UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended ended:January 31, 20182020

or

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

Commission File Number333-205310000-55997

SHARING SERVICES INC.GLOBAL CORPORATION

(Exact name of registrant as specified in its charter)

1700 Coit Rd., Suite 100, Plano, Texas 75075(469) 304-9400

(Address of principal executive offices)(Zip Code)

(714) 203-6717

(Registrant’s telephone number, including area code)

                                                           N/A                                                          None

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

Securities registered pursuant to Section 12(b) of the Act: None

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

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 [X] No [  ]

(X) Yes  (_) No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site,website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). (_) yes  (X)Yes [X] No [  ]

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

[  ] Large accelerated filer  [  ] Accelerated filer

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

[X] Smaller reporting company  [X] Emerging Growth Company

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). (_)Yes (X)[  ] No [X]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court

(_)Yes (_) No

APPLICABLE ONLY TO CORPORATE ISSUERS:

As of March 23, 2018,9, 2020, there were 54,860,000126,072,386 shares of the issuer’s class A common stock issued and outstanding and 10,000,000 shares of the issuer’s class B common stock issued and outstandingoutstanding.

.TABLE OF CONTENTS

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TABLE of CONTENTS

In this Quarterly Report, references to “the Company,” “Sharing Services,” “our company,” “we,” “our,” “ours” and “us” refer to Sharing Services Global Corporation and its consolidated subsidiaries unless otherwise indicated or the context otherwise requires.

3cautionary notice regarding forward-looking statements

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

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

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

The following condensed consolidated balance sheets as of January 31, 2020 and April 30, 2019, the condensed consolidated statements of operations for the three and nine months ended January 31, 2020 and 2019, and the condensed consolidated statements of cash flows and condensed consolidated statements of stockholders’ equity (deficit) for the nine months ended January 31, 2020 and 2019 are those of Sharing Services Global Corporation and subsidiaries.

SHARING SERVICES, INC.

Index to the Unaudited InterimCondensed Consolidated Financial Statements

For the Period from May 5, 2017 (Inception) to January 31, 2018

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SHARING SERVICES INC.GLOBAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETSHEETS

(Unaudited)

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

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SHARING SERVICES INC.GLOBAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited)

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

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SHARING SERVICES INC.GLOBAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

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

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SHARING SERVICES INC.GLOBAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

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

SHARING SERVICES GLOBAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITEDCONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2018

(Unaudited)

NOTE 1 – NATURE–DESCRIPTION OF OPERATIONS AND BASIS OF PRESENTATION

Sharing Services Inc.Global Corporation (“Sharing Services”, “we”, “us”, or “the Company”) is a holding company, with Elepreneurs Holdings, LLC and Elevacity Holdings, LLC as its main operating subsidiaries.The Company is an emerging growth company that primarily markets and distributes health and wellness products under the “Company”) was incorporated on April 24, 2014 in the StateElevate brand through an independent sales force of Nevada.distributors, or “Elepreneurs,” using a marketing strategy which is a form of direct selling. The Company’s wholly owned subsidiary, Total Travel Media, Inc. (“Total Travel Media”, or “TTM”),Elevate health and wellness product line was incorporated on May 5,launched in December 2017 in the Stateand consists of Nevada. The Company’s wholly-owned subsidiary, Four Oceans Holdings, Inc. (“Four Oceans”), was incorporated on September 22, 2017 in the State of Nevada. The fiscal year end is April 30.  The Company acquired Total Travel Media on May 23, 2017.  While Total Travel Media is a wholly owned subsidiary ofNutraceutical products that the Company for financial accounting purposes the transaction has been treatedrefers to as a reverse acquisition (reference is made to the paragraph below entitled “Recapitalization”). The Company acquired Four Oceans from related parties“D.O.S.E.” (which stands for: Dopamine, Oxytocin, Serotonin and was treated as an acquisition under common control.  See Note 11 - Related Party Considerations.Endorphins).

The Company was originally formed to launch a taxi sharing website and application. Beginning on February 1, 2017 the Company changed its business model and is now a travel and technology management company. Sharing Services is a direct-selling model with a subscription-based vacation portal.

Share Exchange and Acquisition – Four Oceans Holdings, Inc.

On September 29, 2017, Sharing Services, Inc., entered into a Share Exchange Agreement with Four Oceans Holdings, Inc., a Nevada corporation. Pursuant to the terms of the Agreement, the Company acquired all of the shares of capital stock of Four Oceans from the holders of such stock (the “Equity-Holders”), in exchange for the issuance of Seventy-five Million (75,000,000) newly-issued restricted shares of the Company’s Series A Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”).  Following the closing, Four Oceans operated as a wholly-owned subsidiary of the Company.

