UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] ☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period endedended: JanuaryDecember 31, 20182023
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 333-205310000-55997
SHARING SERVICES INC.GLOBAL CORPORATION
(Exact name of registrant as specified in its charter)
| Nevada | ||
| 30-0869786 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| 5200 Tennyson Parkway, Suite 400, Plano, Texas | 75024 | |
| (Address of principal executive offices) | (Zip Code) |
1700 Coit Rd., Suite 100, Plano, Texas 75075(469)304-9400
(Address of principal executive offices)(Zip Code)
(714) 203-6717
(Registrant’s telephone number, including area code)
N/A None
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange in which registered | ||
| None | None | None |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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) Yes (_) 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 (X)Yes ☒ 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 emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”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 | ☐ | Smaller reporting company | ☒ |
| Emerging growth company | ☐ |
[ ] Large accelerated filer [ ] Accelerated filer
[ ] Non-accelerated filer (Do not check if a smaller reporting company)
[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 check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). (_)Yes (X) No ☒
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12,As of February 13, or 15(d)2024, there were shares of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a courtissuer’s Class A Common Stock outstanding.
(_)Yes (_) No
APPLICABLE ONLY TO CORPORATE ISSUERS:
TABLE OF CONTENTS
As of March 23, 2018, there were 54,860,000 shares of class A common stock issued and outstanding and 10,000,000 shares of class B common stock issued and outstanding.
2
TABLE of CONTENTS
| 2 |
3In this Quarterly Report, references to “the Company,” “Sharing Services,” “our company,” “we,” “our,” “ours,” and “us” refer to Sharing Services Global Corporation and its consolidated subsidiaries unless otherwise indicated or the context otherwise requires.
cautionary notice regarding forward-looking statements
Statements in this Quarterly Report and in any documents incorporated by reference herein which are not purely historical, or which depend upon future events, may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements generally contain words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “potential,” “project,” “target,” “can,” “could,” “may,” “should,” “will,” “will likely,” “would,” or the negative of such words and/or similar expressions. However, not all forward-looking statements contain these words.
Readers should not place undue reliance upon the Company’s forward-looking statements since such statements speak only as of the date they were made. Such forward-looking statements may refer to events that ultimately do not occur, or may occur to a different extent, or occur at a different time than such forward-looking statements describe. Except to the extent required by federal securities laws, the Company undertakes no obligation to publicly update or revise any forward-looking statements contained in this Quarterly Report and in any documents incorporated by reference herein, whether as a result of new information, future events, or otherwise. The Company acknowledges that all forward-looking statements involve risks and uncertainties that could cause actual events and/or results to differ materially from the events and/or results described in the forward-looking statements.
| 3 |
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
The following unaudited financial statements: condensed consolidated balance sheets as of December 31, 2023, condensed consolidated statements of operations and comprehensive loss for the three and nine months ended December 31, 2023 and 2022, condensed consolidated statements of cash flows, and condensed consolidated statements of changes in stockholders’ deficit for the nine months ended December 31, 2023 and 2022, are those of Sharing Services Global Corporation and its subsidiaries.
SHARING SERVICES, INC.
Index to the Unaudited InterimCondensed Consolidated Financial Statements
For the Period from May 5, 2017 (Inception) to January 31, 2018
Page | |||
| 5 | ||
| 2022 | 6 | ||
| 2023 and 2022 | 7 | ||
| 8 | |||
| Notes to the unaudited condensed consolidated financial statements |
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| 4 |
4
SHARING SERVICES INC.GLOBAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETSHEETS
(Unaudited)
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| December 31, 2023 | March 31, 2023 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 737,850 | $ | 2,994,885 | ||||
| Trade accounts receivable, net | 494,451 | 273,674 | ||||||
| Other receivable | 1,800,000 | - | ||||||
| Short-term advance | 31,194 | - | ||||||
| Inventory, net | 2,190,680 | 1,636,120 | ||||||
| Other current assets, net | 226,371 | 527,827 | ||||||
| Total Current Assets | 5,480,546 | 5,432,506 | ||||||
| Property and equipment, net | 325,523 | 9,270,193 | ||||||
| Right-of-use assets, net | 414,865 | 448,240 | ||||||
| Deferred income taxes, net | 16 | - | ||||||
| Investment in unconsolidated entities, net | - | 206,231 | ||||||
| Intangible assets | 438,002 | 545,372 | ||||||
| Other assets | 1,162,389 | 1,177,173 | ||||||
| TOTAL ASSETS | $ | 7,821,341 | $ | 17,079,715 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | 1,084,968 | $ | 1,028,510 | ||||
| Accrued and other current liabilities | 2,745,147 | 2,781,037 | ||||||
| Accrued sales commission payable | 1,676,362 | 2,357,643 | ||||||
| Tax payable | 1,518,379 | 1,446,503 | ||||||
| Note payable, related party, net of unamortized debt discount and unamortized deferred loan cost | - | 6,922,043 | ||||||
| Note payable | 1,200,000 | - | ||||||
| Convertible note payable, related party, net of unamortized debt discount and unamortized deferred loan cost | - | 24,827,086 | ||||||
| Total Current Liabilities | 8,224,856 | 39,362,822 | ||||||
| Lease liability, long-term | 416,277 | 440,478 | ||||||
| TOTAL LIABILITIES | 8,641,133 | 39,803,300 | ||||||
| Commitments and contingencies | - | - | ||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Series A convertible preferred stock, $ par value, shares designated, shares issued and outstanding | 310 | 310 | ||||||
| Series B convertible preferred stock, $ par value, shares issued and outstanding | - | - | ||||||
| Series C convertible preferred stock, $ par value, shares designated, shares issued and outstanding | 322 | 322 | ||||||
| Series D preferred stock, $ par value, shares issued and outstanding | 3 | - | ||||||
| Preferred stock value | ||||||||
| Class A common stock, $ par value, shares designated, shares and shares issued and outstanding as of December 31, 2023 and March 31, 2023, respectively | 37,633 | 34,745 | ||||||
| Class B common stock, $ par value, shares designated, shares issued and outstanding | - | - | ||||||
| Common stock value | - | - | ||||||
| Treasury stock | - | (626,187 | ) | |||||
| Additional paid in capital | 110,699,858 | 84,619,762 | ||||||
| Shares to be issued | 12,146 | 12,146 | ||||||
| Accumulated deficit | (111,230,122 | ) | (106,456,378 | ) | ||||
| Accumulated other comprehensive loss | (339,942 | ) | (308,305 | ) | ||||
| TOTAL STOCKHOLDERS’ DEFICIT | (819,792 | ) | (22,723,585 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 7,821,341 | $ | 17,079,715 | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 5 |
SHARING SERVICES INC.GLOBAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTSTATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
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| Three Months |
| Date of Inception |
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| (May 5, 2017) to |
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| January 31, |
| January 31, |
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| 2018 |
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Revenues | $ | 960,182 | $ | 960,182 | |
Cost of sales |
| 673,551 |
| 673,551 | |
Gross profit |
| 286,631 |
| 286,631 | |
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Operating Expenses |
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| General and administration |
| 194,201 |
| 288,971 |
| Marketing expenses |
| - |
| 694,207 |
| Stock based compensation |
| - |
| 1,308,948 |
| Professional |
| 117,882 |
| 151,554 |
| Total operating expenses |
| 312,083 |
| 2,443,680 |
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Operating loss |
| (25,452) |
| (2,157,049) | |
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Other income (expense) |
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| Interest expense |
| (118,229) |
| (241,424) |
| Change in fair value of derivative liability |
| (3,455,374) |
| (4,577,965) |
| Total other expense |
| (3,573,603) |
| (4,819,389) |
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Net loss | $ | (3,599,055) | $ | (6,976,438) | |
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Basic and dilutive loss per common share | $ | (0.06) | $ | (0.12) | |
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Weighted average number of common shares outstanding - basic and diluted |
| 64,860,000 |
| 60,461,176 | |
| December 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| December 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||||||
| Net sales | $ | 2,885,645 | $ | 3,245,903 | $ | 8,172,469 | $ | 12,737,673 | ||||||||
| Cost of goods sold | 701,683 | 1,643,111 | 2,217,315 | 5,059,916 | ||||||||||||
| Gross profit | 2,183,962 | 1,602,792 | 5,955,154 | 7,677,757 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Selling and marketing | 948,228 | 928,246 | 3,112,773 | 5,723,642 | ||||||||||||
| General and administrative | 1,972,405 | 4,678,620 | 6,375,717 | 13,787,444 | ||||||||||||
| Total operating expenses | 2,920,633 | 5,606,866 | 9,488,490 | 19,511,086 | ||||||||||||
| Operating loss | (736,671 | ) | (4,004,074 | ) | (3,533,336 | ) | (11,833,329 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense, net | (137,362 | ) | (3,320,159 | ) | (3,006,440 | ) | (9,761,622 | ) | ||||||||
| Other income | - | - | 1,800,000 | - | ||||||||||||
| Gain on employee warrants liability | - | 39,375 | - | 207,210 | ||||||||||||
| Loss on investment and extinguishment of debt | - | - | (116,841 | ) | - | |||||||||||
| Unrealized loss on investment | - | (3,614,242 | ) | - | (10,284,002 | ) | ||||||||||
| Other non-operating income (expense), net | (17,009 | ) | (21,722 | ) | 86,427 | 118,077 | ||||||||||
| Total other expense, net | (154,371 | ) | (6,916,748 | ) | (1,236,854 | ) | (19,720,337 | ) | ||||||||
| Loss before income taxes | (891,042 | ) | (10,920,822 | ) | (4,770,190 | ) | (31,553,666 | ) | ||||||||
| Income tax expense (benefit) | 3,554 | 104,129 | 3,554 | (789,803 | ) | |||||||||||
| Net loss | $ | (894,596 | ) | $ | (11,024,951 | ) | $ | (4,773,744 | ) | $ | (30,763,863 | ) | ||||
| Other comprehensive income (loss), net of tax: | ||||||||||||||||
| Currency translation adjustments | (4,032 | ) | 251,166 | (31,637 | ) | (156,850 | ) | |||||||||
| Total other comprehensive (loss) income | (4,032 | ) | 251,166 | (31,637 | ) | (156,850 | ) | |||||||||
| Comprehensive loss | $ | (898,628 | ) | $ | (10,773,785 | ) | $ | (4,805,381 | ) | $ | (30,920,713 | ) | ||||
| Loss per share: | ||||||||||||||||
| Basic and diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average shares: | ||||||||||||||||
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
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SHARING SERVICES INC.GLOBAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
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| December 31, 2023 | December 31, 2022 | |||||||
| Nine Months Ended | ||||||||
| December 31, 2023 | December 31, 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (4,773,744 | ) | $ | (30,763,863 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 442,643 | 539,411 | ||||||
| Stock-based compensation | (148,267 | ) | (303,784 | ) | ||||
| Amortization of debt discount and other | 2,015,542 | 10,447,435 | ||||||
| Loss (gain) on extinguishment of debt | 38,215 | (350,320 | ) | |||||
| Intangible asset impairment | - | 154,182 | ||||||
| Bad debt expense (recovery of bad debt provision) | 177,115 | (85,155 | ) | |||||
| Realized/unrealized gain on investments | - | 10,284,002 | ||||||
| Provision for obsolete inventory (recovery of inventory provision) | (54,394 | ) | 1,012,433 | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (397,891 | ) | (22,413 | ) | ||||
| Short-term advance | (31,194 | ) | - | |||||
| Other receivable | (1,800,000 | ) | - | |||||
| Inventory | (500,165 | ) | 892,136 | |||||
| Other current assets | 672,915 | 321,291 | ||||||
| Property and equipment | (54,237 | ) | - | |||||
| Other assets | 97,590 | (137,112 | ) | |||||
| Accounts payable | 56,458 | 669,048 | ||||||
| Income taxes payable | 71,860 | (496,026 | ) | |||||
| Lease liability | 1,578 | 35,008 | ||||||
| Accrued and other liabilities | 760,577 | (1,042,211 | ) | |||||
| Net Cash Used in Operating Activities | (3,425,399 | ) | (8,845,938 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Payments for property and equipment and other assets | - | (1,404,013 | ) | |||||
| Issuance of notes receivable | - | (216,885 | ) | |||||
| Purchase of marketable securities | - | (9,510,000 | ) | |||||
| Cash paid for asset purchase | - | (400,000 | ) | |||||
| Net Cash Used in Investing Activities | - | (11,530,898 | ) | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Net proceeds from issuance of promissory notes | - | 10,922,329 | ||||||
| Proceeds from note payable | 1,200,000 | - | ||||||
| Common stock received on litigation settlement | - | (1,046,254 | ) | |||||
| Retirement of loans | - | (3,374,416 | ) | |||||
| Net Cash Provided by Financing Activities | 1,200,000 | 6,501,659 | ||||||
| IMPACT OF CURRENCY RATE CHANGES ON CASH | (31,635 | ) | (35,864 | ) | ||||
| Decrease in cash and cash equivalents | $ | (2,257,034 | ) | $ | (13,911,041 | ) | ||
| Cash and cash equivalents, beginning of period | 2,994,885 | 17,023,266 | ||||||
| Cash and cash equivalents, end of period | $ | 737,851 | $ | 3,112,225 | ||||
| Supplemental cash flow information | ||||||||
| Cash paid for interest | $ | 96,279 | $ | 127,790 | ||||
| Cash paid for income taxes | $ | 550 | $ | - | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 7 |
SHARING SERVICES INC.GLOBAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
(Unaudited)
| Number | Par | Number | Par | Number | Par | Number |
| Par | Number | Par | Paid in | Shares to | Treasury | Accumulated | Comprehensive | |||||||||||||||||||||||||||||||||||||||||||||||||
| Series A | Series B | Series C | Series D | Class A and Class B | Accumulated | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Preferred Stock | Preferred Stock | Preferred Stock | Common Stock | Additional | Other | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Number | Par | Number | Par | Number | Par | Number |
| Par | Number | Par | Paid in | Shares to | Treasury | Accumulated | Comprehensive | |||||||||||||||||||||||||||||||||||||||||||||||||
| of Shares | Value | of Shares | Value | of Shares | Value | of Shares | Value | of Shares | Value | Capital | be Issued | Stock | Deficit | Loss | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance - March 31, 2023 | 3,100,000 | $ | 310 | - | $ | - | 3,220,000 | $ | 322 | - | - | 347,451,880 | $ | 34,745 | $ | 84,619,762 | $ | 12,146 | $ | (626,187 | ) | $ | (106,456,378 | ) | $ | (308,305 | ) | $ | (22,723,585 | ) | ||||||||||||||||||||||||||||||||||
| Balance | 3,100,000 | $ | 310 | - | $ | - | 3,220,000 | $ | 322 | - | - | 347,451,880 | $ | 34,745 | $ | 84,619,762 | $ | 12,146 | $ | (626,187 | ) | $ | (106,456,378 | ) | $ | (308,305 | ) | $ | (22,723,585 | ) | ||||||||||||||||||||||||||||||||||
| Cancellation of treasury-stock | - | - | - | - | - | - | - | - | (626,187 | ) | - | 626,187 | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for debt modification | 26,000 | $ | 3 | 26,169,365 | 26,169,368 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued to settle accrued interest payable | 28,877,005 | 2,888 | 536,918 | 539,806 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Currency translation adjustments | - | (31,637 | ) | (31,637 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | (4,773,744 | ) | (4,773,744 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance - December 31, 2023 | 3,100,000 | $ | 310 | - | $ | - | 3,220,000 | $ | 322 | 26,000 | $ | 3 | 376,328,885 | $ | 37,633 | $ | 110,699,858 | $ | 12,146 | $ | - | $ | (111,230,122 | ) | $ | (339,942 | ) | $ | (819,792 | ) | ||||||||||||||||||||||||||||||||||
| Balance | 3,100,000 | $ | 310 | - | $ | - | 3,220,000 | $ | 322 | 26,000 | $ | 3 | 376,328,885 | $ | 37,633 | $ | 110,699,858 | $ | 12,146 | $ | - | $ | (111,230,122 | ) | $ | (339,942 | ) | $ | (819,792 | ) | ||||||||||||||||||||||||||||||||||
| Series A | Series B | Series C | Series D | Class A and Class B | Accumulated | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Preferred Stock | Preferred Stock | Preferred Stock | Common Stock | Additional | Other | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Number | Par | Number of | Par | Number | Par | Number |
| Par | Number | Par | Paid in | Shares to | Treasury | Accumulated | Comprehensive | |||||||||||||||||||||||||||||||||||||||||||||||||
| of Shares | Value | Shares | Value | of Shares | Value | of Shares | Value | of Shares | Value | Capital | be Issued | Stock | Deficit | Loss | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance - March 31, 2022 | 3,100,000 | $ | 310 | - | $ | - | 3,220,000 | $ | 322 | - | $ | - | 288,923,969 | $ | 28,892 | $ | 80,738,719 | $ | 12,146 | - | $ | (57,886,336 | ) | $ | (65,109 | ) | $ | 22,828,944 | ||||||||||||||||||||||||||||||||||||
| Balance | 3,100,000 | $ | 310 | - | $ | - | 3,220,000 | $ | 322 | - | $ | - | 288,923,969 | $ | 28,892 | $ | 80,738,719 | $ | 12,146 | - | $ | (57,886,336 | ) | $ | (65,109 | ) | $ | 22,828,944 | ||||||||||||||||||||||||||||||||||||
| Refinancing of debt and detachable warrants | - | - | - | - | - | - | - | - | 1,235,516 | - | - | 1,235,516 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of shares of Common Stock | (26,091,136 | ) | (2,609 | ) | (23,482 | ) | $ | (626,187 | ) | (652,278 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of shares of Common Stock | (26,091,136 | ) | (2,609 | ) | (23,482 | ) | $ | (626,187 | ) | (652,278 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Currency translation adjustments | (156,850 | ) | (156,850 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | (30,763,863 | ) | (30,763,863 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance - December 31, 2022 | 3,100,000 | $ | 310 | - | $ | - | 3,220,000 | $ | 322 | - | $ | - | 262,832,833 | $ | 26,283 | $ | 81,950,753 | $ | 12,146 | $ | (626,187 | ) | $ | (88,650,199 | ) | $ | (221,959 | ) | $ | (7,508,531 | ) | |||||||||||||||||||||||||||||||||
| Balance | 3,100,000 | $ | 310 | - | $ | - | 3,220,000 | $ | 322 | - | $ | - | 262,832,833 | $ | 26,283 | $ | 81,950,753 | $ | 12,146 | $ | (626,187 | ) | $ | (88,650,199 | ) | $ | (221,959 | ) | $ | (7,508,531 | ) | |||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
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SHARING SERVICES GLOBAL CORPORATION AND SUBSIDIARIES
NOTES TO THE UNAUDITEDCONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2018(Unaudited)
NOTE 1 – NATURE OF OPERATIONSORGANIZATION AND BASIS OF PRESENTATIONBUSINESS
Description of Operations
Sharing Services Inc.Global Corporation (“Sharing Services”, “we”, “us”, orServices,” “SHRG”) and its subsidiaries (collectively, the “Company”) aim to build shareholder value by developing or investing in innovative emerging businesses and technologies that augment the Company’s products and services portfolio, business competencies, and geographic reach. The Company was incorporated on April 24, 2014 in the State of Nevada.Nevada in April 2015. The Company’s wholly owned subsidiary, Total Travel Media, Inc. (“Total Travel Media”, or “TTM”), was incorporated on May 5, 2017main business activities include:
Sale of Health and Wellness Products - The Company markets its health and wellness products primarily through an independent sales force, using a direct selling business model under the proprietary brand “The Happy Co.” Currently, The Happy Co. TM markets and distributes its health and wellness products primarily in the StateUnited States (the “U.S.”) and Canada.
