# EDGAR Filing Document

**Accession Number:** 0001438901
**File Stem:** 0001161697-23-000052
**Filing Date:** 2023-1
**Character Count:** 141000
**Document Hash:** 3323df841768b2026e5247ec9f45bc12
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001161697-23-000052.hdr.sgml**: 20230109

**ACCESSION NUMBER**: 0001161697-23-000052

**CONFORMED SUBMISSION TYPE**: 10-Q/A

**PUBLIC DOCUMENT COUNT**: 73

**CONFORMED PERIOD OF REPORT**: 20221031

**FILED AS OF DATE**: 20230109

**DATE AS OF CHANGE**: 20230109

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Auto Parts 4Less Group, Inc.
- **CENTRAL INDEX KEY:** 0001438901
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-BUSINESS SERVICES, NEC [7389]
- **IRS NUMBER:** 901494749
- **STATE OF INCORPORATION:** NV
- **FISCAL YEAR END:** 0131

**FILING VALUES:**
- **FORM TYPE:** 10-Q/A
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-55089
- **FILM NUMBER:** 23518810

**BUSINESS ADDRESS:**
- **STREET 1:** 106 WEST MAYFLOWER
- **CITY:** LAS VEGAS
- **STATE:** NV
- **ZIP:** 89030
- **BUSINESS PHONE:** (702) 267-6100

**MAIL ADDRESS:**
- **STREET 1:** 106 WEST MAYFLOWER
- **CITY:** LAS VEGAS
- **STATE:** NV
- **ZIP:** 89030

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** 4Less Group, Inc.
- **DATE OF NAME CHANGE:** 20190430

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** MEDCAREERS GROUP, Inc.
- **DATE OF NAME CHANGE:** 20100107

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Rx Scripted, Inc.
- **DATE OF NAME CHANGE:** 20080630

?xml version='1.0' encoding='ASCII'?

**United States**

**Securities and Exchange Commission**

**Washington, D.C. 20549**

**FORM 10-Q/A**

**Amendment No. 1**

(Mark One)

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

For the quarterly period ended October 31, 2022

**OR**

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

From the transition period ___________ to ____________.

Commission File Number 333-152444

**AUTO PARTS 4LESS GROUP, INC.**

**FORMERLY THE 4LESS GROUP, INC.**

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

---

| | | |
|:---|:---|:---|
| **<u>Nevada</u>** | **<u>7389</u>** | **<u>90-1494749</u>** |
| (State or jurisdiction of<br>incorporation or organization)  | (Primary Standard Industrial<br>Classification Code Number) | (IRS Employer<br>Identification No.)  |

---

**<u>106 W. Mayflower, Las Vegas, NV 89030</u>**

(Address of principal executive offices)

**<u>(702) 267-6100</u>**

(Issuer's telephone number)

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

---

| | | |
|:---|:---|:---|
| <u>Title of each class</u> | <u>Trading Symbol(s)</u> | <u>Name of each exchange on which registered</u> |
| **Common Stock** | **FLES** | **OTCQB** |

---

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

Yes [X] No [_]

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

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

Large Accelerated Filer [_]&nbsp;&nbsp;&nbsp;&nbsp; Accelerated Filer [_]

Non-Accelerated Filer [X]&nbsp;&nbsp;&nbsp;&nbsp; Smaller Reporting Company [X]&nbsp;&nbsp;&nbsp;&nbsp; Emerging Growth Company [_]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [_]

Indicate by a check mark whether the company is a shell company (as defined by Rule 12b-2 of the Exchange Act):

Yes [_] No [X]

As of December 23, 2022, there were 1,890,862 shares of Common Stock of the issuer outstanding.

------

**EXPLANATORY NOTE**

On January 6, 2023, we filed our Form 10-Q for the quarterly period ended October 31, 2022 (the "10-Q"). We are filing herein Amendment Number 1 to the 10-Q to submit the Inline XBRL data for the quarterly period ended October 31, 2022 and amend a typo in the prior year nine-month basic and diluted weighted average shares outstanding and basic and diluted loss per share on the Condensed Consolidated Statements of Operations.

<u>**TABLE OF CONTENTS**</u>

---

| | | |
|:---|:---|:---|
| [PART I.](#Part_I) | [FINANCIAL INFORMATION](#Part_I) | 3 |
| [ITEM 1.](#Part_I_Item_1) | [Condensed Consolidated Financial Statements (Unaudited)](#Part_I_Item_1) | 3 |
|  | [Condensed Consolidated Balance Sheets (Unaudited)](#BS) | 3 |
|  | [Condensed Consolidated Statements of Operations (Unaudited)](#SOP) | 4 |
|  | [Condensed Consolidated Statement of Changes in Stockholders' Deficit (Unaudited)](#SOE) | 5 - 6 |
|  | [Condensed Consolidated Statements of Cash Flows (Unaudited)](#CF) | 7 |
|  | [Notes to Condensed Consolidated Financial Statements (Unaudited)](#Notes) | 8 |
| [ITEM 2.](#Part_I_Item_2) | [Management's Discussion and Analysis of Financial Condition and Results of Operations.](#Part_I_Item_2) | 28 |
| [ITEM 3.](#Part_I_Item_3) | [Quantitative and Qualitative Disclosure About Market Risk](#Part_I_Item_3) | 33 |
| [ITEM 4.](#Part_I_Item_4) | [Controls and Procedures](#Part_I_Item_4) | 33 |
| [PART II.](#Part_II) | [OTHER INFORMATION](#Part_II) | 34 |
| [ITEM 1.](#Part_II_Item_1) | [Legal Proceedings](#Part_II_Item_1) | 34 |
| [ITEM 1A.](#Part_II_Item_1A) | [Risk Factors](#Part_II_Item_1A) | 34 |
| [ITEM 2.](#Part_II_Item_2) | [Unregistered Sales of Securities and Use of Proceeds](#Part_II_Item_2) | 34 |
| [ITEM 3.](#Part_II_Item_3) | [Default Upon Senior Securities](#Part_II_Item_3) | 34 |
| [ITEM 4.](#Part_II_Item_4) | [Mine Safety Disclosures](#Part_II_Item_4) | 34 |
| [ITEM 5.](#Part_II_Item_5) | [Other Information](#Part_II_Item_5) | 34 |
| [ITEM 6.](#Part_II_Item_6) | [Exhibits](#Part_II_Item_6) | 34 |
| [SIGNATURES](#Signatures) |  | 35 |

---

------

[*Table of Contents*](#toc)

**PART I: FINANCIAL INFORMATION**

**ITEM 1: CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**AUTO PARTS 4LESS GROUP, INC.**

**FORMERLY THE 4LESS GROUP, INC.**

**Condensed Consolidated Balance Sheets**

---

| | | |
|:---|:---|:---|
|  | <br>**October 31, 2022**<br>**Unaudited** | <sup>(\*)</sup><br>**January 31, 2022**<br><sup>(\*)</sup> |
| **Assets** |  |  |
| Current Assets |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash and Cash Equivalents | $46026 | $77498 |
| &nbsp;&nbsp;&nbsp;&nbsp;Inventory | 142251 | 432583 |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid Expenses | 8018 | 16065 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred Offering Costs | 23000 | 23000 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other Current Assets | 33248 | 15469 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Current Assets | 252543 | 564615 |
| Operating Lease Assets | 160770 | 242583 |
| Property and Equipment, net of accumulated depreciation of $161,056, and $122,469 | 183891 | 221336 |
| **Total Assets** | $597204 | $1028534 |
| **Liabilities and Stockholders' Deficit** |  |  |
| Current Liabilities |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Bank overdraft | $— | $11055 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts Payable | 1317984 | 1228039 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued Expenses | 1536626 | 796397 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued Expenses – Related Party | 45673 | 46173 |
| &nbsp;&nbsp;&nbsp;&nbsp;Customer Deposits | 57856 | 530900 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred Revenue | 66153 | 665143 |
| &nbsp;&nbsp;&nbsp;&nbsp;Short-Term Debt | 2985041 | 3454133 |
| &nbsp;&nbsp;&nbsp;&nbsp;Current Operating Lease Liability | 70214 | 100001 |
| &nbsp;&nbsp;&nbsp;&nbsp;Short-Term Convertible Debt, net of debt discount of $2,374,330 and $2,131,034 | 5766920 | 647966 |
| &nbsp;&nbsp;&nbsp;&nbsp;Derivative Liabilities | 3663597 | 1263442 |
| &nbsp;&nbsp;&nbsp;&nbsp;Shareholder Loans Payable |  | 119476 |
| &nbsp;&nbsp;&nbsp;&nbsp;Current Portion – Long-Term Debt | 22149 | 27737 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Current Liabilities | 15532213 | 8890462 |
| Non-Current Lease Liability | 90556 | 138551 |
| Long-Term Debt | 95803 | 115900 |
| **Total Liabilities** | 15718572 | 9144913 |
| **Commitments and Contingencies** |  |  |
| Redeemable Preferred Stock |  |  |
| Series D Preferred Stock, $0.001 par value, 870 shares authorized, 870 and 870 shares issued and outstanding | 870000 | 870000 |
| **Stockholders' Deficit** |  |  |
| Preferred Stock – Series A, $0.001 par value, 330,000 shares authorized, 0 and 0 shares issued and outstanding |  |  |
| Preferred Stock – Series B, $0.001 par value, 20,000 shares authorized, 20,000 and 20,000 shares issued and outstanding | 20 | 20 |
| Preferred Stock – Series C, $0.001 par value, 7,250 shares authorized, 0 and 7,250 shares issued and outstanding |  | 7 |
| Common Stock, $0.000001 par value, 75,000,000 shares authorized, 1,823,708 and 341,023 shares issued, issuable and outstanding | 2 |  |
| Additional Paid In Capital | 24689118 | 19465327 |
| Accumulated Deficit | (40680508) | (28451733) |
| **Total Stockholders' Deficit** | (15991368) | (8986379) |
| **Total Liabilities and Stockholders' Deficit** | $597204 | $1028534 |

