Sharing Services Global 10Q 2024 Q3 Quarterly report

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, 2023

☐ 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.)

5200 Tennyson Parkway, Suite 400, Plano, Texas		75024
(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
None		None		None

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

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 No ☒

As of February 13, 2024, there were 376,328,885 shares of the issuer’s Class A Common Stock outstanding.

TABLE OF CONTENTS

PART I—FINANCIAL INFORMATION	4
Item 1. Financial Statements	4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3. Quantitative and Qualitative Disclosures About Market Risk	35
Item 4. Controls and Procedures	35

PART II—OTHER INFORMATION	36
Item 1. Legal Proceedings	36
Item 1A. Risk Factors	36
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3. Defaults Upon Senior Securities	36
Item 4. Mine Safety Disclosures	36
Item 5. Other Information	36
Item 6. Exhibits	37
Signatures	38

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.

cautionary notice regarding forward-looking statements

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

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

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

The following unaudited financial statements: condensed consolidated balance sheets as of December 31, 2023, condensed consolidated statements of operations and comprehensive loss for the three and nine months ended December 31, 2023 and 2022, condensed consolidated statements of cash flows, and condensed consolidated statements of changes in stockholders’ deficit for the nine months ended December 31, 2023 and 2022, are those of Sharing Services Global Corporation and its subsidiaries.

Index to Unaudited Condensed Consolidated Financial Statements

	Page

Condensed consolidated balance sheets as of December 31, 2023, and March 31, 2023	5

Condensed consolidated statements of operations and comprehensive loss for the three and nine months ended December 31, 2023 and 2022	6

Condensed consolidated statements of cash flows for the nine months ended December 31, 2023 and 2022	7

Condensed consolidated statements of changes in stockholders’ deficit for the nine months ended December 31, 2023 and 2022	8

Notes to the unaudited condensed consolidated financial statements	9

SHARING SERVICES GLOBAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	December 31, 2023			March 31, 2023
	(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	737,850		$	2,994,885
Trade accounts receivable, net		494,451			273,674
Other receivable		1,800,000			-
Short-term advance		31,194			-
Inventory, net		2,190,680			1,636,120
Other current assets, net		226,371			527,827
Total Current Assets		5,480,546			5,432,506
Property and equipment, net		325,523			9,270,193
Right-of-use assets, net		414,865			448,240
Deferred income taxes, net		16			-
Investment in unconsolidated entities, net		-			206,231
Intangible assets		438,002			545,372
Other assets		1,162,389			1,177,173
TOTAL ASSETS	$	7,821,341		$	17,079,715

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities
Accounts payable	$	1,084,968		$	1,028,510
Accrued and other current liabilities		2,745,147			2,781,037
Accrued sales commission payable		1,676,362			2,357,643
Tax payable		1,518,379			1,446,503
Note payable, related party, net of unamortized debt discount and unamortized deferred loan cost		-			6,922,043
Note payable		1,200,000			-
Convertible note payable, related party, net of unamortized debt discount and unamortized deferred loan cost		-			24,827,086
Total Current Liabilities		8,224,856			39,362,822
Lease liability, long-term		416,277			440,478
TOTAL LIABILITIES		8,641,133			39,803,300

Commitments and contingencies		-			-

STOCKHOLDERS’ DEFICIT
Series A convertible preferred stock, $0.0001 par value, 100,000,000 shares designated, 3,100,000 shares issued and outstanding		310			310
Series B convertible preferred stock, $0.0001 par value, no shares issued and outstanding		-			-
Series C convertible preferred stock, $0.0001 par value, 100,000,000 shares designated, 3,220,000 shares issued and outstanding		322			322
Series D preferred stock, $0.0001 par value, 26,000 shares issued and outstanding		3			-
Preferred stock value
Class A common stock, $0.0001 par value, 1,990,000,000 shares designated, 376,328,885 shares and 347,451,880 shares issued and outstanding as of December 31, 2023 and March 31, 2023, respectively		37,633			34,745
Class B common stock, $0.0001 par value, 10,000,000 shares designated, no shares issued and outstanding		-			-
Common stock value		-			-
Treasury stock		-			(626,187	)
Additional paid in capital		110,699,858			84,619,762
Shares to be issued		12,146			12,146
Accumulated deficit		(111,230,122	)		(106,456,378	)
Accumulated other comprehensive loss		(339,942	)		(308,305	)
TOTAL STOCKHOLDERS’ DEFICIT		(819,792	)		(22,723,585	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	7,821,341		$	17,079,715

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

SHARING SERVICES GLOBAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

	December 31, 2023			December 31, 2022			December 31, 2023			December 31, 2022
	Three Months Ended						Nine Months Ended
	December 31, 2023			December 31, 2022			December 31, 2023			December 31, 2022
Net sales	$	2,885,645		$	3,245,903		$	8,172,469		$	12,737,673
Cost of goods sold		701,683			1,643,111			2,217,315			5,059,916
Gross profit		2,183,962			1,602,792			5,955,154			7,677,757
Operating expenses
Selling and marketing		948,228			928,246			3,112,773			5,723,642
General and administrative		1,972,405			4,678,620			6,375,717			13,787,444
Total operating expenses		2,920,633			5,606,866			9,488,490			19,511,086
Operating loss		(736,671	)		(4,004,074	)		(3,533,336	)		(11,833,329	)
Other income (expense):
Interest expense, net		(137,362	)		(3,320,159	)		(3,006,440	)		(9,761,622	)
Other income		-			-			1,800,000			-
Gain on employee warrants liability		-			39,375			-			207,210
Loss on investment and extinguishment of debt		-			-			(116,841	)		-
Unrealized loss on investment		-			(3,614,242	)		-			(10,284,002	)
Other non-operating income (expense), net		(17,009	)		(21,722	)		86,427			118,077
Total other expense, net		(154,371	)		(6,916,748	)		(1,236,854	)		(19,720,337	)
Loss before income taxes		(891,042	)		(10,920,822	)		(4,770,190	)		(31,553,666	)
Income tax expense (benefit)		3,554			104,129			3,554			(789,803	)
Net loss	$	(894,596	)	$	(11,024,951	)	$	(4,773,744	)	$	(30,763,863	)

Other comprehensive income (loss), net of tax:
Currency translation adjustments		(4,032	)		251,166			(31,637	)		(156,850	)
Total other comprehensive (loss) income		(4,032	)		251,166			(31,637	)		(156,850	)
Comprehensive loss	$	(898,628	)	$	(10,773,785	)	$	(4,805,381	)	$	(30,920,713	)

Loss per share:
Basic and diluted	$	(0.002	)	$	(0.04	)	$	(0.01	)	$	(0.12	)

Weighted average shares:
Basic and diluted		376,328,885			262,832,833			374,543,761			267,956,183

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)

	December 31, 2023			December 31, 2022
	Nine Months Ended
	December 31, 2023			December 31, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(4,773,744	)	$	(30,763,863	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		442,643			539,411
Stock-based compensation		(148,267	)		(303,784	)
Amortization of debt discount and other		2,015,542			10,447,435
Loss (gain) on extinguishment of debt		38,215			(350,320	)
Intangible asset impairment		-			154,182
Bad debt expense (recovery of bad debt provision)		177,115			(85,155	)
Realized/unrealized gain on investments		-			10,284,002
Provision for obsolete inventory (recovery of inventory provision)		(54,394	)		1,012,433
Changes in operating assets and liabilities:
Accounts receivable		(397,891	)		(22,413	)
Short-term advance		(31,194	)		-
Other receivable		(1,800,000	)		-
Inventory		(500,165	)		892,136
Other current assets		672,915			321,291
Property and equipment		(54,237	)		-
Other assets		97,590			(137,112	)
Accounts payable		56,458			669,048
Income taxes payable		71,860			(496,026	)
Lease liability		1,578			35,008
Accrued and other liabilities		760,577			(1,042,211	)
Net Cash Used in Operating Activities		(3,425,399	)		(8,845,938	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for property and equipment and other assets		-			(1,404,013	)
Issuance of notes receivable		-			(216,885	)
Purchase of marketable securities		-			(9,510,000	)
Cash paid for asset purchase		-			(400,000	)
Net Cash Used in Investing Activities		-			(11,530,898	)

CASH FLOWS FROM FINANCING ACTIVITIES:

Net proceeds from issuance of promissory notes		-			10,922,329
Proceeds from note payable		1,200,000			-
Common stock received on litigation settlement		-			(1,046,254	)
Retirement of loans		-			(3,374,416	)
Net Cash Provided by Financing Activities		1,200,000			6,501,659

IMPACT OF CURRENCY RATE CHANGES ON CASH		(31,635	)		(35,864	)
Decrease in cash and cash equivalents	$	(2,257,034	)	$	(13,911,041	)
Cash and cash equivalents, beginning of period		2,994,885			17,023,266
Cash and cash equivalents, end of period	$	737,851		$	3,112,225

Supplemental cash flow information
Cash paid for interest	$	96,279		$	127,790
Cash paid for income taxes	$	550		$	-

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

SHARING SERVICES GLOBAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

(Unaudited)