Sale of Nevada.Member-Based Travel Services - Through its subsidiary, Hapi Travel Destinations, the Company established a subscription-based travel services business under the proprietary brand MyTravelVentures (“MTV”) in May 2022. MTV provides entrepreneurial opportunities to its subscribers by capitalizing on both the direct selling model and the retail travel business model. The Company’s wholly-owned subsidiary, Four Oceans Holdings, Inc. (“Four Oceans”)MTV services are designed to offer discount for travel relating to airfare, cruises, hotels, resorts, time shares and rental cars for destinations throughout the world for people of all ages, demographics, and economic backgrounds.
In August 2021, Sharing Services and Hapi Café, was incorporated on September 22, 2017 in the State of Nevada. The fiscal year end is April 30. The Company acquired Total Travel Media on May 23, 2017. While Total Travel Media isInc, a wholly owned subsidiarycompany affiliated with Heng Fai Ambrose Chan, a Director of the Company, for financial accounting purposes the transaction has been treated as a reverse acquisition (reference is made to the paragraph below entitled “Recapitalization”). The Company acquired Four Oceans from related parties and was treated as an acquisition under common control. See Note 11 - Related Party Considerations.
The Company was originally formed to launch a taxi sharing website and application. Beginning on February 1, 2017 the Company changed its business model and is now a travel and technology management company. Sharing Services is a direct-selling model with a subscription-based vacation portal.
Share Exchange and Acquisition – Four Oceans Holdings, Inc.
On September 29, 2017, Sharing Services, Inc., entered into a Share ExchangeMaster Franchise Agreement with Four Oceans Holdings, Inc., a Nevada corporation. Pursuant(the “MFA”) pursuant to which Sharing Services acquired the exclusive franchise rights in North America to the brand “Hapi Café.” Under the terms of the Agreement,MFA, Sharing Services, directly or through its subsidiaries, has the right to operate no less than five corporate-owned stores and can offer to the public sub-franchise rights to own and operate other stores, subject to the terms and conditions contained in the MFA. The Company plans to open up Hapi Café in Dallas and other major cities in North America, and is in the process of identifying and evaluating suitable locations.
Directly or through its subsidiaries, the Company acquired allfrom time to time will invest in emerging business in the direct selling industry, using a combination of debt and equity financing, in efforts to leverage the sharesCompany’s business competencies and to participate in the growth of capital stock of Four Oceans from the holders of such stock (the “Equity-Holders”), in exchange for the issuance of Seventy-five Million (75,000,000) newly-issued restricted sharesthese businesses. As part of the Company’s Series A Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”). Followingcommitment to the closing, Four Oceans operated as a wholly-owned subsidiary of the Company.
Four Oceans was controlled by Alchemist Holdings, LLC, a Company controlled by our Chairman, who received 50,000,000 Series A Preferred stock; Bear Bull Market Dividends, Inc., a Company that is a significant shareholder of Sharing Services, who received 20,000,000 Series A Preferred stock; and Research and Referral BZ received 5,000,000 shares. As a resultsuccess of these share exchanges, Four Oceans became a 100% owned subsidiary of the Company. As these transactions are between entities under common control,emerging businesses, the Company, has reporteddirectly or through its subsidiaries, also plans to offer shared services, such as merchant processing, insurance, order fulfillment and logistics, and other “back office” solutions that are success-critical to these businesses in the results of operations for the period in a manner similar to a pooling of interests and hasdirect sales industry.
NOTE 2- GOING CONCERN
The accompanying unaudited condensed consolidated financial results since the initial date in which the above companies were under common control. Assets and liabilities were combined on their carrying values and no recognitionstatements as of goodwill was made. The Company has presented earnings per share based on the new parent company shares issued to the former shareholders of the Company.
Share Exchange and Reorganization – Total Travel Media, Inc.
On May 23, 2017, Sharing Services, Inc., entered into a Share Exchange Agreement (the “Agreement”) with Total Travel Media, Inc. On May 23, 2017, there was a Closing of the transaction (the “Closing Date”). Pursuant to the terms of the Agreement, the Company acquired all of the shares of capital stock of TTM from the holders of such stock (the “Equity-Holders”), in exchange for the issuance of Ten Million (10,000,000) newly-issued shares of the Company’s Common Class B Stock, par value $0.0001 per share and (ii) Ten Million (10,000,000) newly-issued shares of the Company’s Series B Preferred Stock, par value $0.0001 per share. Following the Closing Date, TTM will operate as a wholly-owned subsidiary of the Company.
Recapitalization
For financial accounting purposes, this transaction was treated as a reverse acquisition by Total Travel Media, and resulted in a recapitalization with Total Travel Media being the accounting acquirer and Sharing Services as the acquired company. The consummation of this reverse acquisition resulted in a change of control. Accordingly, the historical financial statements prior to the acquisition are those of the accounting acquirer, Total Travel Media, andDecember 31, 2023 have been prepared to give retroactive effect to the reverse acquisition completed on May 23, 2017, and represent the operations of Total Travel Media. The consolidated financial statements after the acquisition date, May 23, 2017,
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include the balance sheets of both companies at historical cost, the historical results of Total Travel Media and the results of the Company from the acquisition date. All share and per share informationusing generally accepted accounting principles in the accompanying consolidated financial statements and footnotes has been retroactively restatedUnited States of America (“GAAP”) applicable to reflect the recapitalization.
Going concern
These financial statements have been prepared on a going concern, basis, which assumescontemplates the Company will be able to realize itsrealization of assets and discharge itsthe liquidation of liabilities in the normalordinary course of business forbusiness. During the foreseeable future. To date the Company has generated $960,182 in revenues from its business operationsnine months ended December 31, 2023 and has an accumulated deficit of $6,976,438. As of January 31, 2018,2022, the Company had a working capital deficit of $5,058,529. The Company requires additional funding to meet its ongoing obligationsnet loss was approximately $4.8million and to fund anticipated operating losses. The$30.8 million, respectively. These factors among other raise substantial doubt about the ability of the Company to continue as a going concern is dependent on raising capital to fund its initial business plan and ultimately to attain profitable operations. Accordingly, these factors raise substantial doubt as to the Company’s abilityfor a reasonable period of time.
In order to continue as a going concern. The Company has initiated extensive direct sales and social media marketing which it expects to drive significant sales volume of the Company’s products, and services over the next several months. The Company expects to become profitable and not need additional outside funding once working capital needs have been met. The acceptance of the Company’s marketing efforts are uncertain and therefore,concern, the Company has planswill need, among other things, additional capital resources. Management’s plan is to continueobtain such resources for the Company by obtaining capital from significant shareholders sufficient to fundmeet its business by wayminimal operating expenses and seeking third party equity and/or debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of private placements, promissory notes, convertible promissory notes and advances from related parties as may be required.
its plans. These financial statements do not include any adjustments related to the recoverability and classification of recorded assetassets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
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NOTE 23 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The preparation ofunaudited condensed consolidated interim financial statements included herein have been prepared in conformityaccordance with accounting principles generally acceptedGAAP and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted as permitted pursuant to the rules and regulations of the SEC, although we believe that the disclosures made are adequate to make the information not misleading. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the United States (“GAAP”) requires management to make estimates and assumptions that affect (i)Company’s Annual Report on Form 10-K for the reported amounts of assets and liabilities, (ii)fiscal year ended March 31, 2023. Unless so stated, the disclosure of contingent assets and liabilities known to exist asdisclosures in the accompanying condensed consolidated financial statements do not repeal the disclosures in our consolidated financial statements for year ended March 31, 2023.
The accompanying unaudited condensed consolidated financial statements include the accounts of the date the financial statements are published,Company and (iii) the reported amount of net revenuesits wholly owned subsidiaries. All significant intercompany accounts and expenses recognized during the periods presented. Adjustments made with respect to the use of estimates often relate to improved information not previously available.
Uncertainties with respect to such estimates and assumptions are inherent in the preparation of financial statements; accordingly, actual results could differ from these estimates.
In managements’ opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentationtransactions have been included.eliminated in consolidation. Certain prior period financial information has been reclassified to conform with the current year’s presentation.
Use of Estimates and Assumptions
The preparation of financial statements in accordance with accounting principles generally accepted inGAAP requires the United Statesuse of judgment and requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and liabilitiesexpenses, and disclosures ofabout contingent assets and liabilities, atif any. Matters that require the dateuse of estimates and assumptions include, among others: the recoverability of accounts and notes receivable, the valuation of inventory, the useful lives of fixed assets, the assessment of long-lived assets for impairment, the nature and timing of satisfaction of multiple performance obligations resulting from contracts with customers, the allocation of the financial statements, andtransaction price to multiple performance obligations in a sales transaction, the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include assumptions about the valuationmeasurement and recognition of stock-basedright-of-use assets and related lease liabilities, the valuation of share-based compensation expense,awards, the valuationprovision for income taxes, the measurement and recognition of derivative liability,uncertain tax positions, the valuation allowance for deferred tax assetsof long-term debt covenants, and useful lifethe valuation of fixed assets.
Principlesloss contingencies, if any. Actual results may differ from these estimates in amounts that may be material to our consolidated financial statements. We believe that the estimates and assumptions used in the preparation of Consolidation
For January 31, 2018, the unauditedour consolidated financial statements of the Company include the accounts of the Company and its wholly owned subsidiaries, Total Travel Media, Inc. and Four Oceans Holding, Inc. All significant intercompany balances and transactions have been eliminated in consolidation.are reasonable.
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Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents
equivalents. Cash and cash equivalents include cash on hand and on depositrecent customer remittances deposited with our merchant processors at banking institutions as well as all highly liquid short-term investments with original maturities of 90 days or less.the balance sheet date, which generally settle within 24 to 72 hours. As of JanuaryDecember 31, 2018 the Company had2023, and March 31, 2023, cash and cash equivalents included cash held by our merchant processors of $175,451.
Fair value measurements
Fair value is definedapproximately $0.08 million and $0.5 million, respectively. In addition, as the price that the Company would receive to sell an investment or pay to transfer a liabilityof December 31, 2023, and March 31, 2023, cash and cash equivalents held in a timely transaction with an independent counter-partybank accounts in foreign countries in the principal marketordinary course of business were approximately $0.4 million and $1.3 million, respectively. Amounts held by our merchant processor or held in the absence of a principal market, the most advantageous market for the investment or liability. A three-tier hierarchy is established to distinguish between (1) inputs that reflect the assumptions market participants would usebank accounts located in pricing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (2) inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing an asset or liability developed based on the best information available in the circumstances (unobservable inputs); and establishes a classification of fair value measurements for disclosure purposes.foreign countries are generally not insured by any federal agency.
The hierarchy is summarized in the three broad levels listed below:
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In accordance with Accounting Standards Codification (“ASC”) 815, the Company’s debt derivative liabilities are measured at fair value on a recurring basis, and are level 3 measurements in the three-tier fair value hierarchy.
There were no transfers between the levels of the fair value hierarchy during the period of inception (May 5, 2017) to January 31, 2018.
Fair value of financial instruments
The Company’s financial instruments consist primarily of cash, accounts payable and accrued expenses, and debt. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments.
The following table summarizes fair value measurements by level at January 31, 2018 measured at fair value on a recurring basis:
January 31, 2018 |
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| Level 2 |
| Level 3 |
| Total |
Derivative liabilities |
| $ | - | $ | - | $ | 5,265,314 | $ | 5,265,314 |
Related Parties
The Company follows ASC 850, “Related Party Disclosures,” for the identification of related parties and disclosure of related party transactions (see Note 11).
Long-Lived Assets
Long-lived assets are evaluated for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted future cash flows to the recorded value of the asset. If impairment is indicated, the asset is written down to its estimated fair value.
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Property and Equipment
Furniture and equipment is recorded at cost reduced by accumulated depreciation. Depreciation expense is recognized over the assets’ estimated useful lives using the straight-line method. Estimated useful lives of the equipment are as follows:
Office equipment - 5 years
Furniture and fixtures - 3 years
Estimated useful lives are periodically reviewed and, when appropriate, changes are made prospectively. When certain events or changes in operating conditions occur, asset lives may be adjusted and an impairment assessment may be performed on the recoverability of the carrying amounts.
Accounts Receivable and Allowance for Uncollectible AccountsCredit Losses
Substantially allAccounts receivable consists mainly of amounts due from a merchant processor in the normal course of business. To measure impairment on accounts receivables, the Company adopted current expected credit losses (CECL) model, which is established on management’s historical collection experience, age of the Company’s accounts receivable, balance is relatedthe economic environment, industry trend analysis, and the current credit profile and financial condition of the merchant processor. On a quarterly basis, management reviews its receivables to trade receivables. Trade accounts receivable are recorded atdetermine if the invoiced amount and do not bear interest. The allowance for doubtful accounts is adequate and adjusts the Company’s best estimate ofallowance, including the amount of probable credit losses in its existing accounts receivable. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments for services. Accounts with known financial issues are first reviewedbase loss rate and specific estimates are recorded. The remaining accounts receivableadjustment factors, when necessary. Delinquent account balances are then grouped in categories by the number of days the balance is past due, and the estimated loss is calculated as a percentage of the total category based upon past history. Account balances are chargedwritten-off against the allowance when it is probable that the receivable will not be recovered. As of January 31, 2018, the Company determined no valuation allowance for doubtful accounts after all means of collection have been exhausted and that the likelihood of collection is not probable.
Inventory
Inventory consists of finished goods and promotional materials and are stated at the lower of cost, determined using the first-in, first-out (“FIFO”) method, or net realizable value. The Company periodically assesses its inventory levels when compared to current and anticipated sales levels. As of December 31, 2023, and March 31, 2023, the allowance for obsolete inventory was required,$843,034 and $880,926, respectively, in connection with health and wellness product that is damaged, expired or otherwise in excess of forecasted outputs, based on our current and anticipated sales levels. The Company reports its provisions for inventory losses in cost of goods sold in its condensed consolidated statements of operations.
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Other Receivable and Loan Payable
In July 2023, the Company, through its out-sourced payroll services provider (“Paychex”), submitted a claim to the Internal Revenue Services (“IRS”) for the Company’s accounts receivable.Employee Retention Tax Credit (“ERTC credit”) based on its payroll records and other pertinent information. Refunds will be distributed based on IRS processing times and the total ERTC credit will be approximately $1.8 million. Since the likelihood of receiving the ERTC credit is probable and the amount is estimable, the Company has recorded its ERTC credit in the Other Receivable.
Revenue RecognitionThrough the introduction of Paychex, the Company successfully applied for an ERTC loan (“bridge loan”) in August 2023. The bridge loan that was approved came to $1.2 million, and it was recorded as a Loan Payable. The loan is for a 12-month period and carries a 2% monthly interest rate. The loan proceeds must be used solely and exclusively for working capital and other business purposes and it had an origination fee of $24,000. The Company received net proceeds of approximately $1.18 million in September 2023.
InOther Assets
Other assets include a multi-user license and code of a back-office platform that was acquired for $1 million in 2022. This back-office platform is designed to facilitate the computation and processing of commission payments to distributors, and it requires customization in order for it to be operational. Costs associated with the customization and build out of the platform has been capitalized in accordance with ASC 605, “350 - Revenue RecognitionCapitalization on Internal-Use Software Costs”, revenue.
Foreign Currency Translation
The functional currency of each of our foreign operations is recognized when, specifically when allgenerally the following conditionsrespective local currency. Balance sheet accounts are met:
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The Company generally recognizes revenue upon delivery and when both the title and risk and rewards pass to the Independent Representative or Customer. Product sales are recognized net of product returns and discounts referred to as “returns and allowances.” Net sales include product sales net of processing fees The Company generally receives the net sales price through credit card payments on the Company Website ortranslated into U.S. dollars (our reporting currency) at the pointrates of sale. Products sold on an annual basis are recognized as revenue over the following twelve months. Allowances for product returns have not been provided due to the short period that the products have been sold. As historical data is collected a reserve will be providedexchange in effect at the time the sale is recorded.
The Company recognizes revenue when the products are shipped and services are complete.
Deferred Revenue
At January 31, 2018, the Company had advances from customers of $128,851. Advances from customers are a component of deferred revenue in the consolidated balance sheets and includes billings to customers where the
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product has not shipped, for services that were in process but not completed and for annual memberships and other products which are recognized over the succeeding twelve months.
Cost of Sales
The Cost of merchandise sold is recognized at the time of revenue recognition, as the product is shipped and services are complete.
Share-Based Expense
ASC 718, “Compensation - Stock Compensation,” prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).
The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, “Equity - Based Payments to Non-Employees.” Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitmentsheet date, or performance completion date.
Share-based expense totaled $1,308,948 for the period from inception (May 5, 2017) to January 31, 2018.
Advertising Costs
The Company follows ASC 720, “Advertising Costs,” and expenses costs as incurred. Advertising and marketing expense totaled $694,207 for the period from inception (May 5, 2017) to January 31, 2018.
Income Taxes
The Company utilizes the asset and liability method in accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for operating loss and tax credit carry-forwards and for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year 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 inwhile the results of operations and cash flows are generally translated using average exchange rates for the periods presented. Individual material transactions, if any, are translated using the actual rate of exchange on the transaction date. The resulting translation adjustments are reported in accumulated other comprehensive loss in our condensed consolidated balance sheets. In September 2021, the Company, through its wholly owned subsidiary, commenced operations in the period that includesRepublic of Korea (South Korea).
SCHEDULE OF FOREIGN EXCHANGE CURRENCY TRANSLATION
| South Korean | ||||
| Won per USD | ||||
| Exchange rate as of December 31, 2023 | 1,294.46 | |||
| South Korean Won per USD | ||||||||
| Three Months ended | Nine Months ended | |||||||
| December 31, 2023 | December 31, 2023 | |||||||
| Average exchange rate as of December 31, 2023 | 1,320.54 | 1,316.52 | ||||||
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Comprehensive Loss
For the enactment date. A valuation allowancethree and nine months ended December 31, 2023 and 2022, the Company’s comprehensive loss comprised of currency translation adjustments and net loss.
Revenue Recognition
As of December 31, 2023, and March 31, 2023, deferred sales revenue associated with products invoiced but not received by customers at the balance sheet date was $212,715 and $113,896, respectively. In addition, as of December 30, 2023, and March 31, 2023, deferred sales revenue associated with our unfulfilled performance obligations for services offered on a subscription basis was $44,248 and $80,528, and deferred sales revenue associated with our performance obligations for customers’ right of return was $26,970 and $26,894, and deferred revenues associated with customer loyalty points was $25,493 and $25,493, respectively. Deferred sales revenue is recordedexpected to reducebe recognized over one year.
During the carrying amounts of deferred tax assets unless it is more likely than not that the value of such assets will be realized.three and nine months ended December 31, 2023 and 2022, substantially all our consolidated net sales were from our health and wellness products.
Sales Commissions
The Company usesrecognizes sales commission expenses, when incurred, in accordance with GAAP. During the two-step approach to recognizingthree months ended December 31, 2023 and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not, that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount,2022, sales commission expense, which is more than 50% likelyincluded in selling and marketing expenses in our condensed consolidated statements of being realized upon ultimate settlement.operations and comprehensive loss, was approximately $0.9 million and $1.2 million, respectively. During the nine months ended December 31, 2023 and 2022, sales commission expense was approximately $2.7 million and $5.1 million, respectively
Recently Issued Accounting Standards - Pending Adoption
In August 2020, the FASB issued ASU No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (ASU 2020-06), which simplifies the accounting for certain convertible instruments. Among other things, under ASU 2020-06, the embedded conversion features no longer must be separated from the host contract for convertible instruments with conversion features not required to be accounted for as derivatives, or that do not result in substantial premiums accounted for as paid-in capital. ASU 2020-06 also eliminates the use of the treasury stock method when calculating the impact of convertible instruments on diluted Earnings per Share. For the Company, the provisions of ASU 2020-06 are effective for its fiscal year beginning on April 1, 2024. Early adoption is permitted, subject to certain limitations. The Company considers many factors whenis evaluating and estimating the Company's tax positions and tax benefits, which may require periodic adjustments. At January 31, 2018, the Company did not record any liabilities for uncertain tax positions.potential impact of adoption on its consolidated financial statements.
