United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ]X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2016October 31, 2023
OR
[ ]_] TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF 1934
From the transition period ___________ to ____________.
Commission File Number333-152444000-55089
MEDCAREERSAUTO PARTS 4LESS GROUP, INCINC..
(Exact name of small business issuer as specified in its charter)
Nevada |
| 90-1494749 | ||
(State or jurisdiction of | (Primary Standard Industrial
| (IRS Employer
|
758 E Bethel School Road, Coppell, Texas 75019106 W. Mayflower, North Las Vegas, NV89030
(Address of principal executive offices)
(972) 393-5892(702) 267-6100
(Issuer'sIssuer’s telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
N/A | N/A | N/A |
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 [_] No[X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).
Yes [_] No[X] No [ ].
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act:
Large Accelerated Filer [_] Accelerated Filer [_]
Non-Accelerated Filer [X] Smaller Reporting Company [X] Emerging Growth Company [_]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [_]
Indicate by 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 July 8, 2016January 26, 2024, there were 571,577,017, shares of Common Stock of the issuer outstanding.
TABLE OF CONTENTS
PART I. | FINANCIAL INFORMATION | |
ITEM 1. | 3 | |
3 | ||
4 | ||
Condensed Consolidated Statement of Changes in Stockholders’ Deficit (Unaudited) | 5 - 6 | |
7 | ||
Notes to Condensed Consolidated Financial Statements (Unaudited) | 8 | |
| ||
ITEM 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 27 |
|
|
|
ITEM 3. | 32 | |
ITEM 4. | 32 | |
PART II. | OTHER INFORMATION | |
ITEM 2. | 33 | |
ITEM | 33 | |
34 |
- 2 -
PART I — FINANCIAL INFORMATION
MEDCAREERSITEM 1: FINANCIAL STATEMENTS
AUTO PARTS 4LESS GROUP, INC.
Condensed Consolidated Balance Sheets
April 30, 2016 and January 31, 2016
(Unaudited)
April 30, 2016 | Jan 31, 2016 | |||||||
Assets | ||||||||
Current Assets | ||||||||
Cash and Cash Equivalents | $ | 1,491 | $ | — | ||||
Accounts Receivable | 995 | 995 | ||||||
Other Current Assets | — | 83 | ||||||
Total Current Assets | 2,486 | 1,078 | ||||||
Total Assets | $ | 2,486 | $ | 1,078 | ||||
Liabilities and Stockholders’ Deficit | ||||||||
Current Liabilities | ||||||||
Accounts Payable | $ | 52,949 | $ | 48,226 | ||||
Accrued Expenses | 43,721 | 39,590 | ||||||
Accrued Interest Payable | 317,711 | 290,682 | ||||||
Derivative Liabilities | 983,147 | 745,129 | ||||||
Short Term Debt, net of Debt Discount of $147,731 and $104,900 | 822,471 | 799,572 | ||||||
Short Term Debt – Related Party, net of Debt Discount of $0 and $0 | 72,500 | 72,500 | ||||||
Total Current Liabilities | 2,292,499 | 1,995,699 | ||||||
Total Liabilities | 2,292,499 | 1,995,699 | ||||||
Stockholders’ Deficit | ||||||||
Preferred Stock, $0.001 par value, 20,001,000 shares authorized, | ||||||||
330,000 and 0 shares issued and outstanding | 330 | 330 | ||||||
Common Stock, $0.001 par value, 4,000,000,000 shares authorized, | ||||||||
525,692,734 and 454,838,100 shares issued and outstanding | 525,692 | 454,838 | ||||||
Additional Paid In Capital | 5,581,706 | 5,582,991 | ||||||
Accumulated Deficit | (8,397,741 | ) | (8,032,780 | ) | ||||
Total Stockholders’ Deficit | (2,290,013 | ) | (1,994,621 | ) | ||||
Total Liabilities and Stockholders’ Deficit | $ | 2,486 | $ | 1,078 |
The Accompanying Notes are an Integral Part of these Unaudited Consolidated Financial Statements.
* | |||||||
October 31, 2023 | January 31, 2023 * | ||||||
Assets | |||||||
Current Assets | |||||||
Cash and Cash Equivalents | $ | 12,490 | $ | 4,737 | |||
Inventory | 33,337 | 50,000 | |||||
Prepaid Expenses | 35,881 | 8,019 | |||||
Other Current Assets | 7,023 | 34,989 | |||||
Total Current Assets | 88,731 | 97,745 | |||||
Operating Lease Assets | 90,556 | 138,551 | |||||
Property and Equipment, net of accumulated depreciation of $160,672 and $173,475 | 74,131 | 171,472 | |||||
Total Assets | $ | 253,418 | $ | 407,768 | |||
Liabilities and Stockholders’ Deficit | |||||||
Current Liabilities | |||||||
Accounts Payable | $ | 1,441,366 | $ | 1,378,637 | |||
Accrued Interest Payable and Accrued Expenses | 4,111,997 | 2,334,368 | |||||
Accrued Expenses – Related Party | — | 74,111 | |||||
Customer Deposits | 8,912 | 38,448 | |||||
Deferred Revenue | 1,296 | 66,153 | |||||
Short-Term Debt | 3,108,514 | 3,088,993 | |||||
Current Operating Lease Liability | 24,373 | 53,912 | |||||
Short-Term Convertible Debt, net of debt discount of $361,023 and $840,067 | 11,763,014 | 10,438,583 | |||||
Derivative Liabilities | 6,468,586 | 3,271,058 | |||||
Shareholder Loans Payable | 255,893 | — | |||||
Current Portion – Long-Term Debt | 15,558 | 24,569 | |||||
Total Current Liabilities | 27,199,509 | 20,768,832 | |||||
Non-Current Lease Liability | 66,183 | 84,639 | |||||
Long-Term Debt | 39,585 | 87,423 | |||||
Total Liabilities | 27,305,277 | 20,940,894 | |||||
Commitments and Contingencies | |||||||
Redeemable Preferred Stock (Temporary Equity) | |||||||
Series D Preferred Stock, $ | par value, shares authorized, and shares issued and outstanding, see Note 11870,000 | 870,000 | |||||
Stockholders’ Deficit | |||||||
Preferred Stock – Series A, $ | par value, shares authorized, and shares issued and outstanding— | — | |||||
Preferred Stock – Series B, $ | par value, shares authorized, and shares issued and outstanding20 | 20 | |||||
Preferred Stock – Series C, $ | par value, shares authorized, and shares issued and outstanding— | — | |||||
Common Stock, $ | par value, shares authorized, and shares issued, issuable and outstanding7 | 2 | |||||
Additional Paid In Capital | 25,488,242 | 24,833,110 | |||||
Accumulated Deficit | (53,410,128 | ) | (46,236,258 | ) | |||
Total Stockholders’ Deficit | (27,921,859 | ) | (21,403,126 | ) | |||
Total Liabilities and Stockholders’ Deficit | $ | 253,418 | $ | 407,768 |
| Derived from audited information |
(Unaudited)
2016 | 2015 | |||||||
Revenue | $ | 13,445 | $ | 22,435 | ||||
Operating Expenses: | ||||||||
Cost of Revenues | 1,000 | 2,345 | ||||||
Selling and Advertising Expenses | 24,197 | 37,322 | ||||||
General and Administrative | 78,182 | 72,036 | ||||||
Total Operating Expenses | 103,379 | 111,703 | ||||||
Net Operating Loss | (89,934 | ) | (89,268 | ) | ||||
Other Expense | ||||||||
Loss on Derivatives | (210,460 | ) | (191,846 | ) | ||||
Loss on Debt Extinguishment | — | (45,359 | ) | |||||
Interest Expense | (64,567 | ) | (90,726 | ) | ||||
Total Other (Expense) | (275,027 | ) | (327,931 | ) | ||||
Net Loss | $ | (364,961 | ) | $ | (417,199 | ) | ||
Weighted Average Shares Outstanding | 504,658,572 | 153,703,437 | ||||||
Loss Per Share for Common Shareholders | $ | (0.001 | ) | $ | (0.003 | ) | ||
The Accompanying Notes are an Integral Part of these Unaudited Condensed Consolidated Financial Statements.
- 3 -
MEDCAREERSAUTO PARTS 4LESS GROUP, INC.
Condensed Consolidated StatementStatements of Changes in Stockholders’ DeficitOperations
For the Three and Nine Months Ended April 30, 2016 October 31, 2023 and October 31, 2022
(Unaudited)
Retained | ||||||||||||||||||||||||||||
PreferredStock | Common Stock | Paid-In | Earnings | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | (Deficit) | Totals | ||||||||||||||||||||||
Stockholders' Deficit | ||||||||||||||||||||||||||||
at January 31, 2016 | 330,000 | 330 | 454,838,100 | $ | 454,838 | $ | 5,582,991 | $ | (8,032,780 | ) | $ | (1,994,621 | ) | |||||||||||||||
Conversion of | ||||||||||||||||||||||||||||
Notes Payable to Common Stock | 70,854,634 | 70,854 | (53,727 | ) | 17,127 | |||||||||||||||||||||||
Derivative Liability Reclassification Due | ||||||||||||||||||||||||||||
to Debt Conversion | 52,442 | 52,442 | ||||||||||||||||||||||||||
Net Loss | (364,961 | ) | (364,961 | ) | ||||||||||||||||||||||||
Stockholders' Deficit | ||||||||||||||||||||||||||||
at April 30, 2016 | 330,000 | 330 | 525,692,734 | $ | 525,692 | $ | 5,581,706 | $ | (8,397,741 | ) | $ | (2,290,013 | ) |
Three Months Ended | Nine Months Ended | ||||||||||||
October 31, 2023 | October 31, 2022 | October 31, 2023 | October 31, 2022 | ||||||||||
Revenue | $ | 143,696 | $ | 1,017,986 | $ | 339,116 | $ | 4,089,037 | |||||
Cost of Revenue | 37,638 | 846,898 | 70,505 | 3,296,546 | |||||||||
Gross Profit | 106,058 | 171,088 | 268,611 | 792,491 | |||||||||
Operating Expenses: | |||||||||||||
Depreciation | 8,852 | 12,743 | 30,310 | 38,587 | |||||||||
Postage, Shipping and Freight | 15,639 | 32,013 | 29,190 | 146,962 | |||||||||
Marketing and Advertising | 32,469 | 156,522 | 135,986 | 671,348 | |||||||||
E Commerce Services, Commissions and Fees | 92,313 | 396,065 | 360,318 | 1,076,787 | |||||||||
Operating lease cost | 7,500 | 29,219 | 54,502 | 90,177 | |||||||||
Personnel Costs | 22,965 | 131,937 | 134,730 | 505,253 | |||||||||
General and Administrative | 180,539 | 251,408 | 596,638 | 2,849,042 | |||||||||
Total Operating Expenses | 360,277 | 1,009,907 | 1,341,674 | 5,378,156 | |||||||||
Net Operating Loss | (254,219 | ) | (838,819 | ) | (1,073,063 | ) | (4,585,665 | ) | |||||
Other Income (Expense) | |||||||||||||
Gain (Loss) on Sale of Property and Equipment | 6,411 | — | 9,468 | — | |||||||||
Gain (Loss) on Derivatives | (38,261) | (184,146 | ) | (2,178,051 | ) | (841,772 | ) | ||||||
Gain on Settlement of Debt | — | 10,128 | 37,382 | 19,539 | |||||||||
Amortization of Debt Discount | (335,672 | ) | (1,932,722 | ) | (1,422,910 | ) | (4,309,329 | ) | |||||
Interest Expense | (731,321 | ) | (1,186,132 | ) | (2,546,696 | ) | (2,511,548 | ) | |||||
Total Other Income (Expense) | (1,098,843 | ) | (3,292,872 | ) | (6,100,807 | ) | (7,643,110) | ||||||
Net (Loss) | $ | (1,353,062 | ) | $ | (4,131,691 | ) | $ | (7,173,870 | ) | $ | (12,228,775 | ) | |
Basic Weighted Average Shares Outstanding; | 4,756,296 | 1,805,316 | 3,302,841 | 1,576,024 | |||||||||
Basic (Loss) per Share | $ | (0.28 | ) | $ | (2.29 | ) | $ | (2.17 | ) | $ | (7.76 | ) | |
Diluted Average Shares Outstanding; | 4,756,296 | 1,805,316 | 3,302,841 | 1,576,024 | |||||||||
Diluted (Loss) per Share | $ | (0.28 | ) | $ | (2.29 | ) | $ | (2.17 | ) | $ | (7.76 | ) |
The Accompanying Notes are an Integral Part of these Unaudited Condensed Consolidated Financial Statements.
- 4 -
AUTO PARTS 4LESS GROUP, INC.
