UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended: ~~December 31, 2021~~June 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 000-55997

SHARING SERVICES GLOBAL CORPORATION

(Exact name of registrant as specified in its charter)

Nevada

30-0869786

(State or other jurisdiction
of

incorporation or organization)

(I.R.S. Employer

Identification No.)

1700 Coit Road, Suite 290, Plano, Texas		75075
(Address of principal executive offices)		(Zip Code)

(469) 304-9400

(Registrant’s telephone number, including area code)

None

(Former name, former address and former fiscal year, if changed since last report)

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

Title of each class		Trading Symbol(s)		Name of each exchange in which registered
N/A		N/A		N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

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

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	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 ☐~~Yes☐ No ☒

As of ~~February 9,~~August 12, 2022, there were ~~238,923,969~~262,832,833 shares of the issuer’s Class A Common Stock outstanding.

TABLE OF CONTENTS

PART I—FINANCIAL INFORMATION
Item 1. Financial Statements	4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	2224
Item 3. Quantitative and Qualitative Disclosures About Market Risk	3231
Item 4. Controls and Procedures	3231

PART II—OTHER INFORMATION
Item 1. Legal Proceedings	3332
Item 1A. Risk Factors	3332
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	3332
Item 3. Defaults Upon Senior Securities	3332
Item 4. Mine Safety Disclosures	3332
Item 5. Other Information	3332
Item 6. Exhibits	3433

In its fiscal year 2021, the Company changed its fiscal year-end from a fiscal year ending on April 30^th to a fiscal year ending on March 31^st~~. In~~ in this Quarterly Report, references to “the Company,” “Sharing Services,” “our company,” “we,” “our,” ~~“ours”~~“ours,” and “us” refer to Sharing Services Global Corporation and its consolidated subsidiaries unless otherwise indicated or the context otherwise requires.

cautionary notice regarding forward-looking statements

Statements in this Quarterly Report and in any documents incorporated by reference herein which are not purely historical, or which depend upon future events, may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, ~~(the “Securities Act”),~~ and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements generally contain words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “potential,” “project,” “target,” “can,” “could,” “may,” “should,” “will,” “will likely,” “would,” or the negative of such words and/or similar expressions. However, not all forward-looking statements contain these words.

Readers should not place undue reliance upon the Company’s forward-looking statements since such statements speak only as of the date they were made. Such forward-looking statements may refer to events that ultimately do not occur, or may occur to a different extent, or occur at a different time than such forward-looking statements describe. Except to the extent required by federal securities laws, the Company undertakes no obligation to publicly update or revise any forward-looking statements contained in this Quarterly Report and in any documents incorporated by reference herein, whether as a result of new information, future events, or otherwise. The Company acknowledges that all forward-looking statements involve risks and uncertainties that could cause actual events and/or results to differ materially from the events and/or results described in the forward-looking statements.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

The following unaudited financial statements: condensed consolidated balance sheets as of ~~December 31, 2021, and March 31, 2021, the~~June 30, 2022, condensed consolidated statements of operations ~~for the three~~ and ~~nine months ended December 31, 2021, and January 31, 2021, and the~~comprehensive income (loss), condensed consolidated statements of cash flows, and condensed consolidated statements of changes in stockholders’ equity for the ~~nine~~three months ended ~~December 31, 2021,~~June 30, 2022 and ~~January 31,~~ 2021, are those of Sharing Services Global Corporation and its ~~consolidated~~ subsidiaries.

Index to Unaudited Condensed Consolidated Financial Statements

	Page

Condensed consolidated balance sheets as of ~~December 31, 2021,~~June 30, 2022, and March 31, ~~2021~~2022	5

Condensed consolidated statements of operations and comprehensive loss for the three ~~and nine~~ months ended ~~December 31,~~June 30, 2022, and June 30, 2021 ~~and January 31, 2021~~	6

Condensed consolidated statements of cash flows for the ~~nine~~three months ended ~~December 31,~~June 30, 2022, and June 30, 2021 ~~and January 31, 2021~~	7

Condensed consolidated statements of changes in stockholders’ equity for the ~~nine~~three months ended ~~December 31,~~June 30, 2022, and June 30, 2021 ~~and January 31, 2021~~	8

Notes to the unaudited condensed consolidated financial statements	9

SHARING SERVICES GLOBAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	December 31, 2021			March 31, 2021				June 30, 2022			March 31, 2022
	(Unaudited)						(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	19,780,531		$	12,144,409		$	14,453,492		$	17,023,266
Trade accounts receivable, net		1,615,498			1,514,359			1,889,118			1,682,958
Income taxes receivable		306,932			1,011,740			-			300,000
Notes receivable, net		208,289			94,600
Inventory, net		4,818,291			2,471,310			4,132,781			4,374,236
Other current assets		1,764,061			2,403,634
Other current assets, net								2,428,486			3,511,282
Total Current Assets		28,493,602			19,640,052			22,903,877			26,891,742
Property and equipment, net		9,791,938			887,950			9,586,821			9,585,141
Right-of-use assets, net		258,790			428,075			527,492			593,389
Deferred income taxes, net		-			1,873,170			81,205			81,205
Investment in unconsolidated entities		6,183,856			-
Investment in unconsolidated entities, net								9,929,294			5,063,940
Intangible assets		724,498			188,567			652,761			688,670
Other assets		207,659			219,142
Other assets, net								170,597			260,637
TOTAL ASSETS	$	45,660,343		$	23,236,956		$	43,852,047		$	43,164,724

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	658,308		$	1,295,174		$	575,000		$	985,139
Accrued sales commission payable		3,932,772			4,713,777			3,247,913			3,745,481
Employee stock warrants liability		1,069,967			3,132,161			344,463			452,050
State and local taxes payable		1,308,293			1,048,717			1,381,888			1,339,366
Note payable		-			1,040,400
Note payable, related party								5,687,500			-
Accrued and other current liabilities		3,305,973			4,827,414			2,669,096			3,079,782
Current portion of convertible notes payable, net of unamortized debt discount of $7,709 at December 31 and $369 at March 31		142,291			99,631
Convertible notes payable, related parties, net of unamortized debt discount and unamortized deferred loan cost of 20,033,135 and 20,151,230 as of June 30, 2022, and March 31, 2022, respectively.								7,016,865			9,898,770
Total Current Liabilities		10,417,604			16,157,274			20,922,725			19,500,588
Deferred income taxes, net		4,278,331			-
Convertible notes payable, net of unamortized debt discount of $20,348,540 and unamortized deferred financing costs of $2,260,949 at December 31 and unamortized debt discount of $15,238 at March 31		7,390,511			34,762
Deferred income tax liability, net								550,780			-
Settlement liability, long term portion		373,676			808,071			-			373,677
Lease liability, long-term		2,491			77,810			461,515			461,515
TOTAL LIABILITIES		22,462,613			17,077,917			21,935,020			20,335,780
Commitments and contingencies		-						-
Stockholders’ Equity
Preferred stock, $0.0001 par value, 200,000,000 shares authorized:		-
Series A convertible preferred stock, $0.0001 par value, 100,000,000 shares designated, 3,100,000 shares and 5,100,000 shares issued and outstanding at December 31 and March 31, respectively		310			510
Series B convertible preferred stock, $0.0001 par value, 10,000,000 shares designated, 0 shares issued and outstanding at December 31 and March 31		-			-
Series C convertible preferred stock, $0.0001 par value, 10,000,000 shares designated, 3,220,000 shares and 3,230,000 shares issued and outstanding at December 31 and March 31, respectively		322			323
Preferred stock value
Common Stock, $0.0001 par value, 800,000,000 Class A shares authorized, 238,923,969 shares and 160,100,769 shares issued and outstanding at December 31 and March 31, respectively		23,892			16,010
Common Stock, $0.0001 par value, 10,000,000 Class B shares authorized, 0 shares issued and outstanding at December 31 and March 31		-			-
Series A convertible preferred stock, $0.0001 par value, 100,000,000 shares designated, 3,100,000 shares issued and outstanding as of June 30, 2022, and March 31, 2022, respectively								310			310
Series B convertible preferred stock, $0.0001 par value, 10,000,000 shares designated, 0 shares issued and outstanding at June 30 and March 31								-			-
Series C convertible preferred stock, $0.0001 par value, 10,000,000 shares designated, 3,220,000 shares and 3,220,000 shares issued and outstanding at June 30 and March 31, 2022, respectively								322			322
Preferred stock, value								322			322
Common Stock, $0.0001 par value, 800,000,000 shares authorized:
Class A common stock, $0.0001 par value, 790,000,000 shares designated, 288,923,969 shares and 288,923,969 shares issued and outstanding at June 30 and March 31, 2022, respectively								28,892			28,892
Class B common stock, $0.0001 par value, 10,000,000 shares designated, 0 shares issued and outstanding								-			-
Common stock value		23,892			16,010			-			-
Treasury Stock, 26,091,136 shares, at cost								(626,187	)		-
Additional paid in capital		77,238,719			43,757,768			81,950,266			80,738,719
Shares to be issued		12,146			12,146			12,146			12,146
Accumulated deficit		(53,982,772	)		(37,627,718	)		(59,239,346	)		(57,886,336	)
Cumulative translation adjustments		(94,887	)		-
Accumulated other comprehensive loss								(209,376	)		(65,109	)
Total Stockholders’ Equity		23,197,730			6,159,039			21,917,027			22,828,944
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	45,660,343		$	23,236,956		$	43,852,047		$	43,164,724

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

SHARING SERVICES GLOBAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

	December 31, 2021			January 31, 2021			December 31, 2021			January 31, 2021
	Three Months Ended						Nine Months Ended						Three Months Ended
	December 31, 2021			January 31, 2021			December 31, 2021			January 31, 2021			June 30, 2022			June 30, 2021
Net sales	$	7,110,532		$	14,303,054		$	28,195,359		$	55,642,560		$	5,303,618		$	11,211,526
Cost of goods sold		2,328,583			4,744,968			8,606,833			15,693,600			1,657,028			3,353,810
Gross profit		4,781,949			9,558,086			19,588,526			39,948,960			3,646,590			7,857,716
Operating expenses
Selling and marketing expenses		4,219,080			6,984,962			14,391,715			25,355,881			2,757,800			5,150,475
General and administrative expenses		3,612,803			3,698,043			13,881,814			15,359,181			4,550,903			4,728,310
Total operating expenses		7,831,883			10,683,005			28,273,529			40,715,062			7,308,703			9,878,785
Operating loss		(3,049,934	)		(1,124,919	)		(8,685,003	)		(766,102	)		(3,662,113	)		(2,021,069	)
Other income (expense)
Interest expense, net		(3,112,039	)		(24,968	)		(9,168,411	)		(42,367	)		(3,120,054	)		(2,930,014	)
Litigation settlements and other														69,229			(23,605	)
Unrealized gain on investments														4,884,173
Gain (loss) on employee warrants liability		154,487			(234,145	)		1,935,588			672,230			114,960			1,134,170
Gain on extinguishment of debt		-			-			1,040,400			-			-			1,040,400
Unrealized gain on investment		1,201,510			-			3,328,483			-
Foreign currency losses and other non-operating expenses, net		(309,113	)		(20,904	)		(335,163	)		(154,726	)
Other non-operating expense														20,938			-
Total other income (expense), net		(2,065,155	)		(280,017	)		(3,199,103	)		475,137			1,969,246			(779,049	)
Loss before income taxes		(5,115,089	)		(1,404,936	)		(11,884,106	)		(290,965	)		(1,692,867	)		(2,800,118	)
Income tax provision		1,825,073			35,758			1,318,827			391,749
Income tax (benefit) provision														(339,857	)		747,889
Net loss	$	(6,940,162	)	$	(1,440,694	)	$	(13,202,933	)	$	(682,714	)	$	(1,353,010	)	$	(3,548,007	)
Other comprehensive loss (net of tax):
Other Comprehensive Income/Loss (net of tax):
Currency translation adjustments		(118,860	)		-			(94,887	)		-			(144,267	)		32,203
Total other comprehensive loss		(118,860	)		-			(94,887	)		-
Total other comprehensive income (loss)														(144,267	)		32,203
Comprehensive loss		(7,059,022	)		(1,440,694	)		(13,297,820	)		(682,714	)	$	(1,497,277	)	$	(3,515,804	)
Loss per share:
Net income (loss) per share:
Basic	$	(0.04	)	$	(0.01	)	$	(0.07	)	$	(0.00	)	$	(0.01	)	$	(0.02	)
Diluted	$	(0.04	)	$	(0.01	)	$	(0.07	)	$	(0.00	)	$	(0.00	)	$	(0.02	)
Weighted average shares:
Basic		192,112,139			177,722,157			188,051,336			173,572,531			278,315,485			184,435,274
Diluted		192,112,139			177,722,157			188,051,336			173,572,531			278,315,485			184,435,274

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

SHARING SERVICES GLOBAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)


	Nine Months Ended						Three Months Ended
	December 31, 2021			January 31, 2021			June 30, 2022			June 30, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(13,202,933	)	$	(682,714	)	$	(1,353,010	)	$	(3,548,007	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		341,775			128,336			171,035			87,114
Stock-based compensation expense		(1,502,195	)		3,360,070
Stock-based compensation gain								(107,588	)		(931,533	)
Deferred income tax benefit		(3,977,918	)		(66,622	)		-			(717,960	)
Amortization of debt discount and other		9,173,753			15,362			3,412,427			2,356,507
Gain on extinguishment of debt		(1,040,400	)		-			(324,230	)		(1,040,400	)
Loss (gain) on investment and other assets		(2,114,970	)		20,000
Unrealized gain on investments								(4,884,173	)		-
Provision for obsolete inventory		448,484			990,831			108,055			116,334
Changes in operating assets and liabilities:
Accounts receivable		(101,829	)		28,571			(206,163	)		4,755
Inventory		(2,847,188	)		664,300			(111	)		(3,450,228	)
Other current assets		(477,706	)		(1,562,044	)		298,812			730,387
Security deposits		(1,941	)		-
Other assets								(19,950	)		(89,935	)
Accounts payable		(631,412	)		28,050			374,997			959,990
Income taxes payable		5,181,561			(266,299	)		(30,259	)		1,446,896
Lease liability		(7,523	)		1,638			4,162			1,621
Accrued and other liabilities		(2,418,406	)		(7,842,551	)		(1,220,512	)		(1,942,929	)
Net Cash Used in Operating Activities		(13,178,848	)		(5,183,072	)		(3,776,508	)		(6,017,388	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for property and equipment		(9,162,617	)		(951,914	)		(136,807	)		(244,728	)
Collection of (payment for) notes receivable, net		(113,689	)		98,047
Payment for acquisition and other		(2,937,000	)		(8,400	)
Collection of notes receivable											10,070
Net Cash Used in Investing Activities		(12,213,306	)		(862,267	)		(136,807	)		(234,658	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock		3,073,607			3,022,496
Repurchase of common stock		-			(899,500	)
Retirement of loan								(3,270,174	)		-
Proceeds from issuance of promissory notes		30,000,000			1,040,400			5,687,500			-
Common stock received on litigation settlement								(1,043,645	)		-
Proceeds from convertible notes								-			30,000,000
Net Cash Provided by Financing Activities		33,073,607			3,163,396			1,373,681			30,000,000
IMPACT OF CURRENCY RATE CHANGES ON CASH		(45,331	)		-			(30,140	)		26,304
Increase (decrease) in cash and cash equivalents		7,636,122			(2,881,943	)		(2,569,774	)		23,774,258
Cash and cash equivalents, beginning of period		12,144,409			11,742,728			17,023,266			12,144,409
Cash and cash equivalents, end of period	$	19,780,531		$	8,860,785		$	14,453,492		$	35,918,667

Supplemental cash flow information
Cash paid for interest	$	52,331		$	4,702		$	481,043		$	14,442
Cash paid for income taxes	$	47,412		$	820,688		$	-		$	-
Supplemented disclosure of non-cash investing and financing activities:
Stock issued for financing fees and prepaid interest on debt		5,400,000			-		$	-		$	5,400,000
Investment origination fee collected in shares of investee stock		500,000			-
Settlement obligation satisfied with shares of common stock	$	-		$	400,000

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

SHARING SERVICES GLOBAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

Number of
Shares Par
Value Number of
Shares Par
Value Number of
Shares Par
Value Number of
Shares Par
Value Paid in
Capital Shares to
be Issued Accumulated
Deficit Translation
Adjustments Total
Series A Preferred Stock Series B Preferred Stock Series C Preferred Stock Class A and Class B Common Stock Additional Cumulative
Number of
Shares Par
Value Number of
Shares Par
Value Number of
Shares Par
Value Number of
Shares Par
Value Paid in
Capital Subscription
Receivable Shares to
be Issued Treasury
Stock Accumulated
Deficit Translation
Adjustments Total
Balance – March 31, 2021 5,100,000 $ 510                   - $ - 3,230,000 $ 323 160,100,769 $ 16,010 $ 43,757,768                   -   $ 12,146             - $ (37,627,718 ) $ - $ 6,159,039
Common stock issued for cash - - - - - - 50,000,000 5,000 5,245,000                - (2,250,000 ) - 3,000,000
Common stock issued for deferred financing costs and prepaid interest on debt - - - - - - 27,000,000 2,700 6,477,300 - (1,080,000 ) - 5,400,000
Conversions or retirements of preferred stock (2,000,000 ) (200 ) - - (10,000 ) (1 ) 10,000 1 200 - - - -
Issuance of debt with beneficial conversion feature and in-the-money stock warrant, net of tax - - - - - - - - 21,330,000 - - - 21,330,000
Expiration of common stock puts - - - - - - - - - - 177,879 - 177,879
Stock-based compensation expense - - - - - - - - 280,000 - - - 280,000
Stock warrants exercised - - - - - - 1,813,200 181 148,451 - - - 148,632
Currency translation adjustments - - - - - - - - - - - (94,887 ) (94,887 )
Common stock issued upon settlement of litigation
Common stock issued upon settlement of litigation, shares
Preferred stock retired
Preferred stock retired, shares
Repurchase of common stock
Repurchase of common stock, shares
Proceeds from common stock warrants exercised
Common stock redeemed upon settlement of litigation
Common stock redeemed upon settlement of litigation, shares
Net loss - - - - - - - - - - - - (13,202,933 ) - (13,202,933 )
Balance – December 31, 2021 3,100,000 $ 310 - $ - 3,220,000 $ 322 238,923,969 $ 23,892 $ 77,238,719 - $ 12,146 - $ (53,982,772 ) $ (94,887 ) $ 23,197,730

Series A Preferred Stock Series B Preferred Stock Series C
Preferred Stock Class A and Class B Common Stock Accumulated
Number Number Number Number Additional Shares
Other

of Par of Par of Par of Par Paid in to be Treasury Accumulated Comprehensive
Shares Value Shares Value Shares Value Shares Value Capital Issued Stock Deficit
Loss
Total
Balance – March 31, 2022 3,100,000 $ 310    - $ - 3,220,000 $ 322 288,923,969 $ 28,892 $ 80,738,719 $ 12,146 $ - (57,886,336 ) $ (65,109 ) - $ 22,828,944
Refinancing of debt and detachable warrants - - - - - - - - 1,211,547 - - - 1,211,547
Repurchase of 26,091,136 shares of Common Stock

(626,187 ) (626,187 )
Currency translation adjustments - - - - - - - - - - - (144,267 ) (144,267 )
Net loss - - - - - - - - - - (1,353,010 ) (1,353,010 )
Balance – June 30, 2022 3,100,000 $ 310 - $ - 3,220,000 $ 322 288,923,969 $ 28,892 $ 81,950,266 $ 12,146 (626,187 ) (59,239,346 ) $ (209,376 ) - $ 21,917,027
Number of
Shares Par
Value Number of
Shares Par
Value Number of
Shares Par
Value Number of
Shares Par
Value Paid in
Capital Subscription
Receivable Shares to
be Issued Treasury
Stock Accumulated
Deficit Total
Series A Preferred Stock Series B Preferred Stock Series C Preferred Stock Class A and Class B Common Stock Additional
Number of
Shares Par
Value Number of
Shares Par
Value Number of
Shares Par
Value Number of
Shares Par
Value Paid in
Capital Subscription
Receivable Shares to
be Issued Treasury
Stock Accumulated
Deficit Total
Balance – April 30, 2020 32,478,750 $ 3,248 10,000,000 $ 1,000 3,490,000 $ 349 136,072,386 $ 13,607 $ 38,871,057 $ (114,405 ) $ 11,785 $ (1,532,355 ) $ (33,992,697 ) $ 3,261,589
Balance 32,478,750 $ 3,248 10,000,000 $ 1,000 3,490,000 $ 349 136,072,386 $ 13,607 $ 38,871,057 $ (114,405 ) $ 11,785 $ (1,532,355 ) $ (33,992,697 ) $ 3,261,589
Common stock issued for cash - - - - - - 30,000,000 3,000 5,397,000 -                  - - (2,400,000 ) 3,000,000
Common stock issued upon settlement of litigation - - - - - - 10,000,000 1,000 399,000 - - - - 400,000
Preferred stock retired (5,628,750 ) (563 ) - - - - - - 563 - - - - -
Conversions of preferred stock (21,750,000 ) (2,175 ) (10,000,000 ) (1,000 ) (240,000 ) (24 ) 31,990,000 3,199 - - - - - -
Repurchase of common stock - - - - - - (17,500,000 ) (1,750 ) (897,750 ) - - - - (899,500 )
Common stock redeemed upon settlement of litigation - - - - - - (38,308,864 ) (3,831 ) (1,528,524 ) - - 1,532,355 - -
Stock-based compensation expense - - - - - - - - 2,201,004 - - - - 2,201,004
Proceeds from common stock warrants exercised - - - - - - - - - - 22,496 - - 22,496
Stock warrants exercised - - - - - - 7,549,247 755 (572,929 ) - (20,249 ) - - (592,423 )
Net loss - - - - - - - - - - - - (682,714 ) (682,714 )
Balance – January 31, 2021 5,100,000 $ 510 - $ - 3,250,000 $ 325 159,802,769 $ 15,980 $ 43,869,421 $ (114,405 ) $ 14,032 $ - $ (37,075,411 ) $ 6,710,452
Balance 5,100,000 $ 510 - $ - 3,250,000 $ 325 159,802,769 $ 15,980 $ 43,869,421 $ (114,405 ) $ 14,032 $ - $ (37,075,411 ) $ 6,710,452

Series A
Preferred Stock Series B Preferred Stock Series C
Preferred Stock Class A and Class B Common Stock Accumulated
Number Number Number Number Additional Shares Other
of Par of Par of Par of Par Paid in to be Accumulated Comprehensive
Shares Value Shares Value Shares Value Shares Value Capital Issued Deficit Loss Total
Balance – March 31, 2021 5,100,000 $ 510 - $ - 3,230,000 $ 323 160,100,769 $ 16,010 $ 43,757,768 $ 12,146 - $ (37,627,718 ) - $ - $ 6,159,039
Beginning balance, value 5,100,000 510 - - 3,230,000 323 160,100,769 16,010 $ 43,757,768 12,146 - (37,627,718 ) - - 6,159,039
Common stock issued for deferred financing costs and prepaid interest on debt - - - - - - 27,000,000 2,700 6,477,300 - - (1,080,000 ) - - 5,400,000
Conversions of preferred stock - - (10,000 ) (1 ) 10,000 1 - - - - -
Issuance of debt with beneficial conversion feature and in-the-money stock warrant, net of tax - - - - - - - - 21,330,000 - - - 21,330,000
Expiration of common stock puts - - - - - - - - - - 177,879 - 177,879
Stock-based compensation expense - - - - - - - - 280,000 - - - 280,000
Currency translation adjustments - - - - - - - - - - - 32,203 32,203
Net loss - - - - - - - - - - (3,548,007 ) - (3,548,007 )
Balance – June 30, 2021 5,100,000 $ 510 - $ - 3,220,000 $ 322 187,110,769 $ 18,711 $ 71,845,068 $ 12,146 - $ (42,077,846 ) - $ 32,203 $ 29,831,114
Ending balance, value 5,100,000 $ 510 - - 3,220,000 $ 322 187,110,769 $ 18,711 $ 71,845,068 $ 12,146 - $ (42,077,846 ) - $ 32,203 $ 29,831,114
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
8

SHARING SERVICES GLOBAL CORPORATION AND SUBSIDIARIES
NOTES TO ~~UNAUDITED~~ CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 –~~DESCRIPTION OF OPERATIONS~~ORGANIZATION AND ~~BASIS OF PRESENTATION~~BUSINESS
Description of Operations

Sharing Services Global Corporation and subsidiaries (“Sharing ~~Services”) and its subsidiaries (collectively,~~Services,” “we,” or the “Company”) aim to build shareholder value by developing or ~~investing in innovative emerging~~acquiring businesses that augment the Company’s product and services portfolio, business competencies, and geographic reach. ~~Sharing Services~~
The Company was incorporated in the State of Nevada in April 2015.