	Number		Par		Number		Par		Number		Par		Number		Par		Number		Par		Paid in			Shares to		Treasury			Accumulated			Comprehensive
	Series A				Series B				Series C				Series D				Class A and Class B															Accumulated
	Preferred Stock				Preferred Stock				Preferred Stock				Preferred Stock				Common Stock				Additional											Other
	Number		Par		Number		Par		Number		Par		Number		Par		Number		Par		Paid in			Shares to		Treasury			Accumulated			Comprehensive
	of Shares		Value		of Shares		Value		of Shares		Value		of Shares		Value		of Shares		Value		Capital			be Issued		Stock			Deficit			Loss			Total
Balance - March 31, 2023		3,100,000	$	310		-	$	-		3,220,000	$	322		-		-		347,451,880	$	34,745	$	84,619,762		$	12,146	$	(626,187	)	$	(106,456,378	)	$	(308,305	)	$	(22,723,585	)
Balance		3,100,000	$	310		-	$	-		3,220,000	$	322		-		-		347,451,880	$	34,745	$	84,619,762		$	12,146	$	(626,187	)	$	(106,456,378	)	$	(308,305	)	$	(22,723,585	)
Cancellation of treasury-stock		-		-		-		-		-		-		-		-						(626,187	)		-		626,187			-			-			-
Common stock issued for debt modification														26,000	$	3						26,169,365														26,169,368
Common stock issued to settle accrued interest payable																		28,877,005		2,888		536,918														539,806
Currency translation adjustments																														-			(31,637	)		(31,637	)
Net loss																														(4,773,744	)					(4,773,744	)
Balance - December 31, 2023		3,100,000	$	310		-	$	-		3,220,000	$	322		26,000	$	3		376,328,885	$	37,633	$	110,699,858		$	12,146	$	-		$	(111,230,122	)	$	(339,942	)	$	(819,792	)
Balance		3,100,000	$	310		-	$	-		3,220,000	$	322		26,000	$	3		376,328,885	$	37,633	$	110,699,858		$	12,146	$	-		$	(111,230,122	)	$	(339,942	)	$	(819,792	)

	Series A				Series B				Series C				Series D				Class A and Class B																	Accumulated
	Preferred Stock				Preferred Stock				Preferred Stock				Preferred Stock				Common Stock						Additional											Other
	Number		Par		Number of		Par		Number		Par		Number		Par		Number			Par			Paid in			Shares to		Treasury			Accumulated			Comprehensive
	of Shares		Value		Shares		Value		of Shares		Value		of Shares		Value		of Shares			Value			Capital			be Issued		Stock			Deficit			Loss			Total
Balance - March 31, 2022		3,100,000	$	310		-	$	-		3,220,000	$	322		-	$	-		288,923,969		$	28,892		$	80,738,719		$	12,146		-		$	(57,886,336	)	$	(65,109	)	$	22,828,944
Balance		3,100,000	$	310		-	$	-		3,220,000	$	322		-	$	-		288,923,969		$	28,892		$	80,738,719		$	12,146		-		$	(57,886,336	)	$	(65,109	)	$	22,828,944
Refinancing of debt and detachable warrants		-		-		-		-		-		-		-		-								1,235,516			-		-									1,235,516
Repurchase of 26,091,136 shares of Common Stock																		(26,091,136	)		(2,609	)		(23,482	)			$	(626,187	)								(652,278	)
Repurchase of shares of Common Stock																		(26,091,136	)		(2,609	)		(23,482	)			$	(626,187	)								(652,278	)
Currency translation adjustments																																			(156,850	)		(156,850	)
Net loss																																(30,763,863	)					(30,763,863	)
Balance - December 31, 2022		3,100,000	$	310		-	$	-		3,220,000	$	322		-	$	-		262,832,833		$	26,283		$	81,950,753		$	12,146	$	(626,187	)	$	(88,650,199	)	$	(221,959	)	$	(7,508,531	)
Balance		3,100,000	$	310		-	$	-		3,220,000	$	322		-	$	-		262,832,833		$	26,283		$	81,950,753		$	12,146	$	(626,187	)	$	(88,650,199	)	$	(221,959	)	$	(7,508,531	)

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

SHARING SERVICES GLOBAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 – ORGANIZATION AND BUSINESS

Description of Operations

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

Sale of Health and Wellness Products - The Company markets its health and wellness products primarily through an independent sales force, using a direct selling business model under the proprietary brand “The Happy Co.” Currently, The Happy Co. ^TM markets and distributes its health and wellness products primarily in the United States (the “U.S.”) and Canada.

Sale of Member-Based Travel Services - Through its subsidiary, Hapi Travel Destinations, the Company established a subscription-based travel services business under the proprietary brand MyTravelVentures (“MTV”) in May 2022. MTV provides entrepreneurial opportunities to its subscribers by capitalizing on both the direct selling model and the retail travel business model. The MTV services are designed to offer discount for travel relating to airfare, cruises, hotels, resorts, time shares and rental cars for destinations throughout the world for people of all ages, demographics, and economic backgrounds.

In August 2021, Sharing Services and Hapi Café, Inc, a company affiliated with Heng Fai Ambrose Chan, a Director of the Company, entered into a Master Franchise Agreement (the “MFA”) pursuant to which Sharing Services acquired the exclusive franchise rights in North America to the brand “Hapi Café.” Under the terms of the MFA, Sharing Services, directly or through its subsidiaries, has the right to operate no less than five corporate-owned stores and can offer to the public sub-franchise rights to own and operate other stores, subject to the terms and conditions contained in the MFA. The Company plans to open up Hapi Café in Dallas and other major cities in North America, and is in the process of identifying and evaluating suitable locations.

Directly or through its subsidiaries, the Company from time to time will invest in emerging business in the direct selling industry, using a combination of debt and equity financing, in efforts to leverage the Company’s business competencies and to participate in the growth of these businesses. As part of the Company’s commitment to the success of these emerging businesses, the Company, directly or through its subsidiaries, also plans to offer shared services, such as merchant processing, insurance, order fulfillment and logistics, and other “back office” solutions that are success-critical to these businesses in the direct sales industry.

NOTE 2- GOING CONCERN

The accompanying unaudited condensed consolidated financial statements as of December 31, 2023 have been prepared using generally accepted accounting principles in the United States of America (“GAAP”) applicable to a going concern, which contemplates the realization of assets and the liquidation of liabilities in the ordinary course of business. During the nine months ended December 31, 2023 and 2022, the Company had a net loss was approximately $4.8 million and $30.8 million, respectively. These factors among other raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time.

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by obtaining capital from significant shareholders sufficient to meet its minimal operating expenses and seeking third party equity and/or debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. These financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The unaudited condensed consolidated interim financial statements included herein have been prepared in accordance with GAAP and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted as permitted pursuant to the rules and regulations of the SEC, although we believe that the disclosures made are adequate to make the information not misleading. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2023. Unless so stated, the disclosures in the accompanying condensed consolidated financial statements do not repeal the disclosures in our consolidated financial statements for year ended March 31, 2023.

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain prior period financial information has been reclassified to conform with the current year’s presentation.

Use of Estimates and Assumptions

The preparation of financial statements in accordance with 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, among others: the recoverability of accounts and notes receivable, the valuation of inventory, the useful lives of fixed assets, the assessment of long-lived assets for impairment, the nature and timing of satisfaction of multiple performance obligations resulting from contracts with customers, the allocation of the 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 share-based compensation awards, the provision for income taxes, the measurement and recognition of uncertain tax positions, the valuation of long-term debt covenants, and the valuation of 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 assumptions used in the preparation of our consolidated financial statements are reasonable.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. Cash and cash equivalents include recent customer remittances deposited with our merchant processors at the balance sheet date, which generally settle within 24 to 72 hours. As of December 31, 2023, and March 31, 2023, cash and cash equivalents included cash held by our merchant processors of approximately $0.08 million and $0.5 million, respectively. In addition, as of December 31, 2023, and March 31, 2023, cash and cash equivalents held in bank accounts in foreign countries in the ordinary course of business were approximately $0.4 million and $1.3 million, respectively. Amounts held by our merchant processor or held in bank accounts located in foreign countries are generally not insured by any federal agency.

Accounts Receivable and Allowance for Credit Losses

Accounts receivable consists mainly of amounts due from a merchant processor in the normal course of business. To measure impairment on accounts receivables, the Company adopted current expected credit losses (CECL) model, which is established on management’s historical collection experience, age of the receivable, the economic environment, industry trend analysis, and the current credit profile and financial condition of the merchant processor. On a quarterly basis, management reviews its receivables to determine if the allowance for doubtful accounts is adequate and adjusts the allowance, including the base loss rate and adjustment factors, when necessary. Delinquent account balances are written-off against the allowance for doubtful accounts after all means of collection have been exhausted and that the likelihood of collection is not probable.

Inventory

Inventory consists of finished goods and promotional materials and are stated at the lower of cost, determined using the first-in, first-out (“FIFO”) method, or net realizable value. The Company periodically assesses its inventory levels when compared to current and anticipated sales levels. As of December 31, 2023, and March 31, 2023, the allowance for obsolete inventory was $843,034 and $880,926, respectively, in connection with health and wellness product that is damaged, expired or otherwise in excess of forecasted outputs, based on our current and anticipated sales levels. The Company reports its provisions for inventory losses in cost of goods sold in its condensed consolidated statements of operations.

Other Receivable and Loan Payable

In July 2023, the Company, through its out-sourced payroll services provider (“Paychex”), submitted a claim to the Internal Revenue Services (“IRS”) for the Employee Retention Tax Credit (“ERTC credit”) based on its payroll records and other pertinent information. Refunds will be distributed based on IRS processing times and the total ERTC credit will be approximately $1.8 million. Since the likelihood of receiving the ERTC credit is probable and the amount is estimable, the Company has recorded its ERTC credit in the Other Receivable.

Through the introduction of Paychex, the Company successfully applied for an ERTC loan (“bridge loan”) in August 2023. The bridge loan that was approved came to $1.2 million, and it was recorded as a Loan Payable. The loan is for a 12-month period and carries a 2% monthly interest rate. The loan proceeds must be used solely and exclusively for working capital and other business purposes and it had an origination fee of $24,000. The Company received net proceeds of approximately $1.18 million in September 2023.

Other Assets

Other assets include a multi-user license and code of a back-office platform that was acquired for $1 million in 2022. This back-office platform is designed to facilitate the computation and processing of commission payments to distributors, and it requires customization in order for it to be operational. Costs associated with the customization and build out of the platform has been capitalized in accordance with ASC 350 - Capitalization on Internal-Use Software Costs.

Foreign Currency Translation

The functional currency of each of our foreign operations is generally 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. Individual material transactions, if any, are translated using the actual rate of exchange on the transaction date. The resulting translation adjustments are reported in accumulated other comprehensive loss in our condensed consolidated balance sheets. In September 2021, the Company, through its wholly owned subsidiary, commenced operations in the Republic of Korea (South Korea).