---

\* Derived from audited information

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

------

[*Table of Contents*](#toc)

**AUTO PARTS 4LESS GROUP, INC.**

**FORMERLY THE 4LESS GROUP, INC.**

**Condensed Consolidated Statements of Operations**

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

**(Unaudited)**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Nine Months Ended** | **Nine Months Ended** |
|  | **October 31,<br> 2022** | **October 31,<br> 2021** | **October 31,<br> 2022** | **October 31,<br> 2021** |
| Revenue | $1017986 | $3114062 | $4089037 | $9429519 |
| Cost of Revenue | 846898 | 2274564 | 3296546 | 6975126 |
| Gross Profit | 171088 | 839498 | 792491 | 2454393 |
| Operating Expenses: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Depreciation | 12743 | 12479 | 38587 | 35930 |
| &nbsp;&nbsp;&nbsp;Postage, Shipping and Freight | 32013 | 94356 | 146962 | 430105 |
| &nbsp;&nbsp;&nbsp;Marketing and Advertising | 156522 | 609252 | 671348 | 1876576 |
| &nbsp;&nbsp;&nbsp;E Commerce Services, Commissions and Fees | 396065 | 434832 | 1076787 | 1160569 |
| &nbsp;&nbsp;&nbsp;Operating lease cost | 29219 | 30478 | 90177 | 91437 |
| &nbsp;&nbsp;&nbsp;Personnel Costs | 131937 | 319256 | 505253 | 1078449 |
| &nbsp;&nbsp;&nbsp;PPP Loan Forgiveness |  | (209447) |  | (209447) |
| &nbsp;&nbsp;&nbsp;General and Administrative | 251408 | 1569721 | 2849042 | 2682866 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Operating Expenses | 1009907 | 2860927 | 5378156 | 7146485 |
| Net Operating Loss | (838819) | (2021429) | (4585665) | (4692092) |
| Other Income (Expense) |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Gain (Loss) on Sale of Property and Equipment |  |  |  | 20345 |
| &nbsp;&nbsp;&nbsp;Gain (Loss) on Derivatives | (184146) | (76444) | (841772) | (88551) |
| &nbsp;&nbsp;&nbsp;Gain on Settlement of Debt | 10128 | 41249 | 19539 | 1004615 |
| &nbsp;&nbsp;&nbsp;Amortization of Debt Discount | (1932722) | (130139) | (4309329) | (442075) |
| &nbsp;&nbsp;&nbsp;Interest Expense | (1186132) | (379811) | (2511548) | (688622) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Other Income (Expense) | (3292872) | (545145) | (7643110) | (194288) |
| Net (Loss) | $(4131691) | $(2566574) | $(12228775) | $(4886380) |
| Basic Weighted Average Shares Outstanding; | 1805316 | 319866 | 1576024 | 257577 |
| Basic (Loss) per Share | $(2.29) | $(8.02) | $(7.76) | $(18.97) |
| Diluted Average Shares Outstanding; | 1805316 | 319866 | 1576024 | 257577 |
| Diluted (Loss) per Share | $(2.29) | $(8.02) | $(7.76) | $(18.97) |

---

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

------

[*Table of Contents*](#toc)

**AUTO PARTS 4LESS GROUP, INC.**

**FORMERLY THE 4LESS GROUP, INC.**

**Condensed Consolidated Statement of Changes in Stockholders' Deficit**

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

**(Unaudited)**

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Preferred<br> Series A** | **Preferred<br> Series A** | **Preferred<br> Series B** | **Preferred<br> Series B** | **Preferred<br> Series C** | **Preferred<br> Series C** | **Common Stock** | **Common Stock** | | | |
|  | **Shares** | **Amount** | **Shares** | **Amount** | **Shares** | **Amount** | **Shares** | **Amount** | **Paid in**<br>**Capital** | **Retained**<br>**Earnings** |<br>**Total** |
| **Balance at January 31, 2021** |  |  | 20000 | 20 | 7250 | 7 | 142716 |  | 14291760 | (20381977) | (6090190) |
| Common Stock Issued as Payment for Fees |  |  |  |  |  |  | 5000 |  | 107500 |  | 107500 |
| Issuance of Common Stock as Part of REG A Subscription |  |  |  |  |  |  | 109725 |  | 2194500 |  | 2194500 |
| Rounding |  |  |  |  |  |  |  |  | 1 |  | 1 |
| Net (Loss) |  |  |  |  |  |  |  |  |  | (567557) | (567557) |
| **Balance at April 30, 2021** |  | $— | 20000 | $20 | 7250 | $7 | 257441 | $— | $16593761 | $(20949534) | $(4355746) |
| Conversion of Notes Payable and Accrued Interest and Fees to Common Stock |  |  |  |  |  |  | 3000 |  | 59100 |  | 59100 |
| Derivative Liability Reclassified as Equity Upon Conversion of Notes |  |  |  |  |  |  |  |  | 17640 |  | 17640 |
| Issuance of shares |  |  |  |  |  |  | 10475 |  | 200500 |  | 200500 |
| Relative fair value of equity issued with debt |  |  |  |  |  |  | 9181 |  | 59801 |  | 59801 |
| Issuance of warrants |  |  |  |  |  |  |  |  | 600000 |  | 600000 |
| Net (Loss) |  |  |  |  |  |  |  |  |  | (1752249) | (1752249) |
| **Balance at July 31, 2021** |  | $— | 20000 | $20 | 7250 | $7 | 280097 | $— | $17530802 | $(22701783) | $(5170954) |
| Conversion of Notes Payable and Accrued Interest and Fees to Common Stock |  |  |  |  |  |  | 5977 |  | 102341 |  | 102341 |
| Derivative Liability Reclassified as Equity Upon Conversion of Notes |  |  |  |  |  |  |  |  | 58504 |  | 58504 |
| Share Issuances, Net of Issuance Costs of $359,445 |  |  |  |  |  |  | 52100 |  | 392924 |  | 392924 |
| Share Issuance for fees |  |  |  |  |  |  | 1301 |  | 30055 |  | 30055 |
| Additional Shares Issued as Part of Relative Fair Value for Debt |  |  |  |  |  |  | 1548 |  |  |  |  |
| Options Issued to Director and CEO |  |  |  |  |  |  |  |  | 585000 |  | 585000 |
| Warrants Issued for Fees |  |  |  |  |  |  |  |  | 512500 |  | 512500 |
| Net (Loss) |  |  |  |  |  |  |  |  |  | (2566574) | (2566574) |
| **Balance at October 31, 2021** |  | $— | 20000 | $20 | 7250 | $7 | 341023 | $— | $19212126 | $(25268357) | $(6056204) |

---

------

[*Table of Contents*](#toc)

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Preferred<br> Series A** | **Preferred<br> Series A** | **Preferred<br> Series B** | **Preferred<br> Series B** | **Preferred<br> Series C** | **Preferred<br> Series C** | **Common Stock** | **Common Stock** | | | |
|  | **Shares** | **Amount** | **Shares** | **Amount** | **Shares** | **Amount** | **Shares** | **Amount** | **Paid in**<br>**Capital** | **Retained**<br>**Earnings** |<br>**Total** |
| **Balance at January 31, 2022** |  | $— | 20000 | $20 | 7250 | $7 | 341023 | $— | $19465327 | $(28451733) | $(8986379) |
| Conversion of Preferred Series C Shares into Shares Of Common Stock |  |  |  |  | (7250) | (7) | 905110 | 1 | 6 |  |  |
| Relative Fair Value of Equity Issued with Debt |  |  |  |  |  |  | 254141 |  | 1064965 |  | 1064965 |
| Penalty Warrants Recorded as Interest |  |  |  |  |  |  |  |  | 315150 |  | 315150 |
| Rounding shares |  |  |  |  |  |  | 88 |  |  |  |  |
| Net (Loss) |  |  |  |  |  |  |  |  |  | (2594158) | (2594158) |
| **Balance at April 30, 2022** |  | $— | 20000 | $20 |  | $— | 1500362 | $1 | $20845448 | $(31045891) | $(10200422) |
| Relative Fair Value of Equity Issued with Debt |  |  |  |  |  |  | 221500 | 1 | 794465 |  | 794466 |
| Exercise of warrants |  |  |  |  |  |  | 10000 |  |  |  |  |
| Penalty Warrants Recorded as Interest |  |  |  |  |  |  |  |  | 280050 |  | 280050 |
| Stock Based Compensation |  |  |  |  |  |  |  |  | 1998000 |  | 1998000 |
| Rounding shares |  |  |  |  |  |  | 2587 |  |  |  |  |
| Net (Loss) |  |  |  |  |  |  |  |  |  | (5502926) | (5502926) |
| **Balance at July 31, 2022** |  | $— | 20000 | $20 |  | $— | 1734449 | $2 | $23917963 | $(36548817) | $(12630832) |
| Relative Fair Value of Equity Issued with Debt |  |  |  |  |  |  | 80000 |  | 567905 |  | 567905 |
| Exercise of Warrants |  |  |  |  |  |  | 10000 |  |  |  |  |
| Penalty Warrants Recorded as Interest |  |  |  |  |  |  |  |  | 203250 |  | 203250 |
| Cancelled Shares Pursuant to SEC Ruling |  |  |  |  |  |  | (741) |  |  |  |  |
| Net (Loss) |  |  |  |  |  |  |  |  |  | (4131691) | (4131691) |
| **Balance at October 31, 2022** |  | $— | 20000 | $20 |  | $— | 1823708 | $2 | $24689118 | $(40680508) | $(15991368) |

