UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~October~~January 31, ~~2020~~2021

[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from ________ to ___________.

Commission file number: 0-9483

SPARTA COMMERCIAL SERVICES, INC.

(Exact name of registrant as specified in its charter)

Nevada		30-0298178
(State or other jurisdiction of		(IRS Employer
incorporation or organization)		Identification No.)

555 Fifth Avenue, 14^th Floor, New York, NY 10017

(Address of principal executive offices) (Zip Code)

(212) 239-2666

(Registrant’s telephone number, including area code)

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

Title of each class		Trading Symbol		Name of each exchange on which registered
Common stock, $.001 par value		SRCO		Pink Open Market

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. [X] Yes [ ] No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 504 of Regulation S-T (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to file such files). [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. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]		Accelerated filer [ ]
Non-accelerated filer [ ]		Smaller reporting company [X]
(Do not check if a smaller reporting company)		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

As of ~~December 18, 2020,~~March 22, 2021, we had ~~702,792,904~~8,576,046 shares of common stock issued and outstanding.

SPARTA COMMERCIAL SERVICES, INC.

FORM 10-Q

FOR THE QUARTER ENDED ~~October~~January 31, ~~2020~~2021

TABLE OF CONTENTS

		Page

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	3

	Condensed Consolidated Balance Sheets as of ~~October~~January 31, ~~2020~~2021 (unaudited) and April 30, 2020	3
	Condensed Consolidated Statements of Operations for the Three Months Ended ~~October~~January 31, ~~2020~~2021 and ~~2019~~2020 (unaudited)	4
	Condensed Consolidated Statement of Changes in Deficit for the Three Months ended ~~October~~January 31, ~~2020~~2021 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended ~~October~~January 31, ~~2020~~2021 and ~~2019~~2020 (unaudited)	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20

Item 4.	Controls and Procedures	20

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	21

Item 1A.	Risk Factors	22

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22

Item 3.	Defaults Upon Senior Securities	22

Item 5.	Other Information	22

Item 6.	Exhibits	23

Signatures		24

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SPARTA COMMERCIAL SERVICES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF ~~OCTOBER~~JANUARY 31, ~~2020,~~2021, AND APRIL 30, 2020

(Unaudited)

	October 31, 2020			April 30, 2020			January 31, 2021			April 30, 2020

ASSETS
Current Assets
Cash and cash equivalents	$	-		$	-		$	27,768		$	-
Accounts receivable		18,722			1,420			16,121			1,420
Inventory		27,925			23,331			18,687			23,331
Other current assets		21,297			470			2,107			470
Total Current Assets		67,944			25,221			64,683			25,221
Property and equipment, net of accumulated depreciation and amortization of $213,262 and $212,905, respectively		-			-			-			-
Other assets		9,628			9,628			9,628			9,628
Deposits		9,000			9,000			9,000			9,000
Total assets	$	86,572		$	43,849		$	83,311		$	43,849

LIABILITIES AND DEFICIT
Liabilities:
Current Liabilities
Bank overdraft	$	32,375		$	14,773		$	4,287		$	14,773
Accounts payable and accrued expenses		3,080,824			3,427,587			3,028,135			3,427,587
Short Term Loan		120,944			-			411,013			-
Current portion notes payable		5,038,655			4,942,324			4,730,275			4,942,324
Deferred revenue		13,380			16,254			25,259			16,254
Derivative liabilities		4,252,466			2,802,125			4,252,446			2,802,125
Total Current Liabilities		12,538,644			11,203,063			12,451,415			11,203,063
Loans payable-related parties		450,500			432,403			432,403			432,403
Total Long Term Liabilities		450,500			432,403			432,403			432,403
Total liabilities	$	12,989,144		$	11,635,466		$	12,883,818		$	11,635,466

Deficit:
Preferred stock, $0.001 par value; 10,000,000 shares authorized of which 35,850 shares have been designated as Series A convertible preferred stock, with a stated value of $100 per share, 125 and 125 shares issued and outstanding, respectively		12,500			12,500			12,526			12,500
Preferred stock B, 1,000 shares have been designated as Series B redeemable preferred stock, $0.001 par value, with a liquidation and redemption value of $10,000 per share, 0 and 0 shares issued and outstanding, respectively		-			-			-			-
Preferred stock C, 200,000 shares have been designated as Series C redeemable, convertible preferred, $0.001 par value, with a liquidation and redemption value of $10 per share, 4,155and 4,005 shares issued and outstanding, respectively		4,155			4,005			4,174			4,005
Preferred stock D, 2,000,000 shares have been designated as Series D redeemable, convertible preferred, $0.001 par value, with a liquidation and redemption value of $1.00 per share, 1,494 and 1,132 shares issued and outstanding, respectively		1,596			1,132			1,596			1,132
Common stock, $0.001 par value; 750,000,000 shares authorized, 693,792,904 and 627,092,904 shares issued and outstanding, respectively		693,793			627,093
Common stock to be issued 121,452,845 and 84,786,511, respectively		121,453			84,787
Common stock, $0.001 par value; 75,000,000 shares authorized, 7,094,758 and 6,270,929 shares issued and outstanding, respectively								709,476			627,093
Common stock to be issued 1,214,528 and 847,865, respectively								99,516			84,787
Additional paid-in-capital		50,378,075			49,406,954			50,600,320			49,406,954
Accumulated deficit		(65,082,461	)		(62,702,339	)		(65,209,203	)		(62,702,339	)
Total deficiency in stockholders’ equity		(13,870,889	)		(12,565,868	)		(13,781,595	)		(12,565,868	)
Non-controlling interest		968,317			974,251			981,088			974,251
Total Deficit		(12,902,572	)		(11,591,617	)		(12,800,507	)		(11,591,617	)
Total Liabilities and Deficit		86,572			43,849			83,311			43,849

See accompanying notes to unaudited condensed consolidated financial statements.

SPARTA COMMERCIAL SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AS OF ~~OCTOBER~~JANUARY 31, ~~2020,~~2021, AND ~~APRIL 30,~~ 2020

(Unaudited)

	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	October 31,						October 31,						January 31,						January 31,
	2020			2019			2020			2019			2021			2020			2021			2020
Revenue
Information technology	$	61,834		$	72,967		$	135,781		$	150,641		$	49,220		$	63,879		$	185,001		$	214,520
New World Health Brands		3,113			12,262			5,773			29,376			4,253			8,402			10,026			37,778
Total Revenue		64,947			85,229			141,554			180,017			53,473			72,281			195,027			252,298
Less Cost of goods sold		25,586			14,787			45,734			31,671			7,504			19,591			53,238			51,262
Gross profit		39,361			70,442			95,820			148,346			45,969			52,690			141,789			201,036
Operating expenses:
General and administrative		220,033			224,709			933,709			503,715			229,407			300,368			1,163,116			804,083
Depreciation and amortization		-			357			-			357			-			-			-			357
Total operating expenses		220,033			225,066			933,709			504,072			229,407			300,368			1,163,116			804,440
Loss from operations		(180,672	)		(154,624	)		(837,889	)		(355,726	)		(183,438	)		(247,678	)		(1,021,327	)		(603,404	)
Other (income) expense:
Other income		(750	)		(1,200	)		(750	)		(2,293	)		(5,944	)		(5,671	)		(6,694	)		(7,964	)
Forgiveness of debt		-			(311,127	)		(63,053	)		(311,127	)		(62,277	)		-			(125,330	)		(311,127	)
Financing cost		(14,695	)		212,632			295,729			524,258			4,688			508,601			300,417			1,032,859
Amortization of debt discount		-			6,825			-			7,800			-			833			-			8,633
Loss (gain) in changes in fair value of derivative liability		-			1,682,995			1,310,307			292,697			-			(668,314	)		1,310,307			(375,617	)
Total other (income) expense		(15,445	)		1,590,125			1,542,233			511,335			(63,533	)		(164,551	)		1,478,700			346,784
Income (loss) from continuing operations		(165,227	)		(1,744,749	)		(2,380,122	)		(867,061	)		(119,905	)		(83,127	)		(2,500,027	)		(950,188	)
Loss from discontinued operations		-			-			-			-			-			-			-			-
Net income (loss)		(165,227	)		(1,744,749	)		(2,380,122	)		(867,061	)		(119,905	)		(83,127	)		(2,500,027	)		(950,188	)
Net income attributed to non-controlling interest		(3,962	)		(3,383	)		(5,934	)		(7,864	)		(903	)		(2,909	)		(6,837	)		(10,773	)
Preferred dividend		-			(191	)		(191	)		(382	)		-			(191	)		(191	)		(573	)
Net income (loss) attributed to common stockholders	$	(169,189	)	$	(1,748,323	)	$	(2,386,247	)	$	(875,307	)	$	(120,808	)	$	(86,227	)	$	(2,507,055	)	$	(961,534	)

Basic and diluted loss per share:
Loss from continuing operations attributable to Sparta Commercial Services, Inc. common stockholders		(0	)		(0	)								(0	)		(0	)
Loss from discontinued operations attributable to Sparta Commercial Services, Inc. common stockholders		-			-									-			-
Net loss attributable to Sparta Commercial Services, Inc. common stockholders		(0	)		(0	)								(0	)		(0	)

Weighted average shares outstanding		662,430,947			627,092,904									7,094,502			6,270,929

See accompanying notes to unaudited condensed consolidated financial statements.

SPARTA COMMERCIAL SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS DEFICITS

FOR THE THREE AND SIX MONTHS ENDED ~~OCTOBER~~JANUARY 31, ~~2020~~2021 AND ~~2019~~2020

(UNAUDITED)

Series A Preferred Stock Series B Preferred Stock Series C Preferred Stock Series D Preferred Stock Common Stock Common Stock to be issued Additional Paid in Accumulated Non-controlling
Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit Interest Total
Balance April 30, 2020 125 $ 12,500 - $ - 4,005 $ 4,005 1,132 $ 1,132 627,092,904 $ 627,093 84,786,511 $ 84,787 $ 49,406,954 (62,702,339 ) $ 974,251 (11,591,617 )
Sale of preferred stock 140 140 69,860 70,000
Sale of common stock units 13,333,334 13,333 6,667 20,000
Stock based compensation 464,718 464,718
Shares issued for conversion of notes and interest -
Shares issued for settlement of accounts payable 311 311 311,067 311,378
Options issued for settlement of accounts payable 156,947 156,947
Shares issued for conversion of subsidiary preferred 51 51 (40 ) (11 ) -
Preferred dividend (191 ) (191 )
Net loss (2,216,867 ) 1,972 (2,214,895 )
Balance July 31, 2020 125 $ 12,500 - $   - 4,145 $ 4,145 1,494 $ 1,494 627,092,904 $ 627,093 98,119,845 $ 98,120 $ 50,416,173 $ (64,919,397 ) $ 976,212 $ (12,783,660 )
Sale of preferred stocks 10 10 102 $ 102 112
Sale of common stock units 66,700,000 66,700 $ (38,098 ) $ 2,163 $ 35,765
Common Stock to be issued 23,333,000 $ 23,333 23,333
Net loss $ (165,227 ) $ (7,895 ) (173,122 )

Balance October 31, 2020 125 $ 12,500 - $ - 4,155 $ 4,155 1,596 $ 1,596 693,792,904 $ 693,793 121,452,845 $ 121,453 $ 50,378,075 $ (65,082,461 ) $ 968,317 $ (12,902,572 )

