currently on a month to month basis since the lease has not been renewed and the Company records the payments as rent expense. This lease was with a shareholder – See Note 8 – Related Party Transactions. On August 30, 2016, the Company entered into a 60-month lease agreement for its 3,554 sf warehouse facility starting in December 2016 with a minimum base rent of $2,132 and estimated monthly CAM charges of $1,017 per month. This lease is with a shareholder – See Note 9 – Related Party Transactions. On July 1, 2018, the Company entered into a 60-month lease agreement with its minority shareholder for its 8,800 sf warehouse facility with a minimum base rent of $6,400 per month. In September 2019 the Company entered into an operating lease for premises with an annual rent of $15,480, a three year term commencing September 1, 2019 to August 31, 2022 and a one year renewal option. In October 2019 the Company entered into an operating lease for a vehicle with an annual cost of $9,067 and a three year term. The company paid initial fees of $17,744 and will pay fees on lease termination of $395. On a straight-line basis these costs amount to $1,259 per month. Maturity of Lease Liabilities Operating April 30, 2021 $ 136,317 April 30, 2022 136,317 April 30, 2023 131,279 April 30, 2024 47,603 April 30, 2025 30,003 After April 30, 2025 47,506 Total lease payments 529,025 Less: Interest (85,940 ) Present value of lease liabilities $ 443,085 The Company had total operating lease and rent expense of $34,079 and $26,701 for the three months ended April 30, 2020 and 2019 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. |
EARNINGS (LOSS) PER SHARE
EARNINGS (LOSS) PER SHARE | 3 Months Ended |
Apr. 30, 2020 | |
Earnings Per Share [Abstract] | |
EARNINGS (LOSS) PER SHARE | NOTE 11- EARNINGS (LOSS) PER SHARE The net income (loss) per common share amounts were determined as follows: For the Three Months Ended April 30, 2020 2019 Numerator: Net income (loss) available to common shareholders $ 1,186,898 $ (1,813,076 ) Effect of common stock equivalents Add: interest expense on convertible debt 103,540 236,751 Add (Less): loss (gain) on change of derivative liabilities — 910,442 Net income (loss) adjusted for common stock equivalents 1,290,438 (665,883 ) Denominator: Weighted average shares – basic 551,590 404 Net income (loss) per share – basic $ 2.34 $ (4,487.81 ) Dilutive effect of common stock equivalents: Convertible notes and accrued interest 86,413,848 — Convertible Class C Preferred shares 1,632,770 — Warrants 1 — Denominator: Weighted average shares – diluted 88,046,619 404 Net income (loss) per share – diluted $ 0.02 $ (4,487.81 ) The anti-dilutive shares of common stock equivalents for the three months ended April 30, 2020 and April 30, 2019 were as follows: For the Three Months Ended April 30, 2020 2019 Convertible notes and accrued interest — 1,383 Convertible Class C Preferred shares — 1,197 Warrants — 1 Total — 2,581 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Apr. 30, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 12 – SUBSEQUENT EVENTS Conversion of notes Subsequent to the balance sheet date through to June 8, 2020, 61,092 shares were issued for the conversion of $1,793 principal, and $374 of interest totaling $2,167 of convertible notes that had a conversion price at 50% of the lowest market price during the period the Company fails to make all periodic filings with the SEC. Common shares On June 4, 2020 the Company amended its articles decreasing authorized common shares from 20,000,000,000 to 1,000,000,000 |
NATURE OF BUSINESS AND SIGNIF_2
NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Apr. 30, 2020 | |
Accounting Policies [Abstract] | |
Nature of Business | Nature of Business – On November 29, 2018, the Company entered into a transaction (the “Share Exchange”), pursuant to which the Company acquired 100% of the issued and outstanding equity securities of The 4LESS Corp. (“4LESS”), in exchange for the issuance of (i) nineteen thousand (19,000) shares of Series B Preferred Stock, (ii) six thousand seven hundred fifty (6,750) shares of Series C Preferred Stock, and (iii) 870 shares of Series D Preferred Stock. The Series C Preferred Shares have a right to convert into common stock of the Company by multiplying the number of issued and outstanding shares of common stock by 2.63 on the conversion date. The Share Exchange closed on November 29, 2018. As a result of the Share Exchange, the former shareholders of 4LESS became the controlling shareholders of the Company. The Share Exchange was accounted for as a reverse takeover/recapitalization effected by a share exchange, wherein 4LESS is considered the acquirer for accounting and financial reporting purposes. The capital, share price, and earnings per share amount in these consolidated financial statements for the period prior to the reverse merger were restated to reflect the recapitalization in accordance with the shares issued as a result of the reverse merger except otherwise noted. 4LESS was formed as Vegas Suspension & Offroad, LLC on October 24, 2013 as a Nevada limited liability company and converted to a Nevada corporation with the same name on May 8, 2017. On April 2, 2018, the Company changed its name to The 4LESS Corp. The Corporation had S Corporation status. The Corporation operates as an e-commerce auto and truck parts sales company. As a result of the share exchange, the 4LESS Group, Inc. is now a holding company operating through 4LESS and offers products including exhaust systems, suspension systems, wheels, tires, stereo systems, truck bed covers, and shocks. On December 30, 2019 4LESS changed its name to Auto Parts 4Less, Inc. |
Significant Accounting Policies | Significant Accounting Policies: The Company’s management selects accounting principles generally accepted in the United States of America and adopts methods for their application. The application of accounting principles requires the estimating, matching and timing of revenue and expense. The accounting policies used conform to generally accepted accounting principles which have been consistently applied in the preparation of these condensed financial statements. |
Basis of Presentation | Basis of Presentation: The Company prepares its financial statements on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States. The accompanying unaudited condensed consolidated financial statements and related notes have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim unaudited consolidated financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete consolidated financial statements. Certain information and footnote disclosure normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to instructions, rules, and regulations prescribed by the SEC. The unaudited consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended January 31, 2020 and notes thereto contained in the Company’s Annual Report on Form 10-K. |
Principles of Consolidation | Principles of Consolidation: The condensed financial statements include the accounts of The 4LESS Group, Inc. as well as The Auto Parts 4Less, Inc., and JBJ Wholesale LLC. All significant inter-company transactions have been eliminated. All amounts are presented in U.S. Dollars unless otherwise stated. |
Use of Estimates | Use of Estimates: In order to prepare financial statements in conformity with accounting principles generally accepted in the United States, management must make estimates, judgments and assumptions that affect the amounts reported in the financial statements and determine whether contingent assets and liabilities, if any, are disclosed in the financial statements. The ultimate resolution of issues requiring these estimates and assumptions could differ significantly from resolution currently anticipated by management and on which the financial statements are based. The most significant estimates included in these consolidated financial statements are those associated with the assumptions used to value derivative liabilities. |
Reclassifications | Reclassifications Certain amounts in the Company’s condensed consolidated financial statements for prior periods have been reclassified to conform to the current period presentation. These reclassifications have not changed the results of operations of prior periods. |
Cash and Cash Equivalents | Cash and Cash Equivalents: The Company considers all highly liquid instruments with a maturity of three months or less to be cash equivalents. At times, cash balances may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. The carrying amount of cash and cash equivalents approximates fair market value. |
Inventory Valuation | Inventory Valuation Inventories are stated at the lower of cost or net realizable value. Inventories are valued on a first-in, first-out (FIFO) basis. Inventory is comprised of finished goods. |
Concentrations | Concentrations Cost of Goods Sold For the three months ended April 30, 2020 the Company purchased approximately 53% of its inventory and items available for sale from third parties from three vendors. As of April 30, 2020, the net amount due to the vendors included in accounts payable was $434,528. For the three months ended April 30, 2020, the Company purchased from three vendors approximately 62% of its inventory and items available for sale from third parties. As of April 30, 2019, the net amount due to theses vendors included in accounts payable was $161,204. The Company believes there are numerous other suppliers that could be substituted should a supplier become unavailable or non-competitive. |