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Basic and Diluted Net Loss per Common Share
Basic income (loss)
We calculate basic loss per share is computed by dividing net income (loss) availableloss attributable to common shareholders by the weighted average number of common shares outstanding during the reporting period. The weighted average number of shares is calculated by taking the number of shares outstanding and weighting them by the amount of time that they were outstanding. Diluted earnings per share is calculated similarly but reflects the potential dilution that could occurimpact of shares issuable upon the conversion or exercise of outstanding convertible preferred stock, convertible notes payable, if any, stock options, warrants and other commitments to issue common stock, except where the impact would be anti-dilutive.
SCHEDULE OF COMPUTATIONS OF BASIC AND DILUTED LOSS PER SHARE
| 2023 | 2022 | |||||||
| Three Months Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Net loss | $ | (894,596 | ) | $ | (11,024,951 | ) | ||
| Weighted average basic and diluted shares | ||||||||
| Loss per share: | ||||||||
| Basic and diluted | $ | ) | $ | ) | ||||
| 2023 | 2022 | |||||||
| Nine Months Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Net loss | $ | (4,773,744 | ) | $ | (30,763,863 | ) | ||
| Weighted average basic and diluted shares | ||||||||
| Loss per share: | ||||||||
| Basic and diluted | $ | ) | $ | ) | ||||
SCHEDULE OF POTENTIALLY DILUTIVE INSTRUMENTS OUTSTANDING
| 2023 | 2022 | |||||||
| As of December 31, | ||||||||
| 2023 | 2022 | |||||||
| Convertible preferred stock | 6,320,000 | 6,320,000 | ||||||
| Convertible notes payable | - | 163,612,120 | ||||||
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| Total potential incremental shares | 6,320,000 | 169,932,120 | ||||||
NOTE 5 – INVENTORY, NET
Inventory consists primarily of finished goods. The Company provides an allowance for any slow-moving or equity awards vest resulting in the
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issuanceobsolete inventory. As of common stock that could share in the earningsDecember 31, 2023, and March 31, 2023, inventory consists of the Company. There were convertible notes and accrued interest for approximately $575,034 and 101,874,540 convertible preferred shares issued by the Company during the period ended January 31, 2018. Potential dilutive instruments as at January 31, 2018, consistedfollowing:
SCHEDULE OF INVENTORY
| December 31, 2023 | March 31, 2023 | |||||||
| Finished Goods | $ | 3,033,714 | $ | 2,517,046 | ||||
| Allowance for inventory obsolescence | (843,034 | ) | (880,926 | ) | ||||
| Inventory,net | $ | 2,190,680 | $ | 1,636,120 | ||||
NOTE 6 – OTHER CURRENT ASSETS, NET
Other current assets consist of the following common share equivalents:following:
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SCHEDULE OF OTHER CURRENT ASSETS
| December 31,2023 | March 31, 2023 | |||||||
| Inventory-related deposits | $ | 334,373 | $ | 288,649 | ||||
| Accounts receivable, related parties | - | 167,578 | ||||||
| Prepaid insurance and other operational expenses | 46,560 | 105,652 | ||||||
| Deposits for sales events | - | 120,614 | ||||||
| Right to recover asset | 21,079 | 20,975 | ||||||
| Subtotal | 402,012 | 703,468 | ||||||
| Less: allowance for losses | (175,641 | ) | (175,641 | ) | ||||
| Other current assets | $ | 226,371 | $ | 527,827 | ||||
Diluted loss per share is the same as basic loss per share during periods where net losses are incurred since the inclusion of the potential common stock equivalents would be anti-dilutive as a result of the net loss.
Recently Issued Accounting Standards
In November 2017, the FASB has issued Accounting Standards Update (ASU) No. 2017-14, “Income Statement—Reporting Comprehensive Income (Topic 220), Revenue Recognition (Topic 605),Prepaid insurance and Revenue from Contracts with Customers (Topic 606).” ASU 2017-14 includes amendments to certain SEC paragraphs within the FASB Accounting Standards Codification (Codification). ASU 2017-14 amends the Codification to incorporate the following previously issued guidance from the SEC. ‘The amendments in ASU No. 2017-14 amends the Codification to incorporate SEC Staff Accounting Bulletin (SAB) No. 116 and SEC Interpretive Release on Vaccines for Federal Government Stockpiles (SEC Release No. 33-10403) that bring existing SEC staff guidance into conformity with the FASB’s adoption of and amendments to ASC Topic 606, Revenue from Contracts with Customers.
In September 2017, the FASB has issued Accounting Standards Update (ASU) No. 2017-13, “Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments.” The amendments in ASU No. 2017-13 amends the early adoption date option for certain companies related to the adoption of ASU No. 2014-09 and ASU No. 2016-02. Both of the below entities may still adopt using the public company adoption guidance in the related ASUs, as amended. The effective date is the same as the effective date and transition requirements for the amendments for ASU 2014-09 and ASU 2016-02.
In February 2017, the FASB has issued Accounting Standards Update (ASU) No. 2017-05, “Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets.” The amendments clarify that a financial asset is within the scope of Subtopic 610-20 if it meets the definition of an in substance nonfinancial asset. The amendments also define the term in substance nonfinancial asset. The amendments clarify that nonfinancial assets within the scope of Subtopic 610-20 may include nonfinancial assets transferred within a legal entity to a counterparty. For example, a parent may transfer control of nonfinancial assets by transferring ownership interests in a consolidated subsidiary. A contract that includes the transfer of ownership interests in one or more consolidated subsidiaries is within the scope of Subtopic 610-20 if substantially all of the fair value of the assets that are promised to the counterparty in a contract is concentrated in nonfinancial assets. The amendments clarify that an entity should identify each distinct nonfinancial asset or in substance nonfinancial asset promised to a counterparty and derecognize each asset when a counterparty obtains control of it. Effective at the same time as the amendments in Update 2014-09, Revenue from Contracts with Customers (Topic 606). Therefore, public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the amendments in this Update to annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities should apply the amendments in this Update to annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. All other entities may apply the guidance earlier as of annual reporting periods beginning
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after December 15, 2016, including interim reporting periods within that reporting period. All other entities also may apply the guidance earlier as of annual reporting periods beginning after December 15, 2016, and interim reporting periods within annual reporting periods beginning one year after the annual reporting period in which the entity first applies the guidance. An entity is required to apply the amendments in this Update at the same time that it applies the amendments in Update 2014-09. The Company is currently evaluating the potential impact this standard may have on its consolidated financial position and results of operations.
In January 2017, the FASB has issued Accounting Standards Update (ASU) No. 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” These amendments eliminate Step 2 from the goodwill impairment test. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. Effective for public business entities that are a SEC filers for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. ASU 2017-04 should be adopted on a prospective basis. The Company does not anticipate the adoption of ASU 2017-04 will have a material impact on its consolidated financial statements.
In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business.” This new standard clarifies the definition of a business and provides a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This new standard will be effective for the Company on January 1, 2018, however, early adoption is permitted with prospective application to any business development transaction.
Management has considered all recent accounting pronouncements issued. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s consolidated financial statements.
NOTE 3 – ACCOUNTS RECEIVABLE
As at January 31, 2018, accounts receivable of $366,269 represents the billed revenue due from merchant processor net of deferred revenue and merchant processing fees. The full amount was received in subsequent payments, thus no allowance for doubtful accounts was required at January 31, 2018
NOTE 4 – PREPAID EXPENSES AND DEPOSITS
Prepaidoperational expenses and deposits consisted of the following at January 31, 2018:
| January 31, 2018 | |
Prepaid expenses | $ | 57,910 |
Vendor deposits |
| 210,287 |
Security deposit |
| 29,161 |
| $ | 297,358 |
Prepaid expensesprimarily consist of payments for goods and services (such as freight, trade show expenses and insurance premiums) which willare expected to be consumed in the Company’s operationsrealized in the next operating cycle.
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Vendor deposits represent 50% of open purchase orders Prepaid interest represents interest on the 2022 Note due to the Company’s primary supplier, per the vendor agreement.
Security deposits are for the new corporate offices per the lease agreement. See subsequent events (Note 14) regarding the new Corporate offices.
Decentralized Sharing Systems, Inc. (“DSSI”) (see NOTE 5 - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at January 31, 2018:
| January 31, | |
| 2018 | |
Furniture and fixtures | $ | 18,928 |
Office and computer equipment |
| 28,178 |
Accumulated depreciation |
| (933) |
Property and equipment, net | $ | 46,173 |
The depreciation expense14 below) for the period from inceptionJuly 1, 2023 inclusive to January 31,2018December 31, 2023. Right to recover assets is associated with our customers’ right of return and is expected to be realized in one year or less. As of December 31, 2023, and March 31, 2023, the provision for losses in connection with certain inventory-related deposits for which recoverability is less than certain was $800.approximately $176,000.
NOTE 67 – EQUITY INVESTMENTSINVESTMENT IN UNCONSOLIDATED ENTITIES, NET
212 Technologies, LLCIn September 2021, the Company, Stemtech Corporation (“Stemtech”) and Globe Net Wireless Corp. (“GNTW”) entered into a Securities Purchase Agreement (the “SPA”) pursuant to which the Company invested $1.4 million in Stemtech in exchange for: (a) a Convertible Promissory Note in the amount of $1.4 million in favor of the Company (the “Convertible Note”) and (b) a detachable Warrant to purchase shares GNTW common stock (the “GNTW Warrant”). Stemtech is a subsidiary of GNTW. As an inducement to enter into the SPA, GNTW agreed to pay to the Company an origination fee of $500,000, payable in shares of GNTW’s common stock. The Convertible Note matures on September 9, 2024, bears interest at the annual rate of 10%, and is convertible, at the option of the holder, into shares of GNTW’s common stock at a conversion rate calculated based on the closing price per share of GNTW’s common stock during the 30-day period ended September 19, 2021. The GNTW Warrant expires on September 13, 2024 and conveys the right to purchase up to 1.4 million shares of GNTW’s common stock at a purchase price calculated based on the closing price per share of GTNW’s common stock during the 10-day period ended September 13, 2021. In September 2021, GNTW issued to the Company shares of its common stock, or less than 1% of the shares of GNTW then issued and outstanding, in payment of the origination fee. In November 2021, Globe Net Wireless Corp. changed its corporate name to Stemtech Corporation. In connection therewith, the investee’s common stock is now traded under the symbol “STEK”.
On May 21, 2017,The Company carries its investment in the Convertible Note, the GNTW Warrant and the shares of GNTW common stock at fair value in accordance with GAAP. During the three months ended September 30, 2022, the Company recognized unrealized gains, before income tax, of $4,865,354 in connection with its investment in the Convertible Note, the GNTW Warrant and the shares of GNTW common stock.
Effective June 30, 2023, subject to the terms of a certain Loan Purchase Contract, Assignment of Note and Liens and Other Loan Documents, and Note Allonge document, DSSI purchased from SHRG the Stemtech promissory note in the amount of $1.4 million, along with all SHRG’s rights in any Stemtech warrants, for a purchase price of $1.1 million, with the financial terms generally summarized as follows: (a) DSSI paid the $1.1 million purchase price by crediting the $27.0 million loan, first to interest and then to principal, and (b) DSSI acquired ownership of the $1.4 million promissory note payable by Stemtech, free and clear of any liens, and any equity or warrant interest in the Stemtech that SHRG may have held. As of September 30, 2023, as a result of the transaction, the Company no longer has an investment in Stemtech.
In September 2021, the Company entered into a transaction wherebyMembership Unit Purchase Agreement pursuant to which the Company will acquireacquired a Forty-eight percent (48%)30.75% equity interest in 212 Technologies,MojiLife, LLC, a Montana limited liability company organized in the State of Utah (“212 Tech”MojiLife”), in exchange for 15,628,750 shares$1,537,000. MojiLife is an emerging growth distributor of technology-based consumer products for the home and car. MojiLife’s products include esthetically attractive, cordless scent diffusers for the home or for the car, as well as proprietary home cleaning products and accessories.
On October 1, 2023, MojiLife and its principals Darin Davis and Kimberlee Davis (collectively the “Seller”) and Moji Life International, Inc., a Nevada corporation (the “Purchaser”), a wholly-owned subsidiary of the Company (collectively the “Parties”) entered into an Asset Purchase Agreement (the “MojiLife Asset Purchase Agreement”). Pursuant to the MojiLife Asset Purchase Agreement, the Purchaser purchased the Seller’s real and personal property including, machinery and equipment, intellectual property, trade names, patents, marketing strategies and materials, all product formulas, all saleable inventory, the Seller’s organization database of distributors and customers, and assumed certain liabilities of the Seller.
In connection with the Moji Asset Purchase Agreement, on October 1, 2023, the Purchaser and SHRG Development Ventures, LLC (“SHRGDV”), an affiliate of the Purchaser and subsidiary of the Company also entered an Exchange Agreement whereby SHRDV relinquished and surrendered its 30.75% LLC unit ownership interest in Seller.
On a quarterly basis, the Company evaluates the recoverability of its investments and reviews current economic trends to determine the adequacy of its allowance for impairment losses based on each investee financial performance data and other relevant information. An estimate for impairment losses is recognized when recovery in full of the Company’s Series A Convertible Preferred Stockinvestment is no longer probable. Investment balances are written off against the allowance after the potential for recovery is considered remote.
Investment in unconsolidated entities consists of the following:
SUMMARY OF INVESTMENT IN UNCONSOLIDATED ENTITIES
December 31, 2023 | March 31, 2023 | |||||||
| Investment in detachable GNTW stock warrant | $ | - | $ | 143,641 | ||||
| Investment in GNTW common stock | - | 18,300 | ||||||
| Investment in Stemtech convertible note | - | 44,290 | ||||||
| Investment in MojiLife, LLC | - | 1,537,000 | ||||||
| Subtotal | - | 1,743,231 | ||||||
| Less, allowance for impairment losses | - | (1,537,000 | ) | |||||
| Investments | $ | - | $ | 206,231 | ||||
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NOTE 8 – PROPERTY AND EQUIPMENT, NET
Property and cash inequipment consist of the amount of $100,000. 212 Technologies, LLC is a developer of end-to-end online marketing and direct sales software systems. Initially,following:
SUMMARY OF PROPERTY AND EQUIPMENT
| December 31, 2023 | March 31, 2023 | |||||||
| Building and building improvements | $ | - | $ | 8,952,555 | ||||
| Computer software | 1,024,274 | 1,024,274 | ||||||
| Furniture and fixtures | 287,421 | 237,042 | ||||||
| Computer equipment | 220,264 | 220,264 | ||||||
| Leasehold improvements and other | 399,306 | 394,306 | ||||||
| Total property and equipment | 1,931,265 | 10,828,441 | ||||||
| Accumulated depreciation and amortization | (1,605,742 | ) | (1,558,248 | ) | ||||
| Property and equipment, net | $ | 325,523 | $ | 9,270,193 | ||||
Effective June 30, 2023, the Company will acquireand DSSI entered into an Assignment of Limited Liability Company Interests agreement pursuant to which: (a) DSSI assumed approximately $7.24 million in SHRG liabilities secured by certain Commercial Real Estate, (b) DSSI credited SHRG approximately $240,000 towards amounts owed under the 2022 Note (the “$27.0million loan”), and (c) DSSI acquired ownership of Linden Real Estate Holdings LLC, with its sole asset being a Twenty-four percent (24%) interestcommercial lot and commercial building located in exchange for 5,628,750 sharesLindon, Utah, subject to the assumed indebtedness.
NOTE 9 – ACCRUED AND OTHER CURRENT LIABILITIES
Accrued and other current liabilities consist of the Company’s Series A Convertible Preferred Stockfollowing:
SUMMARY OF ACCRUED AND OTHER CURRENT LIABILITIES
| December 31, 2023 | March 31, 2023 | |||||||
| Deferred sales revenues | $ | 369,726 | $ | 246,811 | ||||
| Liability associated with uncertain tax positions | 925,785 | 925,795 | ||||||
| Accrued interest payable | - | 536,123 | ||||||
| Payroll and employee benefits | 302,276 | 329,762 | ||||||
| Lease liability, current portion | 33,790 | 41,385 | ||||||
| Other accruals | 1,113,570 | 701,161 | ||||||
| Accrued and other current liabilities | $ | 2,745,147 | $ | 2,781,037 | ||||
Lease liability, current portion, represents obligations due within one year under operating leases for office space, automobiles, and cash. The Stakeholder and Investment Agreement dated May 21, 2017 also providesoffice equipment. See Note 16 - LEASES below for the acquisition by the Company of the remaining twenty-four percent (24%) interest in 212 Tech at a future date in exchange for an additional 10,000,000 shares of the Company’s Series A Preferred Stock, when the following milestones have been reached: (i) One year has passed from the original MOU; and (ii) the price per share of the Company’s common stock is quoted at $10.00 or more. The Company, in exchange, received a non-exclusive, non-royalty bearing, perpetual, worldwide license of all of the Intellectual Property Rights developed and held by 212 Tech.
The Company acquired a 24% interest in 212 Tech by paying $25,000 in cash, leaving a payable of $75,000, and issuing 5,628,750 shares of Series A Convertible Preferred Stock, with a deemed value of $0.25 per share or $1,407,188.more information. As of January 31, 2018, we recorded $1,507,188 as an investment at cost.
561 LLC
The Company acquired a 25% interest in 561 LLC by agreeing to issue 2,500,000 shares of Series A Convertible Preferred Stock, with a deemed value of $0.25 per share or $625,000. The shares are to be issued to the 561 Equity-holders as follows: 625,000 shares issued within 5 days of the closing date and 625,000 shares issued on or before December 31, 2017. These shares are issued2023, and outstanding at JanuaryMarch 31, 2018. 625,000 Shares are2023, other accruals include amounts due to be issued on or before April 30, 2018related parties of $0 and 625,000 Shares are to be issued on or before August 31, 2018. As$167,578, respectively, and several operational accruals of January 31, 2018, we recorded $312,500 as an investment at cost for the 1,250,000 shares issued.$1,113,570 and $533,583, respectively.
The 561 Equity-Holders shall be entitled to an additional Two Million Five Hundred Thousand (2,500,000) of shares of the Company’s restricted Series A Preferred Stock, $0.0001 par value per share, when both of the following conditions have been met: (a) Following the first year’s anniversary of the Closing Date and (b) the closing bid price of the Company’s common stock equals or exceeds $5.00 per share, as reported by OTC Markets, Inc. If these conditions are met, the Company shall cause the issuance of such shares within ten (10) calendar days of the satisfaction of such conditions.
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15NOTE 10 – NOTES PAYABLE, RELATED PARTY
The 561 Equity-Holders shall be entitled to an additional Two Million Five Hundred Thousand (2,500,000) of shares of the Company’s restricted Series A Preferred Stock, $0.0001 par value per share, when the following conditions have been met: The Company shall be the owner of record of no less than Forty percent (40%) of the member interests in each of (i) 561 and (ii) its affiliated company, America Approved Commercial, LLC. If these conditions are met, the Company shall cause the issuance of such shares within ten (10) calendar days of the satisfaction of such conditions.
America Approved Commercial LLC
The Company acquired a 25% interest in America Approved Commercial LLC by issuing 2,500,000 shares of Series A Convertible Preferred Stock, with a deemed value of $0.25 pure share or $625,000. The Company issued 625,000 shares during the period ended January 31, 2018. As of January 31, 2018, we recorded $ 312,500 as an investment at cost for the first installment of 625,000 shares issued.
The AAC Equity-Holders shall be entitled to an additional Two Million Five Hundred Thousand (2,500,000) of shares of the Company’s restricted Series A Preferred Stock, $0.0001 par value per share, when both of the following conditions have been met: (a) Following the first year’s anniversary of the Closing Date and (b) the closing bid price of the Company’s common stock equals or exceeds $5.00 per share, as reported by OTC Markets, Inc. If these conditions are met, the Company shall cause the issuance of such shares within ten (10) calendar days of the satisfaction of such conditions.