SCHEDULE OF FOREIGN EXCHANGE CURRENCY TRANSLATION

	South Korean
	Won per USD
Exchange rate as of December 31, 2023		1,294.46

	South Korean Won per USD
	Three Months ended		Nine Months ended
	December 31, 2023		December 31, 2023
Average exchange rate as of December 31, 2023		1,320.54		1,316.52

Comprehensive Loss

For the three and nine months ended December 31, 2023 and 2022, the Company’s comprehensive loss comprised of currency translation adjustments and net loss.

Revenue Recognition

As of December 31, 2023, and March 31, 2023, deferred sales revenue associated with products invoiced but not received by customers at the balance sheet date was $212,715 and $113,896, respectively. In addition, as of December 30, 2023, and March 31, 2023, deferred sales revenue associated with our unfulfilled performance obligations for services offered on a subscription basis was $44,248 and $80,528, and deferred sales revenue associated with our performance obligations for customers’ right of return was $26,970 and $26,894, and deferred revenues associated with customer loyalty points was $25,493 and $25,493, respectively. Deferred sales revenue is expected to be recognized over one year.

During the three and nine months ended December 31, 2023 and 2022, substantially all our consolidated net sales were from our health and wellness products.

Sales Commissions

The Company recognizes sales commission expenses, when incurred, in accordance with GAAP. During the three months ended December 31, 2023 and 2022, sales commission expense, which is included in selling and marketing expenses in our condensed consolidated statements of operations and comprehensive loss, was approximately $0.9 million and $1.2 million, respectively. During the nine months ended December 31, 2023 and 2022, sales commission expense was approximately $2.7 million and $5.1 million, respectively

Recently Issued Accounting Standards - Pending Adoption

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

NOTE 4 – LOSS PER SHARE

We calculate basic loss per share by dividing net loss attributable to common shareholders by the weighted average number of common shares outstanding during the reporting period. Diluted earnings 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, if any, stock warrants and other commitments to issue common stock, except where the impact would be anti-dilutive.

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

SCHEDULE OF COMPUTATIONS OF BASIC AND DILUTED LOSS PER SHARE

	2023			2022
	Three Months Ended December 31,
	2023			2022
Net loss	$	(894,596	)	$	(11,024,951	)
Weighted average basic and diluted shares		376,328,885			262,832,833
Loss per share:
Basic and diluted	$	(0.002	)	$	(0.04	)

	2023			2022
	Nine Months Ended December 31,
	2023			2022
Net loss	$	(4,773,744	)	$	(30,763,863	)
Weighted average basic and diluted shares		374,543,761			267,956,183
Loss per share:
Basic and diluted	$	(0.01	)	$	(0.12	)

The following potentially dilutive securities and instruments were outstanding as of December 31, 2023, and 2022, but excluded from the table above:

SCHEDULE OF POTENTIALLY DILUTIVE INSTRUMENTS OUTSTANDING

	2023		2022
	As of December 31,
	2023		2022
Convertible preferred stock		6,320,000		6,320,000
Convertible notes payable		-		163,612,120
		-
Total potential incremental shares		6,320,000		169,932,120

NOTE 5 – INVENTORY, NET

Inventory consists primarily of finished goods. The Company provides an allowance for any slow-moving or obsolete inventory. As of December 31, 2023, and March 31, 2023, inventory consists of the following:

SCHEDULE OF INVENTORY

	December 31, 2023			March 31, 2023

Finished Goods	$	3,033,714		$	2,517,046
Allowance for inventory obsolescence		(843,034	)		(880,926	)
Inventory,net	$	2,190,680		$	1,636,120

NOTE 6 – OTHER CURRENT ASSETS, NET

Other current assets consist of the following:

SCHEDULE OF OTHER CURRENT ASSETS

	December 31,2023			March 31, 2023
Inventory-related deposits	$	334,373		$	288,649
Accounts receivable, related parties		-			167,578
Prepaid insurance and other operational expenses		46,560			105,652
Deposits for sales events		-			120,614
Right to recover asset		21,079			20,975
Subtotal		402,012			703,468
Less: allowance for losses		(175,641	)		(175,641	)
Other current assets	$	226,371		$	527,827

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. Prepaid interest represents interest on the 2022 Note due to Decentralized Sharing Systems, Inc. (“DSSI”) (see NOTE 14 below) for the period from July 1, 2023 inclusive to December 31, 2023. Right to recover assets is associated with our customers’ right of return and is expected to be realized in one year or less. As of December 31, 2023, and March 31, 2023, the provision for losses in connection with certain inventory-related deposits for which recoverability is less than certain was approximately $176,000.

NOTE 7 – 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 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 GAAP. During the three months ended September 30, 2022, the Company recognized unrealized gains, before income tax, of $4,865,354 in connection with its investment in the Convertible Note, the GNTW Warrant and the shares of GNTW common stock.

Effective June 30, 2023, subject to the terms of a certain Loan Purchase Contract, Assignment of Note and Liens and Other Loan Documents, and Note Allonge document, DSSI purchased from SHRG the Stemtech promissory note in the amount of $1.4 million, along with all SHRG’s rights in any Stemtech warrants, for a purchase price of $1.1 million, with the financial terms generally summarized as follows: (a) DSSI paid the $1.1 million purchase price by crediting the $27.0 million loan, first to interest and then to principal, and (b) DSSI acquired ownership of the $1.4 million promissory note payable by Stemtech, free and clear of any liens, and any equity or warrant interest in the Stemtech that SHRG may have held. As of September 30, 2023, as a result of the transaction, the Company no longer has an investment in Stemtech.

In September 2021, the Company entered into a 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 (“MojiLife”), in exchange for $1,537,000. MojiLife is an emerging growth distributor of technology-based consumer products for the home and car. MojiLife’s products include esthetically attractive, cordless scent diffusers for the home or for the car, as well as proprietary home cleaning products and accessories.

On October 1, 2023, MojiLife and its principals Darin Davis and Kimberlee Davis (collectively the “Seller”) and Moji Life International, Inc., a Nevada corporation (the “Purchaser”), a wholly-owned subsidiary of the Company (collectively the “Parties”) entered into an Asset Purchase Agreement (the “MojiLife Asset Purchase Agreement”). Pursuant to the MojiLife Asset Purchase Agreement, the Purchaser purchased the Seller’s real and personal property including, machinery and equipment, intellectual property, trade names, patents, marketing strategies and materials, all product formulas, all saleable inventory, the Seller’s organization database of distributors and customers, and assumed certain liabilities of the Seller.

In connection with the Moji Asset Purchase Agreement, on October 1, 2023, the Purchaser and SHRG Development Ventures, LLC (“SHRGDV”), an affiliate of the Purchaser and subsidiary of the Company also entered an Exchange Agreement whereby SHRDV relinquished and surrendered its 30.75% LLC unit ownership interest in Seller.

On a quarterly basis, the Company evaluates the recoverability of its investments and reviews current economic trends to determine the adequacy of its allowance for impairment losses based on each investee financial performance data and other relevant information. An estimate for impairment losses is recognized when recovery in full of the Company’s investment is no longer probable. Investment balances are written off against the allowance after the potential for recovery is considered remote.

Investment in unconsolidated entities consists of the following:

SUMMARY OF INVESTMENT IN UNCONSOLIDATED ENTITIES

	December 31, 2023		March 31, 2023
Investment in detachable GNTW stock warrant	$	-	$	143,641
Investment in GNTW common stock		-		18,300
Investment in Stemtech convertible note		-		44,290
Investment in MojiLife, LLC		-		1,537,000
Subtotal		-		1,743,231
Less, allowance for impairment losses		-		(1,537,000	)
Investments	$	-	$	206,231

NOTE 8 – PROPERTY AND EQUIPMENT, NET

Property and equipment consist of the following:

SUMMARY OF PROPERTY AND EQUIPMENT

	December 31, 2023			March 31, 2023
Building and building improvements	$	-		$	8,952,555
Computer software		1,024,274			1,024,274
Furniture and fixtures		287,421			237,042
Computer equipment		220,264			220,264
Leasehold improvements and other		399,306			394,306
Total property and equipment		1,931,265			10,828,441
Accumulated depreciation and amortization		(1,605,742	)		(1,558,248	)
Property and equipment, net	$	325,523		$	9,270,193

Effective June 30, 2023, the Company and DSSI entered into an Assignment of Limited Liability Company Interests agreement pursuant to which: (a) DSSI assumed approximately $7.24 million in SHRG liabilities secured by certain Commercial Real Estate, (b) DSSI credited SHRG approximately $240,000 towards amounts owed under the 2022 Note (the “$27.0 million loan”), and (c) DSSI acquired ownership of Linden Real Estate Holdings LLC, with its sole asset being a commercial lot and commercial building located in Lindon, Utah, subject to the assumed indebtedness.

NOTE 9 – ACCRUED AND OTHER CURRENT LIABILITIES

Accrued and other current liabilities consist of the following:

SUMMARY OF ACCRUED AND OTHER CURRENT LIABILITIES

	December 31, 2023		March 31, 2023
Deferred sales revenues	$	369,726	$	246,811
Liability associated with uncertain tax positions		925,785		925,795
Accrued interest payable		-		536,123
Payroll and employee benefits		302,276		329,762
Lease liability, current portion		33,790		41,385
Other accruals		1,113,570		701,161
Accrued and other current liabilities	$	2,745,147	$	2,781,037

Lease liability, current portion, represents obligations due within one year under operating leases for office space, automobiles, and office equipment. See Note 16 - LEASES below for more information. As of December 31, 2023, and March 31, 2023, other accruals include amounts due to related parties of $0 and $167,578, respectively, and several operational accruals of $1,113,570 and $533,583, respectively.

