General





The following discussion of our financial condition and results of operations
should be read in conjunction with (1) our interim unaudited condensed
consolidated financial statements and their explanatory notes included as part
of this quarterly Report and (2) our annual audited consolidated financial
statements and explanatory notes for the year ended April 30, 2022, as disclosed
in our annual Report on Form 10-K for that year as filed with the S.E.C.



"Forward-Looking" Information



This Report on Form 10-Q contains various statements that may constitute
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, Rule 175 promulgated thereunder, Section 21E of the
Securities Exchange Act of 1934, as amended, and Rule 3b-6 promulgated
thereunder which represent our expectations and beliefs, including, but not
limited to statements concerning the Company's business and financial plans and
prospects and are intended to be covered by the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Any statements about our
expectations, beliefs, plans, objectives, assumptions, future events, or
performances are not historical facts and may be forward-looking. The words
"believe," "expect," "anticipate," "estimate," "project," and other similar
expressions can, but do not always, identify forward-looking statements, which
speak only as of the date such statement was made. We base these forward-looking
statements on our current expectations and projections about future events, our
assumptions, and our knowledge of facts when the statements are made. These
statements, by their nature, involve substantial risks and uncertainties, sure
of which are beyond our control, and actual results may differ materially
depending on various important factors. Risks and uncertainties that could cause
our financial performance to differ materially from our goals, plans,
expectations, and projections expressed in forward-looking statements include
those outlined in our filings with the Securities and Exchange Commission
("S.E.C."), including Item 1A of the Company's Annual Report of Form 10-K for
the year ended April 30, 2022. Forward-looking statements speak only as of the
date they are made. The Company does not undertake to update forward-looking
statements to reflect circumstances or events that occur after the date the
forward-looking statements are made or to reflect the occurrence of
unanticipated events. It would be best to consider any forward-looking
statements in light of this explanation, and we caution you about relying on
them.



General Overview



Sparta Commercial Services, Inc. ("Sparta," "we," "us," or the "Company") is a
Nevada corporation with headquarters in New York City, www.spartacommercial.com.
We are a multi-disciplined parent corporation operating across three business
sectors - Financial Services, E-Commerce & Mobile Technology, and Health and
Wellness (www.spartacommercial.com).



Sparta's roots are in the Powersports industry. The Company provided retail
installment loans and leases through authorized motorcycle dealerships in 33
states, with financing provided by institutional lenders. The Company also
maintained a full underwriting and servicing platform for its portfolio.
Notwithstanding the discontinuance of our initial focus on consumer loans and
leases post Lehman and during the 2008 financial crisis, in 2007, the Company
introduced a new initiative, Municipal Financing (www.spartamunicipal.com),
which has financed over 100 jurisdictions to date. Sparta's Municipal Finance
program is available to all nonprofit organizations, institutions, and entities.
All nonprofit organizations which adhere to I.R.S. guidelines, including 501 (c)
3 of the Internal Revenue Code, are eligible. Both public nonprofits, also known
as public charities supported with publicly collected funds, and private
nonprofits, also known as private foundations backed by an individual or
business entity, qualify for the program.



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Consumers, retailers, municipals, nonprofits, auction houses, banks, and
insurance companies scrutinize title history reports for the vital information
needed and factored into crucial business decisions affecting the bottom line.
Vehicle History Reports are a staple of Sparta's E-Commerce Technology
subsidiary iMobile Solutions, Inc. Whether a vehicle is intended for business or
recreational use, Sparta's Vehicle History Reports are highly regarded for
accuracy and completeness. They have been sold across all 50 states and in 62
countries worldwide. They provide a trusted layer of assurance to vehicle buyers
and are available on our websites as well as on various dealership websites.
They include Cyclechex (Motorcycle History Reports at www.cyclechex.com), RVchex
(Recreational Vehicle History Reports at www.rvchex.com), and Truckchex (Heavy
Duty Truck History Reports at www.truckchex.com).