The AAC Equity-Holders shall be entitled to another additional Two Million Five Hundred Thousand (2,500,000) of shares of the Company’s restricted Series A Preferred Stock, $0.0001 par value per share, when the following conditions have been met: The Company shall be the owner of record of no less than Forty percent (40%) of the member interests in each of (i) AAC and (ii) its affiliated company, 561, LLC. If these conditions are met, the Company shall cause the issuance of such shares within ten (10) calendar days of the satisfaction of such conditions.
Medical Smart Care LLC
The Company acquired a 40% interest in Medical Smart Care LLC for 1,000,000 shares of Series A Convertible Preferred Stock, with a deem value of $0.25 pure share or $250,000. The shares are to be issued to the Medical Smart Care Equity-holder as follows: 250,000 shares issued within 5 days of the closing date and 250,000 shares issued on or before December 31, 2017. These shares were issued in November and December 2017 with the mutual consent of the parties. 250,000 Shares are to be issued on or before April 30, 2018; and 250,000 Shares are to be issued on or before August 31, 2018. As of January 31, 2018, we recorded $125,000 as an investment at cost for the installments of 500,000 shares issued.
LEH Insurance Group LLC
The Company acquired a 40% interest in LEH Insurance Group LLC (“LEHIG”) by issuing 500,000 shares of Series A Convertible Preferred Stock, with a deem value of $0.25 pure share or $125,000. As of January 31, 2018, we recorded $125,000 as an investment at cost. The 500,000 shares were issued to the LEHIG Equity-holder in November 2017.
The LEHIG Equity-Holder shall be entitled to an additional Five Hundred Thousand (500,000) of shares of the Company’s restricted Series A Preferred Stock, $0.0001 par value per share, when the following condition has been met: Prior to December 31, 2018, LEHIG has booked premiums of at least Five Hundred Thousand dollars ($500,000). If this condition is met, the Company shall cause the issuance of such shares within ten (10) calendar days of the satisfaction of such conditions.
The LEHIG Equity-Holder shall be entitled to a second additional Five Hundred Thousand (500,000) of shares of the Company’s restricted Series A Preferred Stock, $0.0001 par value per share, when the following condition has been met: Prior to December 31, 2018, LEHIG has booked premiums of at least One Million dollars ($1,000,000). If this condition is met, the Company shall cause the issuance of such shares within ten (10) calendar days of the satisfaction of such conditions.
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NOTE 7 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES
AccountsNotes payable, and accrued expensesrelated party, consisted of the following at January 31, 2018:following:
| January 31, 2018 | |
Accounts payable | $ | 68,738 |
Accrued commissions |
| 240,884 |
Accrued expenses |
| 56,211 |
Accrued interest |
| 11,974 |
| $ | 377,807 |
SCHEDULE OF NOTE PAYABLE RELATED PARTY
Accrued commissions consisted of commissions earned on sales of products and services by independent representatives and paid in the following month.
| December 31, 2023 | March 31, 2023 | |||||||
| APB Loan | $ | - | $ | 5,594,253 | ||||
| APB Revolving Note | - | 1,530,569 | ||||||
| Unamortized discount and deferred financing costs | - | (202,779 | ) | |||||
| Note payable to related party, net | $ | - | $ | 6,922,043 | ||||
NOTE 8 - NOTES PAYABLE
Notes payable consisted of the following at January 31, 2018:
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| January 31, 2018 |
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| Interest Rate |
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| Maturity |
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Dated – March 20, 2017 |
| $ | 10,000 |
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| 12% |
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| March 18, 2018 |
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Dated – May 4, 2017 |
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| 10,000 |
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| 12% |
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| May 3, 2018 |
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Dated – May 11, 2017 |
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| 15,000 |
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| 12% |
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| May 10, 2018 |
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Total notes payable |
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| 35,000 |
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Less: current portion of notes payable |
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| 35,000 |
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As of January 31, 2018,On June 15, 2022, the Company, accruedthrough one of its subsidiaries, Linden Real Estate Holdings LLC (“SHRG Subsidiary”), entered into a secured real estate promissory note with American Pacific Bancorp, Inc. (“APB”), pursuant to which APB loaned the Company approximately $5.7 million the “APB Loan”). The APB Loan would mature on June 1, 2024, bore interest at the annual rate of 8%, with interest payable in equal monthly installments of $43,897 commencing on July 1, 2022 (with the remainder due on June 1, 2024). The loan was secured by a first mortgage interest on these notes of $3,255 and recorded interest expense of $3,117 in interest expense for the period from inception (May 5, 2017) to January 31, 2018.
NOTE 9 - CONVERTIBLE NOTES PAYABLE
Convertible notes payable consisted ofCompany’s Lindon, Utah office building. In connection with this loan, the following as of January 31, 2018:
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The Company recognized amortization expense related to the debt discount and deferred financing fees of $71,478 for the period of inception (May 5, 2017) to January 31, 2018, which are included in interest expense in the
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consolidated statements of operations. The Company also recorded an interest of $25,139 on the convertible notes payables, during the period from inception (May 5, 2017) to January 31, 2018.
On November 14, 2017, the Company paid $90,055, for settlement of the note dated May 15, 2017, with a principal balance of $63,000. For the period ended January 31, 2018, the Company recorded $23,534 in prepayment penalties and accrued interest payable and recognized a gain of $93,285 from the change in derivative liability.
On December 28, 2017, the Company paid $54,420, for settlement of the note dated June 20, 2017, with a principal balance of $38,000. As of January 31, 2018, the Company recorded $14,321 in prepayment penalties and accrued interest payable and recognized a gain of $57,439 from the change in derivative liability.
Promissory Notes – Issued in Fiscal year 2018
During the period of inception (May 5, 2017) to January 31, 2018, the Company issued a total of $616,000 notes with the following terms:
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The notes allow the Company to redeem the notes at rates ranging from 110% to 135% depending on the redemption date provided that no redemption is allowed after the 180th day. The Company received net cashproceeds of $509,000$5,522,829 from APB on the convertible notes and recognized $6,000 as deferred financing fee, which is being amortized over the term of the convertible notes.June 17, 2022.
The Company determined that the conversion feature met the definition of a liability in accordance with ASC Topic No. 815 - 40, “Derivatives and Hedging - Contracts in Entity's Own Stock,” and therefore bifurcated the embedded conversion option once the note becomes convertible and accounted for it as a derivative liability. The fair value of the conversion feature was recorded as a debt discount and amortized to interest expense over the term of the note.
The Company valued the conversion feature using the Binomial option pricing valuation model. The fair value of the derivative liability for all the notes amounted to $7,376,788. $544,000 of the value assigned to the derivative liability was recognized as a debt discount to the notes while the balance of $6,832,788 was recognized as a “day 1” derivative loss.
NOTE 10 - DERIVATIVE LIABILITIES
The Company analyzed the conversion option for derivative accounting consideration under ASC 815, “Derivatives and Hedging,” and determined that the instrument should be classified as a liability since the conversion option becomes effective at issuance resulting in there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.
The Company determined our derivative liabilities to be a Level 3 fair value measurement and used a multi-nominal lattice model to calculate the fair value as of January 31, 2018. The multi-nominal lattice model requires six basic data inputs: the exercise or strike price, time to expiration, the risk free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each convertible note is estimated using the
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multi-nominal lattice valuation model. The following weighted-average assumptions were used for the period ended January 31, 2018:
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The following table summarizes the derivative liabilities included in the balance sheet at January 31, 2018:
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ASC 815 requires we assess the fair market value of derivative liability at the end of each reporting period and recognize any change in the fair market value as other income or expense item. The following table summarizes the loss (gain) on derivative liability included in the income statement for the period of inception (May 5, 2017) to January 31, 2018.
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NOTEOn August 11, - RELATED PARTY CONSIDERATIONS
Alchemist Holdings, LLC
As part of the acquisition of Total Travel Media (see Note 1), Alchemist Holdings, LLC (“Alchemist”), which is controlled by our Chairman, Robert Oblon, received 7,500,000 shares of the Series B Convertible Preferred Stock (75% of the issued shares) and 7,500,000 shares of the Common Class B Stock (75% of the issued shares), respectively.
As part of the acquisition of Four Oceans Holdings, Inc. (see Note 1), Alchemist received 50,000,000 shares of the Series A Convertible Preferred Stock (66.7% of the issued shares).
On March 15, 2017,2022, the Company entered intoexecuted a Consultancy and Marketing Agreementrevolving credit promissory note with AlchemistAPB (“the APB Revolving Note”) pursuant to provide marketing and consulting services, tools, websites, video production and event management services. The Agreement shall remain in effect until the completion of the services. The Agreement may be terminated bywhich the Company without cause and without liability by giving 14 calendar days written notice of such terminationhad access to Alchemist. Total cost for these services were estimatedadvances with a maximum principal balance not to be $840,000 for twelve months from agreement date. The Company has paid $862,361 to the related party, pursuant to this agreement, during the period ended January 31, 2018. Of this amount, $ 694,207 was paid post reverse acquisition (May 23, 2017) and is included in the marketing
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expense in the accompanying financial statements. For the period ended January 31, 2018 there was $69,000 paid to related parties for other services.
The Company purchased property, plant and equipment of $18,928 and inventory amounting to $42,890 from Alchemist, during the period from May 23, 2017 (inception) to January 31, 2018.
Subsequent to January 31, 2018, approximately $35,500 was paid to related parties.
Promissory Note - Bear Bull Market Dividends, Inc.
As part of the acquisition of Total Travel Media (see Note 1), Bear Bull Market Dividends, Inc. (“Bear Bull”), received 2,500,000 shares of the Series B Convertible Preferred Stock (25% of the issued shares) and 2,500,000 shares of the Common Class B Stock (25% of the issued shares), respectively.
As part of the acquisition of Four Oceans Holdings, Inc. (see Note 1), Bear Bull received 20,000,000 shares of the Series A Convertible Preferred Stock (26.7% of the issued shares).
On April 7, 2017, the Company issued a Promissory Note to Bear Bull, for $16,500, due April 6, 2018. The Note carries an annual interest rate of 12%. As of January 31, 2018, the accrued interest on the note amounted to $1,627.
Convertible Promissory Note – Caye Island Ventures LLC
On November 13, 2017, the Company received financing in the amount of $50,000 from Cay Island Ventures LLC, a Company owned by a shareholder of Sharing Services. The $50,000 convertible promissory note bears 12% interest and matures on November 13, 2018. The holder shall be entitled, commencing 180 days from November 13, 2017, to convert any portion of the outstanding and unpaid conversion amount into fully paid and non-assessable shares of Common Stock. Conversion price which is 80% of the average of the lowest two traded prices, determined on the then current trading market for the Company’s common stock, for the 15 trading days prior to conversion. The Company may prepay any portion ofexceed the principal amount at 115%sum of such amount along with any accrued interest$10 million. The APB Revolving Note included origination fees of this note at any time upon three days written notice to the holder. The Company valued the conversion feature using the Binomial option pricing valuation model (see Note 10)$600,000. The fair value of the derivative liability for the note amounted to $57,276. $50,000 of the value assigned to the derivative liabilityAPB Revolving Note was recognized as a debt discount to the note while the balance of $7,276 was recognized as a “day 1” derivative loss. The discount is being amortized over the life of the note using the effective interest method resulting in $10,822 of interest expense and $39,178 as unamortized discount, for the period ended January 31, 2018. As of January 31, 2018, the Company accrued interest on this note of $1,315 and recorded $1,315 in interest expense for the period from inception (May 5, 2017) to January 31, 2018.
Other
During the period from May 5, 2017 to January 31, 2018, the Company paid no management fees to our CEO and CFO.
NOTE 12 - STOCKHOLDERS’ DEFICIT
Preferred Stock
The Company has authorized 200,000,000 preferred shares with a par value of $0.0001 per share. The Board of Directors is authorized to divide the authorized shares of Preferred Stock into one or more series, each of which shall be so designated as to distinguish the shares thereof from the shares of all other series and classes.
Series A Convertible Preferred Stock
The Company has authorized the issuance of one hundred million (100,000,000) shares of Series A Preferred Stock. The Series A Preferred shares are senior in ranking to the Series C Preferred shares, but junior to the Series B Preferred shares. The affirmative vote of the holders of Eighty-six percent (86%) of the issued and outstanding shares of Series A Preferred Stock shall be required for the Board of Directors to: (i) declare dividends upon shares of common stock unless the Series A Preferred shares are to receive the same dividend as the common shares, on an
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as converted basis; (ii) redeem the shares of Series A Preferred Stock at a price of $0.001 per share; (iii) authorize or issue additional or other capital stock that is junior or equal rank to the Series A Preferred shares with respect to the preferences as to distributions and payments upon the liquidation or dissolution and winding up of the Company; and (iv) amend, alter, change, or repeal any of the powers, designations, preferences, and rights of the Series A Preferred Stock. Upon the dissolution, liquidation, or winding up of the Company, whether voluntary or involuntary, the holders of the Series A Preferred Stock shall receive out ofcollateralized by the assets of the Company, and it bore interest at the sumannual rate of $0.001 per shares before8%. On December 9, 2022, APB and the Company mutually agreed to limit and/or end any paymentfurther commitment by APB to fund or distribution shall be made onto readvance under the Common Stock, or any other class of capital stockterms of the Company ranking juniorAPB Revolving Note to the Series A Preferred Stock. For a period$6.0 million. As of ten (10) years from the date of issuance of shares of Series A Preferred Stock, the holders may elect to convert each share of Series A Preferred Stock into one share of the Company’s Common Stock. Each share of Series A Preferred Stock is entitled to one vote when voting as a class or together with shares of Common Stock.
From May 5, 2017 to JanuaryMarch 31, 2018,2023, the Company issuedhad $1.5 million outstanding under the following sharesAPB Revolving Note and accrued interest of Series A Convertible Preferred Stock:$54,384.
·
On January 10, 2018 we issued 625,000 shares of Series A Convertible preferred stock to 561 LLC, as part of an equity investment for 25% of 561 LLC. The shares were issued for a deemed value of $0.25 per share or $156,250 (see Note 4).
·
On January 10, 2018 we issued 625,000 shares of Series A Convertible preferred stock to America Approved Commercial LLC, as part of an equity investment for 25% of America Approved Commercial LLC. The shares were issued for a deemed value of $0.25 per share or $156,250 (see Note 4).
·
On January 10, 2018, we issued 250,000 shares of Series A Convertible preferred stock to Medical Smart Care LLC, as part of an equity investment for 40% of Medical Smart Carer LLC. The shares were issued for a deemed value of $0.25 per share or $62,500 (see Note 4).
·
On October 4, 2017, we issued 500,000 shares of Series A Convertible preferred stock to LEH Insurance Group LLC, as part of an equity investment for 40% of to LEH Insurance Group LLC. The shares were issued for a deemed value of $0.25 per share or $125,000 (see Note 4).
·
On October 4, 2017, we issued 250,000 shares of Series A Convertible preferred stock to Medical Smart Care LLC, as part of an equity investment for 40% of Medical Smart Care LLC. The shares were issued for a deemed value of $0.25 per share or $62,500 (see Note 4).
·
On October 4, 2017, we issued 625,000 shares of Series A Convertible preferred stock to America Approved Commercial LLC, as part of an equity investment for 25% of America Approved Commercial LLC. The shares were issued for a deemed value of $0.25 per share or $156,250 (see Note 4).
·
On October 4, 2017, we issued 625,000 shares of Series A Convertible preferred stock to 561 LLC, as part of an equity investment for 25% of 561 LLC. The shares were issued for a deemed value of $0.25 per share or $156,250 (see Note 4).
·
On September 29, 2017, we issued 75,000,000 shares of Series A Convertible preferred stock, 50,000,000 shares to Alchemist Holdings, 20,000,000 shares to Bear Bull Market Dividends, Inc., and 5,000,000 shares to Research and Referral, BZ; as an acquisition for 100% of Four Oceans Holdings, Inc. The acquisition was under common control and the deemed value was the historical cost of Four Oceans Holdings, Inc. (see Note 1).
·
FromEffective June to July, 2017, we issued 1,065,790 shares of Series A Convertible preferred stock to consultants for a deemed value of $0.25 per share or $266,448.
·
On May 31, 2017, we issued 5,628,750 shares of Series A Convertible preferred stock to 212 Technologies, LLC, as part of an equity investment for 24% of 212 technologies, LLC. The shares were issued for a deemed value of $0.25 per share or $1,407,188 (see Note 4).
As of January 31, 2018, 85,194,540 shares of series A Convertible Preferred Stock were issued and outstanding.
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Series B Convertible Preferred Stock
The Company has authorized the issuance of ten million (10,000,000) series of Series B Preferred Stock. The Series B Preferred shares are senior in ranking to the Series A and Series C Preferred shares. The affirmative vote of the holders of Eighty-six percent (86%) of the issued and outstanding shares of Series B Preferred Stock shall be required for the Board of Directors to: (i) declare dividends upon shares of common stock unless the Series B Preferred shares are to receive the same dividend as the common shares, on an as converted basis; (ii) redeem the shares of Series B Preferred Stock at a price of $0.001 per share; (iii) authorize or issue additional or other capital stock that is senior, junior or equal rank to the Series B Preferred shares with respect to the preferences as to distributions and payments upon the liquidation or dissolution and winding up of the Company; and (iv) amend, alter, change, or repeal any of the powers, designations, preferences, and rights of the Series B Preferred Stock. Upon the dissolution, liquidation, or winding up of the Company, whether voluntary or involuntary, the holders of the Series B Preferred Stock shall receive out of the assets of the Company the sum of $0.001 per shares before any payment or distribution shall be made on the Common Stock, or any other class of capital stock of the Company ranking junior to the Series B Preferred Stock. For a period of ten (10) years from the date of issuance of shares of Series B Preferred Stock, the holders may elect to convert each share of Series B Preferred Stock into one share of the Company’s Common Stock. Each share of Series B Preferred Stock is entitled to one vote when voting as a class and one thousand votes when voting together with shares of Common Stock.
On May 23, 2017, pursuant to the Share Exchange Agreement (See Note 1), the Company issued 10,000,000 shares of Series B convertible preferred stock to the stockholders of Total Travel Media in exchange for 10,000,000 shares of Total Travel Media’s common stock, representing 100% of its issued and outstanding common stock. As a result of the reverse acquisition accounting, these shares issued to the former Total Travel Media stockholders are treated as being outstanding from the date of issuance of the Total Travel Media shares.
As of January 31, 2018, 10,000,000 shares of series B Preferred Stock were issued and outstanding.
Series C Convertible Preferred Stock
The Company has authorized the issuance of ten million (10,000,000) series of Series C Preferred Stock. The Series C Preferred shares are junior in ranking to the Series A and Series B Preferred shares. The affirmative vote of the holders of Eighty-six percent (86%) of the issued and outstanding shares of Series C Preferred Stock shall be required for the Board of Directors to: (i) declare dividends upon shares of common stock unless the Series C Preferred shares are to receive the same dividend as the common shares, on an as converted basis; (ii) redeem the shares of Series C Preferred Stock at a price of $0.001 per share; (iii) authorize or issue additional or other capital stock that is junior or equal rank to the Series C Preferred shares with respect to the preferences as to distributions and payments upon the liquidation or dissolution and winding up of the Company; and (iv) amend, alter, change, or repeal any of the powers, designations, preferences, and rights of the Series C Preferred Stock. Upon the dissolution, liquidation, or winding up of the Company, whether voluntary or involuntary, the holders of the Series C Preferred Stock shall receive out of the assets of the Company the sum of $0.001 per shares before any payment or distribution shall be made on the Common Stock, or any other class of capital stock of the Company ranking junior to the Series C Preferred Stock. For a period of ten (10) years from the date of issuance of shares of Series C Preferred Stock, the holders may elect to convert each share of Series C Preferred Stock into one share of the Company’s Common Stock. Each share of Series C Preferred Stock is entitled to one vote when voting as a class or together with shares of Common Stock.
During the period ended January 31, 2018 we issued 3,680,000 shares of Series C Convertible Preferred Stock for $0.25 per share, for proceeds of $920,000.
As of January 31, 2018, 3,680,000 shares of series C Preferred Stock were issued and outstanding.