~~In March 2021, Sharing Services changed its fiscal year-end from a fiscal year ending on April 30~~^th ~~to a fiscal year ending on March 31~~^st. In connection with its change in fiscal year-end, the Company has decided not to restate the information reported for prior accounting periods, because: (a) the Company’s businesses are not inherently seasonal, (b) the change in fiscal years did not otherwise materially distort comparability of the Company’s results of operations and cash flows, and (c) the cost to restate the data reported for prior periods outweighs the usefulness of such restated data. Accordingly, the condensed consolidated financial statements included herein reflect the results of operations and cash flows for the nine months ended December 31, 2021 (275 days) compared to the nine months ended January 31, 2021 (276 days).
Health and Wellness Products - The Company’s subsidiaries operating in the health and wellness products industry, which accounted for substantially all the Company’s consolidated net sales during the periods included in this Quarterly Report, market their products primarily through an independent sales force, using a direct selling business model under the proprietary brand “The Happy Co.” Currently, The Happy Co.^TM markets and distributes its health and wellness products primarily in the United States, ~~(the “U.S.”),~~ Canada, the Republic of Korea, and other countries in the Asia Pacific region. In addition, certain of the Company’s domestic subsidiaries market its health and wellness products on a “not-for-resale” basis to consumers in other countries outside the U.S.~~, including Australia, New Zealand, and parts of Europe.~~
Subscription-Based Travel Services - Through its subsidiary, Hapi Travel Destinations, the Company is preparing to launch a subscription-based travel services business under the proprietary brand “Hapi Travel.” The Hapi Travel^TM services are designed to offer the opportunity to travel to destinations in the U.S. and abroad to people of all ages, demographics, and economic backgrounds. Hapi Travel^TM will also provide entrepreneurial opportunities to its subscribers by capitalizing on both the direct selling model and the retail travel business model.
Company-Owned and Franchised Destination Cafes – Sharing Services ~~and~~recently entered into a Letter of Intent (the “LOI”) to acquire the exclusive franchise rights in North America to the brand “Hapi Café” from Hapi Café, ~~Inc,~~Inc., a company affiliated with Heng Fai Ambrose Chan, a Director of the Company, ~~entered into~~subject to formalization of a Master Franchise ~~Agreement (the “MFA”) pursuant to which Sharing Services acquired the exclusive franchise rights in North America to the brand “Hapi Café.”~~Agreement. Under the proposed terms, ~~of the MFA,~~ Sharing Services, directly or through its subsidiaries, ~~has the right to~~will operate no less than five (5) corporate-owned stores and can offer to the public sub-franchise rights to own and operate other stores, subject to the terms and conditions contained in the ~~MFA.~~LOI and the ultimate Master Franchise Agreement. Each corporate-owned or franchised Hapi Café^TM store will offer to customers and Brand Partners seeking a healthier lifestyle: (a) a selection of functional and healthy food and beverages, (b) a pleasant workspace with free Wi-Fi service, (c) extensive physical fitness, nutrition management and personal workout print and video content, and (d) our Hapi Travel^TM subsidiary’s proprietary travel services.
Targeted Ownership Interests – Directly or through its subsidiaries, the Company from time to time will invest in emerging businesses, using a combination of debt and equity financing, in efforts to leverage the Company’s resources and business competencies and to participate in ~~the growth of~~ these ~~businesses.~~businesses’ growth. As part of the Company’s commitment to these emerging businesses’ success, the Company, directly or through its subsidiaries, also ~~plans to offer~~offers non-traditional inventory financing, equity or debt financing, order fulfillment and logistic, CRM “Back Office” solutions, and other success-critical services to these businesses.
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The unaudited condensed consolidated interim financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These unaudited condensed consolidated interim financial statements reflect all adjustments which are of a normal recurring nature, and which are, in the opinion of management, necessary to present fairly the results of the interim period presented. Certain note disclosures normally included in annual financial statements prepared in accordance with US GAAP have been condensed or omitted as permitted pursuant to the rules and regulations of the ~~SEC.~~SEC, although we believe that the disclosures made are adequate to make the information not misleading. These ~~unaudited~~ condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s ~~Transition~~Annual Report on Form 10-K for the ~~transition period~~fiscal year ended March 31, ~~2021.~~2022. Unless so stated, the disclosures in the accompanying ~~unaudited~~ condensed consolidated financial statements do not repeal the disclosures in our consolidated financial statements for ~~the transition period~~year ended March 31, ~~2021.~~2022.

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~~During the 11-month transition period ended March 31, 2021, and the nine months ended December 31, 2021, consolidated net loss was $1,235,021~~ ~~and $13,202,933~~, ~~respectively. During the 11-month transition period ended March 31, 2021, and the nine months ended December 31, 2021, consolidated cash used in operating activities was $1,566,970~~ ~~and $13,178,848~~, ~~respectively. As of December 31, 2021, consolidated cash and cash equivalents are $19,780,531~~. In the near term, the Company anticipates continuing to use operating cash due to: (i) a sustained reduction in sales; (ii) investments in new geographic markets, new lines of business, and/or new products; and (iii) costs associated with the due diligence associated with purchasing strategic assets and companies. The Company believes that funds from the $30 million convertible loan received from Decentralized Sharing Systems, Inc. (“DSSI”) on April 5, 2021 (see Note 8 below) and proceeds from investments by DSSI into the Company, provide the Company with sufficient liquidity to sustain the Company’s plans and operations at current levels over the next twelve months.
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.
~~Reclassifications~~
Certain reclassifications have been made to the prior year data to conform to the current period’s presentation, primarily consisting, as of March 31, 2021, reclassification of the liability associated with uncertain tax positions of $~~904,643~~ ~~and, for the nine months ended January 31, 2021, reclassification of the gain on employee warrants liability of $672,230~~.
Use of Estimates and Assumptions

The preparation of financial statements in accordance with US GAAP requires the use of judgment and requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosures about contingent assets and liabilities, if any. Matters that require the use of estimates and assumptions include: the recoverability of notes and accounts receivable, the valuation of inventory, the useful lives of fixed assets, the assessment of long-lived assets for impairment, the nature and timing of satisfaction of performance obligations resulting from contracts with customers, allocation of the transaction price to multiple performance obligations in a sales transaction, the measurement and recognition of right-of-use assets and related lease liabilities, the valuation of stock-based compensation awards, the measurement and recognition of uncertain tax positions, and the valuation of loss contingencies, if any. Actual results may differ from these estimates in amounts that ~~are~~may be material to our consolidated financial statements. We believe that the estimates and assumptions used in the preparation of our consolidated financial statements are reasonable.
Cash and Cash Equivalents ~~and Restricted Cash~~

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. ~~The Company includes in its consolidated cash~~Cash and cash equivalents ~~credit card receivables due from its~~include recent customer remittances deposited with our merchant processors at the balance sheet date, which ~~are expected to be settled~~generally settle within 24 to 72 hours. ~~At December 31, 2021,~~As of June 30, 2022, and March 31, ~~2021, such credit card receivables were~~2022, cash and cash equivalents included cash held by our merchant processors of $~~3,481,546~~1.2 million and $~~6,225,139~~3.3~~, respectively.~~ million, respectively, including $1.1 million and $3.0 million, respectively held by one merchant processor. In addition, as of ~~December 31, 2021,~~June 30, 2022, and March 31, ~~2021,~~2022, cash and cash equivalents held in bank accounts in foreign countries in the ordinary course of business were $~~1,756,997~~1.0 million and $~~1,612,026~~1.4, million, respectively. Amounts held by our merchant ~~processors~~processor or held in bank accounts located in foreign countries are generally not insured by any federal agency.
Notes Receivable, net
At June 30, 2022 and March 31, 2022, Notes receivable were $539,623 and $601,520, before allowance for impairment losses of $539,623 and $601,520, respectively.
Inventory

Inventory consists of finished goods and promotional materials and are stated at the lower of cost, determined using the first-in, first-out (“FIFO”) method, or net realizable value. The Company periodically ~~evaluates the carrying value of~~assesses its inventory ~~based on a comparison of~~levels when compared to current ~~quantities on hand with historical~~ and anticipated sales levels. ~~During~~ As of June 30, 2022, and March 31, 2022,the ~~three months ended December 31, 2021, and January 31, 2021, the Company recognized a provision~~allowance for ~~excess or~~ obsolete inventory ofwas $~~103,787~~108,055 and $~~948,222~~108,055, respectively, in connection with health and wellness ~~products~~product that ~~are~~is damaged, expired or ~~expiring soon. During the nine months ended December 31, 2021,~~otherwise in excess of forecasted outputs, based on our current and ~~January 31, 2021, the Company recognized a provision for excess or obsolete inventory of $448,484~~ ~~and $990,831, respectively, in connection with health and wellness products that are damaged, expired or expiring soon.~~anticipated sales levels. The Company reports its provisions for inventory losses in cost of goods sold in its consolidated statements of operations.

Note Payable

In May 2020, ~~Sharing Services~~the Company was granted a loan (the “PPP Loan”) by a commercial bank in the amount of ~~approximately~~ $1.0million, pursuant to the Paycheck Protection Program features of the Coronavirus Aid, Relief, and Economic Security Act of 2020 (the “CARES Act”).
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At March 31, 2021, loan principal in the amount of ~~approximately~~ $1.0million was outstanding. The Company’s borrowings under the PPP Loan were eligible for loan forgiveness under the provisions of the CARES Act. In June 2021, the Company was formally notified by the lender that the Company’s obligations under the loan ~~were~~have been forgiven effective May 25, 2021. The loan forgiveness ~~applied~~applies to all principal and interest accrued through the loan forgiveness effective date. The Company recognized a gain on extinguishment of debt of $~~1,040,400~~1.0 million in connection with such loan forgiveness.
On June 15, 2022, Linden Real Estate Holdings, LLC, a wholly owned subsidiary of the Company, American Pacific Bancorp, Inc. (“APB”), and the Company entered into a Loan Agreement pursuant to which APB loaned the Company approximately $5.7 million. The loan bears interest at the annual rate of 8%, matures on June 1, 2024, and is secured by a first mortgage interest on the Company’s Lindon, Utah office building. In connection with this loan, the Company received net proceeds of $5,522,829 from APB on June 17, 2022. APB is a subsidiary of DSS, Inc. Heng Fai Ambrose Chan, and Frank D. Heuszel, each a Director of the Company, also serve on the Board of Directors of APB. Monthly payments of principal and interest in the amount of $43,897 are due beginning July 1, 2022 and are payable on the same date of each month thereafter.
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Foreign Currency Translation

Prior to April 1, 2021, substantially all the Company’s consolidated ~~revenues and expenses~~net sales were denominated in U.S. dollars. As part ~~the Company’s~~of our growth initiatives, ~~it is~~we are in the process of expanding ~~its~~ operations outside the United States. The functional currency of each of our foreign operations is generally ~~their~~the respective local currency. Balance sheet accounts are translated into U.S. dollars (our reporting currency) at the rates of exchange in effect at the balance sheet date, while the results of operations and cash flows are generally translated using average exchange rates for the periods presented. ~~Individually~~Individual material transactions, if any, are translated using the actual rate of exchange on the transaction date. The resulting translation adjustments are reported in ~~cumulative translation adjustments~~accumulated other comprehensive loss in our condensed consolidated balance sheets.
Comprehensive Income (Loss)

For the three ~~and nine~~ months ended ~~December 31, 2021,~~June 30, 2022, the Company’s ~~consolidated~~ comprehensive ~~income (loss) consists~~loss was comprised of currency translation adjustments and net loss. Prior to April 1, 2021, the only component of the Company’s comprehensive income (loss) was its net earnings (loss).
Revenue Recognition

The Company’s subsidiaries operating in the health and wellness products industry, which accounted for substantially all the Company’s consolidated net sales during the periods included in this Quarterly Report, market their products primarily through an independent sales force, using a direct selling business model under the proprietary brand “The Happy Co.” As of ~~December 31, 2021,~~June 30, 2022, and March 31, ~~2021,~~2022, deferred sales revenue associated with product invoiced but not received by customers at the balance sheet date was $~~655,918~~195,282 and $~~1.2~~344,071 ~~million,~~, respectively. In addition, as of June 30, 2022, and March 31, 2022, deferred sales revenue associated with our unfulfilled performance obligations for services offered on a subscription basis was $~~76,722~~65,318, and $~~153,216~~70,968, and deferred sales revenue associated with our performance obligations for customers’ right of return was $~~68,831~~63,046 and $~~95,780~~63,890, and deferred revenues associated with customer loyalty points was $81,980 and $68,287, respectively. Deferred sales revenue is expected to be recognized over one year.

During the ~~nine~~three months ended ~~December 31, 2021,~~June 30, 2022, no individual customer, or affiliated group of customers, ~~represents~~represented 10% or more of our consolidated net sales, and approximately 6763% of ~~consolidated~~our net sales were to ~~consumers~~customers (including 3237% to recurring customers, ~~referred~~which we refer to ~~herein~~ as “SmartShip” sales, and approximately35 26% to new customers) and approximately 3337% of our net sales were to our independent distributors. During the ~~nine~~three months ended ~~January 31,~~June 30, 2021, no individual customer, or affiliated group of customers, represents 10% or more of our consolidated net sales, and approximately 7170% of our net sales were to customers (including 4531% to recurring customers and approximately 2639% to new customers) and approximately 2930% of our net sales were to our independent distributors.
During the ~~nine~~three months ended ~~December 31, 2021,~~June 30, 2022, and ~~January 31,~~June 30, 2021, approximately 8693% and 9489%, respectively, of our consolidated net sales were to our customers and/or independent distributors located in the ~~U.S.~~United States. No other country accounted for 10% or more of our consolidated net sales.
During the ~~nine~~three months ended ~~December 31, 2021,~~June 30, 2022, substantially all our consolidated net sales are from our health and wellness products (including approximately 3970% from the sale of Nutraceutical products, 2920% from the sale of coffee and other functional beverages, 9% from the sale of weight management products, and approximately 1% from the sale of all other health and wellness products). During the three months ended June 30, 2021, substantially all our consolidated net sales are from our health and wellness products (including approximately 42% from the sale of Nutraceutical products, 27% from the sale of coffee and other functional beverages, 12% from the sale of weight management products, and approximately 2019% from the sale of all other health and wellness products).
During the ~~nine~~three months ended ~~January 31,~~June 30, 2022, approximately 94% of our consolidated product purchases were from a third-party manufacturer based in the U.S. During the three months ended June 30, 2021, approximately 9949% of our consolidated ~~net sales are from the sale of health and wellness products (including~~ 55~~% from the sale of Nutraceutical products,~~ 27~~% from the sales of coffee and other functional beverages, and~~ 17~~% from the sale of all other health and wellness products).~~
~~During the nine months ended December 31, 2021, approximately~~ 58~~% of~~ product purchases were from a third-party manufacturer based in the U.S., ~~and approximately~~while 4151% of our product purchases were from ~~various suppliers~~a related-party supplier located in ~~Asia. During~~ the ~~nine months ended January 31, 2021, product purchases from a third-party manufacturer (the same U.S.-based supplier discussed in the preceding sentence) accounted for approximately~~ 98%Republic of ~~total product purchases.~~Korea.
Sales Commissions

The ~~Company’s subsidiaries recognize~~Company recognizes sales commission expense, when incurred, in accordance with GAAP. During the three months ended June 30, 2022 and 2021, sales commission expense, which is included in selling and marketing expenses in ~~its~~our consolidated statements of operations and comprehensive loss, ~~when incurred, in accordance with U.S. GAAP. During the three months ended December 31, 2021, and January 31, 2021, consolidated sales commission expense~~ was $~~3.7~~2.4 million and $~~7.0~~ ~~million, respectively, and during the nine months ended December 31, 2021, and January 31, 2021, $13.6~~ ~~million and $25.1~~5.0 million, respectively.
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Recently Issued Accounting Standards - Recently Adopted ~~This Fiscal Year~~

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12, among other things, (a) eliminates the exception to the incremental approach for intra-period tax allocation when there is a loss from continuing operations and income (or a gain) from other items, (b) eliminates the exception to the general methodology for calculating income taxes in an interim period when the year-to-date loss exceeds the anticipated loss for the year, (c) requires than an entity recognize a franchise tax (or a similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax, and (d) requires than an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation for the interim period that includes the enactment date. The Company adopted ASU 2019-12 effective April 1, 2021, and ~~the~~ adoption did not have a material impact on its consolidated financial statements.
Recently Issued Accounting Standards - Pending Adoption

In August 2020, the FASB issued ASU No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (ASU 2020-06), which simplifies the accounting for certain convertible instruments. Among other things, under ASU 2020-06, the embedded conversion features no longer must be separated from the host contract for convertible instruments with conversion features not required to be accounted for as derivatives, or that do not result in substantial premiums accounted for as paid-in capital. ASU 2020-06 also eliminates the use of the treasury stock method when calculating the impact of convertible instruments on diluted Earnings per Share. For the Company, the provisions of ASU 2020-06 are effective for its fiscal quarter beginning on April 1, 2024. Early adoption is permitted, subject to certain limitations. The Company is evaluating the potential impact of adoption on its consolidated financial statements.

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NOTE 23 – ~~EARNINGS (LOSS)~~LOSS PER SHARE
~~The Company calculates its~~We calculate basic earnings (loss) per share by dividing net earnings (loss) available to common shareholders by the weighted average number of common shares outstanding during the reporting period. Diluted earnings ~~(loss)~~ per share is calculated similarly but reflects the potential impact of shares issuable upon the conversion or exercise of outstanding convertible preferred stock, convertible notes payable, stock warrants and other commitments to issue common stock, except where the impact would be anti-dilutive.

The calculation of diluted earnings per share also reflects an adjustment to net earnings for the potential reduction to a reporting period’s interest expense, net of applicable income tax, which would result if the Company’s convertible notes payable were converted at the beginning of such reporting period.
The following table sets forth the computations of basic and diluted ~~earnings (loss)~~loss per share:

SCHEDULE OF COMPUTATIONS OF BASIC AND DILUTED ~~EARNINGS (LOSS)~~LOSS PER SHARE
June 30, 2022 June 30, 2021
Three Months Ended Nine Months Ended Three Months Ended
December 31, 2021 January 31, 2021 December 31, 2021 January 31, 2021 June 30, 2022 June 30, 2021
Net loss $ (6,940,162 ) $ (1,440,694 ) $ (13,202,933 ) $ (682,714 ) $ (1,353,010 ) $ (3,548,007 )
Weighted average basic shares 192,112,139 177,722,157 188,051,336 173,572,531 278,315,485 184,435,274
Dilutive securities and instruments:
Convertible preferred stock - - - -
Convertible notes - - - -
Stock options and warrants - - - -
Weighted average diluted shares 192,112,139 177,722,157 188,051,336 173,572,531 278,315,485 184,435,274
Earnings (loss) per share:
Loss per share:
Basic $ (0.04 ) $ (0.01 ) $ (0.07 ) $ (0.00 ) $ (0.01 ) $ (0.02 )
Diluted $ (0.04 ) $ (0.01 ) $ (0.07 ) $ (0.00 ) $ (0.00 ) $ (0.02 )

The following potentially dilutive securities and instruments were outstanding as of June 30, 2022, and June 30, 2021, but excluded from the table above:
SCHEDULE OF POTENTIALLY DILUTIVE INSTRUMENTS OUTSTANDING
June 30, 2022 June 30, 2021
Convertible preferred stock 6,320,000 8,325,165
Convertible notes payable 135,377,975 152,231,082
Stock warrants - 168,295,815
Total potential incremental shares 141,697,975 328,852,062
The preceding table does not include ~~3,750,000~~1,875,000 and ~~14,250,000~~8,750,000 stock warrants held by employees which are not vested (or exercisable) at ~~December 31,~~June 30, 2022, and June 30, 2021, ~~and January 31, 2021,~~ respectively.
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The following potentially dilutive securities and instruments were outstanding as of December 31, 2021, and January 31, 2021, but were excluded from the table above because their impact would be anti-dilutive:
~~SCHEDULE OF POTENTIALLY DILUTIVE INSTRUMENTS OUTSTANDING~~
December 31, 2021 January 31, 2021
Convertible preferred stock 7,630,800 23,855,915
Convertible notes payable 157,756,728 10,406,100
Stock warrants 94,829,948 36,365,570
Total potential incremental shares 260,217,476 70,627,585
~~NOTE 3 –~~ ~~INVENTORY~~
~~Inventory consists of the following:~~
~~SCHEDULE OF INVENTORY~~
December 31, 2021 March 31, 2021
Finished Goods $ 5,206,722 $ 2,556,368
Allowance for obsolescence (388,431 ) (85,058 )
Inventory, net $ 4,818,291 $ 2,471,310
The increase in finished goods as of December 31, 2021, compared to as of March 31, 2021, reflects the inventory of the Company’s South Korean subsidiary, which started its operations in June 2021, of approximately $~~2.0~~ ~~million.~~

NOTE 4 – INVENTORY, NET
Inventory consists primarily of finished goods. The Company provides an allowance for any slow-moving or obsolete inventory. As of June 30, 2022, and March 31, 2022, inventory consists of the following:
SCHEDULE OF INVENTORY
June 30, 2022 March 31, 2022
June 30, 2022 March 31, 2022
Finished Goods $ 4,240,836 $ 4,482,291
Allowance for inventory obsolescence (108,055 ) (108,055 )
Inventory, net $ 4,132,781 $ 4,374,236
NOTE 5 – OTHER CURRENT ASSETS, NET

Other current assets consist of the following:
SCHEDULE OF OTHER CURRENT ASSETS
December 31, 2021 March 31, 2021
Prepaid interest, DSSI $ 624,658 $ -
Inventory-related deposits 469,323 1,845,722
Employee advances 58,022 320,631
Prepaid expenses and other 612,058 237,281
Other current assets $ 1,764,061 $ 2,403,634
June 30, 2022 March 31, 2022
June 30, 2022 March 31, 2022
Prepaid consulting fees, related party $ 2,013,706 $ 2,867,123
Inventory-related deposits 312,090 384,477
Prepaid insurance and other operational expenses 261,823 201,275
Deposits for sales events 5,000 222,540
Right to recover asset 15,632 15,632
Subtotal 2,608,251 3,691,047
Less: allowance for losses (179,765 ) (179,765 )
Other current assets $ 2,428,486 $ 3,511,282
Prepaid consulting fees represent the fair value on the grant date of stock warrants issued to DSS in January 2022 for consulting services to be rendered over a year from the issue date (see Note 12 – Related Party Transactions for more information). Prepaid insurance and other operational expenses primarily consist of payments for goods and services (such as freight, trade show expenses and insurance premiums) which are expected to be realized in the next operating cycle. Right to recover asset is associated with our customers’ right of return and is expected to be realized in one year or less. As of both June 30, 2022, and March 31, 2022, the provision for losses in connection with certain inventory-related deposits for which recoverability is less than certain was $179,765.
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NOTE 56 – INVESTMENT IN UNCONSOLIDATED ENTITIES, NET

In September 2021, the Company, Stemtech Corporation (“Stemtech”) and Globe Net Wireless Corp. (“GNTW”) entered into a Securities Purchase Agreement (the “SPA”) pursuant to which the Company invested $1.4 million in Stemtech in exchange for: (a) a Convertible Promissory Note in the amount of $1.4 million in favor of the Company (the “Convertible Note”) and (b) a detachable Warrant to purchase shares of GNTW common stock (the “GNTW Warrant”). Stemtech is a subsidiary of GNTW. As an inducement to enter into the SPA, GNTW agreed to pay to the Company an origination fee of $500,000, payable in shares of GNTW’s common stock. The Convertible Note matures on September 9, 2024, bears interest at the annual rate of 10%, and is convertible, at the option of the holder, into shares of GNTW’s common stock at a conversion rate calculated based on the closing price per share of GNTW’s common stock during the 30-day period ended September 19, 2021. The GNTW Warrant expires on September 13, 2024, and conveys the right to purchase up to 1.4 million shares of GNTW’s common stock at a purchase price calculated based on the closing price per share of GTNW’s common stock during the 10-day period ended September 13, 2021. In September 2021, GNTW issued to the Company 154,173 shares of its common stock, or less than 1% of the shares of GNTW then issued and outstanding, in payment of the origination fee. In November 2021, Globe Net Wireless Corp. changed its corporate name to Stemtech Corporation. In connection therewith, the investee’s common stock is now traded under the symbol “STEK”.