Balance April 30, 2019 125 $ 12,500 - $ - 2,960 $ 2,960 580 $ 580 627,092,904 $ 627,093 80,786,511 $ 80,787 $ 48,215,855 $ (61,915,119 ) $ 961,320 $ (12,014,024 )
Sale of preferred stock 206 206 102,794 103,000
Shares issued for financing cost -
Shares issued for conversion of notes and interest 92 92 45,737 45,829
Shares issued for settlement of accounts payable 1,000,000 1,000 99,000 100,000
Shares issued for conversion of subsidiary preferred 125 125 (125 ) -
Reclassification of derivative liability -
Preferred dividend -
Net loss (1,748,966 ) 3,383 (1,745,583 )
Balance July 31, 2019 125 $ 12,500 - $ - 3,258 $ 3,258 705 $ 705 627,092,904 $ 627,093 81,786,511 $ 81,787 $ 48,463,386 $ (63,664,085 ) $ 964,578 $ (13,510,778 )
Sale of preferred stock 392 392 195,608 196,000
Shares issued for conversion of subsidiary preferred 15 15 (15 ) -
Preferred dividend (191 ) (191 )
Net loss 873,016 4,481 877,497
Balance October 31, 2019 125 $ 12,500 - $ - 3,650 $ 4,695 1,425 $ 1,977 627,092,904 $ 627,093 81,786,511 $ 85,787 $ 49,850,093 $ (63,577,480 ) $ 969,044 $ (12,437,472 )
Series A Series C Series D Common Stock Additional Non-
Preferred Stock Preferred Stock Preferred Stock Common Stock to be issued Paid in Accumulated controlling
Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit Interest Total
Balance April 30, 2020 125 $ 12,500 4,005 $ 4,005 1,132 $ 1,132 627,092,904 $ 627,093 84,786,511 $ 84,787 $ 49,406,954 (62,702,339 ) $ 974,251 (11,591,617 )
Sale of preferred stock 140 140 69,860 70,000
Sale of common stock units 13,333,334 13,333 6,667 20,000
Stock based compensation 464,718 464,718
Shares issued for conversion of notes and interest -
Shares issued for settlement of accounts payable 311 311 311,067 311,378
Options issued for settlement of accounts payable 156,947 156,947
Shares issued for conversion of subsidiary preferred 51 51 (40 ) (11 ) -
Preferred dividend (191 ) (191 )
Net loss (2,216,867 ) 1,972 (2,214,895 )
Balance July 31, 2020 125 $ 12,500 4,145 $ 4,145 1,494 $ 1,494 627,092,904 $ 627,093 98,119,845 $ 98,120 $ 50,416,173 $ (64,919,397 ) $ 976,212 $ (12,783,660 )
Sale of preferred stocks 10 10 102 $ 102 112
Sale of common stock units 66,700,000 66,700 $ (38,098 ) $ 2,163 30,765
Common Stock tobe issued 23,333,000 $ 23,333 23,333
Net loss $ (165,227 ) $ (7,895 ) (173,122 )
Balance October 31, 2020 125 $ 12,500 4,155 $ 4,155 1,596 $ 1,596 693,792,904 $ 693,793 121,452,845 $ 121,453 $ 50,378,075 $ (65,082,461 ) $ 968,317 $ (12,902,572 )
Sale of preferred stocks 26 19 45
Shares tobe issued 555,000 55,500 53,000 108,500
Sale of common Stocks 15,000,000 15,000 169,245 $ 6,837 191,082
Shares canncelled due to reverse split (708,792,904 ) (708,793 ) (122,007,845 ) (122,008 ) (830,801 )
Shares re-issued for stock split 7,094,758 709,476 1,220,078 44,571 754,047
Net loss (119,905 ) (903 ) (120,808 )
Balance January 31, 2021 125 $ 12,526 4,155 $ 4,174 1,596 $ 1,596 7,094,758 $ 709,476 1,220,078 $ 99,516 $ 50,600,320 $ (65,202,366 ) $ 974,251 $ (12,800,507 )

Balance April 30, 2019 125 $ 12,500 2,960 $ 2,960 580 $ 580 627,092,904 $ 627,093 80,786,511 $ 80,787 $ 48,215,855 $ (61,915,119 ) $ 961,320 $ (12,014,024 )
Sale of preferred stock 206 206 102,794 103,000
Shares issued for financing cost -
Shares issued for conversion of notes and interest 92 92 45,737 45,829
Shares issued for settlement of accounts payable 1,000,000 1,000 99,000 100,000
Shares issued for conversion of subsidiary preferred 125 125 (125 ) -
Reclassification of derivative liability -
Preferred dividend -
Net loss (1,748,966 ) 3,383 (1,745,583 )
Balance July 31, 2019 125 $ 12,500 3,258 $ 3,258 705 $ 705 627,092,904 $ 627,093 81,786,511 $ 81,787 $ 48,463,386 $ (63,664,085 ) $ 964,578 $ (13,510,778 )
Sale of preferred stock 392 392 195,608 196,000
Shares issued for conversion of subsidiary preferred 15 15 (15 ) -
Preferred dividend (191 ) (191 )
Net loss 873,016 4,481 877,497
Balance October 31, 2019 125 $ 12,500 3,650 $ 4,695 1,425 $ 1,977 627,092,904 $ 627,093 81,786,511 $ 85,787 $ 49,850,093 $ (63,577,480 ) $ 969,044 $ (12,437,472 )
Sale of preferred stock 250 250 124,750 125,000
Shares issued for conversion of subsidiary preferred 30 30 (30 ) -
Reclassification of derivative liability 345,787 345,787
Preferred dividend -
Net loss (86,227 ) 2,909 (83,318 )
Balance January 31, 2020 125 $ 12,500 3,900 $ 4,945 1,455 $ 2,007 627,092,904 $ 627,093 81,786,511 $ 85,787 $ 50,320,630 $ (63,663,707 ) $ 971,923 $ (12,050,003 )
See accompanying notes to unaudited condensed consolidated financial statements.
5
SPARTA COMMERCIAL SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS CASH FLOWS
FOR THE THREE AND SIX MONTHS ENDED ~~OCTOBER~~JANUARY 31, ~~2020~~2021 AND ~~2019~~2021
(UNAUDITED)

Six Months Ended
October 31, Nine Months Ended
2020 2019 January 31,
2021 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (2,380,122 ) $ (867,061 ) $ (2,500,027 ) $ (950,188 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization - 357 - 357
Stock based compensation 464,718 $ - 464,718 $ -
Gain from change in fair value of derivative liabilities 1,310,307 292,697 1,450,321 (375,617 )
Amortization of debt discount - 7,800 - 8,633
Non-cash financing cost 295,729 225,115 300,417 458,881
Forgiveness of debt (63,053 ) (311,127 ) (212,049 ) (311,127 )
Changes in operating assets and liabilities
Accounts receivable (17,302 ) (6,453 ) (14,701 ) (18,536 )
Inventory (4,594 ) (34,672 ) 4,644 (22,600 )
Other assets (20,827 ) (9,978 ) (1,637 ) 1,357
Accounts payable and accrued expenses 346,763 373,844 (399,452 ) 709,609
Deferred revenue (2,874 ) (2,063 ) 9,005 (2,578 )
Net cash used in operating activities (71,255 ) (331,541 ) (898,761 ) (501,809 )
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment - -
Net cash (used in) investing activities - - - -
CASH FLOWS FROM FINANCING ACTIVITIES
Bank overdraft 17,602 (11,496 ) (10,486 ) (11,496 )
Proceeds from sale of stock 90,000 299,000 526,002 299,000
Proceeds from notes payable 130,944 50,000 191,085 50,000
Payments on notes payable (500 ) (5,500 ) - (5,500 )
Proceeds from PPP loan 120,944 - 219,928 -
Proceeds from related party notes 18,097 -
Payments on related party notes (305,832 ) -
Net cash provided by financing activities 71,255 332,004 926,529 332,004

Cash flows from discontinued operations:
Cash used in operating activities of discontinued operations - -
Net cash flow from discontinued operation - -

Net (decrease) increase in cash - 463 27,768 (169,805 )

Cash and cash equivalents, beginning of period - 13 - 13
Cash and cash equivalents , end of period $ - $ 476 $ 27,768 $ (169,792 )

Cash paid for:
Interest $ - $ 249 $ - $ 249
Income taxes $ - $ 700 $ - $ 700

See accompanying notes to unaudited condensed consolidated financial statements.
6
SPARTA COMMERCIAL SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~OCTOBER~~JANUARY 31, ~~2020~~2021 AND ~~2019~~2020
(UNAUDITED)

NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies applied in the preparation of the accompanying unaudited condensed consolidated financial statements follows.

Business

Sparta Commercial Services, Inc. (“Sparta,” “we,” “us,” or the “Company”) is a Nevada corporation ~~serving~~with headquarters in New York City, www.spartacommercial.com. We are a multi-disciplined parent corporation operating across three ~~markets. Sparta is a technology company that develops, markets~~business sectors – Financial Services, E-Commerce & Mobile Technology, and ~~manages business mobile application (mobile apps) for smartphones~~Health and tablets. The Company also owns and manages websites which sell on-demand motorcycle, recreational vehicle, power-sport vehicle and truck title history reports for consumers, retail dealers, auction houses, insurance companies and banks/finance companies. Notwithstanding our discontinuance of consumer loans and leases, since 2007, we have offered, on a pass through basis, an equipment-leasing finance product for local and state agencies throughout the country seeking an alternative and economical way to finance their essential equipment needs, including police motorcycles and cruisers, buses and EMS equipment. Our historic customers can be viewed at ~~https://www.spartamunicipal.com/clients~~Wellness, (www.spartacommercial.com). ~~The Company also introduced a new business line in the rapidly expanding Hemp-CBD (cannabidiol) market~~

~~Our~~Sparta’s roots are in the Powersports ~~industry~~industry. Notwithstanding the discontinuance of our initial focus on consumer loans and ~~our original focus was providing consumer leasing and retail installment contracts as well as municipal financing~~leases, in 2007, the Company had introduced a new initiative, Municipal Financing, (www.spartamunicipal.com). Sparta’s Municipal Finance program is also available to all nonprofit organizations which adhere to IRS guidelines, including 501 (c) 3 of the ~~powersports, recreational vehicle, and automobile industries. Presently, through our~~Internal Revenue Code.
Vehicle History Reports are a staple of Sparta’s E-Commerce Technology subsidiary iMobile Solutions, Inc. ~~(“IMS”)~~Whether a vehicle is intended for business or recreational use, Sparta’s Vehicle History Reports are highly regarded for accuracy and completeness and have been sold across all 50 states and in 62 countries worldwide. They provide a trusted layer of assurance to vehicle buyers and are available on Kelley Blue Book, Auto Trader, AllState Insurance and a range of various dealership websites. They include Cyclechex (Motorcycle History Reports at www.cyclechex.com), ~~we offer~~RVchex (Recreational Vehicle History Reports at www.rvchex.com), CarVINreport (Automobile History Reports at www.carvinreport.com), and Truckchex (Heavy Duty Truck History Reports at www.truckchex.com).
The Company’s E-Commerce and Mobile Technology subsidiary name change to iMobile Solutions, Inc., from Specialty Reports, Inc., in 2017, signifies its ever-broadening service offerings in the evolving technology landscape. Under iMobile App (www.imobileapp.com), the Company provides mobile technology services, including web and mobile application creation, development ~~sales, marketing~~ and ~~support, and Vehicle Title History Reports.~~
~~Our mobile application (mobile app) offerings have broadened our base beyond vehicle dealers to~~management for a wide range of businesses ~~including, but not limited to, racetracks, private clubs, country clubs, restaurants and grocery stores. Our clients can be seen at~~ ~~https://imobileapp.com/app-gallery/. We also offer a private label version~~in the achievement of ~~our mobile app framework to enable other businesses to offer custom apps to~~ their ~~customers.~~
marketing goals. The Company also designs, launches, maintains and hosts websites for businesses. We provide specific, tailored action plans for our clients’ websites that include services such as eCommerce, CRM (Customer Relationship Management) development and integration, ordering system creation and integration, SEO (search engine optimization), social media marketing, and online reviews to improve their presence online. In addition, we offer text messaging services which are vital for businesses’ marketing, retention and loyalty strategies. Our text messaging platform allows our clients to easily manage, schedule, and analyze text message performance.