Leases | Leases We adopted ASU No. 2016-02— Leases (Topic 842) In addition, we elected the hindsight practical expedient to determine the lease term for existing leases. Our election of the hindsight practical expedient resulted in the shortening of lease terms for certain existing leases and the useful lives of corresponding leasehold improvements. In our application of hindsight, we evaluated the performance of the leased stores and the associated markets in relation to our overall real estate strategies, which resulted in the determination that most renewal options would not be reasonably certain in determining the expected lease term. Adoption of the new standard resulted in the recording of additional net lease assets and lease liabilities of $454,087 and $454,087 respectively, as of February 1, 2019. The standard did not materially impact our consolidated net earnings, retained earnings and had no impact on cash flows. |
Income Taxes | Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized when items of income and expense are recognized in the financial statements in different periods than when recognized in the tax return. Deferred tax assets arise when expenses are recognized in the financial statements before the tax returns or when income items are recognized in the tax return prior to the financial statements. Deferred tax assets also arise when operating losses or tax credits are available to offset tax payments due in future years. Deferred tax liabilities arise when income items are recognized in the financial statements before the tax returns or when expenses are recognized in the tax return prior to the financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was signed into law. ASC 740, Accounting for Income Taxes requires companies to recognize the effects of changes in tax laws and rates on deferred tax assets and liabilities and the retroactive effects of changes in tax laws in the period in which the new legislation is enacted. The Company’s gross deferred tax assets were revalued based on the reduction in the federal statutory tax rate from 35% to 21%. A corresponding offset has been made to the valuation allowance, and any potential other taxes arising due to the Tax Act will result in reductions to the Company’s net operating loss carryforward and valuation allowance. The Company will continue to analyze the Tax Act to assess its full effects on the Company’s financial results, including disclosures, for the Company’s fiscal year ending January 31, 2020, but the Company does not expect the Tax Act to have a material impact on the Company’s consolidated financial statements. On November 29, 2018, the Company completed a reverse merger with The 4 Less Corp. At such time that there was a change in control, all net operating losses for tax purposes of the parent were no longer available for carry-forward and the parent started to accumulate profits or losses from that point forward. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments: The Company’s financial instruments consist of cash, accounts payable, advances and notes payable. The Company considers the carrying value of such amounts in the financial statements to approximate their fair value due to the short-term nature of these financial instruments. Derivatives are recorded at fair value at each period end. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The ASC guidance for fair value measurements and disclosure establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below: Level 1 Inputs Level 2 Inputs Level 3 Inputs The following table sets forth, by level within the fair value hierarchy, the Company’s financial liabilities that were accounted for at fair value on a recurring basis as of April 30, 2020: April 30, 2020 Quoted Prices in Significant Significant Liabilities: Derivative Liabilities – embedded redemption feature $ 1,885,583 $ — $ — $ 1,885,583 Totals $ 1,885,583 $ — $ — $ 1,885,583 |
Related Party Transactions | Related Party Transactions: The Company has a verbal policy that includes procedures intended to ensure compliance with the related party provisions in common practice for public companies. For purposes of the policy, a “related party transaction” is a transaction in which the Company or any one of its subsidiaries participates and in which a related party has a direct or indirect material interest, other than ordinary course, arms-length transactions of less than 1% of the revenue of the counterparty. Any transaction exceeding the 1% threshold, and any transaction involving consulting, financial advisory, legal or accounting services that could impair a director’s independence, must be approved by the CEO. Any related party transaction in which an executive officer or a Director has a personal interest, or which could present a possible conflict under the Guide to Ethical Conduct, must be approved by Board of Directors, following appropriate disclosure of all material aspects of the transaction. |
Derivative Liability | Derivative Liability The derivative liabilities are valued as a level 3 input under the fair value hierarchy for valuing financial instruments. The derivatives arise from convertible debt where the debt and accrued interest is convertible into common stock at variable conversion prices and reclassification of equity instrument to liability due to insufficient shares for issuance. As the price of the common stock varies, it triggers a gain or loss based upon the discount to market assuming the debt was converted at the balance sheet date. When evaluating the effect of the issuance of new equity-linked or equity-settled instruments on previously issued instruments, the Company uses first-in, first-out method (“FIFO”) where authorized and unused shares would first be used to satisfy the earliest issued equity-linked instruments. As of April 30, 2020, warrants to purchase 0 common shares (583 shares before the reverse split of 2/25/2020 referred to in Note 6) issued in July 2014 were not classified as derivative liability while the remaining warrants outstanding were classified as derivative liability based on the FIFO method. 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 7), the sensitivity required to change the liability by 1% as of April 30, 2020 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 | Revenue Recognition The Company recognizes revenue under ASC 606, “Revenue from Contracts with Customers Step 1: Identify the contract with the customer Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognize revenue when the company satisfies a performance obligation Because the Company’s sales agreements generally have an expected duration of one year or less, the Company has elected the practical expedient in ASC 606-10-50-14(a) to not disclose information about its remaining performance obligations. Disaggregation of Revenue: Channel Revenue The following table shows revenue split between proprietary and third party website revenue for the three months ended April 30, 2020 and 2019: Change 2020 2019 $ % Proprietary website revenue $ 1,109,106 $ 793,649 $ 315,467 40% Third party website revenue 890,965 1,474,576 (583,611 ) (40% ) Total Revenue $ 2,000,071 $ 2,268,225 $ (268,154 ) (12% ) |
Stock-Based Compensation | Stock-Based Compensation: The Company accounts for stock options at fair value. The Company estimates the fair value of each stock option at the grant date by using the Black-Scholes option-pricing model and provides for expense recognition over the service period, if any, of the stock option. |
Earnings (Loss) Per Common Share | Earnings (Loss) Per Common Share: Basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS give effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used to determine the number of shares assumed to be purchased from the exercise of stock options and/or warrants. Diluted EPS excluded all dilutive potential shares if their effect is anti-dilutive. Basic loss per common share is computed based on the weighted average number of shares outstanding during the period. Diluted loss per share is computed in a manner similar to the basic loss per share, except the weighted-average number of shares outstanding is increased to include all common shares, including those with the potential to be issued by virtue of convertible debt and other such convertible instruments. Diluted loss per share contemplates a complete conversion to common shares of all convertible instruments only if they are dilutive in nature with regards to earnings per share. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards: In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350) which simplifies goodwill impairment testing by requiring that such periodic testing be performed by comparing the fair value of a reporting unit with its carrying amount and recognizing an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The Company is currently evaluating the impact of Topic 350 on its consolidated financial statements and related disclosures, which is effective for fiscal years, including interim periods, beginning after December 15, 2019. We will adopt on February 1, 2020 and expect no impact. Fair Value Measurement In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvement to Nonemployee Share-Based Payment Accounting, which is part of the FASB’s simplification initiative to maintain or improve the usefulness of the information provided to the users of financial statements while reducing cost and complexity in financial reporting. This update provides consistency in the accounting for share-based payments to nonemployees with that of employees. The updated guidance had no impact on the Company’s consolidated financial position, results of operations or cash flows. In addition to the above, the Company has reviewed all other recently issued, but not yet effective, accounting pronouncements, and does not believe the future adoption of any such pronouncements will have a material impact on its financial condition or the results of its operations. There were various other accounting standards and interpretations issued recently, none of which are expected to a have a material impact on our financial position, operations or cash flows. |