The Company's E-Commerce and Mobile Technology subsidiary name change to iMobile
Solutions, Inc., from Specialty Reports, Inc., in 2016, signifies its
ever-broadening service offerings in the evolving technology landscape. With
iMobile App (www.imobileapp.com), the Company provides mobile technology
services, including web and mobile application creation, development, and
management for a wide range of businesses to increase revenue, build brand
recognition, and improve customer engagement. Our ever-broadening business base
of mobile applications includes vehicle dealerships and racetracks, private
clubs and country clubs, schools and entertainment venues, restaurants, grocery
stores, and various other merchant types. (www.imobileapp.com/app-gallery). The
Company also designs, launches, maintains, and hosts websites for businesses
incorporating SEO (search engine optimization), social media marketing, and
online reviews to improve their presence online.



We provide specific, tailored action plans for our clients' websites that
include services such as eCommerce, CRM (Customer Relationship Management)
development, and integration. This custom software helps businesses communicate
with customers and can also be used for employees to communicate internally. The
CRM software can be web-based, integrated with a mobile app, or both. We work
with clients to understand their unique needs and incorporate the features and
requirements that are most important to them and will facilitate their business
growth and success. Correspondingly, the Company designs and builds custom
kitchen ordering software for independent grocery stores, delicatessens, and
other food service businesses. The software can be designed in various ways,
including mobile devices and in-store ordering. The kitchen ordering software is
enabled with payment integration, text messaging notification, wireless
printing, and other features. iMobile Solutions, Inc. provides a turn-key
solution for businesses looking to simplify or streamline their kitchen ordering
process. Additionally, we offer text messaging services, which supplement
business marketing strategies to gain and retain brand loyalty among its
clients, customers, and investors. Our text messaging platform allows clients to
manage, schedule, and analyze text message performance quickly.



Sparta created its subsidiary, New World Health Brands, Inc., in April 2019, on
the heels of the Agriculture Improvement Act (also known as the Farm Bill),
signed into law last December 20, 2018. Consequently, hemp (CBD) was removed
from Schedule 1 of the Controlled Substances Act. Company management recognized
the substantial business opportunity in the rapidly expanding hemp-CBD
(cannabidiol) market in the United States. During 2019-2020, we sourced,
developed, and tested 5 CBD product categories totaling 31 products. We procured
premium, domestic-grade, full-spectrum, broad-spectrum, and THC-free hemp,
created product packaging and labeling, and implemented fulfillment to launch an
online Business-to-Consumer website: www.newworldhealthcbd.com on December

21,
2019.



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Sparta's response to the onset of the COVID-19 pandemic in early 2020 quickly
took shape with thorough investigations into evolving customer trends in health
and wellness. As a result, we expanded New World Health Brands and developed a
new product line of natural dietary supplements. In August 2020, we launched an
online B to C website: www.newworldhealthbrands.com, featuring high-quality
nutritional supplements, including vitamins and minerals, such as Zinc,
Magnesium, Boron, Iodine, Beetroot Extract, Selenium, Vitamin B Complex, Vitamin
C and PQQ. To ensure the safety and quality of our products, all health and
wellness offerings are exclusively sourced and manufactured in the United States
and adhere to strict U.S. standards and guidelines. Sparta's commitment to high
standards and transparency is tantamount to being a trusted brand.



Sparta's subsidiary, Sparta Crypto, Inc., www.SpartaCrypto.com, was established
on September 25, 2020, and is in the process of completing a proprietary
state-of-the-art platform designed to connect users of widely adopted digital
currencies with sellers of various goods and services. The platform has not
launched and the Company can make no assurances that the described plan will
reach implementation. In addition, the Company has completed and tested a
cryptocurrency payment gateway called SpartaPayIQ, www.SpartaPayIQ.com, which is
functional and was formally announced on March 3, 2022.



Agoge Global USA, Inc. was formed as a subsidiary of Sparta Crypto, Inc. in
December 2022 and entered in to a Joint Venture Agreement with WeDev Group to
facilitate cross-border transactions between importers and exporters of goods
from the U.S. and Brazil. In addition, Agoge Global USA provides business
intermediary services to global importers and exporters of goods and services.
These services include, but are not limited to, industry introductions, tax
compliance assistance, import and export documentation assistance, reselling
services in other jurisdictions, and facilitation of cross-border transactions.