Condensed Consolidated Statement of Changes in Stockholders’ Deficit
For the Nine Months Ended October 31, 2023 and October 31, 2022
(Unaudited)
Preferred Series A | Preferred Series B | Preferred Series C | Common Stock | Paid in | Accumulated | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Total | |||||||||||||||||||
Balance at January 31, 2022 | — | $ | — | 20,000 | $ | 20 | 7,250 | $ | 7 | 341,023 | $ | — | $ | 19,465,327 | $ | (28,451,733 | ) | $ | (8,986,379 | ) | |||||||||
Conversion of Preferred Series C Shares into Shares Of Common Stock | — | — | — | — | (7,250 | ) | (7 | ) | 905,110 | 1 | 6 | — | — | ||||||||||||||||
Relative Fair Value of Equity Issued with Debt | — | — | — | — | — | — | 254,141 | — | 1,064,965 | — | 1,064,965 | ||||||||||||||||||
Penalty Warrants Recorded as Interest | — | — | — | — | — | — | — | — | 315,150 | — | 315,150 | ||||||||||||||||||
Rounding shares | — | — | — | — | — | — | 88 | — | — | — | — | ||||||||||||||||||
Net (Loss) | — | — | — | — | — | — | — | — | — | (2,594,158 | ) | (2,594,158 | ) | ||||||||||||||||
Balance at April 30, 2022 | — | $ | — | 20,000 | $ | 20 | — | $ | — | 1,500,362 | $ | 1 | $ | 20,845,448 | $ | (31,045,891 | ) | $ | (10,200,422 | ) | |||||||||
Relative Fair Value of Equity Issued with Debt | — | — | — | — | — | — | 221,500 | 1 | 794,465 | — | 794,466 | ||||||||||||||||||
Exercise of Warrants | — | — | — | — | — | — | 10,000 | — | — | — | — | ||||||||||||||||||
Penalty Warrants Recorded as Interest | — | — | — | — | — | — | — | — | 280,050 | — | 280,050 | ||||||||||||||||||
Stock Based Compensation | — | — | — | — | — | — | — | — | 1,998,000 | — | 1,998,000 | ||||||||||||||||||
Rounding shares | — | — | — | — | — | — | 2,587 | — | — | — | — | ||||||||||||||||||
Net (Loss) | — | — | — | — | — | — | — | — | — | (5,502,926 | ) | (5,502,926 | ) | ||||||||||||||||
Balance at July 31, 2022 | — | $ | — | 20,000 | $ | 20 | — | $ | — | 1,734,449 | $ | 2 | $ | 23,917,963 | $ | (36,548,817 | ) | $ | (12,630,832 | ) | |||||||||
Relative Fair Value of Equity Issued with Debt | — | — | — | — | — | — | 80,000 | — | 567,905 | — | 567,905 | ||||||||||||||||||
Exercise of Warrants | — | — | — | — | — | — | 10,000 | — | — | — | — | ||||||||||||||||||
Penalty Warrants Recorded as Interest | — | — | — | — | — | — | — | — | 203,250 | — | 203,250 | ||||||||||||||||||
Cancelled Shares Pursuant to SEC Ruling | — | — | — | — | — | — | ) | — | — | — | — | ||||||||||||||||||
Net (Loss) | — | — | — | — | — | — | — | — | — | (4,131,691 | ) | (4,131,691 | ) | ||||||||||||||||
Balance at October 31, 2022 | — | $ | — | 20,000 | $ | 20 | — | $ | — | 1,823,708 | $ | 2 | $ | 24,689,118 | $ | (40,680,508 | ) | $ | (15,991,368 | ) |
- 5 -
|
(Unaudited)
Preferred Series A | Preferred Series B | Preferred Series C | Common Stock | Paid in | Accumulated | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Total | |||||||||||||||||||
January 31, 2023 | — | $ | — | 20,000 | $ | 20 | — | $ | — | 1,917,982 | $ | 2 | $ | 24,833,110 | $ | (46,236,258 | ) | $ | (21,403,126 | ) | |||||||||
Common Stock Issued as Payment for Accrued Expenses | — | — | — | — | — | — | 167,958 | — | 122,109 | — | 122,109 | ||||||||||||||||||
Conversion of Notes Payable and Accrued Interest into Shares Of Common Stock | — | — | — | — | — | — | 434,434 | 1 | 105,819 | — | 105,820 | ||||||||||||||||||
Derivative Liability Reclassified as Equity Upon Conversion of Common Shares | — | — | — | — | — | — | — | — | 81,429 | — | 81,429 | ||||||||||||||||||
Penalty Warrants Expensed as Interest | — | — | — | — | — | — | — | — | 34,500 | — | 34,500 | ||||||||||||||||||
Relative Fair Value of Equity Issued with Debt | — | — | — | — | — | — | 50,000 | — | 32,984 | — | 32,984 | ||||||||||||||||||
Net (Loss) | — | — | — | — | — | — | — | — | — | (2,871,291 | ) | (2,871,291 | ) | ||||||||||||||||
April 30, 2023 | — | $ | — | 20,000 | $ | 20 | — | $ | — | 2,570,374 | $ | 3 | $ | 25,209,951 | $ | (49,107,549 | ) | $ | (23,897,575 | ) | |||||||||
Penalty Warrants Expensed as Interest | — | — | — | — | — | — | — | — | 78,020 | — | 78,020 | ||||||||||||||||||
Relative Fair Value of Equity Issued with Debt | — | — | — | — | — | — | 962,000 | 1 | (1) | — | — | ||||||||||||||||||
Net (Loss) | — | — | — | — | — | — | — | — | — | (2,949,517 | ) | (2,949,517 | ) | ||||||||||||||||
July 31, 2023 | — | $ | — | 20,000 | $ | 20 | — | $ | — | 3,532,374 | $ | 4 | $ | 25,287,970 | $ | (52,057,066 | ) | $ | (26,769,072 | ) | |||||||||
Conversion of Notes Payable and Accrued Interest into Shares Of Common Stock | — | — | — | — | — | — | 3,415,847 | 3 | 65,161 | — | 65,164 | ||||||||||||||||||
Derivative Liability Reclassified as Equity Upon Conversion of Common Shares | — | — | — | — | — | — | — | — | 124,764 | — | 124,764 | ||||||||||||||||||
Penalty Warrants Expensed as Interest | — | — | — | — | — | — | — | — | 8,370 | — | 8,370 | ||||||||||||||||||
Relative Fair Value of Equity Issued with Debt | — | — | — | — | — | — | 134,200 | — | 1,977 | — | 1,977 | ||||||||||||||||||
Net (Loss) | — | — | — | — | — | — | — | — | — | (1,353,062 | ) | (1,353,062 | ) | ||||||||||||||||
October 31, 2023 | — | $ | — | 20,000 | $ | 20 | — | $ | — | 7,082,421 | $ | 7 | $ | 25,488,242 | $ | (53,410,128 | ) | $ | (27,921,859 | ) |
2016 | 2015 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net Loss | $ | (364,961 | ) | $ | (417,199 | ) | ||
Adjustments to reconcile net loss to cash used by operating activities: | ||||||||
Loss on change of Derivative Liabilities | 210,460 | 191,846 | ||||||
Loss of Debt Extinguishment | — | 45,359 | ||||||
Amortization of Debt Discount | 37,169 | 59,441 | ||||||
Amortization of Deferred Financing Costs | 2,490 | — | ||||||
Change in Operating Assets and Liabilities: | ||||||||
Decrease (Increase) in Other Current Assets | 83 | — | ||||||
Decrease (Increase) in Accounts Receivable | — | (5,000 | ) | |||||
(Decrease) Increase in Accounts Payable | 4,723 | 5,128 | ||||||
Increase in Accrued Expenses | 4,131 | 8,816 | ||||||
Increase in Deferred Revenue | — | (3,000 | ) | |||||
Increase in Interest Payable | 27,396 | 28,787 | ||||||
CASH FLOWS (USED IN) OPERATING ACTIVITIES | (78,509 | ) | (85,822 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Proceeds from Notes Payable | 80,000 | 65,500 | ||||||
Payments on Notes Payable | — | (25,000 | ) | |||||
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES | 80,000 | 40,500 | ||||||
NET INCREASE (DECREASE) IN CASH | 1,491 | (45,322 | ) | |||||
CASH AT BEGINNING OF PERIOD | — | 49,881 | ||||||
CASH AT END OF PERIOD | $ | 1,491 | $ | 4,559 | ||||
Cash Paid for Interest | $ | — | $ | 12,721 | ||||
Income Taxes | $ | — | $ | — | ||||
Discount Related to Convertible Debt | $ | 80,000 | $ | 54,179 | ||||
Issuance of Common Shares for Debt conversion | $ | 17,127 | $ | 91,626 | ||||
APIC Write Off Due to Debt Conversion | $ | 52,442 | $ | 258,534 | ||||
Debt Extinguished by Issuing New Debt | $ | — | $ | 97,920 |
The Accompanying Notes are an Integral Part of these Unaudited Condensed Consolidated Financial Statements.
- 6 -
AUTO PARTS 4LESS GROUP, INC.
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended October 31, 2023 and October 31, 2022
(Unaudited)
2023 | 2022 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
Net (Loss) | $ | (7,173,870 | ) | $ | (12,228,775 | ) | |
Adjustments to reconcile net income (loss) to cash used by operating activities: | |||||||
Depreciation | 30,310 | 38,587 | |||||
Inventory Provision | — | 143,000 | |||||
Reduction of Right of Use Asset | 47,995 | 77,782 | |||||
Accretion of Lease Liability | 6,507 | 12,396 | |||||
(Gain) loss in Fair Value on Derivative Liabilities | 2,178,051 | 841,772 | |||||
Amortization of Debt Discount | 1,422,910 | 4,309,329 | |||||
Debt Discount in Excess of Face Value of Note to Interest Expense | 318,355 | 225,429 | |||||
Loan Penalties Capitalized to Loan and Accrued Interest | 90,928 | 600,000 | |||||
Debt Discount Expensed | 5,000 | — | |||||
Interest Expense on Penalty Warrants | 120,890 | 798,450 | |||||
Stock Based Compensation | — | 1,998,000 | |||||
Gain on Sale of Property and Equipment | (9,468 | ) | — | ||||
Deferred salary for former CEO | 20,000 | — | |||||
Gain on Settlement of Debt | (37,382 | ) | (19,539 | ) | |||
Change in Operating Assets and Liabilities: | |||||||
(Increase) Decrease in Inventory | 16,661 | 147,333 | |||||
(Increase) Decrease in Prepaid Rent and Expenses | (27,862 | ) | 12,077 | ||||
(Increase) Decrease in Other Current Assets | 27,966 | (17,779 | ) | ||||
Decrease in Bank Overdraft | — | (11,055 | ) | ||||
Increase in Accounts Payable | 85,056 | 95,931 | |||||
Increase in Accrued Interest Payable and Accrued Expenses | 1,986,639 | 741,729 | |||||
Operating Lease Payments | (54,502 | ) | (90,178 | ) | |||
Decrease in Accrued Expenses -Related Party | — | (500 | ) | ||||
Increase (Decrease) in Customer Deposits | (29,536 | ) | (473,044 | ) | |||
Decrease in Deferred Revenue | (64,857 | ) | (598,990 | ) | |||
CASH FLOWS (USED IN) OPERATING ACTIVITIES | (1,040,209 | ) | (3,398,045 | ) | |||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
Disposal of fixed assets | 11,500 | — | |||||
Purchase of Property and Equipment | — | (1,142 | ) | ||||
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES | 11,500 | (1,142 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
Proceeds from Convertible Notes Payable | 788,702 | 4,006,714 | |||||
Proceeds on Short Term Debt | 107,980 | — | |||||
Payments on Short Term Debt | (91,900 | ) | (376,699 | ) | |||
Shareholder Loans Payable | 255,893 | 20,000 | |||||
Repayments on Shareholder Loans Payable | — | (33,561 | ) | ||||
Payments on Long Term Debt | (14,213 | ) | (20,739 | ) | |||
Payments on Convertible Notes Payable | (10,000 | ) | (228,000 | ) | |||
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES | 1,036,462 | 3,367,715 | |||||
NET INCREASE (DECREASE) IN CASH | 7,753 | (31,472 | ) | ||||
CASH AT BEGINNING OF PERIOD | 4,737 | 77,498 | |||||
CASH AT END OF PERIOD | $ | 12,490 | $ | 46,026 | |||
Supplemental Disclosure of Cash Flows Information: | |||||||
Cash Paid for Interest | $ | 45,783 | $ | 75,038 | |||
Convertible Notes Interest and Derivatives Converted to Common Stock | $ | 374,577 | $ | — | |||
Fair Value of Instruments Issued With Debt | $ | 34,961 | $ | 2,427,336 | |||
Derivative Debt Discount | $ | 779,922 | $ | 1,557,922 | |||
Debt Discount | $ | 128,869 | $ | 772,796 | |||
Transfer of Short-term Loan , Shareholder Loan and Accounts payable to Convertible Note | $ | — | $ | 210,740 | |||
Issuance of Shares as Payment of Accrued Expenses | $ | 122,109 | $ | — | |||
Transfer of Vehicle at Fair Market Value to Accounts Payable Related Party | $ | 65,000 | $ | — | |||
Transfer of Vehicle Loan to Accounts Payable Related Party | $ | 42,535 | $ | — |
MEDCAREERSThe Accompanying Notes are an Integral Part of these Unaudited Condensed Consolidated Financial Statements.
- 7 -
AUTO PARTS 4LESS GROUP, INC.
Notes to Condensed Consolidated Financial Statements
April 30, 2016 and 2015 (Unaudited)
NOTE 1 – NATURE OF ACTIVITIESBUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Business:
Nature of Activities, HistoryBusiness – 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 Organization –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 RX Scripted,Vegas Suspension & Offroad, LLC on December 30, 2004October 24, 2013 as a North CarolinaNevada 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 RX Scripted,an e-commerce auto and truck parts sales company. As a result of the share exchange, The 4Less Group, Inc. onis 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 5, 2007 and operates a website for nurses, nursing schools and nurses organizations which enables30, 2019 4LESS changed its name to Auto Parts 4Less, Inc. On April 28, 2022 the respective entitiesCompany changed its name from The 4Less Group, Inc. to communicate more easily and efficiently with their members.Auto Parts 4Less Group, Inc.
Significant Accounting Policies:
The Company’s management selects accounting principles generally accepted in the United States of America and adopts methods for their application. The application of accounting principles requires the estimating, matching and timing of revenue and expense. The accounting policies used conform to generally accepted accounting principles which have been consistently applied in the preparation of these condensed financial statements.
Basis of Presentation:
The Company prepares its financial statements on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States.
The accompanying unaudited condensed consolidated financial statements and related notes have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim unaudited consolidated financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete consolidated financial statements. Certain information and footnote disclosure normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to instructions, rules, and regulations prescribed by the SEC. The unaudited consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended January 31, 2023 and notes thereto contained in the Company’s Annual Report on Form 10-K filed on August 11, 2023.
Principles of Consolidation:
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.
Use of Estimates:
In order to prepare financial statements in conformity with accounting principles generally accepted in the United States, management must make estimates, judgments and assumptions that affect the amounts reported in the financial statements and determine whether contingent assets and liabilities, if any, are disclosed in the financial statements. The ultimate resolution of issues requiring these estimates and assumptions could differ significantly from resolution currently anticipated by management and on which the financial statements are based. The most significant estimates included in these consolidated financial statements are those associated with the assumptions used to value derivative liabilities.
Policy on Related Party Transactions:Reclassifications
Certain amounts in the Company’s condensed consolidated financial statements for prior periods have been reclassified to conform to the current period presentation. These reclassifications have not changed the results of operations of prior periods.
Cash and Cash Equivalents:
The companyCompany considers all highly liquid instruments with a maturity of three months or less to be cash equivalents. At times, cash balances may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. The carrying amount of cash and cash equivalents approximates fair market value.
Inventory Valuation
Inventories are stated at the lower of cost or net realizable value. Inventories are valued on a first-in, first-out (FIFO) basis. Inventory is comprised of finished goods.
Concentrations
Cost of Goods Sold
For the nine months ended October 31, 2023 the Company purchased approximately 49% 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 $339,864. 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. The Company believes there are numerous other suppliers that could be substituted should a supplier become unavailable or non-competitive.
Leases
We elected the hindsight practical expedient to determine the lease term for existing leases. Our election of the hindsight practical expedient resulted in the shortening of lease terms for certain existing leases and the useful lives of corresponding leasehold improvements. In our application of hindsight, we evaluated the performance of the leased stores and the associated markets in relation to our overall real estate strategies, which resulted in the determination that most renewal options would not be reasonably certain in determining the expected lease term.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized when items of income and expense are recognized in the financial statements in different periods than when recognized in the tax return. Deferred tax assets arise when expenses are recognized in the financial statements before the tax returns or when income items are recognized in the tax return prior to the financial statements. Deferred tax assets also arise when operating losses or tax credits are available to offset tax payments due in future years. Deferred tax liabilities arise when income items are recognized in the financial statements before the tax returns or when expenses are recognized in the tax return prior to the financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was signed into law. ASC 740, Accounting for Income Taxes requires companies to recognize the effects of changes in tax laws and rates on deferred tax assets and liabilities and the retroactive effects of changes in tax laws in the period in which the new legislation is enacted. The Company’s gross deferred tax assets were revalued based on the reduction in the federal statutory tax rate from 35% to 21%. A corresponding offset has been made to the valuation allowance, and any potential other taxes arising due to the Tax Act will result in reductions to the Company’s net operating loss carryforward and valuation allowance. The Company will continue to analyze the Tax Act to assess its full effects on the Company’s financial results, including disclosures, for the Company’s fiscal year ending January 31, 2023, but the Company does not expect the Tax Act to have a material impact on the Company’s consolidated financial statements.
Fair Value of Financial Instruments:
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, 2023:
October 31, 2023 | Quoted Prices in Active Markets For Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||
Liabilities: | |||||||||||||
Derivative Liabilities – embedded redemption feature | $ | 6,468,586 | $ | — | $ | — | $ | 6,468,586 | |||||
Totals | $ | 6,468,586 | $ | — | $ | — | $ | 6,468,586 |
Related Party Transactions:
The Company has a formal, writtenverbal 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 (including all of Medcareers’ directors and executive officers) 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.