NATURE OF BUSINESS AND SIGNIF_3
NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Apr. 30, 2020 | |
Accounting Policies [Abstract] | |
Schedule of fair value of assets acquired and liabilities | The following table sets forth, by level within the fair value hierarchy, the Company’s financial liabilities that were accounted for at fair value on a recurring basis as of April 30, 2020: April 30, 2020 Quoted Prices in Significant Significant Liabilities: Derivative Liabilities – embedded redemption feature $ 1,885,583 $ — $ — $ 1,885,583 Totals $ 1,885,583 $ — $ — $ 1,885,583 |
Schedule of disaggregation of Revenue | The following table shows revenue split between proprietary and third party website revenue for the three months ended April 30, 2020 and 2019: Change 2020 2019 $ % Proprietary website revenue $ 1,109,106 $ 793,649 $ 315,467 40% Third party website revenue 890,965 1,474,576 (583,611 ) (40% ) Total Revenue $ 2,000,071 $ 2,268,225 $ (268,154 ) (12% ) |
PROPERTY (Tables)
PROPERTY (Tables) | 3 Months Ended |
Apr. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property | Property consists of the following at April 30, 2020 and January 31, 2020: April 30, 2020 January 31, 2020 Office furniture, fixtures and equipment $ 95,163 $ 95,163 Shop equipment 43,004 43,004 Vehicles 40,433 40,433 Sub-total 178,600 178,600 Less: Accumulated depreciation (70,738 ) (64,091 ) Total Property $ 107,862 $ 114,509 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Apr. 30, 2020 | |
Leases [Abstract] | |
Schedule of operating lease assets and liabilities | Below is a summary of our lease assets and liabilities at April 30, 2020 and January 31, 2020. Leases Classification April 30, 2020 January 31, 2020 Assets Operating Operating Lease Assets $ 457,699 $ 483,193 Liabilities Current Operating Current Operating Lease Liability $ 101,191 $ 101,984 Noncurrent Operating Noncurrent Operating Lease Liabilities 341,894 365,085 Total lease liabilities $ 443,085 $ 467,069 |
SHORT-TERM AND LONG-TERM DEBT (
SHORT-TERM AND LONG-TERM DEBT (Tables) | 3 Months Ended |
Apr. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of debt | The components of the Company’s debt as of April 30, 2020 and January 31 ,2020 were as follows: April 30, 2020 January 31, 2020 Working Capital Note Payable - $ 200,000 dated October 25, 2019, repayment of 10% of all eBay sales proceeds until paid in full, minimum payment of $20,417, fees of $4,173 effective interest rate of 7% (4) (4) $ — * $ 6,978 Loan dated October 8, 2019, and revised February 29, 2020 repayable at $5,704 per month commencing on July 1, 2020, maturing June 1, 2022, interest at 13% per annum (2) 97,340 # 63,635 Loan dated October 14, 2019, repayable in average monthly installments of $11,200, maturing April 14, 2020, interest and fees $7,200, effective interest 35.50% per annum (4)(5) — 30,000 Working Capital Note Payable - $ 200,000 dated July 19, 2019, repayment of 10% of all eBay sales proceeds until paid in full, minimum payment of $20,334, fees of $3,343 effective interest rate of 7% (4) — — Working Capital Note Payable - $200,000, dated March 5, 2020, repayment of 10% of all eBay sales proceeds until paid in full, minimum payments of $20,695 per quarter until paid, interest rate of 7% (3) 160,307 — SFS Funding Loan, original loan of $389,980 January 8, 2020, 24% interest, weekly payments of $6,006, maturing April 7, 2021 (5) 323,917 * 371,963 Forklift Note Payable, original note of $20,432.59 Sept 26,2018, 6.23% interest, 60 monthly payments of $394.54 ending August 2023 (1) 14,857 # 16,106 Demand loan - $122,000 dated August 19, 2019 25% interest, 5% fee on outstanding balance (4)(6) — * 122,000 Demand loan - $5,000 dated February 1, 2020, 15% interest, 5% fee on outstanding balance 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 Total $ 616,336 $ 625,597 * Short-term notes of $504,139 # Long-term loan of $ 14,857 including current portion of $3,899 and $97,340 including current portion of $37,526 (1) Secured by equipment having a net book value of $18,243 (2) On February 29, 2020 the Company amended the agreement extending the maturity to June 1, 2022 from April 8, 2021 and changing monthly payments to $5,705 from $4,679 and interest rate from 15% to 13%.In addition prepaid rent and interest of $27,500 and $8,005 were added to the loan’s principal amount and the 1st monthly payment commence July 1, 2020. (3) The Company has pledged a security interest on all accounts receivable and banks accounts of the Company. (4) The Company has pledged a security interest on all assets of the Company. (5) The amounts due under the note are personally guaranteed by an officer or a director of the Company. (6) On February 26 ,2020 the lender exchanged the $122,000 note along with $22,076 for 26 Class C preferred shares as part of a larger debt exchange transaction as described in Note 7. |
SHORT-TERM CONVERTIBLE DEBT (Ta
SHORT-TERM CONVERTIBLE DEBT (Tables) | 3 Months Ended |
Apr. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of short term convertible debt | The components of the Company’s debt as of April 30, 2020 and January 31, 2020 were as follows: Interest Default Interest Conversion Outstanding Principal at Maturity Date Rate Rate Price April 30, 2020 January 31, 2020 Nov 4, 2013* 12% 12% $1,800,000 $ 100,000 $ 100,000 Jan 31, 2014* 12% 18% $2,400,000 16,000 16,000 Apr 24, 2020* (ii) 12% 24% (3) 69,730 69,730 July 31, 2013* 12% 12% $1,440,000 5,000 5,000 Jan 31, 2014* 12% 12% $2,400,000 30,000 30,000 Dec 24, 2015* (v) 8% 24% (1) 5,000 5,000 Feb 3, 2017* (ii)(iv) 8% 24% (4) 2,500 2,500 Mar 3, 2017* (ii)(iv) 8% 24% (5) — — Mar 3, 2017* (ii)(iv) 8% 24% (5) 33,000 33,000 Mar 24, 2017* (ii)(iv) 8% 24% (5) 27,500 27,500 Apr 24, 2020* (ii)(iv)(vi) 12% 24% (3) 517,787 517,787 July 8, 2015* (v) 8% 24% (1) 5,500 5,500 Apr 24, 2020 (ii)(iv)(vi)X 8% 24% (3) — 4,500 Apr 24, 2020 X 8% 24% (3) — 23,297 Apr 24, 2020 X 8% 24% (3) — 7,703 Apr 24, 2020 X 8% 24% (3) — 26,500 July 19, 2016* (v) 8% 24% (1) 5,000 5,000 Mar 23, 2019* (ii)(iv)(vi)X 15% 24% (3) — 4,444 Feb 20, 2019* (ix)X 10% 10% (6) — 343,047 Jun 6, 2019* (viii)X 12% 18% (7) — 43,577 Oct 24, 2019* (ii)(iv) 8% 24% (5) 43,010 45,595 Nov 14, 2019* (ii)(iv) 8% 24% (5) 86,625 86,625 Dec 14, 2019* (ii)(iv) 8% 24% (5) 143,000 143,000 Dec 28, 2019* (i)(iv)(vi) 12% 18% (6) 133,333 133,333 Jan 9, 2020* (ii)(iv) 8% 24% (2) 68,750 68,750 March 1, 2020* (x) 10% 15% (8) 40,939 40,939 March 14, 2020 (iv)(vi)X 15% 24% (9) — 44,967 April 3, 2020* (iv) 8% 24% (2) 172,148 172,148 April 12, 2020* (xi) 10% 24% (3) 184,815 185,130 May 13, 2020 (iv)(vi)X 15% 24% (9) — 55,000 May 14, 2020 (iv)(vi) 8% 24% (2) 52,500 52,500 May 24, 2020 (iv)(vi)X 15% 24% (9) — 40,000 June 11, 2020 (iv)(vi)X 15% 24% (9) — 85,000 June 26, 2020 (iv)(vi) 15% 24% (9) 76,000 76,000 July 11, 2020 (iv)(vii)X 15% 24% (9) — 60,000 Aug 29, 2020 (iv)(vii)X 15% 24% (9) — 45,000 Sep 16, 2020 (iv)(vii)X 15% 24% (9) — 34,000 Sep 27, 2020 (iv)(vii)X 15% 24% (9) — 34,000 Oct 24, 2020 (iv)(vii)X 15% 24% (9) — 122,000 Nov 7, 2020 (iv)(vii)X 15% 24% (10) — 42,000 Nov 22, 2020 (ii)(iv)(vi) 8% 24% (2) 55,000 55,000 Dec 10, 2020 (iv)(vii)X 15% 24% (9) — 55,000 Dec 23, 2020 (ii)(iv)(vi) 8% 24% (2) 30,000 30,000 Sub-total 1,903,137 2,976,072 Debt Discount (110,263 ) (689,176 ) $ 1,792,874 $ 2,286,896 (1) 52% of the lowest trading price for the fifteen trading days prior to conversion day. (2) 50% of the lowest trading price for the fifteen trading days prior to conversion day. (3) 50% of the lowest trading price for the twenty trading days prior to conversion day. (4) 50% of the lowest trading price for the fifteen trading days prior to conversion day, but not higher than $0.001. (5) 50% of the lowest trading price for the fifteen trading days prior to conversion day, but not higher than $0.005. (6) 60% of the lowest trading price for the twenty trading days prior to conversion day. (7) 52% of the lowest trading price for the twenty trading days prior to conversion day. (8) 55% of the lowest trading price for the twenty-five trading days prior to conversion day. (9) 50% of the lowest bid price for the twenty-five trading days prior to conversion day. (10) 45% of the lowest bid price for the fifteen trading days prior to conversion day * In default. X On February 26 ,2020 the company exchanged convertible and short term notes and accrued interest for 250 Class C shares (transaction described further below). (i) If