Common Stock
The Company has authorized the issuance of Class A common stock and Class B common stock. We are authorized to issue 500,000,000 shares of Class A common stock and 10,000,000 shares of Class B common stock, each with a par value of $0.0001 per share. Holders of our Class A common stock and Class B common stock are entitled to dividends when, as and if, declared by our board of directors,30, 2023 subject to the rightsterms of an Assignment of Limited Liability Company Interests agreement, Decentralized Sharing Systems, Inc. (“DSSI”) purchased the SHRG Subsidiary with the financial terms generally summarized as follows: (a) DSSI assumed approximately $7.24 million in SHRG liabilities (namely, all amounts due under the APB Loan and the APB Revolving Note), (b) DSSI credited SHRG approximately $240,000 towards amounts owned under the 2022 Note (the “$27.0 million loan”), and (c) DSSI acquired ownership of Linden Real Estate Holdings LLC, with its sole asset being a commercial lot and commercial building located in Lindon, Utah, subject to the assumed indebtedness.
NOTE 11 – CONVERTIBLE NOTE PAYABLE, RELATED PARTY
Note payable, related party, consists of the holdersfollowing:
SCHEDULE OF RELATED PARTY CONVERTIBLE NOTES PAYABLE
| Issuance Date | Maturity Date | Interest Rate | Conversion Price (per share) | December 31, 2023 | March 31, 2023 | |||||||||||||
| September 2022 | September 2024 | 8 | % | $ | N/A | $ | - | $ | 27,000,000 | |||||||||
| Unamortized debt discount and deferred financing costs | - | (2,172,914 | ) | |||||||||||||||
| Convertible debt | - | 24,827,086 | ||||||||||||||||
| Less: current portion of note payable | - | 24,827,086 | ||||||||||||||||
| Long-term note payable | $ | - | $ | - | ||||||||||||||
On April 5, 2021, the Company and DSSI entered into a Securities Purchase Agreement, pursuant to which the Company issued: (a) a Convertible Promissory Note in the principal amount of all classes$30.0 million (the “Note”) in favor of
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stock outstanding having priority rights DSSI, and (b) a detachable Warrant to dividends. Thepurchase up to 150,000,000 shares of each class of Common Stock shall be identical except that the holders of the Class B Common Stock shall be entitled to elect a majority of the Board of Directors and the holders of theCompany’s Class A Common Stock, shall electat $0.22 per share, and DSSI loaned to the remainderCompany $30.0 million. DSSI, is a subsidiary of DSS, Inc. (“DSS”), and, together with DSS, is a shareholder of the directors. Each shareCompany. Under the terms of the Note, the Company agreed to pay to DSSI a loan Origination Fee of $3.0 million, payable in shares of the Company’s Class BA Common Stock, shall be convertible at the rate of $0.20 per share. The Note bore interest at the annual rate of 8%, with a maturity date of April 5, 2024, subject to certain accelerated provisions upon the occurrence of an Event of Default, as was defined in the Note. At any time during the term of the Note, all or part of the Note, including the principal amount less unamortized prepaid interest, if any, plus any accrued interest could have been converted into oneshares of the Company’s Class A Common Stock at the rate of $0.20 per share, at the option of the holder. Interest on the Note was pre-payable annually in cash or in shares of the Company’s Class A Common Stock, at the option of the Company, except that interest for the first year was pre-payable in shares of the Company’s Class A Common Stock, at the rate of $0.20 per share. As further discussed below, the Note and the detachable Warrant were redeemed in September 2022.
On September 15, 2022, the Company and DSSI which, together with DSS, a major shareholder of the Company, entered into an agreement pursuant to which the Company issued, to DSSI: (a) a two-year Convertible, Advancing Promissory Note in the principal amount of $27.0 million (the “2022 Note”) in favor of DSSI and (b) a detachable Warrant to purchase up to 818,181,819 shares of the Company’s Class A Common Stock at the exercise price of $0.033 per share. The 2022 Note bore interest at the annual rate of 8%, was due and payable on demand or, if no demand, on May 1, 2024. At any time during the term of the 2022 Note, all or part of the Note may be converted into up to shares of the Company’s Class A Common Stock, at the option of the holder. Under the terms of the agreement, the Company agreed to pay to DSSI a loan origination fee of $270,000. In addition, DSSI agreed to surrender to the Company all DSSI’s rights pursuant to: (a) a certain Convertible Promissory Note in the principal amount of $30.0 million issued by the Company in April 2021 in favor of DSSI, and (b) a certain detachable Warrant to purchase up to 150,000,000 shares of the Company’s Class A Common Stock, at $0.22 per share, issued concurrently with such $30.0 million note. The Company recognized the transaction with DSSI as a debt extinguishment in accordance with GAAP. Since DSSI is a related party, the difference between the fair value of the new equity instruments and the carrying value of the retired equity instruments was recognized in additional paid in capital on the Company’s consolidated balance sheet.
In March 2023, the Company and DSSI entered into a Securities Exchange and Amendment Agreement pursuant to which the parties agreed to amend the 2022 Note by removing the conversion rights granted by the 2022 Note. The Company recognized the transaction with DSSI as a debt extinguishment in accordance with GAAP. Since DSSI is a related party, the difference between the fair value of the new equity instruments and the carrying value of the retired equity instruments was recognized as a deemed dividend of approximately $10.7 million on the Company’s consolidated financial statements.
Effective June 30, 2023, the Company and DSSI entered into two transactions, involving the sale of certain assets to DSSI, pursuant to which DSSI credited, in the aggregate, $641,790 to principal outstanding on the 2022 Note. In addition, effective June 30, 2023, DSSI also credited, in the aggregate, $546,000 in accrued interest due on the 2022 Note in connection with transactions involving the sale of certain assets to DSSI.
On August 31, 2023, the Company and DSSI executed a debt exchange agreement whereby DSSI cancelled the $27 million loan and accepted shares of the Company’s Series D Preferred Stock, $par value per share (“Preferred D Stock”) in exchange for the cancellation of the $27.0 million loan. Pursuant to the debt exchange agreement, the principal amount together with all unpaid interest, totaling $26,169,367 was deemed to be repaid. The holder of Preferred D Stock is entitled to receive dividends in cash valued at a rate of 25% per annum of the operating income of the Company. Any accrued and unpaid dividends shall be payable in cash commencing on August 31, 2024 and continuing each annual anniversary of such date on a perpetual basis.
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NOTE 12 – INCOME TAXES
The statutory rates for our domestic and our material foreign operations are as follows for the periods shown:
SCHEDULE OF STATUTORY RATES FOR OUR DOMESTIC AND FOREIGN OPERATION
| Country | 2023 | 2022 | ||||||
| United States | 21 | % | 21 | % | ||||
| Republic of Korea | 21 | % | 21 | % | ||||
| Effective income tax rate | 21 | % | 21 | % | ||||
Our consolidated effective income tax rate reconciliation is as follows:
SCHEDULE OF INCOME TAX RATE RECONCILIATION RATE
| 2023 | 2022 | |||||||
| Nine Months Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Federal statutory rate | 21.0 | % | 21.0 | % | ||||
| Permanent differences | 0.8 | - | ||||||
| Change in valuation allowance for NOL carry-forwards | (21.0 | ) | (21.0 | ) | ||||
| Stock warrant transactions and other items | - | (2.5 | ) | |||||
| Effective income tax rate | 0.8 | % | (2.5 | )% | ||||
Income taxes applicable to our foreign operations are not material in the periods presented.
NOTE 13 - STOCKHOLDERS’ EQUITY
Common Stock
On September 15, 2022, the Company and DSSI which, together with DSS, a shareholder of the Company, entered into an agreement pursuant to which the Company issued, to DSSI: (a) a two-year Convertible, Advancing Promissory Note in the principal amount of $27.0 million (the “2022 Note”) in favor of DSSI and (b) a detachable Warrant to purchase up to 818,181,819 shares of the Company’s Class A Common Stock at the exercise price of $0.033 per share. The 2022 Note bore interest at the annual rate of 8% and was due and payable on demand or, if no demand, on May 1, 2024. At any time during the term of the 2022 Note, all or part of the Note may be converted into up to shares of the Company’s Class A Common Stock, at the option of the holder. Under the terms of the agreement, the Company agreed to pay to DSSI a loan origination fee of $270,000. In addition, DSSI agreed to surrender to the Company all DSSI’s rights pursuant to: (a) a certain Convertible Promissory Note in the principal amount of $30.0 million issued by the Company in April 2021 in favor of DSSI, and (b) a certain detachable Warrant to purchase up to 150,000,000 shares of the Company’s Class A Common Stock, at $0.22 per share, issued concurrently with such $30.0 million note. The Company recognized the transaction with DSSI as a debt extinguishment in accordance with GAAP. Since DSSI is a related party, the difference between the fair value of the new equity instruments and the carrying value of the retired equity instruments was recognized as a capital contribution of $2.0 million in additional paid in capital on the Company’s consolidated balance sheet.
On February 3, 2023, the Company mutually agreed with DSS to enter into a Letter Agreement (the “DSS Letter Agreement”), pursuant to which the Company and DSS have agreed to terminate and release all obligations of the Consulting Agreement effective as of December 31, 2022. In accordance with the DSS Letter Agreement, the Company also agreed to issue shares of the Company’s Common Stock in lieu of cash payment to satisfy the accrued and unpaid service fees equal to $700,000 owed to DSS under the Consulting Agreement.
On February 28, 2023, the Company and DSSI mutually agreed in a Letter Agreement (the “First DSSI Letter Agreement”) to a mutual settlement of the interest accrued on the 2022 Note issued by the Company to DSSI. In accordance with the DSSI Letter Agreement, the Company agreed to issue shares of the Company’s Common Stock, at a price per share of $ in lieu of cash payment to satisfy the accrued and unpaid interest through and including December 31, 2022, in the amount of $552,000 owed to DSSI.
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On March 24, 2023, the Company, DSS and DSSI, entered into a Securities Exchange and Amendment Agreement (the “Agreement”). Pursuant to the Agreement, the parties decided to: 1) exchange and surrender the Assigned Warrants, 2) exchange and surrender the Service Warrants, 3) exchange and surrender the DSSI Warrants, and 4) amend the 2022 Note by removing all conversion rights granted by the 2022 Note. Under the terms of the Agreement, the Company issued shares of its Class A Common Stock in connection with the exchange and surrender of the Assigned Warrants and the Service Warrants. In accordance with GAAP, the Company recognized a deemed dividend of $213,062 on the Company’s consolidated financial statements. In addition, the Company issued shares of its Class A Common Stock in connection with removal of all conversion rights granted by the 2022 Note. The Company recognized the debt modification transaction as a debt extinguishment in accordance with GAAP. Since DSSI is a related party, the difference between the fair value of the new debt instrument and the carrying value of the retired debt instrument was recognized as a deemed dividend of $10.7 million on the Company’s consolidated financial statements.
In May 2022, the Company and certain of its subsidiaries, on the one hand, and Alchemist, the former officer and certain entities affiliated with the former officer, on the other hand, entered into a Confidential Settlement Agreement with Mutual Releases (the “May 2022 Settlement Agreement”) pursuant to which the parties amicably settled all claims and disputes among them; (b) the former officer sold to the Company shares of the Company’s common stock then under the voting and dispositive control of the former officer; (c) the Company made a one-time payment of $1,043,645; and (d) the Company and its relevant subsidiaries, on the one hand, and the former officer and relevant entities affiliated with the former officer, on the other hand, exchanged customary mutual releases of any prior obligations among them. On May 19, 2022, the closing price for the Company’s common stock was $ per share. In the fiscal quarter ending September 30, 2022, the Company measured and recognized the repurchase of its common stock at its fair value of $626,187, derecognized its remaining liability under the Co-Founder’s Agreement, and recognized a recovery of $324,230 in connection with the previously recognized loss related to the Co-Founder’s Agreement. The Company reported the shares of the Company’s common stock in Treasury Stock until the interim period ended June 30, 2023, when it cancelled the stock certificate.
On April 17, 2023, the Company and DSSI, mutually agreed in a subsequent Letter Agreement (the “Second DSSI Letter Agreement”) to a mutual settlement of the interest accrued on the 2022 Note between January 1, 2023, through and including March 31, 2023. In accordance with the Second DSSI Letter Agreement, the Company issued shares of the Company’s Common Stock, at a price per share of $ in lieu of cash payment to satisfy the accrued and unpaid interest between January 1, 2023, through and including March 31, 2023, equal to $539,806 owed to DSSI under the Second DSSI Letter Agreement. The Company’s shares were trading at $ on April 17, 2023.
On October 30, 2023, the Company filed a Definitive Information Statement on Schedule 14C with the Securities and Exchange Commission and disclosed that a majority of the Company’s stockholders had approved by majority written consent an amendment to the Company’s articles of incorporation with the Secretary of State of Nevada to effect a Reverse Split (the “Reverse Split”) of the Company’s Class A Common Stock, par value $ per share (the “Common Stock”) by a ratio of not less than 700-for-1 and not more than 1,800-for-1, with the Board of Directors (the “Board”) of the Company having the discretion as to the exact date and ratio of any Reverse Split to be set at a whole number within the above range.
On December 15, 2023, the Board approved the exact ratio of the Reverse Split at 1,400-for-1. The Company intends on effecting the Reverse Split for the purpose of enabling a future uplisting of the Company’s Common Stock to a national securities exchange. The Reverse Split remains subject to approval by the Financial Industry Regulatory Authority (“FINRA”). There is no guarantee that the Company will be successful in achieving FINRA’s approval or uplisting to a national exchange.
As of December 31, 2023, and March 31, 2023, shares and shares of our Class A Common Stock remained issued and outstanding, respectively. As of December 31, 2023, and March 31, 2023, there were shares of the Company’s Class B Common Stock outstanding.
Preferred Stock
On August 31, 2023, the Company and DSSI executed a debt exchange agreement whereby DSSI cancelled the $27 million loan and accepted shares of the Company’s Series D Preferred Stock, $par value per share (“Preferred D Stock”) in exchange for the cancellation of the $27.0 million loan. Pursuant to the debt exchange agreement, the principal amount together with all unpaid interest, totaling $26,169,367 was deemed to be repaid. The holder of Preferred D Stock is entitled to receive dividends in cash valued at a rate of 25% per annum of the operating income of the Company. Any accrued and unpaid dividends shall be payable in cash commencing on August 31, 2024 and continuing each annual anniversary of such date on a perpetual basis.
NOTE 14 - RELATED PARTY TRANSACTIONS
Decentralized Sharing Systems, Inc.
In April 2021, the Company and DSSI entered into a Securities Purchase Agreement, pursuant to which DSSI granted a $30.0 million loan to the Company in exchange for: (a) a Convertible Promissory Note in the principal amount of $30.0 million (the “Note”) in favor of DSSI, and (b) a detachable Stock Warrant to purchase up to shares of the Company’s Class A Common Stock, at $0.22 per share. At any time during the term of the Note, all or part of the Note, including the principal amount less unamortized prepaid interest, if any, plus any accrued interest can be converted into shares of the Company’s Class A Common Stock at the rate of $0.20 per share, at the option of the holder. Under the terms of the loan agreement, the Company agreed to pay to DSSI a loan origination fee of $3.0 million, payable in shares of the Company’s Class A Common Stock, with the number of shares to be calculated at the rate of $0.20 per share. In April 2021, Sharing Services issued million shares of its Class A Common Stock to DSSI, including 15.0 million shares in payment of the loan origination fee and million shares in prepayment of interest on a loan for the first year.
On September 15, 2022, the Company and DSSI entered into a Securities Purchase Agreement (the “SPA”), pursuant to which the Company issued: (a) a Convertible Promissory Note in the principal amount of $27.0 million (the “2022 Note”) in favor of DSSI and (b) a detachable Warrant to purchase up to 818,181,819 shares of the Company’s Class A Common Stock (the “Warrant”), at $0.033 per share, in exchange for the $27.0 million. The 2022 Note bears interest at the annual rate of 8% and is due and payable on demand or, if no demand, on May 1, 2024. At any time during the term of the 2022 Note, all or part of the Note may be converted into up to shares of the Company’s Class A Common Stock, at the option of the holder.
In connection with the loan, the Company agreed to pay to DSSI a loan Origination Fee of $270,000. In addition, DSSI agreed to surrender to the Company all DSSI’s rights pursuant to: (a) a certain Convertible Promissory Note in the principal amount of $30.0 million issued by the Company in April 2021 in favor of DSSI, and (b) a certain detachable Warrant to purchase up to shares of the Company’s Class A Common Stock, at $0.22 per share, issued concurrently with such $30.0 million note.
On February 3, 2023, the Company mutually agreed with DSS to enter into a Letter Agreement (the “DSS Letter Agreement”), pursuant to which the Company and DSS have agreed to terminate and release all obligations of the Consulting Agreement effective as of December 31, 2022. In accordance with the DSS Letter Agreement, the Company also agreed to issue shares of the Company’s Common Stock in lieu of cash payment to satisfy the accrued and unpaid service fees equal to $700,000 owed to DSS under the Consulting Agreement.
On February 28, 2023, the Company and DSSI mutually agreed in a Letter Agreement (the “First DSSI Letter Agreement”) to a mutual settlement of the interest accrued on the 2022 Note issued by the Company to DSSI. In accordance with the DSSI Letter Agreement, the Company agreed to issue shares of the Company’s Common Stock, at a price per share of $ in lieu of cash payment to satisfy the accrued and unpaid interest through and including December 31, 2022, in the amount of $552,000 owed to DSSI.
On March 24, 2023, the Company, DSS and DSSI, entered into a Securities Exchange and Amendment Agreement (the “Agreement”) pursuant to which the parties agreed to: (1) exchange and surrender of the Assigned 60 million Warrants in exchange for shares of the Company’s Class A common stockstock; (2) exchange and Class B common stock are referred to as common stock throughoutsurrender the notes to these financial statements, unless otherwise noted.
On September 26, 2017,Service Warrants of warrants for shares of the Company issued 1,500,000 shares ofCompany’s Class A common stock for consulting services, valued at $1,042,500.
On May 23, 2017, pursuant tostock; (3) exchange and surrender the Share Exchange Agreement (SeeDSSI Warrants; and (4) amend the 2022 Note 1),by removing all conversion rights granted by the Company issued 10,000,000 shares of Class B common stock to the stockholders of Total Travel Media2022 Note in exchange for 10,000,000 shares of Total Travel Media’s common stock, representing 100% of its issued and outstandingthe Company’s Class A common stock. The Company issued shares of the Company’s Class A Common Stock in full satisfaction, exchange and payment for the exchanges and amendments set forth in the Agreement. The Company recognized the transaction with DSSI as a debt extinguishment in accordance with GAAP. Since DSSI is a related party, the difference between the fair value of the new equity instruments and the carrying value of the retired equity instruments was recognized as a deemed dividend on the Company’s consolidated financial statements.
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On April 17, 2023, the Company and DSSI mutually agreed in a subsequent Letter Agreement (the “Second DSSI Letter Agreement”) to a mutual settlement of the interest accrued on the 2022 Note between January 1, 2023, through and including March 31, 2023. In accordance with the Second DSSI Letter Agreement, the Company agreed to issue shares of the Company’s Common Stock, at a price per share of $ in lieu of cash payment to satisfy the accrued and unpaid interest between January 1, 2023, through and including March 31, 2023, in the amount of $539,806 owed to DSSI.
On May 4, 2023, DSS and DSSI distributed, in the aggregate, shares of SHRG they then held to DSS, Inc. shareholders in connection with the Form S-1 (file no. 333-271184) initially filed with the Securities and Exchange Commission on April 7, 2023, and declared effective on April 25, 2023. Accordingly, after the distribution, DSS ceased to be a majority shareholder of the Company.
Effective June 30, 2023, subject to the terms of a certain Loan Purchase Contract, Assignment of Note and Liens and Other Loan Documents, and Note Allonge document, DSSI purchased from SHRG a Stemtech promissory note in the amount of $1.4 million, along with all SHRG’s rights in any Stemtech warrants, for a purchase price of $1.1 million, with the financial terms generally summarized as follows: (a) DSSI pays the $1.1 million purchase price by crediting the $27.0 million loan, first to interest and then to principal, and (b) DSSI acquired ownership of certain $1.4 million promissory note payable by Stemtech, free and clear of any liens, and any equity or warrant interest in the Stemtech that SHRG may have held. As of June 30, 2023, as a result of the reverse acquisition accounting, these shares issuedtransaction, the Company no longer has an investment in Stemtech.