The Company carries its investment in the Convertible Note, the GNTW Warrant and the shares of GNTW common stock at fair value in accordance with ~~U.S.~~ GAAP. During the three ~~and nine~~ months ended ~~December 31, 2021,~~June 30, 2022, the Company recognized unrealized gains, before income tax, of $~~1.2~~4,865,354 ~~million and $3.3~~ ~~million, respectively,~~ in connection with its investment in the Convertible Note, the GNTW Warrant and the shares of GNTW common stock.

In September 2021, the Company entered into a Membership Unit Purchase Agreement pursuant to which the Company acquired a 30.75% equity interest in MojiLife, LLC, a limited liability company organized in the State of Utah, in exchange for $1,537,000. MojiLife is an emerging growth distributor of technology-based consumer products ~~such as~~for the home and car. MojiLife’s products include esthetically attractive, cordless scent diffusers for the home ~~and~~or for the car, as well as proprietary home cleaning products and accessories. ~~During the nine months ended December 31, 2021,~~
On a quarterly basis, the Company evaluates the recoverability of its investments and reviews current economic trends to determine the adequacy of its allowance for impairment losses based on each investee financial performance data and other relevant information. An estimate for impairment losses is recognized ~~equity~~when recovery in ~~losses~~full of $~~59,629, before income tax, in connection with its~~the Company’s investment ~~in MojiLife.~~is no longer probable. Investment balances are written off against the allowance after the potential for recovery is considered remote.

Investment in unconsolidated entities consists of the following:
SUMMARY OF INVESTMENT IN UNCONSOLIDATED ENTITIES
June 30, 2022 March 31, 2022
Investment in detachable GNTW stock warrant $ 7,000,000 $ 3,570,000
Investment in GNTW common stock 770,865 393,141
Investment in Stemtech convertible note 2,158,429 1,100,799
Investment in MojiLife, LLC 1,537,000 1,537,000
Subtotal 11,466,294 6,600,940
Less, allowance for impairment losses (1,537,000 ) (1,537,000
Investments $ 9,929,294 $ 5,063,940
The following table reflects the activity in the allowance for impairment losses for the periods presented:
SCHEDULE OF ALLOWANCE FOR IMPAIRMENT LOSSES
June 30, 2022 March 31, 2022
Balance at beginning of fiscal year $ 1,537,000 $ -
Provision for estimated impairment losses - 1,537,000
Balance at end of fiscal year $ 1,537,000 $ 1,537,000
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~~Investment in unconsolidated entities consists of the following:~~
~~SUMMARY OF INVESTMENT IN UNCONSOLIDATED ENTITIES~~
December 31, 2021 March 31, 2021
Investment in detachable GNTW stock warrant $ 3,318,000 $ -
Investment in GNTW common stock 365,390 -
Investment in Stemtech convertible note 1,023,095 -
Investment in MojiLife, LLC 1,477,371 -
Investments $ 6,183,856 $ -
NOTE ~~6 -~~7 – PROPERTY AND EQUIPMENT, NET

Property and equipment consist of the following:
SUMMARY OF PROPERTY AND EQUIPMENT
December 31, 2021 March 31, 2021
Building and building improvements $ 8,942,640 $ -
Computer software 779,363 734,510
Furniture and fixtures 231,976 230,685
Computer equipment 176,655 165,767
Leasehold improvements and other 297,933 138,529
Total property and equipment 10,428,567 1,269,491
Accumulated depreciation and amortization (636,629 ) (381,541 )
Property and equipment, net $ 9,791,938 $ 887,950
~~For the three months ended December 31, 2021 and January 31 2021, depreciation and amortization expense was $77,688~~ ~~and $43,735, respectively. For the nine months ended December 31, 2021 and January 31 2021, depreciation and amortization expense was $255,087~~ ~~and $161,663, respectively.~~
~~On December 8, 2021, the Company, through one of its subsidiaries, purchased an office building in Lindon, Utah for $8,942,640, including $3,675,000~~ allocated to land. The capitalized costs include legal and other professional fees incurred directly in connection with the purchase of the property. Once placed in service, the building will be depreciated over its estimated remaining useful life, approximately 28 ~~years.~~
~~During the fiscal year ended March 31, 2021, the Company capitalized $715,354~~ ~~in computer software in connection with upgrades to its information technology systems then placed in service. In addition, during the fiscal year ended March 31, 2021, the Company incurred $163,106~~ in capitalizable costs primarily in connection with leasehold improvements for office facilities and ongoing upgrades to its information technology systems yet to be placed in service as of March 31, 2021. These costs were reported in other assets in our consolidated balance sheets until the related assets were placed in service in the current fiscal year.

June 30, 2022 March 31, 2022
Building and building improvements $ 8,975,805 $ 8,976,878
Computer software 1,015,742 875,925
Furniture and fixtures 237,042 237,045
Computer equipment 223,393 223,424
Leasehold improvements and other 261,304 263,208
Total property and equipment 10,713,286 10,576,480
Impairment of property and equipment (100,165 ) (100,165
Accumulated depreciation and amortization (1,026,300 ) (891,174 )
Property and equipment, net $ 9,586,821 $ 9,585,141

NOTE 78 – ACCRUED AND OTHER CURRENT LIABILITIES
Accrued and other current liabilities consist of the following:

SUMMARY OF ACCRUED AND OTHER CURRENT LIABILITIES

December 31, 2021 March 31, 2021 June 30, 2022 March 31, 2022
Deferred sales revenues $ 801,471 $ 1,449,359 $ 405,626 $ 547,217
Liability associated with uncertain tax positions 921,977 904,643 921,987 921,987
Accrued severance expense - 700,000
Payroll and employee benefits 366,858 523,454 309,736 478,360
Settlement liability, current portion 341,919 376,921 - 341,919
Lease liability, current portion 272,018 373,398 68,477 134,578
Due to related parties
288,731

125,532

Other operational accruals 601,730 499,639 674,539 530,189
Accrued and other current liabilities $ 3,305,973 $ 4,827,414 $ 2,669,096 $ 3,079,782
Lease liability, current portion, represent obligations due within one year under operating leases for office space, automobiles, and office equipment. See Note14 - LEASES below for more information. Other operational accruals as of June 30, 2022, as presented above, include accrued expense of $379,556 and accrued interest of $118,405.

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NOTE 89 - CONVERTIBLE NOTES PAYABLE, RELATED PARTIES

Convertible notes payable consists of the following:

SCHEDULE OF CONVERTIBLE NOTES PAYABLE
Issuance Date
Maturity
Date

Interest
Rate
Conversion Price
(per share) December 31, 2021 March 31, 2021 Maturity Date Interest Rate Conversion Price (per share) June 30, 2022 March 31, 2022
April 2021 April 2024 8 % $ 0.20 $ 30,000,000 $ - April 2024 8 % $ 0.20 $ - $ 30,000,000
October 2017 October 2022 12 % $ 0.15 50,000 50,000 October 2022 12 % $ 0.15 50,000 50,000
April 2018 April 2021 0 % $ 0.01 100,000 100,000
June 2022 June 2024 8 % $ 0.03 27,000,000 -
Total convertible notes payable Total convertible notes payable 30,150,000 150,000 Total convertible notes payable 27,050,000 30,050,000
Less: unamortized debt discount and deferred financing costs Less: unamortized debt discount and deferred financing costs 22,617,198 15,607 Less: unamortized debt discount and deferred financing costs 20,033,135 20,151,230
7,532,802 134,393 7,016,865 9,898,770
Less: current portion of convertible notes payable Less: current portion of convertible notes payable 142,291 99,631 Less: current portion of convertible notes payable 7,016,865 9,898,770
Long-term convertible notes payable Long-term convertible notes payable $ 7,390,511 $ 34,762 Long-term convertible notes payable $ - $ -

The Company’s convertible notes are convertible, at the option of the holder, into shares of the Company’s Common Stock at the conversion prices shown above.

In October 2017, the Company issued a Convertible Promissory Note in the principal amount of $50,000 (the “Note”) to HWH International, ~~Inc~~Inc. (“HWH” or the “Holder”). HWH is affiliated with Heng Fai Ambrose Chan, who in April 2020 became a Director of the ~~Company in April 2020.~~Company. The Note is convertible into 333,333 shares of the Company’s Common Stock. Concurrent with issuance of the Note, the Company issued to HWH a detachable warrant to purchase up to an additional 333,333 shares of the Company’s Common Stock, at an exercise price of $0.15 per share. Under the terms of the Note and the detachable stock warrant, the Holder is entitled to certain financing rights. If the Company enters into more favorable transactions with a third-party investor, it must notify the Holder and may have to amend and restate the Note and the detachable stock warrant to be identical. ~~See Note 11 below.~~
~~In December 2019,~~On August 9, 2022, HWH and the Company ~~and the holder of the Company’s $100,000~~ ~~convertible note dated April 13, 2018 (the “April 2018 Note”) entered into~~executed an amendment to the underlying promissory note. Pursuant to the amendment, the parties extended the maturity date of the note to April 2021. In addition, after giving effect to the amendment, the April 2018 Note is non-interest bearing. All other terms of the April 2018 Note remain unchanged. As of the date of this Quarterly Report, the Company and the holder of the note are discussing options, which may include the conversion in full or in part of the note, and the repayment of any remainder of the note. The Company intends to conclude these discussions andagreement to settle the ~~April 2018~~ Note inand cancel the ~~foreseeable future.~~related stock warrant for $78,636, which amount represents the principal plus accrued interest. The Company made the payment to HWH on August 9, 2022.

On April 5, 2021, the Company and ~~DSSI~~Decentralized Sharing Systems, Inc. (“DSSI”) entered into a Securities Purchase Agreement, pursuant to which the Company issued: (a) a Convertible Promissory Note in the principal amount of $30.0 million (the “Note”) in favor of DSSI, and (b) a detachable Warrant to purchase up to 150,000,000 shares of the Company’s Class A Common Stock, at $0.22 per share, and DSSI loaned to the Company $30.0 million. DSSI, is a subsidiary of DSS, Inc. (formerly Document Security Systems, Inc.~~) (“DSS”~~, “DSS”), and, together with DSS, is a ~~majority~~major shareholder of the Company. Under the terms of the loan, the Company agreed to pay to DSSI a loan ~~origination fee~~Origination Fee of $3.0 million, payable in shares of the Company’s Class A Common Stock, at the rate of $0.20 per share. The Note ~~bears~~bore interest at the annual rate of 8% ~~and matures on~~, with a maturity date of April 5, 2024, subject to certain ~~acceleration~~accelerated provisions upon the occurrence of an Event of Default, as was defined in the Note. At any time during the term of the Note, all or part of the Note, including the principal amount less unamortized prepaid interest, if any, plus any accrued interest ~~can be~~could have been converted into shares of the Company’s Class A Common Stock at the rate of $0.20 per share, at the option of the holder. Interest on the Note iswas pre-payable annually in cash or in shares of the Company’s Class A Common Stock, at the option of the Company, except that interest for the first year iswas pre-payable in shares of the Company’s Class A Common Stock, at the rate of $0.20 per share. As further discussed below, the Note and the detachable Warrant were redeemed in June 2022.

In connection with the issuance of the Note and the detachable Warrant, the Company allocated $15.0 million of the net proceeds from the loan to the detachable Warrant, allocated $12.0 million of the net proceeds to the beneficial conversion feature embedded in the Note and recognized deferred financing costs of $3.0 million. The resulting debt discount and the deferred financing costs ~~are~~were being amortized into interest expense over the term of the note (three years). During the ~~nine~~three months ended ~~December 31,~~June 30, 2021, the Company issued to DSSI 27,000,000 shares of its Class A Common Stock, including 15,000,000 shares in payment of the loan ~~origination fee discussed above~~Origination Fee and 12,000,000 shares in prepayment of interest for the first ~~year. In connection therewith, the Company~~year and recognized a deemed dividend of $1,080,000 for the excess of the fair value of the shares issued over the amounts settled.

15

On June 15, 2022, the Company and DSSI which, together with DSS, is a majority shareholder of the Company, entered into an agreement pursuant to which the Company issued, to DSSI: (a) a two-year Convertible, Advancing Promissory Note in the principal amount of $27.0 million (the “2022 Note”) in favor of DSSI and (b) a detachable Warrant to purchase up to 818,181,819 shares of the Company’s Class A Common Stock at the exercise price of $0.033 per share. The 2022 Note bears interest at the annual rate of 8% and is due and payable on demand or, if no demand, on May 1, 2024. At any time during the term of the 2022 Note, all or part of the Note may be converted into up to 818,181,819 shares of the Company’s Class A Common Stock, at the option of the holder. Under the terms of the agreement, the Company agreed to pay to DSSI a loan origination fee of $270,000. In addition, DSSI agreed to surrender to the Company all DSSI’s rights pursuant to: (a) a certain Convertible Promissory Note in the principal amount of $30.0 million issued by the Company in April 2021 in favor of DSSI, and (b) a certain detachable Warrant to purchase up to 150,000,000 shares of the Company’s Class A Common Stock, at $0.22 per share, issued concurrently with such $30.0 million note. The Company recognized the transaction with DSSI as a debt extinguishment in accordance with GAAP. Since DSSI is a related party, the difference between the fair value of the new equity instruments and the carrying value of the retired equity instruments, was recognized in additional paid in capital on the Company’s condensed consolidated balance sheet.
During the three months ended ~~December 31, 2021,~~June 30, 2022, and ~~January 31,~~June 30, 2021, interest expense in connection with the Company’s convertible notes was $~~605,934~~143,086 and $~~1,512~~2.9, million, respectively, excluding amortization of debt discount ~~of $2,268,942~~and $~~5,121, respectively, and, during the three months ended December 31, 2021, amortization of~~ deferred financing costs of $~~251,825~~2.5~~. During the nine months ended December 31, 2021, and January 31, 2021, interest expense in connection with the Company’s convertible notes was $1,779,353~~ million and $~~4,537, respectively, excluding amortization of debt discount of $6,659,359~~1.7 ~~and $15,363, respectively, and, during the nine months ended December 31, 2021, amortization of deferred financing costs of $739,051~~.million, respectively. These amounts are included in interest expense in our consolidated statements of operations.
NOTE 910 – INCOME TAXES

The statutory rates for our domestic and our material foreign operations are as follows for the periods shown:

SCHEDULE OF STATUTORY RATES FOR OUR DOMESTIC AND FOREIGN OPERATION
Country 2021 2020 2022 2021
United States 21 % 21 % 21 % 21 %
Republic of Korea 22 % 22 % 21 % 22 %
Effective Income Tax Rate 21 % 22 %

~~For the nine months ended December 31, 2021, and January 31, 2021, the~~Our consolidated effective income tax rate ~~was~~ reconciliation is as follows:
~~-11.1~~
SCHEDULE OF INCOME TAX RATE RECONCILIATION RATE

Three Months Ended June 30,
2022 2021
Federal statutory rate 21.0 % 21.0 %
State and local income taxes 0.6 (0.7 )
Change in valuation allowance for NOL carry-forwards 1.3 (51.1 )
Stock warrant transactions and other items (2.8 ) 4.1
Effective income tax rate 20.1 % (26.7 )%
%
~~and~~ ~~-134.6%, respectively. For the nine months ended December 31, 2021, the effective tax rate was different from the federal statutory rate primarily due to the valuation allowance of $4.5~~ million placed on certain deferred tax assets being carried forward or projected to reverse in future years due to the uncertainty of the Company generating sufficient taxable income in the foreseeable future to make realization probable. For the nine months ended January 31, 2021, the effective tax rate was different from the federal statutory rate primarily due to the provision for state and local income taxes. Income taxes applicable to our foreign operations are not material in the periods presented.
~~For the nine months ended December 31, 2021, and January 31, 2021, our income tax rate reconciliation is as follows:~~
~~SCHEDULE OF INCOME TAX RATE RECONCILIATION RATE~~
December 31, 2021 January 31, 2021
Federal statutory rate 21.0 % 21.0 %
State and local income taxes (0.9 )% (115.5 )%
Valuation allowance (37.5 )% - %
Return to provision and other 6.3 % 40.1 %
Effective tax rate (11.1 )% (134.6 )%

NOTE 1011 - STOCKHOLDERS’ EQUITY
Common Stock

~~On July 28, 2021,~~During the three months ended June 30, 2022, the Company ~~held~~issued to DSSI: (a) a two-year Convertible, Advancing Promissory Note in the principal amount of $27.0 million (the “2022 Note”) in favor of DSSI and (b) a detachable Warrant to purchase up to 818,181,819 shares of the Company’s Class A Common Stock at the exercise price of $0.033 per share. The transaction is discussed more fully in Note 9 – Convertible Notes Payable, Related Parties.
In May 2022, the Company and certain of its ~~Annual Meeting~~subsidiaries, on the one hand, and Alchemist, the former officer and certain entities affiliated with the former officer, on the other hand, entered into a Confidential Settlement Agreement with Mutual Releases (the “May 2022 Settlement Agreement”) pursuant to which the parties amicably settled all claims and disputes among them; (b) the former officer sold to the Company 26,091,136 shares of ~~Stockholders.~~ the Company’s common stock then under the voting and dispositive control of the former officer; (c) the Company made a one-time payment of $1,043,645; and (d) the Company and its relevant subsidiaries, on the one hand, and the former officer and relevant entities affiliated with the former officer, on the other hand, exchanged customary mutual releases of any prior obligations among them. On May 19, 2022, the closing price for the Company’s common stock was $0.25 per share. In the fiscal quarter ending June 30, 2022, the Company measured and recognized the repurchase of its common stock at its fair value of $626,187, derecognized its remaining liability under the Co-Founder’s Agreement, and recognized a recovery of $324,230 in connection with the previously recognized loss related to the Co-Founder’s Agreement.
At the ~~meeting,~~Annual Meeting, the Company’s Shareholders ratified the ~~Second~~Third Amended and Restated Articles of Incorporation of the Company ~~which was previously~~and approved by the ~~Board of Directors. The Second Amended and Restated Articles of Incorporation, among other things, increased the authorized~~maximum number of shares which the Corporation shall have the authority to issue of ~~the Company’s stock to~~ Two Billion Two Hundred Million (~~1,000,000,000~~2,200,000,000) shares, $0.0001 ~~shares, including:~~par value per share, of which: (a) Two Billion (~~800,000,000~~2,000,000,000 ~~shares~~) Shares of Common Stock having a par value of $0.0001 per share (“Common Stock”) and (b) Two Hundred Million (200,000,000 ~~shares~~) Shares of Preferred Stock comprised of Series A and Series C having a par value of $0.0001 per share ~~and comprised of the Company’s Convertible Series A~~ or as authorized (“Preferred ~~Stock and Convertible Series C Preferred Stock.~~Stock”).

16
~~During the nine months ended December 31, 2021, Sharing Services issued to DSSI~~
The Company’s Board of Directors has designated ~~27,000,000~~10,000,000 ~~shares of its Class A Common Stock, including~~ ~~15,000,000~~ ~~shares in payment of the loan origination fee discussed above and~~ ~~12,000,000~~ shares in prepayment of interest for the first year, as more fully discussed in Note 8 above. In addition, on December 23, 2021, Sharing Services and DSSI entered into a Stock Purchase and Share Subscription Agreement pursuant to which DSSI invested $~~3,000,000~~ ~~in the Company in exchange for an aggregate of~~ ~~50,000,000~~ shares of Class AB Common Stock, par value 0.0001 per share. As of both: June 30, 2022, and ~~warrants to purchase up to~~March 31, 2022, there were ~~50,000,000~~ ~~shares of the Company’s Class A Common Stock. Further, during the nine months ended December 31, 2021, the holders of~~ ~~10,000~~ ~~shares of the Company’s Series C preferred stock converted such holdings into~~ ~~10,000~~288,923,969 shares of the Company’s Class A Common Stock issued. As of June 30, 2022, and ~~the Company issued~~March 31, 2022, there were ~~1,813,200~~262,832,833 shares and 288,923,969 shares, respectively, net of ~~its~~26,091,136 shares held in Treasury Stock at June 30, 2022, of the Company’s Class A Common Stock ~~in connection with the exercise of stock warrants by its employees and/or independent distributors.~~
outstanding. As of ~~December~~June 30, 2022, and March 31, ~~2021,~~2022, there were ~~238,923,969~~0 shares of ~~our~~the Company’s Class AB Common Stock ~~are~~ issued and outstanding.
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NOTE 1112 - RELATED PARTY TRANSACTIONS
Decentralized Sharing Systems, Inc.