NOTE 10 – NOTES PAYABLE, RELATED PARTY

Notes payable, related party, consisted of the following:

SCHEDULE OF NOTE PAYABLE RELATED PARTY

	December 31, 2023		March 31, 2023
APB Loan	$	-	$	5,594,253
APB Revolving Note		-		1,530,569
Unamortized discount and deferred financing costs		-		(202,779	)
Note payable to related party, net	$	-	$	6,922,043

On June 15, 2022, the Company, through one of its subsidiaries, Linden Real Estate Holdings LLC (“SHRG Subsidiary”), entered into a secured real estate promissory note with American Pacific Bancorp, Inc. (“APB”), pursuant to which APB loaned the Company approximately $5.7 million the “APB Loan”). The APB Loan would mature on June 1, 2024, bore interest at the annual rate of 8%, with interest payable in equal monthly installments of $43,897 commencing on July 1, 2022 (with the remainder due on June 1, 2024). The loan was secured by a first mortgage interest on 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.

On August 11, 2022, the Company executed a revolving credit promissory note with APB (“the APB Revolving Note”) pursuant to which the Company had access to advances with a maximum principal balance not to exceed the principal sum of $10 million. The APB Revolving Note included origination fees of $600,000. The APB Revolving Note was collateralized by the assets of the Company, and it bore interest at the annual rate of 8%. On December 9, 2022, APB and the Company mutually agreed to limit and/or end any further commitment by APB to fund or to readvance under the terms of the APB Revolving Note to $6.0 million. As of March 31, 2023, the Company had $1.5 million outstanding under the APB Revolving Note and accrued interest of $54,384.

Effective June 30, 2023 subject to the terms of an Assignment of Limited Liability Company Interests agreement, Decentralized Sharing Systems, Inc. (“DSSI”) purchased the SHRG Subsidiary with the financial terms generally summarized as follows: (a) DSSI assumed approximately $7.24 million in SHRG liabilities (namely, all amounts due under the APB Loan and the APB Revolving Note), (b) DSSI credited SHRG approximately $240,000 towards amounts owned under the 2022 Note (the “$27.0 million loan”), and (c) DSSI acquired ownership of Linden Real Estate Holdings LLC, with its sole asset being a commercial lot and commercial building located in Lindon, Utah, subject to the assumed indebtedness.

NOTE 11 – CONVERTIBLE NOTE PAYABLE, RELATED PARTY

Note payable, related party, consists of the following:

SCHEDULE OF RELATED PARTY CONVERTIBLE NOTES PAYABLE

Issuance Date	Maturity Date	Interest Rate			Conversion Price (per share)		December 31, 2023		March 31, 2023
September 2022	September 2024		8	%	$	N/A	$	-	$	27,000,000
Unamortized debt discount and deferred financing costs								-		(2,172,914	)
Convertible debt								-		24,827,086
Less: current portion of note payable								-		24,827,086
Long-term note payable							$	-	$	-

On April 5, 2021, the Company and DSSI entered into a Securities Purchase Agreement, pursuant to which the Company issued: (a) a Convertible Promissory Note in the principal amount of $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. (“DSS”), and, together with DSS, is a shareholder of the Company. Under the terms of the Note, the Company agreed to pay to DSSI a loan Origination Fee of $3.0 million, payable in shares of the Company’s Class A Common Stock, at the rate of $0.20 per share. The Note bore interest at the annual rate of 8%, with a maturity date of April 5, 2024, subject to certain accelerated provisions upon the occurrence of an Event of Default, as was defined in the Note. At any time during the term of the Note, all or part of the Note, including the principal amount less unamortized prepaid interest, if any, plus any accrued interest could have been converted into 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 was pre-payable annually in cash or in shares of the Company’s Class A Common Stock, at the option of the Company, except that interest for the first year was pre-payable in shares of the Company’s Class A Common Stock, at the rate of $0.20 per share. As further discussed below, the Note and the detachable Warrant were redeemed in September 2022.

On September 15, 2022, the Company and DSSI which, together with DSS, a major shareholder of the Company, entered into an agreement pursuant to which the Company issued, to DSSI: (a) a two-year Convertible, Advancing Promissory Note in the principal amount of $27.0 million (the “2022 Note”) in favor of DSSI and (b) a detachable Warrant to purchase up to 818,181,819 shares of the Company’s Class A Common Stock at the exercise price of $0.033 per share. The 2022 Note bore interest at the annual rate of 8%, was due and payable on demand or, if no demand, on May 1, 2024. At any time during the term of the 2022 Note, all or part of the Note may be converted into up to 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 consolidated balance sheet.

In March 2023, the Company and DSSI entered into a Securities Exchange and Amendment Agreement pursuant to which the parties agreed to amend the 2022 Note by removing the conversion rights granted by the 2022 Note. The Company recognized the transaction with DSSI as a debt extinguishment in accordance with GAAP. Since DSSI is a related party, the difference between the fair value of the new equity instruments and the carrying value of the retired equity instruments was recognized as a deemed dividend of approximately $10.7 million on the Company’s consolidated financial statements.

Effective June 30, 2023, the Company and DSSI entered into two transactions, involving the sale of certain assets to DSSI, pursuant to which DSSI credited, in the aggregate, $641,790 to principal outstanding on the 2022 Note. In addition, effective June 30, 2023, DSSI also credited, in the aggregate, $546,000 in accrued interest due on the 2022 Note in connection with transactions involving the sale of certain assets to DSSI.

On August 31, 2023, the Company and DSSI executed a debt exchange agreement whereby DSSI cancelled the $27 million loan and accepted 26,000 shares of the Company’s Series D Preferred Stock, $0.0001 par value per share (“Preferred D Stock”) in exchange for the cancellation of the $27.0 million loan. Pursuant to the debt exchange agreement, the principal amount together with all unpaid interest, totaling $26,169,367 was deemed to be repaid. The holder of Preferred D Stock is entitled to receive dividends in cash valued at a rate of 25% per annum of the operating income of the Company. Any accrued and unpaid dividends shall be payable in cash commencing on August 31, 2024 and continuing each annual anniversary of such date on a perpetual basis.

NOTE 12 – INCOME TAXES

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

SCHEDULE OF STATUTORY RATES FOR OUR DOMESTIC AND FOREIGN OPERATION

Country	2023			2022
United States		21	%		21	%
Republic of Korea		21	%		21	%
Effective income tax rate		21	%		21	%

Our consolidated effective income tax rate reconciliation is as follows:

SCHEDULE OF INCOME TAX RATE RECONCILIATION RATE

	2023			2022
	Nine Months Ended December 31,
	2023			2022
Federal statutory rate		21.0	%		21.0	%
Permanent differences		0.8			-
Change in valuation allowance for NOL carry-forwards		(21.0	)		(21.0	)
Stock warrant transactions and other items		-			(2.5	)
Effective income tax rate		0.8	%		(2.5	)%

Income taxes applicable to our foreign operations are not material in the periods presented.

NOTE 13 - STOCKHOLDERS’ EQUITY

Common Stock

On September 15, 2022, the Company and DSSI which, together with DSS, a shareholder of the Company, entered into an agreement pursuant to which the Company issued, to DSSI: (a) a two-year Convertible, Advancing Promissory Note in the principal amount of $27.0 million (the “2022 Note”) in favor of DSSI and (b) a detachable Warrant to purchase up to 818,181,819 shares of the Company’s Class A Common Stock at the exercise price of $0.033 per share. The 2022 Note bore interest at the annual rate of 8% and was due and payable on demand or, if no demand, on May 1, 2024. At any time during the term of the 2022 Note, all or part of the Note may be converted into up to 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 as a capital contribution of $2.0 million in additional paid in capital on the Company’s consolidated balance sheet.

On February 3, 2023, the Company mutually agreed with DSS to enter into a Letter Agreement (the “DSS Letter Agreement”), pursuant to which the Company and DSS have agreed to terminate and release all obligations of the Consulting Agreement effective as of December 31, 2022. In accordance with the DSS Letter Agreement, the Company also agreed to issue 33,333,333 shares of the Company’s Common Stock in lieu of cash payment to satisfy the accrued and unpaid service fees equal to $700,000 owed to DSS under the Consulting Agreement.

On February 28, 2023, the Company and DSSI mutually agreed in a Letter Agreement (the “First DSSI Letter Agreement”) to a mutual settlement of the interest accrued on the 2022 Note issued by the Company to DSSI. In accordance with the DSSI Letter Agreement, the Company agreed to issue 26,285,714 shares of the Company’s Common Stock, at a price per share of $0.021 in lieu of cash payment to satisfy the accrued and unpaid interest through and including December 31, 2022, in the amount of $552,000 owed to DSSI.

On March 24, 2023, the Company, DSS and DSSI, entered into a Securities Exchange and Amendment Agreement (the “Agreement”). Pursuant to the Agreement, the parties decided to: 1) exchange and surrender the Assigned Warrants, 2) exchange and surrender the Service Warrants, 3) exchange and surrender the DSSI Warrants, and 4) amend the 2022 Note by removing all conversion rights granted by the 2022 Note. Under the terms of the Agreement, the Company issued 10,145,841 shares of its Class A Common Stock in connection with the exchange and surrender of the Assigned Warrants and the Service Warrants. In accordance with GAAP, the Company recognized a deemed dividend of $213,062 on the Company’s consolidated financial statements. In addition, the Company issued 14,854,159 shares of its Class A Common Stock in connection with removal of all conversion rights granted by the 2022 Note. The Company recognized the debt modification transaction as a debt extinguishment in accordance with GAAP. Since DSSI is a related party, the difference between the fair value of the new debt instrument and the carrying value of the retired debt instrument was recognized as a deemed dividend of $10.7 million on the Company’s consolidated financial statements.