On July 1, 2023, the Company and DSSI, entered into a Securities Purchase Agreement, pursuant to which the former Total Travel Media stockholders are treated as being outstanding from the date of issuance of the Total Travel Media shares.
As of January 31, 2018, there were 54,860,000Company purchased shares of Class A common stock, and 10,000,000 sharespar value $ per share, (the “Shares”) representing all of Class B common stockthe issued and outstanding respectively.shares of common stock of HWH World, Inc., a Texas corporation (“HWHW”). The Company purchased the Shares for a consideration of (i) $10 paid immediately in cash, and (ii) up to $711,300 payable from the gross proceeds generated from the sale of HWHW’s inventory, payable quarterly, and as described in detail in the Securities Purchase Agreement.
Effective July 1, 2023, the Company and DSSI cancelled the previously executed Securities Purchase Agreement related to HWHW and replaced it with an Asset Purchase Agreement whereby the Company agreed to purchase the inventory of HWHW as of June 30, 2023 and assumed certain account payable of HWHW as of June 30, 2023. Pursuant to the Asset Purchase Agreement, the Company agreed to pay DSSI a maximum of $757,641.98 from gross proceeds generated from the sale of HWHW inventory.
Effective July 31, 2023, the Company and HWHW also entered into an Exclusive Intellectual Property License Agreement (the “IP Agreement”). Pursuant to the IP Agreement, HWHW granted the Company an exclusive, non-transferable worldwide license to use HWHW’s intellectual property (the “IP”) as set forth in the IP Agreement. The purchase price from the Company to HWHW for the IP was (i) $10.00 paid in cash and (ii) 1% of the gross sales price of all new products made and sold, outside of the existing inventory conveyed under the terms of the Asset Purchase Agreement, which commenced on November 1, 2023. The IP Agreement terminates on November 1, 2033.
On July 1, 2023, the Company and DSSI, entered into a Securities Purchase Agreement (“HWHH SPA”), pursuant to which the Company purchased shares of common stock, par value $ per share, (the “HWHH Shares”) representing all of the issued and outstanding shares of common stock of HWH Holdings, Inc., a Texas corporation (“HWHH”). The Company purchased the HWHH Shares Subscribedfor a consideration of (i) $10.00 paid immediately in cash, and (ii) up to $1,210,224 payable from the gross proceeds generated from the sale of HWHH’s inventory, payable quarterly, and as described in detail in the Securities Purchase Agreement.
AsEffective July 1, 2023, the Company, DSSI and Ascend Management Pte, a Singaporean private limited company (“Ascend Management”) executed an Assignment and Assumption Agreement whereby Ascend Management purchased shares of common stock, par value $ per share, of HWHH, representing all of the issued and outstanding shares of capital stock of HWHH, pursuant to that certain Securities Purchase Agreement made as of July 1, 2023 by and between DSSI and the Company. In connection with the Assignment and Assumption Agreement, the Company and HWHH entered into a business consulting agreement to assist in the management of the business of HWHH.
On January 31, 2018,2024, DSSI and Ascend Management executed an agreement whereby the obligations under the HWHH SPA were deemed fully complied with and that Ascend Management has been fully released and discharged from all liabilities, obligations, claims and demands whatsoever arising out of or in connection with the HWHH SPA and in respect of anything done or omitted to be done under or in connection with the HWHH SPA.
| 22 |
On August 31, 2023, the Company and DSSI executed a debt exchange agreement whereby DSSI cancelled the $27 million loan and accepted shares of the Company’s Series D Preferred Stock, $par value per share (“Preferred D Stock”) in exchange for the cancellation of the $27.0 million loan. Pursuant to the debt exchange agreement, the principal amount together with all unpaid interest, totaling $26,169,367 was deemed to be repaid. The holder of Preferred D Stock is entitled to receive dividends in cash valued at a rate of 25% per annum of the operating income of the Company. Any accrued and unpaid dividends shall be payable in cash commencing on August 31, 2024 and continuing each annual anniversary of such date on a perpetual basis.
Hapi Café, Inc.
In November 2021, Sharing Services and Hapi Café, Inc., a company affiliated with Heng Fai Ambrose Chan, a Director of the Company, entered into a Master Franchise Agreement pursuant to which Sharing Services acquired the exclusive franchise rights in North America to the brand “Hapi Café.” Under the terms, Sharing Services, directly or through its subsidiaries, has the right to operate no less than five (5) corporate-owned stores and can offer to the public sub-franchise rights to own and operate other stores, subject to the terms and conditions contained in the Master Franchise Agreement.
American Pacific Bancorp
On September 15, 2022, Sharing Services, through one of its subsidiaries, entered into a secured real estate promissory note with American Pacific Bancorp, Inc. (“APB”), and the Company entered into a Loan Agreement pursuant to which APB loaned the Company approximately $5.7 million. The loan bore interest at the annual rate of 8%, would mature on September 1, 2024, was payable in equal monthly instalments of $43,897 commencing on July 1, 2022 (with the remainder due on September 1, 2024). The loan was secured by a first mortgage interest on the Company’s Lindon, Utah office building. In connection with this loan, the Company received net proceeds of $5,522,829 from APB on September 17, 2022. APB is a subsidiary of DSS.
On August 11, 2022, the Company executed a revolving credit promissory note with APB pursuant to which the Company has access to advances with a maximum principal balance not to exceed the principal sum of $10.0 million. The APB Revolving Note is collateralized by the assets of the Company, and it bears interest at the annual rate of 8% and such interest shall be due and payable quarterly as it accrues on the outstanding balance. On December 9, 2022, APB and the Company mutually agreed to limit and/or end any further commitment by APB to fund or to readvance under the terms of the APB Revolving Note to $6.0 million.
As discussed above, effective June 30, 2023 subject to the terms of an Assignment of Limited Liability Company Interests agreement, DSSI purchased the SHRG subsidiary, Linden Real Estate Holdings LLC, with the financial terms generally summarized as follows: (a) DSSI assumed approximately $7.24 million in SHRG liabilities (namely, all amounts due under the APB Loan and the APB Revolving Note), (b) DSSI credited SHRG $239,790 towards accrued interest payable under the 2022 Note (the “$27.0 million loan”), and (c) DSSI acquired ownership of Linden Real Estate Holdings LLC, with its sole asset being a commercial lot and commercial building located in Lindon, Utah, subject to the assumed indebtedness.
HWH World, Inc.
A subsidiary of the Company operating in the Republic of Korea subleases office space, on a month-to-month basis, from HWH World, Inc. (“HWH World”), until September 30, 2023, a subsidiary of DSS and a company affiliated with Heng Fai Ambrose Chan, a Director of the Company. Pursuant to the terms of the sublease agreement, the Company recognized a right-of-use asset and an operating lease liability in connection therewith. In May 2022, the Company and HWH World amended the related sublease agreement to significantly reduce the space subleased by the Company and the related rent obligation. On June 30, 2022, the right-of-use asset and liability were written off and a new month-to-month rental agreement was entered into for the reduced space subleased by the Company. The company recognized approximately $630 in monthly rent expense in connection with the new lease.
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Stock Warrants
Stock Warrants Issued to Related Parties, Directors, Officers and Employees
In January 2022, the Company and DSS who, together with its subsidiaries, was then a majority shareholder of the Company, entered into a one-year Business Consulting Agreement (the “Consulting Agreement”) pursuant to which the DSS would provide to the Company certain consulting services, as defined in the Consulting Agreement. In connection with the Consulting Agreement, the Company agreed to pay DSS and flat monthly fee of sixty thousand dollars ($60,000) and DSS received subscriptions for Series C Convertible Preferreda fully vested detachable Stock totaling $16,000.
Warrants
On October 6, 2018, we issued 333,333 warrantsWarrant to purchase up to 333,33350.0 million shares of ourthe Company’s Class A Common Stock, at the exercise price of $0.0001 per share. On the effective date of the Consulting Agreement, the closing price of the Company’s common stock.stock was $ per share and the fair value of the Stock Warrant was $3.5 million. The warrants are exercisablefair value of the Stock Warrant was amortized into 333,333consulting expense over the term of one year. During the three months ended December 31, 2023 and 2022, the Company recognized consulting expense of $0 and $594,521, respectively, in connection with the Consulting Agreement. In February 2023, the Company issued million shares of common stock, forits Common Stock Class A to DSS in connection with exercise of the Stock Warrant.
In September 2022, the Company and DSSI entered into a periodSecurities Purchase Agreement (the “SPA”) pursuant to which the Company issued: (a) a Convertible Promissory Note in the principal amount of five years from issuance,$27.0 million (the “2022 Note”) in favor of DSSI and (b) a detachable Warrant to purchase up to 818,181,819 shares of the Company’s Class A Common Stock (the “Warrant”), at $0.033 per share. At any time during the term of the 2022 Note, all or part of the Note was convertible into up to shares of the Company’s Class A Common Stock, at the option of the holder. In connection with the SPA, DSSI surrendered to the Company all DSSI’s rights pursuant to: (a) the Convertible Promissory Note in the principal amount of $30.0 million discussed in the preceding paragraph, and (b) the detachable Warrant to purchase up to 150,000,000 shares of the Company’s Class A Common Stock discussed in the preceding paragraph. In March 2023, the parties entered into a price of $0.15 per share subjectSecurities Exchange and Amendment Agreement pursuant to default provisions. As of January 31, 2018, there were 333,333 warrants outstanding. We accounted forwhich the issuance of Warrantsparties agreed to amend the 2022 Note by removing the conversion rights granted by the 2022 Note. The Company recognized the transaction with DSSI as a debt extinguishment in accordance with GAAP. Since DSSI is a related party, the difference between the fair value of the new equity instruments and the carrying value of the retired equity instruments was recognized as a deemed dividend in the Company’s financial statements in the fiscal year ended March 31, 2023.
In the fiscal year ended March 31, 2023, the Company issued a fully vested warrant to purchase up to shares of the Company’s Common Stock, at the exercise price of $0.0001 per share, to the Company’s CEO John “JT” Thatch. The fair value of the warrant on the grant date was $109,780.
During fiscal year 2020, subsidiaries of the Company entered multi-year employment agreements with its key employees. In general, each employment contract contained a fully vested initial grant of warrants exercisable at a fixed exercise price and, provided for subsequent grants that were exercisable at a discounted price based on the 10-day average stock price determined at the time of exercise. The subsequent grants would vest at each anniversary date of the employment agreement effective date. The Company begins recognizing the compensatory nature of the warrants at the service inception date and ceases recognition at the vesting date. Due to the variable nature of the exercise price for some grants, the Company will continue to recognize expense (or benefit) after the end of the service period until the warrants are exercised or expire. As such, the Company disclosures below are based on either (i) the fixed exercise price of the warrant; or (ii) the variable exercise price of the warrant as determined on the last day of the period.
During the three months ended December 31, 2023, and 2022, the Company recognized a compensatory gain of $0 and $39,375, respectively, in connection with grants with a variable exercise price after service is completed. During the nine months ended December 31, 2023, and 2022, the Company recognized a gain of $0 and $207,210, respectively, in connection with grants with a variable exercise price after service is completed. As of December 31, 2023, there are no warrants outstanding with a variable exercise price.
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NOTE 16 – LEASES
The Company leases space for its offices and warehouse space, under lease agreements classified as “operating leases” as defined in ASC 815 (see Note 10).Topic 842.
The Company leases space for its corporate headquarters, warehouse space, automobiles, and office and other equipment, under lease agreements classified as operating leases. The Company has remaining lease terms of approximately 1 to 10 years on the remaining Leases. Leases with an initial term in excess of 12 months are recognized on the consolidated balance sheet based on the present value of future lease payments over the defined lease term at the lease commencement date. Future lease payments were discounted using an implicit rate of 10% to 12% in connection with most leases.
The following table summarizes information relatingpertains to outstanding and exercisable warrantsthe Company’s leases as of January 31, 2018:the balance sheet dates indicated:
Warrants Outstanding |
|
| Warrants Exercisable |
| ||||||||||||||
|
|
| Weighted Average Remaining |
|
| Weighted Average |
|
|
|
|
| Weighted Average |
| |||||
Number of Shares |
|
| Contractual life (in years) |
|
| Exercise Price |
|
| Number of Shares |
|
| Exercise Price |
| |||||
| 333,333 |
|
|
| 4.25 |
|
| $ | 0.15 |
|
|
| 333,333 |
|
| $ | 0.15 |
|
SCHEDULE OF OPERATING LEASE ASSETS AND LIABILITIES
A summary of activity during
| Assets | Classification | December 31, 2023 | March 31, 2023 | |||||||
| Operating leases | Right-of-use assets, net | $ | 414,865 | $ | 448,240 | |||||
| Total lease assets | $ | 414,865 | $ | 448,240 | ||||||
| Liabilities | ||||||||||
| Operating leases | Accrued and other current liabilities | $ | 33,790 | $ | 41,385 | |||||
| Operating leases | Lease liability, non-current | 416,277 | 440,478 | |||||||
| Total lease liabilities | $ | 450,067 | $ | 481,863 | ||||||
The following information pertains to the period from inception to January 31, 2018Company’s leases for the periods indicated:
SCHEDULE OF OPERATING LEASE COSTS
| Operating lease cost | General | $ | 28,289 | $ | 21,831 | |||||
| Three Months Ended December 31, | ||||||||||
| Lease cost | Classification | 2023 | 2022 | |||||||
| Operating lease cost | General and administrative expenses | $ | 28,289 | $ | 21,831 | |||||
| Total lease cost | $ | 28,289 | $ | 21,831 | ||||||
| Nine Months Ended December 31, | ||||||||||
| Lease cost | Classification | 2023 | 2022 | |||||||
| Operating lease cost | General and administrative expenses | $ | 84,112 | $ | 45,009 | |||||
| Total lease cost | $ | 84,112 | $ | 45,009 | ||||||
The Company’s lease liabilities are payable as follows:
|
| Warrants Outstanding |
| |||||
|
|
|
|
| Weighted Average |
| ||
|
| Shares |
|
| Exercise Price |
| ||
Balance as of May 5, 2017 |
|
| - |
|
| $ | - |
|
Granted |
|
| 333,333 |
|
|
| 0.15 |
|
Exercised |
|
| - |
|
|
| - |
|
Forfeited/canceled |
|
| - |
|
|
| - |
|
Balance as of January 31, 2018 |
|
| 333,333 |
|
| $ | 0.15 |
|
SCHEDULE OF OPERATING LEASE LIABILITY PAYABLE
23
| Twelve months ending December 31, | Amount | |||
| 2024 | $ | 100,062 | ||
| 2025 | 102,842 | |||
| 2026 | 105,621 | |||
| 2027 | 108,400 | |||
| 2028 | 111,180 | |||
| Thereafter | 113,960 | |||
| Total remaining payments | 642,065 | |||
| Less imputed interest | (191,998 | ) | ||
| Total lease liability | $ | 450,067 | ||
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NOTE 13 - 17 – COMMITMENTS AND CONTINGENCIES
PursuantLegal Matters in General
The Company has incurred several claims in the normal course of business. The Company believes such claims can be resolved without any material adverse effect on our consolidated financial position, results of operations, or cash flows.
The Company maintains certain liability insurance. However, certain costs of defending lawsuits are not covered by or only partially covered by its insurance policies, including claims that are below insurance deductibles. Additionally, insurance carriers could refuse to our 40% equity investmentcover certain claims, in LEH Insurance Group LLC (“LEHIG”), on October 4, 2017, LEHIG based upon attaining certain benchmarks for booked insurance premiums through December 31, 2018, the sellerwhole or in part. The Company accrues costs to defend itself from litigation as they are incurred.
The outcome of litigation is uncertain, and despite management’s view of the LEHIG ownership may be entitled to an additional 1,000,000 sharesmerits of any litigation, or the reasonableness of the Company’s Series A Preferred Stock. As of January 31, 2018,estimates and reserves, the Company’s financial statements could nonetheless be materially affected by an adverse judgment. The Company believes it has not recorded a contingency for this event.
Pursuant to our 25% equity investment in 561 LLC ("561"), on October 4, 2017, if, on October 4, 2018, the Company's common stock has a closing bid price in excess of $5.00 per share, the sellers of 561 ownership shall be entitled to an additional 2,500,000 shares of the Company's Series A Preferred Stock. Additionally, at such time as the Company shall be the owner of record of no less than 40% of the member interests in each of 561 and it's affiliated Company, America Approved Commercial, LLC ("AAC"), the Sellers of 561 ownership shall be entitled to another 2,500,000 shares of the Company's Series A Preferred Stock. As of January 31, 2018, the Company has not made a contingency for these events
Pursuant to our 25% equity investment in AAC, on October 4, 2017, if, on October 4, 2018, the Company's common stock has a closing bid price in excess of $5.00 per share, the sellers of the AAC ownership shall be entitled to an additional 2,500,000 shares of the Company's Series A Preferred Stock. Additionally, at such time as the Company shall be the owner of record of no less than 40% of the member interests in each of AAC and its affiliated company, 561, the sellers of AAC shall be entitled to another 2,500,000 shares of the Company's Series A Preferred Stock. As of January 31, 2018, the Company has not made a contingency for these events.
On January 3, 2018 the Company entered into a 36 month leaseadequately reserved for the new corporate offices (See subsequent events Note 14). contingencies arising from current legal matters where an outcome was deemed to be probable, and the loss amount could be reasonably estimated. No provision for legal matters was deemed necessary as of December 31, 2023.
Legal Proceedings
The total lease commitmentCompany from time to time is $656,940.involved in various claims and lawsuits incidental to the conduct of its business in the ordinary course. We do not believe that the ultimate resolution of these matters will have a material adverse impact on our consolidated financial position, results of operations or cash flows.
| Case No. 4:20-cv-00946; Dennis Burback, Ken Eddy and Mark Andersen v. Robert Oblon, Jordan Brock, Jeff Bollinger, Four Oceans Global, LLC, Four Oceans Holdings, Inc., Alchemist Holdings, LLC, Elepreneurs U.S., LLC, Elevacity U.S., LLC, Sharing Services Global Corporation, Custom Travel Holdings, Inc., and Does 1-5, pending in the United States District Court for the Eastern District of Texas. On December 11, 2020, three investors in Four Oceans Global, LLC filed a lawsuit against the Company, its affiliated entities, and other persons and entities related to an investment made by the three Plaintiffs in 2015. The Company and its affiliated entities filed an answer denying the three investors’ claims. Plaintiffs filed a First Amended Complaint on October 14, 2021. The Company and its affiliated entities responded in November 2021 by filing a Motion to Dismiss the claims contained in the Amended Complaint. The Motion was granted on July 20, 2022, by Court Order dismissing with prejudice the Company and all affiliated entities from the lawsuit. In early August 2022, Plaintiffs on their own motion moved to dismiss all claims against the remaining parties in the case to enable the Order of Dismissal to become an appealable, final Order. On September 7, 2022, Plaintiffs filed a Notice of Appeal to the United States Court of Appeals for the Fifth Circuit. The Plaintiffs filed their Proposed Sufficient Brief of Appellants with the Fifth Circuit on January 2, 2023. The Company filed a Response Brief on February 22, 2023. The appeal is still pending as of December 31, 2023. |
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NOTE 18 - FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS
Our financial instruments consist of cash equivalents, if any, accounts receivable, notes receivable, investments in unconsolidated entities, accounts payable and notes payable. The monthly lease expense is $17,336 forcarrying amounts of cash equivalents, if any, trade accounts receivable and accounts payable approximate their respective fair values due to the first 12 months.short-term nature of these financial instruments.