OnIn July 2020, the Company and Heng Fai Ambrose Chan, a Director of the Company, entered into a Stock Purchase and Share Subscription Agreement (the “SPA Agreement”) pursuant to which Mr. Chan invested $3.0 million in the Company and the Company agreed to issue 30.0 million shares of the Company’s Class A Common Stock and a fully vested Stock Warrant to purchase up to 10.0 million shares of the Company’s Class A Common Stock at an exercise price of $0.20 per share. Concurrently with the SPA Agreement, Mr. Chan and DSS, then a major shareholder of the Company, entered into an Assignment and Assumption Agreement pursuant to which Mr. Chan assigned to DSS all interests in the SPA Agreement. In July 2020, the Company issued 30.0 million of its Class A Common Stock pursuant to the SPA Agreement. The Stock Warrant issued pursuant to the SPA Agreement expires on the third anniversary from the issuance date, unless exercised earlier.
In April 5, 2021, ~~Sharing Services~~the Company and DSSI entered into a Securities Purchase Agreement, pursuant to which DSSI granted a $30.0 million loan to the Company ~~issued:~~in exchange for: (a) a Convertible Promissory Note in the principal amount of $30.0 million (the “Note”) in favor of DSSI, and (b) a detachable Stock Warrant to purchase up to 150,000,000 shares of the Company’s Class A Common Stock, at $0.22 per share. At any time during the term of the Note, all or part of the Note, including the principal amount less unamortized prepaid interest, if any, plus any accrued interest can be converted into shares of the Company’s Class A Common Stock at the rate of $0.20 per share, ~~and DSSI loaned to~~at the ~~Company $30.0~~ ~~million.~~option of the holder. Under the terms of the loan agreement, the Company agreed to pay to DSSI a loan origination fee of $3.0 million, payable in shares of the Company’s Class A Common Stock, with the number of shares to be calculated at the rate of $0.20 per share. ~~See Note 8~~In April 2021, Sharing Services issued 27.0 million shares of its Class A Common Stock to DSSI, including 15.0 million shares in payment of the loan origination fee and 12.0 million shares in prepayment of interest on a loan for ~~more information.~~the first year.

OnIn December ~~23,~~ 2021, ~~Sharing Services~~the Company and DSSI entered into a Stock Purchase and Share Subscription Agreement pursuant to which DSSI invested $3,000,000 in the Company in exchange for ~~an aggregate of~~ ~~50,000,000~~50.0 million shares of Class A Common Stock (the “Shares”) and stock warrants (the ~~“Warrants”~~“Stock Warrants”) to purchase up to ~~50,000,000~~50.0 million shares of the Company’s Class A Common Stock. The Stock Warrants are fully vested, have a term of five (5) years and are exercisable at any time prior to expiration, at the option of DSSI, at a per share price equal to $0.063 ~~( “Transaction”)~~. On the ~~Warrants issuance~~effective date of the Stock Purchase and Share Subscription Agreement, the closing price for the Company’s common stock was $0.075 per ~~share. The~~share and the Company recognized a deemed dividend of $2.3 million in connection with the transaction.
In January 2022, the Company and DSS who, together with its ~~issuance~~subsidiaries, is currently a majority shareholder of the ~~Shares~~Company, entered into a one-year Business Consulting Agreement (the “Consulting Agreement”) pursuant to which DSS will provide to the Company certain consulting services, as defined in the Consulting Agreement. The Consulting Agreement may be terminated by either party on a 60-day’s written notice. In connection with the Consulting Agreement, the Company agreed to pay DSS a flat monthly fee of sixty thousand dollars ($60,000) and DSS received a fully vested detachable Stock Warrant to purchase up to 50.0 million shares of the Company’s Class A Common Stock, at the exercise price of $0.0001 per share. On the effective date of the Consulting Agreement, the closing price of the Company’s common stock was $0.07 per share and the ~~Warrants.~~fair value of the Stock Warrant was $3.5 million. The fair value of the Stock Warrant is being recognized as consulting expense over the term of one year. During the three months ended June 30, 2022, the Company recognized consulting expense of $872,603, in connection with the Consulting Agreement. In February 2022, the Company issued 50.0 million shares of its Common Stock Class A to DSS in connection with exercise of the Stock Warrant.
On June 15, 2022, the Company and Decentralized Sharing Systems, Inc. (“DSSI”) entered into a Securities Purchase Agreement (the “SPA”), pursuant to which the Company issued: (a) a Convertible Promissory Note in the principal amount of $27.0 million (the “2022 Note”) in favor of DSSI and (b) a detachable Warrant to purchase up to 818,181,819 shares of the Company’s Class A Common Stock (the “Warrant”), at $0.033 per share, in exchange for the $27.0 million. The 2022 Note bears interest at the annual rate of 8% and is due and payable on demand or, if no demand, on May 1, 2024. At any time during the term of the 2022 Note, all or part of the Note may be converted into up to 818,181,819 shares of the Company’s Class A Common Stock, at the option of the holder.
17
In connection with the loan, the Company agreed to pay to DSSI a loan Origination Fee of $270,000. In addition, DSSI agreed to surrender to the Company all DSSI’s rights pursuant to: (a) a certain Convertible Promissory Note in the principal amount of $30.0 million issued by the Company in April 2021 in favor of DSSI, and (b) a certain detachable Warrant to purchase up to 150,000,000 shares of the Company’s Class A Common Stock, at $0.22 per share, issued concurrently with such $30.0 million note.

As of ~~December 31, 2021,~~June 30, 2022, DSS and its affiliates owned, in the aggregate, ~~141.9~~191.9 million shares of the Company’s Class A Common Stock, excluding ~~210.0~~878.2 million shares issuable upon the exercise of warrants held by DSS and ~~150.0~~818.2 million shares issuable upon conversion of the Note discussed in the third preceding paragraph. Heng Fai Ambrose Chan, Frank D. Heuszel, and John (“JT”) Thatch, each a Director of the Company, also serve on the Board of Directors of DSS. Mr. Chan serves as Chairman of the Board of Directors of the Company. Mr. Thatch also serves as President, CEO and Vice Chairman of the Board of Directors of the Company.
~~Alset Title Company, Inc.~~
~~On December 8, 2021, Sharing Services, through one of its subsidiaries, purchased an office building in Lindon, Utah for $8,942,640~~. In connection therewith, Alset Title Company, Inc. (“Alset Title”), a subsidiary of DSS, issued an Owner’s Title Insurance Policy in favor of Sharing Services and acted as escrow and closing agent for the transaction. DSS, together with its subsidiaries, is a majority shareholder of the Company.
~~Hapi Café, Inc.~~
In November 2021, Sharing Services and Hapi Café, Inc, a company affiliated with Heng Fai Ambrose Chan, a Director of the Company, entered into a Master Franchise Agreement pursuant to which Sharing Services acquired the exclusive franchise rights in North America to the brand “Hapi Café.” Under the terms, Sharing Services, directly or through its subsidiaries, has the right to operate no less than five (5) corporate-owned stores and can offer to the public sub-franchise rights to own and operate other stores, subject to the terms and conditions contained in the Master Franchise Agreement.
HWH International, Inc.

In October 2017, Sharing Services issued a Convertible Promissory Note in the principal amount of $50,000 (the “Note”) to HWH International, ~~Inc~~Inc. (“HWH” or the “Holder”). HWH is affiliated with Heng Fai Ambrose Chan, who became a Director of the Company in April 2020. The Note is convertible into 333,333 shares of the Company’s Common Stock. Concurrent with issuance of the Note, the Company issued to HWH a detachable stock warrant to purchase up to an additional 333,333 shares of the Company’s Common Stock, at an exercise price of $0.15 per share. Under the terms of the Note and the detachable stock warrant, the Holder is entitled to certain financing rights. If the Company enters into more favorable transactions with a third-party investor, it must notify the Holder and may have to amend and restate the Note and the detachable stock warrant to be identical. ~~As of the date of this Quarterly Report,~~On August 9, 2022, HWH and the Company ~~and HWH are jointly reviewing~~executed an agreement to settle the Note and cancel the ~~detachable stock warrant. The number of shares that HWH may acquire upon conversion of the HWH Note and exercise of the detachable~~related stock warrant ~~may be greater than~~for $78,635.62, which amount represents the ~~amounts described in this paragraph, depending~~principal plus accrued interest. The Company made the payment to HWH on ~~the results of such review.~~August 9, 2022.
HWH World, Inc.

A subsidiary of the Company operating in the Republic of Korea subleases office space from HWH World, Inc. (“HWH World”), a subsidiary of DSS and a company affiliated with Heng Fai Ambrose Chan, a Director of the Company. Pursuant to the terms of the sublease agreement, the Company recognized a right-of-use asset and an operating lease liability of $~~303,322~~261,835 in connection therewith. In ~~the nine months~~fiscal year ended ~~December~~March 31, ~~2021,~~2022, the Company recognized expense of $~~129,113~~222,092 in connection this lease. As of ~~December~~March 31, ~~2021,~~2022, accounts payable ~~includes~~included payments due to HWH World under the lease of $~~179,763~~213,742. In May 2022, the Company and HWH World amended the related sublease agreement to significantly reduce the space subleased by the Company and the related rent obligation. On June 30, 2022, the right-of-use asset and liability were written off and a new month-to-month rental agreement was entered into for the reduced space subleased by the Company. The company recognized $936 in rent expense in connection with the new lease.
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In September 2021, the Company and HWH World ~~Inc., a subsidiary of DSS and a company affiliated with Heng Fai Ambrose Chan, a Director of the Company,~~ entered into an Advisory Agreement pursuant to which the Company provides strategic advisory services to HWH World ~~Inc.~~ in connection with its North America expansion plans in exchange for a monthly fee of $10,000. During the ~~three and nine months~~fiscal year ended ~~December~~March 31, ~~2021,~~2022, the Company recognized consulting income of $~~36,700~~76,700 in connection therewith. The Advisory Agreement was terminated during the three months ended June 30, 2022.
Impact Biomedical, Inc.

In the ~~nine months~~fiscal year ended ~~December~~March 31, ~~2021,~~2022, a wholly owned subsidiary of the Company purchased health and wellness products from Impact Biomedical, Inc., a subsidiary of DSS, in the aggregate amount of $~~82,664~~111,414. During the three months ended June 30, 2022, the Company’s purchases of health and wellness products from Impact Biomedical, Inc., totaled $19,247.
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K Beauty Research Lab. Co., Ltd

In the ~~nine months~~fiscal year ended ~~December~~March 31, ~~2021,~~2022, a wholly owned subsidiary of the Company purchased skin care products manufactured by K Beauty Research Lab. Co., Ltd (“K Beauty”), a South Korean-based supplier of skin care products that is affiliated with Heng Fai Ambrose Chan, a Director of the Company, in the aggregate amount of $2.3million. The Company’s affiliates operating in Asia intend to distribute skin care and other products in South Korea and other countries, including skin care products procured from K Beauty, as part of the Company’s previously announced strategic growth plans. During the three months ended June 30, 2022, the Company purchased skin care products manufactured by K Beauty Research Lab in the amount of $643.
Premier Packaging Corporation

InDuring the ~~nine~~three months ended ~~December 31,~~June 30, 2021, a wholly owned subsidiary of the Company issued purchase orders to Premier Packaging Corporation, a subsidiary of DSS, to acquire printed packaging materials in the aggregate amount of $~~152,813~~151,509. No purchase orders were issued during the three months ended June 30, 2022.
Alchemist Holdings, LLC -
~~Related Party Sublease~~
In February 2020, the Company, Alchemist Holdings, LLC (“Alchemist”), and a former Company officer entered into a Settlement Accommodation Agreement (the “Accommodation Agreement”) pursuant to which Alchemist and the former Company officer agreed to transfer to the Company 22.7 million shares of the Company’s Common Stock held by Alchemist, in settlement of certain obligations to the Company. Under the terms of the Accommodation Agreement, Alchemist and the former Company officer also agreed to transfer to the Company 15.6 million shares of the Company’s Common Stock held by Alchemist, to offset certain legal and other expenses incurred by the Company in connection with various related-party legal claims. Accordingly, in the fiscal year ended March 31, 2021, the Company and Alchemist caused the transfer to the Company, in the aggregate, of 38.3 million shares of the Company’s Common Stock then held by Alchemist, and the Company retired such redeemed shares.
In May 2022, the Company and certain of its subsidiaries, on the one hand, and Alchemist, the former officer and certain entities affiliated with the former officer, on the other hand, entered into a Confidential Settlement Agreement with Mutual Releases (the “May 2022 Settlement Agreement”) pursuant to which the parties amicably settled all claims and disputes among them; (b) the former officer sold to the Company 26,091,136 shares of the Company’s common stock then under the voting and dispositive control of the former officer; (c) the Company made a one-time payment of $1,043,645; and (d) the Company and its relevant subsidiaries, on the one hand, and the former officer and relevant entities affiliated with the former officer, on the other hand, exchanged customary mutual releases of any prior obligations among them. On May 19, 2022, the closing price for the Company’s common stock was $0.25 per share. In the fiscal quarter ending June 30, 2022, the Company measured and recognized the repurchase of its common stock at its fair value of $626,187, derecognized its remaining liability under the Co-Founder’s Agreement, and recognized a recovery of $324,230 in connection with the previously recognized loss related to the Co-Founder’s Agreement.

The Company subleases warehouse and office space from Alchemist, ~~Holdings, LLC,~~until May 2022, a10% shareholder of the Company. During the ~~nine~~three months ended ~~December 31, 2021, and January 31, 2021,~~June 30, 2022, rent expense associated with such sublease agreement was $~~75,486~~25,081.
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American Premium Water Corporation
In July 2021, the Company, and American Premium Water Corporation (“American Premium”) entered into a business consulting agreement pursuant to which the Company provides consulting services to American Premium in exchange for a monthly fee of $~~68,643~~4,166. Mr. John “JT” Thatch, a director of the Company, also serves on the Board of Directors of American Premium. During the three months ended June 30, 2022, the Company recognized consulting fee income of $12,498.
Alset Title Company, Inc.
In December 2021, Sharing Services, through one of its subsidiaries, purchased an office building in Lindon, Utah for $8,942,640. In connection therewith, Alset Title Company, Inc. (“Alset Title”), ~~respectively.~~a subsidiary of DSS, acted as escrow and closing agent for the transaction, at no cost. DSS, together with its subsidiaries, is a majority shareholder of the Company.
Hapi Café, Inc.
In November 2021, Sharing Services and Hapi Café, Inc., a company affiliated with Heng Fai Ambrose Chan, a Director of the Company, entered into a Master Franchise Agreement pursuant to which Sharing Services acquired the exclusive franchise rights in North America to the brand “Hapi Café.” Under the terms, Sharing Services, directly or through its subsidiaries, has the right to operate no less than five (5) corporate-owned stores and can offer to the public sub-franchise rights to own and operate other stores, subject to the terms and conditions contained in the Master Franchise Agreement.

American Pacific Bancorp
~~As disclosed in our Transition Report for the transition period ended March 31, 2021, in~~
On June ~~2020,~~15, 2022, Sharing Services, through one of its subsidiaries, entered into a secured real estate promissory note with American Pacific Bancorp, Inc. (“APB”), and the Company entered into a ~~Settlement Accommodation~~Loan Agreement pursuant to which APB loaned the Company approximately $5.7 million. The loan bears interest at the annual rate of 8% matures on June 1, 2024, is payable in equal monthly instalments of $43,897 commencing on July 1, 2022 (with the remainder due on June 1, 2024), and ~~an Amended~~is secured by a first mortgage interest on the Company’s Lindon, Utah office building. In connection with this loan, the Company received net proceeds of $5,522,829 from APB on June 17, 2022. APB is a subsidiary of DSS. Heng Fai Ambrose Chan, and ~~Restated Founder Consulting Agreement with~~Frank D. Heuszel, each a ~~former officer~~Director of the Company, ~~who is a principal~~also serve on the Board of ~~Alchemist Holdings, LLC. The Company recognized a settlement liability~~Directors of $~~2.0~~APB. ~~million in connection therewith. As of December 31, 2021, the settlement liability balance is $715,596~~.
NOTE 1213 – STOCK-BASED COMPENSATION
Stock Warrants
Stock Warrants Issued to Directors, Officers and Employees

In July 2020, ~~Sharing Services~~the Company and Heng Fai Ambrose Chan, a Director of the Company, entered into a Stock Purchase and Share Subscription Agreement (the “SPA Agreement”) pursuant to which Mr. Chan invested $3.0 million in the Company in exchange for 30.0 million shares of the Company’s Class A Common Stock and a fully vested Stock Warrant to purchase up to 10.0 million shares of the Company’s Class A Common Stock at an exercise price of $0.20 per share. In July 2020, Mr. Chan assigned to DSS all interests in the SPA Agreement and the transactions contemplated in the SPA Agreement were completed. Mr. Chan is also a Director of DSS.

In October 2017, ~~Sharing Services~~the Company issued a convertible note in the principal amount of $50,000 to HWH International, ~~Inc~~Inc. (“HWH”) and a detachable stock warrant to purchase up to 333,333 shares of the Company’s Common Stock, at an exercise price of $0.15 per share. The Note is convertible into 333,333 shares of the Company’s Common Stock and expires in October 2022. HWH is affiliated with Heng Fai Ambrose Chan, who in April 2020 became a Director of the ~~Company in April 2020.~~Company.

During ~~the~~ fiscal year 2020, ~~certain domestic~~ subsidiaries of the Company entered multi-year employment agreements with ~~certain of~~ its key employees. In general, each employment contract contained a fully vested initial grant of warrants exercisable at a fixed exercise price and, provided for subsequent grants that were exercisable at a discounted price based on the 10-day average stock price determined at the time of exercise. The subsequent grants would vest at each anniversary date of the employment agreement effective date. The Company begins recognizing the compensatory nature of the warrants at the service inception date and ceases recognition at the vesting date. Due to the variable nature of the exercise price for some grants, the Company will continue to recognize expense (or benefit) after the end of the service period until the warrants are exercised or expire. As such, the Company disclosures below are based ~~as appropriate,~~ on either (i) the fixed exercise price of the warrant; or (ii) the variable exercise price of the warrant as determined on the last day of the period.

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During the three months ended ~~December 31, 2021,~~June 30, 2022, and ~~January 31,~~ 2021, the Company recognized a compensatory gain of $~~154,488~~114,960 and ~~a loss of~~ $~~234,145~~1,134,170, respectively, in connection with grants with a variable exercise price after ~~the~~ service ~~period ended. During the nine months ended December 31, 2021, and January 31, 2021, the Company recognized a gain of $1,935,588~~ ~~and $672,230, respectively, in connection with grants with a variable exercise price after the service period ended.~~is completed.
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NOTE 1314 – LEASES

The Company leases space for its offices and warehouse space, under lease agreements classified as “operating leases’” as defined in ASC Topic 842.
The ~~weighted-average~~Company leases space for its corporate headquarters, warehouse space, automobiles, and office and other equipment, under lease agreements classified as operating leases. The Company has remaining lease terms of approximately 1 to 10 years on the remaining Leases. Leases with an initial term ~~and discount~~in excess of 12 months are recognized on the consolidated balance sheet based on the present value of future lease payments over the defined lease term at the lease commencement date. Future lease payments were discounted using an implicit rate ~~related~~of 10% to ~~the Company’s lease liabilities as of December 31, 2021, were~~ ~~1.0~~ ~~year and~~ 12% ~~respectively. The Company’s discount rate is generally based on estimates of its incremental borrowing rate, as discount rates implicit~~ in ~~the Company’s leases cannot be readily determined.~~connection with most leases.

The following information pertains to the Company’s leases as of the balance sheet dates indicated:

SCHEDULE OF OPERATING LEASE ASSETS AND LIABILITIES
Assets Classification December 31, 2021 March 31, 2021 Classification June 30, 2022 March 31, 2022
Operating leases Right-of-use assets, net $ 258,790 $ 428,075 Right-of-use assets, net $ 527,492 $ 593,389
Total lease assets $ 258,790 $ 428,075 $ 527,492 $ 593,389

Liabilities
Operating leases Accrued and other current liabilities $ 272,018 $ 373,398 Accrued and other current liabilities $ 68,477 $ 134,578
Operating leases Lease liability, long-term 2,491 77,810 Lease liability, long-term 461,515 461,515
Total lease liability $ 274,509 $ 451,208
Total lease liabilities $ 529,992 $ 596,093

The following information pertains to the Company’s leases for the periods indicated:
SCHEDULE OF OPERATING LEASE COSTS
Three Months Ended
Lease cost Classification December 31, 2021 January 31, 2021
Operating lease cost General and administrative expenses $ 54,463 $ 130,554
Operating lease cost Depreciation and amortization - -
Operating lease cost Interest expense, net - -
Total lease cost $ 54,463 $ 130,554
Nine Months Ended Three Months Ended June 30,
Lease cost Classification December 31, 2021 January 31, 2021 Classification 2022 2021
Operating lease cost General and administrative expenses $ 349,165 $ 401,052 General and administrative expenses $ 23,178 $ 159,820
Operating lease cost Depreciation and amortization - - Depreciation and amortization - -
Operating lease cost Interest expense, net - - Interest expense, net - -
Total lease cost $ 349,165 $ 401,052 $ 23,178 $ 159,820

The Company’s lease ~~liability is~~liabilities are payable as follows:

SCHEDULE OF OPERATING LEASE LIABILITY PAYABLE
Twelve months ending December 31,
2022 $ 272,018
Twelve months ending June 30, Amount
2023 2,491 $ 102,897
2024-2026 -
2024 52,128
2025 60,500
2026 69,746
2027 79,713
Thereafter - 231,108
Total remaining payments 596,092
Less imputed interest (66,100 )
Total lease liability $ 274,509 $ 529,992
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NOTE 1415 – COMMITMENTS AND CONTINGENCIES
~~Regulatory Matters~~
In May 2021, the Company announced that it has received a notice from the pertinent licensing authority in the Republic of Korea, (“KOSSA”) stating that the multi-level license previously issued to the Company’s subsidiary organized in South Korea has been cancelled by KOSSA. The Company is actively investigating the facts surrounding the cancellation and is reviewing all available options to resolve all outstanding issues raised by KOSSA. In addition, the Company has retained a well-respected local law firm and is evaluating several options available to the Company to conduct business in South Korea.
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Legal Matters in General

The Company ~~and its subsidiaries have~~has incurred several claims in the normal course of business. The Company believes such claims can be resolved without any material adverse effect on our consolidated financial position, results of operations, or cash flows.