Four Oceans was controlled by Alchemist Holdings, LLC, a Company controlled by our Chairman, who received 50,000,000 Series A Preferred stock; Bear Bull Market Dividends, Inc., a Company that is a significant shareholder of Sharing Services, who received 20,000,000 Series A Preferred stock; and Research and Referral BZ received 5,000,000 shares. As a result of these share exchanges, Four Oceans became a 100% owned subsidiary of the Company. As these transactions are between entities under common control, the Company has reported the results of operations for the period in a manner similar to a pooling of interests and hascondensed consolidated financial results since the initial date in which the above companies were under common control. Assets and liabilities were combined on their carrying values and no recognition of goodwill was made. The Company has presented earnings per share based on the new parent company shares issued to the former shareholders of the Company.

Share Exchange and Reorganization – Total Travel Media, Inc.

On May 23, 2017, Sharing Services, Inc., entered into a Share Exchange Agreement (the “Agreement”) with Total Travel Media, Inc. On May 23, 2017, there was a Closing of the transaction (the “Closing Date”).  Pursuant to the terms of the Agreement, the Company acquired all of the shares of capital stock of TTM from the holders of such stock (the “Equity-Holders”), in exchange for the issuance of Ten Million (10,000,000) newly-issued shares of the Company’s Common Class B Stock, par value $0.0001 per share and (ii) Ten Million (10,000,000) newly-issued shares of the Company’s Series B Preferred Stock, par value $0.0001 per share.  Following the Closing Date, TTM will operate as a wholly-owned subsidiary of the Company.

Recapitalization

For financial accounting purposes, this transaction was treated as a reverse acquisition by Total Travel Media, and resulted in a recapitalization with Total Travel Media being the accounting acquirer and Sharing Services as the acquired company. The consummation of this reverse acquisition resulted in a change of control. Accordingly, the historicalinterim financial statements prior to the acquisition are those of the accounting acquirer, Total Travel Media, andincluded herein have been prepared to give retroactive effectin accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the reverse acquisition completed on May 23, 2017,rules and representregulations of the operationsSecurities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted as permitted pursuant to the rules and regulations of Total Travel Media. Thethe SEC, although we believe that the disclosures made are adequate to make the information not misleading. These condensed consolidated financial statements aftershould be read in conjunction with the acquisition date, May 23, 2017,

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include the balance sheets of both companies at historical cost, the historical results of Total Travel Media and the results of the Company from the acquisition date. All share and per share information in the accompanying consolidated financial statements and footnotes has been retroactively restatednotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2019.

Recent Corporate Name Change

In January 2019, Sharing Services, Inc. changed its corporate name to Sharing Services Global Corporation to better reflect the recapitalization.Company’s strategic intent to grow its business globally. The corporate name change was approved by the Company’s stockholders and by its Board of Directors. In connection with the name change, the Company adopted the over-the-counter trading symbol “SHRG.”

Going concernConcern

TheseThe accompanying consolidated financial statements have been prepared on a going concern basis, which assumes the Company will be able to realize its assets and dischargesettle its liabilities in the normalordinary course of its business for the foreseeable future. To date theThe Company has generated $960,182 in revenues fromis an emerging growth company and, prior to its business operations and has an accumulated deficit of $6,976,438. As offiscal quarter ended January 31, 2018, the Company had a working capital deficitvirtually no sales. However, the Company’s net sales and/or gross margin generally have increased each quarter since the December 2017 launch of $5,058,529. its Elevate health and wellness product line. For the full fiscal year ended April 30, 2019, cash provided by operations was $6.0 million, on sales of $85.9 million while, for the nine months ended January 31, 2020, cash provided by operations was $7.7 million, on sales of $106.0 million. As of January 31, 2020, cash and cash equivalents were $8.2 million.

The Company requires additional funding to meet its ongoing obligations and to fund anticipated operating losses. The ability of the Company to continue as a going concern is dependent on raising capitalbelieves it will be able to fund its initial business planworking capital needs for the next 12 months with existing cash and ultimatelycash equivalents, cash to attain profitable operations.be provided by operations, secured and unsecured debt, including through the issuance of convertible notes and short-term borrowings under financing arrangements, and capital transactions from time to time. Accordingly, these factors raise substantialthe Company believes there is no longer reasonable doubt as to the Company’s ability to continue as a going concern. The Company has initiated extensive direct sales and social media marketing which it expects to drive significant sales volume ofconcern in the Company’s products, and services over the next several months. The Company expects to become profitable and not need additional outside funding once working capital needs have been met.  The acceptance of the Company’s marketing efforts are uncertain and therefore, the Company has plans to continue to fund its business by way of private placements, promissory notes, convertible promissory notes and advances from related parties as may be required.foreseeable future.