~~Our vehicle history reports, which can be found on Kelly Blue Book, AutoTrader, AllState Insurance, as well as on various dealership websites, include Cyclechex (Motorcycle History Reports at~~ ~~www.cyclechex.com); RVchecks (Recreational Vehicle History Reports at~~ ~~www.rvchecks.com); CarVINreport (Automobile at~~ ~~www.carvinreport.com) and Truckchex (Heavy Duty Truck History Reports at~~ ~~www.truckchex.com). Our Vehicle History Reports are designed for consumers, retail dealers, auction houses, insurance companies and banks/finance companies.~~
Sparta created its subsidiary, New World Health Brands, Inc. ~~(NWHB) was formed~~, in April 2019, ~~as a subsidiary and new business line of Sparta Commercial Services, Inc. While anticipating, and with~~on the ~~passing~~heels of the ~~2018~~Agriculture Improvement Act (also known as the Farm ~~Bill,~~Bill), which ~~resulted in~~was signed into law the ~~removal of~~previous December 20, 2018. Consequently, hemp (CBD) was removed from Schedule 1 of the Controlled Substances Act. ~~Sparta’s~~Company management recognized athe substantial ~~potential~~ business opportunity that lay ahead in the rapidly expanding ~~Hemp-CBD (Cannabinol)~~hemp-CBD (cannabidiol) market in the United States. During 2019-2020, ~~management~~we sourced, developed and tested 5 CBD product categories totaling 31 ~~products,~~products. We procured premium, domestic-grade, full-spectrum, broad-spectrum, and THC free hemp, created product packaging and labeling, and implemented fulfillment ~~and launched~~to launch an ~~on-line~~online B to C ~~website,~~ ~~www.newworldhealthcbd.com. In addition, NWHB expanded~~website: www.newworldhealthcbd.com on December 21, 2019. To ensure the safety and quality of our products, all CBD product offerings are exclusively sourced, manufactured and tested at highly accredited testing facilities in the United States and adhere to strict U.S standards and guidelines.
Sparta’s response to the onset of the COVID 19 pandemic in early 2020 quickly took shape with thorough investigations into ~~the~~evolving customer trends in health and ~~wellness market~~wellness. As a result, we expanded New World Health Brands and developed a new product line of natural dietary supplements. In August 2020, we launched an ~~on-line~~online B to C ~~website,~~website: www.newworldhealthbrands.com, ~~with a line of~~featuring high quality dietary supplements, including ~~but not limited to~~vitamins and minerals, such as, Zinc, Magnesium, Boron, Iodine, Beetroot Extract, Selenium, Vitamin B Complex, Vitamin C and ~~more - specifically formulated~~PQQ. To ensure the safety and quality of our products, all health and wellness offerings are exclusively sourced and manufactured in the United States and adhere to ~~strengthen the immune system. The Company believes that this will allow us~~strict U.S standards and guidelines. Sparta’s commitment to ~~access markets,~~high standards and ~~e-commerce platforms currently not available~~transparency are tantamount to ~~its CBD products.~~being a trusted brand.

7
Sparta’s newest subsidiary, Sparta Crypto, Inc., was established September 25, 2020 and is in the process of building a proprietary state-of-the-art platform designed to connect users of various digital currency with sellers of luxury goods. The platform has not launched and the Company can make no assurances that the described plan will reach implementation.
SPARTA COMMERCIAL SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~OCTOBER 30, 2020~~JANUARY 31, 2021
(Unaudited)

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements as of ~~October~~January 31, ~~2020~~2021 and for the ~~three month~~nine months periods ended ~~October~~January 31, ~~2020~~2021 and ~~2019~~2020 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission, including Form 10-Q and Regulation S-K. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments), which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. The Company believes that the disclosures provided are adequate to make the information presented not misleading.
These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and explanatory notes for the year ended April 30, 2020 as disclosed in the Company’s Form 10-K for that year as filed with the Securities and Exchange Commission. The results of operations for the three months ended ~~October~~January 31, ~~2020~~2021 are not necessarily indicative of the results to be expected for any other interim period or the full year ending April 30, 2020.

The condensed consolidated balance sheet as of April 30, 2020 contained herein has been derived from the audited consolidated financial statements as of April 30, 2020, but do not include all disclosures required by the U.S. GAAP.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its majority owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation. The third-party ownership of the Company’s subsidiary is accounted for as noncontrolling interest in the consolidated financial statements. Changes in the noncontrolling interest are reported in the statement of changes in deficit.

Estimates

These financial statements have been prepared in accordance with accounting principles generally accepted in United States of America which require management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and the disclosures of revenues and expenses for the reported period. Accordingly, actual results could differ from those estimates. Included in these estimates are assumptions about collection of accounts receivable, useful life of property and equipment, beneficial conversion feature of convertible notes payable, deferred income tax asset valuation allowances, and valuation of derivative ~~liabilities~~liabilities.

Revenue Recognition

During the first quarter of 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606), using the cumulative-effect method. The new standard requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The adoption did not have an impact in our consolidated financial statements, other than the enhancement of our disclosures related to our revenue-generating activities. The Company acts as a principal in its revenue transactions as the Company is the primary obligor in the transactions.

Revenues from mobile app products and New World Health products are generally recognized upon delivery. Revenues from history reports are generally recognized upon delivery / download. Prepayments received from customers before delivery (if any) are recognized as deferred revenue and recognized upon delivery.

Cash Equivalents

For the purpose of the accompanying unaudited condensed consolidated financial statements, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents.

Website Development Costs

The Company recognizes website development costs in accordance with ASC 350-50, “Accounting for Website Development Costs.” As such, the Company expenses all costs incurred that relate to the planning and post implementation phases of development of its website. Direct costs incurred in the development phase are capitalized and recognized over the estimated useful life. Costs associated with repair or maintenance for the website are included in cost of net revenues in the current period expenses.
8
SPARTA COMMERCIAL SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~OCTOBER 30, 2020~~JANUARY 31, 2021
~~(Unaudited~~(Unaudited)

Fair Value Measurements

The Company has adopted ASC 820, “Fair Value Measurements (“ASC 820”).” ASC 820 establishes a three-level fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets the lowest priority to unobservable inputs to fair value measurements of certain assets and Liabilities. The three levels of the fair value hierarchy under ASC 820 are described below:

● Level 1 — Quoted prices for identical instruments in active markets. Level 1 assets and liabilities include debt and equity securities and derivative contracts that are traded in an active exchange market, as well as certain securities that are highly liquid and are actively traded in over-the-counter markets.

● Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model derived valuations in which all significant inputs and significant value drivers are observable in active markets.

● Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value measurements. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques based on significant unobservable inputs, as well as management judgments or estimates that are significant to valuation.

This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. For some products or in certain market conditions, observable inputs may not always be available.

Income Taxes

We utilize ASC 740 “Income Taxes” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at year-end based on enacted laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income.

The Company recognizes the impact of a tax position in the financial statements only if that position is more likely than not of being sustained upon examination by taxing authorities, based on the technical merits of the position. Our practice is to recognize interest and/or penalties related to income tax matters in income tax expense.

Stock Based Compensation

We account for our stock-based compensation under ASC 718 “Compensation – Stock Compensation” using the fair value based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.

We use the fair value method for equity instruments granted to non-employees and use the Black-Scholes model for measuring the fair value of options. The stock based fair value compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods.

Inventories

The Company’s inventories represent finished goods, consist of products available for sale and are accounted for using the first-in, first-out (FIFO) method and valued at the lower of cost or net realizable value. Inventory consists of finished goods for the Company’s New World Health business.
9
SPARTA COMMERCIAL SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~OCTOBER 30, 2020~~JANUARY 31, 2021
~~(Unaudited~~(Unaudited)

Concentrations of Credit Risk

Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash, cash equivalents and receivables. The Company places its cash and temporary cash investments with high credit quality institutions. At times, such investments may be in excess of the FDIC insurance limit.

Net Loss Per Share

The Company uses ASC 260-10, “Earnings Per Share” for calculating the basic and diluted loss per share. The Company computes basic loss per share by dividing net loss and net loss attributable to common shareholders by the weighted average number of common shares outstanding. Common equivalent shares are excluded from the computation of net loss per share if their effect is anti-dilutive.

~~At October~~As of January 31, 2021 and 2020 ~~and 2019, 4,748,292,511~~8,314,836 potential shares (including ~~98,119,845 shares~~1,220,078 shares) to be issued on the balance sheet) and ~~3,949,236,328~~7,088,794 potential shares (including ~~81,786,511~~817,865 shares to be issued on the balance sheet), respectively, were excluded from the shares used to calculate diluted earnings per share as their inclusion would reduce net loss per share.

Derivative Liabilities

The Company assessed the classification of its derivative financial instruments as of ~~October~~January 31, ~~2020~~2021 and April 30, 2020, which consist of convertible instruments and rights to shares of the Company’s common stock and determined that such derivatives meet the criteria for liability classification under ASC 815.

ASC 815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as freestanding derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument subject to the requirements of ASC 815. ASC 815 also provides an exception to this rule when the host instrument is deemed to be conventional, as described.

Convertible Instruments

The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with professional standards for “Accounting for Derivative Instruments and Hedging Activities”.

The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with professional standards when “Accounting for Convertible Securities with Beneficial Conversion Features,” as those professional standards pertain to “Certain Convertible Instruments.” Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records when necessary deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. ASC 815-40 provides that, among other things, generally, if an event is not within the entity’s control could or require net cash settlement, then the contract shall be classified as an asset or a liability.

Reclassifications

Certain reclassifications have been made to conform to prior periods’ data to the current presentation. These reclassifications had no effect on reported losses.

Recent Accounting Pronouncements-

In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (Topic 842) “Leases.” Topic 842 supersedes the lease requirements in Accounting Standards Codification (ASC) Topic 840, “Leases.” Under Topic 842, lessees are required to recognize assets and liabilities on the balance sheet for most leases and provide enhanced disclosures. Leases will continue to be classified as either finance or operating. The Company adopted Topic 842 effective May 1, 2019 using a modified retrospective method and will not restate comparative periods. Adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

10
~~SPARTA COMMERCIAL SERVICES, INC.~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~OCTOBER 30, 2020~~
~~(Unaudited~~
A variety of proposed or otherwise potential accounting standards are currently under study by standard setting organizations and various regulatory agencies. Due to the tentative and preliminary nature of those proposed standards, we have not determined whether implementation of such proposed standards would be material to our unaudited condensed consolidated financial statements.
SPARTA COMMERCIAL SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2021
(Unaudited)

NOTE B – GOING CONCERN MATTERS

The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying unaudited condensed consolidated financial statements, the Company has incurred recurring losses and generated negative cash flows from operating activities since inception. As of ~~October~~January 31, ~~2020,~~2021, the Company had an accumulated deficit of ~~$65,082,461~~$65,209,203 and a working capital deficit (total current liabilities exceeded total current assets) of ~~$12,452,072.~~$12,800,507. The Company’s cash balance and revenues generated are not currently sufficient and cannot be projected to cover its operating expenses for the next twelve months from the filing date of this report. These factors among others raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time.

The Company’s existence is dependent upon management’s ability to develop profitable operations. Management is devoting substantially all of its efforts to developing its business and raising capital and there can be no assurance that the Company’s efforts will be successful. No assurance can be given that management’s actions will result in profitable operations or the resolution of its liquidity problems. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might result should the Company be unable to continue as a going concern.

In order to improve the Company’s liquidity, the Company’s management is actively pursuing additional equity financing through discussions with investment bankers and private investors. There can be no assurance that the Company will be successful in its effort to secure additional equity financing.

NOTE C – NOTES PAYABLE AND DERIVATIVES

The Company has outstanding numerous notes payable to various parties. The notes bear interest at rates of 5% - 20% per year and are summarized as follows:

Notes Payable
October 31,
2020

April 30,
2020

January 31,
2021

April 30,
2020

Notes convertible at holder’s option $ 2,590,309 $ 2,590,309 $ 2,522,925 $ 2,590,309
Notes convertible at Company’s option 75,700 75,700 75,700 75,700
Non-convertible notes payable 2,372,646 2,276,315 2,131,650 2,276,315
Subtotal 5,038,655 4,942,324 4,730,275 4,942,324

Less debt discount - - - -
$ 5,038,655 $ 4,942,324 $ 4,730,275 $ 5,038,655

Certain of the notes payable contain variable conversion rates and the conversion features are classified as derivative liabilities. The conversion prices are based on the market price of the Company’s common stock, at discounts of 30% - 48% to market value. At ~~October~~January 31, ~~2020,~~2021, the Company has reserved ~~238,630,500~~2,386,305 shares of its common stock for issuance upon the conversion of debentures.