Consistent with the valuation hierarchy contained in ASC Topic 820, we categorized certain of our financial assets and liabilities as follows:
SCHEDULE OF VALUATION HIERARCHY FINANCIAL ASSETS AND LIABILITIES
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| December 31, 2023 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Assets | ||||||||||||||||
| Investment in unconsolidated entities | $ | - | $ | - | $ | - | - | |||||||||
| Total assets | $ | - | $ | - | $ | - | $ | - | ||||||||
| Liabilities | ||||||||||||||||
| Notes payable | $ | - | $ | - | $ | - | $ | - | ||||||||
| Total liabilities | $ | - | $ | - | $ | - | $ | - | ||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| As of March 31, 2023 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Assets | ||||||||||||||||
| Investment in unconsolidated entities | $ | 206,231 | $ | - | $ | - | $ | 206,231 | ||||||||
| Total assets | $ | 206,231 | $ | - | $ | - | $ | 206,231 | ||||||||
| Liabilities | ||||||||||||||||
| Notes payable | $ | 24,827,086 | $ | - | $ | 24,827,086 | - | |||||||||
| Total liabilities | $ | 24,827,086 | $ | - | $ | 24,827,086 | $ | - | ||||||||
NOTE 14 - 19 – SUBSEQUENT EVENTS
Subsequent toOn January 31, 2018, and through to March 21, 2018, the date these financials were approved to be issued, we had the following subsequent events:
On February 8, 2018,17, 2024, the Company closedexecuted a line of credit financing transaction whereby the Company borrowed the sum of Two Hundred Fifty Thousand dollars ($250,000.00) from an accredited investor, RB Capital Partners, Inc. (the “ Lender ” ). The transaction involved the issuance by the Company in favorconvertible promissory note for $250,000 with Alset Inc, a Texas corporation (“Alset”) and a shareholder of the Lender ofCompany. The promissory note bears a Convertible Promissory Note (the “ Note ” ) in the principal amount of $250,000.00. The Note accrues10% interest at the rate of Twelve percent (12%) per annum with the principal amount and all accrued interest being due andhad an origination fee of $20,000 which is payable on demand y the Lender. At the option of the Lender, the Note isin cash or convertible into common shares of the Company ’ s common stock at any time following 180 days from its issuance.
On March 1, 2018, Jordan Brock, Robert Oblon, and Frank A. Walters were elected as directors to for a one (1) year term or until their successors are elected and qualified. On March 1, 2018, Jordan Brock, President and Chief Executive Officer of the Company, resigned as President and Chief Executive Officer. On the same date, Mr. Brock was appointed to the position of Vice President of the Company. He remains a director of the Company.
On March 1, 2018, the Board of Directors appointed John (“JT”) Thatch to the position of President, Chief Executive Officer, and a director of the Company.
On March 7th 2018, the Company moved into its new corporate offices. The Company and its wholly owned subsidiaries will now operate at the new addressoption of 1700 Coit Rd. Suite 100, Plano, Texas 75075. This new location is slightly less than 10,000 Sq. Ft. allowing for expansion for the customer service department, product fulfillment, opportunityAlset. The note and training rooms as well as a video production suite.
24
On March 16, 2018, the Company closed a line of credit financing transaction whereby the Company borrowed the sum of Two Hundred Fifty Thousand dollars ($250,000.00) from an accredited investor, RB Capital Partners, Inc. (the “ Lender ” ). The transaction involved the issuance by the Company in favor of the Lender of a Convertible Promissory Note (the “ Note ” ) in the principal amount of $250,000.00. The Note accrues interest at the rate of Twelve percent (12%) per annum with the principal amount and allrelated accrued interest beingshall be due and payable in full on demand by the Lender. Atearliest of (i) six months from the optiondate of the Lender,note; (ii) occurrence of event of default (as defined in the note) or (iii) upon the Company’s successful listing on Nasdaq.
On January 31, 2024, DSSI and Ascend Management executed an agreement whereby the obligations under the HWHH SPA (see Note is convertible into shares14) were deemed fully complied with and that Ascend Management was fully released and discharged from all liabilities, obligations, claims and demands whatsoever arising out of or in connection with the Company ’ s common stock at any time following 180 days from its issuance.HWHH SPA and in respect of anything done or omitted to be done under or in connection with the HWHH SPA.
25
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussionsection discusses management’s views of ourthe financial condition and the results of operations and cash flows of Sharing Services Global Corporation and consolidated subsidiaries. This section should be read in conjunction withwith: (a) our unaudited condensedaudited consolidated financial statements and associatedrelated notes appearing elsewhere in this Report on Form 10-Q. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. See “Cautionary Note Regarding Forward-Looking Statements.” Our actual results may differ materially from those contained in or implied by any forward-looking statements as a result of various factors, including the risks and uncertainties described under “Risk Factors.”, as set forthincluded in our Annual Report on Form 10-K filed withfor the SEC on September 11, 2017.
Recapitalization.
Our acquisition of Total Travel Media, Inc., a Nevada corporation (“Total Travel”) discussed below was accounted for as a recapitalization of Total Travel since the shareholders of Total Travel obtained votingfiscal year ended March 31, 2023, and managing control of(b) our Company. Total Travel was the acquirer for financial reporting purposes and Sharing Services, Inc. was the acquired company. Consequently, thecondensed consolidated financial statements after completionincluded elsewhere in this Quarterly Report. This section may contain forward-looking statements. See “Cautionary Notice Regarding Forward-Looking Statements” above for a discussion of forward-looking statements.
Summary Results of Operations:
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||
| December 31, 2023 | December 31, 2022 | Increase (Decrease) | % Change | December 31, 2023 | December 31, 2022 | Increase (Decrease) | % Change | |||||||||||||||||||||||||
| Net sales | $ | 2,885,645 | $ | 3,245,903 | $ | (360,258 | ) | -11.1 | % | $ | 8,172,469 | $ | 12,737,673 | $ | (4,565,204 | ) | -35.8 | % | ||||||||||||||
| Gross profit | $ | 2,183,962 | $ | 1,602,792 | $ | 581,170 | 36.3 | % | $ | 5,955,154 | $ | 7,677,757 | $ | (1,722,604 | ) | -22.4 | % | |||||||||||||||
| Total operating expenses | $ | (2,920,633 | ) | $ | (5,606,866 | ) | $ | 2,686,233 | -47.9 | % | $ | (9,488,490 | ) | $ | (19,511,086 | ) | $ | 10,022,596 | -51.4 | % | ||||||||||||
| Operating loss | $ | (736,671 | ) | $ | (4,004,074 | ) | $ | 3,267,403 | -81.6 | % | $ | (3,533,336 | ) | $ | (11,833,329 | ) | $ | 8,299,993 | -70.1 | % | ||||||||||||
| Non-Operating (expense), net | $ | (154,371 | ) | $ | (6,916,748 | ) | $ | 6,762,377 | -97.8 | % | $ | (1,236,854 | ) | $ | (19,720,337 | ) | $ | 18,483,483 | -93.7 | % | ||||||||||||
| Loss before income taxes | $ | (891,042 | ) | $ | (10,920,822 | ) | $ | 10,029,780 | -91.8 | % | $ | (4,770,190 | ) | $ | (31,553,666 | ) | $ | 26,783,476 | -84.9 | % | ||||||||||||
| Income tax (benefit) expense | $ | 3,554 | $ | 104,129 | $ | (100,575 | ) | -96.6 | % | $ | 3,554 | $ | (789,803 | ) | $ | 793,357 | -100.4 | % | ||||||||||||||
| Net loss | $ | (894,596 | ) | $ | (11,024,951 | ) | $ | 10,130,355 | -91.9 | % | $ | (4,773,744 | ) | $ | (30,763,863 | ) | $ | 25,990,119 | -84.5 | % | ||||||||||||
Highlights for the acquisition include the assets and liabilitiesThree months ended December 31, 2023:
| ● | For the three months ended December 31, 2023, our consolidated net sales decreased $0.4 million, or 11.1%, compared to the three months ended December 31, 2022. | |
| ● | For the three months ended December 31, 2023, our consolidated gross profit increased $0.6 million, or 36.3%, compared to the three months ended December 31, 2022. Our consolidated gross margin was 75.7% for the three months ended December 31, 2023, compared to 49.4% for the three months ended December 31, 2022. | |
| ● | For the three months ended December 31, 2023, our consolidated operating expenses decreased $2.7 million, or 47.9% to 2.9 million, compared to the three months ended December 31, 2022. | |
| ● | For the three months ended December 31, 2023, our consolidated operating loss was $0.7 million, compared to operating loss of $4.0 million for the three months ended December 31, 2022. | |
| ● | For the three months ended December 31, 2023, our consolidated net non-operating expense was $0.2 million, compared to net non-operating expense of $6.9 million for the three months ended December 31, 2022. | |
| ● | For the three months ended December 31, 2023, our consolidated net loss was approximately $0.9 million, compared to $11.0 million for the three months ended December 31, 2022. For the three months ended December 31, 2023, and 2022, our basic and diluted loss per share was $0.002 and $0.04, respectively |
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Overview
Summary Description of both Business
Sharing Services Global Corporation and Total Travel,subsidiaries (“Sharing Services”, “we,” or the historical operations of Total Travel“Company”) aim to build shareholder value by developing or acquiring businesses and their consolidated operations fromtechnologies that increase the May 23, 2017 closing date ofCompany’s product and services portfolio, business competencies, and geographic reach.
Currently, the acquisition. Total Travel retroactively appliedCompany, through its recapitalization for all periods presentedsubsidiaries, markets and distributes its health and wellness and other products primarily in the accompanying consolidated financial statements.U.S. and Canada using a direct selling business model. In addition, the Company’s U.S. subsidiaries market our products and services through an independent sales force, using their proprietary websites, including: www.thehappyco.com.
Total TravelThe Company was incorporated in the State of Nevada on May 5, 2017. Total Travel was the surviving company and became a wholly owned subsidiary of Sharing Services. The financial statements reflected in this 10-Q as of January 31, 2018 represents the period May 5, 2017 (date of inception) to January 31, 2018.
The financial statements included in this report reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management are necessary for fair presentation of the information contained therein.
Our History.
We were incorporated in Nevada on April 24, 2015 under the name Sharing Services, Inc. and were engaged in the development of a taxi sharing web application. In early 2017, we proposed expanding our business model into that of a diversified travel holdings company specializing in ride sharing, mobile applications, Social Travel Alchemy, relationship marketing, group travel programs, brick-and-mortar travel agencies, and vacation funding. The adoption of the new business model was completed when, on May 23, 2017, we completed a reverse merger with Total Travel Media, pursuant to which2015.
As further discussed below, the Company acquired allintends to continue to grow its business both organically and by making strategic acquisitions from time to time of businesses and technologies that augment its product portfolio, complement its business competencies, and fit its growth strategy.
Financing Arrangements
Historically, the sharesCompany has funded a substantial portion of capital stock of Total Travel Media from the holders of such stock, in exchange forits liquidity and cash needs through the issuance of Ten Million (10,000,000) newly-issued sharesnotes or convertible notes and borrowings under short-term financing arrangements, and issuance of equity securities. See “Liquidity and Capital Resources” below for additional information about the Company’s convertible notes and borrowings under short-term financing arrangements.
Industry and Business Trends
The information in “Industry and Business Trends” included in ITEM 1 — “Business” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2023, is incorporated herein by reference.
Strategic Profitable Growth Initiatives
The Company intends to grow its business by pursuing a multipronged growth strategy, that includes: (a) expanding its product offerings, both within the health and wellness category and in new product categories, (b) expanding its direct-to-consumer geographic footprint and (c) re-vamping and re-launching its previously announced membership-based consumer travel products line worldwide. This growth strategy may also include the use of strategic acquisitions of businesses that augment the Company’s product and services portfolio, business competencies and geographic reach.
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Results of Operations
The Three months ended December 31, 2023, Compared to the Three months ended December 31, 2022
Net Sales
For the three months ended December 31, 2023, our consolidated net sales decreased by $0.4 million, or 11.1%, to $2.9 million, compared to the three months ended December 31, 2022. The decrease in net sales mainly reflects: (a) the decline in orders from independent distributors and customers; (b) the decline in the number of independent distributors, resulting, in part, from recent product reformulations and increased competition for independent distributors, and (c) the generally adverse impact on consumer buying trends resulting from the recent increase in consumer good prices and in energy costs in the U.S.
The $0.4 million decrease in consolidated net sales primarily reflects a decrease in the number of comparable product units sold.
During the three months ended December 31, 2023, and 2022, the Company derived substantially all its consolidated net sales from the sale of its health and wellness products.
Gross Profit
For the three months ended December 31, 2023, our consolidated gross profit increased by approximately $0.6 million, to $2.2 million, compared to the three months ended December 31, 2022; and our consolidated gross margin was 75.7% and 49.4%, respectively. The improvement in gross margin was attributed mainly to efforts to reduce our cost of goods sold and our shipping expenses in the three months ended December 31, 2023.
Selling and Marketing Expenses
For the three months ended December 31, 2023, our consolidated selling and marketing expenses increased by $19,982, to $0.9 million, or 32.9% of consolidated net sales, compared to $0.9 million, or 28.6% of consolidated net sales, for the three months ended December 31, 2022. The $19,982 increase in consolidated selling and marketing expenses is due primarily to higher marketing efforts in the three months ended December 31, 2023.
General and Administrative Expenses
For the three months ended December 31, 2023, our consolidated general and administrative expenses (which include corporate employee compensation and benefits, stock-based compensation, professional fees, rent and other occupancy costs, certain consulting fees, telephone and information technology expenses, insurance premiums, and other administrative expenses) decreased by approximately $2.7 million, to $2.0 million, The $2.7 million decrease was primarily due to lower consulting expense of approximately $1.8 million, and lower employee compensation and compensation-related benefits of $0.6 million due to less headcount year over year.
Interest Expense, Net
For the three months ended December 31, 2023, our consolidated interest expense was $137,362.
For the three months ended December 31, 2022, our consolidated interest expense, net was 3.3 million, including amortization of debt discount and deferred financing costs, interest income, and other expenses associated with borrowings from “DSSI” and related parties.
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Gain (Loss) on Employee Warrants Liability
For the three months ended December 31, 2023, no compensatory gain or loss on employee warrants was recognized. For the three months ended December 31, 2022, $39,375 of compensatory gain on employee warrants was recognized.
Unrealized Gain (Loss) on Investments in Unconsolidated Entities and Marketable Securities
For the three months ended December 31, 2023, no compensatory gain or loss on investments in unconsolidated entities and marketable securities was recognized.
For the three months ended December 31, 2022, net unrealized losses, before income tax, in connection with our investments in unconsolidated entities and marketable securities were $3.6 million.
Income Tax (Benefit) Expense
Income tax (benefit) expenses includes current and deferred income taxes for both our domestic and foreign operations. Income from our international operations is subject to taxation in the countries in which we operate.
During the three months ended December 31, 2023, the Company recognized a current federal income tax expense of $3,554. During the three months ended December 31, 2022, the Company had a state and local tax benefit of $22,849 and a provision for deferred federal income taxes of $348,236 and a benefit for current federal income taxes of $429,516.
Net Loss and Loss per Share
As a result of the foregoing, for the three months ended December 31, 2023, our consolidated net loss was $0.9 million, compared to $11.0 million for the three months ended December 31, 2022. For the three months ended December 31, 2023, and December 31, 2022, our diluted loss per share was $0.002 and $0.04, respectively.
Nine months ended December 31, 2023, Compared to the Nine months ended December 31, 2022
Net Sales
For the nine months ended December 31, 2023, our consolidated net sales decreased by approximately $4.6 million, or 35.8%, to $8.2 million, compared to the nine months ended December 31, 2022. The decrease in net sales mainly reflects: (a) the decline in consumer orders and independent distributor orders; (b) the decline in the number of independent distributors resulting, in part, from recent product reformulations and increased competition for independent distributors, and (c) the generally adverse impact on consumer buying trends resulting from the recent increase in consumer good prices and in energy costs in the U.S.
In an effort to stabilize our sales level, we have further intensified our efforts to recruit and develop our distributors and drive product sales to new consumers, including through the continued introduction of new products.
The $4.6 million decrease in consolidated net sales primarily reflects a decrease in the number of comparable product units sold.
During the nine months ended December 31, 2023, and 2022, the Company derived substantially all its consolidated net sales from the sale of its Elevate health and wellness products.
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Gross Profit
For the nine months ended December 31, 2023, our consolidated gross profit decreased by approximately $1.7 million, or 22.4%, to $6.0 million, compared to the nine months ended December 31, 2022: our consolidated gross margin was 72.9% and 60.3%, respectively. The improvement in gross margin is due primarily to our efforts to reduce cost of goods sold and shipping costs.
Selling and Marketing Expenses
For the nine months ended December 31, 2023, our consolidated selling and marketing expenses decreased by approximately $2.6 million, to $3.1 million, or 38.1% of net sales compared to $5.7 million, or 44.9% of net sales for the nine months ended December 31, 2022. The decrease is due primarily to lower sales commissions of $1.9 million (which reflects decrease in our consolidated net sales discussed above) and lower sales convention expenses of $0.7 million.
General and Administrative Expenses
For the nine months ended December 31, 2023, our consolidated general and administrative expenses (which include corporate employee compensation and benefits, stock-based compensation, professional fees, rent and other occupancy costs, certain consulting fees, telephone and information technology expenses, insurance premiums, and other administrative expenses) decreased by approximately $7.4 million to $6.4 million, compared to $13.8 million for the nine months ended December 31, 2022. The decrease was primarily driven by lower professional and legal expenses by $4.9 million, decrease in employee compensation and related benefits by $1.8 million as a result of headcount reduction. In January 2022, the Company entered into a one-year Business Consulting Agreement with DSS. On the effective date of the Consulting Agreement, the closing price of the Company’s Common Class B Stock, par value $0.0001 per share and (ii) Ten Million (10,000,000) newly-issued shares of the Company’s Series B Preferred Stock, par value $0.0001 per share. After the reverse merger, we continued Total Travel’s historical and proposed business.
Business Description
Sharing Services, Inc. is a diversified holding company specializing in the direct selling industry. The Company owns, operates, or controls an interest in a variety of companies that either sell products to the consumer directly through independent representatives or offers services that range from manufacturing, processing, training, and travel benefits.
With the acquisition of Total Travel Media, Inc. on May 23, 2017, Sharing Services, Inc. (“Sharing Services”) completed the transition of its principal business operations from that of a taxi sharing web application to a travel and technology management Company utilizing a direct-selling model with a subscription-based vacation portal.
Sharing Services is a diversified travel holdings company specializing in ride sharing, mobile applications, 4.0 meta-search technologies, relationship marketing, group travel programs, and brick-and-mortar travel agencies. The Company’s direct-to-consumer online travel agent (OTA) platform delivers unprecedented access to many of today’s most popular travel destinations, and all with savings of up to 30% and 80% off published rates.
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The objective of the Company is to scale revenues based on relationship marketing that are proven with the right travel related products and services. Sharing Services will launch a direct selling model with a subscription-based vacation portal accessing the new meta-search 4.0 technology. Included in the subscription will be Vacation Financing options, Seminars on Vacation (called Vacationars) and below published fares with guaranteed lower rates than Expedia.
Metro-search is defined by a “search within a search”. Examples would be Kayak and Trivago, where consumers can search one time and access hundreds of websites. Sharing Services new meta-search 4.0 goes beyond Kayak and Trivago in two important ways: the fares searched (hotels) garner below published pricing and Sharing Services agents fulfill on the travel booked, rather that redirect the chosen result at Kayak for example, to the website the offer was made on. These two differentiators will help Sharing Services travel companies gain market share of travelers from around the world. On February 1, 2017, the Company launched its (BETA) website.
Results of Operations for the Period of Inception (May 5, 2017) to January 31, 2018
As the Company was incorporated on May 5, 2017, we do not have historical operations to base current results on. The results related to the current operations do not include historical results of operations for Sharing Services prior to May 23, 2017 when we acquired Total Travel Media as noted above.
Overview
For quarterly period ended January 31, 2018, we had revenues of $960,182, cost of sales of $673,551, gross profits of $286,631, and operating expenses of $312,083, for an operating loss of $25,452. Our other expenses totaled $3,573,603, giving us a total net loss of $3,599,055.