These financial statements do not include any adjustmentsNOTE 2 –SIGNIFICANT ACCOUNTING POLICIES

We adhere to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The preparation of financial statements in conformity withsame accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and (iii) the reported amount of net revenues and expenses recognized during the periods presented. Adjustments made with respect to the use of estimates often relate to improved information not previously available.

Uncertainties with respect to such estimates and assumptions are inherentpolicies in the preparation of our condensed consolidated interim financial statements; accordingly, actual results could differ from these estimates.statements as we do in the preparation of our full year consolidated financial statements. As permitted under GAAP, interim accounting for certain expenses is based on full-year assumptions.

In managements’ opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentationReclassifications

Certain reclassifications have been included.made to the prior period data to conform with the current period’s presentation.

Comprehensive Income

For the fiscal periods included in this Quarterly Report, the only component of the Company’s comprehensive income (loss) is the Company’s net earnings (loss). Accordingly, the Company does not present a consolidated statement of comprehensive income.

Use of Estimates and Assumptions

The preparation of financial statements in accordance with accounting principles generally accepted in the United StatesGAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and liabilitiesexpenses, and disclosures ofabout contingent assets and liabilities, atif any. Examples of estimates and assumptions include: the daterecoverability of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include assumptions aboutaccounts receivable, the valuation of inventory, the useful lives of fixed assets, the assessment of long-lived assets for impairment, the measurement and recognition of right-of-use assets and related lease liabilities, the valuation and recognition of derivative liabilities, the measurement and recognition of stock-based compensation expense, the valuationmeasurement and recognition of derivative liability,revenues, the nature and timing of satisfaction of performance obligations resulting from contracts with customers, the measurement and recognition of uncertain tax positions, and the valuation allowance for deferred tax assetsof loss contingencies, if any. Actual results may differ from these estimates in amounts that may be material to our consolidated financial statements. We believe that the estimates and useful lifeassumptions used in the preparation of fixed assets.

Principles of Consolidation

For January 31, 2018, the unauditedour consolidated financial statements are reasonable.

Revenue Recognition

The Company derives revenue only from the sale of its products and services and recognizes revenue net of amounts due to taxing authorities (such as local and state sales tax). Our customers place sales orders online and through our “back-office” operations, which creates a contract and establishes the transaction price. The Company recognizes revenue when (or as) it transfers control of the Company includepromised goods and services to the accountscustomer. With respect to products sold, our performance obligation is satisfied upon receipt of the products by the customer. With respect to subscription-based services, including Elepreneur membership fees, our performance obligation is satisfied over time (up to one year). The timing of our revenue recognition may differ from the time when we invoice and/or collect payment. The Company has elected to treat shipping and handling costs as an activity to fulfill its wholly owned subsidiaries, Total Travel Media, Inc.performance obligations, rather than a separate performance obligation.

Deferred revenue associated with product invoiced but not received by customers at the balance sheet date was $1.2 million and Four Oceans Holding, Inc. All significant intercompany balances$2.5 million as of January 31, 2020 and transactions have been eliminatedApril 30, 2019, respectively. In addition, as of January 31, 2020 and April 30, 2019, deferred revenue associated with our performance obligations for services offered on a subscription basis was $460,896 and $515,087, and deferred revenue associated with our performance obligations for customers’ right of return was $215,979 and $194,042, respectively. Deferred revenue is expected to be recognized over one year and is reported in consolidation.accrued and other current liabilities on our consolidated balance sheets.

No individual customer, or related group of customers, represents 10% or more of our consolidated net sales. Over 94% of our consolidated net sales are from sales to our customers and/or independent distributors located in the United States. During the nine months ended January 31, 2020, approximately 50% of our consolidated net sales were to recurring customers, approximately 25% were to new customers, and approximately 25% were to our independent distributors.

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CashDuring the nine months ended January 31, 2020, approximately 98% of our consolidated net sales are from ourElevateproduct line (including approximately 25% from the sales of coffee and cash equivalentscoffee-related products and approximately 52% from the sale of all other D.O.S.E. Nutraceutical products). During the nine months ended January 31, 2020 and 2019, product purchases from one supplier accounted for approximately 98% and 95%, respectively, of our total product purchases.

CashSales Commission

The Company recognizes sales commission expense, when incurred, in accordance with GAAP. During the three months ended January 31, 2020 and cash equivalents include cash on hand2019, sales commission expense was $14.0 million and on deposit at banking institutions as well as all highly liquid short-term investments with original maturities$12.7 million, respectively. During the nine months ended January 31, 2020 and 2019, sales commission expense was $47.6 million and $26.3 million, respectively. Sales commission expense is included in selling and marketing expenses in our consolidated statements of 90 days or less.  operations.