Amortization of debt discount for the three-month periods ended ~~October~~January 31, ~~2020~~2021 and ~~2019~~2020 was $0 and ~~$6,825,~~$8,633, respectively.
11
SPARTA COMMERCIAL SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~OCTOBER 30, 2020~~JANUARY 31, 2021
~~(Unaudited~~(Unaudited)

The Company’s derivative financial instruments consist of embedded derivatives related to the outstanding short term Convertible Notes Payable. These embedded derivatives include certain conversion features indexed to the Company’s common stock. The accounting treatment of derivative financial instruments requires that the Company record the derivatives and related items at their fair values as of the inception date of the Convertible Notes Payable and at fair value as of each subsequent balance sheet date. In addition, under the provisions of Accounting Standards Codification subtopic 815-40, Derivatives and Hedging; Contracts in Entity’s Own Equity (“ASC 815-40”), as a result of entering into the Convertible Notes Payable, the Company is required to classify all other non-employee stock options and warrants as derivative liabilities and mark them to market at each reporting date. Any change in fair value inclusive of modifications of terms will be recorded as non-operating, non-cash income or expense at each reporting date. If the fair value of the derivatives is higher at the subsequent balance sheet date, the Company will record a non-operating, non-cash charge. If the fair value of the derivatives is lower at the subsequent balance sheet date, the Company will record non-operating, non-cash income.

The change in fair value of the derivative liabilities at ~~October~~January 31, ~~2020~~2021 was calculated with the following average assumptions, using a Black-Scholes option pricing model are as follows:

Significant Assumptions:

Risk free interest rate Ranging from 0.11 to 0.2 %
Expected stock price volatility Ranging from 135 to 273 %
Expected dividend payout
Expected life in years Ranging from 0.25 to 3.0 Years

The change in fair value of the derivative liabilities of convertible notes outstanding at October 31, 2019 was calculated with the following average assumptions, using a Black-Scholes option-pricing model are as follows:

Significant Assumptions:

Risk free interest rate Ranging from 1.83% to 2.00 %
Expected stock price volatility 118% to 187 %
Expected dividend payout 0 %
Expected life in years Ranging from 0.25 year to 2.0 years

During the ~~three~~nine months ended ~~October~~January 31, ~~2020~~2021 and ~~2019,~~2020, the Company recorded a (loss) of $1,310,307 and a (loss) of ~~$1,682,995,~~$375,617, respectively, related to the change in value of the derivative liabilities.

Changes in derivative liability during the three months ended ~~October~~January 31, ~~2020~~2021 and ~~2019~~2020 were:

October 31, January 31,
2020 2019 2021 2020
Balance, beginning of year $ 2,802,125 $ 3,496,696 $ 2,802,125 $ 3,496,696
Derivative liability extinguished - - - -
Derivative financial liability arising on the issuance of convertible notes and warrants 140,014 63,613 140,014 63,613
Fair value adjustments 1,310,307 1,682,995 1,310,307 1,682,995
Balance, end of period $ 4,252,446 $ 5,243,304 $ 4,252,446 $ 5,243,304

NOTE D – LOANS PAYABLE TO RELATED PARTIES

As of ~~October~~January 31, ~~2020,~~2021, and April 30, 2020, aggregated loans and notes payable, without demand and with no interest, to officers and directors were ~~$450,500~~$432,403 and $432,403, respectively.
12
SPARTA COMMERCIAL SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~OCTOBER 30, 2020~~JANUARY 31, 2021
~~(Unaudited~~(Unaudited)

NOTE E – EQUITY TRANSACTIONS

The Company is authorized to issue 10,000,000 shares of preferred stock with $0.001 par value per share, of which 35,850 shares have been designated as Series A convertible preferred stock with a $100 stated value per share, 1,000 shares have been designated as Series B Preferred Stock with a $10,000 per share liquidation value, 200,000 shares have been designated as Series C Preferred Stock with a $10 per share liquidation value, and 2,000,000 shares have been designated as Series D Preferred Stock with a $1 per share liquidation value and 750,000,000 shares of common stock with $0.001 par value per share.
The Company had 125 shares of Series A preferred stock issued and outstanding as of ~~October~~January 31, 2020 and April 30, 2020. The Company had no shares of Series B preferred stock issued and outstanding as of ~~October~~January 31, ~~2020~~2021 and April 30, 2020. The Company had 4,155,000 and 4,005,000 shares of Series C preferred stock issued and outstanding as of ~~October~~January 31, 2020 and April 30, 2020. The Company had 1,596,000 and 1,132,000 shares of Series D preferred stock issued and outstanding as of ~~October~~January 31, ~~2020~~2021 and April 30, 2020.

The Company had ~~693,792,904~~7,094,758 and ~~627,092,904~~6,270,929 shares of common stock (after stock split effect) issued and outstanding as of ~~October~~January 31, ~~2020~~2021 and April 30, 2020, respectively. The Company had ~~121,452,845~~1,214,528 and ~~84,786,511~~847,865 shares (after stock split effect) of common classified as to be issued at ~~October~~January 31, 2020 and April 30, 2020.

Preferred Stock

During the ~~three~~Nine months ended ~~October~~January 31, ~~2020,~~2021, the Company:

Sold ~~140~~150 Units Series C Convertible Preferred stock for $70,000. Each Unit consists of 1 share of Series C Preferred stock (convertible at any time into 300 shares of the Company’s common stock) and 150 two-year Warrants to purchase one share of the Company’s common stock at $0.005 per share.

Issued 311 Units Series D Convertible Preferred stock in settlement of $311,378 in accounts payable. Each Unit consists of 1 share of Series D Preferred stock (convertible at any time into 400 shares of the Company’s common stock) and 150 two-year Warrants to purchase one share of the Company’s common stock at $0.01 per share.

Issued 51 Units Series D Convertible Preferred stock upon conversion of $51,000 of the Company’s subsidiary’ preferred stock. Each Unit consists of 1 share of Series D Preferred stock (convertible at any time into 400 shares of the Company’s common stock) and 150 two-year Warrants to purchase one share of the Company’s common stock at $0.01 per share.

During the ~~three~~nine months ended ~~October~~January 31, ~~2019,~~2020, the Company:

Sold 206 Units C Convertible Preferred stock for $103,000. Each Unit consists of 1 share of Series C Preferred stock (convertible at any time into 300 shares of the Company’s common stock) and 150 two-year Warrants to purchase one share of the Company’s common stock at $0.005 per share.
Issued 92 Units C Convertible Preferred stock upon the conversion of $45,829 of notes payable and accrued interest thereon. Each Unit consists of 1 share of Series C Preferred stock (convertible at any time into 300 shares of the Company’s common stock) and 150 two-year Warrants to purchase one share of the Company’s common stock at $0.005 per share.
Issued 125 Units D Convertible Preferred stock upon the conversion of $125,000 of the Company’s subsidiary’ preferred stock. Each Unit consists of 1 share of Series D Preferred stock (convertible at any time into 400 shares of the Company’s common stock) and 150 two-year Warrants to purchase one share of the Company’s common stock at $0.01 per share.
● sold 848 Units C Convertible Preferred stock for $424,000. Each Unit consists of 1 share of Series C Preferred stock (convertible at any time into 300 shares of the Company’s common stock) and 150 two year Warrants to purchase one share of the Company’s common stock at $0.005 per share,
● issued 92 Units of the Company’s Series C Convertible Preferred stock upon conversion of $45,829 of notes payable and accrued interest thereon. Each Unit consists of 1 share of Series C Preferred stock (convertible at any time into 300 shares of the Company’s common stock (subject to certain percentage ownership provisions) and 150 two year Warrants to purchase one share of the Company’s common stock at $0.005 per share,
● issued 170 Units of the Company’s Series D Convertible Preferred stock in exchange for $170,000 worth of the Company’s subsidiary’s preferred stock. Each Unit consists of 1 share of Series D Preferred stock (convertible at any time into 400 shares of the Company’s common stock (subject to certain percentage ownership provisions) and 150 two year Warrants to purchase one share of the Company’s common stock at $0.01 per share.

Common Stock

~~During~~On December 30, 2020, Sparta Commercial Services, Inc. (the “Company”) filed with the ~~three months ended October 31,~~Secretary of State of the state of Nevada, a Certificate of Amendment to its Articles of Incorporation (the “Amendment”), attached herewith as Exhibit 3.1, and incorporated by reference. The Amendment will be effective as of December 30, 2020. On July 9, 2020, the ~~Company:~~Board of Directors of the Company declared July 30, 2020 as the effective date for the 1 for 100 reverse stock split (the “Reverse Stock Split”), previously approved by the stockholders of the Company by written consent in accordance with the information contained in the Schedule 14C Information Statement filed with the Securities and Exchange Commission on July 9, 2020. FINRA reviewed and authorized the corporate action changing the effective date to December 30, 2020 (the “Effective Date”).

~~Sold~~As a result of the Reverse Stock Split, for every one hundred shares of outstanding common stock will automatically be converted into one shares of the Company’s common stock immediately prior to ~~two accredited investors 13,333,334~~the opening of trading on the next business day after the Effective Date. If, as a result of the reverse split, a stockholder is left with a fractional share, that stockholder shall receive one full share in lieu of such fractional share. Immediately after the effectiveness of the reverse split, there will be 7,027,930 shares of the Company’s common stock issued and outstanding. The aggregate number of shares of common stock that the Company is authorized to issue remains the same and ~~two-year warrants,~~was unaffected by the Reverse Stock Split. All outstanding stock options and other contractual rights including the preferred stock entitling the holders of such rights to ~~purchase 6,666,667~~acquire shares of common stock outstanding at ~~$0.004 per share, for $20,000.~~
~~During~~ the ~~three months ended October 31, 2019,~~Effective Date will be appropriately adjusted to give effect to the ~~Company:~~
~~Accrued to be issued 1,000,000 shares of restricted common stock in consideration of the cancellation of $311,127 of accounts payable.~~
13
Reverse Stock Split.
SPARTA COMMERCIAL SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~OCTOBER 30, 2020~~JANUARY 31, 2021
(Unaudited)

NOTE F – FAIR VALUE MEASUREMENTS

The Company follows the guidance established pursuant to ASC 820 which established a framework for measuring fair value and expands disclosure about fair value measurements. ASC 820 defines fair value as the amount that would be received for an asset or paid to transfer a liability (i.e., an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes the following three levels of inputs that may be used:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets and liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2: Observable prices that are based on inputs not quoted on active markets but corroborated by market data.

Level 3: Unobservable inputs when there is little or no market data available, thereby requiring an entity to develop its own assumptions. The fair value hierarchy gives the lowest priority to Level 3 inputs.

The table below summarizes the fair values of financial liabilities as of ~~October~~January 31, ~~2020:~~2021:

Fair Value at Fair Value Measurement Using
October 31, 2020 Level 1 Level 2 Level 3
Derivative liabilities $ 4,252,446 - - $ 4,252,446
Fair Value at Fair Value Measurement Using
January 31, 2021 Level 1 Level 2 Level 3
Derivative liabilities $ 4,252,446 - - $ 4,252,446

Fair values of financial liabilities as of April 30, 2020 are as follows:

Fair Value at Fair Value Measurement Using
April 30, 2020 Level 1 Level 2 Level 3
Derivative liabilities $ 2,802,125 - - $ 2,802,125

The following is a description of the valuation methodologies used for these items:

Derivative liabilities — these instruments consist of certain variable conversion features related to notes payable obligations and certain outstanding warrants. These instruments were valued using pricing models which incorporate the Company’s stock price, volatility, U.S. risk free rate, dividend rate and estimated life.

The Company did not identify any other non-recurring assets and liabilities that are required to be presented in the balance sheets at fair value in accordance with ASC Topic 825 “The Fair Value Option for Financial Issuances”.