Recently Issued Accounting Pronouncements:Derivative Liability
The derivative liabilities are valued as a level 3 input under the fair value hierarchy for valuing financial instruments. The derivatives arise from convertible debt where the debt and accrued interest is convertible into common stock at variable conversion prices and reclassification of equity instrument to liability due to insufficient shares for issuance. As the price of the common stock varies, it triggers a gain or loss based upon the discount to market assuming the debt was converted at the balance sheet date. When evaluating the effect of the issuance of new equity-linked or equity-settled instruments on previously issued instruments, the Company uses first-in, first-out method (“FIFO”) where authorized and unused shares would first be used to satisfy the earliest issued equity-linked instruments.
The fair value of the derivative liability is determined using a lattice model, is re-measured on the Company’s reporting dates, and is affected by changes in inputs to that model including our stock price, historical stock price volatility, the expected term, and both high risk and the risk-free interest rate. The most sensitive inputs to the model are for expected time for the holder to convert or be repaid and the estimated historical volatility of the Company’s common stock. However, because the historical volatility of the Company’s common stock is so high (see Note 10), the sensitivity required to change the liability by 1% as of 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.
Revenue Recognition
The Company recognizes revenue under ASC 606, “Revenue from Contracts with Customers:Customers In May 2014, ASC 606 was issued related to. The core principle of the revenue from contracts with customers. Under this guidance,standard is that a company should recognize revenue when control is recognized whentransferred over the promised goods or services are transferred to customers in an amount that reflects the consideration that is expectedto which the company expects to be receivedentitled in exchange for those goods or services. The updated standard will replace most existing revenue recognition guidance under GAAPCompany only applies the five-step model to contracts when it becomes effectiveis probable that the Company will collect the consideration it is entitled to in exchange for the goods and permitsservices transferred to the usecustomer. 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 eitherone year or less, the retrospective 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, 2023 and 2022:
Schedule of revenue split between proprietary and third-party website revenue
Change | ||||||||||||
2023 | 2022 | $ | % | |||||||||
Proprietary website revenue | $ | 41,710 | $ | 611,799 | $ | (570,089 | ) | (93% | ) | |||
Third party website revenue | 101,986 | 406,187 | (304,201 | ) | (75% | ) | ||||||
Total Revenue | $ | 143,696 | $ | 1,017,986 | $ | (874,290 | ) | (86% | ) |
The following table shows revenue split between proprietary and third-party website revenue for the nine months ended October 31, 2023 and 2022:
Change | ||||||||||||
2023 | 2022 | $ | % | |||||||||
Proprietary website revenue | $ | 159,726 | $ | 2,750,636 | $ | (2,590,910 | ) | (94% | ) | |||
Third party website revenue | 179,390 | 1,338,401 | (1,159,011 | ) | (87% | ) | ||||||
Total Revenue | $ | 339,116 | $ | 4,089,037 | $ | (3,749,921 | ) | (92% | ) |
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.
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.
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 cumulativewarrants. Diluted EPS excluded all dilutive potential shares if their effect transition method. Early adoption is not permitted.anti-dilutive.
Basic loss per common share is computed based on the weighted average number of shares outstanding during the period. Diluted loss per share is computed in a manner similar to the basic loss per share, except the weighted-average number of shares outstanding is increased to include all common shares, including those with the potential to be issued by virtue of convertible debt and other such convertible instruments. Diluted loss per share contemplates a complete conversion to common shares of all convertible instruments only if they are dilutive in nature with regards to earnings per share.
Recently Issued Accounting Standards:
In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350) which simplifies goodwill impairment testing by requiring that such periodic testing be performed by comparing the fair value of a reporting unit with its carrying amount and recognizing an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The standard will bepolicy is effective for the Company's fiscal year beginning January 1, 2017,years, including interim reportingperiods, 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 year.have been eliminated. The newadoption of this guidance ison February 1, 2020 did not expected to have ana material impact on the Company'sour 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.
In January 2020, the FASB issued new guidance intended to clarify certain interactions between accounting standards related to equity securities, equity method investments and certain derivatives. The guidance addresses accounting for the transition into and out of the equity method of accounting and measuring certain purchased options and forward contracts to acquire investments. The Company adopted the new guidance effective February 1, 2021. There was no impact to the Company’s consolidated financial statements upon adoption.
In August 2020, the FASB issued amended guidance on the accounting for convertible instruments and contracts in an entity’s own equity. The guidance removes the separation model for convertible debt instruments and preferred stock, amends requirements for conversion options to be classified in equity as well as amends diluted earnings per share (EPS) calculations for certain convertible debt instruments. The amended guidance is effective for interim and annual periods in 2022. The application of the amendments in the new guidance are to be applied either on a modified retrospective or a retrospective basis. We are currently assessing the effect that the adoption of this standard will have on the Company’s consolidated financial statements upon adoption
In addition to the above, the Company has reviewed all other recently issued, but not yet effective, accounting pronouncements, and does not believe the future adoption of any such pronouncements will have a material impact on its financial condition or the results of its operations.
Recently Issued Accounting Standards Not Yet Adopted
In March 2020, the FASB issued optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting and subsequently issued clarifying amendments. The guidance provides optional expedients and exceptions for accounting for contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued because of reference rate reform. The optional guidance is effective upon issuance and can be applied on a prospective basis at any time between January 1, 2020 through December 31, 2022. The Company is currently evaluating the impact of adoption on its consolidated financial statements.
In October 2021, the FASB issued amended guidance that requires acquiring entities to recognize and measure contract assets and liabilities in a business combination in accordance with existing revenue recognition guidance. The amended guidance is effective for interim and annual periods in 2023 and is to be applied prospectively. Early adoption is permitted on a retrospective basis to the beginning of the fiscal year of adoption. The adoption of this guidance will not have a material impact on the Company’s consolidated financial statements for prior acquisitions; however, the impact in future periods will be dependent upon the contract assets and contract liabilities acquired in future business combinations.
In November 2021, the FASB issued new guidance to increase the transparency of transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. The guidance requires annual disclosures of such transactions to include the nature of the transactions and the significant terms and conditions, the accounting treatment and the impact to the company’s financial statements. The guidance is effective for annual periods beginning in 2022 and is to be applied on either a prospective or retrospective basis. The Company is currently evaluating the impact of adoption on its consolidated financial statements.
There were various other accounting standards and interpretations issued recently, none of which are expected to a have a material impact on our financial position, operations or cash flows.
NOTE 2 – GOING CONCERN AND FINANCIAL POSITION
The consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has an accumulated deficit of $53,410,128 as of October 31, 2023 and has a working capital deficit at October 31, 2023 of $27,110,778. As of October 31, 2023, the Company only had cash and cash equivalents of $12,490 and approximately $14,446,000 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.
- 13 -
NOTE 2 3 – PROPERTY
The Company capitalizes all property purchases over $1,000 and depreciates the assets on a straight-line basis over their useful lives of 3 years for computers and 7 years for all other assets. Property consists of the following at October 31, 2023 and January 31, 2023:
October 31, 2023 | January 31, 2023 | ||||||
Office furniture, fixtures and equipment | $ | 95,183 | $ | 95,183 | |||
Shop equipment | 43,004 | 43,004 | |||||
Vehicles | 96,616 | 206,760 | |||||
Sub-total | 234,803 | 344,947 | |||||
Less: Accumulated depreciation | (160,672 | ) | (173,475 | ) | |||
Total Property | $ | 74,131 | $ | 171,472 |
There were no additions to fixed assets for the nine months ended October 31, 2023. Additions to fixed assets for the nine months ended October 31, 2022 were $1,142.
For the nine months ended October 31, 2023, a vehicle having a cost of $89,711 and a net book value of $61,953 was sold to a former director for fair value proceeds of $65,000 and a gain on sale of property and equipment of $3,057 were recorded. Also, another vehicle having a cost of $20,433 and a net book value of $5,089 was sold for proceeds of $11,500 and a gain on sale of property and equipment of $6,411 was recorded. There were no disposals for the nine months ended October 31, 2022.
Depreciation expense was $8,852 and $12,743 for the three months ended October 31, 2023, and October 31, 2022, respectively.
Depreciation expense was $30,310 and $38,587 for the nine months ended October 31, 2023, and October 31, 2022, respectively.
NOTE 4 – LEASES
We lease certain warehouses and office space. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. 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, 2023 and January 31, 2023.
Leases | Classification | October 31, 2023 | January 31, 2023 | ||||||
Assets | |||||||||
Operating | Operating Lease Assets | $ | 90,556 | $ | 138,551 | ||||
Liabilities | |||||||||
Current | |||||||||
Operating | Current Operating Lease Liability | $ | 24,373 | $ | 53,912 | ||||
Noncurrent | |||||||||
Operating | Noncurrent Operating Lease Liabilities | 66,183 | 84,639 | ||||||
Total lease liabilities | $ | 90,556 | $ | 138,551 |
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 $7,500 and $29,219 for the three months ended October 31, 2023, and October 31, 2022, respectively.
Operating lease cost and rent was $54,502 and $90,177 for the nine months ended October 31, 2023, and October 31, 2022, respectively.
- NOTES14 -
NOTE 5 – ACCRUED INTEREST PAYABLE AND ACCRUED EXPENSES
Accrued interest payable and accrued expenses as of October 31, 2023 and January 31, 2023 were as follows:
October 31, 2023 | January 31, 2023 | ||||||
Accrued interest payable | $ | 3,954,350 | $ | 2,001,391 | |||
Accrued expenses | 157,647 | 332,977 | |||||
Total | $ | 4,111,997 | $ | 2,334,368 |
NOTE 6 – CUSTOMER DEPOSITS
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 2023 or will remain as deposits until the item is either delivered and recorded as revenue or cancelled and refunded. At October 31, 2023 the Company had received $8,912 (January 31, 2023 - $38,448) in customer deposits for orders that were unfulfilled at October 31, 2023 and either canceled subsequent to year end or still awaiting shipment.
NOTE 7 – DEFERRED REVENUE
The Company receives payments from customers on orders prior to shipment and orders that were unfulfilled at October 31, 2023 because of both normal order processing and fulfillment requirements, and back orders are recorded as deferred revenue. At October 31, 2023 the Company had received $1,296 (January 31, 2023 - $66,153) in customer payments for orders that were unfulfilled at October 31, 2023 and delivered subsequent to October 31, 2023.
NOTE 8 – SHORT-TERM AND LONG-TERM DEBT
The components of the Company’s debt as of April 30, 2016October 31, 2023 and January 31, 20162023 were as follows:
Schedule of the components of the Company’s debt
Apr 2016 | Jan 2016 | |||||||
Note Payable - $100,000, 12% interest payable monthly or accrued, due Nov 4, 2013 | $ | 100,000 | $ | 100,000 | ||||
Note Payable - $16,000, 12% interest added to note quarterly, due January 31, 2014 | 16,000 | 16,000 | ||||||
Note Payable - $45,000, 12% interest added to note quarterly, due Nov 5, 2013 | 45,000 | 45,000 | ||||||
Note Payable - $5,000, 12% interest added to note quarterly, due Nov 5, 2013 | 5,000 | 5,000 | ||||||
Note Payable - $40,000, 12% interest added to note quarterly, due April 28, 2013 | 18,000 | 18,000 | ||||||
Note Payable - $490,150, 12% interest payable monthly or accrued, due Oct 29, 2013 | 479,150 | 479,150 | ||||||
Note Payable - $4,000, 12% interest added to note quarterly, due April 30, 2013 | 4,000 | 4,000 | ||||||
Note Payable - $25,000, 12% interest added to note quarterly, due April 30, 2013 | 25,000 | 25,000 | ||||||
Note Payable - $5,000, 12% interest added to note quarterly, due Nov 5, 2013 | 30,000 | 30,000 | ||||||
Note Payable - $5,000, 8% interest payable accrued to maturity, due Nov 25, 2015 | 5,000 | 5,000 | ||||||
Note Payable - $57,958, 8% interest payable accrued to maturity, due Sept 10, 2017 | 57,958 | 57,958 | ||||||
Note Payable - $57,958, 8% interest payable accrued to maturity, due Sept 10, 2017 | — | 259 | ||||||
Note Payable - $23,863, 8% interest payable accrued to maturity, due Sept 10, 2017 | 23,863 | 23,863 | ||||||
Note Payable - $12,355 8% interest payable accrued to maturity, due Sept 10, 2017 | 12,355 | 12,355 | ||||||
Note Payable - $34,280, 8% interest payable accrued to maturity, due Sept 10, 2017 | 10,950 | 27,450 | ||||||
Note Payable - $38,677, 8% interest payable accrued to maturity, due Sept 10, 2017 | 38,677 | 38,677 | ||||||
Note Payable - $25,000, 8% interest payable accrued to maturity, due Dec 7, 2017 | 25,000 | 25,000 | ||||||
Note Payable - $25,000, 8% interest payable accrued to maturity, due Feb 3, 2018 | 25,000 | — | ||||||
Note Payable - $30,000, 8% interest payable accrued to maturity, due March 3, 2018 | 30,000 | — | ||||||
Note Payable - $25,000, 8% interest payable accrued to maturity, due March 24, 2018 | 25,000 | — | ||||||
Deferred Financing Costs | (5,751 | ) | (8,240 | ) | ||||
Debt Discount | (147,731 | ) | (104,900 | ) | ||||
Subtotal | $ | 822,471 | $ | 799,572 | ||||
Related Party Debt | ||||||||
Note Payable - $19,500, 8% interest payable accrued until maturity, due Jan 2, 2015 | ||||||||
Note Payable - $5,500, 8% interest payable accrued until maturity, due July 8, 2015 | 5,500 | 5,500 | ||||||
Note Payable - $4,500, 8% interest payable accrued to maturity, due May 5, 2015 | 4,500 | 4,500 | ||||||
Note Payable - $24,297, 8% interest payable accrued to maturity, due May 14, 2015 | 23,297 | 23,297 | ||||||
Note Payable - $7,703, 8% interest payable accrued to maturity, due May 19, 2015 | 7,703 | 7,703 | ||||||
Note Payable - $26,500, 8% interest payable accrued to maturity, due June 12, 2015 | 26,500 | 26,500 | ||||||
Note Payable - $5,000, 8% interest payable accrued until maturity, due July 19, 2016 | 5,000 | 5,000 | ||||||
Subtotal – Related Party Debt | 72,500 | 72,500 | ||||||
Total | $ | 894,971 | $ | 872,072 | ||||
October 31, 2023 | January 31, 2023 | ||||||
Forklift Note Payable, original note of $20,433 Sept 26, 2018, 6.23% interest, 60 monthly payments of $394.54 ending August 2023.(1) | — | 3,836 | |||||
Vehicle loan original loan of $93,239 February 16, 2021, 2.90 % interest. 72 monthly payments of $1,414 beginning on April 2, 2021 and ending on March 2, 2027. Secured by vehicle having net book value of $62,646. | 55,143 | # | 66,538 | ||||
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 $61,943. | — | 45,454 | |||||
Working Capital Note Payable - $700,000, dated October 29, 2021, repayment of $17,904 per week until Oct 29, 2022, interest rate of approximately 31%.(2,4,7)† | 265,846 | * | 351,923 | ||||
Working Capital Note Payable - $650,000, dated October 25, 2021, repayment of $15,875 per week until October 25, 2022, interest rate of approximately 26%.(2,4,8)† | 440,273 | * | 443,819 | ||||
Demand loan - $5,000 dated February 1, 2020, 15% interest, 5% fee on outstanding balance | 5,000 | * | 5,000 | ||||
Demand loan - $2,500, dated March 8, 2019, 25% interest, 5% fee on outstanding balance | 2,500 | * | 2,500 | ||||
Demand loan - $65,500 dated February 27, 2019, 25% interest, 5% fee on outstanding balance, Secured by the general assets of the Company | 12,415 | * | 12,415 | ||||
Promissory note - $60,000 dated September 18, 2020 maturing April 30, 2022(10), including $5,000 original issue discount, 15% per annum compounded interest, payable monthly.† | 60,000 | * | 60,000 | ||||
Promissory note - $425,000 dated August 28, 2020, including $50,000 original issue discount, 15% per annum compounded interest payable at maturity. This note matures when the Company receives proceeds through a financing event of $825,000 plus accrued interest on the note.(5)† | 425,000 | * | 425,000 | ||||
Promissory note - $1,200,000 dated August 28, 2020, maturing August 28, 2022, 12% interest payable monthly with the first six months interest deferred until the 6th month and added to principal.(6)† | 1,200,000 | * | 1,200,000 | ||||
Promissory note - $420,000 dated December 27, 2021, including $20,000 original issue discount, maturing January 27, 2022, non-interest bearing.(9)† | 420,000 | * | 420,000 | ||||
Promissory note - $30,000 dated November 4, 2022, including $5,000 original issue discount, maturing April 30, 2023, non-interest bearing.(11)† | 30,000 | * | 30,000 | ||||
Promissory note - $90,000 dated November 7, 2022, including $15,000 original issue discount, maturing April 30, 2023, non-interest bearing.(3)† | 90,000 | * | 90,000 | ||||
Demand loan, non-interest bearing. | 80,480 | * | 22,500 | ||||
Promissory note - $22,000 dated December 27, 2022, including $2,000 original issue discount maturing January 6, 2023, non-interest bearing.(10)† | 22,000 | * | 22,000 | ||||
Promissory note - $22,000 dated February 21, 2023, including $2,000 original issue discount maturing April 1, 2023, non-interest bearing.(10)† | 22,000 | * | — | ||||
Promissory note - $30,000 dated April 21, 2023, including $3,000 original issue discount maturing September 30, 2023, non-interest bearing.(12) † | 33,000 | * | — | ||||
Total | $ | 3,163,657 | $ | 3,200,985 |
October 31, 2023 | January 31, 2023 | ||||||
Short-Term Debt | $ | 3,108,514 | $ | 3,088,993 | |||
Current Portion of Long-Term Debt | 15,558 | 24,569 | |||||
Long-Term Debt | 39,585 | 87,423 | |||||
Total | $ | 3,163,657 | $ | 3,200,985 |
* | Short-term loans. |
# | Long-term loan of $55,143 including current portion $15,558. |
† | In default $3,008,119. |
(1) | Vehicle sold and loan fully paid on October 6, 2023. |
(2) | The amounts due under the note are personally guaranteed by an officer or a director of the Company. |
(3) | Secured by all the assets of the Company. Penalty of 10% of principal amount and 60,000 3 year warrants with an exercise price based on based on previous day closing price on initial default and 2% of principal amount and 60,000 3 year warrants with an exercise price based on previous day closing price for every 30 day default period thereafter. |
(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. |
(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. |
(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 based on previous day closing price for every 30 day default period thereafter. Initial default and subsequent defaults to October 31, 2022 have been recorded. |
(10) | Secured by all the assets of the Company and a personal guaranty from the CEO. Penalty of 15% of principal amount on initial default and 1.5% for every subsequent 7 day default period. |
(11) | Secured by all the assets of the Company. Penalty of 10% of principal amount and 20,000 3 year warrants with an exercise price based on based on previous day closing price on initial default and 2% of principal amount and 20,000 3 year warrants with an exercise price based on previous day closing price for every 30 day default period thereafter. |
(12) | Secured by all the assets of the Company. Penalty of 10% of principal amount on initial default and 1.5% for every subsequent 30 day default period. |
The following are the minimum amounts due on the notes as of October 31, 2023:
Year Ended | Amount | |||
October 31, 2024 | $ | 3,124,072 | ||
October 31, 2025 | 16,022 | |||
October 31, 2026 | 16,499 | |||
October 31, 2027 | 7,064 | |||
Total | $ | 3,163,657 |
- 16 -
NOTE 9 – SHORT-TERM CONVERTIBLE DEBT
The components of the Company’s debt as of October 31, 2023 and January 31, 2023 were as follows.
