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Commitments and Contingencies
6 Months Ended
Oct. 31, 2020
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

NOTE 15 - COMMITMENTS AND CONTINGENCIES

 

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.

 

Acquisition-Related Contingencies

 

In October 2017, the Company entered into a Share Exchange Agreement pursuant to which it acquired a 25% equity interest in 561 LLC. Pursuant to the terms of the Share Exchange Agreement, in May 2018, the Company increased its cumulative equity interest in 561 LLC to 40% in exchange for 2,500,000 shares of its Series A Preferred Stock. Under the terms of the Share Exchange Agreement, the sellers would be entitled to an additional 2,500,000 shares of our Series A Preferred Stock if/when both of the following conditions have been met: (a) one year has passed from the Closing Date and (b) the closing bid price of the Company’s common stock equals or exceeds $5.00 per share, as reported by the OTC Markets. In accordance with GAAP, the Company has not recorded a liability in connection with this contingency.

 

In October 2017, the Company entered into a Share Exchange Agreement pursuant to which it acquired a 25% equity interest in America Approved Commercial LLC (“AAC”). Pursuant to the terms of the Share Exchange Agreement, in May 2018, the Company increased its cumulative equity interest in AAC to 40% in exchange for 2,500,000 shares of its Series A Preferred Stock. Under the terms of the Share Exchange Agreement, the sellers would be entitled to an additional 2,500,000 shares of the Company’s Series A Preferred Stock in/when both of the following conditions have been met: (a) one year has passed from the Closing Date and (b) the closing bid price of the Company’s common stock equals or exceeds $5.00 per share, as reported by the OTC Markets. In accordance with GAAP, the Company has not recorded a liability in connection with this contingency.

 

Legal Proceedings – Other Matters

 

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

 

(a) Cause No. 416-02428-2019; Sharing Services Global Corporation, f/k/a Sharing Services, Inc. v. XIP Technologies, LLC, filed in the 416th Judicial District of Collin County, Texas. On May 6, 2019, the Company filed a lawsuit against XIP Technologies, LLC to recover money held by XIP Technologies, LLC that was owed to the Company. The Company obtained a writ of garnishment against a third-party holding funds for XIP Technologies, LLC. This matter has been resolved and the lawsuit was dismissed during the six months ended October 31, 2020.

 

(b) Cause No. 296-03589-2019; Pruvit Ventures, Inc. v. Elevacity, LLC, filed in the 296th Judicial District of Collin County, Texas. On July 3, 2019, Pruvit Ventures, Inc. filed a lawsuit against Elevacity, alleging a breach of contract claim. Elevacity has denied the claim of breach contract. This matter has been resolved and the lawsuit was dismissed during the six months ended October 31, 2020.

 

(c) Case No. A-19-802861-B; Sharing Services Global Corporation v. Bear Bull Market Dividends, Inc., Alchemist Holdings, LLC and Kenyatto M. Jones, filed in the District Court of Clark County, Nevada and subsequently transferred to the Business Court of Clark County, Nevada. On October 1, 2019, the Company filed suit against two shareholders, Bear Bull Market Dividends, Inc. and Alchemist Holdings, LLC, and the key principal of Bear Bull Market Dividends, Inc., Kenyatto M. Jones, concerning an amended certificate of designation filed by the Company, and for allegations of self-dealing by the two shareholders. A request for entry of default was filed against two of the defendant shareholders as well as Mr. Jones, as a key principal. As part of the resolution of this matter as described in Note 13, this case was dismissed pursuant to court order (and stipulation) during the six months ended October 31, 2020.