NOTE G – NON-CASH INVESTING AND FINANCING INFORMATION

During the ~~three~~Nine months ended ~~October~~January 31, ~~2020,~~2021, the Company:

● Issued 311 Units Series D Convertible Preferred stock in settlement of $311,378 in accounts payable. Each Unit consists of 1 share of Series D Preferred stock (convertible at any time into 400 shares of the Company’s common stock) and 150 two year Warrants to purchase one share of the Company’s common stock at $0.01 per share.

● Issued 51 Units Series D Convertible Preferred stock upon conversion of $51,000 of the Company’s subsidiary’ preferred stock. Each Unit consists of 1 share of Series D Preferred stock (convertible at any time into 400 shares of the Company’s common stock) and 150 two-year Warrants to purchase one share of the Company’s common stock at $0.01 per share.

During the ~~three~~nine months ended ~~October~~January 31, ~~2019,~~2020, the Company:

● ~~Issued~~issued 92 Units of the Company’s Series C Convertible Preferred stock upon ~~the~~ conversion of $45,829 of notes payable and accrued interest thereon. Each Unit consists of 1 share of Series C Preferred stock (convertible at any time into 300 shares of the Company’s common ~~stock)~~stock (subject to certain percentage ownership provisions) and 150 ~~two-year~~two year Warrants to purchase one share of the Company’s common stock at $0.005 per ~~share.~~share,
14
~~SPARTA COMMERCIAL SERVICES, INC.~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~OCTOBER 30, 2020~~
~~(Unaudited)~~
● ~~Issued 125~~issued 170 Units of the Company’s Series D Convertible Preferred stock ~~upon the conversion of $125,000~~in exchange for $170,000 worth of the Company’s ~~subsidiary’~~subsidiary’s preferred stock. Each Unit consists of 1 share of Series D Preferred stock (convertible at any time into 400 shares of the Company’s common ~~stock)~~stock (subject to certain percentage ownership provisions) and 150 two year Warrants to purchase one share of the Company’s common stock at $0.01 per ~~share.~~
share,
● ~~Accrued~~accrued as to be issued 1,000,000 shares of ~~restricted~~the Company’s common stock ~~in consideration~~valued at $100,000 upon the forgiveness of ~~the cancellation of $311,127 of accounts payable.~~accounts.
SPARTA COMMERCIAL SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2021
(Unaudited)

NOTE H – COMMITMENTS AND CONTINGENCIES
In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law in March 2020. The CARES Act lifts certain deduction limitations originally imposed by the Tax Cuts and Jobs Act of 2017 (“2017 Tax Act”). Corporate taxpayers may carryback net operating losses (NOLs) originating between 2018 and 2020 for up to five years, which was not previously allowed under the 2017 Tax Act. The CARES Act also eliminates the 80% of taxable income limitations by allowing corporate entities to fully utilize NOL carryforwards to offset taxable income in 2018, 2019 or 2020. Taxpayers may generally deduct interest up to the sum of 50% of adjusted taxable income plus business interest income (30% limit under the 2017 Tax Act) for 2019 and 2020. The CARES Act allows taxpayers with alternative minimum tax credits to claim a refund in 2020 for the entire amount of the credits instead of recovering the credits through refunds over a period of years, as originally enacted by the 2017 Tax Act.
In addition, the CARES Act raises the corporate charitable deduction limit to 25% of taxable income and makes qualified improvement property generally eligible for 15-year cost-recovery and 100% bonus depreciation. The enactment of the CARES Act did not result in any material adjustments to our income tax provision.

Operating Lease Commitments

Our executive offices are located in New York, NY. We have an agreement for use of office space at this location under a sub-lease which expired on October 31, 2019 and continues on a month-to-month basis thereafter. The monthly base rent is $5,100.

Rent expense was ~~$16,200~~$50,607 and ~~$13,250~~$14,250 for the ~~three-month~~nine-months periods ended ~~October~~January 31, ~~2020~~2021 and ~~2019,~~2020, respectively.

Litigation

The Company is subject to legal proceedings and claims which arise in the ordinary course of its business. Sparta can make no representations about the potential outcome of such proceedings.

As of ~~October~~January 31, ~~2020,~~2021, we were not a party to any material pending legal proceeding except as stated below. From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business.

The Company has received notices dated April 1, 2016, May 13, 2016 and July 22, 2016 from two lenders claiming defaults relating to conversion requests of $8,365 principal and $643 interest and $5,000 principal, with regard to notes in the total amounts of $55,125 and $27,500, respectively, which the Company has refused to process and believes it has defenses in that regard. The company believes these claims are contingent, unliquidated and disputed. There can be no assurance that the Company would prevail should litigation with regard to any of these requests occur. These liabilities have been recorded in the unaudited condensed consolidated financial statements.

On September 22, 2016, a motion for summary judgment in lieu of complaint was filed in the Supreme Court of The State of New York County of Kings, against the Company by a lender for the amount of $102,170.82 in principal and interest; accrued and unpaid interest thereupon in the amount from the date of filing to entry of judgment herein; lender’s reasonable attorney’s fees, costs, and expenses; and any such other relief as the Court deems just and proper. Plaintiff’s motion for summary judgment in lieu of complaint was denied on May 5, 2017. On August 22, 2019, Plaintiff brought a second motion seeking summary judgment on the issue of liability which was denied on March 14, 2020. The Court found that there existed issues of fact warranting a trial. The Company believes the claim is contingent, unliquidated and disputed. There is no assurance that the Company will prevail in this litigation. These liabilities have been recorded in the unaudited condensed consolidated financial statements.

On October 26, 2019, a lender commenced an action in the Supreme Court of the State of New York in New York County alleging damages from unpaid principal and interest, attorney’s fees, costs, and expenses arising from a promissory note dated February 26, 2015 in the amount of $50,000.00. The case is presently in the discovery phase of the litigation. The Company believes the claim is contingent, unliquidated and disputed.

NOTE I – SUBSEQUENT EVENTS

~~Subsequent to October 31, 2020 the Company:~~
~~Sold, to an accredited investor, 3,333,334 Shares of Common stock (and two-year warrants to purchase 1,666,667 shares of common stock at $0.004 per share)~~The Company has evaluated subsequent events for ~~$5,000.~~
Sold, to an accredited investor, 10 Units of Series C convertible preferred stock for $10,000. Each Unit consists of 1 share of Series C Preferred stock (convertible at any time into 300 shares of the Company’s common stock)recognition and ~~150 two-year Warrants to purchase one share of the Company’s common stock at $0.005 per share.~~
On July 9, 2020, the Company filed with the Securities and Exchange Commission, a Schedule 14C Information Statement whereby a majority of the Company’s shareholders approved a 1 for 100 reverse stock split of the Company’s common shares outstanding. As ofdisclosure through March 22, 2021 which is the date ~~of this filing, FINRA (the Financial Industry Regulatory Authority) has yet~~the financial statements were available to ~~approve~~be issued. No other matters were identified affecting the ~~reverse stock split.~~accompanying financial statements and related disclosures.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

The following discussion of our financial condition and results of operations should be read in conjunction with (1) our interim unaudited condensed consolidated financial statements and their explanatory notes included as part of this quarterly report, and (2) our annual audited consolidated financial statements and explanatory notes for the year ended April 30, 2020 as disclosed in our annual report on Form 10-K for that year as filed with the SEC.

“Forward-Looking” Information

This report on Form 10-Q contains various statements that may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Rule 175 promulgated thereunder, Section 21E of the Securities Exchange Act of 1934, as amended, and Rule 3b-6 promulgated thereunder which represent our expectations and beliefs, including, but not limited to statements concerning the Company’s business and financial plans and prospects and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements about our expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. The words “believe,” “expect,” “anticipate,” “estimate,” “project,” and other similar expressions can, but not always, identify forward-looking statements, which speak only as of the date such statement was made. We base these forward-looking statements on our current expectations and projections about future events, our assumptions regarding these events and our knowledge of facts at the time the statements are made. These statements by their nature involve substantial risks and uncertainties, certain of which are beyond our control, and actual results may differ materially depending on a variety of important factors. Risks and uncertainties that could cause our financial performance to differ materially from our goals, plans, expectations and projections expressed in forward-looking statements include those set forth in our filings with the Securities and Exchange Commission (“SEC”), including Item 1A of the Company’s Annual Report of Form 10-K for the year ended April 30, 2020. Forward-looking statements speak only as of the date they are made. The Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made or to reflect the occurrence of unanticipated events. You should consider any forward-looking statements in light of this explanation, and we caution you about relying on forward-looking statements.

General Overview

Sparta Commercial Services, Inc. (“Sparta,” “we,” “us,” or the “Company”) is a Nevada corporation ~~serving~~with headquarters in New York City, www.spartacommercial.com. We are a multi-disciplined parent corporation operating across three ~~markets. Sparta~~business sectors – Financial Services, E-Commerce & Mobile Technology, and Health and Wellness, (www.spartacommercial.com).
Sparta’s roots are in the Powersports industry. Notwithstanding the discontinuance of our initial focus on consumer loans and leases, in 2007, the Company had introduced a new initiative, Municipal Financing, (www.spartamunicipal.com). Sparta’s Municipal Finance program is also available to all nonprofit organizations, institutions and entities. All nonprofit organizations which adhere to IRS guidelines, including 501 (c) 3 of the Internal Revenue Code, are eligible. Both public nonprofits, also known as public charities supported with publicly collected funds, and private nonprofits, also known as private foundations supported by an individual or business entity, qualify for the program.
Vehicle History Reports are a ~~technology company that develops, markets~~staple of Sparta’s E-Commerce Technology subsidiary iMobile Solutions, Inc. Whether a vehicle is intended for business or recreational use, Sparta’s Vehicle History Reports are highly regarded for accuracy and ~~manages business mobile applications (mobile apps) for smartphones~~completeness and ~~tablets. The Company also owns~~have been sold across all 50 states and ~~manages websites which sell on-demand motorcycle, recreational~~in 62 countries worldwide. They provide a trusted layer of assurance to vehicle ~~power-sport vehicle~~buyers and ~~truck~~are available on Kelley Blue Book, Auto Trader, AllState Insurance and a range of various dealership websites. They include Cyclechex (Motorcycle History Reports at www.cyclechex.com), RVchex (Recreational Vehicle History Reports at www.rvchex.com), CarVINreport (Automobile History Reports at www.carvinreport.com), and Truckchex (Heavy Duty Truck History Reports at www.truckchex.com). Consumers, retailers, municipals, nonprofits, auction houses, banks and insurance companies alike scrutinize title history reports for ~~consumers, retail dealers, auction houses, insurance companies~~the vital information needed and banks/finance companies. Lastly, since 2007, Sparta has administered leasing programs for local and/or state agencies seeking to finance municipal vehicles and essential equipment. Our historic customers can be viewed at ~~https://www.spartamunicipal.com/clients. The Company also introduced a new~~factored into crucial business ~~line in~~decisions that affect the ~~rapidly expanding Hemp-CBD (cannabidiol) market.~~bottom line.