the Company fails to maintain its status as “DTC Eligible” for any reason, or, if the effective Conversion Price as calculated in Section 4(a) is less than $0.0001 at any time (regardless of whether or not a Conversion Notice has been submitted to the Company), the Principal Amount of the Note shall increase by ten thousand dollars ($10,000) (under Holder’s and Company’s expectation that any Principal Amount increase will tack back to the Issuance Date). In addition, the Conversion Price shall be permanently redefined to equal the lesser of (a) $0.00001 or (b) 50% of the lowest traded price during the twenty five (25) consecutive Trading Days immediately preceding the applicable Conversion Date on which the Holder elects to convert all or part of this Note, subject to adjustment as provided in this Note. If at any time while this Note is outstanding, an Event of Default (as defined herein) occurs, then an additional discount of 15% shall be factored into the Variable Conversion Price until this Note is no longer outstanding (resulting in a discount rate of 65% assuming no other adjustments are triggered hereunder). These above contingencies have not occurred. (ii) In the event the Company experiences a DTC ” Chill” on its shares, the conversion price shall be decreased to 40% instead of 50% while that “Chill” is in effect. If the Company fails to maintain the share reserve at the 4x discount of the note 60 days after the issuance of the note, the conversion discount shall be increased by 10%. (iii) The share purchase agreements ancillary to the convertible note agreements do not allow the lender to engage in short sales. (iv) If the Company becomes delinquent or continues its delinquency in its periodic filings with the SEC after the 6-months anniversary of the note, then the holder is entitled to use the lowest closing bid price during the delinquency period as a base price for the conversion. (v) In the event the Company experiences a DTC ” Chill” on its shares, the conversion price shall be decreased to 42% instead of 52% while that “Chill” is in effect. (vi) If the Company fails to maintain the share reserve at the 4x discount of the note 60 days after the issuance of the note, the conversion discount shall be increased by 10%. (vii) If the Company fails to maintain the share reserve at the 3x discount of the note 60 days after the issuance of the note, the conversion discount shall be increased by 10%. (viii) If at any time while this Note is outstanding, an event of default occurs, then an additional discount of 15% shall be factored into the Variable Conversion Price until this Note is no longer outstanding (resulting in a discount rate of 65% assuming no other adjustments are triggered hereunder). If at any time while this Note is outstanding, the Borrower’s Common Stock are not deliverable via DWAC, an additional 10% discount shall be factored into the Variable Conversion Price until this Note is no longer outstanding. (ix) If the Company fails to maintain its status as “DTC Eligible” for any reason, or, if the effective Conversion Price is less than $0.01 at any time, the Principal Amount of the Note shall increase by ten thousand dollars ($10,000). In addition, the Conversion price shall be permanently redefined to equal the lesser of (a) $0.001 or (b) 50% of the lowest traded price during the twenty five (25) consecutive Trading Days immediately preceding the applicable Conversion Date on which the Holder elects to convert all or part of this Note, subject to adjustment as provided in this Note. (x) In the event that shares of the Borrower’s Common Stock are not deliverable via DWAC following the conversion of any amount hereunder, an additional ten percent (10%) discount shall be factored into the Variable Conversion Price until this Note is no longer outstanding (resulting in a discount rate of 55% assuming no other adjustments are triggered hereunder). Additionally, if the Borrower fails to comply with the reporting requirements of the Exchange Act (including but not limited to becoming late or delinquent in its filings, even if the Borrower subsequently cures such delinquency) at any time while after the Issue Date, and/or the Borrower shall cease to be subject to the reporting requirements of the exchange Act, an additional fifteen percent (15%) discount shall be factored into the Variable Conversion Price until this Note is no longer outstanding (resulting in a discount rate of 60% assuming no other adjustments are triggered hereunder). (xi) If the Borrower’s Common stock is chilled for deposit at DTC, becomes chilled at any point while this Note remains outstanding or deposit or other additional fees are payable due to a Yield Sign, Stop Sign or other trading restrictions, or if the closing price at any time falls below $0.01 (as appropriately and equitably adjusted for stock splits, stock dividends, stock contributions and similar events), then an additional 15% discount will be attributed to the Conversion Price for any and all Conversions submitted thereafter. |
DERIVATIVE LIABILITIES (Tables)
DERIVATIVE LIABILITIES (Tables) | 3 Months Ended |
Apr. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of changes in fair value of the derivative liability | 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, 2020 $ 2,611,125 Change due to Settlement of Debt (792,218 ) Changes due to Conversion of Notes Payable (8,104 ) Mark to Market Change in Derivatives 74,780 Balance, April 30, 2020 $ 1,885,583 |
Schedule of derivative liability | A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring the Company’s warrant liabilities and embedded conversion feature that are categorized within Level 3 of the fair value hierarchy as of April 30, 2020 is as follows: Embedded Derivative Liability As of Strike price $ 0.0198 - 0.40 Contractual term (years) 0.08 - 4.25 years Volatility (annual) 450.80% - 680.56% High yield cash rate 36.25% - 37.90% Underlying fair market value .0001 - 3.59 Risk-free rate 0.12% - 2.64% Dividend yield (per share) 0% |
STOCKHOLDERS' DEFICIT (Tables)
STOCKHOLDERS' DEFICIT (Tables) | 3 Months Ended |
Apr. 30, 2020 | |
Equity [Abstract] | |
Schedule of issued options and warrants outstanding | The Company had the following options and warrants outstanding at April 30, 2020: Issued To # Warrants Dated Expire Strike Price Expired Exercised Lender 1.4 01/08/2018 01/08/2021 $1,800 per share N N |
Schedule of options and warrants outstanding | Options Weighted Average Warrants Weighted Average Outstanding at January 31, 2020 — $ — 1.4 $ 225,520 Granted — — — — Exercised — — — — Forfeited and canceled — — — — Outstanding at April 30, 2020 — $ — 1.5 $ 225,520 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 3 Months Ended |
Apr. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of minimum lease obligations | On a straight-line basis these costs amount to $1,259 per month. Maturity of Lease Liabilities Operating April 30, 2021 $ 136,317 April 30, 2022 136,317 April 30, 2023 131,279 April 30, 2024 47,603 April 30, 2025 30,003 After April 30, 2025 47,506 Total lease payments 529,025 Less: Interest (85,940 ) Present value of lease liabilities $ 443,085 |
EARNINGS (LOSS) PER SHARE (Tabl
EARNINGS (LOSS) PER SHARE (Tables) | 3 Months Ended |
Apr. 30, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of net income (loss) | The net income (loss) per common share amounts were determined as follows: For the Three Months Ended April 30, 2020 2019 Numerator: Net income (loss) available to common shareholders $ 1,186,898 $ (1,813,076 ) Effect of common stock equivalents Add: interest expense on convertible debt 103,540 236,751 Add (Less): loss (gain) on change of derivative liabilities — 910,442 Net income (loss) adjusted for common stock equivalents 1,290,438 (665,883 ) Denominator: Weighted average shares – basic 551,590 404 Net income (loss) per share – basic $ 2.34 $ (4,487.81 ) Dilutive effect of common stock equivalents: Convertible notes and accrued interest 86,413,848 — Convertible Class C Preferred shares 1,632,770 — Warrants 1 — Denominator: Weighted average shares – diluted 88,046,619 404 Net income (loss) per share – diluted $ 0.02 $ (4,487.81 ) |
Schedule of diluted loss per share | The anti-dilutive shares of common stock equivalents for the three months ended April 30, 2020 and April 30, 2019 were as follows: For the Three Months Ended April 30, 2020 2019 Convertible notes and accrued interest — 1,383 Convertible Class C Preferred shares — 1,197 Warrants — 1 Total — 2,581 |
NATURE OF BUSINESS AND SIGNIF_4
NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | Apr. 30, 2020 | Jan. 31, 2020 | |
Liabilities: | |||
Derivative Liabilities - embedded redemption feature | $ 1,885,583 | ||
Totals | 1,885,583 | $ 2,611,125 | [1] |
Quoted Prices in Active Markets For Identical Assets (Level 1) [Member] | |||
Liabilities: | |||
Derivative Liabilities - embedded redemption feature | |||
Totals | |||
Significant Other Observable Inputs (Level 2) [Member] | |||
Liabilities: | |||
Derivative Liabilities - embedded redemption feature | |||
Totals | |||
Significant Unobservable Inputs (Level 3) [Member] | |||
Liabilities: | |||
Derivative Liabilities - embedded redemption feature | 1,885,583 | $ 2,611,125 | |
Totals | $ 1,885,583 | ||
[1] | Derived from audited information |
NATURE OF BUSINESS AND SIGNIF_5
NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) | 3 Months Ended | |