In May 2022, the Company and certain of its subsidiaries, on the one hand, and Alchemist, the former officer and certain entities affiliated with the former officer, on the other hand, entered into a Confidential Settlement Agreement with Mutual Releases (the “May 2022 Settlement Agreement”) pursuant to which the parties amicably settled all claims and disputes among them; (b) the former officer sold to the Company 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 September 30, 2022, the Company measured and recognized the repurchase of its common stock at its fair value of $626,187, derecognized its remaining liability under the Co-Founder’s Agreement, and recognized a recovery of $324,230 in connection with the previously recognized loss related to the Co-Founder’s Agreement. The Company reported the 26,091,136 shares of the Company’s common stock in Treasury Stock until the interim period ended June 30, 2023, when it cancelled the stock certificate.

On April 17, 2023, the Company and DSSI, mutually agreed in a subsequent Letter Agreement (the “Second DSSI Letter Agreement”) to a mutual settlement of the interest accrued on the 2022 Note between January 1, 2023, through and including March 31, 2023. In accordance with the Second DSSI Letter Agreement, the Company issued 28,877,005 shares of the Company’s Common Stock, at a price per share of $0.0187 in lieu of cash payment to satisfy the accrued and unpaid interest between January 1, 2023, through and including March 31, 2023, equal to $539,806 owed to DSSI under the Second DSSI Letter Agreement. The Company’s shares were trading at $0.0180 on April 17, 2023.

On October 30, 2023, the Company filed a Definitive Information Statement on Schedule 14C with the Securities and Exchange Commission and disclosed that a majority of the Company’s stockholders had approved by majority written consent an amendment to the Company’s articles of incorporation with the Secretary of State of Nevada to effect a Reverse Split (the “Reverse Split”) of the Company’s Class A Common Stock, par value $0.0001 per share (the “Common Stock”) by a ratio of not less than 700-for-1 and not more than 1,800-for-1, with the Board of Directors (the “Board”) of the Company having the discretion as to the exact date and ratio of any Reverse Split to be set at a whole number within the above range.

On December 15, 2023, the Board approved the exact ratio of the Reverse Split at 1,400-for-1. The Company intends on effecting the Reverse Split for the purpose of enabling a future uplisting of the Company’s Common Stock to a national securities exchange. The Reverse Split remains subject to approval by the Financial Industry Regulatory Authority (“FINRA”). There is no guarantee that the Company will be successful in achieving FINRA’s approval or uplisting to a national exchange.

As of December 31, 2023, and March 31, 2023, 376,328,885 shares and 347,451,880 shares of our Class A Common Stock remained issued and outstanding, respectively. As of December 31, 2023, and March 31, 2023, there were no shares of the Company’s Class B Common Stock outstanding.

Preferred Stock

NOTE 14 - RELATED PARTY TRANSACTIONS

Decentralized Sharing Systems, Inc.

In April 2021, the Company and DSSI entered into a Securities Purchase Agreement, pursuant to which DSSI granted a $30.0 million loan to the Company in exchange for: (a) a Convertible Promissory Note in the principal amount of $30.0 million (the “Note”) in favor of DSSI, and (b) a detachable Stock Warrant to purchase up to 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, at the option of the holder. Under the terms of the loan agreement, the Company agreed to pay to DSSI a loan origination fee of $3.0 million, payable in shares of the Company’s Class A Common Stock, with the number of shares to be calculated at the rate of $0.20 per share. In April 2021, Sharing Services issued 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 the first year.

On September 15, 2022, the Company and DSSI entered into a Securities Purchase Agreement (the “SPA”), pursuant to which the Company issued: (a) a Convertible Promissory Note in the principal amount of $27.0 million (the “2022 Note”) in favor of DSSI and (b) a detachable Warrant to purchase up to 818,181,819 shares of the Company’s Class A Common Stock (the “Warrant”), at $0.033 per share, in exchange for the $27.0 million. The 2022 Note bears interest at the annual rate of 8% and is due and payable on demand or, if no demand, on May 1, 2024. At any time during the term of the 2022 Note, all or part of the Note may be converted into up to 818,181,819 shares of the Company’s Class A Common Stock, at the option of the holder.

In connection with the loan, the Company agreed to pay to DSSI a loan Origination Fee of $270,000. In addition, DSSI agreed to surrender to the Company all DSSI’s rights pursuant to: (a) a certain Convertible Promissory Note in the principal amount of $30.0 million issued by the Company in April 2021 in favor of DSSI, and (b) a certain detachable Warrant to purchase up to 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.

On March 24, 2023, the Company, DSS and DSSI, entered into a Securities Exchange and Amendment Agreement (the “Agreement”) pursuant to which the parties agreed to: (1) exchange and surrender of the Assigned 60 million Warrants in exchange for 693,194 shares of the Company’s Class A common stock; (2) exchange and surrender the Service Warrants of 818,181,819 warrants for 9,452,647 shares of the Company’s Class A common stock; (3) exchange and surrender the DSSI Warrants; and (4) amend the 2022 Note by removing all conversion rights granted by the 2022 Note in exchange for 14,854,159 shares of the Company’s Class A common stock. The Company issued 25,000,000 shares of the Company’s Class A Common Stock in full satisfaction, exchange and payment for the exchanges and amendments set forth in the Agreement. The Company recognized the transaction with DSSI as a debt extinguishment in accordance with GAAP. Since DSSI is a related party, the difference between the fair value of the new equity instruments and the carrying value of the retired equity instruments was recognized as a deemed dividend on the Company’s consolidated financial statements.

On April 17, 2023, the Company and DSSI mutually agreed in a subsequent Letter Agreement (the “Second DSSI Letter Agreement”) to a mutual settlement of the interest accrued on the 2022 Note between January 1, 2023, through and including March 31, 2023. In accordance with the Second DSSI Letter Agreement, the Company agreed to issue 28,877,005 shares of the Company’s Common Stock, at a price per share of $0.0187 in lieu of cash payment to satisfy the accrued and unpaid interest between January 1, 2023, through and including March 31, 2023, in the amount of $539,806 owed to DSSI.

On May 4, 2023, DSS and DSSI distributed, in the aggregate, 280,528,500 shares of SHRG they then held to DSS, Inc. shareholders in connection with the Form S-1 (file no. 333-271184) initially filed with the Securities and Exchange Commission on April 7, 2023, and declared effective on April 25, 2023. Accordingly, after the distribution, DSS ceased to be a majority shareholder of the Company.

Effective June 30, 2023, subject to the terms of a certain Loan Purchase Contract, Assignment of Note and Liens and Other Loan Documents, and Note Allonge document, DSSI purchased from SHRG a Stemtech promissory note in the amount of $1.4 million, along with all SHRG’s rights in any Stemtech warrants, for a purchase price of $1.1 million, with the financial terms generally summarized as follows: (a) DSSI pays the $1.1 million purchase price by crediting the $27.0 million loan, first to interest and then to principal, and (b) DSSI acquired ownership of certain $1.4 million promissory note payable by Stemtech, free and clear of any liens, and any equity or warrant interest in the Stemtech that SHRG may have held. As of June 30, 2023, as a result of the transaction, the Company no longer has an investment in Stemtech.

On July 1, 2023, the Company and DSSI, entered into a Securities Purchase Agreement, pursuant to which the Company purchased 1,000 shares of common stock, par value $0.001 per share, (the “Shares”) representing all of the issued and outstanding shares of common stock of HWH World, Inc., a Texas corporation (“HWHW”). The Company purchased the Shares for a consideration of (i) $10 paid immediately in cash, and (ii) up to $711,300 payable from the gross proceeds generated from the sale of HWHW’s inventory, payable quarterly, and as described in detail in the Securities Purchase Agreement.

Effective July 1, 2023, the Company and DSSI cancelled the previously executed Securities Purchase Agreement related to HWHW and replaced it with an Asset Purchase Agreement whereby the Company agreed to purchase the inventory of HWHW as of June 30, 2023 and assumed certain account payable of HWHW as of June 30, 2023. Pursuant to the Asset Purchase Agreement, the Company agreed to pay DSSI a maximum of $757,641.98 from gross proceeds generated from the sale of HWHW inventory.

Effective July 31, 2023, the Company and HWHW also entered into an Exclusive Intellectual Property License Agreement (the “IP Agreement”). Pursuant to the IP Agreement, HWHW granted the Company an exclusive, non-transferable worldwide license to use HWHW’s intellectual property (the “IP”) as set forth in the IP Agreement. The purchase price from the Company to HWHW for the IP was (i) $10.00 paid in cash and (ii) 1% of the gross sales price of all new products made and sold, outside of the existing inventory conveyed under the terms of the Asset Purchase Agreement, which commenced on November 1, 2023. The IP Agreement terminates on November 1, 2033.

On July 1, 2023, the Company and DSSI, entered into a Securities Purchase Agreement (“HWHH SPA”), pursuant to which the Company purchased 1,000 shares of common stock, par value $0.001 per share, (the “HWHH Shares”) representing all of the issued and outstanding shares of common stock of HWH Holdings, Inc., a Texas corporation (“HWHH”). The Company purchased the HWHH Shares for a consideration of (i) $10.00 paid immediately in cash, and (ii) up to $1,210,224 payable from the gross proceeds generated from the sale of HWHH’s inventory, payable quarterly, and as described in detail in the Securities Purchase Agreement.

Effective July 1, 2023, the Company, DSSI and Ascend Management Pte, a Singaporean private limited company (“Ascend Management”) executed an Assignment and Assumption Agreement whereby Ascend Management purchased 1,000 shares of common stock, par value $0.01 per share, of HWHH, representing all of the issued and outstanding shares of capital stock of HWHH, pursuant to that certain Securities Purchase Agreement made as of July 1, 2023 by and between DSSI and the Company. In connection with the Assignment and Assumption Agreement, the Company and HWHH entered into a business consulting agreement to assist in the management of the business of HWHH.

On January 31, 2024, DSSI and Ascend Management executed an agreement whereby the obligations under the HWHH SPA were deemed fully complied with and that Ascend Management has been fully released and discharged from all liabilities, obligations, claims and demands whatsoever arising out of or in connection with the HWHH SPA and in respect of anything done or omitted to be done under or in connection with the HWHH SPA.

