Commitments and Contingencies

11 Months Ended

Mar. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

NOTE 16 - COMMITMENTS AND CONTINGENCIES

Contingencies

Acquisition-related Contingencies

In the fiscal year ended April 30, 2020, the Company and 212 Technologies, LLC (“212 Technologies”) entered into a Release and Settlement Agreement (the “Settlement Agreement”) pursuant to which, among other things, the parties rescinded a certain “Stakeholder & Investment Agreement” dated May 21, 2017, and 212 Technologies returned to the Company 5,628,750 shares of the Company’s Series A Preferred Stock. In addition, in connection with the Settlement Agreement, the Company paid to 212 Technologies the amount of $425,000 and dismissed with prejudice certain lawsuit it had previously filed, and the parties resolved all issues between their respective companies. The Company recognized a loss of $425,000 in connection with the Settlement Agreement.

In October 2017, the Company entered into a Share Exchange Agreement pursuant to which it acquired a 40% interest in 561 LLC in exchange for 5,000,000 shares of its Series A Preferred Stock. Under the terms of the Share Exchange Agreement, the sellers shall be entitled to an additional 2,500,000 shares of our Series A Preferred Stock 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 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 40% interest in America Approved Commercial LLC (“AAC”). Under the terms of the Share Exchange Agreement, the sellers shall be entitled to an additional 2,500,000 shares of the Company’s Series A Preferred Stock 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 OTC Markets. In accordance with GAAP, the Company has not recorded a liability in connection with this contingency.

Legal Proceedings – Related-Party Matters and Settlement Liability

In the fiscal year ended April 30, 2020, the Company and the relevant subsidiaries; Jordan Brock (“Brock”), a Co-Founder of the Company; Robert Oblon, a Co-Founder of the Company; certain officers and directors of the Company; and certain other corporate parties entered into a Multi-Party Settlement Agreement pursuant to which the foregoing parties agreed to settle all prior disputes among them. In addition, the Company, Alchemist and Brock entered into a Settlement Accommodation Agreement and an amendment to a previous founder’s agreement pursuant to which the Company agreed to pay to Brock the sum of $1.4 million over time, and the Company recognized a settlement liability for that amount. See Note 15 – “Related Party Transactions” above for more information. As of March 31, 2021, and April 30, 2020, the Company has a remaining settlement liability of $1.2 million and $2.6 million in connection with all matters discussed in this paragraph.

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. 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 filed an answer denying the former employee’s claims. This matter has been settled, but final administration of the settlement terms remains pending as of March 31, 2021.
(b)	Case No. 4:20-cv-00946; Dennis Burback, Ken Eddy and Mark Andersen v. Robert Oblon, Jordan Brock, Jeff Bollinger, John Thatch, Four Oceans Global, LLC, Four Oceans Holdings, Inc., Alchemist Holdings, LLC, Elepreneurs U.S., LLC, Elevacity U.S., LLC, Sharing Services Global Corporation, Custom Travel Holdings, Inc., and Does 1-5, pending in the United States District Court for the Eastern District of Texas. On December 11, 2020, three investors in Four Oceans Global, LLC filed a lawsuit against the Company, its affiliated entities, and other persons and entities related to an investment made by the three investors in 2015. The Company and its affiliated entities have filed an answer denying the three investors’ claims. This matter remains pending as of March 31, 2021.
(c)	Case No. 4:20-cv-961; Crispina Meily v. Sharing Services Global Corporation f/k/a Sharing Services, Inc., pending in the United States District Court for the Eastern District of Texas. On December 18, 2020, a former employee filed a lawsuit against the Company for a statutory claim related to the former employee’s discharge from the Company. The Company filed an answer denying the former employee’s claims. This matter remains pending as of March 31, 2021.
(d)	AAA Ref. No. 01-20-0019-3907; Sharing Services Global Corporation, Elevacity Holdings, LLC, Elevacity U.S., LLC, Elepreneurs Holdings, LLC and Elepreneurs U.S., LLC v. Robert Oblon, pending before the American Arbitration Association. On December 30, 2020, the Company and its affiliated companies filed an arbitration complaint against Robert Oblon for breach of contract and a declaratory judgment relating to the Multi-Party Settlement Agreement with Robert Oblon. This matter remains pending as of March 31, 2021.
(e)	Case No. 4:20-cv-00989; Sharing Services Global Corporation, Elevacity Holdings, LLC, Elevacity U.S., LLC, Elepreneurs Holdings, LLC and Elepreneurs U.S., LLC v. Robert Oblon, pending in the in the United States District Court for the Eastern District of Texas. On December 30, 2020, the Company and its affiliated companies filed a lawsuit against Robert Oblon seeking injunctive relief relating to the Multi-Party Settlement Agreement with Robert Oblon. This matter is a companion case to the AAA arbitration proceeding described in paragraph (d) above and, while it remains pending as of March 31, 2021, further action in this case has been stayed by court order, pending final adjudication of the referenced AAA arbitration proceeding.

(f)	Case No. 4:21-cv-00026; Elepreneurs Holdings, LLC d/b/a Elepreneur, LLC, Elepreneurs U.S., LLC d/b/a Elepreneurs, LLC, and SHRG IP Holdings, LLC v. Lori Ann Benson, Andrea Althaus and Lindsey Buboltz, pending in the United States District Court for the Eastern District of Texas. On December 31, 2020, the Company filed suit against three former distributors and obtained injunctive relief from the 429th Judicial District of Collin County, Texas. The lawsuit was removed by the three former distributors to federal court. The Company subsequently obtained injunctive relief from the federal court. The matter remains pending as of March 31, 2021.
(g)	Case No. 4:21-cv-00183; Sharing Services Global Corporation f/k/a Sharing Services, Inc., Elepreneurs Holdings, LLC n/k/a Elevacity Holdings, LLC, Elepreneurs U.S., LLC n/k/a Elevacity U.S., LLC and SHRG IP Holdings, LLC v. AmplifeiIntl, LLC d/b/a HAPInss and HAPInssBrands, LLC pending in the United States District Court for the Eastern District of Texas. On March 5, 2021, the Company and its affiliated entities filed suit against a newly formed competitor for various claims including trademark infringement, trade secret violations, unfair competition under state and federal law as well as tortious interference with contracts and business relationships. The matter remains pending as of March 31, 2021.
(h)	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 as of March 31, 2021.
(i)	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. This matter remains pending as of March 31, 2021. See Note 2 - “SIGNIFICANT ACCOUNTING POLICIES - Sales Commissions” for more information about the stock warrants liability associated with this matter.
(j)	The Company engaged in preliminary discussions with an independent contractor distributor of its Subsidiary regarding a previously reported dispute concerning an investment in ventures alleged to be related to the Company, and its Subsidiary operations. This matter remains pending as of March 31, 2021. See Note 2 - “SIGNIFICANT ACCOUNTING POLICIES - Sales Commissions” for more information about the stock warrants liability associated with this matter.