As of January 31, 20182020 and April 30, 2019, accrued sales commission payable was $8,491,081 and $7,402,659, respectively; including $1,290,599 and $1,365,705, respectively, payable with stock warrants.

Accounting Changes

In February 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-02,Leases, which requires lessees to report on their balance sheets a right-of-use asset and a lease liability in connection with most lease agreements classified as operating leases under the prior guidance. As permitted, the Company had cash and cash equivalents of $175,451.

Fair value measurements

Fair value is definedadopted the new guidance, codified as the price that the Company would receive to sell an investment or pay to transfer a liability in a timely transaction with an independent counter-party in the principal market or in the absence of a principal market, the most advantageous market for the investment or liability. A three-tier hierarchy is established to distinguish between (1) inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (2) inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing an asset or liability developed based on the best information available in the circumstances (unobservable inputs); and establishes a classification of fair value measurements for disclosure purposes.

The hierarchy is summarized in the three broad levels listed below:

In accordance with Accounting Standards Codification (“ASC”) 815,Topic 842,Leases, effective May 1, 2019 using the optional cumulative-effect transition method, and adoption resulted in an initial lease liability in the aggregate amount of approximately $1.4 million and right-of-use assets in the same aggregate amount. The Company’s right-of-use assets relate to leases involving office space, automobiles and office equipment, and are amortized over periods ranging from one to three years. The adoption of ASC Topic 842 did not otherwise have a material impact on the Company’s debt derivative liabilities are measured atconsolidated financial statements.

Recently Issued Accounting Standards

In August 2018, the FASB issued ASU 2018-13,Fair Value Measurement (Topic 820) which modifies the disclosure requirements on fair value on a recurring basis,measurements under ASC Topic No. 820,Fair Value Measurement, as amended (“ASC 820”). For public companies, ASU 2018-13 removes (a) the prior requirement to disclose the amount and are level 3 measurements in the three-tier fair value hierarchy.

There were noreason for transfers between the levelsLevel 1 and Level 2 of the fair value hierarchy duringcontained in ASC Topic 820, (b) the periodpolicy for timing of inception (May 5, 2017)transfers between levels, and (c) the valuation processes used for level 3 fair value measurements. For public companies, ASU 2018-13 also adds, among other things, a requirement to January 31, 2018.

Fairdisclose the range and weighted average of significant unobservable inputs used in Level 3 fair value ofmeasurements. The Company adopted ASU 2018-13 effective February 1, 2020 and such adoption did not have a material effect on its consolidated financial instrumentsstatements.

The Company’sNOTE 3 – FAIR VALUE MEASURENTS OF FINANCIAL INSTRUMENTS

Our financial instruments consist primarily of cash equivalents, if any, accounts receivable, notes receivable, investments in unconsolidated entities, accounts payable, notes payable and accrued expenses, and debt.derivative liabilities. The carrying amounts of such financial instrumentscash equivalents, if any, trade accounts receivable, notes receivable, and accounts payable approximate their respective estimated fair valuevalues due to the short-term maturities and approximate market interest ratesnature of these financial instruments.

The following table summarizes fair value measurements by level at January 31, 2018 measured at fair value on a recurring basis:Consistent with the valuation hierarchy contained in ASC Topic 820, we categorized certain of our financial assets and liabilities as follows:

Related Parties

The Company follows ASC 850, “Related Party Disclosures,” for the identification of related parties and disclosure of related party transactions (see Note 11).NOTE 4 – EARNINGS (LOSS) PER SHARE

Long-Lived Assets

Long-lived assets are evaluated for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted future cash flows to the recorded value of the asset. If impairment is indicated, the asset is written down to its estimated fair value.

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Property and Equipment

Furniture and equipment is recorded at cost reduced by accumulated depreciation. Depreciation expense is recognized over the assets’ estimated useful lives using the straight-line method. Estimated useful lives of the equipment are as follows:

Office equipment - 5 years

Furniture and fixtures - 3 years

Estimated useful lives are periodically reviewed and, when appropriate, changes are made prospectively. When certain events or changes in operating conditions occur, asset lives may be adjusted and an impairment assessment may be performed on the recoverability of the carrying amounts.

Accounts Receivable and Allowance for Uncollectible Accounts

Substantially all of the Company’s accounts receivable balance is related to trade receivables. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments for services. Accounts with known financial issues are first reviewed and specific estimates are recorded. The remaining accounts receivable balances are then grouped in categories by the number of days the balance is past due, and the estimated loss is calculated as a percentage of the total category based upon past history. Account balances are charged against the allowance when it is probable that the receivable will not be recovered. As of January 31, 2018, the Company determined no valuation allowance for doubtful accounts was required, for the Company’s accounts receivable.