Hapi Café, Inc.

In November 2021, Sharing Services and Hapi Café, Inc., a company affiliated with Heng Fai Ambrose Chan, a Director of the Company, entered into a Master Franchise Agreement pursuant to which Sharing Services acquired the exclusive franchise rights in North America to the brand “Hapi Café.” Under the terms, Sharing Services, directly or through its subsidiaries, has the right to operate no less than five (5) corporate-owned stores and can offer to the public sub-franchise rights to own and operate other stores, subject to the terms and conditions contained in the Master Franchise Agreement.

American Pacific Bancorp

On September 15, 2022, Sharing Services, through one of its subsidiaries, entered into a secured real estate promissory note with American Pacific Bancorp, Inc. (“APB”), and the Company entered into a Loan Agreement pursuant to which APB loaned the Company approximately $5.7 million. The loan bore interest at the annual rate of 8%, would mature on September 1, 2024, was payable in equal monthly instalments of $43,897 commencing on July 1, 2022 (with the remainder due on September 1, 2024). The loan was secured by a first mortgage interest on the Company’s Lindon, Utah office building. In connection with this loan, the Company received net proceeds of $5,522,829 from APB on September 17, 2022. APB is a subsidiary of DSS.

On August 11, 2022, the Company executed a revolving credit promissory note with APB pursuant to which the Company has access to advances with a maximum principal balance not to exceed the principal sum of $10.0 million. The APB Revolving Note is collateralized by the assets of the Company, and it bears interest at the annual rate of 8% and such interest shall be due and payable quarterly as it accrues on the outstanding balance. On December 9, 2022, APB and the Company mutually agreed to limit and/or end any further commitment by APB to fund or to readvance under the terms of the APB Revolving Note to $6.0 million.

As discussed above, effective June 30, 2023 subject to the terms of an Assignment of Limited Liability Company Interests agreement, DSSI purchased the SHRG subsidiary, Linden Real Estate Holdings LLC, with the financial terms generally summarized as follows: (a) DSSI assumed approximately $7.24 million in SHRG liabilities (namely, all amounts due under the APB Loan and the APB Revolving Note), (b) DSSI credited SHRG $239,790 towards accrued interest payable under the 2022 Note (the “$27.0 million loan”), and (c) DSSI acquired ownership of Linden Real Estate Holdings LLC, with its sole asset being a commercial lot and commercial building located in Lindon, Utah, subject to the assumed indebtedness.

HWH World, Inc.

A subsidiary of the Company operating in the Republic of Korea subleases office space, on a month-to-month basis, from HWH World, Inc. (“HWH World”), until September 30, 2023, a subsidiary of DSS and a company affiliated with Heng Fai Ambrose Chan, a Director of the Company. Pursuant to the terms of the sublease agreement, the Company recognized a right-of-use asset and an operating lease liability in connection therewith. In May 2022, the Company and HWH World amended the related sublease agreement to significantly reduce the space subleased by the Company and the related rent obligation. On June 30, 2022, the right-of-use asset and liability were written off and a new month-to-month rental agreement was entered into for the reduced space subleased by the Company. The company recognized approximately $630 in monthly rent expense in connection with the new lease.

NOTE 15 – STOCK-BASED COMPENSATION

Stock Warrants

Stock Warrants Issued to Related Parties, Directors, Officers and Employees

In January 2022, the Company and DSS who, together with its subsidiaries, was then a majority shareholder of the Company, entered into a one-year Business Consulting Agreement (the “Consulting Agreement”) pursuant to which the DSS would provide to the Company certain consulting services, as defined in the Consulting Agreement. In connection with the Consulting Agreement, the Company agreed to pay DSS and flat monthly fee of sixty thousand dollars ($60,000) and DSS received 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 fair value of the Stock Warrant was $3.5 million. The fair value of the Stock Warrant was amortized into consulting expense over the term of one year. During the three months ended December 31, 2023 and 2022, the Company recognized consulting expense of $0 and $594,521, respectively, in connection with the Consulting Agreement. In February 2023, the Company issued 50.0 million shares of its Common Stock Class A to DSS in connection with exercise of the Stock Warrant.

In September 2022, the Company and DSSI entered into a Securities Purchase Agreement (the “SPA”) pursuant to which the Company issued: (a) a Convertible Promissory Note in the principal amount of $27.0 million (the “2022 Note”) in favor of DSSI and (b) a detachable Warrant to purchase up to 818,181,819 shares of the Company’s Class A Common Stock (the “Warrant”), at $0.033 per share. At any time during the term of the 2022 Note, all or part of the Note was convertible into up to 818,181,819 shares of the Company’s Class A Common Stock, at the option of the holder. In connection with the SPA, DSSI surrendered to the Company all DSSI’s rights pursuant to: (a) the Convertible Promissory Note in the principal amount of $30.0 million discussed in the preceding paragraph, and (b) the detachable Warrant to purchase up to 150,000,000 shares of the Company’s Class A Common Stock discussed in the preceding paragraph. In March 2023, the parties entered into a Securities Exchange and Amendment Agreement pursuant to which the parties agreed to amend the 2022 Note by removing the conversion rights granted by the 2022 Note. The Company recognized the transaction with DSSI as a debt extinguishment in accordance with GAAP. Since DSSI is a related party, the difference between the fair value of the new equity instruments and the carrying value of the retired equity instruments was recognized as a deemed dividend in the Company’s financial statements in the fiscal year ended March 31, 2023.

In the fiscal year ended March 31, 2023, the Company issued a fully vested warrant to purchase up to 8,444,663 shares of the Company’s Common Stock, at the exercise price of $0.0001 per share, to the Company’s CEO John “JT” Thatch. The fair value of the warrant on the grant date was $109,780.

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

During the three months ended December 31, 2023, and 2022, the Company recognized a compensatory gain of $0 and $39,375, respectively, in connection with grants with a variable exercise price after service is completed. During the nine months ended December 31, 2023, and 2022, the Company recognized a gain of $0 and $207,210, respectively, in connection with grants with a variable exercise price after service is completed. As of December 31, 2023, there are no warrants outstanding with a variable exercise price.

NOTE 16 – 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 Company leases space for its corporate headquarters, warehouse space, automobiles, and office and other equipment, under lease agreements classified as operating leases. The Company has remaining lease terms of approximately 1 to 10 years on the remaining Leases. Leases with an initial term in excess of 12 months are recognized on the consolidated balance sheet based on the present value of future lease payments over the defined lease term at the lease commencement date. Future lease payments were discounted using an implicit rate of 10% to 12% in connection with most leases.

The following 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, 2023		March 31, 2023
Operating leases	Right-of-use assets, net	$	414,865	$	448,240
Total lease assets		$	414,865	$	448,240

Liabilities
Operating leases	Accrued and other current liabilities	$	33,790	$	41,385
Operating leases	Lease liability, non-current		416,277		440,478
Total lease liabilities		$	450,067	$	481,863

The following information pertains to the Company’s leases for the periods indicated:

SCHEDULE OF OPERATING LEASE COSTS

Operating lease cost	General	$	28,289	$	21,831
		Three Months Ended December 31,
Lease cost	Classification	2023		2022
Operating lease cost	General and administrative expenses	$	28,289	$	21,831
Total lease cost		$	28,289	$	21,831


		Nine Months Ended December 31,
Lease cost	Classification	2023		2022
Operating lease cost	General and administrative expenses	$	84,112	$	45,009
Total lease cost		$	84,112	$	45,009

The Company’s lease liabilities are payable as follows:

SCHEDULE OF OPERATING LEASE LIABILITY PAYABLE

Twelve months ending December 31,	Amount
2024	$	100,062
2025		102,842
2026		105,621
2027		108,400
2028		111,180
Thereafter		113,960
Total remaining payments		642,065
Less imputed interest		(191,998	)
Total lease liability	$	450,067

NOTE 17 – COMMITMENTS AND CONTINGENCIES

Legal Matters in General

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

The Company maintains certain liability insurance. However, certain costs of defending lawsuits are not covered by or only partially covered by its insurance policies, including claims that are below insurance deductibles. Additionally, insurance carriers could refuse to 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, 2023.

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.

Case No. 4:20-cv-00946; Dennis Burback, Ken Eddy and Mark Andersen v. Robert Oblon, Jordan Brock, Jeff Bollinger, Four Oceans Global, LLC, Four Oceans Holdings, Inc., Alchemist Holdings, LLC, Elepreneurs U.S., LLC, Elevacity U.S., LLC, Sharing Services Global Corporation, Custom Travel Holdings, Inc., and Does 1-5, pending in the United States District Court for the Eastern District of Texas. On December 11, 2020, three investors in Four Oceans Global, LLC filed a lawsuit against the Company, its affiliated entities, and other persons and entities related to an investment made by the three Plaintiffs in 2015. The Company and its affiliated entities filed an answer denying the three investors’ claims. Plaintiffs filed a First Amended Complaint on October 14, 2021. The Company and its affiliated entities responded in November 2021 by filing a Motion to Dismiss the claims contained in the Amended Complaint. The Motion was granted on July 20, 2022, by Court Order dismissing with prejudice the Company and all affiliated entities from the lawsuit. In early August 2022, Plaintiffs on their own motion moved to dismiss all claims against the remaining parties in the case to enable the Order of Dismissal to become an appealable, final Order. On September 7, 2022, Plaintiffs filed a Notice of Appeal to the United States Court of Appeals for the Fifth Circuit. The Plaintiffs filed their Proposed Sufficient Brief of Appellants with the Fifth Circuit on January 2, 2023. The Company filed a Response Brief on February 22, 2023. The appeal is still pending as of December 31, 2023.