~~In 2020, the Company changed the~~The Company’s E-Commerce and Mobile Technology subsidiary name ~~of its majority-owned subsidiary~~change to iMobile Solutions, Inc., from Specialty Reports, Inc., toin 2017, signifies its ever-broadening service offerings in the evolving technology landscape. Under iMobile ~~Solutions, Inc. The new name reflects~~App (www.imobileapp.com), the ~~Company’s strategic evolution~~Company provides mobile technology services, including web and ~~focus on the fast-growing~~ mobile application ~~market.~~
~~Sparta’s mobile application (mobile app) offerings have broadened our base beyond our original base of vehicle dealers to include~~creation, development and management for a wide range of businesses ~~including, but not limited to,~~in the achievement of their marketing goals. Our ever-broadening business base of mobile application includes vehicle dealerships and racetracks, private clubs and country clubs, schools and entertainment venues, restaurants and grocery ~~stores. Our clients can be seen at~~ ~~https://imobileapp.com/app-gallery/~~stores, as well as various other merchant types. (www.imobileapp.com/app-gallery). ~~We also offer a private label version of our mobile app framework to enable other businesses to offer custom apps to their customers.~~
The Company also designs, launches, maintains and hosts websites for businesses. We provide specific, tailored action plans for our clients’ websites that include services such as eCommerce, CRM (Customer Relationship Management) development and integration, ordering system creation and integration, SEO (search engine optimization), social media marketing, and online reviews to improve their presence online. ~~In addition,~~Additionally, we offer text messaging services, which ~~are vital for businesses’~~supplement business marketing ~~retention~~strategies both to gain and retain brand loyalty ~~strategies.~~among its clients, customers and investors. Our text messaging platform allows our clients to easily manage, schedule and analyze text message performance.
The Company’s vehicle history reports, which can be found on Kelly Blue Book, AutoTrader, AllState Insurance, as well as on various dealership websites, include Cyclechex (Motorcycle History Reports at ~~www.cyclechex.com); RVchex (Recreational Vehicle History Reports at~~ ~~www.rvchecks.com); CarVINreport (Automobile Reports at~~ ~~www.carvinreport.com) and Truckchex (Heavy Duty Truck History Reports at~~ ~~www.truckchex.com). Our Vehicle History Reports are designed for consumers, retail dealers, auction houses, insurance companies and banks/finance companies.~~
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Sparta also administers a Municipal Leasing Program for local and/or state agencies throughout the country who are seeking a better and more economical way to finance their essential equipment needs, including police motorcycles, cruisers, buses, and EMS equipment. We are continuing to expand our roster of equipment manufacturers and the types of equipment we lease.
created its subsidiary, New World Health Brands, Inc. ~~(NWHB) was formed~~, in April ~~2020 as a subsidiary and new business line of Sparta Commercial Services, Inc. While anticipating, and with~~2019, on the ~~passing~~heels of the ~~2019~~Agriculture Improvement Act (also known as the Farm ~~Bill,~~Bill), which ~~resulted in~~was signed into law the ~~removal of~~previous December 20, 2018. Consequently, hemp (CBD) was removed from Schedule 1 of the Controlled Substances Act. ~~Sparta’s~~Company management recognized athe substantial ~~potential~~ business opportunity that lay ahead in the rapidly expanding ~~Hemp-CBD (Cannabinol)~~hemp-CBD (cannabidiol) market in the United States. During 2019-2020, ~~management~~we sourced, developed and tested 5 CBD product categories totaling 31 ~~products,~~products. We procured premium, domestic-grade, full-spectrum, broad-spectrum, and THC free hemp, created product packaging and labeling, and implemented fulfillment ~~and launched~~to launch an ~~on-line~~online B to C ~~website, www.newworldhealthcbd.com. . In addition, NWHB expanded~~website: www.newworldhealthcbd.com on December 21, 2019. Our CBD products are available in full spectrum, broad spectrum and non-detectable below the legal limit of .3 THC (ND-THC) and come in capsules, oils, tablets, gel caps, tinctures, salves, creams, lotions, as well as pet tinctures. We remain watchful of consumer needs, adjusting our product line offerings either by adding new products, adjusting the potency levels of existing products or discontinuing still others, as warranted. To ensure the safety and quality of our products, all CBD product offerings are exclusively sourced, manufactured and tested at highly accredited testing facilities in the United States and adhere to strict U.S standards and guidelines. Because of our high standards, in-depth quality testing and label transparency, consumers know they can trust us.
Sparta’s response to the onset of the COVID 19 pandemic in early 2020 quickly took shape with thorough investigations into ~~the~~evolving customer trends in health and ~~wellness market with~~wellness. As a result, we expanded New World Health Brands and developed a new product line of natural dietary supplements. In August 2020, we launched an online B to C website: www.newworldhealthbrands.com, featuring high quality dietary supplements, including ~~but not limited to~~vitamins and minerals, such as, Zinc, Magnesium, Boron, Iodine, Beetroot Extract, Selenium, Vitamin B Complex, Vitamin C and ~~more - specifically formulated~~PQQ. To ensure the safety and quality of our products, all health and wellness offerings are exclusively sourced and manufactured in the United States and adhere to ~~strengthen~~strict U.S standards and guidelines. Sparta’s commitment to high standards and transparency are tantamount to being a trusted brand.
Sparta’s newest subsidiary, Sparta Crypto, Inc., was established on September 25, 2020 and in the ~~immune system.~~process of building a proprietary state-of-the-art platform designed to connect users of various digital currency with sellers of luxury goods. The platform has not launched and the Company ~~believes~~can make no assurances that ~~this~~the described plan will ~~allow us to access markets, and e-commerce platforms currently not available to its CBD products.~~reach implementation.

RESULTS OF OPERATIONS

Comparison of the ~~six~~nine Months Ended ~~October~~January 31, 2021 and 2020 ~~to the Three Months Ended October 31, 2019~~

For the ~~three~~nine months ended ~~October~~January 31, ~~2020~~2021 and ~~2019,~~2020, we have generated limited sales revenues, have incurred significant expenses, and have sustained significant losses.

Revenues

Revenues totaled ~~$141,554~~$195,027 during the ~~six~~nine months ended ~~October~~January 31, ~~2020~~2021 as compared to ~~$180,017~~$252,298 during the ~~three~~nine months ended ~~October~~January 31, ~~2019,~~2020, a decrease of ~~$38,463~~$52,271 or ~~21%~~23%, primarily due to Covid-19. Revenues from our Information Technology products declined ~~$908~~by $29,519 or ~~1.34% to $73,947 while~~14% and revenues from our New World Health Brands products declined ~~$9,602~~$27,752 or ~~78.31 % to $2,660.~~73 %.

Cost of Revenue

Cost of revenue consists of costs and fees incurred to third parties to construct and maintain mobile apps, as well as fees for subscription services related to vehicle history reports and cost of goods purchased for New World Health Brand products. Cost of revenue was ~~$20,148~~$53,238 during the ~~three~~nine months ended ~~October~~January 31, ~~2020~~2021 as compared to ~~$14,787~~$51,262 during the ~~three~~nine months ended ~~October~~January 31, ~~2019.~~2020. This ~~$5,361~~$1,976 or ~~36.25%~~4% increase was due to New World Health Brands product line inventory purchases.

Operating Expenses

General and administrative expenses were ~~$933,709~~$1,163,116 during the ~~six~~nine months ended ~~October~~January 31, ~~2020,~~2021, compared to ~~$503,715~~$804,083 during the ~~six~~nine months ended ~~October~~January 31, 2020, an increase of ~~$429,994~~$359,033 or ~~85%~~45%, primarily due to the non-cash Black Scholes $464,718 valuation of options issued to management and directors. Expenses incurred during the current ~~six~~nine months period consisted primarily of the following expenses: Compensation, options and related costs, ~~$594,763;~~$902,650; Accounting, audit and professional fees, ~~$52,620; Consulting fees, $12,580~~$88,951; and Rent, utilities and telecommunication expenses ~~$21,447.~~$63,947. Expenses incurred during the comparative ~~six month~~nine months period in ~~2019~~2020 consisted primarily of the following expenses: Compensation and related costs, ~~$151,421;~~$427,632; Accounting, audit and professional fees, ~~$17,130; Consulting fees, $7,134;~~$111,369; and Rent, utilities and telecommunication expenses ~~$22,244.~~$63,941.

Other (income) expense

Other (income) expense is comprised primarily of interest and financing costs and expense related to the change in fair value of our derivative liabilities. Other loss was ~~$1,557,678~~$1,478,700 for the nine months ended ~~October~~January 31, ~~2020,~~2021, compared to net other loss of ~~$1,590,125~~$346,784 for the nine months ended ~~October~~January 31, ~~2019,~~2020, a ~~decrease~~increase in net other expense of ~~$32,447 or 2.04%~~$1,131,916or 326%. The ~~decrease~~increase results were from the change in the fair value of our derivative liabilities.
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Net income (loss)

Our net loss attributable to common stockholders for the ~~six~~nine months ended ~~October~~January 31, ~~2020~~2021 increased by ~~$1,513,061~~$1,545,521 or ~~26.81%~~161% to ~~$2,380,122~~$2,507,055 from ~~$867,061~~$961,534 for the ~~six~~nine months ended ~~October~~January 31, ~~2019.~~2020. This increase in net loss attributable to common stockholders for the ~~six~~nine months ended ~~October~~January 31, ~~2020~~2021 was primarily due to the factors discussed above.

LIQUIDITY AND CAPITAL RESOURCES

As of ~~October~~January 31, ~~2020,~~2021, we had an accumulated deficit of ~~$65,082,461~~$65,209,203 and a total net loss for the ~~six~~nine months of ~~$2,380,122.~~$2,506,864. We generated a deficit in cash flow from operations of ~~$71,255~~$905,598 for the ~~six~~nine months ended ~~October~~January 31, ~~2020.~~2021. This deficit results primarily from our net loss of ~~$2,380,122,~~$2,506,864, partially offset by noncash expense of ~~$2,070,754~~$2,215,456 and an increase of ~~$346,763~~$399,452 in accounts payables and accrued expenses.

We met our cash requirements during the period through proceeds from the sale of ~~preferred~~ stock for proceeds ~~of $90,000,~~ and ~~the sale of~~ notes payable ~~in the amount~~$717,087, proceeds from PPP loans from SBA of ~~$130,944. We repaid notes in the amount of $500.~~$219,928.

We do not anticipate incurring significant research and development expenditures, and we do not anticipate the sale or acquisition of any significant property, plant or equipment, during the next twelve months. At ~~October~~January 31, ~~2020,~~2021, we had 6 full time employees. If we fully implement our business plan, we anticipate our employment base may increase during the next twelve months. As we continue to expand, we will incur additional cost for personnel. This potential increase in personnel is dependent upon our generating increased revenues and obtaining sources of financing. There is no guarantee that we will be successful in raising the funds required or generating revenues sufficient to fund the potential increase in the number of employees. Our employees are not represented by a union.

While we have raised capital to meet our working capital and financing needs in the past, additional financing is required in order to meet our current and potential future cash flow deficits from operations.

We continue to seek additional financing, which may be in the form of senior debt, subordinated debt or equity. We currently have no commitments for financing that are not at the investor’s election. There is no guarantee that we will be successful in raising the funds required to support our operations.

We estimate that we will need approximately $1,000,000 in addition to our normal operating cash flow to conduct operations during the next twelve months. However, there can be no assurance that additional private or public financing, including debt or equity financing, will be available as needed, or, if available, on terms favorable to us. Any additional equity financing may be dilutive to stockholders and such additional equity securities may have rights, preferences or privileges that are senior to those of our existing common or preferred stock. Furthermore, debt financing, if available, will require payment of interest and may involve restrictive covenants that could impose limitations on our operating flexibility. However, if we are not successful in generating sufficient liquidity from operations or in raising sufficient capital resources, on terms acceptable to us, this could have a material adverse effect on our business, results of operations, liquidity and financial condition, and we will have to adjust our planned operations and development on a more limited scale.

The effect of inflation on our revenue and operating results was not significant. Our operations are located in North America and there are no seasonal aspects that would have a material effect on our financial condition or results of operations.

GOING CONCERN ISSUES

The ~~independent auditors report on our April 30, 2020 and 2019 consolidated financial statements included in the Company’s Annual Report states that the~~ Company’s historical losses and the lack of revenues raise substantial doubts about the Company’s ability to continue as a going concern, ~~due to the losses incurred and its lack of significant operations.~~. If we are unable to develop our business, we have to discontinue operations or cease to exist, which would be detrimental to the value of the Company’s common stock. We can make no assurances that our business operations will develop and provide us with significant cash to continue operations.

In order to improve the Company’s liquidity, the Company’s management is actively pursuing additional financing through discussions with investment bankers, financial institutions and private investors. There can be no assurance the Company will be successful in its effort to secure additional financing.

We continue to experience net operating losses. Our ability to continue as a going concern is subject to our ability to develop profitable operations. We are devoting substantially all of our efforts to developing our business and raising capital. Our net operating losses increase the difficulty in meeting such goals and there can be no assurances that such methods will prove successful.