The Company maintains certain liability insurance. However, certain costs of defending lawsuits are not covered by or only partially covered by its insurance policies, including claims that are below insurance deductibles. Additionally, insurance carriers could refuse to cover certain claims, in whole or in part. The Company accrues costs to defend itself from litigation as they are incurred.

The outcome of litigation is uncertain, and despite management’s view of the merits of any litigation, or the reasonableness of the Company’s estimates and reserves, the Company’s financial statements could nonetheless be materially affected by an adverse judgment. The Company believes it has adequately reserved for the contingencies arising from current legal matters where an outcome was deemed to be probable, and the loss amount could be reasonably estimated. No provision for legal matters was deemed necessary ~~as of December 31, 2021.~~at June 30, 2022.
Legal Proceedings

The Company from time to time is involved in various claims and lawsuits incidental to the conduct of its business in the ordinary course. We do not believe that the ultimate resolution of these matters will have a material adverse impact on our consolidated financial position, results of operations or cash flows.

(a) Case No. 4:20-cv-00946; Dennis Burback, Ken Eddy and Mark Andersen v. Robert Oblon, Jordan Brock, Jeff Bollinger, Four Oceans Global, LLC, Four Oceans Holdings, Inc., Alchemist Holdings, LLC, Elepreneurs U.S., LLC, Elevacity U.S., LLC, Sharing Services Global Corporation, Custom Travel Holdings, Inc., and Does 1-5, pending in the United States District Court for the Eastern District of Texas. On December 11, 2020, three investors in Four Oceans Global, LLC filed a lawsuit against the Company, its affiliated entities, and other persons and entities related to an investment made by the three investors in 2015. The Company and its affiliated entities have filed an answer denying the three investors’ claims. Plaintiffs filed a first amended complaint on October 14, 2021. ~~This~~The Company and its affiliated companies were dismissed with prejudice from this matter ~~remains pending as of December 31, 2021.~~on July 20, 2022.
(b) AAA Ref. No. 01-20-0019-3907; Sharing Services Global Corporation, Elevacity Holdings, LLC, Elevacity U.S., LLC, Elepreneurs Holdings, LLC and Elepreneurs U.S., LLC v. Robert Oblon, pending before the American Arbitration Association. On December 30, 2020, the Company and its affiliated companies filed an arbitration complaint against Robert Oblon for breach of contract and a declaratory judgment relating to the Multi-Party Settlement Agreement with Robert Oblon. This matter ~~remains pending~~was settled and closed as of ~~December 31, 2021.~~June 30, 2022.
(c) Case No. 4:20-cv-00989; Sharing Services Global Corporation, Elevacity Holdings, LLC, Elevacity U.S., LLC, Elepreneurs Holdings, LLC and Elepreneurs U.S., LLC v. Robert Oblon, pending in the in the United States District Court for the Eastern District of Texas. On December 30, 2020, the Company and its affiliated companies filed a lawsuit against Robert Oblon seeking injunctive relief relating to the Multi-Party Settlement Agreement with Robert Oblon. This matter ~~is a companion case to the AAA arbitration proceeding described in paragraph (b) above~~was settled and ~~while it remains pending~~closed as of ~~December 31, 2021, further action in this case has been stayed by court order, pending final adjudication of the referenced AAA arbitration proceeding.~~June 30, 2022.
(d) Case No. 4:21-cv-00026; Elepreneurs Holdings, LLC d/b/a Elepreneur, LLC, Elepreneurs U.S., LLC d/b/a Elepreneurs, LLC, and SHRG IP Holdings, LLC v. Lori Ann Benson, Andrea Althaus and Lindsey Buboltz, pending in the United States District Court for the Eastern District of Texas. On December 31, 2020, the Company filed suit against three former distributors and obtained injunctive relief from the 429^thJudicial District of Collin County, Texas. The lawsuit was removed by the three former distributors to federal court. The Company subsequently obtained injunctive relief from the federal court. ~~The~~This matter remains pending as of ~~December 31, 2021.~~June 30, 2022.
(e) Case No. 4:21-cv-00183; Sharing Services Global Corporation f/k/a Sharing Services, Inc., Elepreneurs Holdings, LLC n/k/a Elevacity Holdings, LLC, Elepreneurs U.S., LLC n/k/a Elevacity U.S., LLC and SHRG IP Holdings, LLC v. AmplifeiIntl, LLC d/b/a HAPInss and HAPInssBrands, LLC pending in the United States District Court for the Eastern District of Texas. On March 5, 2021, the Company and its affiliated entities filed suit against a newly formed competitor for various claims including trademark infringement, trade secret violations, and unfair competition under state and federal law as well as tortious interference with contracts and business relationships. This matter was settled and closed as of June 30, 2022.
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(f) Case No. 429-01137-2022; Elevacity U.S., LLC d/b/a The Happy Co. and Elepreneurs U.S., LLC d/b/a Elepreneurs, LLC v. Mark Willodson, Judy Willodson and Valentus, Inc., pending in the 429^th Judicial District Court of Collin County, Texas. On March 9, 2022, the Company filed suit against a competitor and former distributors. This matter remains pending as of ~~December 31, 2021.~~June 30, 2022.
(g) Case No. 4:22-cv-00042; Elevacity U.S., LLC d/b/a The Happy Co. and Elepreneurs U.S., LLC d/b/a Elepreneurs, LLC v. Brian Christopher Schweda, Jr., pending in the United States District Court for the Eastern District of Texas. On January 20, 2022, the Company filed suit against a former distributor. This matter remains pending as of June 30, 2022.
(h) Case No. 4:22-cv-00047; Elevacity U.S., LLC d/b/a The Happy Co. and Elepreneurs U.S., LLC d/b/a Elepreneurs, LLC v. Kimberley McLean, pending in the United States District Court for the Eastern District of Texas. On January 20, 2022, the Company filed suit against a former distributor. This matter remains pending as of June 30, 2022.

NOTE ~~15 –~~16 - FAIR VALUE ~~MEASURENTS~~MEASUREMENTS OF FINANCIAL INSTRUMENTS

Our financial instruments consist of cash equivalents, if any, accounts receivable, notes receivable, investments in unconsolidated entities, accounts payable and convertible notes payable. The carrying amounts of cash equivalents, if any, trade accounts receivable and accounts payable approximate their respective fair values due to the short-term nature of these financial instruments.

Consistent with the valuation hierarchy contained in ASC Topic 820, we categorized certain of our ~~consolidated~~ financial assets and liabilities as follows:

~~SUMMARY~~SCHEDULE OF VALUATION HIERARCHY FINANCIAL ASSETS AND LIABILITIES
December 31, 2021
Total Level 1 Level 2 Level 3
Assets
Investment in unconsolidated entities $ 6,183,856 $ 365,390 $ 4,341,095 $ 1,477,371
Notes receivable 208,289 - - 208,289
Total assets $ 6,392,145 $ 365,390 $ 4,341,095 $ 1,685,660
Liabilities
Notes Payable $ 1,040,400 $ - $ - $ 1,040,400
Convertible notes payable $ 13,567,292 $ - $ 13,425,000 $ 142,292
Total liabilities $ 13,567,292 $ - $ 13,425,000 $ 142,292
Total Level 1 Level 2 Level 3
March 31, 2021 June 30, 2022
Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3
Assets
Notes receivable $ 94,600 $ - $ - $ 94,600

Investment in unconsolidated entities $ 9,929,294 $ - $ - 9,929,294
Total assets $ 94,600 $ - $ - $ 94,600 $ 9,929,294 $ - $ - $ 9,929,294
Liabilities
Notes Payable $ 1,040,400 $ - $ - $ 1,040,400

Convertible notes payable 134,393 - - 134,393 $ 25,577,273 $ - $ 25,527,273 $ 50,000
Total liabilities $ 1,174,793 $ - $ - $ 1,174,793 $ 25,577,273 $ - $ 25,527,273 $ 50,000
Total Level 1 Level 2 Level 3
March 31, 2022
Total Level 1 Level 2 Level 3
Assets

Investment in unconsolidated entities $ 5,063,940 $ - $ - $ 5,063,940
Total assets $ 5,063,940 $ - $ - $ 5,063,940
Liabilities

Convertible notes payable $ 5,840,000 $ - $ 5,790,000 $ 50,000
Total liabilities $ 5,840,000 $ - $ 5,790,000 $ 50,000

NOTE ~~16 –~~17 - SUBSEQUENT EVENTS

On ~~January 10,~~July 28, 2022, at the Company’s Annual Meeting of Stockholders, the Company’s Stockholders: (i) elected each John (“JT”) Thatch and Robert H Trapp to serve as Class I directors for a four-year term or until their respective successors are elected and qualified, (ii) ratified the Third Amended and Restated Articles of Incorporation of the Company which was previously approved by the Board of Directors, and (iii) ratified the appointment by the Board of Directors of Ankit Consulting Services, Inc., Certified Public Accountants as the Company’s independent registered public accounting firm for the fiscal year that commenced on April 1, 2022.
In July and August 2022, the Company ~~and MojiLife entered into a one-year Business Consulting Agreement pursuant~~made investments in marketable securities, in the aggregate, of approximately $5.1 million to ~~which~~be carried at fair value in the ~~Company will provide to MojiLife certain consulting services in exchange for a monthly fee of $10,000. The agreement may be terminated by either party with a 60-day written notice.~~Company’s unaudited consolidated financial statements.

~~On January 14, 2022,~~In October 2017, Sharing Services issued a Convertible Promissory Note in the principal amount of $50,000 (the “Note”) to HWH International, Inc. (“HWH”). Concurrent with issuance of the Note, the Company ~~loaned $150,000~~issued to ~~MojiLife in exchange for~~HWH a ~~secured promissory note for that amount (the “Note”). Upon funding, the Company earned a loan origination fee equal to~~ ~~0.5% of the loan amount. The Note bears interest at~~ 10~~%, matures on~~ ~~January 14, 2023, and is secured by substantially all the borrower’s assets. The loan is payable in eleven (11) equal monthly installments of $8,833.33~~ ~~commencing 30 days from the loan inception date, and one (1) installment of $52,833.37~~ ~~at maturity. As disclosed earlier, the Company holds a~~ ~~30.75% equity interest in MojiLife.~~
On January 24, 2022, the Company and DSS who, together with its subsidiaries, is a majority shareholder of the Company, entered into a one-year Business Consulting Agreement (the “Consulting Agreement”) pursuant to which the DSS will provide to the Company certain consulting services, as defined in the Consulting Agreement. The Consulting Agreement may be terminated by either party on a 60-day’s written notice. In connection with the Consulting Agreement, the Company agreed to pay DSS and flat monthly fee of sixty thousand dollars ($~~60,000) and DSS received a fully vested~~ detachable stock ~~Warrant~~warrant to purchase up to an additional ~~50,000,000~~333,333 shares of the Company’s ~~Class A~~ Common ~~Stock. The Warrant may be exercised~~Stock, at ~~any time on or before~~ ~~January 24, 2027, at the~~an exercise price of $~~0.0001~~0.15 per share. ~~Notwithstanding the foregoing, the detachable Warrant would terminate~~On August 9, 2022, HWH and ~~be of no further legal force or effect if, prior to its exercise, the Consulting Agreement is terminated by~~ the Company executed an agreement to settle the Note and cancel the related stock warrant for ~~cause, as defined in~~$78,636, which amount represents the ~~Consulting Agreement.~~principal plus accrued interest. The Company made the payment to HWH on August 9, 2022.

On January 26, 2022, the Company, through a wholly owned subsidiary, and 1044Pro LLC, a Florida limited liability company (“1044Pro”), entered into a loan agreement pursuant to which the Company agreed to loan to 1044Pro up to $~~250,000, with $125,000~~ ~~of the loan amount funded immediately. Borrowings under the loan agreement bear interest at~~ 10% and are payable in full on or before July 26, 2023. In addition, borrowings are secured by a security interest in substantially all 1044Pro’s assets and a security interest in 50% of 1044Pro’s members’ interest. Borrowings are further secured by a personal guaranty executed by a member of 1044Pro.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
~~In March 2021, the Company changed its fiscal year-end from a fiscal year ending on April 30~~^th ~~to a fiscal year ending on March 31~~^st. Accordingly, this Management’s Discussion and Analysis relates to the consolidated results of operations for the three months ended December 31, 2021, compared to the three months ended January 31, 2021. The following section discusses management’s views of the financial condition and the results of operations and cash flows of Sharing Services Global Corporation and consolidated subsidiaries. This section should be read in conjunction with: (a) ~~the Company’s~~our audited consolidated financial statements and related notes included in ~~its Transition~~our Annual Report on Form 10-K for the ~~transition period~~fiscal year ended March 31, ~~2021,~~2022, and (b) ~~the Company’s unaudited~~our condensed consolidated financial statements included elsewhere in this Quarterly Report. This section may contain forward-looking statements. See “Cautionary Notice Regarding Forward-Looking Statements” above for a discussion of forward-looking statements.
Summary Results of Operations:
Three Months Ended June 30,
2022 2021 Increase (Decrease)
%
Change

Net sales $ 5,303,618 $ 11,211,526 $ (5,907,908 ) -52.7 %
Gross profit 3,646,590 7,857,716 (4,211,126 ) -53.6 %
Operating expenses (7,308,703 ) (9,878,785 ) (2,570,081 ) -26.0 %
Operating loss (3,662,113 ) (2,021,069 ) (1,641,044 ) 81.2 %
Non-operating income (expense), net 1,969,246 (779,049 ) 2,748,295
-352.8
%
Loss before income taxes (1,692,867 ) (2,800,118 ) (1,107,251 ) -39.5 %
Income tax (benefit) expense (339,857 ) 747,889 (1,087,746 ) -145.4 %
Net loss $ (1,353,010 ) $ (3,548,007 ) $ 2,194,997 -61.9 %
Highlights for the Three ~~Months Ended December 31, 2021:~~months ended June 30, 2022:
● For the three months ended ~~December 31, 2021,~~June 30, 2022, our consolidated net sales decreased ~~$7.2~~$5.9 million, or ~~50.3%~~52.7%, to ~~$7.1~~$5.3 million, compared to the three months ended ~~January 31,~~June 30, 2021.
● For the three months ended December 31, 2021, consolidated gross profit decreased $4.8 million, or 50.0%, to $4.8 million, compared to the three months ended January 31, 2021. Consolidated gross margin was 67.3% for the three months ended December 31, 2021, compared to 66.8% for the three months ended January 31, 2021.
● For the three months ended ~~December 31, 2021,~~June 30, 2022, our consolidated ~~operating expenses~~gross profit decreased ~~$2.9~~$4.2 million, or ~~26.7%~~53.6%, to ~~$7.8~~$3.6 million, compared to the three months ended ~~January 31,~~June 30, 2021. Our consolidated gross margin was 68.8% for the three months ended June 30, 2022, compared to 70.1% for the three months ended June 30, 2021.
● For the three months ended ~~December 31, 2021,~~June 30, 2022, our consolidated operating ~~loss was $3.0~~expenses decreased $2.6 million, or 26.0%, to $7.3 million, compared to ~~$1.1 million for~~ the three months ended ~~January 31,~~June 30, 2021.
● For the three months ended ~~December 31, 2021,~~June 30, 2022, our consolidated ~~net non-operating expenses were $2.1~~operating loss was $3.7 million, compared to ~~$280,017~~$2.0 million for the three months ended ~~January 31,~~June 30, 2021.
● For the three months ended ~~December 31, 2021,~~June 30, 2022, our consolidated net non-operating income ~~tax provision~~ was ~~$1.8~~$1.9 million, compared to ~~$35,758~~net non-operating expenses of $779,049 for the three months ended ~~January 31,~~June 30, 2021.
● For the three months ended ~~December 31, 2021,~~June 30, 2022, our consolidated net loss was ~~$6.9~~$1.3 million compared to ~~$1.4~~net loss of $3.5 million for the three months ended ~~January 31,~~June 30, 2021. For the three months ended ~~December 31,~~June 30, 2022, and June 30, 2021, our diluted ~~loss~~losses per share ~~was $0.04, compared to $0.01 for the three months ended January 31, 2021.~~were $0.00 and $0.02, respectively.
~~Other Significant Data or Events:~~
● For the ~~nine~~three months ended ~~December 31, 2021,~~June 30, 2022, our consolidated net cash used by operating activities was ~~$13.2~~$3.8 million compared to ~~$5.2~~$6.0 million for the ~~nine~~three months ended ~~January 31,~~June 30, 2021.
● In ~~April 2021, Sharing Services borrowed $30.0 million from~~June 2022, the Company and Decentralized Sharing Systems, Inc. (“DSSI”), a subsidiary of DSS, Inc. ~~(formerly Document Security Systems, Inc.)~~ (“DSS”), and, together with DSS, a ~~majority~~major shareholder of the ~~Company.~~
● InCompany entered into an agreement pursuant to which the parties to the agreement replaced the $30.0 million loan from April 2021 ~~Sharing Services issued to DSSI 27,000,000 shares of its Class A Common Stock, including 15,000,000 shares in payment of~~with a ~~loan origination fee of $3.0~~$27.0 million ~~and 12,000,000 shares in prepayment of $2.4 million in interest in connection with the DSSI loan discussed above.~~loan.
● ~~In September 2021, Sharing Services invested $1.4 million in Stemtech Corporation and $1.5 million in MojiLife, LLC, both emerging growth companies.~~
● In ~~December 2021, Sharing Services,~~June 2022, the Company, through ~~one~~a subsidiary, and American Pacific Bancorp, Inc. (“APB”), a subsidiary of ~~its subsidiaries, purchased an office building in Lindon, Utah for $8.9~~DSS, entered into a Loan Agreement pursuant to which APB loaned the Company approximately $5.7 million.
● In December 2021, DSSI invested $3.0 million in Sharing Services in exchange for 50,000,000 shares of its Class A Common Stock and a warrant to purchase up to 50,000,000 shares of Class A Common Stock.
● In January 2022, DSS agreed to provide certain consulting services to Sharing Services in exchange for a monthly fee of $60,000 and a fully vested detachable stock Warrant to purchase up to 50,000,000 shares of its Class A Common Stock. The Warrant may be exercised at the exercise price of $0.0001 per share.
2224