Since May 5, 2017 (inception) through January 31, 2018, the Company has had revenues of $960,182, costs of sales of $673,551, gross profits of $286,631, and operating expenses of $2,433,680, for an operating loss of $2,157,049. Our other expenses totaled $4,819,389, giving us a total net loss and accumulated losses since inception of $6,976,438.
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Operating Expenses and Loss from Operations
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| Date of Inception | |
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| (May 5, 2017) to | |
| For the Quarter Ended | January 31, | |
| January 31, 2018 | 2018 | |
General and administration | $ 194,201 |
| 288,971 |
Marketing expenses | - |
| 694,207 |
Stock based compensation | - |
| 1,308,948 |
Professional fees | 117,882 |
| 151,554 |
Total Operating Expenses | $ 312,083 |
| 2,443,680 |
During the Quarter ended January 31, 2018 our loss from operations and operating expenses was $25,452.
Since inception (Mar 5, 2017) through January 31, 2018, our loss from operations and operating expenses were $2,157,049, primarily from marketing expenses of $694,207 and share based compensation of $1,308,948 incurred
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prior to the most recent quarter. The marketing expenses were for payments made to a related party, who was a significant shareholder and now Chairman of the Board of the Company, pursuant to a consulting and marketing agreement dated March 15, 2017, to provide marketing and consulting services, tools, websites, video production and event management services. Stock based compensation is related to the issuance of 1,500,000 shares of common stock to consultant, at a deemed value of $0.695was $0.07 per share and the issuance of 1,065,790 shares of Series A Convertible Preferred Stock, to consultants, at a deemedfair value of $0.25 share.the Stock Warrant was $3.5 million. The fair value of the Stock Warrant is being recognized as consulting expense over the term of one year. During the nine months ended December 31, 2022, the Company recognized consulting expense of $3.1 million, in connection with the Consulting Agreement.
Interest Expense, Net
For the nine months ended December 31, 2023, our consolidated interest expense was $3.0 million, including amortization of debt discount, deferred financing costs, and interest income.
For the nine months ended December 31, 2022, our consolidated interest expense was $9.8 million, including amortization of debt discount and deferred financing costs, interest income, and other expenses associated with borrowings from “DSSI” and related parties.
Other Income
For the nine months ended December 31, 2023, Sharing Services qualified and is eligible for a U.S. government ERTC (employee retention tax credit) for $1.8 million.
Other Non-operating Income/Expenses
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| Date of Inception | |
| For the Quarter Ended | (May 5, 2017) to | |
| January 31, 2018 | January 31, 2018 | |
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Interest expense | $ 118,229 | $ | 241,424 |
Change in fair value of derivative liability | 3,455,374 |
| 4,577,965 |
Total Other Expenses | $ 3,573,603 | $ | 4,819,389 |
For the nine months ended December 31, 2023, our net consolidated non-operating income, includes litigation settlements and other non-operating income of $86,427. For the nine months ended December 31, 2022, our net consolidated non-operating income, includes litigation settlements and other non-operating income of $118,077.
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Gain (Loss) on Employee Warrants Liability
For the nine months ended December 31, 2023, no compensatory gain or loss on employee warrants was recognized. For the nine months ended December 31, 2022, we recognized a compensatory gain of $207,210.
Loss on Investment and Extinguishment of Debt
For the Quarternine months ended JanuaryDecember 31, 2018, interest expenses consisted2023, the Company recognized a loss, before income tax, of $92,790$78,632 in connections with its investment in Stemtech. The company recognized a loss on extinguishment of debt of $38,209 in connection with cancelling the promissory note in exchange of Series D Preferred Stock with DSSI.
For the nine months ended December 31, 2022, no amounts were incurred related to investment and extinguishment of debt.
Income Tax Benefit
During the nine months ended December 31, 2023, the Company recognized a current federal income tax expense of $3,554.
During the nine months ended December 31, 2022, the Company recognized a provision for deferred taxes and federal taxes of $799,748 and a state and local tax benefit of $9,945.
Net Loss and Loss per Share
As a result of the foregoing, for the amortizationnine months ended December 31, 2023, our consolidated net loss was $4.8 million, compared to $30.8 million for the same period of the debt discount on convertible notesprior year. For the nine months ended December 31, 2023 and $25,439 for interest expenses on notes payable. The change in fair value of derivative liability represents the day one derivate expense on inception of the convertible notes2022, our diluted loss per share was $0.01 and warrants of $4,595,778 less a derivative revaluation gain at January 31, 2018 of $1,140,404.$0.12, respectively.
Since inception (Mar 5, 2017) through January 31, 2018, interest expenses consisted of $183,300 for the amortization of the debt discount on convertible notes, prepayment penalties of $43,476 and $14,648 for interest expenses on notes payable. The change in fair value of derivative liability represents the day one derivative expense on inception of the convertible notes and warrants of $6,840,064 less a derivative revaluation gain at January 31, 2018 of $2,262,099.
Liquidity and Capital Resources
The following tables present selected financial information onWe broadly define liquidity as our ability to generate sufficient cash, from internal and external sources, to meet our obligations and commitments. We believe that, for this purpose, liquidity cannot be considered separately from capital resources.
Working Capital
Working capital (total current assets minus total current liabilities). We had a deficiency in our working capital of approximately $2.7 million as of December 31, 2023, compared to $33.9 million as of March 31, 2023.
As of December 31, 2023, and March 31, 2023, our cash and cash equivalents were $0.7 million and $3.0 million, respectively. Based upon the current level of operations and anticipated investments necessary to grow our business, we believe that anticipated funds from operations will likely be sufficient to meet our working capital requirements over the next 12 months.
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We have implemented measures to streamline and revamp our business operations and reduce our monthly cash burns and operating loss. Such measures include, and are not limited to, headcount reduction and elimination of certain overhead and consulting fees. Based upon the current level of operations and anticipated investments necessary to sustain/grow our business, we believe that existing cash balances and anticipated funds from operations will likely be sufficient to meet our working capital requirements over the next 12 months.
Historical Cash Flows
Historically, our primary sources of cash have been capital transactions involving the issuance of equity securities and secured and unsecured debt (See “Short-term Borrowings and Convertible Notes” below) and cash flows asfrom operating activities; and our primary uses of cash have been for operating activities, capital expenditures, acquisitions, net cash advances to related parties, and debt repayments in the ordinary course of our business.
The following table summarizes our cash flow activities for the periodnine months ended JanuaryDecember 31, 2018:2023, compared to the nine months ended December 31, 2022:
| January 31, | |
| 2018 | |
Current Assets | $ | 930,833 |
Current Liabilities |
| 5,989,362 |
Working Capital Deficiency | $ | 5,058,529 |
| Nine Months Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Net cash used in operating activities | $ | (3,425,399 | ) | $ | (8,845,938 | ) | ||
| Net cash used in investing activities | - | (11,530,898 | ) | |||||
| Net cash provided by financing activities | 1,200,000 | 6,501,659 | ||||||
| Impact of currency rate changes in cash | (31,635 | ) | (35,864 | ) | ||||
| Decrease in cash and cash equivalents | $ | (2,257,034 | ) | $ | (13,911,041 | ) | ||
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Net Cash Used in Operating Activities
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As of JanuaryFor the nine months ended December 31, 2018, our working capital deficiency is primarily a result of currently liabilities from a derivative liability of $5,265,314, convertible notes payable of $82,300 (net of unamortized discount) and notes payable totaling $51,500. Our current assets consisted primarily of cash in the amount of $175,451, accounts receivable of $366,269, and prepaid expenses and deposits of $297,358. We also had inventory of $91,755 at January 31, 2018.
Net2023, net cash used in operating activities duringwas $3.4 million, compared to $8.8 million for the periodnine months ended JanuaryDecember 31, 20182022. The $5.4 million decrease was $1,156,392, which consisteddue to a decline in operating losses of a net loss$6.7 million (excluding non-cash items, such as depreciation and amortization, stock-based compensation expense, provision for obsolete inventory losses, amortization of $6,976,438, reduced by net non-cash expensesdebt discount, unrealized gain (loss) on investments, losses on impairment of $6,070213,investments in unconsolidated entities and netnotes receivable, and gains on extinguishment of debt), and partially offsets with a change in operating assets and liabilities of $250.967.$1.3 million.
Net Cash Used in Investing Activities
For the nine months ended December 31, 2023, net cash used in investing activities was $0, compared to $11.5 million for the result ofnine months ended December 31, 2022. The $11.5 million change was due to lower capital expenditures.
Net Cash Provided by Financing Activities
For the nine months ended December 31, 2023, net cash retained in the merger with Total Travel Media of $57,605 and less $15,000 paid for an equity investment and investment in Property and Equipment of $43,111
Net cash provided by financing activities was from proceeds on issuance of a convertible notes$1.2 million, compared to $6.5 million for $544,000,the nine months ended December 31, 2022. The decrease was due to lower proceeds from loans under promissory notes, net of loan repayments, of $7.5 million. The decrease was partially offset by lower Sharing Services common stock received in connection with a promissory note from a related partylitigation settlement of $50,000, proceeds from stock subscription$1.0 million.
Impact of currency rate changes in cash
For the nine months ended December 31, 2023, the impact of currency rate changes in cash was negative $31,635, compared to negative $35,864, for the nine months ended December 31, 2022.
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Potential Future Acquisitions
The Company, directly and through its subsidiaries, may make strategic acquisitions and purchases of equity interests in businesses that complement its business competencies and growth strategy. Such acquisitions and purchases of equity interests are expected to be funded with cash and cash equivalents, cash provided by operations, if any, and issuance of Series C Preferred Stockequity securities and debt.
Capital Requirements
During the quarter ended December 31, 2023, there were no capital expenditures for $853,500, $849 proceeds from a related party, less a repaymentproperty and equipment (consisting of $15,000 on a promissory notefurniture and repayments of convertible notes payable of $101,000.
Capital Resources
We currently have limited cash resources on handfixtures, computer equipment and our projected operating expensessoftware, other office equipment and working capital needs exceed our income and cash resources. We do not have sufficient cash to carry out our operations over the next 12 months. As a result, capital raising has been and continues to be essential for our continued operations, ongoing sales and marketing efforts and further development of our business.
Off Balance Sheet Arrangements
We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. In addition, we do not have any undisclosed borrowings or debt, and we have not entered into any synthetic leases. We are, therefore, not materially exposed to any financing, liquidity, market, or credit risk that could arise if we had engagedleasehold improvements) in such relationships.
Application of Critical Accounting Policies
We have identified the policies below as critical to our business operations and the understanding of our results of operations. The impact on our business operations and any associated risks related to these policies are discussed throughout Management’s Discussion and Analysis of Financial Condition and Results of Operations when such policies affect our reported or expected financial results.
In the ordinary course of business, we have made a number of estimates and assumptions relatingour business.
Contractual Obligations
There were no material changes to our contractual cash obligations during the reporting of results of operations and financial condition in the preparation of our financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”). We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. The results form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ significantly from those estimates under different assumptions and conditions. We believe that the following discussion addresses our most critical accounting policies, which are those that are most important to the portrayal of our financial condition and results of operations and require our most difficult, subjective, and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.three months ended December 31, 2023.
The material estimates for our company are that of the stock-based compensation recorded for preferred stock issued, and the fair value of embedded conversion options that are convertible into a variable amount of shares, and the income tax valuation allowance recorded for deferred tax assets. The fair values of embedded conversion options are determined using the Black-Scholes option pricing model. We have no historical data on the accuracy of these estimates. The estimated sensitivity to change is related to the various variables of the Black-Scholes option pricing model stated below. The specific quantitative variables are included in the notes to the consolidated financialOff-Balance Sheet Financing Arrangements
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statements. The fair value of each option granted is estimated on the date of grant using the Black-Scholes option pricing model with the expected life, dividend yield, expected volatility, and risk-free interest rate weighted-average assumptions used for conversion options. Expected volatility for 2017 was estimated using the average historical volatility of our common stock. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the grant date. The expected life of options is based on the life of the instrument on grant date.
Going Concern
These financial statements have been prepared on a going concern basis, which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. To date the Company has generated $960,182 in revenues from its business operations and has an accumulated deficit of $6,976,438. As of JanuaryDecember 31, 2018, the Company2023, we had a working capital deficit of $5,058,529. The Company requires additional funding to meet its ongoing obligations and to fund anticipated operating losses. The ability of the Company to continue as a going concern is dependent on raising capital to fund its initial business plan and ultimately to attain profitable operations. Accordingly, these factors raise substantial doubt asno off-balance sheet financing arrangements.
Critical Accounting Estimates
There were no material changes to the Company’s ability to continue as a going concern. The Company has initiated extensive direct salescritical accounting estimates or assumptions since March 31, 2023.
Accounting Changes and social media marketing which it expects to drive significant sales volume of the Company’s products, and services over the next several months. The Company expects to become profitable and not need additional outside funding once working capital needs have been met. The acceptance of the Company’s marketing efforts is uncertain and therefore, the Company has plans to continue to fund its business by way of private placements, promissory notes, convertible promissory notes and advances from related parties as may be required.Recent Accounting Pronouncements
These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Stock-Based Compensation
ASC 718, “Compensation - Stock Compensation,” prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).
The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, “Equity - Based Payments to Non-Employees.” Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.
Share-based expense totaled $1,308,948 for the period of inception (May 5, 2017) to January 31, 2018.
Convertible Notes
Convertible notes are regarded as compound instruments, consisting of a liability component and an equity component. The component parts of compound instruments are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangement. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for a similar non-convertible instrument. This amount is recorded as a liability on an amortized cost basis until extinguished upon conversion or at the instrument’s maturity date. The equity component is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognized as additional paid-in capital and included in equity, net of income tax effects, and is not subsequently remeasured. After initial measurement, they are carried at amortized cost using the effective interest method.
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Derivative Financial Instruments
The fair value of an embedded conversion option that is convertible into a variable amount of shares and warrants that include price protection reset provision features are deemed to be “down-round protection” and, therefore, do not meet the scope exception for treatment as a derivative under ASC 815 “Derivatives and Hedging”, since “down-round protection” is not an input into the calculation of the fair value of the conversion option and warrants and cannot be considered “indexed to the Company’s own stock” which is a requirement for the scope exception as outlined under ASC 815.
The accounting treatment of derivative financial instruments requires that the Company record the embedded conversion option and warrants at their fair values as of the inception date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, non-cash income or expense for each reporting period at each balance sheet date. The Company reassesses the classification of its derivative instruments at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification.
The Black-Scholes option valuation model was used to estimate the fair value of the conversion options. The model includes subjective input assumptions that can materially affect the fair value estimates. The expected volatility is estimated based on the most recent historical period of time, of other comparative securities, equal to the weighted average life of the options.
Conversion options are recorded as debt discount and are amortized as interest expense over the life of the underlying debt instrument.
Also, refer to Note 2 - Significant Accounting Policies and Note 7 - Derivative Liabilities in the unaudited condensed consolidated financial statements that are included in this Report.
Recent accounting pronouncements
For discussion of recently issuedaccounting changes and recent accounting pronouncements, please see Note 23 of the Notes to the unaudited condensed consolidated financial statements includedCondensed Consolidated Financial Statements contained elsewhere in this report.Quarterly Report.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
We areThe Company is a smaller reporting companySmaller Reporting Company, as defined byin Rule 12b-2 of the Exchange Act, and, areaccordingly, is not required to provide the information required undercalled for by this item.Item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and ProceduresProcedures.
Disclosure Our management, with the participation of our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), evaluated the effectiveness of our disclosure controls and procedures, areas defined in Rule 13a-15(e) of the Exchange Act, as of the end of the fiscal period covered by this Quarterly Report, and concluded that, as of December 31, 2023, the Company’s disclosure controls and other procedures that are designed to ensurewere effective in providing reasonable assurance that information required to be disclosed in our reports filedthat it files or submittedsubmits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periodperiods specified in the SEC'sSEC’s rules and forms. Disclosure controlsforms, and procedures include, without limitation, controls and procedures designed to ensure that such information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is accumulated and communicated to the Company’s management including our principal executive officer and principal financial officerits Board of Directors, as appropriate to allow timely decisions regarding required disclosure.
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In connection with this quarterly report, as required by Rule 15d-15 under
Limitations on the Securities Exchange Act of 1934, we have carried out an evaluation of the effectiveness of the designCompany’s Controls and operation ofProcedures. We do not expect that our company's disclosure controls and procedures. The material weaknesses in our disclosure control procedures are as follows:
1.Lackwill prevent all errors and all fraud. Any system of formal policiescontrols and procedures, necessary to adequately review significant accounting transactions.We utilize a third party independent contractor forno matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the preparationobjectives of our financial statements. Although the financial statementssystem will be met. Because of the limitations in all such systems, no evaluation can provide absolute assurance that all control issues and footnotes are reviewed by our management, we do not have a formal policy to review significant accounting transactions and the accounting treatmentinstances of such transactions. The third party
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independent contractor is not involved in our day to day operations and may not be provided information from our management on a timely basis to allow for adequate reporting/consideration of certain transactions.
2.Audit Committee and Financial Expert. We do not have an audit committee with a financial expert and, thus, we lack the appropriate oversightfraud (if any) within the financial reporting process.Company have been detected. Furthermore, the design of any system of disclosure controls and procedures is based in part upon assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how unlikely. Because of these inherent limitations in a cost-effective system of controls and procedures, misstatements and/or omissions due to error or fraud may occur undetected.
We intend to initiate measures to remediate the identified material weaknesses, including, but not necessarily limited to, the following:
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Changes in Internal Control Overover Financial ReportingReporting.
There wereDuring our most recent fiscal quarter, there have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f)) during the quarter ended January 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal controlscontrol over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
Currently we are not involvedThe information contained in any pending litigation or legal proceeding.Note 17, COMMITMENTS AND CONTINGENCIES - Legal Proceedings, of the Notes to Unaudited Condensed Consolidated Financial Statements located elsewhere in this Quarterly Report is incorporated herein by reference.
Item 1A. Risk Factors.
WeThe factors contained in ITEM 1A, — “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2023, are a smaller reporting company as definedincorporated herein by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.reference.
Item 2. Unregistered Sales of Securities and Use of Proceeds.
(a) Unregistered Sales of unregistered securitiesSecurities
None
(b) Not applicable
(c) Purchases of Equity Securities by the Company during the period covered by this report were disclosed in our Current Reports on Form 8-K filed January 5, 2018Issuer and January 26, 2018, respectively, and as such, are not required to be furnished in this report. In addition, the Company sold additional unregistered securities during the period covered by this report as follows: during the Quarter ended January 31, 2018, the Company issued 3,680,000 restricted shares of its Series C Preferred Stock and received subscriptions for an additional 64,000 shares of Series C Preferred Stock, all pursuant to an offering by means of a private placement memorandum. Each of the aforementioned sales of securities were made in reliance upon the exemption offered under Section 4(2) of the Securities Act of 1933.Affiliated Purchasers
None
Item 3. Defaults Upon Senior Securities.
None(a) Not applicable
(b) Not applicable
Item 4. Mining Safety Disclosures.
NoneNot applicable
Item 5. Other Information.
None
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Item 6. Exhibits.
The following exhibits are incorporated intofiled as part of this Form 10-Q Quarterly Report:Report unless otherwise indicated:
*Filed herewith
33**Furnished herewith.
SIGNATURES† Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K, and portions of this exhibit have been redacted in compliance with Item 601(b)(2) of Regulation S-K.
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SIGNATURES
Pursuant to 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.
SHARING SERVICES GLOBAL CORPORATION | ||
| (Registrant) | ||
| Date: February 14, 2024 | ||
| By: | /s/ John Thatch | |
| John Thatch | ||
| President,
and Vice Chairman of the Board of Directors | ||
| (Principal Executive Officer) | ||
| Date: February 14, 2024 | ||
| By: | /s/
Anthony S. Chan | |
| Anthony S Chan | ||
| Chief Financial Officer | ||
| (Principal Financial
| ||
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