 

(d) Case No. A-20-811265-C; Sharing Services Global Corporation v. Bear Bull Market Dividends, Inc., Research & Referral, BZ and Kenyatto M. Jones, filed in the District Court of Clark County, Nevada. On February 27, 2020, the Company filed suit against two shareholders, Bear Bull Market Dividends, Inc. and Research & Referral BZ, as well as a key principal of Bear Bull Market Dividends, Inc., Kenyatto M. Jones, concerning breach of contract, fraud, violations of state securities laws and alter ego relating to a stock exchange/transfer transaction, involving the Company’s stock. A request for entry of default was filed against the two shareholders and key principal Jones. As part of the resolution of this matter as described in Note 13, dismissal documents were submitted to the court. This matter is pending final action by the court for dismissal with prejudice.

 

(e) Cause No. 219-04726-2019; Sharing Services Global Corporation v. Research & Referral, BZ, filed in the 219th Judicial District of Collin County, Texas. On August 22, 2019, the Company filed a lawsuit against Research & Referral, BZ, another entity and an individual for breach of contract, fraud in the inducement, statutory fraud in a stock transaction and violations of the Texas Securities Act. The claims against the other entity and individual were voluntarily dismissed and a judgment was entered against Research & Referral, BZ by the Court on May 1, 2020 which rescinded the subject stock transaction.

 

(f) Cause No. 366-04941-2019; Sharing Services Global Corporation, Elepreneurs U.S., LLC and Elevacity, LLC v. Robert Oblon, filed in the 366th Judicial District of Collin County, Texas. On August 30, 2019, the Company and its affiliated entities filed a lawsuit against Robert Oblon for breach of contract, tortious interference with business relationships, and misappropriation of trade secrets, and sought injunctive relief. This matter has been resolved and the lawsuit was dismissed during the six months ended October 31, 2020. 

 

(g) Cause No. DC-19-20587; Sharing Services Global Corporation f/k/a Sharing Services, Inc. v. Amber-Lynn Beers-Hutchinson, n/k/a Amber-Lynn Cantrell, filed in the 192nd Judicial District of Dallas County, Texas. On December 30, 2019, the Company filed a lawsuit against a former contractor for breach of contract. The former contractor filed a counterclaim, asserting defamatory conduct engaged in by the Company. This matter has been resolved and the lawsuit was dismissed during the six months ended October 31, 2020.

 

(h) Cause No. 380-01007-2020; Elepreneurs Holdings, LLC v. Carissa Rogers and Barbie Williams, filed in the 380th Judicial District of Collin County, Texas. On February 20, 2020, the Company’s affiliated entity filed a lawsuit against two former distributors for breach of contract and tortious interference. The Company’s affiliated entity obtained injunctive relief and a final judgment with injunctive relief was entered against the two former distributors.

 

(i) Cause No. 429-04618-2020; Kevin Young v. Elepreneurs Holdings, LLC, Elepreneurs U.S., LLC, Elevacity Holdings, LLC, Elevacity U.S., LLC, and Sharing Services Global Corporation f/k/a Sharing Services, Inc., pending in the 429th Judicial District of Collin County, Texas. On September 18, 2020, a former employee filed a lawsuit against the Company and its affiliated entities for breach a contract. The Company and its affiliated entities have filed an answer denying the former employee’s claims. This matter remains pending.

 

(j) On December 4, 2019, Entrepreneur Media, Inc. filed a Notice of Opposition in response to the “Elepreneurs” trademark application filed by SHRG IP Holdings, LLC, a wholly owned subsidiary of the Company. This opposition proceeding is now pending before the Trademark Trial and Appeal Board of the United States Patent and Trademark Office. On April 13, 2020, SHRG IP Holdings, LLC filed an answer to the Notice of Opposition. A scheduling order has been entered and the parties have exchanged initial disclosures. This matter remains pending.

 

(k) In March 2019, the Company engaged in preliminary discussions with various independent contractor distributors of its subsidiaries regarding a previously reported dispute concerning the issuance of stock warrants based on the satisfaction of certain individual sales production metrics. Please see Note 2 - SIGNIFICANT ACCOUNTING POLICIES - Sales Commissions for more information about the stock warrants liability associated with this matter.