Revenue Recognition

In accordance with ASC 605, “Revenue Recognition”, revenue is recognized when, specifically when all the following conditions are met:

The Company generally recognizes revenue upon delivery and when both the title and risk and rewards pass to the Independent Representative or Customer. Product sales are recognized net of product returns and discounts referred to as “returns and allowances.” Net sales include product sales net of processing fees The Company generally receives the net sales price through credit card payments on the Company Website or at the point of sale.  Products sold on an annual basis are recognized as revenue over the following twelve months. Allowances for product returns have not been provided due to the short period that the products have been sold.  As historical data is collected a reserve will be provided at the time the sale is recorded.

The Company recognizes revenue when the products are shipped and services are complete.

Deferred Revenue

At January 31, 2018, the Company had advances from customers of $128,851.  Advances from customers are a component of deferred revenue in the consolidated balance sheets and includes billings to customers where the

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product has not shipped, for services that were in process but not completed and for annual memberships and other products which are recognized over the succeeding twelve months.

Cost of Sales

The Cost of merchandise sold is recognized at the time of revenue recognition, as the product is shipped and services are complete.

Share-Based Expense

ASC 718, “Compensation - Stock Compensation,” prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).

The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, “Equity - Based Payments to Non-Employees.” Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.

Share-based expense totaled $1,308,948 for the period from inception (May 5, 2017) to January 31, 2018.

Advertising Costs

The Company follows ASC 720, “Advertising Costs,” and expenses costs as incurred.  Advertising and marketing expense totaled $694,207 for the period from inception (May 5, 2017) to January 31, 2018.  

Income Taxes

The Company utilizes the asset and liability method in accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for operating loss and tax credit carry-forwards and for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets unless it is more likely than not that the value of such assets will be realized.

The Company uses the two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not, that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount, which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating the Company's tax positions and tax benefits, which may require periodic adjustments. At January 31, 2018, the Company did not record any liabilities for uncertain tax positions.

Basic and Diluted Net Loss per Common Share

Basic incomeWe calculate basic earnings (loss) per share is computed by dividing net incomeearnings (loss) available to common shareholders by the weighted average number of common shares outstanding during the reporting period. The weighted average number of shares is calculated by taking the number of shares outstanding and weighting them by the amount of time that they were outstanding.  Diluted earnings per share is calculated similarly but reflects the potential dilution that could occur ifimpact of outstanding convertible preferred stock, options,stock warrants and other commitments to issue common stock, were exercised or equity awards vest resulting inincluding shares issuable upon the

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issuance conversion of common stock that could share in the earnings of the Company. There were convertible notes, except where the impact would be anti-dilutive.

The following table sets forth the computations of basic and diluted earnings (loss) per share:

The following potentially dilutive securities and instruments were outstanding during the three months ended January 31, 2019 but excluded from the table above because their impact would be anti-dilutive:

NOTE 5 – NOTES RECEIVABLE

In March and April 2018, the Company entered into certain investment agreements with a third party pursuant to which the Company loaned an aggregate of $275,000 to the third party. The related promissory notes accrued interest at the rate of 12% per annum. In June 2019, the Company and the third party entered into a loan exchange agreement pursuant to which the Company received a promissory note for $309,309 in settlement of all amounts owed to the Company under the March and April 2018 loans, including loan principal of $275,000 and accrued interest for approximately $575,034 and 101,874,540 convertible preferred shares issued byof $34,309. Loans under the June 2019 promissory note bear interest at the rate of 8% per annum. In October 2019, after exhausting all efforts to collect the amounts due pursuant to the June 2019 promissory note, the Company duringrecognized an impairment loss of $317,105 in connection therewith. For the periodnine months ended January 31, 2018. Potential dilutive instruments as at January 31, 2018, consisted of the following common share equivalents:

Diluted loss per share is the same as basic loss per share during periods where net losses are incurred since the inclusion of the potential common stock equivalents would be anti-dilutive as2020 and 2019, interest income earned in connection with our promissory notes, excluding promissory notes from a result of the net loss.