Interest | Default Interest | Conversion | Outstanding Principal at | ||||||
Maturity Date | Rate | Rate | Price (a) | October 31, 2023 | January 31, 2023 | ||||
Nov. 4, 2013* | 12% | 12% | $1,800,000 | $ | 100,000 | $ | 100,000 | ||
Jan. 31, 2014* | 12% | 18% | $2,400,000 | 16,000 | 16,000 | ||||
July 31, 2013* | 12% | 12% | $1,440,000 | 5,000 | 5,000 | ||||
Jan. 31, 2014* | 12% | 12% | $2,400,000 | 30,000 | 30,000 | ||||
Nov. 12, 2022* | 8% | 12% | (1) | 3,000,000 | 3,000,000 | ||||
Feb. 14, 2023* | 12% | 20% | (4) | 2,400,000 | 2,400,000 | ||||
Feb. 25, 2023* | 12% | 20% | (4) | 179,650 | 250,000 | ||||
Feb. 25, 2023* | 12% | 20% | (4) | 700,000 | 700,000 | ||||
Mar. 9, 2023* | 12% | 20% | (4) | 400,000 | 400,000 | ||||
Mar. 9, 2023* | 12% | 20% | (4) | 400,000 | 400,000 | ||||
Apr. 22, 2023* | 12% | 20% | (4) | 880,000 | 880,000 | ||||
Apr. 22, 2023* | 12% | 20% | (4) | 220,000 | 220,000 | ||||
May 19, 2023* | 12% | 16% | (5) | 500,000 | 500,000 | ||||
Feb. 11, 2023* | 12% | 18% | (4) | 275,000 | 275,000 | ||||
Dec. 27, 2022* | 12% | 18% | (4) | 275,000 | 275,000 | ||||
Jan. 6, 2023* | 12% | 18% | (4)(b)(iv) | 140,000 | 125,000 | ||||
Jan. 6, 2023* | 12% | 18% | (4)(b)(iv) | 140,000 | 125,000 | ||||
Jan. 11, 2023* | 12% | 18% | (4)(b)(iv) | 153,890 | 138,890 | ||||
Apr. 22, 2023* | 12% | 18% | (4)(b)(iv) | 290,000 | 275,000 | ||||
Apr. 22, 2023* | 12% | 18% | (4)(b)(iv) | 290,000 | 275,000 | ||||
Sept. 29, 2023* | 12% | 22% | (6)(b)(iii) | 142,263 | 211,428 | ||||
May 10, 2023 | 12% | 18% | (2) | 186,450 | 186,450 | ||||
May 10, 2023 | 12% | 18% | (2) | 186,450 | 186,450 | ||||
Nov. 21, 2023 | 12% | 22% | (2) | 54,432 | 54,432 | ||||
July 5, 2023* | 12% | 18% | (4) | 527,947 | 250,000 | ||||
Apr. 20, 2024 | 12% | 18% | (3) | 69,230 | — | ||||
May 3, 2024 | 10% | 18% | (7) | 176,000 | — | ||||
June 13, 2024 | 10% | 18% | (7) | 127,500 | — | ||||
June 13, 2024 | 12% | 16% | (3) | 64,625 | — | ||||
July 17, 2024 | 10% | 18% | (7) | 127,500 | — | ||||
Sept. 7, 2024 | 10% | 18% | (7) | 67,100 | — | ||||
Sub-total | 12,124,037 | 11,278,650 | |||||||
Debt Discount | (361,023 | ) | (840,067 | ) | |||||
$ | 11,763,014 | $ | 10,438,583 |
* | In default at filing date $11,437,650. |
(1) | lesser of $ 1.25 or 75 % of offering price if there is an uplisting to a national securities exchange. |
(2) | convertible at 20% discount of the offering price on company’s uplist to NASDAQ and convertible upon default at conversion price lower of 75% of lowest trading price 20 days prior to conversion. |
(3) | lesser of $ 0.25 or 75 % of offering price if there is an uplisting to a national securities exchange. |
(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. |
(7) | lower of $0.20 or 20% discount on previous days close |
(a) | Note all conversions are subject to dilutive issuance clauses where the conversion price will revert to the lowest transacted share price. |
(b) | All debt issuances are subject to events of default which may trigger penalties. The Company was in default of non payment at maturity and therefore penalties resulted on some of the loans. Penalties totaling $90,928 were added to the principal of the loan with a corresponding adjustment to interest expense. |
(i) | Penalty of 100% of the loan and accrued interest added to the principal and accrued interest, respectively. |
(ii) | Penalty of 25% of the loan and accrued interest added to the principal and accrued interest, respectively. |
(iii) | Penalty of 50% of the loan and accrued interest added to the principal and accrued interest, respectively. |
(iv) | Penalty of 15,000 added to the principal of the loan. |
The Company had accrued interest payable of $317,711$2,849,339 and $290,682 interest$1,342,097 on the notes at April 30, 2016October 31, 2023 and January 31, 2016,2023, respectively.
The Company has entered in to various promissory notes with lenders during the three months ended April 30, 2016 and the year ended January 31, 2016 bearing interest at between 8% and 12% rate per annum, unsecured, payable on demand and convertible into the Company’s common stock. The conversion price ranges from 52% to 50% of the average of the three lowest closing bid prices of the common stock during the 10 or 25 trading days prior to conversion.
The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the instrumentsome instruments should be classified as liabilities due to there being no explicit limit to thea variable number of shares to be delivered upon settlement of the above conversion options. The instrument isinstruments 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.
DuringThe fair value of the embedded conversion option resulted in a discount to the note on the debt modification date. For the three months ended April 30, 2016,October 31, 2023 and 2022, the Company recorded amortization of debt discount expense of $335,672 and $1,932,722, respectively. For the nine months ended October 31, 2023 and 2022, the Company recorded amortization of debt discount expense of $1,422,910 and $4,309,329, respectively.
For both the three months ended October 31, 2023 and 2022 there was $0 in penalty interest to the loans. For the nine months ended October 31, 2023 and 2022 there was $90,028 and $0 in penalty interest to the loans, respectively. For the three months ended October 31, 2023 lenders converted $57,957 of principal, $4,087 of interest, derivative of $124,764 and $3,120 of fees all totaling $189,928 into 3,415,847 common shares with a totalcorresponding increase in paid in capital .For the three months ended October 31, 2022 there were no debt conversions. For the nine months ended October 31, 2023, lenders converted $153,212 of $17,127principal, $12,052 of interest, derivative of $206,193 and $5,720 of fees all totaling $377,177 into 3,850,281 common shares with a corresponding increase in paid in capital. For the nine months ended October 31, 2022 there were no debt conversions.
On April 20, 2023, the Company entered into a convertible note for $77,000 with a one year maturity, interest rate of 12% with a warrant to purchase 388,884 common shares with a five year maturity and an exercise price of $0.25, and 50,000 common shares. The Company will receive $60,800 and recorded an original issue discount of $7,000 along with fees of $9,200, a derivative discount of 60,800 for the conversion feature, recognized $27,541 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 Company expensed $13,428 as interest which was the amount of the convertible debt plus accruedderivative discount that exceeded the face value of the loan. 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 into 70,854,634 common shares.when due and failure to issue shares upon conversion. In the event of these or any other default provisions, the note becomes due and payable at 150%. The note is secured on all assets of the Company subordinated to a prior security.
A summaryIn April 2023, the Company issued an amended and restated note replacing the July 5, 2022 $250,000 note with a January 5, 2023 maturity. In addition, the Company issued a warrant to acquire 97,221 shares with a $1.00 exercise price and a 5 year maturity, and the maturity of the note was revised to July 5, 2023. The terms of the amended note are that the Company received $70,000 with an original issue discount of $7,000 a derivative discount of $76,212 for the conversion feature, recognized $5,443 based on a relative fair value calculation as debt indiscount with a corresponding adjustment to paid-in capital for the attached warrants. The original note had cash proceeds of $225,000 and 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. When combined with the original note, the total new note will now be for $327,000 having total cash proceeds of $295,000 and total original issue discount of $32,000 a derivative discount of $110,072 for the conversion feature, recognized $145,101 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 follows:
2016 | 2015 | |||||||
Convertible debt – fixed conversion rate | $ | 692,150 | $ | 692,150 | ||||
Convertible debt – variable conversion rates, net of debt discount | 105,321 | 82,422 | ||||||
Convertible debt – variable conversion rates, Related Party, net of debt discount | 72,500 | 72,500 | ||||||
Non-Convertible debt | 25,000 | 25,000 | ||||||
Net | $ | 894,971 | 872,072 |
failure to pay any principal or interest when due and failure to issue shares upon conversion.
On May 5, 2023, the Company entered into a convertible note for $176,000 with a May 3, 2024, maturity, interest rate of 10% with 352,000 common shares. The Company has $692,150will receive $155,000 and $692,150recorded an original issue discount of debt that$16,000 along with fees of $5,000. The Company recognized a derivative discount of $155,000 for the conversion feature with an additional $82,212 expensed as interest. The discount is amortized over the term of the loan. The note is convertible at ranges from $0.06 to $1.00 per share and accrues interest between 8% and 12% at April 30,2016 and January 31, 2016 respectively.
The Company has $25,000 and $25,000a price lower of debt which has no conversion feature at April 30, 2016 and January 31, 2016 respectively.
The Company has $105,321 and $82,422$0.20 or 80% of debt (net of debt discount) with variable conversionclosing market price ranges from 52% to 50% of the average of the three lowest closing bid prices of the common stock during the 10 or 25 trading days prior to conversion date. The note has certain default provisions such as failure to pay any principal or interest when due and failure to issue shares upon conversion. In the event of April 30, 2016these or any other default provisions, default interest is 18%. Penalty shares of 16.67% of the outstanding loan balance, per month is due if the note is not paid by November 3, 2023.
On June 1, 2023 the Company further amended the July 5, 2022 note above with a second amendment. The Company received $72,652 with an original issue discount of $8,850 bringing the value of the new note to $408,502 having total cash proceeds of $367,652 with a total original issue discount of $40,850. In addition, the Company issued 100,000 common shares and January 31, 2016 respectively.a warrant to acquire up to 1,000,000 common shares at an exercise price of $0.00001 and a maturity upon full exercise of this warrant. The Company recognized a derivative discount of $72,652 for the conversion feature with an additional $665 expensed as interest. On July 12, 2023, the Company again amended the above note with a third amendment. The Company received $50,000 with an original issue discount of $25,000. The Company recognized a derivative discount of $50,000 for the conversion feature with an additional $16,119 expensed as interest. The discount is amortized over the term of the loan. The principal value of this amended note is now $483,502 with total cash proceeds of $417,652 and total original issue discount of $65,850. All other terms and conditions remain the same. Default interest is 18%.
On June 13, 2023, the Company entered into a convertible note for $127,500 with a June 13, 2024, maturity, interest rate of 10% with 255,000 common shares. The companyCompany received $115,000 and recorded an original issue discount of $11,500 along with fees of $1,000. The Company recognized a derivative discount of $115,000 for the conversion feature with an additional $80,908 expensed as interest. The discount is amortized over the term of the loan. The note is convertible at a price lower of $0.20 or 80% of closing market price prior to conversion date. The note has $72,500certain default provisions such as failure to pay any principal or interest when due and failure to issue shares upon conversion. In the event of related partythese or any other default provisions, default interest is 18%. Penalty shares of 16.67% of the outstanding loan balance, per month is due if the note is not paid by November 3, 2023.