The primary issues management will focus on in the immediate future to address this matter include: seeking additional credit facilities from institutional lenders; seeking institutional investors for debt or equity investments in our Company; short term interim debt financing: and private placements of debt and equity securities with accredited investors.

To address these issues, we have engaged a financial advisory firm to advise and assist us in negotiating and raising capital.
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INFLATION

The impact of inflation on the costs of the Company, and the ability to pass on cost increases to its customers over time is dependent upon market conditions. The Company is not aware of any inflationary pressures that have had any significant impact on the Company’s operations over the past quarter, and the Company does not anticipate that inflationary factors will have a significant impact on future operations.

OFF-BALANCE SHEET ARRANGEMENTS

The Company does not maintain off-balance sheet arrangements, nor does it participate in non-exchange traded contracts requiring fair value accounting treatment.

CRITICAL ACCOUNTING POLICIES

The preparation of our financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect our reported assets, liabilities, revenues, and expenses, and the disclosure of contingent assets and liabilities. We base our estimates and judgments on historical experience and on various other assumptions, we believe to be reasonable under the circumstances. Future events, however, may differ markedly from our current expectations and assumptions. While there are a number of significant accounting policies affecting our financial statements, we believe the following critical accounting policy involves the most complex, difficult and subjective estimates and judgments.

Revenue Recognition

Information Technology:

During the first quarter of 2019, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606), using the cumulative-effect method. The new standard requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The adoption did not have an impact in our consolidated financial statements, other than the enhancement of our disclosures related to our revenue-generating activities. The Company acts as a principal in its revenue transactions as the Company is the primary obligor in the transactions.

Revenues from mobile app products are generally recognized upon delivery. Revenues from History Reports are generally recognized upon delivery / download. Prepayments received from customers before delivery (if any) are recognized as deferred revenue and recognized upon delivery.

New World Health Brands (“NWHB”):

Revenues from NWHB products are generally recognized upon delivery.

Stock-Based Compensation

The Company adopted Financial Accounting Standards Board Accounting Standard Codification Topic 718 (“ASC 718-10”), which records compensation expense on a straight-line basis, generally over the explicit service period of three to five years.

ASC 718-10 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s Consolidated Statement of Operations. The Company is using the Black-Scholes option-pricing model as its method of valuation for share-based awards. The Company’s determination of fair value of share-based payment awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include but are not limited to the Company’s expected stock price volatility over the term of the awards, and certain other market variables such as the risk-free interest rate.
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Convertible Instruments

The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with professional standards for “Accounting for Derivative Instruments and Hedging Activities” (“ASC 815-40”).

The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with professional standards when “Accounting for Convertible Securities with Beneficial Conversion Features,” as those professional standards pertain to “Certain Convertible Instruments.” Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records when necessary deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. ASC 815-40 provides that, among other things, generally, if an event is not within the entity’s control could or require net cash settlement, then the contract shall be classified as an asset or a liability.

Derivative Liabilities

The Company assessed the classification of its derivative financial instruments as of ~~October~~January 31, ~~2020~~2021 and April 30, 2020, which consist of convertible instruments and rights to shares of the Company’s common stock, and determined that such derivatives meet the criteria for liability classification under ASC 815.

ASC 815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as freestanding derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument subject to the requirements of ASC 815. ASC 815 also provides an exception to this rule when the host instrument is deemed to be conventional, as described.

RECENT ACCOUNTING PRONOUNCEMENTS

See Note A to the unaudited condensed consolidated financial statements for a description of recent accounting pronouncements, including the expected dates of adoption and estimated effects on our unaudited condensed consolidated financial statements, which is incorporated herein by reference.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Exchange Act that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure. We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Principal Financial Officer, of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of ~~October~~January 31, ~~2020.~~2021. Based on the evaluation of these disclosure controls and procedures, and in light of the material weaknesses found in our internal controls, the Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were not effective.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the company’s financial reporting. In our assessment of the effectiveness of internal control over financial reporting as of October 31, 2020, we determined that control deficiencies existed that constituted material weaknesses, as described below:
20

● lack of documented policies and procedures;
● we have no audit committee;
● there is a risk of management override given that our officers have a high degree of involvement in our day-to-day operations.
● there is no effective separation of duties, which includes monitoring controls, between the members of management.

Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. As a result, we have not been able to take steps to improve our internal controls over financial. However, to the extent possible, we will implement procedures to assure that the initiation of transactions, the custody of assets and the recording of transactions will be performed by separate individuals. Management is currently evaluating what steps can be taken in order to address these material weaknesses.

Accordingly, we concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by our internal controls.

As a result of the material weaknesses described above, management has concluded that we did not maintain effective internal control over financial reporting as of ~~October~~January 31, ~~2020~~2021 based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In light of these significant deficiencies, we performed additional analyses and procedures in order to conclude that our consolidated financial statements for the three months ended ~~October~~January 31, ~~2020~~2021 included in this Quarterly Report on Form 10-Q were fairly stated in accordance with U.S. GAAP. Accordingly, management believes that despite our significant deficiency, our consolidated financial statements for the three months ended ~~October~~January 31, ~~2020~~2021 are fairly stated, in all material respects, in accordance with U.S. GAAP.

There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the fiscal quarter to which this report relates that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

As at ~~October~~January 31, ~~2020,~~2021, we were not a party to any material pending legal proceeding except as stated below. From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business.

The Company has received notices dated April 1, 2016, May 13, 2016 and July 22, 2016 from two lenders claiming defaults relating to conversion requests of $8,365 principal and $643 interest and $5,000 principal, with regard to notes in the total amounts of $55,125 and $27,500, respectively, which the Company has refused to process and believes it has defenses in that regard. The company believes these claims are contingent, unliquidated and disputed. There can be no assurance that the Company would prevail should litigation with regard to any of these requests occur. These liabilities have been recorded in the unaudited condensed consolidated financial statements.
On September 22, 2016, a motion for summary judgment in lieu of complaint was filed in the Supreme Court of The State of New York County of Kings, against the Company by a lender for the amount of $102,170.82 in principal and interest; accrued and unpaid interest thereupon in the amount from the date of filing to entry of judgment herein; lender’s reasonable attorney’s fees, costs, and expenses; and any such other relief as the Court deems just and proper. Plaintiff’s motion for summary judgment in lieu of complaint was denied on May 5, 2017. On August 22, 2018, Plaintiff brought a second motion seeking summary judgment on the issue of liability which was denied on March 14, 2019. The Court found that there existed issues of fact warranting a trial. The Company believes the claim is contingent, unliquidated and disputed. There is no assurance that the Company will prevail in this litigation. These liabilities have been recorded in the unaudited condensed consolidated financial statements.
21
On October 26, 2018, a lender commenced an action in the Supreme Court of the State of New York in New York County alleging damages from unpaid principal and interest, attorney’s fees, costs, and expenses arising from a promissory note dated February 26, 2015 in the amount of $50,000.00. The case is presently in the discovery phase of the litigation. The Company believes the claim is contingent, unliquidated and disputed.
ITEM 1A. RISK FACTORS

We are subject to certain risks and uncertainties in our business operations including those which are described below. The risks and uncertainties described below are not the only risks we face. Additional risks and uncertainties not presently known or which are currently deemed immaterial may also impair our business operations. A description of factors that could materially affect our business, financial condition or operating results were included in Item 1A “Risk Factors” of our Form 10-K for the year ended April 30, 2020, and is incorporated herein by reference.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Each of the issuance and sale of securities described below was deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended, as transactions by an issuer not involving a public offering. No advertising or general solicitation was employed in offering the securities. Each purchaser is a sophisticated investor (as described in Rule 506(b) (2) (ii) of Regulation D) or an accredited investor (as defined in Rule 501 of Regulation D), and each received adequate information about the Company or had access to such information, through employment or other relationships, to such information.

Sales of Preferred Stock, Common Stock and Warrants:

During the ~~six~~nine months ended ~~October~~January 31, ~~2020~~2021 the Company:

● Sold ~~206~~150 Units Series C Convertible Preferred stock for ~~$103,000.~~$70,000. Each Unit consists of 1 share of Series C Preferred stock (convertible at any time into 300 shares of the Company’s common stock) and 150 ~~two year~~two-year Warrants to purchase one share of the Company’s common stock at $0.005 per share
●
Issued 311 Units Series D Convertible Preferred stock in settlement of $311,378 in accounts payable. Each Unit consists of 1 share of Series D Preferred stock (convertible at any time into 400 shares of the Company’s common stock) and 150 two-year Warrants to purchase one share of the Company’s common stock at $0.01 per share.

● Issued 9251 Units ~~C Convertible Preferred stock upon the conversion of $45,829 of notes payable and accrued interest thereon. Each Unit consists of 1 share of~~ Series ~~C Preferred stock (convertible at any time into 300 shares of the Company’s common stock) and 150 two year Warrants to purchase one share of the Company’s common stock at $0.005 per share.~~
● ~~Issued 125 Units~~ D Convertible Preferred stock upon ~~the~~ conversion of ~~$125,000~~$51,000 of the Company’s subsidiary’ preferred stock. Each Unit consists of 1 share of Series D Preferred stock (convertible at any time into 400 shares of the Company’s common stock) and 150 ~~two year~~two-year Warrants to purchase one share of the Company’s common stock at $0.01 per share.
~~Sold to two accredited investors 13,333,334 shares of common stock and two-year warrants, to purchase 6,666,667 shares of common stock at $0.004 per share, for $20,000.~~

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 5. OTHER INFORMATION

Not applicable.
22
ITEM 6. EXHIBITS

The following exhibits are filed with this report:

Exhibit
No. Description
31.1* Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a)
31.2* Certification of Principal Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a)
32.1* Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350
101.INS* XBRL Instance Document
101.SCH* XBRL Taxonomy Extension Schema
101.CAL* XBRL Taxonomy Extension Calculation Linkbase
101.DEF* XBRL Taxonomy Extension Definition Linkbase
101.LAB* XBRL Taxonomy Extension Label Linkbase
101.PRE* XBRL Taxonomy Extension Presentation Linkbase

* Filed herewith
23
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SPARTA COMMERCIAL SERVICES, INC.

Date: ~~December 21, 2020~~March 22, 2021 By: /s/ Anthony L. Havens
Anthony L. Havens, Chief Executive Officer,
Principal financial and accounting officer

24

	Series A Preferred Stock				Series B Preferred Stock				Series C Preferred Stock				Series D Preferred Stock				Common Stock				Common Stock to be issued				Additional Paid in			Accumulated			Non-controlling
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Capital			Deficit			Interest			Total
Balance April 30, 2020		125	$	12,500		-	$	-		4,005	$	4,005		1,132	$	1,132		627,092,904	$	627,093		84,786,511	$	84,787	$	49,406,954			(62,702,339	)	$	974,251			(11,591,617	)
Sale of preferred stock										140		140														69,860									70,000
Sale of common stock units																						13,333,334		13,333		6,667									20,000
Stock based compensation																										464,718									464,718
Shares issued for conversion of notes and interest																																			-
Shares issued for settlement of accounts payable														311		311										311,067									311,378
Options issued for settlement of accounts payable																										156,947									156,947
Shares issued for conversion of subsidiary preferred														51		51										(40	)					(11	)		-
Preferred dividend																													(191	)					(191	)
Net loss																													(2,216,867	)		1,972			(2,214,895	)
Balance July 31, 2020		125	$	12,500		-	$	-		4,145	$	4,145		1,494	$	1,494		627,092,904	$	627,093		98,119,845	$	98,120	$	50,416,173		$	(64,919,397	)	$	976,212		$	(12,783,660	)
Sale of preferred stocks										10		10		102	$	102																			112
Sale of common stock units																		66,700,000		66,700					$	(38,098	)	$	2,163					$	35,765
Common Stock to be issued																						23,333,000	$	23,333											23,333
Net loss																												$	(165,227	)	$	(7,895	)		(173,122	)

Balance October 31, 2020		125	$	12,500		-	$	-		4,155	$	4,155		1,596	$	1,596		693,792,904	$	693,793		121,452,845	$	121,453	$	50,378,075		$	(65,082,461	)	$	968,317		$	(12,902,572	)