Recently Issued Accounting Standards

In November 2017, the FASB has issued Accounting Standards Update (ASU) No. 2017-14, “Income Statement—Reporting Comprehensive Income (Topic 220), Revenue Recognition (Topic 605),related party, was $15,620 and Revenue from Contracts with Customers (Topic 606).” ASU 2017-14 includes amendments to certain SEC paragraphs within the FASB Accounting Standards Codification (Codification). ASU 2017-14 amends the Codification to incorporate the following previously issued guidance from the SEC. ‘The amendments in ASU No. 2017-14 amends the Codification to incorporate SEC Staff Accounting Bulletin (SAB) No. 116 and SEC Interpretive Release on Vaccines for Federal Government Stockpiles (SEC Release No. 33-10403) that bring existing SEC staff guidance into conformity with the FASB’s adoption of and amendments to ASC Topic 606, Revenue from Contracts with Customers.

In September 2017, the FASB has issued Accounting Standards Update (ASU) No. 2017-13, “Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments.” The amendments in ASU No. 2017-13 amends the early adoption date option for certain companies related to the adoption of ASU No. 2014-09 and ASU No. 2016-02. Both of the below entities may still adopt using the public company adoption guidance in the related ASUs, as amended. The effective date is the same as the effective date and transition requirements for the amendments for ASU 2014-09 and ASU 2016-02.

In February 2017, the FASB has issued Accounting Standards Update (ASU) No. 2017-05, “Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets.” The amendments clarify that a financial asset is within the scope of Subtopic 610-20 if it meets the definition of an in substance nonfinancial asset. The amendments also define the term in substance nonfinancial asset. The amendments clarify that nonfinancial assets within the scope of Subtopic 610-20 may include nonfinancial assets transferred within a legal entity to a counterparty. For example, a parent may transfer control of nonfinancial assets by transferring ownership interests in a consolidated subsidiary. A contract that includes the transfer of ownership interests in one or more consolidated subsidiaries is within the scope of Subtopic 610-20 if substantially all of the fair value of the assets that are promised to the counterparty in a contract is concentrated in nonfinancial assets. The amendments clarify that an entity should identify each distinct nonfinancial asset or in substance nonfinancial asset promised to a counterparty and derecognize each asset when a counterparty obtains control of it. Effective at the same time as the amendments in Update 2014-09, Revenue from Contracts with Customers (Topic 606). Therefore, public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the amendments in this Update to annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities should apply the amendments in this Update to annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. All other entities may apply the guidance earlier as of annual reporting periods beginning

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after December 15, 2016, including interim reporting periods within that reporting period. All other entities also may apply the guidance earlier as of annual reporting periods beginning after December 15, 2016, and interim reporting periods within annual reporting periods beginning one year after the annual reporting period in which the entity first applies the guidance. An entity is required to apply the amendments in this Update at the same time that it applies the amendments in Update 2014-09. The Company is currently evaluating the potential impact this standard may have on its consolidated financial position and results of operations.$24,953, respectively.

In January 2017, the FASB has issued Accounting Standards Update (ASU) No. 2017-04, “Intangibles - Goodwillfiscal year 2019, the Company received a promissory note for $106,404 from a prior merchant processor in connection with amounts owed to the Company. The Company and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” These amendments eliminate Stepissuer have been in negotiations aimed at settling this balance. On March 2, from2020, the goodwill impairment test. The annual, or interim, goodwill impairment test is performed by comparingCompany and the fair valueissuer of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount bynote reached an agreement pursuant to which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocatedCompany expect to that reporting unit. In addition, income tax effects from any tax deductible goodwill on the carrying amountcollect $60,000 in full payment of the reporting unit should be considered when measuringbalance owed to it. In January 2020, the goodwillCompany recognized an impairment loss if applicable. The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2of $46,404 in connection therewith.

NOTE 6 – OTHER CURRENT ASSETS

Other current assets consist of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. Effective for public business entities that are a SEC filers for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. ASU 2017-04 should be adopted on a prospective basis. The Company does not anticipate the adoption of ASU 2017-04 will have a material impact on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business.” This new standard clarifies the definition of a business and provides a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This new standard will be effective for the Company on January 1, 2018, however, early adoption is permitted with prospective application to any business development transaction.following:

Management has considered all recent accounting pronouncements issued. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s consolidated financial statements.

NOTE 3 – ACCOUNTS RECEIVABLE

As at January 31, 2018, accounts receivable of $366,269 represents the billed revenue due from merchant processor net of deferred revenue and merchant processing fees. The full amount was received in subsequent payments, thus no allowance for doubtful accounts was required at January 31, 2018  

NOTE 4 – PREPAID EXPENSES AND DEPOSITS

Prepaid expenses and deposits consisted of the following at January 31, 2018:

Prepaid expenses consist of payments for goods and services which will be consumed in the Company’s operations in the next operating cycle.

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Vendor deposits represent 50% of open purchase orders to the Company’s primary supplier, per the vendor agreement.