Overview
Summary Description of Business
~~The~~Sharing Services Global Corporation and subsidiaries (“Sharing Services”, “we,” or the “Company”) aim to build shareholder value by developing or acquiring businesses and technologies that increase the Company’s product and services portfolio, business competencies, and geographic reach.
Currently, the Company, through its subsidiaries, aims to further develop and operate a multi-platform business, including: (a) the Company’s current health and wellness products businesses, (b) a subscription-based travel services business in the U.S. and in international geographies under the banner: Hapi Travel ^TM~~, (c) the operation and franchising of Hapi Cafe~~ ^TM innovative destination cafes in North America, and (d) investing from time to time in emerging businesses in efforts to leverage the Company’s resources and business competencies and to participate in these businesses’ growth.
~~Health and Wellness Products~~ - The Company’s subsidiaries operating in the health and wellness products industry, which accounted for substantially all the Company’s consolidated net sales during the periods included in this Quarterly Report, market their products primarily through an independent sales force, using a direct selling business model under the proprietary brand “The Happy Co.” Currently, The Happy Co. ^TM markets and distributes its health and wellness and other products primarily in the ~~United States,~~U.S. and Canada using a direct selling business model. In addition, the Company distributes its products from the U.S. to customers located in Australia, New Zealand and other countries. The Company’s U.S. subsidiaries market our products and services through an independent sales force, using their proprietary websites, including: www.elevacity.com and www.thehappyco.com. In June 2021, the Company, through a subsidiary, commenced operations in the Republic of Korea and other countries in the Asia Pacific region. In addition, certain of the Company’s domestic subsidiaries market its health and wellness products on a “not-for-resale” basis to consumers in other countries outside the U.S.(South Korea).
~~Subscription-Based Travel Services~~ ~~- Through its subsidiary, Hapi Travel Destinations, the~~The Company ~~is preparing to launch a subscription-based travel services business under the proprietary brand “Hapi Travel.” The Hapi Travel~~ ^TM ~~services are designed to offer the opportunity to travel to exciting destinations in the U.S. and abroad to people of all ages, demographics, and economic backgrounds. Hapi Travel~~ ^TM ~~will also provide excellent entrepreneurial opportunities by capitalizing on both the direct selling model and the retail travel model.~~
~~Company-Owned and Franchised Destination Cafes~~ – In November 2021, Sharing Services and Hapi Café, Inc, a company affiliated with Heng Fai Ambrose Chan, a Director of the Company, entered into a Master Franchise Agreement pursuant to which Sharing Services acquired the exclusive franchise rights in North America to the brand “Hapi Café.” Under the terms, Sharing Services, directly or through its subsidiaries, has the right to operate no less than five (5) corporate-owned stores and can offer to the public sub-franchise rights to own and operate other stores, subject to the terms and conditions contained in the Master Franchise Agreement. Each corporate-owned or franchised Hapi Café ^TM store will offer customers and Brand Partners seeking a healthier lifestyle: (a) a selection of functional and healthy food and beverages, (b) a functional workspace with free Wi-Fi service, (c) extensive physical fitness, nutrition management and personal workout print and video content, and (d) our Hapi Travel ^TM ~~subsidiary’s proprietary travel services.~~
~~Targeted Ownership Interests~~ – Directly and through its subsidiaries, the Company from time to time will invest in emerging businesses, using a combination of debt and equity financing, in efforts to leverage the Company’s resources and business competencies and to participate in these businesses’ growth. As part of the Company’s commitment to these emerging businesses’ success, the Company, directly and through its subsidiaries, also offers non-traditional inventory financing, equity or debt financing, order fulfillment and logistic, CRM “Back Office” solutions, and other success-critical services to these businesses.
~~Sharing Services~~ was incorporated in the State of Nevada inon April 24, 2015.
As further discussed below, the Company intends to continue to grow its business both organically and by making strategic acquisitions from time to time of businesses and technologies that augment its product portfolio, complement its business competencies, and fit its growth strategy.
Convertible Notes and Borrowing Under Short-term Financing Arrangements
Historically, the Company has funded a substantial portion of its liquidity and cash needs through the intermittent issuance of convertible notes and borrowings under short-term financing arrangements, and through the intermittent issuance of equity securities. See “Liquidity and Capital Resources” below for additional information about the Company’s convertible notes and borrowings under short-term financing arrangements.
Industry and Business Trends
The information in “Industry and Business Trends” included in ITEM 1 — “Business” in our ~~Transition~~Annual Report on Form 10-K for the fiscal year ended March 31, ~~2021,~~2022, is incorporated herein by reference.
~~Change of Fiscal Year~~
~~In March 2021, the Company adopted a change in its fiscal year-end, from a fiscal year ending on April 30~~^th ~~to a fiscal year ending on March 31~~^st. Accordingly, this discussion and analysis relates to the consolidated results of operations for the three months ended December 31, 2021 (92 days) compared to the three months ended January 31, 2021 (92 days), and the results of operations and cash flows for the nine months ended December 31, 2021 (275 days) compared to the nine months ended January 31, 2021 (276 days).
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Strategic Profitable Growth Initiatives
The Company intends to grow its business by pursuing a multipronged growth strategy, ~~which includes~~that includes: (a) ~~increasing the number of~~expanding its product offerings, both within the health and wellness category and in ~~the U.S. and Canada,~~new product categories, (b) expanding ~~U.S. sales directly to foreign consumers,~~its direct-to-consumer geographic footprint (primarily in Asia), and (c) ~~expanding~~launching its ~~operations in the Asia Pacific region, (d) developing and launching a subscription-based~~previously announced membership-based consumer travel ~~services business in the U.S. and in international geographies, and (e) operating corporate-owned and franchising Hapi Café~~ ^TM ~~stores.~~
products line worldwide. This growth strategy may also include the use of strategic acquisitions of businesses that augment the Company’s product and services portfolio, business competencies and geographic reach, including by leveraging the Company’s business competencies by investing in emerging businesses, using a combination of debt and equity financing, in efforts to participate in these businesses’ growth.reach.
~~Significant~~Continuing Uncertainty Regarding the ~~Potential Impact~~Recent COVID Pandemic
In 2020, in response to the COVID pandemic, governments in the countries where our products are sold mandated or recommended various containment measures, including selective business closures, social distancing, quarantine, stay-at-home or shelter-in-place directives, and limitations on, or cancellations of, ~~Ongoing COVID Health Crisis~~larger meetings and other public events. We believe that the actual impact of the health crisis, and/or actions taken to contain the spread of the virus, have had and continue to have an adverse impact on the economies in the geographies we serve. Consumer demand for discretionary products such as ours is sensitive to significant downturns in the economy, increases in unemployment or decreases in perceived employment security, and decreases in consumer sentiment in general.
In ~~an effort~~efforts to protect our customers, distributors, employees, and other business partners, in 2020, we ~~have~~ instituted several ~~temporary~~ preventive measures, including temporarily transitioning a significant number of our corporate employees to working remotely, increasing efforts to clean and sanitize our business facilities, increasing employee safety communication, ~~efforts,~~ and transitioning our sales conventions to a virtual convention platform. ~~Some of~~While these temporary measures have increased our already significant reliance on telephone and computer systems and on the availability of continued and impeded access to the Internet by our business. The timing when these temporary measures will beare increasingly being eased or fully reversed altogether is contingent on the success of current efforts, by governmental policy makers, healthcare service providers, and others, to contain the infection rates in the U.S. and other countries where we operate. Atat the time of this Quarterly Report, we ~~cannot project with certainty the timing and extend of any potential easing or reversal of~~believe these necessary, temporary measurements are likely to have had an adverse impact on our ~~temporary preventive measures.~~business.
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There continues to be significant uncertainty in the U.S. and other countries where we operate about: (a) the availability of effective vaccines in sufficient quantities, (b) the ability of governmental authorities, healthcare service providers, and others to achieve population immunization levels that effectively stop the spread of the decease, and (c) the timing and speed of any economic recovery after the COVID health crisis is controlled.
As a result of the foregoing, we cannot predict with certainty the ~~ultimate~~ scope, duration, and ultimate impact of ~~the global COVID~~this public health emergency in the countries where we operate, including its impact on the economy, but we believe ~~the pandemic may~~these conditions are likely to have had and continue to have a material adverse impact on our ~~businesses,~~business, financial condition, cash flows, and results of operations (including revenues and profitability), and those of our key suppliers.
The COVID emergency also may have the effect of exacerbating some of the other risk factors described elsewhere in our Annual Report on Form 10-K for the fiscal year ended March 31, 2022, including the success of our growth initiatives, our ability to anticipate and effectively respond to changes in consumer preferences and buying trends in a timely manner, our dependence on one supplier for a substantial portion of the products we sell, potential fluctuations in our quarterly financial performance, our ability to generate sustained, positive cash flows from operations with which to fund our working capital needs, the potential impact on our financial performance from economic slowdowns, our ability to effectively and cost-efficiently respond to any epidemics and other health emergencies, and the potential impact on our business of any disruption in our information technology systems.
Results of Operations
The Three ~~Months Ended December 31, 2021, compared~~months ended June 30, 2022, Compared to the Three ~~Months Ended January 31,~~months ended June 30, 2021
Net Sales
~~The Company recently changed its fiscal year-end, from a fiscal year ending on April 30 to a fiscal year ending on March 31.~~ For the three months ended ~~December 31, 2021 (92-days),~~June 30, 2022, our consolidated net sales decreased ~~$7.2~~by $5.9 million, or ~~50.3%~~52.7%, to ~~$7.1~~$5.3 million, compared to the three months ended ~~January 31, 2021 (92 days).~~June 30, 2021. The decrease in ~~consolidated~~ net sales mainly reflects: (a) continuation of the decline in consumer orders that we experienced ~~by our direct-to-consumer subsidiaries~~ since the fourth quarter of the fiscal year 2020, (b) a decline ~~experienced by our direct-to-consumer subsidiaries,~~ in independent distributor orders, in the number of new independent distributors and in the number of continuing active distributors, resulting, in part, from recent product reformulations and increased competition for independent distributors, and (c) the generally adverse impact on consumer buying trends resulting from the recent increase in consumer good prices and in energy costs in the U.S. and from lingering effects of the COVID global health emergency and actions taken to help mitigate the spread of the virus in the geographies in which we operate. ~~This decrease was partially mitigated by sales (approximately $2.0 million) of health and wellness products introduced since January 31, 2021.~~
In efforts to restore strong sales growth, in the past several months, we have developed and launched ~~the~~our new business brand, “The Happy Co^TM,” at our Elevacity division, have accelerated our previously announced initiatives to expand our operations into additional international geographies, and ~~our subsidiaries~~ have further intensified ~~their~~our efforts to recruit, develop and reward ~~their~~our distributors and ~~their~~our efforts to reach new consumers, including through the continued introduction of new products.
We believe there continues to be significant uncertainty about the potentially adverse impact of the current health crisis on the economies and employment markets inof several countries, including the U.S. and ~~other countries where we operate.~~Canada. Please see Overview - Significant Uncertainty Regarding the Potential Impact of Ongoing COVID Health Crisis above.
The ~~$7.2~~$5.9 million decrease in consolidated net sales primarily reflects a decrease in ~~the~~ number of comparable product units sold, ~~and in the average unit selling prices.~~partially offset by sales of products introduced since June 30, 2021, of approximately $795,000.
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During the three months ended ~~December 31,~~June 30, 2022, and 2021, ~~approximately 88% of~~the Company derived substantially all its consolidated net sales ~~were~~ from ~~our~~the sale of its Elevate health and wellness product ~~line and approximately 12% from the sale of our weight management systems.~~line.
During the three months ended ~~January 31, 2021,~~ June 30, 2022, approximately ~~99%~~63% of ~~consolidated net sales were from the Elevate health and wellness product line~~.
~~During the three months ended December 31, 2021, approximately 61% of consolidated~~our net sales were to ~~consumers~~customers (including approximately ~~31%~~37% to recurring customers, which we refer to as “SmartShip” sales, and approximately ~~30%~~26% were to new customers) and approximately ~~39%~~37% of ~~consolidated~~our net sales were to our independent distributors.
Gross Profit
For the three months ended ~~December 31, 2021,~~June 30, 2022, our consolidated gross profit decreased ~~$4.8~~by $4.2 million, or ~~50.0%~~53.6%, to ~~$4.8~~$3.6 million, compared to the three months ended ~~January 31,~~June 30, 2021, and our consolidated gross margins were ~~67.3%~~68.8% and ~~66.8%~~70.1%, respectively. For the three months ended ~~December 31, 2021,~~June 30, 2022, gross margin ~~benefited from a decrease in our provision for excess (slow-moving) inventory of $844,435, partially offset~~was affected by an increase in ~~sales promotions~~shipping expenses and promotional pricing, as a percentage of ~~$261,398 and a shift in product sales mix (to lower margin products) in the ordinary course of business.~~sales.
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Selling and Marketing Expenses
For the three months ended ~~December 31, 2021,~~June 30, 2022, our consolidated selling and marketing expenses decreased by $2.4 million, to $2.8 million, ~~to $4.2 million,~~ or ~~59.3%~~46.5% of consolidated net sales, compared to ~~$7.0~~$5.2 million, or ~~48.8%~~45.9% of consolidated net sales, for the three months ended ~~January 31,~~June 30, 2021. The ~~$2.8 million~~ decrease in consolidated selling and marketing expenses is due primarily ~~due~~ to lower sales commissions of ~~$3.3~~$2.7 million (which reflects decrease in our consolidated net sales discussed above), partially offset by higher sales convention expenses of ~~$405,270~~approximately $309,800 (as we resumed holding some in-person ~~conventions in 2022) and higher marketing expense of $160,905.~~conventions).
General and Administrative Expenses
For the three months ended ~~December 31, 2021,~~June 30, 2022, our consolidated general and administrative expenses (which include corporate employee compensation and benefits, stock-based compensation, professional fees, rent and other occupancy costs, certain consulting fees, telephone and information technology expenses, insurance premiums, and other administrative expenses) decreased ~~$85,240,~~by approximately $177,407 to ~~$3.6~~$4.5 million, or ~~50.8%~~85.8% of consolidated net sales compared to ~~$3.7~~$4.7 million, or ~~25.9%~~42.2% of consolidated net sales, for the three months ended ~~January 31,~~June 30, 2021. The approximately $177,407 decrease in consolidated general and administrative expenses was primarily due to by lower stock-based compensation expense of ~~$697,841~~approximately $108,000, and lower ~~other general corporate administrative expenses (other than consulting and professional fees and~~ employee compensation and compensation-related ~~benefits)~~benefits of ~~$276,164,~~approximately $760,000, partially offset by higher consulting and professional fees of ~~$638,342, and higher employee compensation and compensation-related benefits of $250,423.~~approximately $867,000.

Interest Expense, Net
For the three months ended ~~December 31, 2021,~~June 30, 2022, our consolidated interest expense was ~~$616,417,~~$143,086, excluding amortization of debt discount of ~~$2,268,942,~~$2.1 million and amortization of deferred financing costs of ~~$251,825,~~$400,000, and interest income of ~~$25,145.~~$42,033. Consolidated interest expense of ~~$616,417~~$3.1 million reflects ~~$604,932~~$3.0 million associated with borrowings from “DSSI”.
For the three months ended June 30, 2021, our consolidated interest expense was $579,182, excluding amortization of debt discount of $2,356,507, amortization of deferred financing costs of $235,401, and interest income of $5,674. Consolidated interest expense of $579,183 reflects $565,479 associated with borrowings under the $30.0 million ~~loan~~ from ~~“DSSI.”~~“DSSI”.
Litigation Settlements and Other Non-operating Income/Expenses
For the three months ended ~~January 31, 2021,~~June 30, 2022, our net consolidated ~~interest expense was $21,078, excluding amortization of debt discount of $5,121~~non-operating income include litigation settlements and ~~interest~~other non-operating income of ~~$1,231. Consolidated interest expense~~approximately $1.97 million. For the three months ended June 30, 2021, our consolidated non-operating expenses include litigation settlements and other non-operating expenses of $21,078 includes $19,566 associated with borrowings under short-term financing arrangements (including borrowing under the PPP Loan discussed under Short-term Borrowings and Convertible Notes below) and $1,512 associated with our convertible notes.approximately $779,600.
Gain (loss) on employee warrants liability
For the three months ended ~~December 31,~~June 30, 2022, we recognized a compensatory gain of $114,960, compared to $1,134,170 for the three months ended June 30, 2021, ~~consolidated gain~~ in connection with employee warrants with a variable exercise price after service was ~~completed was $154,487 compared to a consolidated compensatory loss of $234,145 for the three months ended January 31, 2021.~~completed.
~~Unrealized Gains (Losses) on Investment in Unconsolidated Entities~~
For the three months ended December 31, 2021, net unrealized gains, before income tax, in connection with our investment in equity instruments of unconsolidated entities were $1,201,510. See Note 5 of the Notes to Unaudited Condensed Consolidated Financial Statements for more details.
~~Foreign Currency Losses and~~ ~~Other Non-operating Expenses, Net~~
For the three months ended December 31, 2021, foreign currency losses and other non-operating expenses (including foreign currency transaction losses of $249,484 and equity in losses of unconsolidated affiliates of $59,629) were $309,113 compared to consolidated other non-operating expenses (including litigation settlements) of $20,904 for the three months ended January 31, 2021.
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~~Provision for (Benefit from) Income Taxes~~
Income tax (benefit) provision include current and deferred income taxes for both our domestic and foreign operations. Income from our international operations is subject to taxation in the countries in which we operate.
We use the recognition and measurement provisions of the FASB ASC Topic 740, Income Taxes (“Topic 740”) to account for income taxes. The provisions of Topic 740 require a company to record a valuation allowance when the “more likely than not” criterion for realizing net deferred tax assets cannot be met. Furthermore, the weight given to the potential effect of such evidence should be commensurate with the extent to which it can be objectively verified. As a result, we reviewed the operating results, as well as all positive and negative evidence related to realization of such deferred tax assets to evaluate the need for a valuation allowance in each tax jurisdiction. In evaluating the US and South Korea markets, it was determined a valuation allowance should be placed on each market as of December 31, 2021.
During the three months ended December 31, 2021, the Company recognized a consolidated current federal income tax provision of $4.2 million, including a valuation allowance of $2.6 million placed on certain deferred tax assets being carried forward or projected to reverse in future years due to the uncertainty of the Company generating sufficient taxable income in the foreseeable future to make realization probable, a consolidated deferred income tax benefit of $2.5 million and a provision for state and local taxes of $41,931. During the three months ended January 31, 2021, the Company recognized a provision for deferred income taxes of $368,032, a current federal income tax benefit of $354,059, and a provision for state and local taxes of $21,785.
~~Net Earnings (Loss) and Earnings (Loss) per Share~~
As a result of the foregoing, for the three months ended December 31, 2021, consolidated net loss was $6.9 million, compared to $1.4 million for the three months ended January 31, 2021. For the three months ended December 31, 2021, diluted loss per share was $0.04, compared to $0.01 for the three months ended January 31, 2021.
~~The Nine Months Ended December 31, 2021, compared to the Nine Months Ended January 31, 2021~~
~~Net Sales~~
For the nine months ended December 31, 2021 (275 days), consolidated net sales decreased $27.4 million, or 49.3%, to $28.2 million, compared to the nine months ended January 31, 2021 (276 days). The decrease in consolidated net sales mainly reflects: (a) continuation of the decline in consumer orders experienced by our direct-to-consumer subsidiaries since the fourth quarter of the fiscal year 2020, (b) a decline, experienced by our direct-to-consumer subsidiaries, in independent distributor orders, in the number of new independent distributors, and in the number of continuing active distributors, resulting, in part, from recent product reformulations and increased competition for independent distributors, (c) the generally adverse impact on consumer buying trends resulting from the COVID global health emergency and actions taken to help mitigate the spread of the virus in the geographies in which we operate, and (d) one fewer day of sales, or approximately $80,000. This decrease was partially mitigated by sales (approximately $3.5 million) of health and wellness products introduced since January 31, 2021, by sales (approximately $3.0 million) of our new weight management systems, and by sales (approximately $1.4 million) of our subsidiary operating in South Korea.
~~In efforts to restore sales growth, we have launched our new business brand, “The Happy Co~~ ^TM,” at our Elevacity division, accelerated our previously announced initiatives to expand operations into additional international geographies, and our subsidiaries have intensified their efforts to recruit, develop and reward their distributors and their efforts reach new consumers, including through the continued introduction of new products.
We believe there continues to be significant uncertainty about the potentially adverse impact of the current health crisis on the economies and employment markets in several countries, including the U.S. and other countries where we operate. Please see Overview - ~~Significant Uncertainty Regarding the Potential Impact of Ongoing COVID Health Crisis~~ ~~above.~~
~~The $27.4 million decrease in consolidated net sales reflects a decrease in number of comparable product units sold and in the average unit selling prices.~~
~~During the nine months ended December 31, 2021,~~ ~~approximately 88% of consolidated net sales were from our Elevate health and wellness product line and approximately 12% from the sale of our weight management systems.~~ ~~During the nine months ended January 31, 2021,~~ ~~approximately 99% of consolidated net sales from the Elevate health and wellness product line~~.
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During the nine months ended December 31, 2021, approximately 67% of consolidated net sales were to consumers (including approximately 32% to recurring customers, which we refer to as “SmartShip” sales, and approximately 35% were to new customers) and approximately 33% of consolidated net sales were to independent distributors.
~~Gross Profit~~
For the nine months ended December 31, 2021, consolidated gross profit decreased $20.4 million, or 51.0%, to $19.6 million, compared to the nine months ended January 31, 2021, and consolidated gross margins were 69.5% and 71.8%, respectively. For the nine months ended December 31, 2021, gross margin was adversely affected by an increase in sales promotions of $559,538 and a shift in product sales mix (to lower margin products) in the normal course of business, partially offset by a decrease in our provision for excess (slow-moving) inventory of $542,348.
~~Selling and Marketing Expenses~~
For the nine months ended December 31, 2021, consolidated selling and marketing expenses decreased $11.0 million to $14.4 million, or 51.0% of consolidated net sales, compared to $25.4 million, or 45.6% of consolidated net sales, for the nine months ended January 31, 2021. The decrease in consolidated selling and marketing expenses is primarily due to lower sales commissions of $11.5 million (which reflects decrease in consolidated net sales discussed above), partially offset by higher convention expenses of $420,189 (as we resumed holding some in-person conventions in 2022) and higher marketing expense of $102,245.
~~General and Administrative Expenses~~
For the nine months ended December 31, 2021, consolidated general and administrative expenses (which include employee compensation and benefits, stock-based compensation, professional fees, rent and other occupancy costs, certain consulting fees, telephone and information technology expenses, insurance premiums, and other administrative expenses) decreased $1.5 million, to $13.9 million, or 49.2% of consolidated net sales, compared to $15.4 million, or 27.6% of consolidated net sales, for the nine months ended January 31, 2021. The $1.5 million decrease in consolidated general and administrative expenses was due to lower stock-based compensation expense of $3.2 million and lower other general corporate administrative expenses (other than consulting and professional fees) of $83,111, partially offset by higher consulting and professional fees of $1.9 million.
~~Interest Expense, Net~~
For the nine months ended December 31, 2021, consolidated interest expense was $1,829,517, excluding amortization of debt discount of $6,659,359, amortization of deferred financing costs of $739,051, and interest income of $59,516. Consolidated interest expense of $1,829,517 reflects $1,775,342 associated with borrowings under the $30.0 million loan from “DSSI.”
For the nine months ended January 31, 2021, our consolidated interest expense was $32,470, excluding amortization of debt discount of $15,362 and interest income of $5,465. Consolidated interest expense of $32,470 includes $27,933 associated with borrowings under short-term financing arrangements (including borrowing under the PPP Loan discussed under Short-term Borrowings and Convertible Notes below) and $4,537 associated with our convertible notes.
~~Gain (loss) on employee warrants liability~~
For the three months ended December 31, 2021, and three months ended January 31, 2021, consolidated gains in connection with employee warrants with a variable exercise price after service was completed were $1,935,588 and $672,230, respectively.
Gain on Extinguishment of Debt
In June 2021, ~~Sharing Services’~~the Company’s borrowings under the Paycheck Protection Program features of the Coronavirus Aid, Relief, and Economic Security Act of 2020 (the “CARES Act”) were forgiven pursuant to the CARES Act. The Company recognized a gain on extinguishment of debt of ~~approximately $1,040,400,~~$1.0 million, before income tax, in connection therewith.
~~Unrealized Gains (Losses) on Investment in Unconsolidated Entities~~Income Tax (Benefit) Provision
For the nine months ended December 31, 2021, net unrealized gains, before income tax, in connection with our investment in equity instruments of unconsolidated entities were $3.3 million. See Note 5 of the Notes to Unaudited Condensed Consolidated Financial Statements for more details.
~~Foreign Currency Losses and~~ ~~Other Non-operating Expenses, net~~
For the nine months ended December 31, 2021, foreign currency losses and other non-operating expenses (including foreign currency transaction losses of $249,484, equity in losses of unconsolidated affiliates of $59,629 and litigation settlements of $26,050) were $335,163. For the nine months ended January 31, 2021, consolidated other non-operating expenses (including litigation settlements) were $154,726, including a loss of $134,726 from the settlement of legal claims and related legal expenses, and loss on impairment of investments of $20,000
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~~Provision for (Benefit from) Income Taxes~~
Income tax (benefit) provision include current and deferred income taxes for both our domestic and foreign operations. Income from our international operations is subject to taxation in the countries in which we operate.
We use the recognition and measurement provisions of the FASB ASC Topic 740, Income Taxes (“Topic 740”) to account for income taxes. The provisions of Topic 740 require a company to record a valuation allowance when the “more likely than not” criterion for realizing net deferred tax assets cannot be met. Furthermore, the weight given to the potential effect of such evidence should be commensurate with the extent to which it can be objectively verified. As a result, we reviewed the operating results, as well as all positive and negative evidence related to realization of such deferred tax assets to evaluate the need for a valuation allowance in each tax jurisdiction. In evaluating the US and South Korea markets, it was determined a valuation allowance should be placed on each market as of December 31, 2021.
During the ~~nine~~three months ended ~~December 31,~~June 30, 2022, the Company recognized a current federal income tax benefit of $882,692, a provision for deferred federal income taxes of $552,445, and a state and local tax benefit of $9,610. During the three months ended June 30, 2021, the Company recognized a ~~consolidated~~ provision for current federal income taxes of ~~$5.2 million, including~~$1,445,951, net of a valuation allowance recognized of $4.5 million placed on certain deferred tax assets being carried forward or projected to reverse in future years due to the uncertainty of the Company generating sufficient taxable income in the foreseeable future to make realization probable, a consolidated deferred income tax benefit of $4.0 million, and$1,428,620, a provision for state and local taxes of ~~$109,241. During the nine months ended January 31, 2021, the Company recognized~~$19,898, and a deferred income tax ~~provision of $301,410, a current federal income tax~~ benefit of ~~$245,759, and a provision for state and local taxes of $336,098.~~$717,960.
27