---

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

------

[*Table of Contents*](#toc)

**AUTO PARTS 4LESS GROUP, INC.**

**FORMERLY THE 4LESS GROUP, INC.**

**Condensed Consolidated Statements of Cash Flows**

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

**(Unaudited)**

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| CASH FLOWS FROM OPERATING ACTIVITIES |  |  |
| Net (Loss) | $(12228775) | $(4886380) |
| Adjustments to reconcile net income (loss) to cash used by operating activities: |  |  |
| Depreciation | 38587 | 35930 |
| Inventory Provision | 143000 |  |
| Reduction of Right of Use Asset | 77782 | 69691 |
| Accretion of Lease Liability | 12396 | 21746 |
| (Gain) loss in Fair Value on Derivative Liabilities | 841772 | 88551 |
| Amortization of Debt Discount | 4309329 | 442075 |
| Debt Discount in Excess of Face Value of Note to Interest Expense | 225429 |  |
| Loan Penalties Capitalized to Loan and Accrued Interest | 600000 | 28000 |
| Interest Expense on Penalty Warrants | 798450 |  |
| Stock Based Compensation | 1998000 | 1097500 |
| Stock Based Payment of Consulting Fees and Shares |  | 303555 |
| Gain on Sale of Property and Equipment |  | (20345) |
| PPP Loan Forgiveness |  | (209447) |
| Gain on Settlement of Debt | (19539) | (1004615) |
| Change in Operating Assets and Liabilities: |  |  |
| (Increase) Decrease in Inventory | 147333 | (78033) |
| Decrease in Prepaid Rent and Expenses | 12077 | 5546 |
| (Increase) in Other Current Assets | (17779) | (39270) |
| Decrease in Bank Overdraft | (11055) |  |
| Increase in Accounts Payable | 95931 | 230225 |
| Increase in Accrued Expenses | 741729 | 137440 |
| Operating Lease Payments | (90178) | (91437) |
| Decrease in Accrued Expenses - Related Party | (500) | (60000) |
| Increase (Decrease) in Customer Deposits | (473044) | 32391 |
| Decrease in Deferred Revenue | (598990) | (446474) |
| CASH FLOWS (USED IN) OPERATING ACTIVITIES | (3398045) | (4343351) |
| CASH FLOWS FROM INVESTING ACTIVITIES |  |  |
| Proceeds of Sales of Property and Equipment |  | 25060 |
| Purchase of Property and Equipment | (1142) | (43628) |
| CASH FLOWS (USED IN) INVESTING ACTIVITIES | (1142) | (18568) |
| CASH FLOWS FROM FINANCING ACTIVITIES |  |  |
| Proceeds from Issuance of Common Shares, Net of Issuance Costs |  | 3037625 |
| Proceeds from Short Term Debt |  | 1568472 |
| Proceeds from Convertible Notes Payable | 4006714 | 699525 |
| Payments on Short Term Debt | (376699) | (449386) |
| Shareholder Loans Payable | 20000 |  |
| Repayments on Shareholder Loans Payable | (33561) |  |
| Payments on Long Term Debt | (20739) | (14857) |
| Payments on Convertible Notes Payable | (228000) | (406825) |
| CASH FLOWS PROVIDED BY FINANCING ACTIVITIES | 3367715 | 4434554 |
| NET INCREASE (DECREASE) IN CASH | (31472) | 72635 |
| CASH AT BEGINNING OF PERIOD | 77498 | 277664 |
| CASH AT END OF PERIOD | $46026 | $350299 |
| Supplemental Disclosure of Cash Flows Information: |  |  |
| Cash Paid for Interest | $75038 | $345868 |
| Convertible Notes Interest and Derivatives Converted to Common Stock | $— | $237085 |
| Fair Value of Instruments Issued With Debt | $2427336 | $487284 |
| Derivative Debt Discount | $1557922 | $— |
| Debt Discount | $772796 | $— |
| Transfer of Short-term Loan , Shareholder Loan and Accounts payable to Convertible Note | $210740 | $— |
| Issuance of Warrants to Deferred Offering Costs | $— | $600000 |
| Deferred Offering Costs Against Share Proceeds | $— | $312000 |
| Loans to acquire Fixed Assets | $— | $151327 |

---

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

------

[*Table of Contents*](#toc)

**AUTO PARTS 4LESS GROUP, INC.**

**FORMERLY THE 4LESS GROUP, INC.**

**Notes to Condensed Consolidated Financial Statements**

**(Unaudited)**

**<u>NOTE 1 – NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES</u>**

<u>Business:</u>

**Nature of Business –** Auto Parts 4Less Group, Inc., (the "Company"), formerly The 4Less Group, Inc., was incorporated under the laws of the State of Nevada on December 5, 2007. The Company, under the name MedCareers Group, Inc. ("MCGI") formally operated a website for nurses, nursing schools and nurses' organizations designed for better communication between nurses and the nursing profession.

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

4LESS was formed as Vegas Suspension & Offroad, LLC on October 24, 2013 as a Nevada limited liability company and converted to a Nevada corporation with the same name on May 8, 2017. On April 2, 2018, the Company changed its name to The 4LESS Corp. The Corporation had S Corporation status. The Corporation operates as an e-commerce auto and truck parts sales company. As a result of the share exchange, The 4Less Group, Inc. is now a holding company operating through 4LESS and offers products including exhaust systems, suspension systems, wheels, tires, stereo systems, truck bed covers, and shocks. On December 30, 2019 4LESS changed its name to Auto Parts 4Less, Inc. On April 28, 2022 the Company changed its name from The 4Less Group, Inc. to Auto Parts 4Less Group, Inc.

<u>Significant Accounting Policies:</u>

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.

<u>Basis of Presentation:</u>

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, 2022 and notes thereto contained in the Company's Annual Report on Form 10-K filed on May 9, 2022.

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<u>Principles of Consolidation:</u>

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

<u>Use of Estimates:</u>

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.

<u>Reclassifications</u>

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.

<u>Cash and Cash Equivalents:</u>

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.

<u>Inventory Valuation</u>

Inventories are stated at the lower of cost or net realizable value. Inventories are valued on a first-in, first-out (FIFO) basis. Inventory is comprised of finished goods. At October 31, 2022 the provision for inventory obsolescence was $143,000. (January 31, 2022 - $0)

<u>Concentrations</u>

*Cost of Goods Sold*

For the nine months ended October 31, 2022 the Company purchased approximately 51% of its inventory and items available for sale from third parties from three vendors. As of October 31, 2022, the net amount due to the vendors included in accounts payable was $426,606. For the nine months ended October 31, 2021 the Company purchased approximately 58% of its inventory and items available for sale from third parties from three vendors. As of October 31, 2021, the net amount due to the vendors included in accounts payable was $440,977. The Company believes there are numerous other suppliers that could be substituted should a supplier become unavailable or non-competitive.

<u>Leases</u>

We elected the hindsight practical expedient to determine the lease term for existing leases. Our election of the hindsight practical expedient resulted in the shortening of lease terms for certain existing leases and the useful lives of corresponding leasehold improvements. In our application of hindsight, we evaluated the performance of the leased stores and the associated markets in relation to our overall real estate strategies, which resulted in the determination that most renewal options would not be reasonably certain in determining the expected lease term.

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<u>Income Taxes</u>

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

<u>Fair Value of Financial Instruments:</u>

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

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

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

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

*Level 3 Inputs* – Instruments with primarily unobservable value drivers.

The following table sets forth, by level within the fair value hierarchy, the Company's financial liabilities that were accounted for at fair value on a recurring basis as of October 31, 2022:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **October 31, 2022** | **Quoted Prices in<br> Active Markets<br> For Identical<br> Assets<br> (Level 1)** | **Significant<br> Other<br> Observable<br> Inputs<br> (Level 2)** | **Significant<br> Unobservable<br> Inputs<br> (Level 3)** |
| Liabilities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Derivative Liabilities – embedded redemption feature | $3663597 | $— | $— | $3663597 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Totals | $3663597 | $— | $— | $3663597 |

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<u>Related Party Transactions:</u>

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.