NOTE 18 - FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS

Our financial instruments consist of cash equivalents, if any, accounts receivable, notes receivable, investments in unconsolidated entities, accounts payable and notes payable. The 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 financial assets and liabilities as follows:

SCHEDULE OF VALUATION HIERARCHY FINANCIAL ASSETS AND LIABILITIES

Total

Level 1

Level 2

Level 3

December 31, 2023

Total

Level 1

Level 2

Level 3

Assets

Investment in unconsolidated entities

Total assets

Liabilities

Notes payable

Total liabilities

	Total		Level 1		Level 2		Level 3
	As of March 31, 2023
	Total		Level 1		Level 2		Level 3
Assets
Investment in unconsolidated entities	$	206,231	$	-	$	-	$	206,231
Total assets	$	206,231	$	-	$	-	$	206,231
Liabilities

Notes payable	$	24,827,086	$	-	$	24,827,086		-
Total liabilities	$	24,827,086	$	-	$	24,827,086	$	-

NOTE 19 – SUBSEQUENT EVENTS

On January 17, 2024, the Company executed a convertible promissory note for $250,000 with Alset Inc, a Texas corporation (“Alset”) and a shareholder of the Company. The promissory note bears a 10% interest per annum and had an origination fee of $20,000 which is payable in cash or convertible into common shares of the Company at the option of Alset. The note and related accrued interest shall be due and payable in full on the earliest of (i) six months from the date of the note; (ii) occurrence of event of default (as defined in the note) or (iii) upon the Company’s successful listing on Nasdaq.

On January 31, 2024, DSSI and Ascend Management executed an agreement whereby the obligations under the HWHH SPA (see Note 14) were deemed fully complied with and that Ascend Management was fully released and discharged from all liabilities, obligations, claims and demands whatsoever arising out of or in connection with the HWHH SPA and in respect of anything done or omitted to be done under or in connection with the HWHH SPA.

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

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) our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2023, and (b) 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												Nine Months Ended
	December 31, 2023			December 31, 2022			Increase (Decrease)			% Change			December 31, 2023			December 31, 2022			Increase (Decrease)			% Change
Net sales	$	2,885,645		$	3,245,903		$	(360,258	)		-11.1	%	$	8,172,469		$	12,737,673		$	(4,565,204	)		-35.8	%
Gross profit	$	2,183,962		$	1,602,792		$	581,170			36.3	%	$	5,955,154		$	7,677,757		$	(1,722,604	)		-22.4	%
Total operating expenses	$	(2,920,633	)	$	(5,606,866	)	$	2,686,233			-47.9	%	$	(9,488,490	)	$	(19,511,086	)	$	10,022,596			-51.4	%
Operating loss	$	(736,671	)	$	(4,004,074	)	$	3,267,403			-81.6	%	$	(3,533,336	)	$	(11,833,329	)	$	8,299,993			-70.1	%
Non-Operating (expense), net	$	(154,371	)	$	(6,916,748	)	$	6,762,377			-97.8	%	$	(1,236,854	)	$	(19,720,337	)	$	18,483,483			-93.7	%
Loss before income taxes	$	(891,042	)	$	(10,920,822	)	$	10,029,780			-91.8	%	$	(4,770,190	)	$	(31,553,666	)	$	26,783,476			-84.9	%
Income tax (benefit) expense	$	3,554		$	104,129		$	(100,575	)		-96.6	%	$	3,554		$	(789,803	)	$	793,357			-100.4	%
Net loss	$	(894,596	)	$	(11,024,951	)	$	10,130,355			-91.9	%	$	(4,773,744	)	$	(30,763,863	)	$	25,990,119			-84.5	%

Highlights for the Three months ended December 31, 2023:

	●	For the three months ended December 31, 2023, our consolidated net sales decreased $0.4 million, or 11.1%, compared to the three months ended December 31, 2022.

	●	For the three months ended December 31, 2023, our consolidated gross profit increased $0.6 million, or 36.3%, compared to the three months ended December 31, 2022. Our consolidated gross margin was 75.7% for the three months ended December 31, 2023, compared to 49.4% for the three months ended December 31, 2022.

	●	For the three months ended December 31, 2023, our consolidated operating expenses decreased $2.7 million, or 47.9% to 2.9 million, compared to the three months ended December 31, 2022.

	●	For the three months ended December 31, 2023, our consolidated operating loss was $0.7 million, compared to operating loss of $4.0 million for the three months ended December 31, 2022.

	●	For the three months ended December 31, 2023, our consolidated net non-operating expense was $0.2 million, compared to net non-operating expense of $6.9 million for the three months ended December 31, 2022.

	●	For the three months ended December 31, 2023, our consolidated net loss was approximately $0.9 million, compared to $11.0 million for the three months ended December 31, 2022. For the three months ended December 31, 2023, and 2022, our basic and diluted loss per share was $0.002 and $0.04, respectively

Overview

Summary Description of Business

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, markets and distributes its health and wellness and other products primarily in the U.S. and Canada using a direct selling business model. In addition, the Company’s U.S. subsidiaries market our products and services through an independent sales force, using their proprietary websites, including: www.thehappyco.com.

The Company was incorporated in the State of Nevada on 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.

Financing Arrangements

Historically, the Company has funded a substantial portion of its liquidity and cash needs through the issuance of notes or convertible notes and borrowings under short-term financing arrangements, and issuance of equity securities. See “Liquidity and Capital Resources” below for additional information about the Company’s convertible notes and borrowings under short-term financing arrangements.

Industry and Business Trends

The information in “Industry and Business Trends” included in ITEM 1 — “Business” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2023, is incorporated herein by reference.

Strategic Profitable Growth Initiatives

The Company intends to grow its business by pursuing a multipronged growth strategy, that includes: (a) expanding its product offerings, both within the health and wellness category and in new product categories, (b) expanding its direct-to-consumer geographic footprint and (c) re-vamping and re-launching its previously announced membership-based consumer travel products line worldwide. This growth strategy may also include the use of strategic acquisitions of businesses that augment the Company’s product and services portfolio, business competencies and geographic reach.

Results of Operations

The Three months ended December 31, 2023, Compared to the Three months ended December 31, 2022

Net Sales

For the three months ended December 31, 2023, our consolidated net sales decreased by $0.4 million, or 11.1%, to $2.9 million, compared to the three months ended December 31, 2022. The decrease in net sales mainly reflects: (a) the decline in orders from independent distributors and customers; (b) the decline in the number of independent distributors, resulting, in part, from recent product reformulations and increased competition for independent distributors, and (c) the generally adverse impact on consumer buying trends resulting from the recent increase in consumer good prices and in energy costs in the U.S.

The $0.4 million decrease in consolidated net sales primarily reflects a decrease in the number of comparable product units sold.

During the three months ended December 31, 2023, and 2022, the Company derived substantially all its consolidated net sales from the sale of its health and wellness products.

Gross Profit

For the three months ended December 31, 2023, our consolidated gross profit increased by approximately $0.6 million, to $2.2 million, compared to the three months ended December 31, 2022; and our consolidated gross margin was 75.7% and 49.4%, respectively. The improvement in gross margin was attributed mainly to efforts to reduce our cost of goods sold and our shipping expenses in the three months ended December 31, 2023.

Selling and Marketing Expenses

For the three months ended December 31, 2023, our consolidated selling and marketing expenses increased by $19,982, to $0.9 million, or 32.9% of consolidated net sales, compared to $0.9 million, or 28.6% of consolidated net sales, for the three months ended December 31, 2022. The $19,982 increase in consolidated selling and marketing expenses is due primarily to higher marketing efforts in the three months ended December 31, 2023.

General and Administrative Expenses

For the three months ended December 31, 2023, our consolidated general and administrative expenses (which include corporate employee compensation and benefits, stock-based compensation, professional fees, rent and other occupancy costs, certain consulting fees, telephone and information technology expenses, insurance premiums, and other administrative expenses) decreased by approximately $2.7 million, to $2.0 million, The $2.7 million decrease was primarily due to lower consulting expense of approximately $1.8 million, and lower employee compensation and compensation-related benefits of $0.6 million due to less headcount year over year.

Interest Expense, Net

For the three months ended December 31, 2023, our consolidated interest expense was $137,362.

For the three months ended December 31, 2022, our consolidated interest expense, net was 3.3 million, including amortization of debt discount and deferred financing costs, interest income, and other expenses associated with borrowings from “DSSI” and related parties.

Gain (Loss) on Employee Warrants Liability

For the three months ended December 31, 2023, no compensatory gain or loss on employee warrants was recognized. For the three months ended December 31, 2022, $39,375 of compensatory gain on employee warrants was recognized.

Unrealized Gain (Loss) on Investments in Unconsolidated Entities and Marketable Securities

For the three months ended December 31, 2023, no compensatory gain or loss on investments in unconsolidated entities and marketable securities was recognized.

For the three months ended December 31, 2022, net unrealized losses, before income tax, in connection with our investments in unconsolidated entities and marketable securities were $3.6 million.

Income Tax (Benefit) Expense

Income tax (benefit) expenses includes current and deferred income taxes for both our domestic and foreign operations. Income from our international operations is subject to taxation in the countries in which we operate.

During the three months ended December 31, 2023, the Company recognized a current federal income tax expense of $3,554. During the three months ended December 31, 2022, the Company had a state and local tax benefit of $22,849 and a provision for deferred federal income taxes of $348,236 and a benefit for current federal income taxes of $429,516.

Net Loss and Loss per Share

As a result of the foregoing, for the three months ended December 31, 2023, our consolidated net loss was $0.9 million, compared to $11.0 million for the three months ended December 31, 2022. For the three months ended December 31, 2023, and December 31, 2022, our diluted loss per share was $0.002 and $0.04, respectively.

Nine months ended December 31, 2023, Compared to the Nine months ended December 31, 2022

Net Sales

For the nine months ended December 31, 2023, our consolidated net sales decreased by approximately $4.6 million, or 35.8%, to $8.2 million, compared to the nine months ended December 31, 2022. The decrease in net sales mainly reflects: (a) the decline in consumer orders and independent distributor orders; (b) the decline in the number of independent distributors resulting, in part, from recent product reformulations and increased competition for independent distributors, and (c) the generally adverse impact on consumer buying trends resulting from the recent increase in consumer good prices and in energy costs in the U.S.