On June 13, 2023, the Company entered into a convertible note for $64,625 with a June 13, 2024, maturity and an interest rate of 10%. The Company received $50,250 and recorded an original issue discount of $6,425 along with fees of $8,500. In addition, the Company issued a warrant to acquire up to 427,750 common shares at an exercise price of $0.25 and a five year term. The Company recognized a derivative discount of $50,250 for the conversion feature with an additional $17,605 expensed as interest. The discount is amortized over the term of the loan. The note is convertible at a price lower of $0.25 or 75% of offering price on uplisting. The note has certain default provisions such as failure to pay any principal or interest when due and failure to issue shares upon conversion. In the event of these or any other default provisions, default interest is 16%.
On July 17, 2023, the Company entered into a convertible note for $127,500 with a July 17, 2024, maturity, interest rate of 10% with 255,000 common shares. The Company received $115,000 and recorded an original issue discount of $11,500 along with fees of $1,000. The Company recognized a derivative discount of $115,000 for the conversion feature with an additional $107,418 expensed as interest. The discount is amortized over the term of the loan. The note is convertible at a price lower of $0.20 or 80% of closing market price prior to conversion date. The note has certain default provisions such as failure to pay any principal or interest when due and failure to issue shares upon conversion. In the event of these or any other default provisions, default interest is 18%. Penalty shares of 16.67% of the outstanding loan balance, per month is due if the note is not paid by January 17, 2024.
On September 7, 2023, the Company entered into a convertible note for $67,100 with a September 7, 2024, maturity, interest rate of 10% with 134,200 common shares. The Company received $60,000 and recorded an original issue discount of $6,000 along with fees of $1,100. The Company recognized a derivative discount of $51,061 and recognized $1,977 based on a relative fair value calculation as a debt discount with a corresponding adjustment to paid-in capital for the attached shares. The discount is amortized over the term of the loan. The note is convertible at a price lower of $0.20 or 80% of closing market price prior to conversion date. The note has certain default provisions such as failure to pay any principal or interest when due and failure to issue shares upon conversion. In the event of these or any other default provisions, default interest is 18%. Penalty shares of 16.67% of the outstanding loan balance, per month is due if the note is not paid by March 6, 2024. The loan is secured against all assets of the Company.
On September 28, 2023 the Company further amended the July 5, 2022 note above with a fourth amendment. The Company received $40,000 with an original issue discount of $4,444 bringing the value of the new note to $527,947 having total cash proceeds of $457,653 with a total original issue discount of $70,294. The Company recognized a derivative discount of $33,947 for the conversion feature.
As of October 31, 2023, the Company had $11,437,650 of aggregate convertible debt at April 30, 2016 and January 31. 2016.
in default. The Company is in default on a number of its promissory notes whichagreements provide legal remedies for satisfaction of defaults, none of whichthe 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. Accordingly, the Company has classified the entire loan amounts as a current liability.
- 19 -
NOTE 3 - STOCKHOLDERS’ DEFICIT10 – DERIVATIVE LIABILITIES
Preferred Stock:
The Company is authorized to issue 20,001,000 sharesAs of Preferred Stock, having a par value of $0.001 per share, of which 500,000 are designated as Series A and 1,000 are designated as Series B.
There were 330,000 Series A preferred shares outstanding at April 30, 2016October 31, 2023, and January 31, 2016.
There were 1,000 Series B preferred shares outstanding at April 30, 20162023, the Company had derivative liabilities of $ 6,468,586 and January$3,271,058, respectively. During the three months ended October 31, 2016.
Common Stock:
The Company is authorized to issue 4,000,000,000 common shares at a par value of $0.001 per share. These shares have full voting rights. At April 30, 20162023, and January 31, 2016, there were 525,692,734 and 454,838,100 shares outstanding, respectively. No dividends were paid in2022, the period ended April 30, 2016 or in the year ended January 31, 2016.
Options and Warrants:
The Company recorded optiona loss of $38,261 and warrant expensea loss of $0 in the period ended April 30, 2016 and the year ended January 31, 2016.
The Company had the following options or warrants outstanding at April 30, 2016:
Issued To | # Options | Dated | Expire | Strike Price | ||||||||||||||||||||||||||||
Shareholder | 127,500 | 08/28/2011 | 08/28/2016 | $0.10 per share | ||||||||||||||||||||||||||||
Shareholder | 127,500 | 04/29/2012 | 04/29/2017 | $0.10 per share | ||||||||||||||||||||||||||||
Shareholder | 127,500 | 07/31/2013 | 07/31/2017 | $0.10 per share | ||||||||||||||||||||||||||||
Shareholder | 1,000,000 | 08/31/2012 | 08/31/2016 | $0.12 per share | ||||||||||||||||||||||||||||
Shareholder | 2,000,000 | 01/18/2013 | 01/18/2018 | $0.05 per share | ||||||||||||||||||||||||||||
Lender | 3,500,000 | 07/02/2015 | 07/01/2019 | $0.10 per share | ||||||||||||||||||||||||||||
Options | Weighted Average | Warrants | Weighted Average | |||||||||||||||||||||||||||||
Exercise | Exercise | |||||||||||||||||||||||||||||||
Price | Price | |||||||||||||||||||||||||||||||
Outstanding at January 31, 2016 | - | $ | 0.25 | 6,982,500 | $ | 0.09 | ||||||||||||||||||||||||||
Granted | - | |||||||||||||||||||||||||||||||
Exercised | - | — | — | — | ||||||||||||||||||||||||||||
Forfeited and canceled | - | 100,000 | ||||||||||||||||||||||||||||||
Outstanding at April 30, 2016 | - | $ | — | 6,882,500 | $ | 0.13 | ||||||||||||||||||||||||||
Summary of warrants outstanding and exercisable as of April 30, 2016 is as follows: | ||||||||||||||||||||||||||||||||
Range of Exercise | Weighted Average | Number of Warrants | Number of Warrants | |||||||||||||||||||||||||||||
Prices | Remaining Contractual | Outstanding | Exercisable | |||||||||||||||||||||||||||||
Life (years) | ||||||||||||||||||||||||||||||||
$ 0.05 to $ 0.12 | 1.86 | 6,882,500 | 6,882,500 | |||||||||||||||||||||||||||||
0 | ||||||||||||||||||||||||||||||||
$ 0.05 to $ 0.12 | 1.86 | 6,882,500 | 6,882,500 | |||||||||||||||||||||||||||||
NOTE 4 – COMMITMENTS AND CONTINGENCIES
There is pending litigation initiated by the Company around the validity of a $100,000 note which the Company signed based upon representations of funding from the maker which were never received. The Company is initiated litigation to dispute the note and the 10,151, 540 shares that have been issued.
NOTE 5 - GOING CONCERN AND FINANCIAL POSITION
MedCareers’ financial statements are prepared using United States generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has incurred cumulative losses through April 30, 2016 of $8,397,741 and has a working capital deficit at April 30, 2016 of $(2,290,013).
Historically, revenues have not been sufficient to cover operating costs that would permit the Company to continue as a going concern. The potential proceeds from the sale of common stock and other contemplated debt and equity financing, and increases in operating revenues from new development and business acquisitions might enable MedCareers to continue as a going concern. These conditions raise substantial doubt about the company’s ability to continue as a going concern. There can be no assurance that the Company can or will be able to complete any debt or equity financing, or develop or acquire one or more business interests on terms favorable to it. MedCareers’ financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The ASC guidance for fair value measurements and disclosure establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:
Level 1 Inputs – Quoted prices for identical instruments in active markets.
Level 2 Inputs – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level 3 Inputs – Instruments with primarily unobservable value drivers.
As of April 30, 2016 and January 31, 2016, the Company’s financial assets were measured at fair value using Level 3 inputs, with the exception of cash, which was valued using Level 1 inputs.
Fair Value Measurement at April 30, 2016 Using:
April 30, 2016 | Quoted Prices in Active Markets For Identical Assets (Level 1) |
Significant Other |
Significant | |||||||||||||
Assets: | ||||||||||||||||
None | $ — | $ — | $ — | $ — | ||||||||||||
Totals | $ — | $ — | $ — | $ — | ||||||||||||
Liabilities: | ||||||||||||||||
Derivative Liabilities | $ | 983,147 | $ | — | $ | — | $ | 983,147 | ||||||||
Totals | $ | 983,147 | $ | — | $ | — | $ | 983,147 | ||||||||
January 31, 2016 | Quoted Prices in Active Markets For Identical Assets (Level 1) |
Significant Other |
Significant | |||||||||||||
Assets: | ||||||||||||||||
None | — | — | — | — | ||||||||||||
Totals | $ | — | $ | — | $ | — | $ | — | ||||||||
Liabilities: | ||||||||||||||||
Derivative Liabilities | $ | 745,129 | — | — | 745,129 | |||||||||||
Totals | $ | 745,129 | $ | — | $ | — | $ | 745,129 | ||||||||
Derivative Liability:
As of April 30, 2016 and January 31, 2016 the company had $983,147 and $745,129 recorded as derivative liabilities. During the periods ended April 30, 2016 and January 31, 2016 the company recorded $210,460 in loss and $633,185 in loss$184,146, respectively, from the change in the fair value of derivative liabilities. During the nine months ended October 31, 2023, and 2022, the Company recorded a loss of $2,178,051 and a loss of $841,772, 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, 2023. Both observable and unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long- dated volatilities) inputs.
Level 3 | ||||
Derivatives | ||||
Balance, January 31, 2023 | $ | 3,271,058 | ||
Changes Due to Issuance of New Convertible Notes | 1,098,277 | |||
Changes due to Settlements of Convertible Notes | 127,393 | |||
Changes due to Conversions of Notes Payable | (206,193 | ) | ||
Mark to Market Change in Derivatives | 2,178,051 | |||
Balance, October 31, 2023 | $ | 6,468,586 |
The derivatives arise from convertible debt where the debt is convertible into common stock at variable conversion prices. Asprices which are linked to the pricetrading and/or bid prices of the Company’s common stock varies it triggers a gain or loss based uponas traded on the discount to market assuming the debt was converted at the balance sheet date.OTC market.
The fair value of the derivative liability is determined using the Black-Scholes option-pricinglattice 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. In our calculation at April 30, 2016, volatility ranged from 385% to 437%,A summary of the term ranged from 0.49 to 0.64 years,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 risk free interest rate was 6%.fair value hierarchy as of October 31, 2023, is as follows:
Level 3 | |||
Derivatives | |||
Balance, January 31, 2016 | $ | 745,129 | |
Derivative Liabilities due to New Convertible Debt | $ | 210,460 | |
Reclassification of Derivative Liabilities to Additional Paid in Capital | |||
Due to Conversion of Notes Payable | $ | (52,442 | ) |
Market to Market adjustment of Derivatives | $ | 80,000 | |
Ending Balance, April 30, 2016 | $ | 983,147 | |
Embedded Derivative Liability As of October 31, 2023 | |||
Strike price | $ | - $||
Contractual term (years) | 0.01 - 0.62 years | ||
Volatility (annual) | 246.2% - 543.2% | ||
Underlying fair market value | $ | ||
Risk-free rate | 5.71% - 6.12% | ||
Dividend yield (per share) | 0 |
NOTE 11 – STOCKHOLDERS’ DEFICIT
NOTE 7 – RELATED PARTY TRANSACTIONSPreferred Stock:
The Series A Preferred Stock has an automatic forced conversion into common stock upon the completion of the repurchase or extinguishing of all “toxic” debt (notes having conversion features tied to the Company’s common stock), the extinguishing of all other existing dilutive debt or equity structures, and total recapitalization of the Company. As of both October 31, 2023, and January 31, 2023, the Company had
shares of Series A Preferred issued and outstanding and authorized with a par value of $ per share.At both October 31, 2023, and January 31, 2022, there were
and 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 Series B preferred shares authorized and issued of the Series B Preferred Stock with a par-value of $ per share.At both October 31, 2023, and January 31, 2023, there were
and Series C preferred shares outstanding, respectively. The Series C Preferred Stock have the right to convert into the common stock of the Company by multiplying the number of issued and outstanding shares of common stock by 2.63 on the conversion date. The holders of Series C Preferred shares are not entitled to dividends, and the Company does not have the right of redemption. Currently, there are Series C preferred shares authorized and shares issued with a par-value of $ per share.At both October 31, 2023, and January 31, 2023, there were These shares are non-voting, do not receive dividends and are redeemable according to the terms set out as follows:
Series D preferred shares authorized and outstanding, respectively which with a par value $ . 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.REDEEMABLE PREFERRED STOCK (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 $
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, 2023, 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, 2023, and January 31, 2023.
Common Stock
The Company maintains its executive officesis authorized to issue common shares at a par value of approximately 300 sq. ft., at 758 E. Bethel School Road, Coppell, Texas 75019$ 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, 2023 and January 31, 2023 there were and shares outstanding and issuable, respectively. No dividends were paid in the homethree months ended October 31, 2023 or 2022. The Company’s articles of incorporation include a provision that the Company is not allowed to issue fractional shares.
Common shares | October 31, 2023 | January 31, 2023 | |||||
Issued | 6,139,346 | 1,773,987 | |||||
Shares to be cancelled | (5,000 | ) | (5,000 | ) | |||
Issuable | 948,075 | 148,995 | |||||
Issued, issuable and outstanding | 7,082,421 | 1,917,982 |
The issuable shares are presently unissued due to limitations of authorized capital and shares on reserve for convertible debt holders.
The Company issued the following shares of common stock in the nine months ended October 31, 2023:
Lenders converted $153,212 of principal, $12,052 of interest, derivative of $206,193 and $5,720 of fees all totaling $377,177 into 3,850,281 common shares.
The Company issued 196,958 in accrued expenses and recorded a gain on settlement of debt of $74,489.
common shares at fair value of $ to settle $The Company issued
shares and warrants to acquire common shares along with debt for a relative fair value of $ with an adjustment to paid -on capital and a corresponding adjustment to debt discount.Options and Warrants:
The Company has
and options outstanding as of both October 31, 2023, and January 31, 2023.The Company recorded option and warrant expense of $0 and $0 for the nine months ended October 31, 2023, and 2022, respectively.
For the nine months ended October 31, 2023 the Company issued warrants to purchase 1,913,855 common shares along with debt to various lenders as well as warrants to acquire 410,000 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 President1,913,855 warrants (and 1,146,200 common shares mentioned above) at $34,960, which has been recorded as a debt discount and the 695,000 warrants at $120,890 which has been recorded as interest both with corresponding adjustments to paid-in capital.
Schedule of warrants fair value
Expected volatility | % - % |
Exercise price | $ | - $
Stock price | $ | - $
Expected life | - years |
Risk-free interest rate | % - % |
Dividend yield | % |
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.