RESULTS OF OPERATIONS

Comparison of the nine Months Ended January 31, 2023, and 2023

For the nine months ended January 31, 2023, and 2022, we have generated limited sales revenues, incurred significant expenses, and sustained substantial operating losses.





Revenues



Revenues totaled $189,042 during the nine months ending January 31, 2023,
compared to $187,103 during the nine months ending January 31, 2022. Revenues
from information technology and sales of New World Health Products remain on the
same level for both periods.



Cost of Revenue



The revenue consists of costs and fees paid to third parties to construct and
maintain mobile apps and payments for subscription services related to vehicle
history reports and the cost of goods purchased for New World Health Brand
products. The cost of revenue was $31,987 during the nine months ended January
31, 2023, compared to $32,551 during the nine months ended January 31, 2022.
This $564, or a 2% decline, was due to the cost of New World Health Brands'
product line inventory purchases being slightly lower than the previous period.



Operating Expenses




Operating expenses were $1,281,423 during the nine months ended January 31,
2023, compared to $847,017 during the nine months ended January 31, 2022, an
increase of $434,406 or 51%, primarily due to increased legal and professional
fees and stock-based compensation in the current period. General office expenses
increased by $62,268 was due mainly to software development cost for the new
business venture in Sparta Crypto $41,183



Expenses incurred during the current nine months period consisted primarily of
the following expenses:



                                          January 31,      January 31,       Increase
                                              2023            2022          (Decrease)           %

Compensation, option, and related cost $ 594,299 $ 452,011 $ 142,288

             31 %
Accounting, audit and professional fees         42,763          50,642     

      (7,879 )          -15 %
Consulting Fees                                356,000         142,884           213,117            149 %
Rent and Utilities                              49,700          67,058           (17,358 )          -29 %

General office expenses                        196,690         134,422            62,268             46 %
Research and development                        41,969                     

      41,969            100 %
                                          $  1,281,423     $   847,017     $     392,437             46 %




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Other (income) expense



Other income is comprised primarily of writing off some convertible notes of
$625,064, which were expired and no longer an obligation for the company and
offset by gain in valuation in fair value of our derivative liabilities of
$5,044,879. In the previous year, there was no debt forgiveness, and a loss on
the change in fair value of our derivative liabilities was $4,504,762. The
significant change in value of derivative liabilities primarily due to lower
value of stock prices and the write off of the expired convertible notes.



Net income (loss)



Our net income attributable to common stockholders for the nine months ended
January 31, 2023, was $4,536,254 compared to a net loss of $6,836,851 for the
nine months ended January 31, 2022, primarily due to the change in valuation of
derivative liabilities $5,044,878 for this period as compared to nine months
ending January 31, 2022, we have a loss in valuation in fair value of derivative
liabilities of $5,990,400.

LIQUIDITY AND CAPITAL RESOURCES

As of January 31, 2023, we had an accumulated deficit of $69,448,432, a decreased of $4,536,254 compared to the fiscal year-end April 30, 2022, primarily due to the recognition of other income posted during the nine months ending January 31, 2023, as explained above.

The net cash flow used by operations was $1,047,550 for the nine months ending January 31, 2023. This deficit results primarily from our net income of $4,546,048 offset by a net gain in fair value valuation of derivative liabilities of $5,044,878, write-off of promissory notes of $625,064 and increased accounts payable and accrued expense decreased by $78,215.

We met our cash requirements during the period through proceeds from the issuance of stock for a total of $135,000 and a bank overdraft of $13,895. We also have converted a net total of $623,930 of Promissory notes to equity.





We anticipate minimal research and development expenditures or expect the sale
or acquisition of any significant property, plant, or equipment during the next
twelve months. On January 31, 2023, we had five full-time employees, three
part-time employees, and one intern. If we fully implement our business plan,
our employment base may increase during the next twelve months. As we continue
to expand, we will incur additional costs for personnel. This potential increase
in personnel is dependent upon our generating increased revenues and obtaining
sources of financing. We are still determining if we will successfully raise the
necessary funds or generate revenues sufficient to fund the potential increase
in the number of employees. A union does not represent our employees.