<u>Derivative Liability</u>

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

The fair value of the derivative liability is determined using a lattice model, is re-measured on the Company's reporting dates, and is affected by changes in inputs to that model including our stock price, historical stock price volatility, the expected term, and both high risk and the risk-free interest rate. The most sensitive inputs to the model are for expected time for the holder to convert or be repaid and the estimated historical volatility of the Company's common stock. However, because the historical volatility of the Company's common stock is so high (see Note 9), the sensitivity required to change the liability by 1% as of October 31, 2022 is greater than 25% change in historical volatility as of that date. The other inputs, such as risk free rate, high yield cash rate and stock price all have a sensitivity for a 1% change in the input variable results in a significantly less than 1% change in the calculated derivative liability.

<u>Revenue Recognition</u>

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

Step 1: Identify the contract with the customer

Step 2: Identify the performance obligations in the contract

Step 3: Determine the transaction price

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

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

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

Disaggregation of Revenue: Channel Revenue

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

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| | | | |
|:---|:---|:---|:---|
|  | |**Change** | **Change** |
|  | **2022** | **2021** | **%** |
| Proprietary website revenue | $611799 | $2392668) | (74%) |
| Third party website revenue | 406187 | 721394) | (44%) |
| Total Revenue | $1017986 | $3114062) | (67%) |

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

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| | | | |
|:---|:---|:---|:---|
|  | |**Change** | **Change** |
|  | **2022** | **2021** | **%** |
| Proprietary website revenue | $2750636 | $6339478) | (57%) |
| Third party website revenue | 1338401 | 3090041) | (57%) |
| Total Revenue | $4089037 | $9429519) | (57%) |

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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.

<u>Stock-Based Compensation:</u>

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.

<u>Earnings (Loss) Per Common Share:</u>

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.

<u>Recently Issued Accounting Standards:</u>

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350) which simplifies goodwill impairment testing by requiring that such periodic testing be performed by comparing the fair value of a reporting unit with its carrying amount and recognizing an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. The policy is effective for fiscal years, including interim periods, beginning after December 15, 2019. We adopted on February 1, 2020 and the adoption had no impact.

*Fair Value Measurement*: In 2018, the FASB issued amended guidance to remove, modify and add disclosure requirements for fair value measurements. This amendment is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted for any removed or modified disclosure requirements. Transition is on a prospective basis for the new and modified disclosures, and on a retrospective basis for disclosures that have been eliminated. The adoption of this guidance on February 1, 2020 did not have a material impact on our consolidated financial statements.

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

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

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

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

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

 

*Recently Issued Accounting Standards Not Yet Adopted*

 

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

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

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

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

**<u>NOTE 2 – GOING CONCERN AND FINANCIAL POSITION</u>**

The consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has an accumulated deficit of $40,680,508 as of October 31, 2022 and has a working capital deficit at October 31, 2022 of $15,279,670. As of October 31, 2022, the Company only had cash and cash equivalents of $46,026 and approximately $6,111,000 of short-term debt in default. The short-term debt agreements provide legal remedies for satisfaction of defaults, none of the lenders of which to this point have pursued their legal remedies. While the Company has plans to grow its revenues through the new website , at this time, our current liquidity position raises substantial doubt about the Company's ability to continue as a going concern.

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

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**<u>NOTE 3 – PROPERTY</u>**

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 October 31, 2022 and January 31, 2022:

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| | | |
|:---|:---|:---|
|  | **October 31, 2022** | **January 31, 2022** |
| Office furniture, fixtures and equipment | $95183 | $94041 |
| Shop equipment | 43004 | 43004 |
| Vehicles | 206760 | 206760 |
| Sub-total | 344947 | 343805 |
| Less: Accumulated depreciation | (161056) | (122469) |
| Total Property | $183891 | $221336 |

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Additions to fixed assets for the nine months ended October 31, 2022 were $1,142. Additions to fixed assets for the nine months ended October 31, 2021 and were $186,327 with $35,000 paid in cash and $151,327 financed through vehicle loans for vehicles and an additional $8,628 acquired in equipment.

There were no disposals for the nine months ended October 31, 2022. For the nine months ended October 31, 2021, vehicles having a cost of $20,000 and a net book value of $4,715 was disposed of. Proceeds received of $25,060 and a gain on sale of property and equipment of $20,345 were recorded.

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

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

**<u>NOTE 4 – LEASES</u>**

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 October 31, 2022 and January 31, 2022.

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| | | | |
|:---|:---|:---|:---|
| **Leases** | **Classification** | **October 31, 2022** | **January 31, 2022** |
| **Assets** |  |  |  |
| Operating | Operating Lease Assets | $160770 | $242583 |
| **Liabilities** |  |  |  |
| Current |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating | Current Operating Lease Liability | $70214 | $100001 |
| Noncurrent |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating | Noncurrent Operating Lease Liabilities | 90556 | 138551 |
| Total lease liabilities |  | $160770 | $238552 |

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

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

Operating lease cost and rent was $29,219 and $30,478 for the three months ended October 31, 2022, and October 31, 2021, respectively.

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

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**<u>NOTE 5 – CUSTOMER DEPOSITS</u>**

The Company receives payments from customers on orders prior to shipment and these customer deposits on cancelled orders were either returned to the customers subsequent to October 31, 2022 or will remain as deposits until the item is either delivered and recorded as revenue or cancelled and refunded. At October 31, 2022 the Company had received $57,856 (January 31, 2022- $530,900) in customer deposits for orders that were unfulfilled at October 31, 2022 and either canceled subsequent to year end or still awaiting shipment.

**<u>NOTE 6 – DEFERRED REVENUE</u>**

The Company receives payments from customers on orders prior to shipment and orders that were unfulfilled at October 31, 2022 because of both normal order processing and fulfillment requirements, and back orders are recorded as deferred revenue. At October 31, 2022, the Company had received $66,153 (January 31, 2022- $665,143) in customer payments for orders that were unfulfilled at October 31, 2022 and delivered subsequent to October 31, 2022.

**<u>NOTE 7 – SHORT-TERM AND LONG-TERM DEBT</u>**

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

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| | | | |
|:---|:---|:---|:---|
|  | **October 31, 2022** |  | **January 31, 2022** |
| Loan dated October 8, 2019, and revised February 29, 2020 and November 10, 2020 repayable June 30, 2022 with an additional interest payment of $20,000<sup>(3)</sup> | $— | <sup>\*</sup> | $97340 |
| Forklift Note Payable, original note of $20,433 Sept 26, 2018, 6.23% interest, 60 monthly payments of $394.54 ending August 2023<sup>(1)</sup> | 4947 | <sup>\*</sup> | 8183 |
| Vehicle loan original loan of $93,239 February 16, 2021, 2.90 % interest. 72 monthly payments of $1,414 beginning on July 2, 2021 and ending on March 2, 2027. Secured by vehicle having net book value of $72,977. | 70277 | <sup>#</sup> | 81346 |
| Vehicle loan original loan of $59,711 March 20, 2021, 7.89% interest. 72 monthly payments of $1,048 beginning on May 4, 2021 and ending on April 4, 2027. Secured by vehicle having net book value of $68,35. | 47675 | <sup>#</sup> | 54108 |
| Working Capital Note Payable - $700,000, dated October 29, 2021, repayment of $17,904 per week until Oct 29, 2022, interest rate of approximately 31%<sup>(2)(4)(7)</sup> | 407423 | <sup>\* ∞</sup> | 635831 |
| Working Capital Note Payable - $650,000, dated October 25, 2021, repayment of $15,875 per week until October 25, 2022, interest rate of approximately 26%<sup>(2)(4)(8)</sup> | 447756 | <sup>\* ∞</sup> | 596047 |
| Demand loan - $5,000 dated February 1, 2020, 15% interest, 5% fee on outstanding balance | 5000 | <sup>\*</sup> | 5000 |
| Demand loan - $2,500, dated March 8, 2019, 25% interest, 5% fee on outstanding balance | 2500 | <sup>\*</sup> | 2500 |
| Demand loan - $65,500 dated February 27, 2019, 25% interest, 5% fee on outstanding balance, Secured by the general assets of the Company | 12415 | <sup>\*</sup> | 12415 |
| Promissory note - $60,000 dated September 18, 2020 maturing April 30, 2022<sup>(10)</sup>, including $5,000 original issue discount, 15% compounded interest payable monthly | 60000 | <sup>\* ∞</sup> | 60000 |
| Promissory note - $425,000 dated August 28, 2020, including $50,000 original issue discount, 15% compounded interest payable monthly. This note matures when the Company receives proceeds through a financing event of $825,000 plus accrued interest on the note.<sup>(5)</sup> | 425000 | <sup>\* ∞</sup> | 425000 |
| Promissory note - $1,200,000 dated August 28, 2020, maturing August 28, 2022, 12% interest payable monthly with the first six months interest deferred until the 6th month and added to principal.<sup>(6)</sup> | 1200000 | <sup>\* ∞</sup> | 1200000 |
| Promissory note - $420,000 dated December 27, 2021, including $20,000 original issue discount, maturing January 27, 2022, non-interest bearing<sup>(9)</sup> | 420000 | <sup>\* ∞</sup> | 420000 |
| Total | $3102993 |  | $3597770 |

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| | | |
|:---|:---|:---|
|  | **October 31, 2022** | **January 31, 2022** |
| Short-Term Debt | $2985041 | $3454133 |
| Current Portion of Long-Term Debt | 22149 | 27737 |
| Long-Term Debt | 95803 | 115900 |
| Total | $3102993 | $3597770 |