Expected volatility | % - % |
Exercise price | $ | - $
Stock price | $ | - $
Expected life | - years |
Risk-free interest rate | % - % |
Dividend yield | % |
The Company had the following fully vested warrants outstanding at October 31,2023:
Issued To | # Warrants | Dated | Expire | Strike Price * | Expired | Exercised |
Lender | 95,000 | 08/28/2020 | 08/28/2023 | $4.00 per share | Y | N |
Broker | 250 | 10/11/2020 | 10/11/2025 | $45.00 per share | N | N |
Broker | 300 | 11/25/2020 | 11/25/2025 | $30.00 per share | N | N |
Triton | 30,000 | 07/27/2021 | 07/27/2024 | $21.10 per share | N | N |
Consultant | 25,000 | 08/26/2021 | 08/26/2024 | $15.00 per share | N | N |
Lender | 60,845 | 11/12/2021 | 11/12/2026 | $15.00 per share | N | N |
Lender | 90,000 | 11/12/2021 | 11/12/2026 | $15.00 per share | N | N |
Lender | 30,000 | 1/27/2022 | 1/27/2025 | $15.00 per share | N | N |
Lender | 120,000 | 2/14/2022 | 2/14/2027 | $ per share | N | N |
Lender | 35,000 | 2/25/2022 | 2/25/2027 | $15.00 per share | N | N |
Lender | 15,000 | 2/25/2022 | 2/25/2027 | $15.00 per share | N | N |
Lender | 20,000 | 3/9/2022 | 3/9/2027 | $15.00 per share | N | N |
Lender | 20,000 | 3/9/2022 | 3/9/2027 | $15.00 per share | N | N |
Lender | 11,000 | 4/22/2022 | 4/22/2027 | $15.00 per share | N | N |
Lender | 44,000 | 4/22/2022 | 4/22/2027 | $15.00 per share | N | N |
Lender | 15,000 | 2/26/2022 | 2/26/2025 | $ per share | N | N |
Lender | 15,000 | 3/28/2022 | 3/28/2025 | $ per share | N | N |
Lender | 15,000 | 4/27/2022 | 4/27/2025 | $6.99 per share | N | N |
Lender | 15,000 | 5/27/2022 | 5/27/2025 | $5.12 per share | N | N |
Lender | 33,333 | 5/19/2022 | 5/19/2027 | $15.00 per share | N | N |
Lender | 100,000 | 6/27/2022 | 6/27/2027 | $15.00 per share | N | N |
Lender | 15,000 | 6/26/2022 | 6/26/2025 | $5.12 per share | N | N |
Lender | 15,000 | 7/26/2022 | 7/26/2025 | $5.12 per share | N | N |
Lender | 100,000 | 7/5/2022 | 7/5/2027 | $15.00 per share | N | N |
Lender | 50,000 | 7/6/2022 | 7/6/2027 | $15.00 per share | N | N |
Lender | 50,000 | 7/6/2022 | 7/6/2027 | $15.00 per share | N | N |
Lender | 50,000 | 7/11/2022 | 7/11/2027 | $15.00 per share | N | N |
Lender | 100,000 | 8/11/2022 | 8/11/2027 | $15.00 per share | N | N |
Lender | 100,000 | 8/22/2022 | 8/22/2027 | $15.00 per share | N | N |
Lender | 100,000 | 8/22/2022 | 8/22/2027 | $15.00 per share | N | N |
Lender | 15,000 | 8/25/2022 | 8/25/2025 | $5.10 per share | N | N |
Lender | 15,000 | 9/24/2022 | 9/24/2025 | $4.00 per share | N | N |
Lender | 15,000 | 10/24/2022 | 10/24/2025 | $3.30 per share | N | N |
Lender | 75,000 | 11/10/2022 | 11/10/2027 | $15.00 per share | N | N |
Lender | 75,000 | 11/10/2022 | 11/10/2027 | $15.00 per share | N | N |
Lender | 15,000 | 11/23/2022 | 11/23/2025 | $2.20 per share | N | N |
Lender | 15,000 | 12/23/2022 | 12/23/2025 | $3.30 per share | N | N |
Lender | 15,000 | 1/22/2023 | 1/22/2026 | $3.30 per share | N | N |
Lender | 15,000 | 2/21/2023 | 2/21/2026 | $1.03 per share | N | N |
Lender | 15,000 | 3/21/2023 | 1/22/2026 | $1.00 per share | N | N |
Lender | 388,884 | 4/20/2023 | 4/20/2028 | $1.00 per share | N | N |
Lender | 15,000 | 4/23/2023 | 1/22/2026 | $0.20 per share | N | N |
Lender | 97,221 | 4/27/2023 | 4/27/2028 | $0.25 per share | N | N |
Lender | 60,000 | 4/30/2023 | 4/30/2026 | $0.15 per share | N | N |
Lender | 20,000 | 4/30/2023 | 4/30/2026 | $0.15 per share | N | N |
Lender | 15,000 | 5/23/2023 | 5/23/2026 | $0.35 per share | N | N |
Lender | 60,000 | 5/30/2023 | 5/30/2026 | $0.25 per share | N | N |
Lender | 20,000 | 5/30/2023 | 5/30/2026 | $0.25 per share | N | N |
Lender | 1,000,000 | 6/1/2023 | On exercise | $0.00001 per share | N | N |
Lender | 427,750 | 6/13/2023 | 6/13/2028 | $0.25 per share | N | N |
Lender | 15,000 | 6/22/2023 | 6/22/2026 | $0.33 per share | N | N |
Lender | 60,000 | 6/29/2023 | 6/29/2026 | $0.25 per share | N | N |
Lender | 20,000 | 6/29/2023 | 6/29/2026 | $0.25 per share | N | N |
Lender | 15,000 | 7/22/2023 | 7/22/2026 | $0.30 per share | N | N |
Lender | 60,000 | 7/29/2023 | 7/29/2026 | $0.30 per share | N | N |
Lender | 20,000 | 7/29/2023 | 7/29/2026 | $0.30 per share | N | N |
Lender | 15,000 | 8/21/2023 | 8/21/2026 | $0.07 per share | N | N |
Lender | 60,000 | 8/28/2023 | 8/28/2026 | $0.05 per share | N | N |
Lender | 20,000 | 8/28/2023 | 8/28/2026 | $0.05 per share | N | N |
Lender | 15,000 | 9/20/2023 | 9/20/2026 | $0.04 per share | N | N |
Lender | 60,000 | 9/28/2023 | 9/28/2026 | $0.02 per share | N | N |
Lender | 20,000 | 9/28/2023 | 9/28/2026 | $0.02 per share | N | N |
Lender | 15,000 | 10/20/2023 | 10/20/2026 | $0.02 per share | N | N |
Lender | 60,000 | 10/28/2023 | 10/28/2026 | $0.01 per share | N | N |
Lender | 20,000 | 10/28/2023 | 10/28/2026 | $0.01 per share | N | N |
* | The strike price is subject to price adjustments due to dilutive issuance clauses. |
Issued To | # Options | Dated | Expire | Strike Price | Expired | Exercised | |
T. Armes | 250,000 | 7/11/2022 | 7/11/2027 | $4.00 per share | N | N |
The following table summarizes the activity of options and warrants issued and outstanding as of and for the three months ended October 31, 2023:
Options | Weighted Average Exercise Price | Warrants | Weighted Average Exercise Price | ||||||||
Outstanding at January 31, 2023 | $ | 4.00 | 1,609,728 | $ | 13.49 | ||||||
Granted | — | — | 2,608,855 | 0.25 | |||||||
Exercised | — | — | — | — | |||||||
Forfeited and canceled | — | — | (95,000 | ) | (4.00 | ) | |||||
Outstanding at October 31, 2023 | $ | 4.00 | 4,123,583 | $ | 5.33 |
NOTE 12 – RELATED PARTY TRANSACTIONS
As of October 31, 2023 and January 31, 2023, the Company had $0 and $46,173, respectively of related party accrued expenses related to accrued compensation for employees and consultants. On May 17, 2023 former director and CEO Tim Armes resigned (replaced by Christopher Davenport). At this time Mr. Armes exchanged his debt owed by the Company totaling $94,291 in exchange for which it paysthe vehicle having a cost of $89,711 and a net book value of $61,953 sold for fair value proceeds of $65,000 and a gain on sale of property and equipment of $3,057 was recorded by the Company. In addition, the vehicle loan of $42,635 was also transferred to Mr. Armes. The company recorded a gain on settlement of debt of $71,926.
As of October 31, 2023 the CEO has advanced the Company $255,893 (January 31, 2023 - $0) included in shareholder loans payable. These advances are non-interest bearing with no rent. The Company plans to lease office space when their operations require it and funding permits.
specified terms of repayment.
NOTE 8 13 – COMMITMENTS AND CONTINGENCIES
On August 30, 2016, the Company entered into a 60-month lease agreement for its 3,554 sf warehouse facility starting in December 2016 with a minimum base rent of $2,132 and estimated monthly CAM charges of $1,017 per month. This lease is with a shareholder.
On July 1, 2018, the Company entered into a 60-month lease agreement with its minority shareholder for its 8,800 sf warehouse facility with a minimum base rent of $6,400 per month.
Schedule of minimum lease obligations
Maturity of Lease Liabilities | Operating Leases | ||
October 31, 2024 | $ | 30,003 | |
October 31, 2025 | 30,003 | ||
October 31, 2026 | 30,003 | ||
October 31, 2027 | 2,501 | ||
Total lease payments | 92,510 | ||
Less: Interest | (1,954 | ) | |
Present value of lease liabilities | $ | 90,556 |
The Company had total operating lease and rent expense of $7,500 and $29,219 for the three months ended October 31, 2023, and 2022 respectively. The Company had total operating lease and rent expense of $54,502 and $90,177 for the nine months ended October 31, 2023, and 2022 respectively.
- 24 -
For the Three Months Ended | |||||||
October 31, | |||||||
2023 | 2022 | ||||||
Numerator: | |||||||
Net income (loss) available to common shareholders | $ | (1,353,062 | ) | $ | (4,131,691 | ) | |
Denominator: | |||||||
Weighted average shares – basic | 4,756,296 | 1,805,316 | |||||
Net income (loss) per share – basic | $ | (0.28 | ) | $ | (2.29 | ) | |
Effect of common stock equivalents: | |||||||
Add: interest expense on convertible debt | 526,466 | 166,046 | |||||
Add: amortization of debt discount | 335,672 | 1,932,722 | |||||
Less: gain on settlement of debt on convertible notes | — | (10,128 | ) | ||||
Add (Less): loss (gain) on change of derivative liabilities | 38,261 | 186,146 | |||||
Net income (loss) adjusted for common stock equivalents | (452,663 | ) | (1,856,905 | ) | |||
Dilutive effect of common stock equivalents: | |||||||
Convertible notes and accrued interest | — | — | |||||
Convertible Class C Preferred shares | — | — | |||||
Warrants and options | — | — | |||||
Denominator: | |||||||
Weighted average shares – diluted | 4,756,296 | 1,805,316 | |||||
Net income (loss) per share – diluted | $ | (0.28 | ) | $ | (2.29 | ) |
The net income (loss) per common share amounts were determined as follows:
For the Nine Months Ended | |||||||
October 31, | |||||||
2023 | 2022 | ||||||
Numerator: | |||||||
Net income (loss) available to common shareholders | $ | (7,173,870 | ) | $ | (12,228,775 | ) | |
Denominator: | |||||||
Weighted average shares – basic | 3,302,841 | 1,576,024 | |||||
Net income (loss) per share – basic | $ | (2.17 | ) | $ | (7.76 | ) | |
Effect of common stock equivalents: | |||||||
Add: interest expense on convertible debt | 1,519,052 | 278,788 | |||||
Add: amortization of debt discount | 1,422,910 | 4,309,329 | |||||
Add (less): loss (gain) on settlement of debt on convertible notes | 127,393 | (19,539 | ) | ||||
Add (less): loss (gain) on change of derivative liabilities | 2,178,051 | 841,772 | |||||
Net income (loss) adjusted for common stock equivalents | (1,926,464 | ) | (6,818,425 | ) | |||
Dilutive effect of common stock equivalents: | |||||||
Convertible notes and accrued interest | — | — | |||||
Convertible Class C Preferred shares | — | — | |||||
Warrants and options | — | — | |||||
Denominator: | |||||||
Weighted average shares – diluted | 3,302,841 | 1,576,024 | |||||
Net income (loss) per share – diluted | $ | (2.17 | ) | $ | (7.76 | ) |
For the Three and Nine Months Ended | |||||||
October 31, | |||||||
2023 | 2022 | ||||||
Convertible notes and accrued interest | |||||||
Convertible Class C Preferred shares | — | ||||||
Options | |||||||
Warrants | |||||||
Total |
NOTE 15 – SUBSEQUENT EVENTS
Subsequent to April 30, 2016,October 31, 2023 through to February 14 2024:
• lenders converted $6,870 in debt, $5,916 in interest and $7,520 in fees into 1,762,941 common shares.
• On November 29, 2023 the Company borrowed $25,000 onfurther amended the July 5, 2022 note mentioned in Note 8 with a Convertible Notes:fifth amendment. The Company received $86,212 with an original issue discount of $9,579 for a total of $ $95,791 bringing the value of the new note to $623,738 having total cash proceeds of $543,864 with a total original issue discount of $79,874.
Note Payable: $4,000.00 Unruh• On January 4, 2024, the Company entered into a convertible note plusfor $744,610 with a July 4, 2024, maturity, interest rate of 12% The Company received $ along with fees of $5,000. The remaining $726,810 will be charges as penalty interest representing the difference in value for commitment fees that were stated versus what was assignedrealized. The discount is amortized over the term of the loan. The note is convertible at a price lower of trading price 20 days prior to Blackbridge Capital Growth Fund, LLC
conversion or issue date. The note has certain default provisions such as failure to pay any principal or interest when due and failure to issue shares upon conversion. In the period since April 30, 2016,event of these or any other default provisions, default interest is 18%. If the Company issued 35,962,743 shares of restricted common stock pursuant to the conversion of $6,293.48 of the Unruh convertible promissory note and interest. The Notes provided conversion features which was tied to the market price of the Company’s common stock.is not paid at maturity then principal increases by $15,000.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, which we refer to in this quarterly report as the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, which we refer to in this quarterly report as the Exchange Act. Forward-looking statements are not statements of historical fact but rather reflect our current expectations, estimates and predictions about future results and events. These statements may use words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “predict,” “project” and similar expressions as they relate to us or our management. When we make forward-looking statements, we are basing them on our management’s beliefs and assumptions, using information currently available to us. These forward-looking statements are subject to risks, uncertainties and assumptions, including but not limited to, risks, uncertainties and assumptions discussed in this quarterly report. Factors that can cause or contribute to these differences include those described under the headings “Risk Factors” and “Management Discussion and Analysis and Plan of Operation.”
If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from what we projected. Any forward-looking statement you read in this quarterly report reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. All subsequent written and oral forward-looking statements attributable to us or individuals acting on our behalf are expressly qualified in their entirety by this paragraph. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this quarterly report. The Company expressly disclaims any obligation to release publicly any updates or revisions to these forward-looking statements to reflect any change in its views or expectations. The Company can give no assurances that such forward-looking statements will prove to be correct.
Company
MedCareers
The Auto Parts 4Less Group Inc. (“MedCareers”FLES”, the “Company”, “we” or “us”), the Company described herein, is awas incorporated under the laws of the State of Nevada corporation,on December 5, 2007, with offices located at 758 E. Bethel School Road, Coppell, Texas 75019. It can be reached by106 W Mayflower, Las Vegas, Nevada 89030. Our phone at (972) 393-5892.number is (702) 267-7100.
Recent ActivityNature 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.
AtOn November 29, 2018, the end of our fiscal year end and through our first quarter of FY 2017 we have concentrated our efforts into re-launching the employer area of our networkCompany entered into a talent acquisition platformtransaction (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 hiring nurses.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.
OneOn 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.