In an effort to stabilize our sales level, we have further intensified our efforts to recruit and develop our distributors and drive product sales to new consumers, including through the continued introduction of new products.

The $4.6 million decrease in consolidated net sales primarily reflects a decrease in the number of comparable product units sold.

During the nine months ended December 31, 2023, and 2022, the Company derived substantially all its consolidated net sales from the sale of its Elevate health and wellness products.

Gross Profit

For the nine months ended December 31, 2023, our consolidated gross profit decreased by approximately $1.7 million, or 22.4%, to $6.0 million, compared to the nine months ended December 31, 2022: our consolidated gross margin was 72.9% and 60.3%, respectively. The improvement in gross margin is due primarily to our efforts to reduce cost of goods sold and shipping costs.

Selling and Marketing Expenses

For the nine months ended December 31, 2023, our consolidated selling and marketing expenses decreased by approximately $2.6 million, to $3.1 million, or 38.1% of net sales compared to $5.7 million, or 44.9% of net sales for the nine months ended December 31, 2022. The decrease is due primarily to lower sales commissions of $1.9 million (which reflects decrease in our consolidated net sales discussed above) and lower sales convention expenses of $0.7 million.

General and Administrative Expenses

For the nine months ended December 31, 2023, our consolidated general and administrative expenses (which include corporate employee compensation and benefits, stock-based compensation, professional fees, rent and other occupancy costs, certain consulting fees, telephone and information technology expenses, insurance premiums, and other administrative expenses) decreased by approximately $7.4 million to $6.4 million, compared to $13.8 million for the nine months ended December 31, 2022. The decrease was primarily driven by lower professional and legal expenses by $4.9 million, decrease in employee compensation and related benefits by $1.8 million as a result of headcount reduction. In January 2022, the Company entered into a one-year Business Consulting Agreement with DSS. On the effective date of the Consulting Agreement, the closing price of the Company’s common stock was $0.07 per share and the 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 nine months ended December 31, 2022, the Company recognized consulting expense of $3.1 million, in connection with the Consulting Agreement.

Interest Expense, Net

For the nine months ended December 31, 2023, our consolidated interest expense was $3.0 million, including amortization of debt discount, deferred financing costs, and interest income.

For the nine months ended December 31, 2022, our consolidated interest expense was $9.8 million, including amortization of debt discount and deferred financing costs, interest income, and other expenses associated with borrowings from “DSSI” and related parties.

Other Income

For the nine months ended December 31, 2023, Sharing Services qualified and is eligible for a U.S. government ERTC (employee retention tax credit) for $1.8 million.

Other Non-operating Income/Expenses

For the nine months ended December 31, 2023, our net consolidated non-operating income, includes litigation settlements and other non-operating income of $86,427. For the nine months ended December 31, 2022, our net consolidated non-operating income, includes litigation settlements and other non-operating income of $118,077.

Gain (Loss) on Employee Warrants Liability

For the nine months ended December 31, 2023, no compensatory gain or loss on employee warrants was recognized. For the nine months ended December 31, 2022, we recognized a compensatory gain of $207,210.

Loss on Investment and Extinguishment of Debt

For the nine months ended December 31, 2023, the Company recognized a loss, before income tax, of $78,632 in connections with its investment in Stemtech. The company recognized a loss on extinguishment of debt of $38,209 in connection with cancelling the promissory note in exchange of Series D Preferred Stock with DSSI.

For the nine months ended December 31, 2022, no amounts were incurred related to investment and extinguishment of debt.

Income Tax Benefit

During the nine months ended December 31, 2023, the Company recognized a current federal income tax expense of $3,554.

During the nine months ended December 31, 2022, the Company recognized a provision for deferred taxes and federal taxes of $799,748 and a state and local tax benefit of $9,945.

Net Loss and Loss per Share

As a result of the foregoing, for the nine months ended December 31, 2023, our consolidated net loss was $4.8 million, compared to $30.8 million for the same period of the prior year. For the nine months ended December 31, 2023 and 2022, our diluted loss per share was $0.01 and $0.12, 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

Working capital (total current assets minus total current liabilities). We had a deficiency in our working capital of approximately $2.7 million as of December 31, 2023, compared to $33.9 million as of March 31, 2023.

As of December 31, 2023, and March 31, 2023, our cash and cash equivalents were $0.7 million and $3.0 million, respectively. Based upon the current level of operations and anticipated investments necessary to grow our business, we believe that anticipated funds from operations will likely be sufficient to meet our working capital requirements over the next 12 months.

We have implemented measures to streamline and revamp our business operations and reduce our monthly cash burns and operating loss. Such measures include, and are not limited to, headcount reduction and elimination of certain overhead and consulting fees. Based upon the current level of operations and anticipated investments necessary to sustain/grow our business, we believe that existing cash balances and anticipated funds from operations will likely be sufficient to meet our working capital requirements over the next 12 months.

Historical Cash Flows

Historically, our primary sources of cash have been capital transactions involving the issuance of equity securities and secured and unsecured debt (See “Short-term Borrowings and Convertible Notes” below) and cash flows from operating activities; and our primary uses of cash have been for operating activities, capital expenditures, acquisitions, net cash advances to related parties, and debt repayments in the ordinary course of our business.

The following table summarizes our cash flow activities for the nine months ended December 31, 2023, compared to the nine months ended December 31, 2022:

	Nine Months Ended December 31,
	2023			2022
Net cash used in operating activities	$	(3,425,399	)	$	(8,845,938	)
Net cash used in investing activities		-			(11,530,898	)
Net cash provided by financing activities		1,200,000			6,501,659
Impact of currency rate changes in cash		(31,635	)		(35,864	)
Decrease in cash and cash equivalents	$	(2,257,034	)	$	(13,911,041	)

Net Cash Used in Operating Activities

For the nine months ended December 31, 2023, net cash used in operating activities was $3.4 million, compared to $8.8 million for the nine months ended December 31, 2022. The $5.4 million decrease was due to a decline in operating losses of $6.7 million (excluding non-cash items, such as depreciation and amortization, stock-based compensation expense, provision for obsolete inventory losses, amortization of debt discount, unrealized gain (loss) on investments, losses on impairment of investments in unconsolidated entities and notes receivable, and gains on extinguishment of debt), and partially offsets with a change in operating assets and liabilities of $1.3 million.

Net Cash Used in Investing Activities

For the nine months ended December 31, 2023, net cash used in investing activities was $0, compared to $11.5 million for the nine months ended December 31, 2022. The $11.5 million change was due to lower capital expenditures.

Net Cash Provided by Financing Activities

For the nine months ended December 31, 2023, net cash provided by financing activities was $1.2 million, compared to $6.5 million for the nine months ended December 31, 2022. The decrease was due to lower proceeds from loans under promissory notes, net of loan repayments, of $7.5 million. The decrease was partially offset by lower Sharing Services common stock received in connection with a litigation settlement of $1.0 million.

Impact of currency rate changes in cash

For the nine months ended December 31, 2023, the impact of currency rate changes in cash was negative $31,635, compared to negative $35,864, for the nine months ended December 31, 2022.

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.

Capital Requirements

During the quarter ended December 31, 2023, there were no capital expenditures for 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.

Contractual Obligations

There were no material changes to our contractual cash obligations during the three months ended December 31, 2023.

Off-Balance Sheet Financing Arrangements

As of December 31, 2023, we had no off-balance sheet financing arrangements.

Critical Accounting Estimates

There were no material changes to the Company’s critical accounting estimates or assumptions since March 31, 2023.

Accounting Changes and Recent Accounting Pronouncements

For discussion of accounting changes and recent accounting pronouncements, see Note 3 of the Notes to 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 and Procedures. Our management, with the participation of our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), evaluated the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) of the Exchange Act, as of the end of the fiscal period covered by this Quarterly Report, and concluded that, as of December 31, 2023, the Company’s disclosure controls and procedures were effective in providing reasonable assurance that information required to be disclosed in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management and its Board of Directors, as appropriate to allow timely decisions regarding required disclosure.

Limitations on the 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 have been detected. Furthermore, the design of any system of disclosure controls and procedures is based in part upon assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how unlikely. Because of these inherent limitations in a cost-effective system of controls and procedures, misstatements and/or omissions due to error or fraud may occur undetected.

Changes in Internal Control over Financial Reporting. 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.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

The information contained in Note 17, COMMITMENTS AND CONTINGENCIES - Legal Proceedings, of the Notes to Unaudited Condensed Consolidated Financial Statements located elsewhere in this Quarterly Report is incorporated herein by reference.

Item 1A. Risk Factors.

The factors contained in ITEM 1A, — “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2023, are incorporated herein by reference.

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

(a) Unregistered Sales of Securities

None

(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.

None

Item 6. Exhibits.

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

3.1		Amended and Restated Certificate of Designation of Series D Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on November 16, 2023)

10.1†		Asset Purchase Agreement between Sharing Services Global Corporation and HWH World, Inc., dated November 3, 2023 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on November 21, 2023)

10.2		Bill of Sale and Assumption Agreement between Sharing Services Global Corporation and HWH World, Inc., dated November 3, 2023 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on November 21, 2023)

10.3		Exclusive Intellectual Property License Agreement between Sharing Services Global Corporation and HWH World, Inc., dated November 3, 2023 (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on November 21, 2023)

10.4		Assignment and Assumption Agreement between Sharing Services Global Corporation, Decentralized Sharing Systems, Inc., and Ascend Management Pte. Ltd., dated November 3, 2023 (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the SEC on November 21, 2023)

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		Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101)

*Filed herewith

**Furnished herewith.

† Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K, and portions of this exhibit have been redacted in compliance with Item 601(b)(2) of Regulation S-K.

SIGNATURES

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

	SHARING SERVICES GLOBAL CORPORATION
	(Registrant)

Date: February 14, 2024

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

Date: February 14, 2024

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

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Sharing Services Global (SHRG) 10-Q2024 Q3 Quarterly report

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