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| | |
|:---|:---|
| \* | Short-term loans |
| # | Long-term loans of $47,675 including current portion $8,317; <br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $70,277 including current portion $13,832 |
| ∞ | In default $2,960,179. |
| (1) | Secured by equipment having a net book value of $7,285. |
| (2) | The amounts due under the note are personally guaranteed by an officer or a director of the Company. |
| (3) | On November 10, 2020 the Company amended the agreement extending the maturity to June 30, 2022 from April 8, 2021 and changing monthly payments to $0 from $5,705 and interest rate from 13% to a $20,000 lump sum payable at maturity. This loan and accrued interest are payable to a shareholder and were transferred to a convertible loan in August 2022. |
| (4) | The Company has pledged a security interest on all accounts receivable and banks accounts of the Company. |
| (5) | Financing event would be a sale or issuance of assets, debt, shares or any means of raising capital. As the Company has entered into such a transaction the loan has reached maturity and is treated as current. An extension was granted on December 13, 2021 amending the maturity date to April 30, 2022. The April 30, 2022 payment has not been made and the Company is working on another extension with the lender. |
| (6) | Secured by all assets of the Company. Loan payable in 2 instalments, $445,200 payable August 28, 2021 and $826,800 payable August 28, 2022. On December 13, 2021 the parties amended the maturity date for the first instalment to be April 30, 2022 with the second instalment date unchanged. The April 30, 2022 payment has not been made and the Company is working on another extension with the lender. |
| (7) | This loan replaces $500,000 loan dated June 4, 2021, $422,009 proceeds were used to repay this loan, net cash received was $253,491 after payment of $26,500 in fees. |
| (8) | This loan replaces $500,000 loan dated June 4, 2021, $359,919 proceeds were used to repay this loan, net cash received was $267,606 after payment of $22,475 in fees. |
| (9) | Penalty of 10% of principal amount and 30,000 3 year warrants with an exercise price of $15.00 on initial default and 2% of principal amount and 15,000 3 year warrants with an exercise price of $15.00 for every 30 day default period thereafter. Initial default has been recorded at January 31, 2022 with an interest charge of $42,000 and another $276,000 which was the fair value of the warrants (see Note 11). The Company has defaulted on the February 26, 2022, through to July 26, 2022 and will issue an additional 15,000 warrants for each of those six defaults for a total of 90,000 warrants. The Company has recorded $798,450 based on the fair value of the warrants and $75,600 for the 2% fee as interest expense to October 31, 2022. |
| (10) | The April 30, 2022 payment has not been made and the Company is working on another extension with the lender. |

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

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| | |
|:---|:---|
| **Year Ended** | **Amount** |
| October 31, 2023 | $3007190 |
| October 31, 2024 | 25174 |
| October 31, 2025 | 26443 |
| October 31, 2026 | 27792 |
| October 31, 2027 | 16394 |
| **Total** | $**3102993** |

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**<u>NOTE 8 – SHORT-TERM CONVERTIBLE DEBT</u>**

The components of the Company's debt as of October 31, 2022 and January 31, 2022 were as follows.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | | | | **Outstanding Principal at** | **Outstanding Principal at** |
| <br>**Maturity Date** | **Interest**<br>**Rate** | **Default Interest**<br>**Rate** | **Conversion**<br>**Price <sup>(a)</sup>** | **October 31, 2022** | **January 31, 2022** |
| Nov 4, 2013<sup>\*</sup> | 12% | 12% | $1800000 | $100000 | $100000 |
| Jan 31, 2014<sup>\*</sup> | 12% | 18% | $2400000 | 16000 | 16000 |
| July 31, 2013<sup>\*</sup> | 12% | 12% | $1440000 | 5000 | 5000 |
| Jan 31, 2014<sup>\*</sup> | 12% | 12% | $2400000 | 30000 | 30000 |
| Nov 12, 2022<sup>\*</sup> | 8% | 12% | <sup>(1)</sup> | 3000000 | 2400000 |
| Jan. 13, 2023 | 12% | 22% | <sup>(2)</sup> |  | 228000 |
| Aug. 11, 2022 | 10% | 10% | <sup>(3)</sup> |  |  |
| Feb. 14, 2023 | 12% | 20% | <sup>(4)</sup> | 1200000 |  |
| Feb 25, 2023 | 12% | 20% | <sup>(4)</sup> | 150000 |  |
| Feb. 25, 2023 | 12% | 20% | <sup>(4)</sup> | 350000 |  |
| Mar. 9 2023 | 12% | 20% | <sup>(4)</sup> | 200000 |  |
| Mar. 9, 2023 | 12% | 20% | <sup>(4)</sup> | 200000 |  |
| Apr. 22, 2023 | 12% | 20% | <sup>(4)</sup> | 440000 |  |
| Apr. 22, 2023 | 12% | 20% | <sup>(4)</sup> | 110000 |  |
| May 19, 2023 | 12% | 16% | <sup>(5)</sup> | 400000 |  |
| Feb.11, 2023 | 12% | 18% | <sup>(4)</sup> | 275000 |  |
| Dec 27, 2022 | 12% | 18% | <sup>(4)</sup> | 275000 |  |
| Jan. 5, 2023 | 12% | 18% | <sup>(4)</sup> | 250000 |  |
| Jan.6 ,2023 | 12% | 18% | <sup>(4)</sup> | 125000 |  |
| Jan.6 ,2023 | 12% | 18% | <sup>(4)</sup> | 125000 |  |
| Jan.11 ,2023 | 12% | 18% | <sup>(4)</sup> | 138890 |  |
| Apr. 22, 2023 | 12% | 18% | <sup>(4)</sup> | 275000 |  |
| Apr. 22, 2023 | 12% | 18% | <sup>(4)</sup> | 275000 |  |
| Sept. 9, 2023 | 12% | 22% | <sup>(6)</sup> | 201360 |  |
| Sub-total |  |  |  | 8141250 | 2779000 |
| Debt Discount |  |  |  | (2374330) | (2131034) |
|  |  |  |  | $5766920 | $647966 |

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\* In default at filing date $3,151,000

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

(2) 75% of closing bid price on day preceding conversion date in event of default.

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

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

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

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

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

The Company had accrued interest payable of $478,271 and $231,412 on the notes at July 31, 2022 and January 31, 2022, respectively.

The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15 "Derivatives and Hedging" and determined that 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 October 31, 2022 and 2021, the Company recorded amortization of debt discount expense of $1,932,722 and $130,139, respectively. For the nine months ended October 31, 2022 and 2021, the Company recorded amortization of debt discount expense of $4,309,329 and $442,075, respectively.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

During the three and nine months ended October 31, 2022 and October 31, 2021 the Company added $600,000 and $28,000 in penalty interest to these loans, respectively.

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

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**<u>NOTE 9 – DERIVATIVE LIABILITIES</u>**

As of October 31, 2022, and January 31, 2022, the Company had derivative liabilities of $3,663,597 and $1,263,442, respectively. During the three months ended October 31, 2022, and 2021, the Company recorded a loss of $184,146 and a loss of $76,444, respectively, from the change in the fair value of derivative liabilities. During the nine months ended October 31, 2022, and 2021, the Company recorded a loss of $841,772 and a loss of $88,551, respectively, from the change in the fair value of derivative liabilities. Any liabilities resulting from the warrants outstanding are immaterial.

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

The following table presents changes in Level 3 liabilities measured at fair value for the three months ended October 31, 2022. Both observable and unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long- dated volatilities) inputs.

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| | |
|:---|:---|
|  | **Level 3**<br>**Derivatives** |
| Balance, January 31, 2022 | $1263442 |
| Changes Due to Issuance of New Convertible Notes | 1577922 |
| Settlement Due to Repayment of Debt | (19539) |
| Mark to Market Change in Derivatives | 841772 |
| Balance, October 31, 2022 | $3663597 |

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The derivatives arise from convertible debt where the debt is convertible into common stock at variable conversion prices which are linked to the trading and/or bid prices of the Company's common stock as traded on the OTC market.

The fair value of the derivative liability is determined using the lattice model, is re-measured on the Company's reporting dates, and is affected by changes in inputs to that model including our stock price, expected stock price volatility, the expected term, and the risk-free interest rate. A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring the Company's warrant liabilities and embedded conversion feature that are categorized within Level 3 of the fair value hierarchy as of October 31, 2022, is as follows:

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| | |
|:---|:---|
|  | **Embedded<br> Derivative Liability<br> As of<br> October 31, 2022** |
| Strike price | 5.20 – 5.55 |
| Contractual term (years) | 0.25 - 1.00 years |
| Volatility (annual) | 182.9% - 213.76 |
| Underlying fair market value | 5.20 |
| Risk-free rate | 7.11% - 8.46 |
| Dividend yield (per share) | 0 |

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**<u>NOTE 10 – STOCKHOLDERS' DEFICIT</u>**

<u>Preferred Stock:</u>

The Series A Preferred Stock has an automatic forced conversion into common stock upon the completion of the repurchase or extinguishing of all "toxic" debt (notes having conversion features tied to the Company's common stock), the extinguishing of all other existing dilutive debt or equity structures, and total recapitalization of the Company. As of both October 31, 2022, and January 31, 2022, the Company had 0 shares of Series A Preferred issued and outstanding and 330,000 authorized with a par value of $0.001 per share.

At both October 31, 2022, and January 31, 2022, there were 20,000 and 20,000 Series B preferred shares outstanding, respectively. The Series B Preferred Stock have voting rights equal to 51% of the total voting rights at any time. There are no conversion rights granted holders of Series B Preferred shares, they are not entitled to dividends, and the Company does not have the right of redemption. Currently, there are 20,000 Series B preferred shares authorized and issued of the Series B Preferred Stock with a par-value of $0.001 per share.

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

At both October 31, 2022, and January 31, 2022, there were 870 Series D preferred shares authorized and outstanding, respectively which with a par value $0.001. All shares of Series D Preferred Stock will rank subordinate and junior to all shares of Series A, B and C of Preferred Stock of the Corporation and pari passu with any of the Corporation's preferred stock hereafter created as to distributions of assets upon dissolution or winding up of the Corporation, whether voluntary or involuntary. These shares are non-voting, do not receive dividends and are redeemable according to the terms set out as follows:

OPTIONAL REDEMPTION.

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

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

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

The Series D Preferred Stock is not entitled to any pre-emptive or subscription rights in respect of any securities of the Corporation. Neither the Company nor any Series D preferred stockholders has given notice to exercise the redemption as of October 31, 2022, on the date of the financial statements. Because the holders of the Series D preferred stock have the right to demand cash redemption, the cumulative amount of the redemption feature is included in Temporary Equity as of October 31, 2022, and January 31, 2022.

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<u>Common Stock</u>

The Company is authorized to issue 75,000,000 common shares at a par value of $0.000001 per share. These shares have full voting rights. The Company undertook a 10-1 reverse stock split on April 28, 2022. The share capital has been retrospectively adjusted accordingly to reflect these reverse stock splits. At October 31, 2022 and January 31, 2022 there were 1,823,708 and 341,023 shares outstanding and issuable, respectively. No dividends were paid in the three months ended October 31, 2022 or 2021. The Company's articles of incorporation include a provision that the Company is not allowed to issue fractional shares.

<u>The Company issued the following shares of common stock in the nine months ended October 31, 2022:</u>

The Company issued 905,110 shares upon conversion of 7,250 Series C preferred shares.

The Company issued 555,641 common shares along with warrants to purchase 948,333 common shares (see below) along with debt for relative fair value of $2,427,336.

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

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

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

<u>Options and Warrants:</u>

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

The Company recorded option and warrant expense of $0 and $0 for the six months ended October 31, 2022, and 2021, respectively.

The Company cancelled the options to acquire 50,000 shares issued to the CEO on July 14, 2021 and issued new options on October 11, 2022 to acquire 250,000 shares with a 5 year term and an exercise price of $4.00. The Company recorded stock-based compensation of $1,998,000 with a corresponding adjustment to paid-in capital. This amount is the incremental value between the new options of $2,497,500 and the revalued cancelled options if $499,500 which were determined by using the significant estimated determined below:

---

| | |
|:---|:---|
| Expected volatility | 753 - 1,735% |
| Exercise price | $4.00 - $15.00 |
| Stock price | $9.99 |
| Expected life | 1.5 - 5 years |
| Risk-free interest rate | 3.05% - 3.07% |
| Dividend yield | 0% |

---

For the nine months ended October 31, 2022 the Company issued 555,641 common shares and warrants to purchase 948,333 common shares along with debt to various lenders as well as warrants to acquire 135,000 common shares as penalty interest. The table below provides the significant estimates used that resulted in the Company determining the relative fair value of the 555,641 common shares and 948,333 warrants at $2,427,336, which has been recorded as a debt discount and the 135,000 warrants at $798,450 which has been recorded as interest both with corresponding adjustments to paid-in capital.

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| | |
|:---|:---|
| Expected volatility | 1,686 - 2,227% |
| Exercise price | $4.45 - $15.00 |
| Stock price | $0.95 - $11.99 |
| Expected life | 3 - 5 years |
| Risk-free interest rate | 1.76% - 4.45% |
| Dividend yield | 0% |

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

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| | | | | |
|:---|:---|:---|:---|:---|
| **Issued To** | **# Warrants** | **Dated** | **Expire** | **Strike Price <sup>\*</sup>** |
| Lender | 95000 | 08/28/2020 | 08/28/2023 | $4.00 per share N |
| Broker | 250 | 10/11/2020 | 10/11/2025 | $45.00 per share N |
| Broker | 300 | 11/25/2020 | 11/25/2025 | $30.00 per share N |
| Triton | 30000 | 07/27/2021 | 07/27/2024 | $21.10 per share N |
| Consultant | 25000 | 08/26/2021 | 08/26/2024 | $15.00 per share N |
| Lender | 60845 | 11/12/2021 | 11/12/2026 | $15.00 per share N |
| Lender | 90000 | 11/12/2021 | 11/12/2026 | $15.00 per share N |
| Lender | 30000 | 1/27/2022 | 1/27/2025 | $15.00 per share N |
| Lender | 120000 | 2/14/2022 | 2/14/2027 | $15.00 per share N |
| Lender | 35000 | 2/25/2022 | 2/25/2027 | $15.00 per share N |
| Lender | 15000 | 2/25/2022 | 2/25/2027 | $15.00 per share N |
| Lender | 20000 | 3/9/2022 | 3/9/2027 | $15.00 per share N |
| Lender | 20000 | 3/9/2022 | 3/9/2027 | $15.00 per share N |
| Lender | 11000 | 4/22/2022 | 4/22/2027 | $15.00 per share N |
| Lender | 44000 | 4/22/2022 | 4/22/2027 | $15.00 per share N |
| Lender | 15000 | 2/26/2022 | 2/26/2025 | $5.40 per share N |
| Lender | 15000 | 3/28/2022 | 3/28/2025 | $7.50 per share N |
| Lender | 15000 | 4/27/2022 | 4/27/2025 | $6.99 per share N |
| Lender | 15000 | 5/27/2022 | 5/27/2025 | $5.12 per share N |
| Lender | 33333 | 5/19/2022 | 5/19/2027 | $15.00 per share N |
| Lender | 100000 | 6/27/2022 | 6/27/2027 | $15.00 per share N |
| Lender | 15000 | 6/26/2022 | 6/26/2025 | $5.12 per share N |
| Lender | 15000 | 7/26/2022 | 7/26/2025 | $5.12 per share N |
| Lender | 100000 | 7/5/2022 | 7/5/2027 | $15.00 per share N |
| Lender | 50000 | 7/6/2022 | 7/6/2027 | $15.00 per share N |
| Lender | 50000 | 7/6/2022 | 7/6/2027 | $15.00 per share N |
| Lender | 50000 | 7/11/2022 | 7/11/2027 | $15.00 per share N |
| Lender | 100000 | 8/11/2022 | 8/11/2027 | $15.00 per share N |
| Lender | 100000 | 8/22/2022 | 8/22/2027 | $15.00 per share N |
| Lender | 100000 | 8/22/2022 | 8/22/2027 | $15.00 per share N |
| Lender | 15000 | 8/25/2022 | 8/25/2025 | $5.10 per share N |
| Lender | 15000 | 9/24/2022 | 9/24/2025 | $4.00 per share N |
| Lender | 15000 | 10/24/2022 | 10/24/2025 | $3.30 per share N |

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

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

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Issued To** | **# Options** | **Dated** | **Expire** | **Strike Price** | **Expired** |
| T. Armes | 50000 | 10/14/2021 | 7/11/2022 | $15.00 per share | Y N |
| T. Armes | 250000 | 7/11/2022 | 7/11/2027 | $4.00 per share | N |

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

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Options** | **Weighted Average<br> Exercise Price** | **Warrants** | **Weighted Average<br> Exercise Price** |
| Outstanding at January 31, 2022 | 50000 | $15.00 | 360550 | $12.64 |
| Granted | 250000 | 4.00 | 1083333 | 15.00 |
| Exercised |  |  | (29155) | 5.00 |
| Forfeited and canceled | (50000) | (15.00) |  |  |
| Outstanding at October 31, 2022 | 250000 | $4.00 | 1414728 | $13.70 |

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**<u>NOTE 11 – RELATED PARTY TRANSACTIONS</u>**

As of October 31, 2022 and January 31, 2021, the Company had $45,673 and $46,173, respectively of related party accrued expenses related to accrued compensation for employees and consultants.

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**<u>NOTE 12 – COMMITMENTS AND CONTINGENCIES</u>**

On August 30, 2016, the Company entered into a 60-month lease agreement for its 3,554 sf warehouse facility starting in December 2016 with a minimum base rent of $2,132 and estimated monthly CAM charges of $1,017 per month. This lease is with a shareholder.

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

In October 2019 the Company entered into an operating lease for a vehicle with an annual cost of $9,067 and a three year term. The company paid initial fees of $17,744 and will pay fees on lease termination of $395. On a straight-line basis these costs amount to $1,259 per month.

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| | |
|:---|:---|
| **Maturity of Lease Liabilities** | **Operating<br> Leases** |
| October 31 2023 | $81203 |
| October 31, 2024 | 30003 |
| October 31, 2025 | 30003 |
| October 31, 2026 | 30003 |
| October 31, 2027 | 2501 |
| Total lease payments | 173713 |
| Less: Interest | (12943) |
| Present value of lease liabilities | $160770 |

---

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

**<u>NOTE 13 – EARNINGS (LOSS) PER SHARE</u>**

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

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| | | |
|:---|:---|:---|
|  | **For the Three Months Ended** | **For the Three Months Ended** |
|  | **October 31,** | **October 31,** |
|  | **2022** | **2021** |
| Numerator: |  |  |
| Net income (loss) available to common shareholders | $(4131691) | $(2566574) |
| Denominator: |  |  |
| Weighted average shares – basic | 1805316 | 319866 |
| Net income (loss) per share – basic | $(2.29) | $(8.02) |
| Effect of common stock equivalents |  |  |
| Add: interest expense on convertible debt | 166046 | 19247 |
| Add: amortization of debt discount | 1932722 | 130139 |
| Less: gain on settlement of debt on convertible notes | (10128) | (41249) |
| Add (Less): loss (gain) on change of derivative liabilities | 186146 | 76444 |
| Net income (loss) adjusted for common stock equivalents | (1856905) | (2381993) |
| Dilutive effect of common stock equivalents: |  |  |
| Convertible notes and accrued interest |  |  |
| Convertible Class C Preferred shares |  |  |
| Warrants and options |  |  |
| Denominator: |  |  |
| Weighted average shares – diluted | 1805316 | 319866 |
| Net income (loss) per share – diluted | $(2.29) | $(8.02) |

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**<u>NOTE 13 – EARNINGS (LOSS) PER SHARE</u>**

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

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| | | |
|:---|:---|:---|
|  | **For the Nine Months Ended** | **For the Nine Months Ended** |
|  | **October 31,** | **October 31,** |
|  | **2022** | **2021** |
| Numerator: |  |  |
| Net income (loss) available to common shareholders | $(12228775) | $(4886380) |
| Denominator: |  |  |
| Weighted average shares – basic | 1576024 | 257577 |
| Net income (loss) per share – basic | $(7.76) | $(18.97) |
| Effect of common stock equivalents |  |  |
| Add: interest expense on convertible debt | 278788 | 35237 |
| Add: amortization of debt discount | 4309329 | 442075 |
| Less: gain on settlement of debt on convertible notes | (19539) | (1004615) |
| Add (Less): loss (gain) on change of derivative liabilities | 841772 | 88551 |
| Net income (loss) adjusted for common stock equivalents | (6818425) | (5325132) |
| Dilutive effect of common stock equivalents: |  |  |
| Convertible notes and accrued interest |  |  |
| Convertible Class C Preferred shares |  |  |
| Warrants and options |  |  |
| Denominator: |  |  |
| Weighted average shares – diluted | 1576024 | 257577 |
| Net income (loss) per share – diluted | $(7.76) | $(18.97) |

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

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| | | |
|:---|:---|:---|
|  | **For the Three and Nine Months Ended** | **For the Three and Nine Months Ended** |
|  | **October 31,** | **October 31,** |
|  | **2022** | **2021** |
| Convertible notes and accrued interest | 7093733 | 94564 |
| Convertible Class C Preferred shares | 4796352 | 896892 |
| Options | 250000 | 50000 |
| Warrants | 1414728 | 150550 |
| Total | 13554813 | 1192006 |

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**<u>NOTE 14 – SUBSEQUENT EVENTS</u>**

Subsequent to October 31, 2022 through to December 26, 2022:

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

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

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

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

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

• On December 27, 2022, the Company entered into a promissory note for $22,000 maturing January 6, 2023. The loan bears no interest and is secured on all assets of the Company. The note is also guaranteed by the CEO of the Company. The Company received $20,000 in cash proceeds and recorded an original issue discount of $2,000. The discount is expensed as interest. If the note is not repaid at maturity there is an initial 15% penalty , followed by a 1.5 % penalty for every subsequent default every seven day period thereafter.

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**<u>ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.</u>**

**FORWARD-LOOKING STATEMENTS**

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

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

**<u>Company</u>**

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

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

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

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

**Our Business**

Like many small businesses, Christopher Davenport, the founder of Auto Parts 4Less ("4Less") previously named The 4less Corp., the wholly owned subsidiary of Auto Parts 4Less Group, Inc., began selling auto parts on eBay and shipping those items out of his garage in 2013. What started out as a hobby, quickly grew into a fully functioning ecommerce aftermarket auto parts company that required a significant technical staff and facilities to support their growth. In June of 2015, they leased their first office.

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

Starting in 2016 the company began investing to become their own ecommerce platform thereby allowing their auto parts to be direct listed across marketplace and social media sites. Technical achievements including CRM system, warehouse integration API, warehouse inventory software to name a few.

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

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

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

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

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

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

**Competition**

We believe that our automotive parts marketplace AutoParts4less.com, with no known large challengers presently in the space outside of "all things to all people" online marketplaces Amazon and eBay, has the opportunity to quickly be branded when launched as the auto part's industry premier marketplace just as sites like Etsy, Wayfair, Uber and Chewey's have been able to successfully do in their industries.

<u>Results of Operations For the Nine Months Ended October 31, 2022 Compared to the Nine Months Ended October 31, 2021</u>

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

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| | | | |
|:---|:---|:---|:---|
|  | |**Change** | **Change** |
|  | **2022** | **2021** | **%** |
| Total Revenues | $4089037 | $9429519) | (57%) |
| Gross Profit | 792491 | 2454393) | (68%) |
| Total Operating Expenses | 5378156 | 7146485) | (25%) |
| Total Other Income (Expense) | (7643110) | (194288) | (3,834%) |
| Net Income (Loss) | $(12228775) | $(4886380) | (150%) |

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**Revenue**

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

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| | | | |
|:---|:---|:---|:---|
|  | |**Change** | **Change** |
|  | **2022** | **2021** | **%** |
| Proprietary website revenue | $2750636 | $6339478) | (57%) |
| Third party website revenue | 1338401 | 3090041) | (57%) |
| Total Revenue | $4089037 | $9429519) | (57%) |

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We had total revenue of $4,089,037 for the nine months ended October 31, 2022, compared to $9,425,519 for the nine months ended October 31, 2021. Sales decreased by $5,340,482 primarily due to present economic conditions reducing consumer demand as well as supply chain issues. In the prior year's quarter, sales were driven by high consumer demand as a result of economic stimulus packages provided during the pandemic and an aggressive marketing push by the Company. In current Q3 the Company began winding its website Liftkits4less in anticipation of the November 2022 launch of its new automotive parts marketplace AutoParts4Less.com. The Company also recorded $66,153 in deferred revenue, which will be recognized as revenue next quarter and recognized $665,143 of deferred revenue recorded January 31, 2022. The deferred revenue represents orders paid by customers this period but delivered in the following period due to back orders and processing and delivery times. The Company also recorded $57,856 in customer deposits and recognized $530,900 recorded January 31, 2022. The customer deposits are orders paid by customers and canceled in the following period due to back orders or other reasons. For the prior year period, the Company recorded $241,292 in deferred revenue, which was recognized as revenue the next quarter and recognized $687,766 of deferred revenue that was recorded January 31, 2021. For the nine months ended October 31, 2022, the Company also recorded $220,776 in customer deposits and recognized $188,385 recorded January 31, 2021.

Both proprietary website revenues and third party website revenues fell by 57% as the Company transitions from a seller of accessories to a pure-play automotive parts-only marketplace.

Gross Profit

We had gross profit of $792,491 for the nine months ended October 31, 2022, compared to gross profit of $2,454,393 for the nine months ended October 31, 2021. Gross profit decreased by $1,661,902 as a result of the decreased revenues explained above and also due to an increase in cost because the Company had to purchase goods at higher product costs from distributers rather than the usual manufacturers for many of the new available products or some of the products that were not available from the usual manufacturers due to still existing supply chain issues. The 2022 gross profit was further reduced by a $143,000 provision on inventory which will be sold off in the coming quarter on transitioning to the new AutoParts4Less.com website.

**Operating Expenses**

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

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| | | | | |
|:---|:---|:---|:---|:---|
| | | | **Change** | **Change** |
| <br>Operating Expenses | **2022** | **2021** | **$** | **%** |
| Depreciation | $38587 | $35930 |  | 7% |
| Postage, Shipping and Freight | 146962 | 430105 |  | (66%) |
| Marketing and Advertising | 671348 | 1876576 |  | (64%) |
| E Commerce Services, Commissions and Fees | 1076787 | 1160569 |  | (7%) |
| Operating lease cost | 90177 | 91437 |  | (1%) |
| Personnel Costs | 505253 | 1078449 |  | (53%) |
| PPP Loan Forgiveness |  | (209447) |  |  |
| General and Administrative | 2849042 | 2682866 |  | 6% |
| Total Operating Expenses | $5378156 | $7146485 |  | (25%) |

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

• Postage shipping and freight decreased by $283,143 due to lower sales.

• Marketing and advertising decreased by $1,205,228 due to aggressive promotional efforts in the prior period to drive sales to our proprietary websites and build our brands. For the nine months ended October 31, 2022, the spending has resumed to usual levels and in Q32022 we reduced advertising in anticipation on new website launch in November.

• E Commerce Services, Commissions and Fees decreased by $83,782 due to lower sales.

• Operating lease cost decreased by $1,260.

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

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

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• General and Administrative increased by $166,176 mainly due to stock-based compensation of $1,998,000 on the CEO's 250,000 options. This was partially reduced by reductions of 1,831,823 across all other general and administrative accounts as the Company focused on reducing its costs in a declining market. Investor relations were lower as a result of the REG A subscription offering in the prior year and there was also a reduction in professional fees due to associated reporting and business requirements of the afore-mentioned REG A subscription from the prior year's quarter.

**Other Income (Expense)**

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

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| | | | | |
|:---|:---|:---|:---|:---|
| | | | **Change** | **Change** |
| <br>Other Income (Expense) | **2022** | **2022** | **$** | **%** |
| Gain (Loss) on Sale of Property and Equipment | $— | $20345 |  |  |
| Gain (Loss) on Derivatives | (841772) | (88551) |  | 851% |
| Gain on Settlement of Debt | 19539 | 1004615 |  | (98%) |
| Amortization of Debt Discount | (4309329) | (442075) |  | (875%) |
| Interest Expense | (2511548) | (688622) |  | (265%) |
| Total Other Income (Expense) | $(7643110) | $(194288) |  | (3,834%) |

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The changes above can be explained by the increase in convertible debt that started at the end of last fiscal year and continued for the nine months ended October 31, 2022. Convertible debt increased from $949,300 at October 31, 2021 to $8,141,250 at October 31, 2022. As a result all debt related items such as amortization of debt discount and interest expense increased significantly. The higher loss on derivatives in 2022 is a function of the market factors in the valuation of the derivative liability described in Note 9 of the included financial statements as well as the derivative discounts acquired with the new debt.

We had net loss of $12,228,775 for the nine months ended October 31, 2022, compared to net income of $4,886,380 for the nine months ended October 31, 2021. The increase in net loss was mainly due to the large increase in other expenses, the lower sales and the increase in stock-based compensation as explained in the discussion above.

<u>Results of Operations for the Three Months Ended October 31, 2022, Compared to the Three Months Ended October 31, 2021</u>

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

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| | | | |
|:---|:---|:---|:---|
|  | |**Change** | **Change** |
|  | **2022** | **2021** | **%** |
| Total Revenues | $1017986 | $3114062) | (67%) |
| Gross Profit | 171088 | 839498) | (80%) |
| Total Operating Expenses | 1009907 | 2860927) | (65%) |
| Total Other Income (Expense) | (3292872) | (545145) | (504%) |
| Net Income (Loss) | $(4131691) | $(2566574) | (61%) |

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**Revenue**

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

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| | | | |
|:---|:---|:---|:---|
|  | |**Change** | **Change** |
|  | **2022** | **2021** | **%** |
| Proprietary website revenue | $611799 | $2392668) | (74%) |
| Third party website revenue | 406187 | 721394) | (44%) |
| Total Revenue | $1017986 | $3114062) | (67%) |

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We had total revenue of $1,017,986 for the three months ended October 31, 2022, compared to $3,114,062 for the three months ended October 31, 2021. Sales decreased by $2,096,074 primarily due to present economic conditions reducing consumer demand as well as supply chain issues. In the prior year's quarter, sales were driven by high consumer demand as a result of economic stimulus packages provided during the pandemic and an aggressive marketing push by the Company. In current Q3 the Company began winding its website Liftkits4less in anticipation of the November 2022 launch of its new automotive parts marketplace AutoParts4Less.com.

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**Gross Profit**

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

**Operating Expenses**

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

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| | | | | |
|:---|:---|:---|:---|:---|
| | | | **Change** | **Change** |
| <br>Operating Expenses | **2022** | **2021** | **$** | **%** |
| Depreciation | $12743 | $12479 |  | 2% |
| Postage, Shipping and Freight | 32013 | 94356 |  | (66%) |
| Marketing and Advertising | 156522 | 609252 |  | (74%) |
| E Commerce Services, Commissions and Fees | 396065 | 434832 |  | (9%) |
| Operating lease cost | 29219 | 30478 |  | (4%) |
| Personnel Costs | 131937 | 319256 |  | (59%) |
| PPP Loan Forgiveness |  | (209447) |  | (100%) |
| General and Administrative | 251408 | 1569721 |  | (84%) |
| Total Operating Expenses | $1009907 | $2860927 |  | (65%) |

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• Depreciation increased by $264.

• Postage shipping and freight decreased by $62,343 due to lower sales.

• Marketing and advertising decreased by $452,730 due to aggressive promotional efforts in 2021 to drive sales to our proprietary websites and build our brands. For the quarter ended October 31, 2022 minimal advertising was done in anticipation on new website launch in November.

• E Commerce Services, Commissions and Fees decreased by $38,767 due to lower sales.

• Operating lease cost decreased by $1,259.

• Personnel Costs decreased by $187,319 due to staff reductions as a result of lower demand.

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

• General and Administrative decreased by $1,338,313 due to the Company reducing its expenses in a declining market. Investor relations were lower as a result of the REG A subscription offering in the prior year and there was also a reduction in professional fees due to associated reporting and business requirements of the afore-mentioned REG A subscription from the prior year's quarter.

**Other Income (Expense)**

The following table shows our other income and expenses for the three months ended October 31, 2022, and 2021:

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| | | | | |
|:---|:---|:---|:---|:---|
| | | | **Change** | **Change** |
| <br>Other Income (Expense) | **2022** | **2022** | **$** | **%** |
| Gain (Loss) on Derivatives | $(184146) | $(76444) |  | (141%) |
| Gain on Settlement of Debt | 10128 | 41249 |  | (75%) |
| Amortization of Debt Discount | (1932722) | (130139) |  | (1,385%) |
| Interest Expense | (1186132) | (379811) |  | (212%) |
| Total Other Income (Expense) | $(3292872) | $(545145) |  | (504%) |

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

We had a net loss of $4,131,691 for three months ended October 31, 2022, compared to a net loss of $2,566,574 for three months ended October 31, 2021. The decrease in net income was mainly due to the large increase in other expenses and the lower sales as explained in the discussion above.

<u>Liquidity and Capital Resources</u>

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

As of October 31, 2022, we had a cash balance of $46,026, net inventory of $142,251 and $15,532,213 in current liabilities. At the current cash consumption rate, we will need to consider additional funding sources going forward. We are taking proactive measures to reduce operating expenses and drive growth in revenue.

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

<u>Capital Resources</u>

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

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| | | |
|:---|:---|:---|
|  | **October 31, 2022** | **January 31, 2022** |
| Current assets | $252543 | $564615 |
| Current liabilities | 15532213 | 8890462 |
| Working capital (deficits) | $(15279670) | $(8325847) |

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

**ITEM 3. Quantitative and Qualitative Disclosure about Market Risk.**

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

**ITEM 4. Controls and Procedures**

(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Evaluation of disclosure controls and procedures. Our Chief Executive Officer and Principal Financial Officer, after evaluating the effectiveness of our "<u>disclosure controls and procedures</u>" (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q (the "<u>Evaluation Date</u>"), has concluded that as of the Evaluation Date, our disclosure controls and procedures were not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Moving forward, we hope that our Chief Executive Officer and Principal Financial Officer will be able to devote the additional time and effort required so that our disclosure controls and procedures can become effective. Notwithstanding the assessment that our internal controls and procedures were not effective, we believe that our financial statements contained in this Quarterly Report for the quarter ended October 31, 2022 fairly present our financial position, results of operations and cash flows for the years and months covered thereby in all material respects.

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

**PART II OTHER INFORMATION**

**Item 1. Legal Proceedings**

None

**Item 1A. Risk Factors**

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

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

**Recent Sales of Unregistered Securities**

None.

**Item 3. Default Upon Senior Securities**

None.

**Item 4. Mine Safety Disclosures**

Not applicable.

**Item 5. Other Information**

None.

**Item 6. Exhibits**

See the [Exhibit Index](#Exhibit_Index) immediately following the signature page of this Report on Form 10-Q.

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**SIGNATURES**

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

**Auto Parts 4Less Group, Inc.**

By: /s/ Timothy Armes

Timothy Armes

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

Date: January 9, 2023

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**EXHIBIT INDEX**

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| | |
|:---|:---|
| **Exhibit**<br> **Number** | **Description of Exhibit** |
| 31.1 | [Certificate of the Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](exhibit_31-1.htm) \* |
| 32.1 | [Certificate of the Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](exhibit_32-1.htm) \* |
| 101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. \*\* |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document \*\* |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document \*\* |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document \*\* |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document \*\* |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document \*\* |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) \*\* |

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__________

\* Filed herewith.

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

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## Ex-31

**Exhibit 31.1**

**CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER**

**PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, Timothy Armes, certify that:

1. I have reviewed this Amendment No. 1 to Quarterly Report on Form 10-Q/A of Auto Parts 4Less Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: January 9, 2023

*<u>*By: /s/ Timothy Armes*</u>*

Timothy Armes

Chief Executive Officer

(Principal Executive Officer and Principal Financial/Accounting Officer)

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## Ex-32

**Exhibit 32.1**

**CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

I, Timothy Armes, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that Amendment No. 1 to the Quarterly Report of Auto Parts 4Less Group, Inc. on Form 10-Q/A for the period ended October 31, 2022 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q/A fairly presents in all material respects the financial condition and results of operations of The 4Less Group, Inc.

*<u>*By: /s/ Timothy Armes*</u>*

Timothy Armes

Chief Executive Officer

(Principal Executive Officer and Principal Financial/Accounting Officer)

January 9, 2023

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