Net ~~Earnings (Loss)~~Loss and ~~Earnings (Loss)~~Loss per Share
As a result of the foregoing, for the ~~nine~~three months ended ~~December 31, 2021,~~June 30, 2022, our consolidated net loss was ~~$13.2~~$1.4 million, compared to ~~$0.7~~$3.5 million for the ~~nine~~three months ended ~~January 31,~~June 30, 2021. For the ~~nine~~three months ended ~~December 31,~~June 30, 2022, and June 30, 2021, our diluted loss per share was ~~$0.07, compared to~~ $0.00 ~~for the nine months ended January 31, 2021.~~and $0.02, respectively.
Liquidity and Capital Resources
We broadly define liquidity as our ability to generate sufficient cash, from internal and external sources, to meet our obligations and commitments. We believe that, for this purpose, liquidity cannot be considered separately from capital resources.
Working Capital
~~Consolidated working~~Working capital (total current assets minus total current liabilities) was ~~$18.1~~$2.0 million and ~~$3.5~~$7.4 million as of ~~December 31, 2021,~~June 30, 2022, and March 31, ~~2021, respectively.~~2022, respectively,
As of ~~December 31, 2021, consolidated~~June 30, 2022, our cash and cash equivalents were ~~$19.8~~$14.5 million. Based upon the current level of operations and anticipated investments necessary to grow our business, we believe that existing cash balances and anticipated funds from operations will likely be sufficient to meet our working capital requirements over the next 12 months.
Historical Cash Flows
Historically, our primary sources of cash have been capital transactions involving the issuance of equity securities and secured and unsecured debt (See “Recent Issuances of Equity Securities” and “Short-term Borrowings and Convertible Notes” below) and cash flows from operating activities; and our primary uses of cash have been for ~~our subsidiaries’~~ operating activities, capital expenditures, acquisitions, net cash advances to related parties, and debt repayments in the ordinary course of our business.
28
The following table summarizes our cash flow activities for the ~~nine~~three months ended ~~December 31, 2021,~~June 30, 2022, compared to the ~~nine~~three months ended ~~January 31,~~June 30, 2021:
Nine Months Ended
December 31,
2021 January 31,
2021 Increase
(Decrease)
Net cash used in operating activities $ (13,178,848 ) $ (5,183,072 ) $ 7,995,776
Net cash used in investing activities (12,213,306 ) (862,267 ) 11,351,039
Net cash provided by financing activities 33,073,607 3,163,396 29,910,211
Impact of currency rate changes in cash (45,331 ) - 45,331
Net increase (decrease) in cash and cash equivalents $ 7,636,122 $ (2,881,943 ) $ 10,518,065
Three Months Ended June 30,
2022 2021 Increase (Decrease)
Net cash used in operating activities $ (3,776,508 ) $ (6,017,388 ) $ 2,240,880
Net cash used in investing activities (136,807 ) (234,658 ) 97,851
Net cash provided by financing activities 1,373,681 30,000,000 (28,626,319 )
Impact of currency rate changes in cash (30,140 ) 26,304 (56,444 )
Net (decrease) increase in cash and cash equivalents $ (2,569,774 ) $ 23,774,258 $ (26,344,032 )

Net Cash Used in Operating Activities
For the ~~nine~~three months ended ~~December 31, 2021,~~June 30, 2022, net cash used in operating activities was ~~$13.2~~$3.8 million, compared to ~~$5.2~~net cash used in operating activities of $6.0 million for the ~~nine~~three months ended ~~January 31,~~June 30, 2021. The ~~$8.0~~$2.2 million ~~increase~~change was due to a ~~decrease~~decline in profitability, ~~of $15.6 million,~~ excluding non-cash items, such as depreciation and amortization, stock-based compensation expense, provision for obsolete inventory losses, amortization of debt discount, losses on impairment of investments in unconsolidated entities and a note receivable, and estimated settlement liability. ~~This~~In addition, the change ~~was partially offset by~~in net ~~changes~~cash used in operating activities reflects a change in operating assets and liabilities of ~~$7.6~~$1.3 million.
Net Cash Used in Investing Activities
For the ~~nine~~three months ended ~~December 31, 2021,~~June 30, 2022, net cash used in investing activities was ~~$12.2 million,~~$136,807, compared to ~~$862,267~~$234,658 for the ~~nine~~three months ended ~~January 31,~~June 30, 2021. The ~~$11.4 million increase~~$97,851 change was ~~primarily~~ due to ~~higher~~lower capital expenditures ~~(including the December 2021 purchase of our Lindon, Utah building)~~ and capitalizable costs related to ongoing upgrades to our information technology ~~systems of $8.2 million, higher payments for acquisitions of $2.9 million and lower net collections of notes receivable of $211,736.~~systems.
28

Net Cash Provided by Financing Activities
For the ~~nine~~three months ended ~~December 31, 2021,~~June 30, 2022, net cash ~~provided by~~used in financing activities ~~was $33.1~~decreased by $28.6 million, to $1.4 million, compared to ~~$3.2~~$30.0 million for the ~~nine~~three months ended ~~January 31, 2021. The $29.9 million increase was mainly~~June 30, 2021, primarily due to ~~higher net proceeds ($29.0 million) from borrowings under short-term financing arrangements and/or convertible promissory notes (including borrowings from~~refinancing of the April 2021 DSSI ~~in the nine months ended December 31, 2021) and lower repurchases of common stock of $899,500.~~loan.
Impact of currency rate changes in cash
For the three months ended June 30, 2022, the impact of currency rate changes in cash was $30,140, compared to $26,304 for the three months ended June 30, 2021. Prior to April 1, 2021, substantially all our consolidated net sales were denominated in U.S. dollars. Effective April 1, 2021, the Company’s consolidated financial statements reflect the operation of our wholly owned subsidiaries operating in the Asia Pacific region. See Note 12 of the Notes to ~~Unaudited Condensed~~ Consolidated Financial Statements contained ~~elsewhere~~ in ~~this Quarterly~~our Annual Report on Form 10-K for the fiscal year ended March 31, 2022, for information about our translation of foreign currency financial statements.
Legal Proceedings
The information contained in Note ~~14,~~ ~~Commitments and Contingencies~~,15, COMMITMENTS AND CONTINGENCIES - Legal Proceedings, of the Notes to ~~Unaudited~~ Condensed Consolidated Financial Statements located elsewhere in this Quarterly Report is incorporated herein by reference.
Potential Future Acquisitions
The Company, directly and through its subsidiaries, may make strategic acquisitions and purchases of equity interests in businesses that complement its business competencies and growth strategy. Such acquisitions and purchases of equity interests are expected to be funded with cash and cash equivalents, cash provided by operations, if any, and issuance of equity securities and debt.
29
~~Recent Issuances of Equity Securities~~
~~Common Stock~~
~~During~~ ~~the nine months ended December 31, 2021:~~
● Sharing Services issued to DSSI 27,000,000 shares of its Class A Common Stock, including 15,000,000 shares in payment of the loan origination fee discussed below and 12,000,000 shares in prepayment of interest for the first year in connection with the related party loan discussed below,
● Sharing Services and DSSI entered into a Stock Purchase and Share Subscription Agreement pursuant to which DSSI invested $3,000,000 in the Company in exchange for an aggregate of 50,000,000 shares of Class A Common Stock,
● ~~Sharing Services issued 10,000 shares of its Class A Common Stock upon the conversion of 10,000 shares of its Series C preferred stock, and~~
● ~~Sharing Services issued, in the aggregate, 1,813,200 shares of its Class A Common Stock in connection with the exercise of stock warrants by its employees and/or independent distributors.~~

Short-term Borrowings and Convertible Notes

Borrowing Under Financing Arrangements (Note Payable)

In May 2020, ~~Sharing Services~~the Company was granted a loan (the “PPP Loan”) by a commercial bank in the amount of $1.0 million, pursuant to the Paycheck Protection Program features of the Coronavirus Aid, Relief, and Economic Security Act of 2020 (the “CARES Act”). The Company’s borrowings under the PPP Loan were eligible for loan forgiveness under the provisions of the CARES Act. In June 2021, the Company was formally notified by the lender that the Company’s obligations under the loan have been forgiven effective May 25, 2021. ~~See Note 1, Description of Operations~~ The loan forgiveness applies to all principal and ~~Basis of Presentation – Note Payable, of~~interest accrued through the ~~Notes to Unaudited Condensed Consolidated Financial Statements contained elsewhere in this Quarterly Report for more information about the PPP Loan.~~loan forgiveness effective date.

Convertible Notes ~~Held by~~from Related Parties

Decentralized Sharing Systems, Inc.

On April 5, 2021, the Company and Decentralized Sharing ~~Services and DSSI~~Systems, Inc. (“DSSI”) which, together with DSS, Inc., is a majority shareholder of the Company, entered into a Securities Purchase Agreement, pursuant to which the Company issued: (a) a Convertible Promissory Note in the principal amount of $30.0 million (the “Note”) in favor of DSSI, and (b) a detachable Warrant to purchase up to 150,000,000 shares of the Company’s Class A Common Stock, at $0.22 per share, and DSSI loaned to the Company $30.0 million. Under the terms of the loan, the Company agreed to pay to DSSI a loan ~~origination fee~~Origination Fee of $3.0 million, payable in shares of the Company’s Class A Common Stock, at the rate of $0.20 per share. The Note bears interest at the annual rate of 8% and matures on April 5, 2024, subject to certain acceleration provisions upon the occurrence of an Event of Default, as defined in the Note. At any time during the term of the Note, all or part of the Note, including principal, less unamortized prepaid interest, if any, plus any accrued interest and other fees ~~can be converted~~was convertible into shares of the Company’s Class A Common Stock at the rate of $0.20 per share, at the option of the holder.

On June 15, 2022, the Company and DSSI entered into an agreement pursuant to which the Company issued to DSSI: (a) a two-year Convertible, Advancing Promissory Note in the principal amount of $27.0 million (the “2022 Note”) in favor of DSSI and (b) a detachable Warrant to purchase up to 818,181,819 shares of the Company’s Class A Common Stock at the exercise price of $0.033 per share. The 2022 Note bears interest at the annual rate of 8% and is due and payable on demand or, if no demand, on May 1, 2024. At any time during the term of the 2022 Note, all or part of the Note may be converted into up to 818,181,819 shares of the Company’s Class A Common Stock, at the option of the holder. Under the terms of the agreement, the Company paid to DSSI a loan origination fee of $270,000, and DSSI surrendered to the Company all DSSI’s rights pursuant to the Convertible Promissory Note in the principal amount of $30.0 million issued by the Company in April 2021 and the detachable Warrant to purchase up to 150,000,000 shares of the Company’s Class A Common Stock, at $0.22 per share, issued concurrently with such $30.0 million note, as discussed in the preceding paragraph.

American Pacific Bancorp, Inc.

On June 15, 2022, Linden Real Estate Holdings, LLC, a wholly owned subsidiary of the Company, American Pacific Bancorp, Inc. (“APB”), a subsidiary of DSS, and the Company entered a Loan Agreement pursuant to which APB loaned the Company approximately $5.7 million. The loan bears interest at the annual rate of 8%, matures on June 1, 2024, and is secured by a first mortgage interest on the Company’s Lindon, Utah office building. In connection with this loan, the Company received net proceeds of $5,522,829 from APB. Heng Fai Ambrose Chan and Frank D. Heuszel, each a Director of the Company, also serve on the Board of Directors of APB.

HWH International, Inc.

In October 2017, ~~Sharing Services~~the Company issued a Convertible Promissory Note in the principal amount of $50,000 (the “Note”) to HWH International, Inc (“HWH” or the “Holder”). HWH is affiliated with Heng Fai Ambrose Chan, who in April 2020 became a Director of the ~~Company in April 2020.~~Company. The Note is convertible into 333,333 shares of the Company’s Common Stock. Concurrent with issuance of the Note, the Company issued to HWH a detachable stock warrant to purchase up to an additional 333,333 shares of the Company’s Common Stock, at an exercise price of $0.15 per share. Under the terms of the Note and the detachable stock warrant, the Holder is entitled to certain financing rights. If the Company enters into more favorable transactions with a third-party investor, it must notify the Holder and may have to amend and restate the Note and the detachable stock warrant to be identical. ~~As of the date of this Quarterly Report,~~On August 9, 2022, HWH and the Company ~~and HWH are jointly reviewing~~executed an agreement to settle the Note and cancel the ~~detachable stock warrant. The number of shares that HWH may acquire upon conversion of the HWH Note and exercise of the detachable~~related stock warrant ~~may be greater than~~for $78,636, which amount represents the ~~amounts described in this paragraph, depending on the results of such review.~~

~~Convertible Note Payable, Other~~

As of December 31, 2021, convertible notes payable also include a note in the amount of $100,000 held by an unaffiliated lender. As of the date of this Quarterly Report, the Company and the holder of the note are discussing options for the note holder to convert a portion of the note and for the Company to settle the remainder of the note.principal plus accrued interest. The Company ~~intends~~made the payment to conclude these discussions and to settle the April 2018 Note in the foreseeable future. See Note 8 of the Notes to Unaudited Condensed Consolidated Financial Statements contained elsewhere in this Quarterly Report for more information.HWH on August 9, 2022.

Capital Requirements

During the ~~nine~~three months ended ~~December 31, 2021, consolidated~~June 30, 2022, capital expenditures ~~included $8.9 million related to our purchase of the Lindon, Utah building in December 2021 and $219,977~~ for ~~other~~ property and equipment (consisting of furniture and fixtures, computer equipment and software, other office equipment and leasehold improvements) in the ordinary course of our ~~business.~~business were $136,807.

Contractual Obligations

There were no material changes to our contractual cash obligations during the three months ended June 30, 2022, except for (a) the June 2022 refinancing of our loan from DSSI and (b) the June 2022 financing or our Lindon, Utah office building, as described above.

Off-Balance Sheet Financing Arrangements

As of June 30, 2022, we had no off-balance sheet financing arrangements.

Inflation

In recent history, inflation has generally been low in the geographies where we operate. However, at the time of this Quarterly Report, the increase in price of consumer goods in the United States has reached a 40-year high, primarily as a result of higher energy costs, higher housing costs, and the impact global supply chain disruptions. Please see “Our business and financial performance could be adversely affected by inflation” contained in ITEM 1A, — “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2022.

~~Contractual Obligations~~

There were no material changes to contractual cash obligations during the nine months ended December 31, 2021, except for (a) the issuance of the $30.0 million convertible promissory note in favor of Decentralized Sharing Systems, Inc. in connection with the related-party loan discussed above and (b) the May 2021 forgiveness of the PPP loan obligation under the CARES Act as discussed above.

~~Off-Balance Sheet Financing Arrangements~~

~~As of December 31, 2021, we had no off-balance sheet financing arrangements.~~

~~Inflation~~

~~We believe inflation did not have a material effect on our consolidated results of operations during the periods presented in this Quarterly Report.~~

Critical Accounting Estimates

While the Company is not aware of material changes to its critical accounting estimates or assumptions since March 31, ~~2021,~~2022, it is reasonably possible that estimates made in the Company’s unaudited condensed consolidated financial statements have been, or will be, materially impacted as a result of the ultimate resolution of the uncertainties associated with the COVID health crisis. This may include estimates regarding ~~losses on~~allowance for slow-moving or obsolete inventory, impairment losses related to long-lived assets, the nature and timing of satisfaction of performance obligations resulting from contracts with customers, and the valuation of loss contingencies. Please see Overview - ~~Significant~~Continuing Uncertainty Regarding the ~~Potential Impact of Ongoing~~Recent COVID ~~Health Crisis~~Pandemic above.

Accounting Changes and Recent Accounting Pronouncements

For discussion of accounting changes and recent accounting pronouncements, see Note 12 of the Notes to ~~Unaudited~~ Condensed Consolidated Financial Statements contained elsewhere in this Quarterly Report.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

The Company is a Smaller Reporting Company, as defined in Rule 12b-2 of the Exchange Act, and, accordingly, is not required to provide the information called for by this Item.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls ~~Evaluation~~ and ~~Related CEO and CFO Certifications.~~ Procedures.Our management, with the participation of our ~~principal executive officer~~Chief Executive Officer (“CEO”) and ~~principal financial officer~~our Chief Financial Officer (“CFO”), ~~conducted an evaluation of~~evaluated the effectiveness ~~of the design and operation~~ of our disclosure controls and procedures, as ~~of December 31, 2021.~~

~~Certifications of our CEO and our CFO, which are required~~defined in ~~accordance with~~ Rule ~~13a-14~~13a-15(e) of the Exchange Act, ~~are attached~~ as ~~exhibits~~of the end of the fiscal period covered by this Annual Report, and concluded that, as of June 30, 2022, the Company’s disclosure controls and procedures were effective in providing reasonable assurance that information required to ~~this Quarterly Report. This “Controls~~be disclosed in reports that it files or submits under the Exchange Act is recorded, processed, summarized and ~~Procedures” section discusses~~reported within the ~~above-described Certifications~~time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the ~~evaluation~~Company’s management and its Board of ~~“disclosure controls” referred~~Directors, as appropriate to ~~therein. Accordingly, this section should be read in conjunction with such Certifications.~~allow timely decisions regarding required disclosure.

Limitations on the ~~Effectiveness of Controls.~~Company’s Controls and Procedures. We do not expect that our disclosure controls and procedures will prevent all errors and all fraud. Any system of controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the system will be met. Because of the limitations in all such systems, no evaluation can provide absolute assurance that all control issues and instances of fraud (if any) within the Company ~~will be~~have been detected. Furthermore, ~~because~~ the design of any system of disclosure controls and procedures is based in part upon assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future ~~conditions.~~conditions, regardless of how unlikely. Because of these inherent limitations in a cost-effective system of controls and procedures, misstatements and/or omissions due to error or fraud may occur undetected.

~~Scope~~In light of the ~~Controls Evaluation.~~ Form 10-K/A filed by the Company with the Securities Exchange Commission (SEC) on July 7, 2022, for the purpose of correcting a typographical error included in its Consolidated Statements of Changes in Stockholders’ Equity for fiscal years ended March 31, 2022 and 2021, management determined that the Company had a significant deficiency in its internal control over financial reporting. The above-described evaluation of our disclosure controls and procedures included a review of (a) their objectives and design, (b) our implementation of the controls and procedures and (c) the effect of the controls and procedures upon the information generated for this Quarterly Report. In the course of the evaluation, we sought to identify whether we had any data errors, control problems or acts of fraud and sought to confirm that necessary corrective action, including process improvement, followed. We perform this type of evaluation on a quarterly basis so that conclusions concerning the effectiveness of our disclosure controls and procedures can accompany our Quarterly Reports on Form 10-Q and our Annual Report on Form 10-K.

~~Conclusions regarding Disclosure Controls.~~ Based upon the aforementioned evaluation of our disclosure controls and procedures, our CEO and CFO concluded that, as of December 31, 2021, we maintain disclosure controls and procedures that are effective in providing reasonable assurance 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 rules and forms, and that such information is accumulated and communicatedsignificant deficiency was attributable mainly to our ~~management, including our CEO~~failure to effectively review and ~~CFO, as appropriate~~proofread the registration statement, detect and correct any errors before it was filed with the SEC. To address this significant deficiency, procedures have been developed and implemented by the accounting department in August 2022, to ~~allow~~ensure the timely ~~decisions regarding required disclosure.~~review, proof reading and sign-off of all registration statements prior to their submission to the SEC.

Changes in Internal Control over Financial Reporting. ~~During~~Except for the remedial actions described above, during our most recent fiscal quarter, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

3231

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

The information contained in Note ~~14,~~ ~~Commitments and Contingencies~~,15, COMMITMENTS AND CONTINGENCIES - Legal Proceedings, of the Notes to Unaudited Condensed Consolidated Financial Statements located elsewhere in this Quarterly Report is incorporated herein by reference.

Item 1A. Risk Factors.

The factors contained in ITEM 1A, — “Risk Factors” in our ~~Transition~~Annual Report on Form 10-K for the ~~transition period~~fiscal year ended March 31, ~~2021,~~2022, are incorporated herein by reference.

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

(a) Unregistered Sales of Securities

In the three months ended December 31, 2021, Company issued to its employees 1,500,000 shares of its Class A Common Stock in connection with the exercise of employee stock warrants. Proceeds from such exercise of stock warrants were used for general operations.None

In the three months ended December 31, 2021, the Company issued to DSSI an aggregate of 50,000,000 shares of Class A Common Stock in exchange for $3.0 million in cash. Proceeds from such stock issuance were used for general operations.

In connection with the transactions described in the two preceding paragraphs, no underwriters were involved, and the issuances were made in reliance on the exemption from the registration requirements of the Securities Act provided under Section 4(a)(2) thereof.

(b) Not applicable

None

Item 3. Defaults Upon Senior Securities.

(a) Not applicable

(b) Not applicable

Item 4. Mining Safety Disclosures.

Not applicable

Item 5. Other Information.

On December 8, 2021, Sharing Services, through one of its subsidiaries, purchased an office building in Lindon, Utah for $8,942,640. In connection therewith, Alset Title Company, Inc., a subsidiary of DSS, issued an Owner’s Title Insurance Policy in favor of Sharing Services and acted as escrow and closing agent for the transaction. DSS, together with its subsidiaries, is a majority shareholder of the Company.None

3332

Item 6. Exhibits.