Apr. 30, 2020 | Apr. 30, 2019 | |
Total Revenue | $ 2,000,071 | $ 2,268,225 |
Change in revenue | $ (268,154) | |
Percentage change in revenue | 12.00% | |
Proprietary Website Revenue [Member] | ||
Total Revenue | $ 1,109,106 | 793,649 |
Change in revenue | $ 315,467 | |
Percentage change in revenue | 40.00% | |
Third Party Website Revenue [Member] | ||
Total Revenue | $ 890,965 | $ 1,474,576 |
Change in revenue | $ (583,611) | |
Percentage change in revenue | (40.00%) |
NATURE OF BUSINESS AND SIGNIF_6
NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | ||||||
Nov. 29, 2018 | Dec. 22, 2017 | Apr. 30, 2020 | Feb. 25, 2020 | Jan. 31, 2020 | [1] | Apr. 30, 2019 | Feb. 02, 2019 | |
Date of incorporation | Dec. 5, 2007 | |||||||
Business acquisition transaction of equity securities, description | The Company entered into a transaction (the “Share Exchange”), pursuant to which the Company acquired 100% of the issued and outstanding equity securities of The 4LESS Corp. (“4LESS”), in exchange for the issuance of (i) nineteen thousand (19,000) shares of Series B Preferred Stock, (ii) six thousand seven hundred fifty (6,750) shares of Series C Preferred Stock, and (iii) 870 shares of Series D Preferred Stock. The Series C Preferred Shares have a right to convert into common stock of the Company by multiplying the number of issued and outstanding shares of common stock by 2.63 on the conversion date. | |||||||
Net lease assets and lease liabilities | $ 457,699 | $ 483,193 | $ 454,087 | $ 454,087 | ||||
Percentage of inventory | 53.00% | 62.00% | ||||||
Accounts payable | $ 434,528 | $ 161,204 | ||||||
Warrant [Member] | ||||||||
Warrants to purchase common shares | 0 | 583 | ||||||
Minimum [Member] | ||||||||
Federal statutory tax rate | 21.00% | |||||||
Maximum [Member] | ||||||||
Federal statutory tax rate | 35.00% | |||||||
[1] | Derived from audited information |
GOING CONCERN AND FINANCIAL P_2
GOING CONCERN AND FINANCIAL POSITION (Details Narrative) - USD ($) | Apr. 30, 2020 | Jan. 31, 2020 | [1] | Apr. 30, 2019 | Jan. 31, 2019 | [1] |
Going Concern and Financial Position [Abstract] | ||||||
Accumulated deficit | $ (20,382,255) | $ (21,569,153) | ||||
Working capital deficit | 6,195,178 | |||||
Cash and cash equivalents | $ 188,243 | $ 162,124 | $ 141,928 | $ 59,401 | ||
[1] | Derived from audited information |
PROPERTY (Details)
PROPERTY (Details) - USD ($) | Apr. 30, 2020 | Jan. 31, 2020 | |
Sub-total | $ 178,600 | $ 178,600 | |
Less: Accumulated depreciation | (70,738) | (64,091) | |
Total Property | 107,862 | 114,509 | [1] |
Office Furniture, Fixtures and Equipment [Member] | |||
Sub-total | 95,163 | 95,163 | |
Shop Equipment [Member] | |||
Sub-total | 43,004 | 43,004 | |
Vehicles [Member] | |||
Sub-total | $ 40,433 | $ 40,433 | |
[1] | Derived from audited information |
PROPERTY (Details Narrative)
PROPERTY (Details Narrative) - USD ($) | 3 Months Ended | |
Apr. 30, 2020 | Apr. 30, 2019 | |
Purchase property | $ 1,000 | |
Purchase of Property and Equipment | 0 | $ 0 |
Depreciation expense | $ 6,647 | $ 10,240 |
Computer [Member] | ||
Property for their estimated useful lives | 3 years | |
Other Assets [Member] | ||
Property for their estimated useful lives | 7 years |
LEASES (Details)
LEASES (Details) - USD ($) | Apr. 30, 2020 | Jan. 31, 2020 | Apr. 30, 2019 | Feb. 02, 2019 | |
Assets | |||||
Operating Lease Assets | $ 457,699 | $ 483,193 | [1] | $ 454,087 | $ 454,087 |
Current | |||||
Current Operating Lease Liability | 101,191 | 101,984 | [1] | ||
Noncurrent | |||||
Noncurrent Operating Lease Liabilities | 341,894 | 365,085 | [1] | ||
Total lease liabilities | $ 443,085 | $ 467,069 | |||
[1] | Derived from audited information |
LEASES (Details Narrative)
LEASES (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | |
Sep. 30, 2019 | Apr. 30, 2020 | Apr. 30, 2019 | |
Leases [Abstract] | |||
Operating lease cost | $ 34,079 | $ 26,701 | |
Annual rent | $ 15,480 | ||
Leases, description | A three year term commencing September 1, 2019 to August 31, 2022 and a one year renewal option. | 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. | |
Incremental borrowing rate | 8.00% | ||
Description of renewal lease term | One to 17 years or more, |
SHORT-TERM AND LONG-TERM DEBT_2
SHORT-TERM AND LONG-TERM DEBT (Details) - USD ($) | Apr. 30, 2020 | Jan. 31, 2020 | |
Total | $ 616,336 | $ 625,597 | |
Working Capital Note Payable Two [Member] | |||
Debt | [1] | ||
Loan One [Member] | |||
Debt | 97,340 | [2] | 63,635 |
Loan Two [Member] | |||
Debt | 30,000 | ||
SFS Funding Loan [Member] | |||
Debt | 323,917 | [1] | 371,963 |
Forklift Note Payable [Member] | |||
Debt | 14,857 | [2] | 16,106 |
Demand Loan [Member] | |||
Debt | [1] | 122,000 | |
Demand Loan One [Member] | |||
Debt | 5,000 | [1] | |
Demand Loan Two [Member] | |||
Debt | 2,500 | [1] | 2,500 |
Demand Loan Three [Member] | |||
Debt | 12,415 | [1] | 12,415 |
Working Capital Note Payable Three [Member] | |||
Debt | |||
Total | 160,307 | ||
Working Capital Note Payable One [Member] | |||
Debt | 6,978 | ||
Amazon Working Capital Note [Member] | |||
Debt | |||
[1] | Short-term notes of $504,139 | ||
[2] | Long-term loan of $ 14,857 including current portion of $3,899 and $97,340 including current portion of $37,526 |
SHORT-TERM AND LONG-TERM DEBT_3
SHORT-TERM AND LONG-TERM DEBT (Details Narrative) - USD ($) | Feb. 29, 2020 | Feb. 26, 2020 | Apr. 30, 2020 | Feb. 28, 2020 | Jan. 31, 2020 | ||
Maturity date, description | Maturity to June 1, 2022 from April 8, 2021 | ||||||
Description of payment terms | monthly | ||||||
Accrued interest payable | $ 0 | $ 0 | |||||
Short-term notes | 541,665 | 609,491 | [1] | ||||
Long-term loan, current | 3,899 | 4,166 | [1] | ||||
Long-term loan | 14,857 | 97,340 | |||||
Prepaid rent | 15,980 | $ 25,700 | $ 0 | ||||
Minimum [Member] | |||||||
Percentage of debt instrument effective interest rate | 13.00% | ||||||
Debt instrument periodic payment | $ 4,679 | ||||||
Prepaid rent | $ 8,005 | ||||||
Maximum [Member] | |||||||
Percentage of debt instrument effective interest rate | 15.00% | ||||||
Debt instrument periodic payment | $ 5,705 | ||||||
Prepaid rent | $ 27,500 | ||||||
Series C Preferred Stock [Member] | |||||||
Notes payable principal amount | $ 122,000 | ||||||
Exchange amount | $ 22,076 | ||||||
Working Capital Note Payable One [Member] | |||||||
Notes payable principal amount | $ 200,000 | ||||||
Debt issuance date | Oct. 25, 2019 | ||||||
Maturity date | [2] | Jan. 25, 2020 | |||||
Note payable percentage | 10.00% | ||||||
Percentage of debt instrument effective interest rate | [2] | 7.00% | |||||
Debt fees | $ 4,173 | ||||||
Debt instrument periodic payment | 20,417 | ||||||
Loan One [Member] | |||||||
Notes payable principal amount | $ 5,704 | ||||||
Debt issuance date | Oct. 8, 2019 | ||||||
Debt start date | Jul. 1, 2020 | ||||||
Maturity date | Jun. 1, 2022 | ||||||
Note payable percentage | [3] | 13.00% | |||||
Loan Two [Member] | |||||||
Notes payable principal amount | $ 11,200 | ||||||
Debt issuance date | Oct. 14, 2019 | ||||||
Maturity date | Apr. 14, 2020 | ||||||
Percentage of debt instrument effective interest rate | [2],[4] | 35.50% | |||||
Debt fees | $ 7,200 | ||||||
Debt instrument periodic payment | $ 11,200 | ||||||
Working Capital Note Payable Two [Member] | |||||||
Debt issuance date | Jul. 19, 2019 | ||||||
Maturity date | [2] | Oct. 22, 2019 | |||||
Note payable percentage | 10.00% | ||||||
Percentage of debt instrument effective interest rate | [2] | 7.00% | |||||
Debt fees | $ 3,343 | ||||||
Debt instrument periodic payment | $ 20,334 | ||||||
Working Capital Note Payable Three [Member] | |||||||
Debt issuance date | Mar. 5, 2020 | ||||||
Working Capital Note Payable Three [Member] | |||||||
Notes payable principal amount | $ 200,000 | ||||||
Note payable percentage | 10.00% | ||||||
Percentage of debt instrument effective interest rate | [5] | 7.00% | |||||
SFS Funding Loan [Member] | |||||||
Notes payable principal amount | $ 389,980 | ||||||
Debt issuance date | Jan. 8, 2020 | ||||||
Maturity date | [4] | Apr. 7, 2021 | |||||
Note payable percentage | 24.00% | ||||||
Description of payment terms | Weekly | ||||||
Debt instrument periodic payment | $ 6,006 | ||||||
Forklift Note Payable [Member] | |||||||
Notes payable principal amount | $ 20,432 | ||||||
Debt issuance date | Sep. 26, 2018 | ||||||
Maturity date | [6] | Aug. 31, 2023 | |||||
Note payable percentage | 6.23% | ||||||
Description of payment terms | 60 monthly payments | ||||||
Debt instrument periodic payment | $ 395 | ||||||
Secured equipment net book value | 18,243 | ||||||
Demand Loan [Member] | |||||||
Notes payable principal amount | $ 122,000 | ||||||
Debt issuance date | Aug. 19, 2019 | ||||||
Maturity date | Aug. 19, 2019 | ||||||
Note payable percentage | 25.00% | ||||||
Maturity date, description | [2],[7] | 5% fee on outstanding balance | |||||
Demand Loan One [Member] | |||||||
Notes payable principal amount | $ 5,000 | ||||||
Maturity date | Feb. 1, 2020 | ||||||
Note payable percentage | 15.00% | ||||||
Maturity date, description | 5% fee on outstanding balance | ||||||
Demand Loan Two [Member] | |||||||
Notes payable principal amount | $ 2,500 | ||||||
Maturity date | Mar. 8, 2019 | ||||||
Note payable percentage | 25.00% | ||||||
Maturity date, description | 5% fee on outstanding balance | ||||||
Demand Loan Three [Member] | |||||||
Notes payable principal amount | $ 65,500 | ||||||
