NOTE 5 – NOTES RECEIVABLE

In the fiscal year 2020, the Company received a promissory note for $58,047 from a prior merchant processor in connection with amounts owed to the Company. In the fiscal year 2019, the Company received a promissory note for $106,404 from a prior merchant processor in connection with amounts owed to the Company. The Company and the issuer have been in negotiations aimed at settling this balance. In March 2020, the Company and the issuer of the note reached an agreement pursuant to which the Company expects to collect $60,000 in full payment of the balance owed to it. In January 2020, the Company recognized an impairment loss of $46,404 in connection therewith.

In March and April 2018, the Company entered into certain investment agreements with a third party pursuant to which the Company loaned an aggregate of $275,000 to the third party. Loans under the related promissory notes accrued at the rate of 12% per annum. In June 2019, the Company and the third party entered into a loan exchange agreement pursuant to which the Company received a promissory note for $309,309 in settlement of all amounts owed to the Company under the March and April 2018 loans, including loan principal of $275,000 and accrued but unpaid interest of $34,309. Loans under the June 2019 promissory note accrue interest at the rate of 8% per annum. In October 2019, after exhausting all efforts to collect the amounts due pursuant to the June 2019 promissory note, the Company recognized an impairment loss of $309,309 in connection therewith.

In July 2018, the Company and Hyten Global LLC (“Hyten”) entered into an Asset Purchase Agreement pursuant to which Sharing Services agreed to purchase certain operating assets from Hyten. In connection with the Asset Purchase Agreement, the Company had provided secured cash advances in the aggregate amount of $655,789. In September 2018, the Company and Hyten entered into a Rescission and Mutual Release agreement pursuant to which the parties agreed to terminate the transaction contemplated in the Asset Purchase Agreement and exchanged customary mutual releases. In addition, in September 2018, Hyten executed a promissory note in favor of the Company for $655,789 relating to the cash advances received from the Company prior to that date. The note bears interest at 5%. In April 2019, the Company determined that it is probable the Company will not recover its loan principal and, accordingly, the Company recognized a provision for uncollectible note receivable of $655,789 in connection therewith.