Balance April 30, 2019		125	$	12,500		-	$	-		2,960	$	2,960		580	$	580		627,092,904	$	627,093		80,786,511	$	80,787	$	48,215,855		$	(61,915,119	)	$	961,320		$	(12,014,024	)
Sale of preferred stock										206		206														102,794									103,000
Shares issued for financing cost																																			-
Shares issued for conversion of notes and interest										92		92														45,737									45,829
Shares issued for settlement of accounts payable																						1,000,000		1,000		99,000									100,000
Shares issued for conversion of subsidiary preferred														125		125																(125	)		-
Reclassification of derivative liability																																			-
Preferred dividend																																			-
Net loss																													(1,748,966	)		3,383			(1,745,583	)
Balance July 31, 2019		125	$	12,500		-	$	-		3,258	$	3,258		705	$	705		627,092,904	$	627,093		81,786,511	$	81,787	$	48,463,386		$	(63,664,085	)	$	964,578		$	(13,510,778	)
Sale of preferred stock										392		392														195,608									196,000
Shares issued for conversion of subsidiary preferred														15		15																(15	)		-
Preferred dividend																													(191	)					(191	)
Net loss																													873,016			4,481			877,497
Balance October 31, 2019		125	$	12,500		-	$	-		3,650	$	4,695		1,425	$	1,977		627,092,904	$	627,093		81,786,511	$	85,787	$	49,850,093		$	(63,577,480	)	$	969,044		$	(12,437,472	)

	Series A				Series C				Series D										Common Stock						Additional						Non-
	Preferred Stock				Preferred Stock				Preferred Stock				Common Stock						to be issued						Paid in			Accumulated			controlling
	Shares		Amount		Shares		Amount		Shares		Amount		Shares			Amount			Shares			Amount			Capital			Deficit			Interest			Total
Balance April 30, 2020		125	$	12,500		4,005	$	4,005		1,132	$	1,132		627,092,904		$	627,093			84,786,511		$	84,787		$	49,406,954			(62,702,339	)	$	974,251			(11,591,617	)
Sale of preferred stock						140		140																		69,860									70,000
Sale of common stock units																				13,333,334			13,333			6,667									20,000
Stock based compensation																										464,718									464,718
Shares issued for conversion of notes and interest																																			-
Shares issued for settlement of accounts payable										311		311														311,067									311,378
Options issued for settlement of accounts payable																										156,947									156,947
Shares issued for conversion of subsidiary preferred										51		51														(40	)					(11	)		-
Preferred dividend																													(191	)					(191	)
Net loss																													(2,216,867	)		1,972			(2,214,895	)
Balance July 31, 2020		125	$	12,500		4,145	$	4,145		1,494	$	1,494		627,092,904		$	627,093			98,119,845		$	98,120		$	50,416,173		$	(64,919,397	)	$	976,212		$	(12,783,660	)
Sale of preferred stocks						10		10		102	$	102																							112
Sale of common stock units														66,700,000			66,700								$	(38,098	)	$	2,163						30,765
Common Stock tobe issued																				23,333,000		$	23,333												23,333
Net loss																												$	(165,227	)	$	(7,895	)		(173,122	)
Balance October 31, 2020		125	$	12,500		4,155	$	4,155		1,596	$	1,596		693,792,904		$	693,793			121,452,845		$	121,453		$	50,378,075		$	(65,082,461	)	$	968,317		$	(12,902,572	)
Sale of preferred stocks				26				19																											45
Shares tobe issued																				555,000			55,500			53,000									108,500
Sale of common Stocks														15,000,000			15,000									169,245					$	6,837			191,082
Shares canncelled due to reverse split														(708,792,904	)		(708,793	)		(122,007,845	)		(122,008	)											(830,801	)
Shares re-issued for stock split														7,094,758			709,476			1,220,078			44,571												754,047
Net loss																													(119,905	)		(903	)		(120,808	)
Balance January 31, 2021		125	$	12,526		4,155	$	4,174		1,596	$	1,596		7,094,758		$	709,476			1,220,078		$	99,516		$	50,600,320		$	(65,202,366	)	$	974,251		$	(12,800,507	)

Balance April 30, 2019		125	$	12,500		2,960	$	2,960		580	$	580		627,092,904		$	627,093			80,786,511		$	80,787		$	48,215,855		$	(61,915,119	)	$	961,320		$	(12,014,024	)
Sale of preferred stock						206		206																		102,794									103,000
Shares issued for financing cost																																			-
Shares issued for conversion of notes and interest						92		92																		45,737									45,829
Shares issued for settlement of accounts payable																				1,000,000			1,000			99,000									100,000
Shares issued for conversion of subsidiary preferred										125		125																				(125	)		-
Reclassification of derivative liability																																			-
Preferred dividend																																			-
Net loss																													(1,748,966	)		3,383			(1,745,583	)
Balance July 31, 2019		125	$	12,500		3,258	$	3,258		705	$	705		627,092,904		$	627,093			81,786,511		$	81,787		$	48,463,386		$	(63,664,085	)	$	964,578		$	(13,510,778	)
Sale of preferred stock						392		392																		195,608									196,000
Shares issued for conversion of subsidiary preferred										15		15																				(15	)		-
Preferred dividend																													(191	)					(191	)
Net loss																													873,016			4,481			877,497
Balance October 31, 2019		125	$	12,500		3,650	$	4,695		1,425	$	1,977		627,092,904		$	627,093			81,786,511		$	85,787		$	49,850,093		$	(63,577,480	)	$	969,044		$	(12,437,472	)
Sale of preferred stock						250		250																		124,750									125,000
Shares issued for conversion of subsidiary preferred										30		30																				(30	)		-
Reclassification of derivative liability																										345,787									345,787
Preferred dividend																																			-
Net loss																													(86,227	)		2,909			(83,318	)
Balance January 31, 2020		125	$	12,500		3,900	$	4,945		1,455	$	2,007		627,092,904		$	627,093			81,786,511		$	85,787		$	50,320,630		$	(63,663,707	)	$	971,923		$	(12,050,003	)

●	Level 1 — Quoted prices for identical instruments in active markets. Level 1 assets and liabilities include debt and equity securities and derivative contracts that are traded in an active exchange market, as well as certain securities that are highly liquid and are actively traded in over-the-counter markets.

●	Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model derived valuations in which all significant inputs and significant value drivers are observable in active markets.

●	Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value measurements. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques based on significant unobservable inputs, as well as management judgments or estimates that are significant to valuation.

Notes Payable	October 31, 2020		April 30, 2020		January 31, 2021		April 30, 2020
Notes convertible at holder’s option	$	2,590,309	$	2,590,309	$	2,522,925	$	2,590,309
Notes convertible at Company’s option		75,700		75,700		75,700		75,700
Non-convertible notes payable		2,372,646		2,276,315		2,131,650		2,276,315
Subtotal		5,038,655		4,942,324		4,730,275		4,942,324

Less debt discount		-		-		-		-
	$	5,038,655	$	4,942,324	$	4,730,275	$	5,038,655

Significant Assumptions:

Risk free interest rate	Ranging from	0.11 to 0.2	%
Expected stock price volatility	Ranging from	135 to 273	%
Expected dividend payout
Expected life in years	Ranging from	0.25 to 3.0 Years

	●	sold 848 Units C Convertible Preferred stock for $424,000. Each Unit consists of 1 share of Series C Preferred stock (convertible at any time into 300 shares of the Company’s common stock) and 150 two year Warrants to purchase one share of the Company’s common stock at $0.005 per share,
	●	issued 92 Units of the Company’s Series C Convertible Preferred stock upon conversion of $45,829 of notes payable and accrued interest thereon. Each Unit consists of 1 share of Series C Preferred stock (convertible at any time into 300 shares of the Company’s common stock (subject to certain percentage ownership provisions) and 150 two year Warrants to purchase one share of the Company’s common stock at $0.005 per share,
	●	issued 170 Units of the Company’s Series D Convertible Preferred stock in exchange for $170,000 worth of the Company’s subsidiary’s preferred stock. Each Unit consists of 1 share of Series D Preferred stock (convertible at any time into 400 shares of the Company’s common stock (subject to certain percentage ownership provisions) and 150 two year Warrants to purchase one share of the Company’s common stock at $0.01 per share.

	Fair Value at		Fair Value Measurement Using
	October 31, 2020		Level 1		Level 2		Level 3
Derivative liabilities	$	4,252,446		-		-	$	4,252,446

	●	Issued 311 Units Series D Convertible Preferred stock in settlement of $311,378 in accounts payable. Each Unit consists of 1 share of Series D Preferred stock (convertible at any time into 400 shares of the Company’s common stock) and 150 two year Warrants to purchase one share of the Company’s common stock at $0.01 per share.

	●	Issued 51 Units Series D Convertible Preferred stock upon conversion of $51,000 of the Company’s subsidiary’ preferred stock. Each Unit consists of 1 share of Series D Preferred stock (convertible at any time into 400 shares of the Company’s common stock) and 150 two-year Warrants to purchase one share of the Company’s common stock at $0.01 per share.

	●	~~Issued 125~~issued 170 Units of the Company’s Series D Convertible Preferred stock ~~upon the conversion of $125,000~~in exchange for $170,000 worth of the Company’s ~~subsidiary’~~subsidiary’s preferred stock. Each Unit consists of 1 share of Series D Preferred stock (convertible at any time into 400 shares of the Company’s common ~~stock)~~stock (subject to certain percentage ownership provisions) and 150 two year Warrants to purchase one share of the Company’s common stock at $0.01 per ~~share.~~
		share,
	●	~~Accrued~~accrued as to be issued 1,000,000 shares of ~~restricted~~the Company’s common stock ~~in consideration~~valued at $100,000 upon the forgiveness of ~~the cancellation of $311,127 of accounts payable.~~accounts.

●		lack of documented policies and procedures;
●		we have no audit committee;
●		there is a risk of management override given that our officers have a high degree of involvement in our day-to-day operations.
●		there is no effective separation of duties, which includes monitoring controls, between the members of management.

	●	Sold ~~206~~150 Units Series C Convertible Preferred stock for ~~$103,000.~~$70,000. Each Unit consists of 1 share of Series C Preferred stock (convertible at any time into 300 shares of the Company’s common stock) and 150 ~~two year~~two-year Warrants to purchase one share of the Company’s common stock at $0.005 per share

	●	Issued 311 Units Series D Convertible Preferred stock in settlement of $311,378 in accounts payable. Each Unit consists of 1 share of Series D Preferred stock (convertible at any time into 400 shares of the Company’s common stock) and 150 two-year Warrants to purchase one share of the Company’s common stock at $0.01 per share.

	●	Issued 9251 Units ~~C Convertible Preferred stock upon the conversion of $45,829 of notes payable and accrued interest thereon. Each Unit consists of 1 share of~~ Series ~~C Preferred stock (convertible at any time into 300 shares of the Company’s common stock) and 150 two year Warrants to purchase one share of the Company’s common stock at $0.005 per share.~~

	●	~~Issued 125 Units~~ D Convertible Preferred stock upon ~~the~~ conversion of ~~$125,000~~$51,000 of the Company’s subsidiary’ preferred stock. Each Unit consists of 1 share of Series D Preferred stock (convertible at any time into 400 shares of the Company’s common stock) and 150 ~~two year~~two-year Warrants to purchase one share of the Company’s common stock at $0.01 per share.

Exhibit No.		Description
31.1*		Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a)
31.2*		Certification of Principal Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a)
32.1*		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350
101.INS*		XBRL Instance Document
101.SCH*		XBRL Taxonomy Extension Schema
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase
101.DEF*		XBRL Taxonomy Extension Definition Linkbase
101.LAB*		XBRL Taxonomy Extension Label Linkbase
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase

* Filed herewith

	SPARTA COMMERCIAL SERVICES, INC.

Date: ~~December 21, 2020~~March 22, 2021	By:	/s/ Anthony L. Havens
		Anthony L. Havens, Chief Executive Officer,
		Principal financial and accounting officer