Maturity date | Feb. 27, 2019 | ||||||
Note payable percentage | 25.00% | ||||||
Maturity date, description | 5% fee on outstanding balance, Secured by the general assets of the Company | ||||||
[1] | Derived from audited information | ||||||
[2] | The Company has pledged a security interest on all assets of the Company. | ||||||
[3] | On February 29, 2020 the Company amended the agreement extending the maturity to June 1, 2022 from April 8, 2021 and changing monthly payments to $5,705 from $4,679 and interest rate from 15% to 13%.In addition prepaid rent and interest of $27,500 and $8,005 were added to the loan's principal amount and the 1st monthly payment commence July 1, 2020. | ||||||
[4] | The amounts due under the note are personally guaranteed by an officer or a director of the Company. | ||||||
[5] | The Company has pledged a security interest on all accounts receivable and banks accounts of the Company. | ||||||
[6] | Secured by equipment having a net book value of $18,243 | ||||||
[7] | On February 26 ,2020 the lender exchanged the $122,000 note along with $22,076 for 26 Class C preferred shares as part of a larger debt exchange transaction as described in Note 7. |
SHORT-TERM CONVERTIBLE DEBT (De
SHORT-TERM CONVERTIBLE DEBT (Details) - USD ($) | 3 Months Ended | |||
Apr. 30, 2020 | Jan. 31, 2020 | |||
Sub-total | $ 1,903,137 | $ 2,976,072 | ||
Debt Discount | (110,263) | (689,176) | ||
Total | $ 1,792,874 | 2,286,896 | ||
Debt Due on Nov 4, 2013 [Member] | ||||
Maturity date | [1] | Nov. 4, 2013 | ||
Interest rate | 12.00% | |||
Default interest rate | [1] | 12.00% | ||
Conversion price | $ 1,800,000 | |||
Sub-total | $ 100,000 | 100,000 | ||
Debt Due On Jan 31, 2014 [Member] | ||||
Maturity date | [1] | Jan. 31, 2014 | ||
Interest rate | 12.00% | |||
Default interest rate | [1] | 18.00% | ||
Conversion price | $ 2,400,000 | |||
Sub-total | $ 16,000 | 16,000 | ||
Debt Due on Apr 24, 2020 [Member] | ||||
Maturity date | [1],[2] | Apr. 24, 2020 | ||
Interest rate | [2] | 12.00% | ||
Default interest rate | [1],[2] | 24.00% | ||
Sub-total | [2] | $ 69,730 | 69,730 | |
Debt Due On July 31, 2013 [Member] | ||||
Maturity date | [1] | Jul. 31, 2013 | ||
Interest rate | 12.00% | |||
Default interest rate | [1] | 12.00% | ||
Conversion price | $ 1,440,000 | |||
Sub-total | $ 5,000 | 5,000 | ||
Debt Due on Jan 31, 2014 [Member] | ||||
Maturity date | [1] | Jan. 31, 2014 | ||
Interest rate | 12.00% | |||
Default interest rate | [1] | 12.00% | ||
Conversion price | $ 2,400,000 | |||
Sub-total | $ 30,000 | 30,000 | ||
Debt Due On Dec 24, 2015 [Member] | ||||
Maturity date | [1],[3] | Dec. 24, 2015 | ||
Interest rate | [3] | 8.00% | ||
Default interest rate | [1],[3] | 24.00% | ||
Sub-total | [3] | $ 5,000 | 5,000 | |
Debt Due On Feb 3, 2017 [Member] | ||||
Maturity date | [1],[2],[4] | Feb. 3, 2017 | ||
Interest rate | [2],[4] | 8.00% | ||
Default interest rate | [1],[2],[4] | 24.00% | ||
Sub-total | [2],[4] | $ 2,500 | 2,500 | |
Debt Due On Mar 3, 2017 [Member] | ||||
Maturity date | [1],[2],[4] | Mar. 3, 2017 | ||
Interest rate | [2],[4] | 8.00% | ||
Default interest rate | [1],[2],[4] | 24.00% | ||
Sub-total | [2],[4] | |||
Debt Due On Mar 3, 2017 [Member] | ||||
Maturity date | [1],[2],[4] | Mar. 3, 2017 | ||
Interest rate | [2],[4] | 8.00% | ||
Default interest rate | [1],[2],[4] | 24.00% | ||
Sub-total | [2],[4] | $ 33,000 | 33,000 | |
Debt Due On Mar 24, 2017 [Member] | ||||
Maturity date | [1],[2],[4] | Mar. 24, 2017 | ||
Interest rate | [2],[4] | 8.00% | ||
Default interest rate | [1],[2],[4] | 24.00% | ||
Sub-total | [2],[4] | $ 27,500 | 27,500 | |
Debt Due On Apr 24, 2020 [Member] | ||||
Maturity date | [1],[2],[4],[5] | Apr. 24, 2020 | ||
Interest rate | [2],[4],[5] | 12.00% | ||
Default interest rate | [1],[2],[4],[5] | 24.00% | ||
Sub-total | [2],[4],[5] | $ 517,787 | 517,787 | |
Debt Due On July 8, 2015 [Member] | ||||
Maturity date | [1],[3] | Jul. 8, 2015 | ||
Interest rate | [3] | 8.00% | ||
Default interest rate | [1],[3] | 24.00% | ||
Sub-total | [3] | $ 5,500 | 5,500 | |
Debt Due On Apr 24, 2020 [Member] | ||||
Maturity date | [2],[4],[5],[6] | Apr. 24, 2020 | ||
Interest rate | [2],[4],[5] | 8.00% | ||
Default interest rate | [2],[4],[5],[6] | 24.00% | ||
Sub-total | [2],[4],[5] | 4,500 | ||
Debt Due On Apr 24, 2020 [Member] | ||||
Maturity date | [6] | Apr. 24, 2020 | ||
Interest rate | 8.00% | |||
Default interest rate | [6] | 24.00% | ||
Sub-total | 23,297 | |||
Debt Due On Apr 24, 2020 [Member] | ||||
Maturity date | [6] | Apr. 24, 2020 | ||
Interest rate | 8.00% | |||
Default interest rate | [6] | 24.00% | ||
Sub-total | 7,703 | |||
Debt Due On Apr 24, 2020 [Member] | ||||
Maturity date | [6] | Apr. 24, 2020 | ||
Interest rate | 8.00% | |||
Default interest rate | [6] | 24.00% | ||
Sub-total | 26,500 | |||
Debt Due On July 19, 2016 [Member] | ||||
Maturity date | [1],[3] | Jul. 19, 2016 | ||
Interest rate | 8.00% | |||
Default interest rate | [1],[3] | 24.00% | ||
Sub-total | $ 5,000 | 5,000 | ||
Debt Due On Mar 23, 2019 [Member] | ||||
Maturity date | [1],[2],[4],[5],[6] | Mar. 23, 2019 | ||
Interest rate | [2],[4],[5] | 15.00% | ||
Default interest rate | [1],[2],[4],[5],[6] | 24.00% | ||
Sub-total | [2],[4],[5] | 4,444 | ||
Debt Due On Feb 20, 2019 [Member] | ||||
Maturity date | [1],[6],[7] | Feb. 20, 2019 | ||
Interest rate | [7] | 10.00% | ||
Default interest rate | [1],[6],[7] | 10.00% | ||
Sub-total | [7] | 343,047 | ||
Debt Due On Jun 6, 2019 [Member] | ||||
Maturity date | [1],[6],[8] | Jun. 6, 2019 | ||
Interest rate | [8] | 12.00% | ||
Default interest rate | [1],[6],[8] | 18.00% | ||
Sub-total | [8] | 43,577 | ||
Debt Due On Oct 24, 2019 [Member] | ||||
Maturity date | [1],[2] | Oct. 24, 2019 | ||
Interest rate | [2],[4] | 8.00% | ||
Default interest rate | [1],[2] | 24.00% | ||
Sub-total | [2],[4] | $ 43,010 | 45,595 | |
Debt Due On Nov 14, 2019 [Member] | ||||
Maturity date | [1],[2] | Nov. 14, 2019 | ||
Interest rate | [2],[4] | 8.00% | ||
Default interest rate | [1],[2] | 24.00% | ||
Sub-total | [2],[4] | $ 86,625 | 86,625 | |
Debt Due On Dec 14, 2019 [Member] | ||||
Maturity date | [1],[2],[4] | Dec. 14, 2019 | ||
Interest rate | [2],[4] | 8.00% | ||
Default interest rate | [1],[2],[4] | 24.00% | ||
Sub-total | [2],[4] | $ 143,000 | 143,000 | |
Debt Due On Dec 28, 2019 [Member] | ||||
Maturity date | [1],[4],[5],[9] | Dec. 28, 2019 | ||
Interest rate | [4],[5],[9] | 12.00% | ||
Default interest rate | [1],[4],[5],[9] | 18.00% | ||
Sub-total | [4],[5],[9] | $ 133,333 | 133,333 | |
Debt Due On Jan 9, 2020 [Member] | ||||
Maturity date | [1],[2] | Jan. 9, 2020 | ||
Interest rate | [2],[4] | 8.00% | ||
Default interest rate | [1],[2] | 24.00% | ||
Sub-total | [2],[4] | $ 68,750 | 68,750 | |
Debt Due On March 1, 2020 [Member] | ||||
Maturity date | [1],[10] | Mar. 1, 2020 | ||
Interest rate | [10] | 10.00% | ||
Default interest rate | [1],[10] | 15.00% | ||
Sub-total | [10] | $ 40,939 | 40,939 | |
Debt Due On March 14, 2020 [Member] | ||||
Maturity date | [1],[4],[5],[6] | Mar. 14, 2020 | ||
Interest rate | [4] | 15.00% | ||
Default interest rate | [1],[4],[5],[6] | 24.00% | ||
Sub-total | [4] | 44,967 | [5] | |
Debt Due On April 3, 2020 [Member] | ||||
Maturity date | [1] | Apr. 3, 2020 | ||
Interest rate | [4] | 8.00% | ||
Default interest rate | [1] | 24.00% | ||
Sub-total | [4] | $ 172,148 | 172,148 | |
Debt Due On April 12, 2020 [Member] | ||||
Maturity date | [1] | Apr. 12, 2020 | ||
Interest rate | 10.00% | |||
Default interest rate | [1] | 24.00% | ||
Sub-total | $ 184,815 | 185,130 | ||
Debt Due On May 13, 2020 [Member] | ||||
Maturity date | [4],[5],[6] | May 13, 2020 | ||
Interest rate | [4],[5] | 15.00% | ||
Default interest rate | [4],[5],[6] | 24.00% | ||
Sub-total | [4],[5] | 55,000 | ||
Debt Due On May 14, 2020 [Member] | ||||
Maturity date | [4],[5] | May 14, 2020 | ||
Interest rate | [4],[5] | 8.00% | ||
Default interest rate | [4],[5] | 24.00% | ||
Sub-total | [4],[5] | $ 52,500 | 52,500 | |
Debt Due On May 24, 2020 [Member] | ||||
Maturity date | [4],[5],[6] | May 24, 2020 | ||
Interest rate | [4],[5] | 15.00% | ||
Default interest rate | [4],[5],[6] | 24.00% | ||
Sub-total | [4],[5] | 40,000 | ||
Debt Due On June 11, 2020 [Member] | ||||
Maturity date | [4],[5],[6] | Jun. 11, 2020 | ||
Interest rate | [4],[5] | 15.00% | ||
Default interest rate | [4],[5],[6] | 24.00% | ||
Sub-total | [4],[5] | 85,000 | ||
Debt Due On June 26, 2020 [Member] | ||||
Maturity date | [4],[5] | Jun. 26, 2020 | ||
Interest rate | [4],[5] | 15.00% | ||
Default interest rate | [4],[5] | 24.00% | ||
Sub-total | [4],[5] | $ 76,000 | 76,000 | |
Debt Due On July 11, 2020 [Member] | ||||
Maturity date | [4],[6],[11] | Jul. 11, 2020 | ||
Interest rate | [4],[11] | 15.00% | ||
Default interest rate | [4],[6],[11] | 24.00% | ||
Sub-total | [4],[11] | 60,000 | ||
Debt Due On Aug 29, 2020 [Member] | ||||
Maturity date | [4],[6],[11] | Aug. 29, 2020 | ||
Interest rate | [4],[11] | 15.00% | ||
Default interest rate | [4],[6],[11] | 24.00% | ||
Sub-total | [4],[11] | 45,000 | ||
Debt Due On Sep 16, 2020 [Member] | ||||
Maturity date | [4],[6],[11] | Sep. 16, 2020 | ||
Interest rate | [4],[11] | 15.00% | ||
Default interest rate | [4],[6],[11] | 24.00% | ||
Sub-total | [4],[11] | 34,000 | ||
Debt Due On Sep 27, 2020 [Member] | ||||
Maturity date | [4],[6],[11] | Sep. 27, 2020 | ||
Interest rate | [4],[11] | 15.00% | ||
Default interest rate | [4],[6],[11] | 24.00% | ||