While we have raised capital to meet our working capital and financing needs in
the past, additional financing is required to meet our current and potential
future cash flow deficits from operations.



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We continue to seek additional financing, whether in the form of senior debt,
subordinated debt, or equity. We currently have no commitments for financing
that are not at the investor's election. There is no guarantee that we will
successfully raise funds required to support our operations.



We will need approximately $1,000,000 in addition to our normal operating cash
flow to conduct operations during the next twelve months. However, there can be
no assurance that additional private or public financing, including debt or
equity financing, will be available as needed or, if available, on terms
favorable to us. Any additional equity financing may be dilutive to
stockholders. Such additional equity securities may have rights, preferences, or
privileges that are senior to those of our existing common or preferred stock.
Furthermore, if available, debt financing will require the payment of interest.
However, it may involve restrictive covenants limiting our operating flexibility
if we cannot generate sufficient liquidity from operations or raise enough
capital resources on acceptable terms. In that case, this could have a material
adverse effect on our business, results of operations, liquidity, and financial
condition. We must adjust our planned operations and development on a more
limited scale.

The effect of inflation on our revenue and operating results was not significant. Our operations are located in North America, and no seasonal aspects would have a material impact on our financial condition or results of operations.





GOING CONCERN ISSUES



The Company's historical losses and the lack of revenues raise substantial
doubts about the Company's ability to continue as a going concern. We cannot
assure that our business operations will develop and provide us with significant
cash to continue operations. If we cannot build our business, we have to
discontinue operations or cease to exist, which would be detrimental to the
value of the Company's common stock.

To improve the Company's liquidity, the Company's management is actively pursuing additional financing through discussions with investment bankers, financial institutions, and private investors. There can be no assurance that the Company will be successful in its effort to secure additional financing.


We continue to experience net operating losses. Our ability to continue as a
going concern is subject to our ability to develop profitable operations. We are
devoting all our efforts to growing our business and raising capital. Our net
operating losses increase the difficulty in meeting such goals, and there can be
no assurance that such methods will prove successful.



The primary issues management will focus on in the immediate future include:
seeking additional credit facilities from institutional lenders, institutional
investors for debt or equity investments in our Company, short-term interim debt
financing: and private placements of debt and equity securities with accredited
investors.

To address these issues, we have engaged a financial advisory firm to advise and assist us in negotiating and raising capital.





INFLATION




The impact of inflation on the costs of the Company and the ability to pass on
cost increases to its customers over time is dependent upon market conditions.
The Company is not aware of any inflationary pressures that have had any
significant impact on the Company's operations over the past quarter, and the
Company does not anticipate that inflationary factors will have a substantial
effect on future operations.



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OFF-BALANCE SHEET ARRANGEMENTS

The Company does not maintain off-balance sheet arrangements or participate in non-exchange traded contracts requiring fair value accounting treatment.

CRITICAL ACCOUNTING POLICIES





The preparation of our financial statements in conformity with accounting
principles generally accepted in the United States requires us to make estimates
and judgments that affect our reported assets, liabilities, revenues, and
expenses and the disclosure of contingent assets and liabilities. We base our
estimates and judgments on historical experience and various other assumptions
we believe to be reasonable under the circumstances. Future events, however, may
differ markedly from our current expectations and assumptions. While several
significant accounting policies affect our financial statements, the following
critical accounting policy involves the most complex, difficult, and subjective
estimates and judgments.



Revenue Recognition




During the first quarter of 2018, the Company adopted ASU 2014-09, Revenue from
Contracts with Customers (Topic 606), using the cumulative-effect method. The
new standard requires an entity to recognize revenue when it transfers promised
goods or services to customers in an amount that reflects the consideration to
which the entity expects to be entitled in exchange for those goods or services.
The adoption did not impact our consolidated financial statements other than the
enhancement of our disclosures related to our revenue-generating activities.

The Company acts as a principal in its revenue transactions as it is the primary obligor.