The following exhibits are filed as part of this Quarterly Report unless otherwise indicated:

3.1		~~Second~~Third Amended and Restated Articles of Incorporation of Sharing Services Global Corporation, which is incorporated herein by reference from Exhibit A to the Company’s ~~2021~~2022 Proxy Statement on Schedule 14A filed on July 14, ~~2021~~2022

3.2		Bylaws of Sharing Services Global Corporation, which is incorporated herein by reference from Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on January 24, 2019

4.1		Certificate of Designation of Series A Preferred Stock, which is incorporated herein by reference from Exhibit 3.1.2 to the Company’s Current Report on Form 8-K filed on May 8, 2017

4.2		Certificate of Designation of Series C Preferred Stock, which is incorporated herein by reference from Exhibit 3.1.4 to the Company’s Current Report on Form 8-K filed on May 8, 2017

4.3		Convertible Promissory Note dated April 13, 2018, issued by Sharing Service, Inc. in favor of RB Capital Partners, Inc., which is incorporated herein by reference from Exhibit 1.1 to the Company’s Current Report on Form 8-K filed on April 19, 2018

4.4		Convertible Promissory Note dated April 5, 2021, issued by Sharing Service Global Corporation in favor of Decentralized Sharing Systems, Inc., which is incorporated herein by reference from Exhibit 1.2 to the Company’s Current Report on Form 8-K filed on April 9, 2021

4.5		Warrant to Purchase Shares of Sharing Services Global Corporation’s Class A Common Stock issued to Decentralized Sharing Systems, Inc., which is incorporated herein by reference from Exhibit 1.3 to the Company’s Current Report on Form 8-K filed on April 9, 2021

~~10.1~~4.6		~~Amended and Restated Executive Employment Agreement effective as~~Warrant to Purchase Shares of ~~May 16, 2019, between John “JT” Thatch and~~ Sharing ~~Service~~Services Global ~~Corporation,~~Corporation’s Class A Common Stock, which is incorporated herein by reference from Exhibit ~~10.10~~10.2 to the Company’s ~~Quarterly~~Current Report on Form ~~10-Q~~8-K filed on ~~March 12, 2020~~December 29, 2021

~~10.2~~4.7		Multi-Party Settlement Agreement, effective as of February 28, 2020, by and between Sharing Services Global Corporation and relevant subsidiaries, Robert Oblon, Jordan Brock, certain officers and directorsWarrant to Purchase Shares of Sharing Services Global ~~Corporation, and certain other corporate parties,~~Corporation’s Class A Common Stock, which is incorporated herein by reference from Exhibit ~~10.21~~4.1 to the Company’s Current Report on Form 8-K filed on January 27, 2022

4.8		Form of Convertible Promissory Note issued, in June 2022, by Sharing Service Global Corporation in favor of Decentralized Sharing Systems, Inc., which is incorporated herein by reference from Exhibit 4.8 to the Company’s Annual Report on Form 10-K filed on ~~July 8, 2020~~June 21, 2022

~~10.3~~4.9		Form of Warrant to Purchase Shares of Sharing Services Global Corporation’s Class A Common Stock issued, in June 2022, by Sharing Service Global Corporation to Decentralized Sharing Systems, Inc., which is incorporated herein by reference from Exhibit 4.9 to the Company’s Annual Report on Form 10-K filed on June 21, 2022

10.1		U. S. Small Business Administration Note dated May 13, 2020, issued by Sharing Services Global Corporation in favor of Prosperity Bank, which is incorporated herein by reference from Exhibit 1.1 to the Company’s Current Report on Form 8-K filed on May 18, 2020

10.2		Stock Purchase and Share Subscription Agreement dated as of July 22, 2020, by and between Sharing Services Global Corporation and Heng Fai Ambrose Chan, which is incorporated herein by reference from Exhibit 1.1 to the Company’s Current Report on Form 8-K filed on July 24, 2020

10.3		Settlement Accommodation Agreement [Including Stock Disposition and Release Provisions] dated July 22, 2020, by and between Sharing Services Global Corporation, Bear Bull Market Dividends, Inc., Kenyatto Montez Jones, and MLM Mafia, Inc., which is incorporated herein by reference from Exhibit 1.1 to the Company’s Current Report on Form 8-K filed on July 30, 2020

10.4		Securities Purchase Agreement ~~dated~~dates as of April 5, 2021, by and among Sharing Service Global Corporation and Decentralized Sharing Systems, Inc., which is incorporated herein by reference from Exhibit 1.1 to the Company’s Current Report on Form 8-K filed on April 9, 2021

10.5		Stock Purchase and Share Subscription Agreement dated as of December 23, 2021 by and among Sharing Service Global Corporation and Decentralized Sharing Systems, Inc., which is incorporated herein by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 29, 2021

10.6		Business Consulting Agreement dated January 24, 2022 by and between Sharing Service Global Corporation and DSS, Inc., which is incorporated herein by reference from Exhibit 1.1 to the Company’s Current Report on Form 8-K filed on January 27, 2022

10.7		Form of Distributor Agreement of The Happy Co., which is incorporated herein by reference from Exhibit 10.8 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021, filed on June 10, 2021

~~10.6~~10.8		2021 The Happy Co. Brand Partner Compensation Plan, which is incorporated herein by reference from Exhibit 10.9 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021, filed on June 10, 2021

10.9		Form of Securities Purchase Agreement entered into, in June 2022, by and among Sharing Services Global Corporation, and the Decentralized Sharing Systems, Inc., which is incorporated herein by reference from Exhibit 10.9 to the Company’s Annual Report on Form 10-K filed on June 21, 2022

10.10		Form of Security Agreement made, in June 2022, by Sharing Service Global Corporation in favor of Decentralized Sharing Systems, Inc., which is incorporated herein by reference from Exhibit 10.10 to the Company’s Annual Report on Form 10-K filed on June 21, 2022

10.11		Form of Loan Agreement entered into, in June 2022,by and between LINDEN REAL ESTATE HOLDINGS, LLC and AMERICAN PACIFIC BANCORP, INC., which is incorporated herein by reference from Exhibit 10.11 to the Company’s Annual Report on Form 10-K filed on June 21, 2022

10.12		Form of DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FINANCING STATEMENT made, in June 2022, by LINDEN REAL ESTATE HOLDINGS, LLC in favor of Cottonwood Title Insurance Agency, Inc., for the benefit of American Pacific Bancorp, Inc., which is incorporated herein by reference from Exhibit 10.12 to the Company’s Annual Report on Form 10-K filed on June 21, 2022

10.13		Form of Demand Promissory Note issued, in June 2022, by LINDEN REAL ESTATE HOLDINGS, LLC in favor of AMERICAN PACIFIC BANCORP, INC., which is incorporated herein by reference from Exhibit 10.13 to the Company’s Annual Report on Form 10-K filed on June 21, 2022

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *

32.1		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *

32.2		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *

101		The following financial information from our Quarterly Report on Form 10-Q for the three months ended ~~December 31, 2021,~~June 30, 2022 and ~~January 31,~~ 2021, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Operations and Comprehensive ~~Loss;~~Income (Loss); (iii) the Condensed Consolidated Statements of Cash Flows and (iv) Condensed Consolidated Statements of Changes in Stockholders’ Equity *

*Included herewith

*Included herewith

SIGNATURES

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

	SHARING SERVICES GLOBAL CORPORATION
	(Registrant)

Date: ~~February 11,~~August 15, 2022

	By:	/s/ John Thatch
		John Thatch
		President, Chief Executive Officer and Vice Chairman of the Board of Directors
		(Principal Executive Officer)


Date: ~~February 11,~~August 15, 2022

	By:	/s/ Anthony S. Chan
		Anthony S.S Chan
		Chief Financial Officer
		(Principal Financial Officer)

	Number of Shares			Par Value			Number of Shares		Par Value		Number of Shares			Par Value			Number of Shares		Par Value		Paid in Capital				Shares to be Issued				Accumulated Deficit			Translation Adjustments			Total
	Series A Preferred Stock						Series B Preferred Stock				Series C Preferred Stock						Class A and Class B Common Stock				Additional											Cumulative
	Number of Shares			Par Value			Number of Shares		Par Value		Number of Shares			Par Value			Number of Shares		Par Value		Paid in Capital		Subscription Receivable		Shares to be Issued		Treasury Stock		Accumulated Deficit			Translation Adjustments			Total
Balance – March 31, 2021		5,100,000		$	510			-	$	-		3,230,000		$	323			160,100,769	$	16,010	$	43,757,768		-	$	12,146		-	$	(37,627,718	)	$	-		$	6,159,039
Common stock issued for cash		-			-			-		-		-			-			50,000,000		5,000		5,245,000				-				(2,250,000	)		-			3,000,000
Common stock issued for deferred financing costs and prepaid interest on debt		-			-			-		-		-			-			27,000,000		2,700		6,477,300				-				(1,080,000	)		-			5,400,000
Conversions or retirements of preferred stock		(2,000,000	)		(200	)		-		-		(10,000	)		(1	)		10,000		1		200				-				-			-			-
Issuance of debt with beneficial conversion feature and in-the-money stock warrant, net of tax		-			-			-		-		-			-			-		-		21,330,000				-				-			-			21,330,000
Expiration of common stock puts		-			-			-		-		-			-			-		-		-				-				177,879			-			177,879
Stock-based compensation expense		-			-			-		-		-			-			-		-		280,000				-				-			-			280,000
Stock warrants exercised		-			-			-		-		-			-			1,813,200		181		148,451				-				-			-			148,632
Currency translation adjustments		-			-			-		-		-			-			-		-		-				-				-			(94,887	)		(94,887	)
Common stock issued upon settlement of litigation
Common stock issued upon settlement of litigation, shares
Preferred stock retired
Preferred stock retired, shares
Repurchase of common stock
Repurchase of common stock, shares
Proceeds from common stock warrants exercised
Common stock redeemed upon settlement of litigation
Common stock redeemed upon settlement of litigation, shares
Net loss		-			-			-		-		-			-			-		-		-		-		-		-		(13,202,933	)		-			(13,202,933	)
Balance – December 31, 2021		3,100,000		$	310			-	$	-		3,220,000		$	322			238,923,969	$	23,892	$	77,238,719		-	$	12,146		-	$	(53,982,772	)	$	(94,887	)	$	23,197,730


	Series A Preferred Stock				Series B Preferred Stock				Series C Preferred Stock				Class A and Class B Common Stock														Accumulated
	Number				Number				Number				Number				Additional		Shares								Other
	of		Par		of		Par		of		Par		of		Par		Paid in		to be		Treasury			Accumulated			Comprehensive
	Shares		Value		Shares		Value		Shares		Value		Shares		Value		Capital		Issued		Stock			Deficit			Loss				Total
Balance – March 31, 2022		3,100,000	$	310		-	$	-		3,220,000	$	322		288,923,969	$	28,892	$	80,738,719	$	12,146	$	-			(57,886,336	)	$	(65,109	)	-	$	22,828,944
Refinancing of debt and detachable warrants		-		-		-		-		-		-		-		-		1,211,547		-					-			-				1,211,547
Repurchase of 26,091,136 shares of Common Stock																						(626,187	)									(626,187	)
Currency translation adjustments		-		-		-		-		-		-		-		-		-		-					-			(144,267	)			(144,267	)
Net loss		-		-		-		-		-		-		-		-		-		-					(1,353,010	)						(1,353,010	)
Balance – June 30, 2022		3,100,000	$	310		-	$	-		3,220,000	$	322		288,923,969	$	28,892	$	81,950,266	$	12,146		(626,187	)		(59,239,346	)	$	(209,376	)	-	$	21,917,027


	Series A Preferred Stock				Series B Preferred Stock				Series C Preferred Stock						Class A and Class B Common Stock													Accumulated
	Number				Number				Number						Number				Additional		Shares							Other
	of		Par		of		Par		of			Par			of		Par		Paid in		to be			Accumulated				Comprehensive
	Shares		Value		Shares		Value		Shares			Value			Shares		Value		Capital		Issued			Deficit				Loss		Total
Balance – March 31, 2021		5,100,000	$	510		-	$	-		3,230,000		$	323			160,100,769	$	16,010	$	43,757,768	$	12,146	-	$	(37,627,718	)	-	$	-	$	6,159,039
Beginning balance, value		5,100,000		510		-		-		3,230,000			323			160,100,769		16,010	$	43,757,768		12,146	-		(37,627,718	)	-		-		6,159,039
Common stock issued for deferred financing costs and prepaid interest on debt		-		-		-		-		-			-			27,000,000		2,700		6,477,300		-	-		(1,080,000	)	-		-		5,400,000
Conversions of preferred stock						-		-		(10,000	)		(1	)		10,000		1		-		-			-				-		-
Issuance of debt with beneficial conversion feature and in-the-money stock warrant, net of tax		-		-		-		-		-			-			-		-		21,330,000		-			-				-		21,330,000
Expiration of common stock puts		-		-		-		-		-			-			-		-		-		-			177,879				-		177,879
Stock-based compensation expense		-		-		-		-		-			-			-		-		280,000		-			-				-		280,000
Currency translation adjustments		-		-		-		-		-			-			-		-		-		-			-				32,203		32,203
Net loss		-		-		-		-		-			-			-		-		-		-			(3,548,007	)			-		(3,548,007	)
Balance – June 30, 2021		5,100,000	$	510		-	$	-		3,220,000		$	322			187,110,769	$	18,711	$	71,845,068	$	12,146	-	$	(42,077,846	)	-	$	32,203	$	29,831,114
Ending balance, value		5,100,000	$	510		-		-		3,220,000		$	322			187,110,769	$	18,711	$	71,845,068	$	12,146	-	$	(42,077,846	)	-	$	32,203	$	29,831,114

	June 30, 2022		June 30, 2021
Convertible preferred stock		6,320,000		8,325,165
Convertible notes payable		135,377,975		152,231,082
Stock warrants		-		168,295,815
Total potential incremental shares		141,697,975		328,852,062

	December 31, 2021			March 31, 2021
Finished Goods	$	5,206,722		$	2,556,368
Allowance for obsolescence		(388,431	)		(85,058	)
Inventory, net	$	4,818,291		$	2,471,310

	December 31, 2021		March 31, 2021
Prepaid interest, DSSI	$	624,658	$	-
Inventory-related deposits		469,323		1,845,722
Employee advances		58,022		320,631
Prepaid expenses and other		612,058		237,281
Other current assets	$	1,764,061	$	2,403,634

		June 30, 2022			March 31, 2022
Investment in detachable GNTW stock warrant	$	7,000,000		$	3,570,000
Investment in GNTW common stock		770,865			393,141
Investment in Stemtech convertible note		2,158,429			1,100,799
Investment in MojiLife, LLC		1,537,000			1,537,000
Subtotal		11,466,294			6,600,940
Less, allowance for impairment losses		(1,537,000	)		(1,537,000
Investments	$	9,929,294		$	5,063,940

		June 30, 2022		March 31, 2022
Balance at beginning of fiscal year	$	1,537,000	$	-
Provision for estimated impairment losses		-		1,537,000
Balance at end of fiscal year	$	1,537,000	$	1,537,000

	December 31, 2021			March 31, 2021
Building and building improvements	$	8,942,640		$	-
Computer software		779,363			734,510
Furniture and fixtures		231,976			230,685
Computer equipment		176,655			165,767
Leasehold improvements and other		297,933			138,529
Total property and equipment		10,428,567			1,269,491
Accumulated depreciation and amortization		(636,629	)		(381,541	)
Property and equipment, net	$	9,791,938		$	887,950

Issuance Date		Maturity Date	Interest Rate			Conversion Price (per share)		December 31, 2021		March 31, 2021			Maturity Date	Interest Rate			Conversion Price (per share)		June 30, 2022		March 31, 2022
April 2021		April 2024		8	%	$	0.20	$	30,000,000	$	-		April 2024		8	%	$	0.20	$	-	$	30,000,000
October 2017		October 2022		12	%	$	0.15		50,000		50,000		October 2022		12	%	$	0.15		50,000		50,000
April 2018		April 2021		0	%	$	0.01		100,000		100,000
June 2022													June 2024		8	%	$	0.03		27,000,000		-
Total convertible notes payable	Total convertible notes payable								30,150,000		150,000	Total convertible notes payable								27,050,000		30,050,000
Less: unamortized debt discount and deferred financing costs	Less: unamortized debt discount and deferred financing costs								22,617,198		15,607	Less: unamortized debt discount and deferred financing costs								20,033,135		20,151,230
									7,532,802		134,393									7,016,865		9,898,770
Less: current portion of convertible notes payable	Less: current portion of convertible notes payable								142,291		99,631	Less: current portion of convertible notes payable								7,016,865		9,898,770
Long-term convertible notes payable	Long-term convertible notes payable							$	7,390,511	$	34,762	Long-term convertible notes payable							$	-	$	-

Country	2021			2020			2022		2021
United States		21	%		21	%	21	%	21	%
Republic of Korea		22	%		22	%	21	%	22	%
Effective Income Tax Rate							21	%	22	%


	Three Months Ended June 30,
	2022			2021
Federal statutory rate		21.0	%		21.0	%
State and local income taxes		0.6			(0.7	)
Change in valuation allowance for NOL carry-forwards		1.3			(51.1	)
Stock warrant transactions and other items		(2.8	)		4.1
Effective income tax rate		20.1	%		(26.7	)%

Assets	Classification	December 31, 2021		March 31, 2021		Classification	June 30, 2022		March 31, 2022
Operating leases	Right-of-use assets, net	$	258,790	$	428,075	Right-of-use assets, net	$	527,492	$	593,389
Total lease assets		$	258,790	$	428,075		$	527,492	$	593,389

Liabilities
Operating leases	Accrued and other current liabilities	$	272,018	$	373,398	Accrued and other current liabilities	$	68,477	$	134,578
Operating leases	Lease liability, long-term		2,491		77,810	Lease liability, long-term		461,515		461,515
Total lease liability		$	274,509	$	451,208
Total lease liabilities							$	529,992	$	596,093

		Three Months Ended
Lease cost	Classification	December 31, 2021		January 31, 2021
Operating lease cost	General and administrative expenses	$	54,463	$	130,554
Operating lease cost	Depreciation and amortization		-		-
Operating lease cost	Interest expense, net		-		-
Total lease cost		$	54,463	$	130,554

Twelve months ending December 31,
2022	$	272,018
Twelve months ending June 30,			Amount
2023		2,491	$	102,897
2024-2026		-
2024				52,128
2025				60,500
2026				69,746
2027				79,713
Thereafter		-		231,108
Total remaining payments				596,092
Less imputed interest				(66,100	)
Total lease liability	$	274,509	$	529,992

(a)	Case No. 4:20-cv-00946; Dennis Burback, Ken Eddy and Mark Andersen v. Robert Oblon, Jordan Brock, Jeff Bollinger, Four Oceans Global, LLC, Four Oceans Holdings, Inc., Alchemist Holdings, LLC, Elepreneurs U.S., LLC, Elevacity U.S., LLC, Sharing Services Global Corporation, Custom Travel Holdings, Inc., and Does 1-5, pending in the United States District Court for the Eastern District of Texas. On December 11, 2020, three investors in Four Oceans Global, LLC filed a lawsuit against the Company, its affiliated entities, and other persons and entities related to an investment made by the three investors in 2015. The Company and its affiliated entities have filed an answer denying the three investors’ claims. Plaintiffs filed a first amended complaint on October 14, 2021. ~~This~~The Company and its affiliated companies were dismissed with prejudice from this matter ~~remains pending as of December 31, 2021.~~on July 20, 2022.

(b)	AAA Ref. No. 01-20-0019-3907; Sharing Services Global Corporation, Elevacity Holdings, LLC, Elevacity U.S., LLC, Elepreneurs Holdings, LLC and Elepreneurs U.S., LLC v. Robert Oblon, pending before the American Arbitration Association. On December 30, 2020, the Company and its affiliated companies filed an arbitration complaint against Robert Oblon for breach of contract and a declaratory judgment relating to the Multi-Party Settlement Agreement with Robert Oblon. This matter ~~remains pending~~was settled and closed as of ~~December 31, 2021.~~June 30, 2022.

(c)	Case No. 4:20-cv-00989; Sharing Services Global Corporation, Elevacity Holdings, LLC, Elevacity U.S., LLC, Elepreneurs Holdings, LLC and Elepreneurs U.S., LLC v. Robert Oblon, pending in the in the United States District Court for the Eastern District of Texas. On December 30, 2020, the Company and its affiliated companies filed a lawsuit against Robert Oblon seeking injunctive relief relating to the Multi-Party Settlement Agreement with Robert Oblon. This matter ~~is a companion case to the AAA arbitration proceeding described in paragraph (b) above~~was settled and ~~while it remains pending~~closed as of ~~December 31, 2021, further action in this case has been stayed by court order, pending final adjudication of the referenced AAA arbitration proceeding.~~June 30, 2022.

(d)	Case No. 4:21-cv-00026; Elepreneurs Holdings, LLC d/b/a Elepreneur, LLC, Elepreneurs U.S., LLC d/b/a Elepreneurs, LLC, and SHRG IP Holdings, LLC v. Lori Ann Benson, Andrea Althaus and Lindsey Buboltz, pending in the United States District Court for the Eastern District of Texas. On December 31, 2020, the Company filed suit against three former distributors and obtained injunctive relief from the 429^thJudicial District of Collin County, Texas. The lawsuit was removed by the three former distributors to federal court. The Company subsequently obtained injunctive relief from the federal court. ~~The~~This matter remains pending as of ~~December 31, 2021.~~June 30, 2022.

(e)	Case No. 4:21-cv-00183; Sharing Services Global Corporation f/k/a Sharing Services, Inc., Elepreneurs Holdings, LLC n/k/a Elevacity Holdings, LLC, Elepreneurs U.S., LLC n/k/a Elevacity U.S., LLC and SHRG IP Holdings, LLC v. AmplifeiIntl, LLC d/b/a HAPInss and HAPInssBrands, LLC pending in the United States District Court for the Eastern District of Texas. On March 5, 2021, the Company and its affiliated entities filed suit against a newly formed competitor for various claims including trademark infringement, trade secret violations, and unfair competition under state and federal law as well as tortious interference with contracts and business relationships. This matter was settled and closed as of June 30, 2022.


(g)	Case No. 4:22-cv-00042; Elevacity U.S., LLC d/b/a The Happy Co. and Elepreneurs U.S., LLC d/b/a Elepreneurs, LLC v. Brian Christopher Schweda, Jr., pending in the United States District Court for the Eastern District of Texas. On January 20, 2022, the Company filed suit against a former distributor. This matter remains pending as of June 30, 2022.

(h)	Case No. 4:22-cv-00047; Elevacity U.S., LLC d/b/a The Happy Co. and Elepreneurs U.S., LLC d/b/a Elepreneurs, LLC v. Kimberley McLean, pending in the United States District Court for the Eastern District of Texas. On January 20, 2022, the Company filed suit against a former distributor. This matter remains pending as of June 30, 2022.

	December 31, 2021
	Total		Level 1		Level 2		Level 3
Assets
Investment in unconsolidated entities	$	6,183,856	$	365,390	$	4,341,095	$	1,477,371
Notes receivable		208,289		-		-		208,289
Total assets	$	6,392,145	$	365,390	$	4,341,095	$	1,685,660
Liabilities
Notes Payable	$	1,040,400	$	-	$	-	$	1,040,400
Convertible notes payable	$	13,567,292	$	-	$	13,425,000	$	142,292
Total liabilities	$	13,567,292	$	-	$	13,425,000	$	142,292
									Total		Level 1		Level 2		Level 3
	March 31, 2021								June 30, 2022
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Assets
Notes receivable	$	94,600	$	-	$	-	$	94,600

Investment in unconsolidated entities									$	9,929,294	$	-	$	-		9,929,294
Total assets	$	94,600	$	-	$	-	$	94,600	$	9,929,294	$	-	$	-	$	9,929,294
Liabilities
Notes Payable	$	1,040,400	$	-	$	-	$	1,040,400

Convertible notes payable		134,393		-		-		134,393	$	25,577,273	$	-	$	25,527,273	$	50,000
Total liabilities	$	1,174,793	$	-	$	-	$	1,174,793	$	25,577,273	$	-	$	25,527,273	$	50,000


	●	For the three months ended ~~December 31, 2021,~~June 30, 2022, our consolidated operating ~~loss was $3.0~~expenses decreased $2.6 million, or 26.0%, to $7.3 million, compared to ~~$1.1 million for~~ the three months ended ~~January 31,~~June 30, 2021.


	●	For the ~~nine~~three months ended ~~December 31, 2021,~~June 30, 2022, our consolidated net cash used by operating activities was ~~$13.2~~$3.8 million compared to ~~$5.2~~$6.0 million for the ~~nine~~three months ended ~~January 31,~~June 30, 2021.


	●	In ~~April 2021, Sharing Services borrowed $30.0 million from~~June 2022, the Company and Decentralized Sharing Systems, Inc. (“DSSI”), a subsidiary of DSS, Inc. ~~(formerly Document Security Systems, Inc.)~~ (“DSS”), and, together with DSS, a ~~majority~~major shareholder of the ~~Company.~~

	Nine Months Ended
	December 31, 2021			January 31, 2021			Increase (Decrease)
Net cash used in operating activities	$	(13,178,848	)	$	(5,183,072	)	$	7,995,776
Net cash used in investing activities		(12,213,306	)		(862,267	)		11,351,039
Net cash provided by financing activities		33,073,607			3,163,396			29,910,211
Impact of currency rate changes in cash		(45,331	)		-			45,331
Net increase (decrease) in cash and cash equivalents	$	7,636,122		$	(2,881,943	)	$	10,518,065