Sub-total | [4],[11] | 34,000 | ||
Debt Due On Oct 24, 2020 [Member] | ||||
Maturity date | [4],[6],[11] | Oct. 24, 2020 | ||
Interest rate | [4],[11] | 15.00% | ||
Default interest rate | [4],[6],[11] | 24.00% | ||
Sub-total | [4],[11] | 122,000 | ||
Debt Due On Nov 7, 2020 [Member] | ||||
Maturity date | [4],[6],[11] | Nov. 7, 2020 | ||
Interest rate | [4],[11] | 15.00% | ||
Default interest rate | [4],[6],[11] | 24.00% | ||
Sub-total | [4],[11] | 42,000 | ||
Debt Due On Nov 22, 2020 [Member] | ||||
Maturity date | [4],[5] | Nov. 22, 2020 | ||
Interest rate | [4],[11] | 8.00% | ||
Default interest rate | [4],[5] | 24.00% | ||
Sub-total | [4],[11] | $ 55,000 | 55,000 | [5] |
Debt Due On Dec 10, 2020 [Member] | ||||
Maturity date | [4],[6],[11] | Dec. 10, 2020 | ||
Interest rate | [4] | 15.00% | ||
Default interest rate | [4],[6],[11] | 24.00% | ||
Sub-total | [4] | 55,000 | ||
Debt Due On Dec 23, 2020 [Member] | ||||
Maturity date | [2],[4],[5] | Dec. 23, 2020 | ||
Interest rate | [4],[5],[11] | 8.00% | ||
Default interest rate | [2],[4],[5] | 24.00% | ||
Sub-total | [2],[4],[5],[11] | $ 30,000 | 30,000 | |
Debt Due On Sep 10, 2017 [Member] | ||||
Sub-total | ||||
Debt Sep 10, 2017 [Member] | ||||
Sub-total | ||||
Debt Sep 10, 2017 [Member] | ||||
Sub-total | ||||
Debt Sep 10, 2017 [Member] | ||||
Sub-total | ||||
Debt Due On March 24, 2017 [Member] | ||||
Sub-total | ||||
Debt Due On Dec 27, 2018 [Member] | ||||
Sub-total | ||||
Debt Due On Mar 23, 2019 [Member] | ||||
Sub-total | ||||
Debt Due On Dec 27, 2018 [Member] | ||||
Sub-total | ||||
[1] | In default | |||
[2] | In the event the Company experiences a DTC "Chill" on its shares, the conversion price shall be decreased to 40% instead of 50% while that "Chill" is in effect. If the Company fails to maintain the share reserve at the 4x discount of the note 60 days after the issuance of the note, the conversion discount shall be increased by 10%. | |||
[3] | In the event the Company experiences a DTC "Chill" on its shares, the conversion price shall be decreased to 42% instead of 52% while that "Chill" is in effect. | |||
[4] | If the Company becomes delinquent or continues its delinquency in its periodic filings with the SEC after the 6-months anniversary of the note, then the holder is entitled to use the lowest closing bid price during the delinquency period as a base price for the conversion. | |||
[5] | If the Company fails to maintain the share reserve at the 4x discount of the note 60 days after the issuance of the note, the conversion discount shall be increased by 10% | |||
[6] | On February 26 ,2020 the company exchanged convertible and short term notes and accrued interest for 250 Class C shares (transaction described further below). | |||
[7] | If the Company fails to maintain its status as "DTC Eligible'' for any reason, or, if the effective Conversion Price is less than $0.01 at any time, the Principal Amount of the Note shall increase by ten thousand dollars ($10,000). In addition, the Conversion price shall be permanently redefined to equal the lesser of (a) $0.001 or (b) 50% of the lowest traded price during the twenty five (25) consecutive Trading Days immediately preceding the applicable Conversion Date on which the Holder elects to convert all or part of this Note, subject to adjustment as provided in this Note. | |||
[8] | If at any time while this Note is outstanding, an event of default occurs, then an additional discount of 15% shall be factored into the Variable Conversion Price until this Note is no longer outstanding (resulting in a discount rate of 65% assuming no other adjustments are triggered hereunder). If at any time while this Note is outstanding, the Borrower's Common Stock are not deliverable via DWAC, an additional 10% discount shall be factored into the Variable Conversion Price until this Note is no longer outstanding. | |||
[9] | If the Company fails to maintain its status as "DTC Eligible" for any reason, or, if the effective Conversion Price as calculated in Section 4(a) is less than $0.0001 at any time (regardless of whether or not a Conversion Notice has been submitted to the Company), the Principal Amount of the Note shall increase by ten thousand dollars ($10,000) (under Holder's and Company's expectation that any Principal Amount increase will tack back to the Issuance Date). In addition, the Conversion Price shall be permanently redefined to equal the lesser of (a) $0.00001 or (b) 50% of the lowest traded price during the twenty five (25) consecutive Trading Days immediately preceding the applicable Conversion Date on which the Holder elects to convert all or part of this Note, subject to adjustment as provided in this Note. If at any time while this Note is outstanding, an Event of Default (as defined herein) occurs, then an additional discount of 15% shall be factored into the Variable Conversion Price until this Note is no longer outstanding (resulting in a discount rate of 65% assuming no other adjustments are triggered hereunder). These above contingencies have not occurred | |||
[10] | In the event that shares of the Borrower's Common Stock are not deliverable via DWAC following the conversion of any amount hereunder, an additional ten percent (10%) discount shall be factored into the Variable Conversion Price until this Note is no longer outstanding (resulting in a discount rate of 55% assuming no other adjustments are triggered hereunder). Additionally, if the Borrower fails to comply with the reporting requirements of the Exchange Act (including but not limited to becoming late or delinquent in its filings, even if the Borrower subsequently cures such delinquency) at any time while after the Issue Date, and/or the Borrower shall cease to be subject to the reporting requirements of the exchange Act, an additional fifteen percent (15%) discount shall be factored into the Variable Conversion Price until this Note is no longer outstanding (resulting in a discount rate of 60% assuming no other adjustments are triggered hereunder). | |||
[11] | If the Company fails to maintain the share reserve at the 3x discount of the note 60 days after the issuance of the note, the conversion discount shall be increased by 10%. |
SHORT-TERM CONVERTIBLE DEBT (_2
SHORT-TERM CONVERTIBLE DEBT (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Feb. 26, 2020 | Apr. 30, 2020 | Apr. 30, 2019 | Jan. 31, 2020 | |
Accrued interest payable | $ 610,988 | $ 703,270 | ||
Converted Debt | 1,792,874 | $ 2,286,896 | ||
Amortization expense | $ 578,913 | $ 302,366 | ||
Short term debt, description | If the Company fails to maintain its status as “DTC Eligible” for any reason, or, if the effective Conversion Price as calculated in Section 4(a) is less than $0.0001 at any time (regardless of whether or not a Conversion Notice has been submitted to the Company), the Principal Amount of the Note shall increase by ten thousand dollars ($10,000) (under Holder’s and Company’s expectation that any Principal Amount increase will tack back to the Issuance Date). In addition, the Conversion Price shall be permanently redefined to equal the lesser of (a) $0.00001 or (b) 50% of the lowest traded price during the twenty five (25) consecutive Trading Days immediately preceding the applicable Conversion Date on which the Holder elects to convert all or part of this Note, subject to adjustment as provided in this Note. | |||
Description of short term debt default | Event of Default (as defined herein) occurs, then an additional discount of 15% shall be factored into the Variable Conversion Price until this Note is no longer outstanding (resulting in a discount rate of 65% assuming no other adjustments are triggered hereunder). | |||
Convertible notes payable | $ 2,901 | |||
Aggregate debt in default | 1,689,637 | |||
Common Stock [Member] | ||||
Accrued interest payable | $ 498 | |||
Number of shares converted (in shares) | 82,361 | |||
Series C Preferred Stock [Member] | ||||
Convertible debt, description | On February 26, 2020 a lender exchanged $1,070,035 in convertible notes and $175,421 in accrued interest (as denoted by X in the above schedule) as well as $122,000 in short-term debt and $22,076 in accrued interest (as described in Note 5), and the associated derivative liability of $792,218 all totaling $2,181,750 in exchange for 250 Class C shares having a fair-value of $9,105. A gain of $2,172,646 was recorded. | |||
Number of shares converted (in shares) | 250 |
DERIVATIVE LIABILITIES (Details
DERIVATIVE LIABILITIES (Details) - Fair Value, Inputs, Level 3 [Member] | 3 Months Ended |
Apr. 30, 2020USD ($) | |
Balance, January 31, 2020 | $ 2,611,125 |
Change due to Settlement of Debt | (792,218) |
Changes due to Conversion of Notes Payable | (8,104) |
Mark to Market Change in Derivatives | 74,780 |
Balance, April 30, 2020 | $ 1,885,583 |
DERIVATIVE LIABILITIES (Detai_2
DERIVATIVE LIABILITIES (Details 1) - Significant Unobservable Inputs (Level 3) [Member] | Apr. 30, 2020Number |
Strike Price [Member] | Maximum [Member] | |
Derivative liability, measurement input | 0.40 |
Strike Price [Member] | Minimum [Member] | |
Derivative liability, measurement input | 0.0198 |
Contractual Term (Years) [Member] | Maximum [Member] | |
Contractual term | 4 years 3 months |
Contractual Term (Years) [Member] | Minimum [Member] | |
Contractual term | 29 days |
Volatility [Member] | Maximum [Member] | |
Derivative liability, measurement input | 680.56 |