Revenues from mobile app products and New World Health Brands products are
generally recognized upon delivery. Revenues from History Reports are generally
recognized upon delivery/download. Prepayments received from customers before
delivery (if any) are recognized as deferred revenue and recognized upon
delivery. The Company records deferred revenues when cash payments are received
or due before our performance, including refundable amounts.



Information Technology:

The Company recognizes revenue when the following criteria have been met:





  ? Persuasive evidence of an arrangement exists.
  ? No significant Company obligations remain.
  ? Collection of the related receivable is reasonably assured.
  ? The fees are fixed or determinable.

The Company acts as a principal in its revenue transactions as it is the primary obligor.





Revenues from mobile app products are generally recognized upon delivery.
Revenues from History Reports are generally recognized upon delivery/download.
Prepayments received from customers before delivery (if any) are recognized as
deferred revenue and recognized upon delivery.



New World Health Brands:

Revenues from New World Health Brands products are generally recognized upon delivery.





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Stock-Based Compensation



The Company adopted Financial Accounting Standards Board Accounting Standard
Codification Topic 718 ("ASC 718-10"), which records compensation expense on a
straight-line basis, generally over the explicit service period of three to

five
years.



ASC 718-10 requires companies to estimate the fair value of share-based payment
awards on the grant date using an option-pricing model. The value of the portion
of the award that is ultimately expected to vest is recognized as expense over
the requisite service periods in the Company's Consolidated Statement of
Operations. The Company is using the Black-Scholes option-pricing model as its
method of valuation for share-based awards. The Company's determination of the
fair value of share-based payment awards on the date of grant using an
option-pricing model is affected by the Company's stock price as well as
assumptions regarding several highly complex and subjective variables. These
variables include but are not limited to the Company's expected stock price
volatility over the awards term and other market variables, such as the
risk-free interest rate.



Inventories

Inventory comprises finished goods for the Company's New World Health Brands business. The Company's inventories represent finished goods, consisting of products available for sale. They are accounted for using the first-in, first-out (FIFO) method and valued at the lower cost or net realizable value.





Convertible Instruments

The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with professional standards for "Accounting for Derivative Instruments and Hedging Activities" ("ASC 815-40").


ASC 815-40 provides that, among other things, generally, if an event is not
within the entity's control and could or require net cash settlement, then the
contract shall be classified as an asset or a liability. The Company accounts
for convertible instruments (when it has determined that the embedded conversion
options should not be bifurcated from their host instruments) in accordance with
professional standards when "Accounting for Convertible Securities with
Beneficial Conversion Features," as those professional standards pertain to
"Certain Convertible Instruments." Accordingly, the Company records, when
necessary, discounts to convertible notes for the intrinsic value of conversion
options embedded in debt instruments based on the differences between the fair
value of the underlying common stock at the commitment date of the note
transaction and the effective conversion price embedded in the note. The Company
also records, when necessary, deemed dividends for the intrinsic value of
conversion options embedded in preferred shares based upon the differences
between the underlying common stock's fair value at the note transaction's
commitment date and the effective conversion price embedded in the note. Debt
discounts under these arrangements are amortized over the term of the related
debt to their earliest redemption date.



Derivative Liabilities



ASC 815 generally provides three criteria that, if met, require companies to
bifurcate conversion options from their host instruments and account for them as
freestanding derivative financial instruments. These three criteria include
circumstances in which (a) the economic characteristics and risks of the
embedded derivative instrument are not clearly and closely related to the
economic characteristics and risks of the host contract, (b) the hybrid
instrument that embodies both the embedded derivative instrument and the host
contract is not re-measured at fair value under otherwise applicable generally
accepted accounting principles with changes in fair value reported in earnings
as they occur and (c) a separate instrument with the same terms as the embedded
derivative instrument would be considered a derivative instrument subject to the
requirements of ASC 815. ASC 815 also provides an exception to this rule when
the host instrument is deemed conventional, as described.



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RECENT ACCOUNTING PRONOUNCEMENTS


For information regarding recent accounting pronouncements and their effect on
the Company, see "Recent Accounting Pronouncements" in Note A of the Notes to
Consolidated Financial Statements contained herein.

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