Security deposits are for the new corporate offices per the lease agreement.  See subsequent events (Note 14) regarding the new Corporate offices.

NOTE 5 -7 – PROPERTY AND EQUIPMENT

Property and equipment consistedconsist of the following atfollowing:

Depreciation and amortization expense was $40,264 and $22,850 for the three months ended January 31, 2018:

The depreciation expense2020 and 2019 and, for the period from inceptionnine months ended January 31, 2020 and 2019, $87,506 and $54,760, respectively.

NOTE 8 – INVESTMENTS IN UNCONSOLIDATED ENTITIES

In the fiscal year ended April 30, 2019, the Company recognized an impairment loss in the aggregate amount of $4.4 million in connection with its investments in unconsolidated entities as a result of a less than temporary decline in the value of the Company’s investment. In addition, in the nine months ended January 31, 2020, the Company recognized an impairment loss in the amount of $187,500 in connection with its investments in an unconsolidated entity as a result of a less than temporary decline in the value of the Company’s investment. The information contained in Note 8 of the Notes to January 31,2018 was $800.Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2019 is incorporated herein by reference. See Note 16 below for contingencies and other matters associated with the Company’s investments in unconsolidated entities.

NOTE 6 – EQUITY INVESTMENTS9 - NOTES PAYABLE

212 Technologies, LLC

On May 21, 2017,December 11, 2018, the Company entered into a transaction wherebyLoan Agreement and Promissory Note (the “loan agreement”) with Global Payroll Gateway pursuant to which the Company will acquire a Forty-eight percent (48%) interestborrowed the principal amount of $1,000,000. Borrowings under the loan agreement were payable in 212 Technologies, LLC, a Montana limited liability company (“212 Tech”), in exchange for 15,628,750 shares52 weekly installments. Consistent with the terms of the Company’s Series A Convertible Preferred Stock and cash in the amount of $100,000.  212 Technologies, LLC is a developer of end-to-end online marketing and direct sales software systems. Initially,loan agreement, on December 11, 2019, the Company will acquire a Twenty-four percent (24%)paid in full all principal and interest in exchange for 5,628,750 shares ofoutstanding thereunder.

In the Company’s Series A Convertible Preferred Stock and cash. The Stakeholder and Investment Agreement dated May 21, 2017 also provides for the acquisition by the Company of the remaining twenty-four percent (24%) interest in 212 Tech at a future date in exchange for an additional 10,000,000 shares of the Company’s Series A Preferred Stock, when the following milestones have been reached: (i) One year has passed from the original MOU; and (ii) the price per share of the Company’s common stock is quoted at $10.00 or more. The Company, in exchange, received a non-exclusive, non-royalty bearing, perpetual, worldwide license of all of the Intellectual Property Rights developed and held by 212 Tech.

The Company acquired a 24% interest in 212 Tech by paying $25,000 in cash, leaving a payable of $75,000, and issuing 5,628,750 shares of Series A Convertible Preferred Stock, with a deemed value of $0.25 per share or $1,407,188.  As of January 31, 2018, we recorded $1,507,188 as an investment at cost.

561 LLC

The Company acquired a 25% interest in 561 LLC by agreeing to issue 2,500,000 shares of Series A Convertible Preferred Stock, with a deemed value of $0.25 per share or $625,000.    The shares are to be issued to the 561 Equity-holders as follows: 625,000 shares issued within 5 days of the closing date and 625,000 shares issued on or before December 31, 2017.  These shares are issued and outstanding at January 31, 2018. 625,000 Shares are to be issued on or before April 30, 2018 and 625,000 Shares are to be issued on or before August 31, 2018. As of January 31, 2018, we recorded $312,500 as an investment at cost for the 1,250,000 shares issued.

The 561 Equity-Holders shall be entitled to an additional Two Million Five Hundred Thousand (2,500,000) of shares of the Company’s restricted Series A Preferred Stock, $0.0001 par value per share, when both of the following conditions have been met: (a) Following the first year’s anniversary of the Closing Date and (b) the closing bid price of the Company’s common stock equals or exceeds $5.00 per share, as reported by OTC Markets, Inc. If these conditions are met, the Company shall cause the issuance of such shares within ten (10) calendar days of the satisfaction of such conditions.

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The 561 Equity-Holders shall be entitled to an additional Two Million Five Hundred Thousand (2,500,000) of shares of the Company’s restricted Series A Preferred Stock, $0.0001 par value per share, when the following conditions have been met: The Company shall be the owner of record of no less than Forty percent (40%) of the member interests in each of (i) 561 and (ii) its affiliated company, America Approved Commercial, LLC. If these conditions are met, the Company shall cause the issuance of such shares within ten (10) calendar days of the satisfaction of such conditions.