Volatility [Member] | Minimum [Member] | |
Derivative liability, measurement input | 450.80 |
High Yield Cash Rate [Member] | Maximum [Member] | |
Derivative liability, measurement input | 37.90 |
High Yield Cash Rate [Member] | Minimum [Member] | |
Derivative liability, measurement input | 36.25 |
Underlying Fair Market Value [Member] | Maximum [Member] | |
Derivative liability, measurement input | 3.59 |
Underlying Fair Market Value [Member] | Minimum [Member] | |
Derivative liability, measurement input | 0.0001 |
Risk-Free Rate [Member] | Maximum [Member] | |
Derivative liability, measurement input | 2.64 |
Risk-Free Rate [Member] | Minimum [Member] | |
Derivative liability, measurement input | 0.12 |
Dividend Yield [Member] | |
Derivative liability, measurement input | 0 |
DERIVATIVE LIABILITIES (Detai_3
DERIVATIVE LIABILITIES (Details Narrative) - USD ($) | 3 Months Ended | ||
Apr. 30, 2020 | Apr. 30, 2019 | Jan. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||
Derivative liabilities | $ 1,792,874 | $ 2,286,896 | |
Gain loss fair value of derivative liabilities | $ 74,780 | $ 910,442 |
STOCKHOLDERS' DEFICIT (Details)
STOCKHOLDERS' DEFICIT (Details) - Lender One [Member] | 3 Months Ended |
Apr. 30, 2020$ / sharesshares | |
Issued To | Lender |
# Warrants | shares | 1.4 |
Dated | Jan. 8, 2018 |
Expire | Jan. 8, 2021 |
Strike Price | $ / shares | $ 1,800 |
Expired | N |
Exercised | N |
STOCKHOLDERS' DEFICIT (Details
STOCKHOLDERS' DEFICIT (Details 1) | 3 Months Ended |
Apr. 30, 2020$ / sharesshares | |
Warrant [Member] | |
Number of outstanding | |
Beginning balance | shares | 1.4 |
Granted | shares | |
Exercised | shares | |
Forfeited and canceled | shares | |
Ending balance | shares | 1.5 |
Weighted Average Exercise Price | |
Beginning balance | $ / shares | $ 225,520 |
Granted | $ / shares | |
Exercised | $ / shares | |
Forfeited and canceled | $ / shares | |
Ending balance | $ / shares | $ 225,520 |
Employee Stock Option [Member] | |
Number of outstanding | |
Beginning balance | shares | |
Granted | shares | |
Exercised | shares | |
Forfeited and canceled | shares | |
Ending balance | shares | |
Weighted Average Exercise Price | |
Beginning balance | $ / shares | |
Granted | $ / shares | |
Exercised | $ / shares | |
Forfeited and canceled | $ / shares | |
Ending balance | $ / shares |
STOCKHOLDERS' DEFICIT (Detail_2
STOCKHOLDERS' DEFICIT (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | |||||
Mar. 31, 2020 | Feb. 25, 2020 | Mar. 29, 2019 | Apr. 30, 2020 | Apr. 30, 2019 | Feb. 26, 2020 | Jan. 31, 2020 | |
Common stock, par value | $ 0.000001 | $ 0.000001 | |||||
Common stock, shares issued | 620,825 | 538,464 | |||||
Common stock, shares outstanding | 620,825 | 538,464 | |||||
Common stock, shares authorized | 20,000,000,000 | 20,000,000,000 | |||||
Option and warrant expense | $ 0 | $ 0 | |||||
Conversion of notes payable | 2,901 | ||||||
Accrued Interest to common tock | $ 498 | ||||||
Conversion of common stock | 82,361 | ||||||
Description of reverse stock split | 4000:1 reverse stock split | 6000:1 reverse stock | |||||
Additional number of common stock issued | 1,699 | ||||||
Series C Preferred Stock [Member] | |||||||
Preferred stock, shares authorized | 7,250 | 7,250 | |||||
Preferred stock, par value | $ 0.001 | $ 0.001 | |||||
Preferred stock, shares issued | 7,000 | 250 | 6,750 | ||||
Preferred stock, shares outstanding | 7,000 | 6,750 | |||||
Conversion price | $ 2.63 | $ 2.63 | |||||
Preferred Series B [Member] | |||||||
Preferred stock, shares authorized | 20,000 | 20,000 | |||||
Preferred stock, par value | $ 0.001 | $ 0.001 | |||||
Preferred stock, shares issued | 20,000 | 20,000 | |||||
Preferred stock, shares outstanding | 20,000 | 20,000 | |||||
Preferred stock voting rights, description | The Series B Preferred Stock have voting rights equal to 51% of the total voting rights at any time. | ||||||
Preferred Series A [Member] | |||||||
Preferred stock, shares authorized | 330,000 | 330,000 | |||||
Preferred stock, par value | $ 0.001 | $ 0.001 | |||||
Preferred stock, shares issued | 0 | 0 | |||||
Preferred stock, shares outstanding | 0 | 0 | |||||
Series D Preferred Stock [Member] | |||||||
Preferred stock, shares authorized | 870 | 870 | |||||
Preferred stock, par value | $ 0.001 | $ 0.001 | |||||
Preferred stock, shares issued | 870 | 870 | |||||
Preferred stock, shares outstanding | 870 | 870 | |||||
Optional redemption per share | $ 1,000 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | Apr. 30, 2020 | Feb. 28, 2020 | Jan. 31, 2020 |
Related Party Transactions [Abstract] | |||
Accrued expenses related party | $ 155,750 | $ 155,750 | |
Prepaid rent | $ 15,980 | $ 25,700 | $ 0 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) | Apr. 30, 2020 | Jan. 31, 2020 |
Commitments and Contingencies Disclosure [Abstract] | ||
April 30, 2021 | $ 136,317 | |
April 30, 2022 | 136,317 | |
April 30, 2023 | 131,279 | |
April 30, 2024 | 47,603 | |
April 30, 2025 | 30,003 | |
After April 30, 2025 | 47,506 | |
Total lease payments | 529,025 | |
Less: Interest | (85,940) | |
Present value of lease liabilities | $ 443,085 | $ 467,069 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | Jul. 01, 2018 | Jun. 01, 2015 | Oct. 30, 2019 | Sep. 30, 2019 | Aug. 30, 2016 | Apr. 30, 2020 | Jan. 31, 2019 | Jan. 31, 2018 | Apr. 30, 2019 |
Rent expense | $ 34,079 | $ 26,701 | |||||||
Litigation description | 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. | ||||||||
Warehouse Facility Three [Member] | |||||||||
Operating leases, rent expense | $ 6,400 | ||||||||
Operating lease description | The Company entered into a 60-month lease agreement with its minority shareholder for its 8,800 sf warehouse facility with a minimum base rent of $6,400 per month. | ||||||||
Warehouse Facility One [Member] | |||||||||
Operating leases, rent expense | $ 2,720 | ||||||||
Lease maintenance expense | $ 43,200 | $ 43,200 | |||||||
Operating lease description | The Company entered into a 36-month lease agreement for its 2,590 sf office facility with a minimum base rent of $2,720 per month. | ||||||||
Vehicles [Member] | |||||||||
Operating leases, rent expense | $ 9,067 | ||||||||
Operating lease description | The Company entered into an operating lease for a vehicle with an annual cost of $9,067 and a three year term. The company paid initial fees of $17,744 and will pay fees on lease termination of $395. On a straight-line basis these costs amount to $1,259 per month. | ||||||||
Premises [Member] | |||||||||
Operating leases, rent expense | $ 15,480 | ||||||||
Operating lease description | The Company entered into an operating lease for premises with an annual rent of $15,480, a three year term commencing September 1, 2019 to August 31, 2022 and a one year renewal option. | ||||||||
Warehouse Facility Two [Member] | |||||||||
Operating leases, rent expense | $ 2,132 | ||||||||
Operating lease description | The Company entered into a 60-month lease agreement for its 3,554 sf warehouse facility starting in December 2016 with a minimum base rent of $2,132 and estimated monthly CAM charges of $1,017 per month. |
EARNINGS (LOSS) PER SHARE (Deta
EARNINGS (LOSS) PER SHARE (Details) - USD ($) | 3 Months Ended | |
Apr. 30, 2020 | Apr. 30, 2019 | |
Numerator: | ||
Net income (loss) available to common shareholders | $ 1,186,898 | $ (1,813,076) |
Effect of common stock equivalents | ||
Add: interest expense on convertible debt | 103,540 | 236,751 |
Add (Less): loss (gain) on change of derivative liabilities | 910,442 | |
Net income (loss) adjusted for common stock equivalents | $ 1,186,898 | $ (1,813,076) |
Denominator: | ||
Weighted average shares - basic | 551,590 | 404 |
Net income (loss) per share - basic | $ 2.34 | $ (4,487.81) |
Convertible notes and accrued interest | $ 86,413,848 | |
Denominator: | ||
Weighted average shares - diluted | 88,046,619 | 404 |
Net income (loss) per share - diluted | $ 0.02 | $ (4,487.81) |
Warrant [Member] | ||
Denominator: | ||
Convertible notes and accrued interest | $ 1 | |
Convertible Class C Preferred Shares [Member] | ||
Denominator: | ||
Convertible notes and accrued interest | $ 1,632,770 |
EARNINGS (LOSS) PER SHARE (De_2
EARNINGS (LOSS) PER SHARE (Details 1) - shares | 3 Months Ended | |
Apr. 30, 2020 | Apr. 30, 2019 | |
Anti-dilutive shares | 2,581 | |
Warrant [Member] | ||
Anti-dilutive shares | 1 | |
Convertible Class C Preferred Shares [Member] | ||
Anti-dilutive shares | 1,197 | |
Convertible Notes And Accrued Interest [Member] | ||
Anti-dilutive shares | 1,383 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | Jun. 08, 2020 | Jun. 04, 2020 | Apr. 30, 2020 | Jan. 31, 2020 |
Subsequent Event [Line Items] | ||||
Common Stock, shares authorized | 20,000,000,000 | 20,000,000,000 | ||
Convertible Notes [Member] | Subsequent Event [Member] | ||||
Subsequent Event [Line Items] | ||||
Conversion of stock issuance shares (in shares) | 61,092 | |||
Conversion of stock amount | $ 1,793 | |||
Interest of convertible notes amount | 374 | |||
Debt of principal amount | $ 2,167 | |||
Conversion price | 50.00% | |||
Convertible Notes [Member] | Subsequent Event [Member] | Maximum [Member] | ||||
Subsequent Event [Line Items] | ||||
Common Stock, shares authorized | 20,000,000,000 | |||
Convertible Notes [Member] | Subsequent Event [Member] | Minimum [Member] | ||||
Subsequent Event [Line Items] | ||||
Common Stock, shares authorized | 1,000,000,000 |