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Starting in 2016 the company began investing to become their own ecommerce platform thereby allowing their auto parts to be direct listed across marketplace and social media sites. Technical achievements including CRM system, warehouse integration API, warehouse inventory software to name a few.
In 2019, shortly after the share exchange with MedCareers Group, Inc., with technology upgrades in place, 4Less began successfully moving majority of sales from third party marketplaces direct to their proprietary ecommerce web site Liftkits4Less.com. By doing so the company saves 8%-10% in fees charged by the major marketplace’s such as e-Bay and Amazon as well as further building the 4less brand as a leading ecommerce site for auto parts.
On November 19, 2019 the Company acquired the URL Autoparts4Less.com and changed the name of their wholly owned subsidiary from the 4Less Corp. to Auto Parts 4Less, Inc. With the acquisition of the goals isURL AutoParts4Less.com, the Company also began focusing all of their efforts and resources on building out a flagship automotive marketplace with the potential to have upwardoffer buyers a wide range of 10,000 paid nursing jobs postedautomotive parts for cars, trucks, boats, motorcycles and RV’s on our job boarda 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 healthcare systems acrossnumerous types of large sellers, which included not only ecommerce sites presently selling parts online, but also interest from other large parts sellers such as warehouse distributors, new car dealers with large inventories of parts as well as brick and mortar parts retailers looking to move sales online, the country. By achieving this goal we willplatform originally created would soon be oneinadequate. As such, the Company made the decision to upgrade to a larger and more advanced platform solution so they immediately began implementation of the largest nursing jobAWS Fargate serverless platform solution.
The platform upgrade was completed in the 1st quarter FYE 2023, with marketplace sales expected to begin in 3rd 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.
On April 28, 2022 the Company changed its name from The 4Less Group, Inc. to Auto Parts 4Less Group, Inc.
Competition
We directly compete for buyers to use our web sites for direct hire employersover current e-commerce sites as well as sellers that utilize major marketplaces such as hospitals as opposed to travel firms. As of April 30, 2016Amazon and eBay. However, we had reached 25% ofbelieve our goalspecialty ecommerce website liftkits4less.com offers substantial value-added content including installation guides, install videos, high impact photos, order customization and live chat with 2,500 jobs posted or under contract to be posted. We believe the 10,000 jobs will be achieved with between 60 and 100 health systems under contract.
Management is still looking to add approximately 5 commission business partners to represent us in 5 of our 7 regions. These representatives will be responsible for revenue generation and membership growth in their assigned markets.a technical expert.
Additionally, we believe that our automotive parts marketplace AutoParts4less.com, with no known large challengers presently in the space outside of “all things to all people” online marketplaces Amazon and eBay, has the opportunity to quickly be branded when launched as the auto part’s industry premier marketplace just as sites like Etsy, Wayfair, Uber and Chewey’s have been able to successfully do in their industries
Results of Operations For the Nine Months Ended October 31, 2023 Compared to the Nine Months Ended October 31, 2022
The following table shows our results of operations for the nine months ended October 31, 2023, and 2022. The historical results presented below are not necessarily indicative of the results that may be expected for any future period.
Change | ||||||||||||
2023 | 2022 | $ | % | |||||||||
Total Revenues | $ | 339,116 | $ | 4,089,037 | $ | (3,749,921 | ) | (92% | ) | |||
Gross Profit | 268,611 | 792,491 | (523,880 | ) | (66% | ) | ||||||
Total Operating Expenses | 1,341,674 | 5,378,156 | (4,036,482 | ) | (75% | ) | ||||||
Total Other Income (Expense) | (6,100,807 | ) | (7,643,110 | ) | 1,542,303 | (20% | ) | |||||
Net Loss | $ | (7,173,870 | ) | $ | (12,228,775 | ) | $ | 5,054,905 | (43% | ) |
Revenue
The following table shows revenue split between proprietary and third-party website revenue for the nine months ended October 31, 2023, and 2022:
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Change | ||||||||||||
2023 | 2022 | $ | % | |||||||||
Proprietary website revenue | $ | 159,726 | $ | 2,750,636 | $ | (2,590,910 | ) | (94% | ) | |||
Third party website revenue | 179,390 | 1,338,401 | (1,159,011 | ) | (87% | ) | ||||||
Total Revenue | $ | 339,116 | $ | 4,089,037 | $ | (3,749,921 | ) | (92% | ) |
We had some unsolicitedtotal revenue of $339,116 for the nine months ended October 31, 2023, compared to $4,089,037 for the nine months ended October 31, 2022. Sales decreased by $3,749,921. For the nine months ended October 31, 2023, the Company began selling off its inventory and transitioning its business to the newly developed autoplarts4less.com marketplace. For the nine months ended October 31, 2023, marketplace revenues were $22,043 ($2022 - $0). There are no associated cost of sales with these revenues as they represent fees earned on sales. However, sales fell dramatically since the Company is only concentrating on the new marketplace which is its future and continues cutting costs associated with its old business model.
Total revenues fell by 92% as the Company transitions from organizations wanting to purchase targeted email campaigns since year-end. The sales ranged between $1,000 and $2,500. We believe as our membership grows there will be a tremendous sales opportunity for these transactions. As we do not sale our member lists, this transactions consistseller of our sending a clients emailaccessories to a targeted grouppure-play automotive parts-only marketplace.
Gross Profit
We had gross profit of nurses defined$268,611 for the nine months ended October 31, 2023, compared to gross profit of $792,491 for the nine months ended October 31, 2022. Gross profit decreased by $523,880 as a result of the decreased revenues explained above. Gross profit % was 79% in 2023 compared to 19% in 2022. The reason for the increase in gross profit % was that the Company has no associated costs with the marketplace revenues, and also was able to realize higher margins on sales of inventory written down in January 31, 2023
Operating Expenses
The following table shows our operating expenses for the nine months ended October 31, 2023, and 2022:
Change | ||||||||||||
2023 | 2022 | $ | % | |||||||||
Operating expenses | ||||||||||||
Depreciation | $ | 30,310 | $ | 38,587 | $ | (8,277 | ) | (21% | ) | |||
Postage, Shipping and Freight | 29,190 | 146,962 | (117,772 | ) | (80% | ) | ||||||
Marketing and Advertising | 135,986 | 671,348 | (535,362 | ) | (80% | ) | ||||||
E Commerce Services, Commissions and Fees | 360,318 | 1,076,787 | (716,469 | ) | (67% | ) | ||||||
Operating lease cost | 54,502 | 90,177 | (35,675 | ) | (40% | ) | ||||||
Personnel Costs | 134,730 | 505,253 | (370,523 | ) | (73% | ) | ||||||
General and Administrative | 596,638 | 2,849,042 | (2,252,404 | ) | (79% | ) | ||||||
Total Operating Expenses | $ | 1,341,674 | $ | 5,378,156 | $ | (4,036,482 | ) | (75% | ) |
• Depreciation decreased by $8,277 due to vehicle disposals in 2023.
• Postage shipping and freight decreased by $117,772 due to lower sales.
• Marketing and advertising decreased by $535,362 due to cost cutting and limiting spend on new marketplace.
• E Commerce Services, Commissions and Fees decreased by $716,469 due to lower sales and shift to new marketplace.
• Operating lease cost decreased by $35,675 due to two fewer leases.
• Personnel Costs decreased by $370,523 due to staff reductions as a result of lower demand ,shift to new marketplace which requires fewer employees and CEO not taking a salary in 2023.
• General and Administrative decreased by $2,252,404 due to a decreases of the following: $1,998,000 in stock based compensation for warrants issued to former CEO in prior year, $17,525 in office expense, $165,437 lower sub-contractors due to less outside work being needed for new marketplace compared to websites, $39,557 decreases in insurance costs due to lower health plan costs on fewer employees, with the remaining decrease to other office and general expenses.
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Other Income (Expense)
The following table shows our other income and expenses for the nine months ended October 31, 2023, and 2022:
Change | ||||||||||||
2023 | 2022 | $ | % | |||||||||
Other Income (Expense) | ||||||||||||
Gain (Loss) on Sale of Property and Equipment | $ | 9,468 | $ | — | $ | 9,468 | — | |||||
Gain (Loss) on Derivatives | (2,178,051 | ) | (841,772 | ) | (1,336,279 | ) | (159% | ) | ||||
Gain on Settlement of Debt | 37,382 | 19,539 | 17,843 | 91% | ||||||||
Amortization of Debt Discount | (1,422,910 | ) | (4,309,329 | ) | 2,886,419 | (67% | ) | |||||
Interest Expense | (2,546,696 | ) | (2,511,548 | ) | (35,148 | ) | 1% | |||||
Total Other Income (Expense) | $ | (6,100,807 | ) | $ | (7,643,110 | ) | $ | 1,542,303 | (20% | ) |
The changes above can be explained by the client through our own email service.increase in convertible debt that started at the end of last fiscal year and continued for the nine months ended October 31, 2022. The decrease in amortization in debt discount is a result of maturing debt in the prior year’s reporting period. The higher loss on derivatives in 2023 is a function of the market factors in the valuation of the derivative liability described in Note 10 of the included financial statements as well as the derivative discounts acquired with the new debt.
Our financial statements contain information expressingWe had a net loss of $7,173,870 for the nine months ended October 31, 2023, compared to net loss of $12,228,775 for the nine months ended October 31, 2022. The decrease in net loss was mainly due to the decrease in other expenses, large decrease in operating expenses partly offset by the lower gross profit.
Results of Operations for the Three Months Ended October 31, 2023, Compared to the Three Months Ended October 31, 2022
The following table shows our results of operations for the three months ended October 31, 2023, and 2022. The historical results presented below are not necessarily indicative of the results that may be expected for any future period.
Change | ||||||||||||
2023 | 2022 | $ | % | |||||||||
Total Revenues | $ | 143,696 | $ | 1,017,986 | $ | (874,290 | ) | (86% | ) | |||
Gross Profit | 106,058 | 171,088 | (65,030 | ) | (38% | ) | ||||||
Total Operating Expenses | 360,277 | 1,009,907 | (649,630 | ) | (64% | ) | ||||||
Total Other Income (Expense) | (1,098,843 | ) | (3,292,872 | ) | 2,194,029 | (67% | ) | |||||
Net Loss | $ | (1,353,062 | ) | $ | (4,131,691 | ) | $ | 2,778,629 | (67% | ) |
Revenue
The following table shows revenue split between proprietary and third-party website revenue for the three months ended October 31, 2023 and 2022:
Change | ||||||||||||
2023 | 2022 | $ | % | |||||||||
Proprietary website revenue | $ | 41,710 | $ | 611,799 | $ | (570,089 | ) | (93% | ) | |||
Third party website revenue | 101,986 | 406,187 | (304,201 | ) | (75% | ) | ||||||
Total Revenue | $ | 143,696 | $ | 1,017,986 | $ | (874,290 | ) | (86% | ) |
We had total revenue of $143,696 for the three months ended October 31, 2023, compared to $1,017,986 for the three months ended October 31, 2022. Sales decreased by $874,390. For the three months ended October 31, 2023, the Company began selling off its inventory and transitioning its business to the newly developed autoplarts4less.com marketplace. For the three months ended October 31, 2023, marketplace revenues were $5,326 ($2022 - $0). There are no associated cost of sales with these revenues as they represent fees earned on sales. However, sales fell dramatically since the Company is only concentrating on the new marketplace which is its future and continues cutting costs associated with its old business model.
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Gross Profit
We had gross profit of $106,058 for the three months ended October 31, 2023, compared to gross profit of $171,088 for the three months ended October 31, 2022. Gross profit decreased by $65,029 as a result of the decreased revenues explained above. Gross profit % was 74% in 2023 compared to 17% in 2022. The reason for the increase in gross profit % was that the Company has no associated costs with the marketplace revenues , and also was able to realize higher margins on sales of inventory written down in January 31, 2023.
Operating Expenses
The following table shows our operating expenses for the three months ended October 31, 2023 and 2022:
Change | ||||||||||||
2023 | 2022 | $ | % | |||||||||
Operating expenses | ||||||||||||
Depreciation | $ | 8,852 | $ | 12,743 | $ | (3,891 | ) | (31% | ) | |||
Postage, Shipping and Freight | 15,639 | 32,013 | (16,374 | ) | (51% | ) | ||||||
Marketing and Advertising | 32,469 | 156,522 | (124,053 | ) | (79% | ) | ||||||
E Commerce Services, Commissions and Fees | 92,313 | 396,065 | (303,752 | ) | (77% | ) | ||||||
Operating lease cost | 7,500 | 29,219 | (21,719 | ) | (74% | ) | ||||||
Personnel Costs | 22,965 | 131,937 | (108,972 | ) | (83% | ) | ||||||
General and Administrative | 180,540 | 251,408 | (70,868 | ) | (28% | ) | ||||||
Total Operating Expenses | $ | 360,277 | $ | 1,009,907 | $ | (649,630 | ) | (64% | ) |
• Depreciation increased by $3,892 due to vehicle disposals.
• Postage shipping and freight decreased by $16,374 due to lower sales.
• Marketing and advertising decreased by $124,052 due to cost cutting and limiting spend on new marketplace.
• E Commerce Services, Commissions and Fees decreased by $303,752 due to lower sales.
• Operating lease cost decreased by $21,719 due to two fewer leases.
• Personnel Costs decreased by $108,9729 due to staff reductions as a result of lower demand and CEO not taking a salary in 2023.
• General and Administrative decreased by $70,868 due to the Company reducing its expenses as a result of the new marketplace and general cost cutting measures.
Other Income (Expense)
The following table shows our other income and expenses for the three months ended October 31, 2023, and 2022:
Change | ||||||||||||
2023 | 2022 | $ | % | |||||||||
Other Income (Expense) | ||||||||||||
Gain (Loss) on Derivatives | $ | (38,261 | ) | $ | (184,146 | ) | $ | 145,885 | (79% | ) | ||
Gain (Loss) on Disposal of Fixed Assets | 6,411 | — | 6,411 | — | ||||||||
Gain on Settlement of Debt | — | 10,128 | (10,128 | ) | (100% | ) | ||||||
Amortization of Debt Discount | (335,672 | ) | (1,932,722 | ) | 1,597,050 | (83% | ) | |||||
Interest Expense | (731,321 | ) | (1,186,132 | ) | 454,811 | (38% | ) | |||||
Total Other Income (Expense) | $ | (1,098,843 | ) | $ | (3,292,872 | ) | $ | 2,194,029 | (67% | ) |
The changes above can be explained by the lower amortization of debt discount this quarter ended October 31, 2023 as many convertible notes matured and were fully amortized in the prior year’s corresponding quarter. Interest in the quarter ended October 31, 2022 was higher due to penalty interest. The loss on derivatives is a function of the market factors in the valuation of the derivative liability described in Note 10 as well as the increase in derivative discount resulting from the new debt issuances.
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We had a net loss of $1,353,062 for three months ended October 31, 2023, compared to a net loss of $4,131,691 for three months ended October 31, 2022. The decrease in net loss was mainly due to the large decrease in other expenses and operating expenses.
Liquidity and Capital Resources
Management believes that we will continue to incur losses for the immediate future. Therefore, we will need additional equity or debt financing until we can achieve profitability and positive cash flows from operating activities, if ever. These conditions raise substantial doubt about our ability to continue as a going concern. TheOur unaudited consolidated financial statements have been prepared "assumingdo not include any adjustments relating to the recovery of assets or the classification of liabilities that may be necessary should we willbe unable to continue as a going concern," which contemplates that we satisfy our liabilities and commitments in the ordinary course of business.concern.
CompetitionAs of October 31, 2023, we had a cash balance of $12,490, net inventory of $33,337 and $27,110,778 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.
WhileThe successful outcome of future activities cannot be determined at this time and there are various online community forums and nurse portals, Nurses Lounge does not believe that there is a direct competitor designed from the ground up as a professional network for nurses and to solve many of the day-to-day communications problems nursing organizations have. The largest competitors of Nurses Lounge bill themselves as “communities” that claim to provide news, career advice and social interaction, and include Nurse.com - owned by OnCourse Learning; and Allnurses – a nursing forum and discussion board. Additionally, and to a lesser extent, Nurses Lounge indirectly competes with other websites that encourage users to create connections with other colleagues and persons with similar interests such as Linkedin and Facebook, however, unlike like these websites which have very broad general appeal, Nurses Lounge focuses solely on the nursing pro and the organizations which support them.
Proprietary Rights
We plan to rely on a combination of copyright, trade secret and trademark laws, and non-disclosure and other contractual arrangements to protect our proprietary rights moving forward. There can be no assurance that, the stepsif achieved, we will have sufficient funds to execute our intended business plan to take in the future to protect our future proprietary rights, however, will be adequate to deter misappropriation of proprietary information, and we may not be able to detect unauthorized use and take appropriate steps to enforce our intellectual property rights. Although we believe that our websites and services will not infringe upon the intellectual property rights of others and that we have all rights necessary to utilize our intellectual property, we are subject to the risk of claims alleging infringement of third-party intellectual property rights. Any such claims could require us to spend significant sums on litigation, pay damages, delay our products and software, develop non-infringing intellectual property or acquire licenses to intellectual property that are the subject of any such infringement. Therefore, such claims could have a material adverse effect on our planned business,generate positive operating results and financial condition.results.
Nursing Profession OverviewCapital Resources
From Nurses Lounge business viewpoint,The following table summarizes total current assets, liabilities and working capital (deficit) for the nursing profession is broken down into the individual registered nurses (RNs) and the professions stake holder organizations consisting of nursing schools, associations and employers.periods indicated:
Throughout their career, nurses need to be connected with numerous organizations in order to simply stay up to date with basic continuing education requirements which they need to meet state guidelines and/or employers qualification to maintain employment.
As such, we believe that there is an opportunity to unite the industry on one simple to use communication platform that can upgrade, simplify and reduce the cost of communications used by stakeholder organizations while providing nurses quick access to the information important to their careers. The market for nurses is growing in the United States and we believe that our website has a significant number of potential users based on the following:
Due to the above factors, the Company’s Nurses Lounge professional Network has a significant market for their services and that even with significant competition for recruitment and job placement services as described below in the risk factor entitled “WE WILL FACE SIGNIFICANT COMPETITION FROM MONSTER.COM and CAREERBUILDER, NICHE HEALTHCARE SITES SUCH AS NURSE.COM AND HEALTHECAREERS AS WELL AS JOB AGGREGATOR SITES SUCH AS INDEED.COM AND OTHER INTERNET JOB POSTING WEBSITES”. ”, there will be room in the global marketplace for website posting, recruiting and job placement services for the Company’s niche healthcare related websites.
***
Results for the three months ended April 30, 2016
Revenue for the three months ended April 30, 2016 and 2015 was $13,445 and $22,435, respectively. The lower revenue for the first quarter in 2016 was primarily due to sales to staffing firms at a price of $6,000 in 2015 versus an average sales price to healthcare systems at rate of approximately $995.00. As a result the total number of sales in 1st quarter of 2016 is greater than in same period the previous year.
Cost of revenues were $1,000 and $2,345 for the three months ended April 30, 2016 and 2015, respectively. The changes reflect the swings in costs as the Company promotes its nurse portal and the variation in those costs as the Company has yet to enter a period where the operations in sales and cost of sales are relatively constant. Until the Company enters a reasonably constant operating period, the costs will vary widely.
Selling expenses were $24,197 and $37,322 for the three months ended April 30, 2016 and 2015. This decrease was due to the President doing more of the sales presentations rather than paying rather than paying others to do this work.
Operating expenses for the three months ended April 30, 2016 and 2015 were $103,379 and $72,036 respectively.
Other expense reflects interest on loans which was $64,567 and $90,726 expense for the three months ended April 30, 2016 and 2015, respectively. Also, there were other expenses relating to the cost of our convertible debt being a loss on derivatives of $210,460 and $191,846 for the three months ended April 30, 2016 and 2015 respectively. We also incurred a loss on debt extinguishment for the three months ended April 30, 2016 and 2015 of $0 and $45,359 respectively.
Liquidity and Capital Resources
As of April 30, 2016, the Company had negative working capital of $2,290,013, comprised of current assets of $2,486 and current liabilities of $2,292,499.
October 31, 2023 | January 31, 2023 | ||||||
Current assets | $ | 88,731 | $ | 97,745 | |||
Current liabilities | 27,199,509 | 20,768,832 | |||||
Working capital (deficits) | $ | (27,110,778 | ) | $ | (20,671,087 | ) |
Net cash used in operations for the threenine months ended April 30, 2016October 31, 2023 was $78,509$1,040,209 as compared to $85,822net cash used in operations of $3,398,045 for the threenine months ended April 30, 2015.
Cash used for purchase of fixed assets was $0October 31, 2022. Net cash provided by investing activities for the threenine months ended April 30, 2016 and 2015.
CashOctober 31, 2023 was $11,500 as compared to cash flows used in investing activities of $1,142 for the same period in 2022. Net cash provided by financing activities for the threenine months ended April 30, 2016October 31, 2023 was $80,000$1,036,462 as compared to $40,500$3,367,715 for the same period in 2015.nine months ended October 31, 2022.
The Company has borrowed funds and/or sold stock for working capital. These transactions are detailed in the section “Recent Sales of Unregistered Securities”.
Currently the Company does not have sufficient cash reserves or revenues to meet its contractual obligations under its outstanding notes payable and to pay its ongoing monthly expenses, which the Company anticipates totaling approximately $300,000 over the next 12 months. The Company has been able to continue operating to date largely from loans made by its shareholders and other debt financings to date. The Company is currently looking at both short-term and more permanent financing opportunities, including debt or equity funding, bridge or short term loans, and/or traditional bank funding, but we have not decided on any specific path moving forward. Unless we have raised sufficient funding to pay our ongoing expenses associated with being a public company, and we have sufficient funds to support our planned operations, the Company can provide no assurances that it will be able to meet its short and long term liquidity needs. The Company continues to generate revenue from the Nurses Lounge business, which the Company believes will increase to the point where the Company can cover its basis monthly obligations, of which there can be no assurance.
Our financial statements contain information expressing substantial doubt about our ability to continue as a going concern. The consolidated financial statements have been prepared "assuming that we will continue as a going concern," which contemplates that we satisfy our liabilities and commitments in the ordinary course of business.
We do not currently have any additional formal commitments or identified sources of additional capital from third parties or from our officers, director or significant shareholders. We can provide no assurance that additional financing will be available on favorable terms, if at all. If we are not able to raise the capital necessary to continue our business operations, we may be forced to abandon or curtail our business plan.
In the future, we may be required to seek additional capital by selling additional debt or equity securities, selling assets, if any, or otherwise be required to bring cash flows in balance when we approach a condition of cash insufficiency. The sale of additional equity or debt securities, if accomplished, may result in dilution to our then shareholders. We provide no assurance that financing will be available in amounts or on terms acceptable to us, or at all.
ITEM 3. Quantitative and Qualitative Disclosure about Market Risk.
Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), we are not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).
ITEM 4. Controls and Procedures
(a) Evaluation of disclosure controls and procedures. Our Chief Executive Officer and Principal Financial Officer, after evaluating the effectiveness of our "“disclosure controls and procedures"” (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q (the "“Evaluation Date"”), has concluded that as of the Evaluation Date, our disclosure controls and procedures were not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Moving forward, we hope that our Chief Executive Officer and Principal Financial Officer will be able to devote the additional time and effort required so that our disclosure controls and procedures are once againcan 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, 20152023 fairly present our financial position, results of operations and cash flows for the years and months covered thereby in all material respects.
(b) Changes in internal control over financial reporting. There were no changes in our internal control over financial reporting during our most recent fiscal quarter that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
Item 1. Legal Proceedings
There is pending litigation initiated by the Company around the validity of a $100,000 note which the Company signed based upon representations of funding from the maker which were never received. The Company is initiated litigation to dispute the note and the 10,151, 540 shares that have been issued.
Item 1A. Risk Factors
There have been no material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended January 31, 2016, filed with the Commission on June 27, 2016, other than as set forth below, and investors are encouraged to review such risk factors below and in the Form 10-K, prior to making an investment in the Company.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Recent Sales of Unregistered Securities
Consideration | Date | # Shares | ||
Balance, Number of shares outstanding, January 31, 2016 | 454,838,100 | |||
Common stock at issued fifty percent discount to market per note conversion agreement | Convert a portion of note payable | (1) | Feb 5, 2016 |
27,525,867 |
Common stock at issued fifty percent discount to market per note conversion agreement | Convert a portion of note payable | (2) | Mar 11, 2016 |
43,328,767 |
Balance, Number of shares outstanding, April 30, 2016 | 525,692,734 |
Convertible Promissory Notes
(1) Partial conversionOn May 5, 2023, we issued a promissory note in the principal amount of Note that had$176,000 to Cove Funding LP.
On June 13, 2023, we issued a conversion feature at 50%promissory note in the principal amount of market price per share. These$127,500 to Cove Funding LP.
On June 13, 2023, we issued a senior secured promissory note in the principal amount of $64,625 to Auctus Fund, LLC.
On July 17, 2023, we issued a promissory note in the principal amount of $127,500 to Cove Funding LP.
On September 7, 2023, we issued a promissory note in the principal amount of $127,500 to Cove Funding LP.
Common Stock
On June 7, 2023, pursuant to an amendment to a convertible promissory note issued on July 5, 2022, we issued 100,000 shares of Common Stock to the lender.
On July 10, 2023, pursuant to the promissory note of May 5, 2023 issued to Cove Funding LP, we issued 130,000 shares of Common Stock to the lender, with another 222,000 shares to be issued.
Pursuant to the promissory note of June 13, 2023 issued to Cove Funding LP, there were 255,000 shares of Common Stock to be issued forto the conversionlender.
Pursuant to the promissory note of $4,129July 17, 2023 issued to Cove Funding LP, there were 255,000 shares of Common Stock to be issued to the lender.
Warrants
On June 1, 2023, pursuant to an amendment to a convertible promissory note issued on July 5, 2022, we issued warrants to purchase 1,000,000 shares of Common Stock to the lender.
On June 13, 2023, pursuant to the senior secured promissory note issued to Auctus Fund, LLC, we issued warrants to purchase 427,750 shares of Common Stock to the lender.
The sales of the note plus accrued interest.
securities above were made in reliance on Section 4(a)(2) under the Securities Act and were made without general solicitation or advertising. The Company claimssecurities offered have not been registered under the Securities Act, and may not be offered or sold in the United States without registration or an applicable exemption from the registration afforded by Section 4(2)requirements of the Securities ActAct. There were no sales commissions paid in connection with the sales of 1933, as amended (the “Act”) since the foregoing issuances and grants did not involve a public offering, the recipients took the shares and options for investment and not resale, the Company took appropriate measures to restrict transfer, and the recipients were either (a) “accredited investors” and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Act. No underwriters or agents were involved in the foregoing issuances and the Company paid no underwriting discounts or commissions.these securities.
(2) Partial conversion of Note that had a conversion feature at 50% of market price per share. These shares were issued for the conversion of $12,998 of the note and accrued interest.
The Company claims an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Act”) since the foregoing issuances and grants did not involve a public offering, the recipients took the shares and options for investment and not resale, the Company took appropriate measures to restrict transfer, and the recipients were either (a) “accredited investors” and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Act. No underwriters or agents were involved in the foregoing issuances and the Company paid no underwriting discounts or commissions.
Options and Warrants
The Company had the following options or warrants outstanding at April 30, 2016:
(1) Three options for 127,500 shares of restricted common stock at an exercise price of $0.10 per share and for a term of 5 years was awarded Geneva7, LLC in consideration for renewing the loan it has with the company of $25,000 two times. Geneva7, LLC originally loaned the company $25,000 at 12% interest on August 29, 2011 and was awarded an option to purchase 127,500 shares of restricted common stock at an exercise price of $0.10. The term of the option is 5 years and expired without it being exercised. The loan matured on April 30th 2012 and Geneva 7 agreed to renew the loan and accrue interest thru July 31, 2013 and additionally renewed the loan thru October 31, 2103 when it matured on July 31, 2013. With each additional renewal Geneva7 received an additional option to purchase 127,500 shares of restricted common stock at an exercise price of $0.10 per share and for a term of 5 years. This note was sold to a third party who converted the note into common shares at market and sold the shares.
(2) Warrant 1,000,000 shares. The Company entered into a contract for services with Horse and Hammerhead Marketing Solutions, LLC , a management consulting firm. Based on the agreement, the consultant was issued a warrant for 1,000,000 shares of MCGI’s restricted common stock at an exercise price of $0.12 per/share with a 4-year term.
The Company claims an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Act”) since the foregoing issuances and grants did not involve a public offering, the recipients took the shares and options for investment and not resale, the Company took appropriate measures to restrict transfer, and the recipients were either (a) “accredited investors” and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Act. No underwriters or agents were involved in the foregoing issuances and the Company paid no underwriting discounts or commissions.
(4)On January 9, 2013 the company issued 2,000,000 units of its securities in a private placement to an accredited investor. The price of these Units was $0.10 per unit. Each Unit consists of 1 share of restricted common stock valued at $0.10 per share for a total of 2,000,000 shares and one 5 year Warrant. Each Series B Warrant entitles the holder to purchase one share of common stock at an exercise price of $0.05 per share and subject to adjustments due to recapitalization or reclassification of common stock.
The Company claims an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Act”) since the foregoing issuances and grants did not involve a public offering, the recipients took the shares and options for investment and not resale, the Company took appropriate measures to restrict transfer, and the recipients were either (a) “accredited investors” and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Act. No underwriters or agents were involved in the foregoing issuances and the Company paid no underwriting discounts or commissions.
(5) Option for 3,500,000 common shares granted to a lender as part of the loan transaction. The options have a strike price of $0.10 per share and expire on July 1, 2019.
The Company claims an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Act”) since the foregoing issuances and grants did not involve a public offering, the recipients took the shares and options for investment and not resale, the Company took appropriate measures to restrict transfer, and the recipients were either (a) “accredited investors” and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Act. No underwriters or agents were involved in the foregoing issuances and the Company paid no underwriting discounts or commissions.
Item 3. Default Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits
See the Exhibit Index immediately following the signature page of this Report on Form 10-Q.
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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.
MedcareersAuto Parts 4Less Group, Inc.
By: /s/ Timothy Armes/s/ Christopher Davenport
Timothy ArmesChristopher Davenport
Chairman (Director), Chief Executive Officer President, Secretary and TreasurerChief Financial Officer
(Principal Executive Officer and Principal Financial and Accounting Officer)
Date: July 8, 2016February 14, 2024
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EXHIBIT INDEX
Exhibit
| ||
Number | Exhibit Description | |
Rule 13a-14(a) Certification of | ||
32.1 | ||
101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. ** | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document ** | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document ** | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document ** | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document ** | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document ** | |
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) ** |
__________
* Filed herewith.
** In accordance with Regulation S-T, the Interactive Data Files in Exhibit 101 to the Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed.”
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