America Approved Commercial LLC

The Company acquired a 25% interest in America Approved Commercial LLC by issuing 2,500,000 shares of Series A Convertible Preferred Stock, with a deemed value of $0.25 pure share or $625,000. The Company issued 625,000 shares during the periodnine months ended January 31, 2018. As2020, the Company paid in full all borrowings under financing arrangements with third-party lenders, including borrowings under the loan agreement discussed above. At April 30, 2019, notes payable, consisting of January 31, 2018, we recorded $ 312,500 as an investment at cost forshort-term borrowings under financing arrangements, in the first installmentaggregate, were $2,123,208, net of 625,000 shares issued.unamortized debt discount of $379,777. Borrowings under the Company’s financing arrangements were secured by a lien on the Company’s accounts receivable, inventory and property and equipment.

The AAC Equity-Holders shall be entitled to an additional Two Million Five Hundred Thousand (2,500,000) of shares

NOTE 10 - ACCRUED AND OTHER CURRENT LIABILITIES

Accrued and other current liabilities consist of the Company’s restricted Series A Preferred Stock, $0.0001 par value per share, when bothfollowing:

Lease liability, current portion, represent obligations under leases that are payable within one year for office space, automobiles and office equipment. See Note 2 of the following conditions have been met: (a) FollowingCondensed Notes to the first year’s anniversary of the Closing Date and (b) the closing bid price ofConsolidated Financial Statements above for information about the Company’s common stock equals or exceeds $5.00 per share, as reported by OTC Markets, Inc.  If these conditions are met, the Company shall cause the issuanceadoption of such shares within ten (10) calendar days of the satisfaction of such conditions.ASC Topic 842,Leases.

The AAC Equity-Holders shall be entitled to another additional Two Million Five Hundred Thousand (2,500,000) of shares of the Company’s restricted Series A Preferred Stock, $0.0001 par value per share, when the following conditions have been met: The Company shall be the owner of record of no less than Forty percent (40%) of the member interests in each of (i) AAC and (ii) its affiliated company, 561, LLC.  If these conditions are met, the Company shall cause the issuance of such shares within ten (10) calendar days of the satisfaction of such conditions.

Medical Smart Care LLC

The Company acquired a 40% interest in Medical Smart Care LLC for 1,000,000 shares of Series A Convertible Preferred Stock, with a deem value of $0.25 pure share or $250,000.  The shares are to be issued to the Medical Smart Care Equity-holder as follows: 250,000 shares issued within 5 days of the closing date and 250,000 shares issued on or before December 31, 2017.  These shares were issued in November and December 2017 with the mutual consent of the parties. 250,000 Shares are to be issued on or before April 30, 2018; and 250,000 Shares are to be issued on or before August 31, 2018. As of January 31, 2018, we recorded $125,000 as an investment at cost for the installments of 500,000 shares issued.

LEH Insurance Group LLC

The Company acquired a 40% interest in LEH Insurance Group LLC (“LEHIG”) by issuing 500,000 shares of Series A Convertible Preferred Stock, with a deem value of $0.25 pure share or $125,000.  As of January 31, 2018, we recorded $125,000 as an investment at cost.  The 500,000 shares were issued to the LEHIG Equity-holder in November 2017.

The LEHIG Equity-Holder shall be entitled to an additional Five Hundred Thousand (500,000) of shares of the Company’s restricted Series A Preferred Stock, $0.0001 par value per share, when the following condition has been met:  Prior to December 31, 2018, LEHIG has booked premiums of at least Five Hundred Thousand dollars ($500,000). If this condition is met, the Company shall cause the issuance of such shares within ten (10) calendar days of the satisfaction of such conditions.

The LEHIG Equity-Holder shall be entitled to a second additional Five Hundred Thousand (500,000) of shares of the Company’s restricted Series A Preferred Stock, $0.0001 par value per share, when the following condition has been met: Prior to December 31, 2018, LEHIG has booked premiums of at least One Million dollars ($1,000,000).  If this condition is met, the Company shall cause the issuance of such shares within ten (10) calendar days of the satisfaction of such conditions.

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NOTE 7 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the following at January 31, 2018:

Accrued commissions consisted of commissions earned on sales of products and services by independent representatives and paid in the following month.

NOTE 8 - NOTES PAYABLE

Notes payable consisted of the following at January 31, 2018:

As of January 31, 2018, the Company accrued interest on these notes of $3,255 and recorded interest expense of $3,117 in interest expense for the period from inception (May 5, 2017) to January 31, 2018.

NOTE 911 - CONVERTIBLE NOTES PAYABLE

Convertible notes payable consistedconsists of the following as of January 31, 2018:following: