Quarterly Report (10-q)

Date : 08/16/2019 @ 8:09PM
Source : Edgar (US Regulatory)
Stock : DSG Global Inc (DSGT)
Quote : 1.25  -0.05 (-3.85%) @ 8:59PM

Quarterly Report (10-q)

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the quarterly period ended June 30, 2019

 

or

 

[  ] Transition Report Pursuant Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the transition period from _____________ to _____________.

 

Commission file number 000-53988

 

DSG GLOBAL, INC.

(Exact name of registrant as specified in its charter)

 

Nevada   26-1134956
(State or other jurisdiction of
incorporation or organization)
 

(I.R.S. Employer

Identification No.)

 

312 – 2630 Croydon Drive

Surrey, British Columbia, V3Z 6T3, Canada

(Address of principal executive offices, zip code)

 

(604) 575-3848

(Registrant’s telephone number, including area code)

 

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 [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [  ] No [X]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):

 

Large accelerated filer [  ]   Accelerated filer [  ]
Non-accelerated filer [  ] (Do not check if smaller reporting company) Smaller reporting company [X]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

 

As August 16, 2019, the issuer had 825,469 shares of common stock issued and outstanding.

 

 

 

 
 

 

DSG GLOBAL, INC.
TABLE OF CONTENTS

 

    Page No.
PART I — FINANCIAL INFORMATION  
     
Item 1. Financial Statements (unaudited) 3
     
  Interim Condensed Consolidated Balance Sheets 4
     
  Interim Condensed Consolidated Statements of Operations 5
     
  Interim Condensed Statements of Comprehensive Loss 6
     
  Interim Condensed Consolidated Statements of Stockholders’ Deficit 7
     
  Interim Condensed Consolidated Statements of Cash Flows 8
     
  Notes to Interim Condensed Consolidated Financial Statements 9
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 20
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk 32
     
Item 4. Controls and Procedures 32
     
PART II — OTHER INFORMATION  
     
Item 1. Legal Proceedings 33
     
Item 1A. Risk Factors 34
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 34
     
Item 3. Defaults Upon Senior Securities 34
     
Item 4. Mine Safety Disclosures 34
     
Item 5. Other Information 34
     
Item 6. Exhibits 35
     
Signatures 38

 

2
 

 

PART I: FINANCIAL INFORMATION

 

ITEM 1: Financial Statements (unaudited)

 

The accompanying unaudited consolidated interim financial statements of DSG Global Inc. as at June 30, 2019, have been prepared by our management in conformity with accounting principles generally accepted in the United States of America and in accordance with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X and, therefore, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders’ equity in conformity with generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature.

 

Operating results for the six-month period ended June 30, 2019 are not necessarily indicative of the results that can be expected for the year ending December 31, 2019.

 

3
 

 

DSG GLOBAL, INC.

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

AS AT JUNE 30, 2019 AND DECEMBER 31, 2018

(Expressed in U.S. dollars)

(UNAUDITED)

 

    June 30, 2019     December 31, 2018  
    (unaudited)        
ASSETS                
CURRENT ASSETS                
Cash   $ 31,820     $ 5,059  
Trade receivables, net     227,350       139,400  
Inventories, net of inventory allowance of $149,577 and $146,292, respectively     162,104       141,296  
Prepaid expenses and deposits     78,847       47,484  
TOTAL CURRENT ASSETS     500,121       333,239  
                 
NON-CURRENT ASSETS                
Intangible assets, net     14,675       15,289  
Fixed assets, net     33,195       869  
Equipment on lease, net     2,120       3,316  
TOTAL NON-CURRENT ASSETS     49,990       19,474  
                 
TOTAL ASSETS   $ 550,111     $ 352,713  
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIT                
CURRENT LIABILITIES                
Trade and other payables   $ 2,368,800     $ 1,897,530  
Deferred revenue     147,288       215,662  
Operating lease liability     32,695       -  
Convertible note payable to related party     310,000       310,000  
Loans payable     1,019,383       795,588  
Derivative liability     1,717,939       2,188,354  
Convertible loans payable, net of unamortized discounts and premiums of $212,401 and $213,461, respectively     1,743,361       1,613,912  
TOTAL CURRENT LIABILITIES     7,339,466       7,021,046  
                 
Going concern (Note 2)                
Commitments (Note 16)                
Contingencies (Note 17)                
Subsequent events (Note 18)                
                 
MEZZANINE EQUITY                
Redeemable preferred stock, (2019 and 2018 - to be issued)   $ 6,702,450     $ 6,702,450  
                 
STOCKHOLDERS’ DEFICIT                
Preferred stock to be issued     4,872,732       4,872,732  
Common stock, $0.001 par value, 150,000,000 shares authorized, (2018 - 750,000); 787,569 issued and outstanding (2018 - 634,471)     788       634  
Additional paid in capital     22,649,842       22,415,121  
Discounts on common stock     (69,838 )     (69,838 )
Other accumulated comprehensive income     1,389,278       1,465,389  
Accumulated deficit     (42,334,607 )     (42,054,821 )
TOTAL STOCKHOLDERS’ DEFICIT     (13,491,805 )     (13,370,783 )
                 
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT   $ 550,111     $ 352,713  

 

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

 

4
 

 

DSG GLOBAL, INC.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2019 AND 2018

(Expressed in U.S. dollars)

(UNAUDITED)

 

    Three months ending     Six months ending  
    June 30, 2019     June 30, 2018     June 30, 2019     June 30, 2018  
                         
Revenue   $ 284,646     $ 237,046     $ 786,070     $ 347,942  
Cost of revenue     32,886       79,552       338,954       97,881  
Gross profit     251,760       157,494       447,116       250,061  
                                 
Operating expenses                                
Compensation expense     144,673       209,174       279,756       417,802  
General and administration expense     203,938       275,480       431,694       633,493  
Warranty expense     -       46,273       -       46,273  
Bad debt     (3,290 )     2,099       (1,866 )     30,992  
Depreciation and amortization expense     10,900       2,220       20,821       8,914  
Total operating expense     356,221       535,246       730,405       1,137,474  
Loss from operations     (104,461 )     (377,752 )     (283,289 )     (887,413 )
                                 
Other income (expense)                                
Foreign currency exchange gain (loss)     13,526       410,454       31,163       (150,212 )
Change in fair value of derivative instruments     7,356,541       6,013,778       720,624       397,517  
Loss on extinguishment of debt     (54,145 )     (768,964 )     (128,254 )     (2,164,231 )
Finance costs     (318,274 )     (776,506 )     (620,030 )     (1,517,068 )
Total other income (expense)     6,997,648       4,878,762       3,503       (3,433,994 )
                                 
Net income (loss)   $ 6,893,187     $ 4,501,010     $ (279,786 )   $ (4,321,407 )
                                 
Net income (loss) per share                                
                                 
Basic and diluted:                                
Basic   $ 9.80     $ 16.80     $ (0.41 )   $ (23.26 )
Diluted   $ 9.80     $ 16.80     $ (0.41 )   $ (23.26 )
                                 

Weighted average number of shares used in computing basic and diluted net loss per share:

                               
Basic     703,437       267,903       677,426       185,772  
Diluted     703,437       267,903       677,426       185,772  

 

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

 

5
 

 

DSG GLOBAL, INC.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2019 AND 2018

(Expressed in U.S. dollars)

(UNAUDITED)

 

    Three months ending     Six months ending  
    June 30, 2019     June 30, 2018     June 30, 2019     June 30, 2018  
                         
Net income (loss)   $ 6,893,187     $ 4,501,010     $ (279,786 )   $ (4,321,407 )
Other comprehensive income                                
                                 
Foreign currency translation adjustments     (6,476 )     (361,594 )     (76,111 )     279,497  
                                 
Comprehensive income (loss)   $ 6,886,711     $ 4,139,416     $ (355,897 )   $ (4,041,910 )

 

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

 

6
 

 

DSG GLOBAL, INC.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(Expressed in U.S. dollars)

(UNAUDITED)

 

    Common Stock     Preferred Stock                    
    Shares     Amount     Additional
paid in capital
    Discount on
common stock
    To be
issued
    Accumulated
comprehensive
income
    Accumulated
deficit
    Total
stockholders’
deficit
 
Balance, December 31, 2017     25,485     $ 25     $ 17,613,525     $ -     $ -     $ 873,250     $ (32,229,417 )   $ (13,742,617 )
Shares issued for cash     12,501       12       81,647       -       -       -       -       81,659  
Shares issued on conversion of debt     185,798       186       1,802,955       -       -       -       -       1,803,141  
Net loss for the period     -       -       -       -       -       641,091       (8,822,417 )     (8,181,326 )
Balance, March 31, 2018     223,784     $ 223     $ 19,498,127     $ -     $ -     $ 1,514,341     $ (41,051,834 )   $ (20,039,143 )
Shares issued for commission     188       -       2,250       -       -       -       -       2,250  
Shares issued on conversion of debt     92,040       92       1,172,185       -       -       -       -       1,172,277  
Net loss for the period     -       -       -       -       -       (361,594 )     4,501,010       4,139,416  
Balance, June 30, 2018     316,012     $ 315     $ 20,672,562     $ -     $ -     $ 1,152,747     $ (36,550,824 )   $ (14,725,200 )
                                                                 
Balance, December 31, 2018     634,471     $ 634     $ 22,415,121     $ (69,838 )   $ 4,872,732     $ 1,465,389     $ (42,054,821 )   $ (13,370,783 )
Shares issued on conversion of debt     55,932       56       119,921       -       -       -       -       119,977  
Net loss for the period     -       -       -       -       -       (69,635 )     (7,172,973 )     (7,242,608 )
Balance, March 31, 2019     690,403     $ 690     $ 22,535,042     $ (69,838 )   $ 4,872,732     $ 1,395,754     $ (49,227,794 )   $ (20,493,414 )
Shares issued for services     17,500       18       19,582       -       -       -       -       19,600  
Shares issued on conversion of debt     79,666       80       95,218       -       -       -       -       95,298  
Net loss for the period     -       -       -       -       -       (6,476 )     6,893,187       6,886,711  
Balance, June 30, 2019     787,569     $ 788     $ 22,649,842     $ (69,838 )   $ 4,872,732     $ 1,389,278     $ (42,334,607 )   $ (13,491,805 )

 

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

 

7
 

 

DSG GLOBAL INC.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018

(Expressed in U.S. Dollars)

(UNAUDITED)

 

    2019     2018  
             
Net loss   $ (279,786 )   $ (4,321,407 )
                 
Adjustments to reconcile net loss to net cash used in operating activities:                
Depreciation and amortization     20,821       8,914  
Change in inventory allowance     (2,814 )     -  
Non-cash financing costs     -       224,956  
Accretion of discounts on debt     328,055       924,905  
Change in fair value of derivative liabilities     (720,624 )     (397,517 )
Reserve for bad debt     (1,866 )     30,992  
Shares issued for services     19,600       2,250  
Loss on extinguishment of debt     128,254       2,164,231  
Unrealized foreign exchange loss (gain)     (81,146 )     152,901  
(Increase) decrease in assets:                
Trade receivables, net     (81,051 )     (107,836 )
Inventories     (12,103 )     (47,868 )
Prepaid expense and deposits     (35,880 )     (33,629 )
Related party receivable     -       1,034  
Increase (decrease) in current liabilities:                
Trade payables and accruals     554,903       313,849  
Deferred revenue     (68,374 )     123,204  
Warranty reserve     -       (30,583 )
Operating lease liabilities     (16,228 )     -  
Net cash used in operating activities     (248,239 )     (991,604 )
                 
Cash flows from investing activities                
Purchase of property, plant and equipment     -       (1,544 )
Net cash used in investing activities     -       (1,544 )
                 
Cash flows from financing activities:                
Proceeds from issuing shares     -       81,659  
Repayments of notes payable     -       (45,000 )
Proceeds from notes payable     275,000       967,000  
Net cash provided by financing activities     275,000       1,003,659  
                 
Net increase in cash     26,761       10,511  
Cash at beginning of period     5,059       5,488  
                 
Cash at the end of the period   $ 31,820     $ 15,999  
                 
Supplemental disclosures                
Cash paid during the period for:                
Income tax payments   $ -     $ -  
Interest payments   $ 2,513     $ -  
                 
Supplemental schedule of non-cash financing activities:                
Convertible debenture issued for financing fees   $ -     $ 15,000  
Initial recognition of lease asset   $ 51,203     $ -  
Initial recognition of lease liability   $ 47,118     $ -  
Shares issued for convertible notes payable   $ 215,275     $ 2,975,418  

 

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

 

8
 

 

DSG GLOBAL, INC.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Note 1 – ORGANIZATION

 

DSG Global, Inc. (the “Company”) was incorporated under the laws of the State of Nevada on September 24, 2007.

 

The Company is a technology development company engaged in the design, manufacture, and marketing of fleet management solutions in the golf industry. The Company’s principal activities are the sale and rental of GPS tracking devices and interfaces for golf vehicles and related support services.

 

On April 13, 2015, the Company entered into a share exchange agreement with Vantage Tag Systems Inc. (“VTS”) (formerly DSG Tag Systems Inc.), now wholly-owned subsidiary of the Company, incorporated under the laws of the State of Nevada on April 17, 2008 and extra provincially registered in British Columbia, Canada in 2008. In March 2011, VTS formed DSG Tag Systems International, Ltd. in the United Kingdom (“DSG UK”). DSG UK is a wholly owned subsidiary of VTS.

 

On March 26, 2019, the Company effected a reverse stock split of its shares of common stock on a four thousand (4,000) old for one (1) new basis. Upon effect of the reverse split, authorized capital decreased from 3,000,000,000 shares of common stock to 750,000 shares of common stock, with a par value of $0.001. Subsequently, on May 23, 2019, an increase in common shares to 150,000,000 was authorized, with a par value of $0.001. Shares of Preferred Stock remain unchanged. These consolidated financial statements give retroactive effect to such reverse stock split named above and all share and per share amounts have been adjusted accordingly, unless otherwise noted.

 

Note 2 – GOING CONCERN

 

These unaudited interim condensed consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders and note holders, the ability of the Company to obtain necessary equity financing to continue operations, and ultimately the attainment of profitable operations. As at June 30, 2019, the Company has a working capital deficit of $6,839,345 and has an accumulated deficit of $42,334,607 since inception. Furthermore, the Company incurred a net loss of $279,786 and used $248,239 of cash flows for operating activities during the six months ended June 30, 2019. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These unaudited interim condensed consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

Note 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accompanying condensed consolidated financial statements were prepared in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”) and with the instructions to Form 10-Q.

 

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to U.S. GAAP rules and regulations for presentation of interim financial information. Therefore, the unaudited condensed interim consolidated financial statements should be read in conjunction with the financial statements and the notes thereto, included in the Company’s Annual Report on the Form 10-K for the year ended December 31, 2018. Current and future financial statements may not be directly comparable to the Company’s historical financial statements. However, except as disclosed herein, there have been no material changes in the information disclosed in the notes to the financial statements for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission. In the opinion of Management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019.

 

9
 

 

Principles of Consolidation

 

The interim condensed consolidated financial statements include the accounts of DSG Global Inc. and its wholly-owned subsidiaries VTS and DSG UK, collectively referred to as the Company. All material intercompany accounts, transactions and profits were eliminated in consolidation.

 

Use of Estimates

 

The preparation of interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the interim condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the condensed consolidated financial statements in the period they are determined. New estimates in the period relate to determining the Company’s estimated incremental borrowing rate in recognizing right-of-use assets and lease liabilities. Differences in the estimated incremental borrowing rate could result in materially different lease liabilities and right-of-use assets.

 

Recently Adopted Accounting Pronouncements

 

In February 2016, the Financial Accounting Standards Board, or FASB, established Topic 842, Leases, by issuing Accounting Standards Update (“ASU”) No. 2016-02, which requires lessors to classify leases as a sales-type, direct financing, or operating lease and requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements.

 

The Company adopted the new standard effective January 1, 2019 and elected the modified retrospective for the transition. The Company elected the following practical expedients:

 

Transition method practical expedient – permits the Company to use the effective date as the date of initial application. Upon adoption, the Company did not have a cumulative-effect adjustment to the opening balance of retained earnings. Financial information and disclosures for periods before January 1, 2019 were not updated.  
     
Package of practical expedients – permits the Company not to reassess under the new standard its prior conclusions about lease identification, lease classification, and initial direct costs. This allowed the Company to continue classifying its leases at transition in substantially the same manner.  
     
Single component practical expedient – permits the Company to not separate lease and non-lease components of leases. Upon transition, rental income, expense reimbursement, and other were aggregated into a single line within rental and other revenues on the condensed consolidated statement of operations.  
     
Short-term lease practical expedient – permits the Company not to recognize leases with a term equal to or less than 12 months.  

 

Lessee Accounting

 

The new standard requires lessees to recognize a right-of-use asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases are classified as finance or operating at inception, with classification affecting the pattern and recording of expenses in the statement of operations. Upon transition the Company recognized lease assets and lease liabilities principally for its office lease. When measuring lease liabilities for leases that were classified as operating leases, the Company discounted lease payments using its incremental borrowing rate at January 1, 2019. The weighted-average incremental borrowing rate applied was 11.98%. Refer to Notes 5 and 11.

 

10
 

 

Reclassification

 

Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations or cash flow.

 

Note 4 – TRADE RECEIVABLES, NET

 

As of June 30, 2019, and December 31, 2018, trade receivables consist of the following:

 

    June 30, 2019     December 31, 2018  
Accounts receivables   $ 272,132     $ 184,214  
Allowance for doubtful accounts     (44,782 )     (44,814 )
Total trade receivables, net   $ 227,350     $ 139,400  

 

Note 5 – FIXED ASSETS AND EQUIPMENT ON LEASE

 

As of June 30, 2019 and December 31, 2018, fixed assets consisted of the following:

 

    June 30, 2019     December 31, 2018  
Furniture and equipment   $ 16,250     $ 20,509  
Computer equipment     25,459       28,460  
Right-of-use lease asset     51,203       -  
Accumulated depreciation     (59,717 )     (48,100 )
    $ 33,195     $ 869  

 

As of June 30, 2019 and December 31, 2018, equipment on lease consisted of the following:

 

    June 30, 2019     December 31, 2018  
Tags   $ 126,042     $ 120,998  
Text     27,858       26,743  
Touch     23,076       22,152  
Accumulated depreciation     (174,856 )     (166,577 )
    $ 2,120     $ 3,316  

 

For the three months ended June 30, 2019 and 2018, total depreciation expense for fixed assets and leased equipment was $10,593 and $1,937, respectively.

 

For the six months ended June 30, 2019 and 2018, total depreciation expense for fixed assets and leased equipment was $20,207 and $8,348, respectively.

 

Note 6 – INTANGIBLE ASSETS

 

Intangible assets consist of the following as of June 30, 2019 and December 31, 2018:

 

    June 30, 2019     December 31, 2018  
Intangible asset – Patent   $ 22,353     $ 22,353  
Accumulated depreciation     (7,678 )     (7,064 )
    $ 14,675     $ 15,289  

 

The estimated useful life of the patent is 20 years. Patents are amortized on a straight-line basis. For the three months ended June 30, 2019 and 2018, total amortization expense was $307 and $283, respectively.

 

For the six months ended June 30, 2019 and 2018, total amortization expense was $614 and $566, respectively.

 

11
 

 

Note 7 – TRADE AND OTHER PAYABLES

 

As of June 30, 2019, and December 31, 2018, trade and other payables consist of the following:

 

    June 30, 2019     December 31, 2018  
Accounts payable   $ 1,190,174     $ 978,770  
Accrued expenses     252,502       245,737  
Accrued interest     906,052       686,354  
Other liabilities     20,072       (13,331 )
Total payables   $ 2,368,800     $ 1,897,530  

 

Note 8 – LOANS PAYABLE

 

As of June 30, 2019 and December 31, 2018, loans payable consisted of the following:

 

Loans Payable   June 30, 2019     December 31, 2018  
             
Unsecured, due on demand, interest at 15% per annum   $ 190,896     $ 183,258  
Unsecured, due on demand, interest at 36% per annum     46,701       44,830  
Unsecured, loan payable, due on demand, interest at 18% per annum     317,500       317,500  
Unsecured, loan payable, interest 10% per annum, with a minimum interest amount of $25,000, due on demand.     250,000       250,000  
Unsecured share-settled debt, interest at 4.99% per month, due on May 7, 2019.     214,286       -  
                 
    $ 1,019,383     $ 795,588  

 

On March 8, 2019, the Company entered into a convertible bridge loan agreement (the “Share-Settled Loan”). The Share-Settled Loan bears interest at 4.99% per month, was due in 60 days on May 7, 2019 and is convertible into restricted common shares of the Company at the lender’s option at the market price per share less a 30% discount to market. The Company has accounted the Share-Settled Loan as share-settled debt. It is initially recognized at its fair value and accreted to its share-settled redemption value of $214,286 over the term of the debt. At June 30, 2019, the carrying value consists of principal of $150,000 and accumulated accretion of $64,286. The Share-Settled Loan was not repaid on May 7, 2019 and is in default.

 

Note 9 – CONVERTIBLE NOTES

 

As of June 30, 2019 and December 31, 2018, convertible loans payable consisted of the following:

 

Related Party Convertible Loans Payable

 

(a) On March 31, 2015, the Company issued a convertible promissory note in the principal amount of $310,000 to a company owned by a director of the Company for marketing services. The note is unsecured, bears interest at 5% per annum, is convertible at $1.25 per common share, and is due on demand. As at June 30, 2019, the carrying value of the convertible promissory note was $310,000 (December 31, 2018 - $310,000).

 

Third Party Convertible Loans Payable

 

(b) On August 25, 2015, the Company issued a convertible promissory note in the principal amount of $250,000. The convertible promissory note is unsecured, bears interest at 10% per annum, is due on demand, and is convertible at $7,000 per share. As at June 30, 2019, the carrying value of the convertible promissory note was $250,000 (December 31, 2018 - $250,000).
   
(c) On November 7, 2016, the Company entered into a securities purchase agreement with a non-related party. Pursuant to the agreement, the Company was provided with proceeds of $125,000 on November 10, 2016 in exchange for the issuance of a secured convertible promissory note in the principal amount of $138,889, which was inclusive of an 8% original issue discount and bears interest at 8% per annum to the holder. The convertible promissory note matures nine months from the date of issuance and is convertible at the option of the holder into our common shares at a price per share that is the lower of $480 or the closing price of the Company’s common stock on the conversion date. In addition, under the same terms, the Company also issued a secured convertible note of $50,000 in consideration for proceeds of $10,000 and another secured convertible note of $75,000 in consideration for proceeds of $10,000. Under the agreements, the Company has the right to redeem $62,500 and $40,000 of the notes for consideration of $1 each at any time prior to the maturity date in the event that the convertible promissory note is exchanged or converted into a revolving credit facility with the lender, whereupon the two $10,000 convertible note balances shall be rolled into such credit facility.

 

12
 

 

  On May 7, 2017, the Company triggered an event of default in the convertible note by failing to repay the full principal amount and all accrued interest on the due date. The entire convertible note payable became due on demand and would accrue interest at an increased rate of 1.5% per month (18% per annum) or the maximum rate permitted under applicable law until the convertible note payable was repaid in full.
   
  On May 8, 2017, the Company issued 25 common shares for the conversion of $5,000 of the $72,500 convertible note dated November 7, 2016. On May 24, 2017, the Company issued 53 common shares for the conversion of $10,500 of the $72,500 convertible note dated November 7, 2016. On May 25, 2017, the lender provided conversion notice for the remaining principal $57,000 of the $72,500 convertible note dated November 7, 2016. This conversion was not processed by the Company’s transfer agent due to direction from the Company not to honor any further conversion notices from the lender. In response, the Company received legal notification pursuant to the refusal to process further conversion notices. Refer to Note 17.
   
  As at June 30, 2019, the carrying value of the note was $245,889 (December 31, 2018 - $245,889) and the fair value of the derivative liability was $307,641 (December 31, 2018 - $606,710).
   
(d) On June 5, 2017, the Company issued a convertible promissory note in the principal amount of $110,000. The note is unsecured, bears interest at 10% per annum, was due on December 5, 2017, and is convertible into common shares at a conversion price equal to the lessor of (i) 55% multiplied by the lowest trading price during the previous twenty-five trading day period ending on the latest complete trading day prior to the date of this note and (ii) the alternate conversion price which means 55% multiplied by the lowest trading price during the previous twenty-five trading day period ending on the latest complete trading day prior to the conversion date. Interest will be accrued and payable at the time of promissory note repayment. Financing fees on the note were $7,000. The derivative liability applied as a discount on the note was $103,000 and is accreted over the life of the note.
   
  During the year ended December 31, 2018, $75,000 of the note was reassigned to another unrelated note holder and the note was treated as an extinguishment. There were no material changes to the note upon reassignment.
   
  During the year ended December 31, 2018, the Company issued 51,749 common shares with a fair value of $524,487 for the conversion of the remaining principal balance of $35,000, and default penalties and finance costs of $37,448 resulting in a loss on settlement of debt of $452,039.
   
  As at June 30, 2019, the carrying value of the note was $9,487 (December 31, 2018 - $9,487), relating to a penalty.
   
(e)

On July 17, 2017, the Company issued a convertible promissory note in the principal amount of $135,000. The note is unsecured, bears interest at 10% per annum, is due on July 17, 2018, and is convertible into common shares at a conversion price equal to the lessor of (i) 55% multiplied by the lowest trading price during the previous twenty trading day period ending on the latest complete trading day prior to the date of this note and (ii) $244. Interest will be accrued and payable at the time of promissory note repayment. Financing fees on the note were $16,500. Derivative liability applied as discount on the note was $118,500 and is accreted over the life of the note.

 

During the year ended December 31, 2018, the Company issued 25,000 common shares with a fair value of $227,222 for the conversion of $53,530 of principal balance resulting in a loss on settlement of debt of $173,692.

   
  As at June 30, 2019, the carrying value of the note was $81,470 (December 31, 2018 - $81,470) and the fair value of the derivative liability was $106,863 (December 31, 2018 - $121,485). During the six months ended June 30, 2019, the Company accreted $nil (2018 - $64,282) of the debt discount to finance costs.

 

13
 

 

(f)

On March 19, 2018, the Company issued a convertible promissory note in the principal amount of up to $900,000. The note is unsecured, bears interest at 12% per annum, is due 184 days upon receipt, and is convertible into common shares after 180 days from issuance date at a conversion price equal to the lessor of: (i) the lowest trading price during the previous fifteen trading days prior to the date of the promissory note; or (ii) 55% of the lowest trading price during the previous fifteen days prior to the latest complete trading day prior to the conversion date. Interest will be accrued and payable at the time of promissory note repayment.

 

On May 3, 2018, the Company amended the convertible promissory note to include that at any time after the 100th calendar day after the funds are issued, and at the option of the holder in addition to the right of conversion, the holder may deduct daily payments from the Company’s bank account in the amount of $5,562 per calendar day or $27,812 per week until the Company has paid or the holder has converted an amount equal to the principal balance, interest, accrued interest, and default amount.

   
 

First Tranche

 

On March 19, 2018, the Company received $270,000 pursuant to the first tranche of the note, which is $300,000 in the principal amount, net of the original issuance discount of $30,000. The derivative liability applied as a discount on the note was $270,000.

   
  On August 31, 2018, the principal balance of $300,000 and accrued interest of $15,978 for the first tranche of the note was reassigned to another unrelated note holder. There were no material changes to the note upon reassignment. Refer to Note 9(l).
   
  Second Tranche
   
  On May 3, 2018, the Company received $146,500, net of $3,500 in legal fees, pursuant to the second tranche of the note, which is $166,667 in the principal amount, net of the original issuance discount of $16,667. The derivative liability applied as a discount on the note was $150,000 and is accreted over the life of the note.
   
  On April 26, 2019 and May 22, 2019, an aggregate principal balance of $166,667 and accrued interest of $3,567 for the second tranche of the note was reassigned to another unrelated note holder. There were no material changes to the note upon reassignment. Refer to Note 9(n).
   
  As at June 30, 2019, the carrying value of the second tranche of the note was $nil (December 31, 2018 - $166,667) and the fair value of the derivative liability was $87,975 (December 31, 2018 - $229,951). During the six months ended June 30, 2019, the Company accreted $nil (2018 - $52,536) of the debt discount to finance costs.
   
  Third Tranche
   
  On July 16, 2018, the Company received $125,000, net of $53,500 in legal and financing fees, pursuant to the third tranche of the agreement, which is $198,333 in the principal amount, net of the original issuance discount of $19,833. The derivative liability applied as a discount on the note was $125,000 and is accreted over the life of the note.
   
  On June 24, 2019, the principal balance of $77,844 and accrued interest of $42,656 for the third tranche of the note was reassigned to another unrelated note holder. There were no material changes to the note upon reassignment. Refer to Note 9(n).
   
  As at June 30, 2019, the carrying value of the third tranche of the note was $120,489 (December 31, 2018 - $181,087) and the fair value of the derivative liability was $100,506 (December 31, 2018 - $231,250). During the six months ended June 30, 2019, the Company accreted $17,246 (2018 - $nil) of the debt discount to finance costs.
   
(g)

In January 2018, the Company issued a convertible promissory note in the principal amount of $15,000 as a commitment fee. The note is unsecured, non-interest bearing until default, was due on August 16, 2018, and is convertible into common shares at a conversion price equal to 75% of the average closing trading price during the previous five trading days prior to conversion date, with a minimum of $0.20.

 

During the year ended December 31, 2018, the Company issued 1,558 common shares with a fair value of $19,937 for the conversion of $10,000 of principal resulting in a loss on settlement of debt of $9,937.

   
  As at June 30, 2019, the carrying value of the note was $5,000 (December 31, 2018 - $5,000) and the fair value of the derivative liability was $3,076 (December 31, 2018 - $2,714).

 

14
 

 

(h) On May 8, 2018, the Company issued a convertible note in the principal amount of $51,500. The note is unsecured, bears interest at 10% per annum, and is due on February 8, 2019. The note is convertible into common shares at a 32% discount to the lowest intra-day trading price of the Company’s common stock for the ten trading days immediately preceding the conversion date.
   
  As at June 30, 2019, the carrying value of the note was $51,500 (December 31, 2018 - $44,223) and the fair value of the derivative liability was $46,432 (December 31, 2018 - $44,543). During the six months ended June 30, 2019, the Company accreted $7,277 (2018 - $9,889) of the debt discount to finance costs.
   
(i)

On May 28, 2018 the Company issued a convertible note in the principal amount of $180,000. The note is unsecured, bears interest at 10% per annum, and is due on February 28, 2019. The note is convertible into common shares at a 32% discount to the lowest intra-day trading price of the Company’s common stock for the ten trading days immediately preceding the conversion date.

 

As at June 30, 2019, the carrying value of the note was $180,000 (December 31, 2018 - $141,522) and the fair value of the derivative liability was $160,460 (December 31, 2018 - $165,742). During the six months ended June 30, 2019, the Company accreted $38,478 (2018 - $21,522) of the debt discount to finance costs.

   
(j) On June 18, 2018, the Company reassigned convertible note balances from another unrelated party in the principal amount of $168,721. The note is unsecured, bears interest at 10% per annum, which was due on August 2, 2018, and is convertible into common shares at a conversion price equal to the lesser of the lowest trading price during the previous twenty-five trading days prior to: (i) the date of the promissory note; or (ii) the latest complete trading day prior to the conversion date. Interest is accrued will be and payable at the time of promissory note repayment. The remaining derivative liability applied as a discount on the reassigned note was $25,824 and is accreted over the remaining life of the note.
   
  During the year ended December 31, 2018, the Company issued 43,750 common shares with a fair value of $185,200 for the conversion of $66,672 of principal and $5,653 of accrued interest resulting in a loss on settlement of debt of $112,875.
   
  During the six months ended June 30, 2019, the Company issued 34,450 common shares with a fair value of $36,517 for the conversion of $13,324 of principal and $6,571 of accrued interest resulting in a loss on settlement of debt of $16,622.
   
  As at June 30, 2019, the carrying value of the note was $88,725 (December 31, 2018 - $102,049) and the fair value of the derivative liability was $43,846 (December 31, 2018 - $53,896). During the six months ended June 30, 2019, the Company accreted $nil (2018 - $73,669) of the debt discount to finance costs.
   
(k) On August 31, 2018, the Company issued a convertible promissory note in the principal amount of $226,000. The note is unsecured, bears interest at 12% per annum, is due on August 31, 2019, and is convertible into common shares at a conversion price equal to 55% of the lowest trading price during the previous fifteen trading days prior to the conversion date, including the conversion date. Interest will be accrued and payable at the time of promissory note repayment. Deferred financing fees and original issuance discount on the note were $26,000. The derivative liability applied as a discount on the note was $200,000 and is accreted over the life of the note.
   
  On May 7, 2019 and June 28, 2019, an aggregate principal balance of $125,209 was purchased by another unrelated note holder. There were no material changes to the note upon purchase. Refer to Note 9(o). The deferred financing fees and derivative liability applied as discounts on the purchase portion of the note were fully extinguished at the time of the transfer.
   
  As at June 30, 2019, the carrying value of the note was $81,597 (December 31, 2018 - $75,540) and the fair value of the derivative liability was $129,531 (December 31, 2018 - $305,890). During the six months ended June 30, 2019, the Company accreted $131,266 (2018 - $nil) of the debt discount to finance costs.
   
(l) On August 31, 2018, the Company reassigned the first tranche of a convertible note balance from another unrelated party in the principal amount of $315,978. The first tranche of the note is unsecured, bears interest at 12% per annum, which is due on demand, and is convertible into common shares at a conversion price equal to the lessor of: (i) the lowest trading price during the previous fifteen trading days prior to the date of the promissory note; or (ii) 55% of the lowest trading price during the previous fifteen days prior to the latest complete trading day prior to the conversion date. Interest will be accrued and payable at the time of promissory note repayment.

 

15
 

 

  The deferred financing fees and derivative liability applied as discounts on the reassigned note were fully amortized at the time of the transfer.
   
  During the six months ended June 30, 2019, the Company issued 55,915 common shares with a fair value of $119,977 for the conversion of $42,000 of principal and $3,868 of accrued interest resulting in a loss on settlement of debt of $74,109.
   
  As at June 30, 2019, the carrying value of the note was $273,978 (December 31, 2018 - $315,978) and the fair value of the derivative liability was $362,395 (2018 - $426,173).
   
(m) On January 22, 2019, the Company issued a convertible promissory note in the principal amount of $137,500. The note is unsecured, bears interest at 12% per annum, is due on January 22, 2020, and is convertible into common shares at a conversion price equal to 55% of the lowest trading price during the previous fifteen trading days prior to the conversion date, including the conversion date. Interest will be accrued and payable at the time of promissory note repayment. Deferred financing fees and original issuance discount on the note were $12,500. The derivative liability applied as a discount on the note was $125,000 and is accreted over the life of the note.
   
  As at June 30, 2019, the carrying value of the note was $59,897 and the fair value of the derivative liability was $202,332. During the six months ended June 30, 2019, the Company accreted $59,897 of the debt discount to finance costs.
   
(n) On April 26, 2019, the Company entered into a note purchase and assignment agreement with two unrelated parties pursuant to a certain secured inventory convertible note issued on March 19, 2018 in the principal amount of $900,000. Refer to Note 9(f). Pursuant to this agreement, the seller desires to sell the balance owing under the Second and Third tranche of the original note in four separate closings on April 26, May 22, June 24, and July 24, 2019, totaling $84,396, $85,838, $120,490 and $122,866, respectively (consisting of $375,804 principal and $37,786 of accrued interest). As at June 30, 2019, $290,724 in principal and accrued interest had been assigned to the purchaser.
   
  As at June 30, 2019, the carrying value of the note was $290,724.
   
(o) On May 7, 2019, the Company entered into a securities purchase agreement with an unrelated party pursuant to a certain secured inventory convertible promissory note issued on August 31, 2018 in the principal amount of $226,000. Refer to Note 9(k). Pursuant to this agreement, the investor desired to purchase from the Company the balance owing under the original note in four separate closings on or about May 7 and up to three additional tranches, each at the investor’s discretion. As at June 30, 2019, two tranches totaling $125,209 had been purchased by the investor. The derivative liability applied as a discount on the note was $125,209 and is accreted over the life of the note.
   
  As at June 30, 2019, the carrying value of the note was $9,605 and the fair value of the derivative liability was $166,881. During the six months ended June 30, 2019, the Company accreted $9,605 of the debt discount to finance costs.

 

Note 10 – DERIVATIVE LIABILITIES

 

The Company records the fair value of the of the conversion price of the convertible debentures disclosed in Note 9 in accordance with ASC 815, Derivatives and Hedging. The fair value of the derivative was calculated using a multi-nominal lattice model. The fair value of the derivative liabilities is revalued on each balance sheet date with corresponding gains and losses recorded in the consolidated statement of operations. For the three and six months ended June 30, 2019, the Company recorded a gain on the change in fair value of derivative liability of $7,356,541 and $720,624, respectively (2018 – $6,013,778 and $397,517, respectively). As at June 30, 2019, the Company’s derivative liability had a balance of $1,717,939 (December 31, 2018 - $2,188,354).

 

The following inputs and assumptions were used to value the derivative liabilities outstanding at June 30, 2019 and December 31, 2018, assuming no dividend yield:

 

      2019       2018  
Expected volatility     218 - 350 %     180 - 447 %
Risk free interest rate     1.92 - 2.44 %     1.63 - 2.59 %
Expected life (in years)     0.25 - 1.0       0.1 - 1.0  

 

A summary of the activity of the derivative liabilities is shown below:

 

    $  
Balance, December 31, 2018     2,188,354  
New issuances     250,209  
Mark to market adjustment     (720,624 )
         
Balance, June 30, 2019     1,717,939  

 

16
 

 

Note 11 - LEASES

 

The Company leases certain assets under lease agreements. The lease liability consists of a single lease for office space. Upon adoption of Topic 842, on January 1, 2019 the Company recognized right-of-use assets of $51,203 and lease liabilities of $47,118. The difference between the recorded operating lease assets and lease liabilities is mainly due to the reclassification of prepaid rent deposits. As of June 30, 2019, the lease had a remaining term of 0.92 years. Right-of-use assets have been included within fixed assets, net, and lease liabilities have been included in operating lease liability on the Company’s interim condensed consolidated balance sheet as follows:

 

Right-of-use asset   June 30, 2019  
Right-of-use asset   $ 51,203  
Depreciation     (18,072 )
Total right-of-use asset   $ 33,131  

 

Lease liability   June 30, 2019  
Lease liability   $ 47,118  
Lease payments     (18,741 )
Interest     2,513  
Change in foreign exchange rate     1,805  
Total lease liability   $ 32,695  

 

Current portion   $ 32,695  
Long-term portion     -  
Total lease liability   $ 32,695  

 

Operating lease liabilities are measured at the commencement date based on the present value of future lease payments. As the Company’s lease did not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. The Company used a weighted average discount rate of 11.98% in determining its lease liabilities. The discount rate was derived from the Company’s assessment of current borrowings.

 

Right-of-use assets include any prepaid lease payments and exclude any lease incentives and initial direct costs incurred. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The lease terms may include options to extend or terminate the lease if it is reasonably certain that the Company will exercise that option.

 

Interest on operating lease liabilities for the three and six months ended June 30, 2019 was $1,125 and $2,513, respectively. Total payments for principal and interest on operating lease liabilities for the three and six months ended June 30, 2019 were $9,288 and $18,741, respectively.

 

Future minimum lease payments to be paid by the Company as a lessee for operating leases as of June 30, 2019 for the next two years and thereafter are as follows:

 

2019   $ 18,919  
2020     15,766  
         
Total future minimum lease payments   $ 34,685  
Discount     (1,990 )
         
Total   $ 32,695  

 

Note 12 – MEZZANINE EQUITY

 

Authorized

 

5,000,000 shares of convertible, redeemable Series C preferred shares authorized, each having a par value of $0.001 per share. Each share of Series C preferred shares is convertible into 10 shares of common stock.

 

1,000,000 shares of convertible, redeemable Series D preferred shares authorized, each having a par value of $0.001 per share. Each share of Series D preferred shares is convertible into 5 shares of common stock.

 

5,000,000 shares of convertible, redeemable Series E preferred shares authorized, each having a par value of $0.001 per share. Each share of Series E preferred shares is convertible into 4 shares of common stock.

 

The Series C, D and E preferred shares are mandatorily redeemable upon a major transaction which includes a change in control. As a result, they are classified as mezzanine equity.

 

17
 

 

Mezzanine equity transactions

 

During the six months ended June 30, 2019, the Company did not have any mezzanine equity transactions.

 

Note 13 – PREFERRED STOCK

 

Authorized

 

3,000,000 shares of Series A preferred shares authorized, each having a par value of $0.001 per share.

 

10,000 shares of Series B convertible preferred shares authorized, each having a par value of $0.001 per share. Each share of Series B convertible preferred shares is convertible into 1,000,000 shares of common stock.

 

On March 26, 2019, the Company effected a reverse stock split of its shares of common stock on a four thousand (4,000) old for one (1) new basis. Preferred share amounts remained unchanged.

 

Preferred Equity Transactions

 

During the six months ended June 30, 2019, the Company did not have any preferred share equity transactions.

 

Note 14 – COMMON STOCK

 

Authorized

 

On March 26, 2019, the Company effected a reverse stock split of its shares of common stock on a four thousand (4,000) old for one (1) new basis. Upon effect of the reverse split, authorized capital decreased from 3,000,000,000 shares of common stock to 750,000 shares of common stock. Subsequently, on May 23, 2019, an increase in common shares to 150,000,000 was authorized, with a par value of $0.001. These consolidated financial statements give retroactive effect to such reverse stock split named above and all share and per share amounts have been adjusted accordingly, unless otherwise noted.

 

There were 787,569 and 634,971 shares of common stock of the Company issued and outstanding as of June 30, 2019 and December 31, 2018, respectively. Each share of common stock is entitled to one (1) vote.

 

Common Equity Transactions

 

During the six months ended June 30, 2019 the Company had the following transactions:

 

 

The Company issued an aggregate of 17,500 shares of common stock with a fair value of $19,600 in exchange for services.

 

  The Company issued an aggregate of 135,598 shares of common stock with a fair value of $215,274 upon the conversion of $87,020 of convertible debentures, accrued interest and accounts payable, as noted in Note 9, per the table below:

 

Date Issued   Common Shares Issued (#)     Fair
Value (1)
    Converted
Balance (2)
    Gain (loss) on
Conversion
 
January 22, 2019     10,189     $ 28,527     $ 15,690     $ (12,837 )
March 11, 2019     18,606       37,212       12,280       (24,932 )
March 15, 2019     27,137       54,238       17,898       (36,340 )
June 17, 2019     45,216       58,780       21,257       (37,523 )
June 27, 2019     34,450       36,517       19,895       (16,622 )
Total     135,598     $ 215,274     $ 87,020     $ (128,254 )

 

  (1) Fair values are derived based on the closing price of the Company’s common stock on the date of the conversion notice.
     
  (2) Converted balance includes portions of principal, accrued interest, accounts payable, derivative liabilities, financing fees and interest penalties converted upon the issuance of shares of common stock.

 

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Note 15 – RELATED PARTY TRANSACTIONS

 

As at June 30, 2019, the Company owed $216,579 ($283,632 CDN) (December 31, 2018 - $139,835 ($190,764 CDN)) to the President, CEO, and CFO of the Company for management fees and salaries, which has been recorded in trade and other payables. The amounts owed and owing are unsecured, non-interest bearing, and due on demand. During the six months ended June 30, 2019 the Company incurred $100,000 (2018 - $100,000) in salaries to the President, CEO, and CFO of the Company.

 

As at June 30, 2019, the Company owed $13,325 ($17,450 CDN) (December 31, 2018 - $12,791 ($17,450 CDN)) to a company controlled by the son of the President, CEO, and CFO of the Company for subcontractor services. The balance owing has been recorded in trade and other payables. The amount owing is unsecured, non-interest bearing, and due on demand.

 

Note 16 – COMMITMENTS

 

In the normal course of business, the Company indemnifies other parties, including customers, lessors, and parties to other transactions with the Company, with respect to certain matters. The Company has agreed to hold the other parties harmless against losses arising from a breach of representations or covenants, or out of intellectual property infringement or other claims made against certain parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. In addition, the Company has entered into indemnification agreements with its officers and directors, and the Company’s bylaws contain similar indemnification obligations to the Company’s agents. It is not possible to determine the maximum potential amount under these indemnification agreements due to the Company’s limited history with prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, payments made by the Company under these agreements have not had a material effect on the Company’s operating results, financial position, or cash flows.

 

Note 17 – CONTINGENCIES

 

On September 7, 2016, Chetu Inc. filed a Complaint for Damage in Florida to recover an unpaid invoice amount of $27,335 plus interest of $4,939. The invoice was not paid due to a service dispute. As at June 30, 2019, included in trade and other payables is $44,804 related to this unpaid invoice, interest and legal fees.

 

On May 24, 2017, the Company received a notice of default from Coastal Investment Partners LLC (“Coastal”), on three 8% convertible promissory notes issued by the Company in aggregate principal amount of $261,389 and commenced a lawsuit on June 12, 2017 in the United States District Court, Southern District of New York. Refer to Note 9. Coastal alleges that the Company failed to deliver shares of common stock underlying the Coastal notes, and thus giving rise to an event of default. Coastal seeks damages in excess of $250,000 for breach of contact damages, and legal fees incurred by Coastal with respect to the lawsuit. This action is still pending but management’s assessment is that an unfavorable outcome is not probable. As at June 30, 2019, the principal balance and accrued interest on this convertible note is included on the consolidated balance sheet under convertible notes payable.

 

On October 10, 2017, a vendor filed a complaint for breach of contract with Superior Court of the State of California. The complainant is alleging that it is contractually owed 462 shares of the Company’s common stock and is seeking damages of $270,000. In addition, a related vendor filed in the same filing a complaint for $72,000 as part of a consulting agreement the Company executed. No accrual has been recorded because the Company is of the opinion that no obligation exists since the vendors have not performed their contractual duties. The outcome of this breach is undecided and the company will defend its position if so required.

 

On April 9, 2018, the Company received a share-reserve increase letter from JSJ Investments Inc. (“JSJ”) pursuant to the terms of a 10% convertible promissory note issued to the Company in the principal amount of $135,000. On April 24, 2018, the Company received a notice of default from JSJ for failure to comply with the share-reserve increase and on April 30, 2018 demanded payment in full of the default amount totaling $172,845. On May 7, 2018, JSJ commenced a lawsuit in the United States District Court, District of Dallas County, Texas. JSJ alleges that the Company failed to comply with the share-reserve increase letter, thus giving rise to an event of default, and failed to pay the outstanding default amount due under the terms of the note. JSJ seeks damages in excess of $200,000 but not more than $1,000,000, which consists of the principal amount of the note, default interest, and legal fees incurred by JSJ with respect to the lawsuit. This action is still pending but as at June 30, 2019, JSJ has negotiated a reduced amount with a private investor. As at June 30, 2019, the principal balance and accrued interest on this convertible note is included on the consolidated balance sheet under convertible notes payable.

 

Note 18 – SUBSEQUENT EVENTS

 

Management has evaluated events subsequent to June 30, 2019, for transactions and other events that may require adjustment of and/or disclosure in such financial statements.

 

On July 24, 2019, the Company issued 37,900 shares of common stock pursuant to the conversion of outstanding convertible debentures and related accrued interest.

 

19
 

 

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

 

FORWARD LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “plan,” “expect” and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements. These forward-looking statements include, but are not limited to, statements concerning the following:

 

  our future financial and operating results;
     
  our intentions, expectations and beliefs regarding anticipated growth, market penetration and trends in our business;
     
  the timing and success of our business plan;
     
  our plans regarding future financings;
     
  our ability to attract and retain customers;
     
  our dependence on growth in our customers’ businesses;
     
  the effects of market conditions on our stock price and operating results;
     
  our ability to maintain our competitive technological advantages against competitors in our industry;
     
  the expansion of our business in our core golf market as well as in new markets like commercial fleet management and agriculture;
     
  our ability to timely and effectively adapt our existing technology and have our technology solutions gain market acceptance;
     
  our ability to introduce new offerings and bring them to market in a timely manner;
     
  our ability to maintain, protect and enhance our intellectual property;
     
  the effects of increased competition in our market and our ability to compete effectively;
     
  the attraction and retention of qualified employees and key personnel;
     
  future acquisitions of or investments in complementary companies or technologies; and
     
  our ability to comply with evolving legal standards and regulations, particularly concerning requirements for being a public company.

 

These forward-looking statements speak only as of the date of this Form 10-Q and are subject to uncertainties, assumptions and business and economic risks. As such, our actual results could differ materially from those set forth in the forward-looking statements as a result of the factors set forth below in Part II, Item 1A, “Risk Factors,” and in our other reports filed with the Securities and Exchange Commission. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Form 10-Q may not occur, and actual results could differ materially and adversely from those anticipated or implied in our forward-looking statements.

 

20
 

 

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances described in the forward-looking statements will be achieved or occur. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Form 10-Q to conform these statements to actual results or to changes in our expectations, except as required by law.

 

Our unaudited financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Principles. The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.

 

Corporate History

 

DSG Global, Inc. (formerly Boreal Productions Inc.) was incorporated under the laws of the State of Nevada on September 24, 2007. We were formed to option feature films and TV projects to be packaged and sold to movie studios and production companies.

 

In January 2015, we changed our name to DSG Global, Inc. and effected a one-for-three reverse stock split of our issued and outstanding common stock in anticipation of entering in a share exchange agreement with Vantage Tag Systems Inc. (“VTS”) (formerly DSG Tag Systems Inc.), a corporation incorporated under the laws of the State of Nevada on April 17, 2008 and extra provincially registered in British Columbia, Canada in 2008.

 

On April 13, 2015, we entered into a share exchange agreement with VTS and the shareholders of VTS who become parties to the agreement. Pursuant to the terms of the share exchange agreement, we agreed to acquire not less than 75% and up to 100% of the issued and outstanding common shares in the capital stock of VTS in exchange for the issuance to the selling shareholders of up to 20,000,000 shares of our common stock on the basis of 1 common share for 5.4935 common shares of VTS.

 

On May 6, 2015, we completed the acquisition of approximately 75% (82,435,748 common shares) of the issued and outstanding common shares of VTS as contemplated by the share exchange agreement by issuing 15,185,875 shares of our common stock to shareholders of VTS who became parties to the agreement. In addition, concurrent with the closing of the share exchange agreement, we issued an additional 179,823 shares of our common stock to Westergaard Holdings Ltd. in partial settlement of accrued interest on outstanding indebtedness of VTS.

 

Following the initial closing of the share exchange agreement and through October 22, 2015, we acquired an additional 101,200 shares of common stock of VTS from shareholders who became parties to the share exchange agreement and issued to these shareholders an aggregate of 18,422 shares of our common stock. Following completion of these additional purchases, DSG Global owns approximately 100% of the issued and outstanding shares of common stock of VTS. An aggregate of 4,229,384 shares of Series A Convertible Preferred Stock of VTS continues to be held by Westergaard Holdings Ltd., an affiliate of Keith Westergaard, a former member of our board of directors.

 

The reverse acquisition was accounted for as a recapitalization effected by a share exchange, wherein VTS is considered the acquirer for accounting and financial reporting purposes. The assets and liabilities of the acquired entity have been brought forward at their book value and no goodwill has been recognized. We adopted the business and operations of VTS upon the closing of the share exchange agreement.

 

21
 

 

Overview of Our Business

 

DSG Global, Inc., under the brand name Vantage Tag Systems Inc. (“VTS”), is a technology development company based in Surrey, British Columbia, Canada, engaged in the design, manufacture, and marketing of fleet management solutions for the golf industry, as well as commercial, government and military applications. Our principal activities are the sale and rental of GPS tracking devices and interfaces for golf vehicles, and related support services. We were founded by a group of individuals who have dedicated their careers to fleet management technologies and have been at the forefront of the industry’s most innovative developments, and our executive team has over 50 years of experience in the design and manufacture of wireless, GPS, and fleet tracking solutions. We have developed the TAG suite of products that we believe is the first completely modular fleet management solution for the golf industry. The TAG suite of products is currently sold and installed around the world in golf facilities and as commercial applications through a network of established distributors and partnerships with some of the most notable brands in fleet and equipment manufacture.

 

VTS is giving fleet operator’s new capabilities to track and control their vehicles through the new INFINITY XL system and the new 3G-4G TAG. We have developed inhouse a proprietary combination of hardware and software that is marketed around the world as the INFINITY TAG system. We have primarily focused on the golf industry where the TAG system is deployed to help golf course operators manage their fleet of golf carts, turf equipment, and utility vehicles. We are a leader in the category of fleet management in the golf industry and were awarded “Best Technology of the Year” in 2010 by Boardroom magazine, a publication of the National Golf Course Owners Association. To date the TAG system is installed on vehicles around the world and has been used to monitor millions of rounds of golf.

 

The TAG system fills a void in the marketplace by offering a modular structure that allows the customer to customize their system to meet desired functionality and budget constraints. In addition to the core TAG system vehicle control functionality, which can operate independently, we offer 3 information display systems to the golf courses management and golfer — the alphanumeric TEXT and high definition 12” INFINITY XL, 10” INFINITY RM and 7” INFINITY DM— providing the operator with three display options which is unique in the industry. VTS also offers inhouse financing thru purchase or lease.

 

The primary market for our TAG system is the 40,000 golf operations worldwide. While the golf industry remains the primary focus of our sales and marketing efforts, we have completed several successful pilots of the TAG system in other markets such as agriculture and commercial fleet operations. With appropriate resources, we intend to expand our sales and marketing efforts into these new markets.

 

We are expanding our sales force in North America, which comprises the most significant portion of the golf fleet market and have developed key relationships with privately owned distributors and golf equipment manufacturers such as E-Z-GO, Yamaha and Ransomes Jacobsen to help drive sales through-out Europe, Asia, UK and many other markets worldwide Including our most recent move to New Zealand and Australia.

 

In order to successfully deliver products, increase sales, and maintain customer satisfaction, we need to have a reliable supplier of our hardware units and components at competitive prices. Presently, we source our TAG and INFINITY fleet from one fortune 200 companies in NA who has manufacturing in China and our RAPTORS from one supplier in the United Kingdom and Asia. This new relationship that has been established provides us with higher quality, newer technology at competitive pricing.

 

In addition, VTS recently engaged with a telecommunications provider to provide new technology in hardware and wireless access through-out the world therefor allowing VTS to substantially reduce cellular cost.

 

Our most recent product that is used to increase the Pace of Play on the course up to 90 minutes per round is the RAPTOR. Our 3 wheel single rider allows the course to revenue share with VTS as the RAPTOR is put on the course free of charge and then allows the course to revenue share with VTS along the way. Each seat is rented to the customers for minimum $25 per round.

 

22
 

 

Our Revenue Model

 

We derive revenue from four different sources, as follows:

 

  Systems Sales Revenue , which consists of the sales price paid by those customers who purchase or lease our TAG system hardware.
     
  Monthly Service Fees are paid by all customers for the wireless data fee charges required to operate the GPS tracking on the TAG systems.
     
  Monthly Rental Fees are paid by those customers that rent the TAG system hardware. The amount of a customer’s monthly payment varies based on the type of equipment rented (a TAG, a TAG and TEXT, or a TAG and INFINITY).
     
  Programmatic Advertising Revenue is a new source of revenue that we believe has the potential to be strategic for us in the future. We are in the process of implementing and designing software to provide advertising and other media functionality on our INFINITY.

 

We recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is reasonably assured. In instances where final acceptance of the product is specified by the customer, revenue is deferred until all acceptance criteria have been met. We accrue for warranty costs, sales returns, and other allowances based on its historical experience.

 

Our revenue recognition policies are discussed in more detail under “ Note 2 – Summary of Significant Accounting Policies ” in the notes to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

 

Cost of Revenue

 

Our cost of revenue consists primarily of hardware purchases, wireless data fees, mapping, installation costs, freight expenses and inventory adjustments.

 

  Hardware purchases. Our equipment purchases consist primarily of TAG system control units, TEXT display, and INFINITY displays. The TAG system control unit is sold as a stand-alone unit or in conjunction with our TEXT alphanumeric display or INFINITY high definition “touch activated” display. Hardware purchases also include costs of components used during installations, such as cables, mounting solutions, and other miscellaneous equipment.
     
  Wireless data fees. Our wireless data fees consist primarily of the data fees charged by outside providers of GPS tracking used in all of our TAG system control units.
     
  Mapping. Our mapping costs consist of aerial mapping, course map, geofencing, and 3D flyovers for golf courses. This cost is incurred at the time of hardware installation.
     
  Installation. Our installation costs consist primarily of costs incurred by our employed service technicians for the cost of travel, meals, and miscellaneous components required during installations. In addition, these costs also include fees paid to external contractors for installations on a project by project basis.
     
  Freight expenses and Inventory adjustments. Our freight expenses consist primarily of costs to ship hardware to courses for installations. Our inventory adjustments include inventory write offs, write downs, and other adjustments to the cost of inventory.
     
  Operating Expenses & Other Income (Expenses) We classify our operating expenses and other income (expenses) into six categories: compensation, research and development, general and administrative, warranty, foreign currency exchange, and finance costs. Our operating expenses consist primarily of sales and marketing, salaries and wages, consulting fees, professional fees, trade shows, software development, and allocated costs. Allocated costs include charges for facilities, office expenses, telephones and other miscellaneous expenses. Our other income (expenses) primarily consists of financing costs and foreign exchange gains or losses.
     
  Compensation expense. Our compensation expenses consist primarily of personnel costs, such as employee salaries, payroll expenses, and employee benefits. This includes salaries for management, administration, engineering, sales and marketing, and service support technicians. Salaries and wages directly related to projects or research and development are expensed as incurred to their operating expense category.

 

23
 

 

  General and administrative . Our general and administrative expenses consist primarily of sales and marketing, commissions, travel, trade shows, consultant fees, insurance, and compliance and other administrative functions, as well as accounting and legal professional services fees, allocated costs and other corporate expenses. Sales and marketing includes brand marketing, marketing materials, and media management.
     
  Warranty expense. Our warranty expenses consist primarily of associated material product costs, labor costs for technical support staff, and other associated overhead. Warranty costs are expensed as they are incurred.
     
  Bad debt. Our bad debt expense consists primarily of amounts written down for doubtful accounts recorded on trade receivables.
     
  Foreign currency exchange. Our foreign currency exchange consists primarily of foreign exchange fluctuations recorded in Canadian dollar (CAD), British Pounds (GBP), or Euro (EUR) at the rates of exchange in effect when the transaction occurred.
     
  Finance costs. Our finance costs consist primarily of investor interest expense, investor commission fees, and other financing charges for obtaining debt financing.

 

We expect to continue to invest in corporate infrastructure and incur additional expenses associated with being a public company, including increased legal and accounting costs, investor relations costs, higher insurance premiums and compliance costs associated with Section 404 of the Sarbanes-Oxley Act of 2002. In addition, we expect sales and marketing expenses to increase in absolute dollars in future periods. In particular, we expect to incur additional marketing costs to support the expansion of our offerings in new markets like commercial fleet management and agriculture.

 

Additional Capital

 

We require additional capital to continue to develop software and products, meet our contractual obligations, and execute our business plan. There can be no assurances that we will be able to raise additional capital on acceptable terms or at all, which would adversely affect our ability to achieve our business objectives.

 

Results of Operations

 

We recognized net income of $6,893,187 for the three-month period ended June 30, 2019, which was $2,392,177 or 53.1% more than the net income of $4,501,010 for the three-month period ended June 30, 2018. The primary reasons are attributable to the increase in gain from change in fair value of derivative liabilities, decrease in loss on extinguishment of debt and decrease in finance costs. Also contributing to this increase in gain is a decrease in loss from operations.

 

We recognized a net loss of $279,786 for the six-month period ended June 30, 2019, which was $4,041,621 or 93.5% less than the net loss of $4,321,407 for the six-month period ended June 30, 2018. The primary reasons are attributable to decrease in loss on extinguishment of debt, decrease in finance costs the increase in gain from change in fair value of derivative liabilities. Also contributing to this increase in gain is a decrease in loss from operations and increase in gain from change in fair value of derivative liabilities.

 

24
 

 

The following table summarizes key items of comparison and their related increase (decrease) for the three and six month periods June 30, 2019 and 2018:

 

    Three months ended     Increase (Decrease)     Six months ended     Increase (Decrease)  
    30-Jun-19     30-Jun-18     2019 – 2018     30-Jun-19     30-Jun-18     2019 – 2018  
    ($)     ($)     (%)     ($)     ($)     (%)  
Revenues   $ 284,646       237,046       20.1 %   $ 786,070     $ 347,942       125.9 %
Cost of revenue     32,886       79,552       -58.7 %     338,954       97,881       246.3 %
Gross profit     251,760       157,494       59.9 %     447,116       250,061       78.8 %
                                                 
Operating Expenses:                                                
Compensation expense     144,673       209,174       -30.8 %     279,756       417,802       -33.0 %
General and administrative expense     203,938       275,480       -26.0 %     431,694       633,493       -31.9 %
Warranty expense     -       46,273       -100.0 %     -       46,273       -100.0 %
Bad debt     (3,290 )     2,099       -256.7 %     (1,866 )     30,992       -106.0 %
Depreciation and amortization expense     10,900       2,220       391.0 %     20,821       8,914       133.6 %
Total operating expenses     356,221       535,246       -33.4 %     730,405       1,137,474       -35.8 %
Loss from operations     (104,461 )     (377,752 )     -72.3 %     (283,289 )     (887,413 )     -68.1 %
                                                 
Other income (expense)                                                
Foreign currency exchange     13,526       410,454       -96.7 %     31,163       (150,212 )     -120.7 %
Change in fair value of derivative liabilities     7,356,541       6,013,778       22.3 %     720,624       397,517       81.3 %
Loss on extinguishment of debt     (54,145 )     (768,964 )     -93.0       (128,254 )     (2,164,231 )     -94.1 %
Finance costs     (318,274 )     (776,506 )     -59.0 %     (620,030 )     (1,517,068 )     -59.1 %
Total other expense     6,997,648       4,878,762       43.4 %     3,503       (3,433,994 )     -100.1 %
                                                 
Provision for income taxes expense (benefit)     -       -       - %     -       -       - %
Net income (loss)     6,893,187       4,501,010       53.1 %     (279,786 )     (4,321,407 )     -93.5 %

 

Comparison of the three and six months ended June 30, 2019 and 2018:

 

Revenue

 

    For the Three Months Ended June 30,     For the Six Months Ended June 30,  
    2019     2018     % Change     2019     2018     % Change  
                                     
Revenue   $ 284,646     $ 237,046       20.1     $ 786,070       347,942       125.9  

 

Revenue increased by $47,600 or 20.1%, for the three months ended June 30, 2019 as compared to the three months ended June 30, 2018. Revenue increased by $438,128 or 125.9%, for the six months ended June 30, 2019 as compared to the three months ended June 30, 2018.

 

25
 

 

Sales increased as the result of aggressive marketing and installation of the new infinity suite of products compared to lower sales in the comparative period.

 

Cost of Revenue

 

    For the Three Months Ended June 30,     For the Six Months Ended June 30,  
    2019     2018     % Change     2019     2018     % Change  
                                     
Cost of revenue   $ 32,886     $ 79,552       (58.7 )   $ 338,954     $ 97,881       246.3  

 

Cost of revenue decreased by $46,666, or 58.7%, for the three months ended June 30, 2019 as compared to the three months June 30, 2018. The overall decrease was due to the decrease of cost of goods sold, partially offset by an increase in wireless fees. The table below outlines the differences in detail:

 

    For the Three Months Ended  
   

June 30,

2019

   

June 30,

2018

    Difference    

%

Difference

 
Cost of Goods   $ 8,576     $ 64,570     $ (55,994 )     (86.7 )
Labour     (28 )     -       (28 )     (100.0 )
Mapping & Freight Costs     (38 )     4,478       (4,516 )     (100.8 )
Wireless Fees     24,368       10,504       13,864       132.0  
Inventory Write-off/Adjustments     8       -       8       100.0  
    $ 32,886     $ 79,552     $ (46,666 )     (58.7 )

 

Cost of revenue increased by $241,073, or 246.3%, for the six months ended June 30, 2019 as compared to the six months June 30, 2018. The overall increase was due to the increase of cost of goods sold and labour, partially offset by a decrease in wireless fees. The table below outlines the differences in detail:

 

    For the Six Months Ended  
   

June 30,

2019

   

June 30,

2018

    Difference    

%

Difference

 
Cost of Goods   $ 296,270     $ 64,570     $ 231,700       358.8  
Labour     8,967       -       8,967       100.0  
Mapping & Freight Costs     12,112       5,138       6,974       135.7  
Wireless Fees     24,368       28,173       (3,805 )     (13.5 )
Inventory Write-off/Adjustments     (2,763 )     -       (2,763 )     (100.0 )
    $ 338,954     $ 97,881     $ 241,073       246.3  

 

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Compensation Expense

 

    For the Three Months Ended June 30,     For the Six Months Ended June 30,  
    2019     2018     % Change     2019     2018     % Change  
                                     
Compensation Expense   $ 144,673     $ 209,174       (30.8 )   $ 279,756     $ 417,802       (33.0 )

 

Compensation expense decreased by $64,501, or 30.8%, for the three months ended June 30, 2019 as compared to the three months ended June 30, 2018 due to a reduction in headcount and employees. Compensation expense decreased by $138,046, or 33.0%, for the six months ended June 30, 2019 as compared to the six months ended June 30, 2018 due to a reduction in headcount and employees.

 

General and Administration Expense

 

General & administration expense decreased by $71,542 or 26.0% for the three months ended June 30, 2019 compared to the three months ended June 30, 2018. The table below outlines the differences in detail:

 

    For the Three Months Ended  
   

June 30,

2019

   

June 30,

2018

    Difference    

%

Difference

 
Accounting & Legal   $ 75,534     $ 96,884     $ (21,350 )     (22.0 )
Marketing & Advertising     24,887       7,535       17,352       230.3  
Subcontractor & Commissions     36,435       64,854       (28,419 )     (43.8 )
Hardware     1,091       21,632       (20,541 )     (95.0 )
Office Expense, Rent, Software, Bank & Credit Card Charges, Telephone, Travel, & Meals     65,991       84,575       (18,584 )     (22.0 )
    $ 203,938     $ 275,480     $ (71,542 )     (26.0 )

 

The overall decrease in general and administrative expenses was primary related to a decrease in subcontractor and commissions. Also contributing to this decrease was a decrease in office expense, rent, software and other charges primarily due to a reduction in rent expense and travel and other expenses. Rent expense decreased as the Company relocating to a new office space. Travel and other expenses decreased as the Company began providing remote service and support, rather than on-site support and attended a trade show in the prior but not current period.

 

General & administration expense decreased by $201,799 or 31.9% for the six months ended June 30, 2019 compared to the three months ended June 30, 2018. The table below outlines the differences in detail:

 

    For the Six Months Ended  
   

June 30,

2019

   

June 30,

2018

    Difference    

%

Difference

 
Accounting & Legal   $ 84,855     $ 144,670     $ (59,815 )     (41.3 )
Marketing & Advertising     45,793       20,218       25,575       126.5  
Subcontractor & Commissions     127,311       121,162       6,149       5.1  
Hardware     3,814       37,240       (33,426 )     (89.8 )
Office Expense, Rent, Software, Bank & Credit Card Charges, Telephone, Travel, & Meals     169,921       310,203       (140,282 )     (45.2 )
    $ 431,694     $ 633,493     $ (201,799 )     (31.9 )

 

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The overall decrease in general and administrative expenses was primary related to a decrease in office expense, rent, software and other charges of $140,282 or 45.2% primarily due to a reduction in rent expense and travel and other expenses. Rent expense decreased as the Company relocating to a new office space. Travel and other expenses decreased as the Company began providing remote service and support, rather than on-site support and attended a trade show in the prior but not current period.

 

Foreign Currency Exchange

 

    For the Three Months Ended June 30,     For the Six Months Ended June 30,  
    2019     2018     % Change     2019     2018     % Change  
                                     
Foreign currency
exchange (gain) loss
  $ (13,526 )   $ (410,454 )     (96.7 )   $ (31,163 )   $ 150,212       (120.7 )

 

For the three months ended June 30, 2019, we recognized a $13,526 foreign exchange gain as compared to a $410,454 foreign exchange gain for the three months ended June 30, 2018. The change was primarily due to settlement of various foreign currency denominated debt instruments in the prior year as well as beneficial changes in foreign currency rates on payables, receivables and other foreign exchange transactions denominated in currencies other than the functional currencies of the legal entities in which the transactions are recorded. Foreign currency fluctuations are primarily from the Canadian Dollar, Euro and British pound.

 

For the six months ended June 30, 2019, we recognized a $31,163 foreign exchange gain as compared to a $150,212 foreign exchange loss for the six months ended June 30, 2018. The change was primarily due to settlement of various foreign currency denominated debt instruments in the prior year as well as beneficial changes in foreign currency rates on payables, receivables and other foreign exchange transactions denominated in currencies other than the functional currencies of the legal entities in which the transactions are recorded. Foreign currency fluctuations are primarily from the Canadian Dollar, Euro and British pound.

 

Unrealized (Gain) Loss on Derivative

 

    For the Three Months Ended June 30,     For the Six Months Ended June 30,  
    2019     2018     % Change     2019     2018     % Change  
                                     
Unrealized (gain) loss on derivative   $ (7,356,541 )   $ (6,013,778 )     22.3     $ (720,624 )   $ (397,517 )     81.3  

 

Derivative gain increased by $1,342,763 or 22.3%, for the three months ended June 30, 2019 as compared to the three months ended June 30, 2018 due to the change in fair value as of June 30, 2018 triggering of unrealized gains on derivative instruments in the current quarter ending on convertible notes payable. The change in fair value was impacted heavily due to the volatility in the Company’s stock price.

 

Derivative gain increased by $323,107 or 81.3%, for the six months ended June 30, 2019 as compared to the six months ended June 30, 2018 due to the change in fair value as of June 30, 2018 triggering of unrealized gains on derivative instruments in the current quarter ending on convertible notes payable. The change in fair value was impacted heavily due to the volatility in the Company’s stock price.

 

28
 

 

Finance Costs

 

    For the Three Months Ended June 30,     For the Six Months Ended June 30,  
    2019     2018     % Change     2019     2018     % Change  
                                     
Finance costs   $ 318,274     $ 776,506       (59.0 )   $ 620,030     $ 1,517,068       (59.1 )

 

Finance costs decreased by $458,232 or 59.0%, for the three months ended June 30, 2019 as compared to the three months ended June 30, 2018. Finance costs decreased due to the large number of conversions of settlement of notes in the current period and prior year.

 

Finance costs decreased by $897,038 or 59.1%, for the six months ended June 30, 2019 as compared to the six months ended June 30, 2018. Finance costs decreased due to the large number of conversions of settlement of notes in the current period and prior year.

 

Net Loss

 

    For the Three Months Ended June 30,     For the Six Months Ended June 30,  
    2019     2018     % Change     2019     2018     % Change  
                                     
Net income (loss)   $ 6,893,187     $ 4,501,010       53.1     $ (279,786 )   $ (4,321,407 )     (93.5 )

 

As a result of the above factors, net income increased by $2,392,177 or 53.1% and net loss decreased by $4,041,621 or 93.5% for the three and six months ended June 30, 2019 as compared to the three and six months ended June 30, 2018, respectively.

 

Liquidity and Capital Resources

 

From our incorporation in April 17, 2008 through June 30, 2019, we have financed our operations, capital expenditures and working capital needs through the sale of common shares and the incurrence of indebtedness, including term loans, convertible loans, revolving lines of credit and purchase order financing. At June 30, 2019, we had $7,346,720 in outstanding indebtedness, all of which matures within the next twelve months.

 

We had cash in the amount of $31,820 as of June 30, 2019, as compared to $5,059 as of December 31, 2018. We had a working capital deficit of $6,839,345 as of June 30, 2019 compared to working capital deficit of $6,687,807 as of December 31, 2018.

 

Liquidity and Financial Condition

 

Our financial position as of June 30, 2019 and 2018, and the changes for the periods then ended are as follows:

 

Working Capital

 

   

At June 30,

2019

    At December 31, 2018  
Current Assets   $ 500,121     $ 333,239  
Current Liabilities   $ 7,339,466     $ 7,021,046  
Working Capital   $ (6,839,345 )   $ (6,687,807 )

 

29
 

 

Cash Flow Analysis

 

Our cash flows from operating, investing, and financing activities are summarized as follows:

 

    June 30,  
    2019     2018  
             
Net cash used in by operating activities   $ (248,239 )   $ (991,604 )
Net cash used in investing activities     -       (1,544 )
Net cash provided by financing activities     275,000       1,003,659  
Net increase in cash     26,761       10,511  
Cash at beginning of period     5,059       5,488  
Cash at end of period   $ 31,820     $ 15,999  

 

Net Cash Used in Operating Activities. During the six months ended June 30, 2019, cash used in operations totaled $248,239. This reflects the net loss of $279,786 less $31,547 provided by changes in operating assets and liabilities and adjustments for non-cash items. Non-cash items and working capital items consisted primarily of non-cash change in fair value of derivative liabilities of $720,624, non-cash accretion of discounts on debt of $328,055 and increase in trade payables and accruals of $554,903.

 

Net Cash (Used in) Provided by Investing Activities . The Company had no investing activities in the six months ended June 30, 2019. Investing activities reduced cash by $1,544 in the six months ended June 30, 2018, related to the purchase of property, plant and equipment.

 

Net Cash Provided by Financing Activities . Net cash from financing activities during the six months ended June 30, 2019 totaled $275,000, from various note and loan facilities entered during the period. Net cash provided by financing activities during the six months ended June 30, 2018 was $1,003,659, primarily from various note and loan facilities entered during the period in addition to the issuance of shares.

 

Outstanding Indebtedness

 

Our current indebtedness as of June 30, 2019 is comprised of the following:

 

  Unsecured loan payable in the amount of $190,896 bearing interest at 15% per annum and due on demand;  
       
  Unsecured loan payable in the amount of $317,500 bearing interest at 18% per annum;  
       
  Unsecured note payable in the amount of $46,701, bearing interest at 36% per annum, matured and in default;  
       
  Unsecured loan payable in the amount of $250,000, bearing interest at 10% per annum, with a minimum interest amount of $25,000, mature and in default;  
       
  Unsecured loan payable in the amount of $250,000, bearing interest at 10% per annum, is due on demand, and convertible into common shares at $1.75 per share;  
       
  Unsecured, convertible note payable to related party in the amount of $310,000, bearing interest at 5% per annum, mature and in default;  
       
  Senior secured, convertible note payable in the amount of $245,889 interest 8% per annum. Repayable in cash or common shares at the lower of (i) twelve cents ($0.12) and (ii) the closing sales price of the Common Stock on the date of conversion;  
       
  Unsecured, convertible note payable in the amount of $81,470 interest 10% per annum. Matures on July 17, 2018. Principal is repayable in cash or common shares at the lower of (i) six cents ($0.06) (ii) 55% of the lowest trading price during the 20 Trading Days immediately preceding the date of conversion;  
       
  Unsecured, convertible promissory note in the principal amount of up to $900,000, bears interest at 12% per annum, is convertible into common shares after 180 days from issuance date at a conversion price equal to the lessor of (i) the lowest trading price during the previous fifteen trading days prior to the date of the promissory note; or (ii) 55% of the lowest trading price during the previous fifteen days prior to the latest complete trading day prior to the conversion date. As at June 30, 2019, the Company had received $665,000 from the note. $300,000 was due on September 19, 2018 and was assigned to another lender along with accrued interest on August 31, 2018. $166,667 was due on November 3, 2018 and was assigned to another lender along with accrued interest in two tranches on April 26, 2019 and May 22, 2019. $198,333 was due on November 3, 2018, $77,844 of which was assigned to another lender along with accrued interest in two tranches on June 24, 2019 and June 30, 2019. Interest will be accrued and payable at the time of promissory note repayment;  

 

30
 

 

  Unsecured, convertible note payable in the principal amount of $51,500, bears interest at 10% per annum, is due on February 8, 2019, and is convertible into common shares at a conversion price equal to the lower of (i) 32% discount off of the lowest intra-day trading price during previous (10) trading days immediately preceding a conversion date;  
       
  Unsecured, convertible note payable in the principal amount of $180,000, bears interest at 10% per annum, is due on February 28, 2019, and is convertible into common shares at a conversion price equal to the lower of (i) 32% discount off of the lowest intra-day trading price during previous (15) trading days immediately preceding a conversion date;  
       
  Unsecured, convertible note payable in the principal amount of $88,725, bears interest 10% per annum, is due on August 2, 2018, and is convertible into common shares at a conversion price equal to the lower of (i) lowest trading price during previous (25) trading days prior to the date of note or (ii) lowest trading price during previous (25) trading days prior to the date of conversion;  
       
  Unsecured, convertible promissory note in the principal amount of $100,791, bears interest at 12% per annum, is due on August 31, 2019, and is convertible into common shares at a conversion price equal to 55% of the lowest trading price during the previous fifteen trading days prior to the conversion date, including the conversion date. Interest will be accrued and payable at the time of promissory note repayment;  
       
  Unsecured, convertible note payable in the principal amount of $273,978, bears interest 12% per annum, is due on demand, and is convertible into common shares at a conversion price equal to the lower of (i) the lowest trading price during the previous fifteen trading days prior to the date of the promissory note; or (ii) 55% of the lowest trading price during the previous fifteen days prior to the latest complete trading day prior to the conversion date;  
       
  Unsecured, convertible promissory note in the principal amount of $137,500, bears interest at 12% per annum, is due on January 22, 2020, and is convertible into common shares at a conversion price equal to 55% of the lowest trading price during the previous fifteen trading days prior to the conversion date, including the conversion date. Interest will be accrued and payable at the time of promissory note repayment;  
       
  Unsecured, convertible bridge loan agreement in the principal amount of $150,000, bears interest at 4.99% per month, is due in 60 days on May 7, 2019 and is convertible into restricted common shares of the Company at the lender’s option at the market price per share less a 30% discount to market. Settlement by conversion into common shares would result in settlement for share of common stock of the Company with a fair value of $214,286;  
       
  Unsecured, convertible promissory note in the principal amount of $290,724, bears interest at 12% per annum, is convertible into common shares after 180 days from issuance date at a conversion price equal to the lessor of (i) the lowest trading price during the previous fifteen trading days prior to the date of the promissory note; or (ii) 55% of the lowest trading price during the previous fifteen days prior to the latest complete trading day prior to the conversion date. Interest will be accrued and payable at the time of promissory note repayment; and  
       
  Unsecured, convertible promissory note in the principal amount of $125,210, bears interest at 12% per annum, is due on August 31, 2019, and is convertible into common shares at a conversion price equal to 55% of the lowest trading price during the previous fifteen trading days prior to the conversion date, including the conversion date. Interest will be accrued and payable at the time of promissory note repayment.  

 

Prospective Capital Needs

 

We estimate our operating expenses and working capital requirements for the twelve-month period to be as follows:

 

Estimated Expenses for the Twelve-Month Period ending June 30, 2020
Management compensation   $ 500,000  
Professional fees   $ 150,000  
General and administrative   $ 1,900,000  
Total   $ 2,550,000  

 

As noted earlier, during the six months ended June 30, 2019, cash used in operations totaled $241,038. The relatively low level of cash used compared to our estimated working capital needs in the future was the result of an accumulation of vendor payables, customer receivables, and an increasing loan payable balance. We need to reduce the current level of payables in the near future to keep a good relationship with our vendors and expand our sales and service team to achieve our operational objectives. At present, our cash requirements for the next 12 months outweigh the funds available. Of the $2,550,000 that we require for the next 12 months, we had $39,021 in cash as of June 30, 2019 and a working capital deficit of $6,839,398. Our principal sources of liquidity are cash generated from product sales. In order to achieve sustained profitability and positive cash flows from operations, we will need to increase revenue and/or reduce operating expenses. Our ability to maintain, or increase, current revenue levels to achieve and sustain profitability will depend, in part, on demand for our products.

 

31
 

 

In order to improve our liquidity, we also plan to pursue additional equity financing from private investors or possibly a registered public offering. We do not currently have any definitive arrangements in place for the completion of any further private placement financings and there is no assurance that we will be successful in completing any further private placement financings. To help finance our day to day working capital needs, the founder and CEO of the company has made a total payment of $113,475 since late 2015. If we are unable to achieve the necessary additional financing, then we plan to reduce the amounts that we spend on our business activities and administrative expenses in order to be within the amount of capital resources obligations and execute our business plan. There can be no assurances that we will be able to raise additional capital on acceptable terms or at all, which would adversely affect our ability to achieve our business objectives.

 

Off-Balance Sheet Transactions

 

We do not have any off-balance sheet arrangements.

 

Critical Accounting Policies and Estimates

 

We prepare our consolidated financial statements in accordance with U.S. GAAP. The preparation of consolidated financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from the estimates made by our management. To the extent that there are differences between our estimates and actual results, our future financial statements presentation, financial condition, results of operations, and cash flows will be affected.

 

We believe that the assumptions and estimates associated with revenue recognition, foreign currency and foreign currency transactions and comprehensive loss have the greatest potential impact on our consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates. For further information on all of our significant accounting policies, see the notes to our condensed consolidated financial statements.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Not Applicable

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

The phrase “disclosure controls and procedures” refers to controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended, or the Exchange Act, such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the U.S. Securities and Exchange Commission, or SEC. Disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to our management, including our interim chief executive officer, or Interim CEO, and chief financial officer, or CFO, as appropriate to allow timely decision regarding required disclosure.

 

Our management, with the participation of our CEO and CFO, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of June 30, 2019, the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our CEO and CFO have concluded that as of September 30, 2016, our disclosure controls and procedures were designed at a reasonable assurance level and were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

 

32
 

 

Changes in Internal Control

 

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the first quarter of 2019 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

Limitations on Effectiveness of Controls and Procedures

 

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

 

PART II: OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

On June 4, 2015, a lawsuit was commenced against VTS in the Supreme Court of British Columbia, captioned Amanda McGuire v. VTS, No. S-154634, Vancouver Registry. The plaintiff alleges that a promissory note in the principal amount of $100,000 CDN issued by VTS was not converted into common shares of VTS, as asserted by VTS, and the plaintiff seeks repayment of indebtedness in the amount of $100,000 CDN plus interest and costs. An agreement was reached on August 13, 2015 between VTS and the plaintiff, pursuant to which VTS agreed to pay the plaintiff $119,700 CDN in monthly installations of $17,100 CDN, the first payment commencing on October 1, 2015, and the plaintiff agreed to exchange 101,200 shares of common stock of VTS for 18,422 shares of common stock of DSG Global, which exchange occurred on October 22, 2015. On October 17, 2016, the Supreme Court of British Columbia made an order in relating to the above discussed lawsuit from a shareholder to recover a loan of CAD$100,000. VTS was ordered to repay the remaining loan plus costs in the amount of $77,589 to the shareholder in 14 monthly payments of $5,500 each plus $589 at the 15th month, starting February 15, 2017. Negotiations have taken place and Amanda McGuire has agreed to accept $50,000 in full and final settlement.

 

On September 7, 2016, a vendor has filed a Complaint for Damage in Florida (Case Number: CACE-16-016663) to recover unpaid invoice amount of $27,335 plus interest of $4,939. The invoice was not paid due to a dispute that VTS did not think that vendor had delivered the service according to the agreement between the two parties. On May 31, 2017, the Company was ordered to repay the total invoice amount of $22,396 plus interest of $7,722 as well as costs and reasonable attorney fees incurred in this action totaling $9,971. The Company has accrued liabilities related to this matter in the financial statements. As of June 30, 2019, the Company not yet made any payments.

 

On May 24, 2017, we received a notice of default from Coastal Investment Partners LLC (“Coastal”), on three 8% convertible promissory notes issued by the Company in aggregate principal amount of $261,389 and commenced a lawsuit on June 12, 2017 in the United States District Court, Southern District of New York. Coastal alleges that the Company failed to deliver shares of common stock underlying the Coastal notes, and thus giving rise to an event of default. Coastal seeks damages in excess of $250,000 for breach of contact damages, and legal fees incurred by Coastal with respect to the lawsuit. This action is still pending. As at June 30, 2019, the principal balance and accrued interest on this convertible note is included on the consolidated balance sheet under convertible notes payable.

 

On October 10, 2017, a vendor filed a complaint for Breach of Contract with Superior Court of the State of California. The Complainant is alleging that it is contractually owed 1,848,130 of DSG’s common stock and has asked for a cash reward $270,000. In addition, a related vendor filed in the same filing a complaint for $72,000 as part of consulting agreement DSG executed. The Company believes the vendors have not performed duties required on the contractual relationships and that obligations exist.

 

33
 

 

On April 9, 2018, we received a share-reserve increase letter from JSJ Investments Inc. (“JSJ”) pursuant to the terms of a 10% convertible promissory note issued to the Company in the principal amount of $135,000. On April 24, 2018, the Company received a notice of default from JSJ for failure to comply with the share-reserve increase and on April 30, 2018 demanded payment in full of the default amount totaling $172,845. On May 7, 2018, JSJ commenced a lawsuit in the United States District Court, District of Dallas County, Texas. JSJ alleges that the Company failed to comply with the share-reserve increase letter, thus giving rise to an event of default, and failed to pay the outstanding default amount due under the terms of the note. JSJ seeks damages in excess of $200,000 but not more than $1,000,000, which consists of the principal amount of the note, default interest, and legal fees incurred by JSJ with respect to the lawsuit. This action is still pending. As at June 30, 2019, the principal balance and accrued interest on this convertible note is included on the consolidated balance sheet under convertible notes payable.

 

We may, from time to time, be party to litigation and subject to claims incident to the ordinary course of business. As our growth continues, we may become party to an increasing number of litigation matters and claims. The outcome of litigation and claims cannot be predicted with certainty, and the resolution of any future matters could materially affect our future financial position, results of operations or cash flows.

 

ITEM 1A. RISK FACTORS

 

As a smaller reporting company, we are not required to provide the information required by this item.

 

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

 

None.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not Applicable.

 

Item 5. Other Information

 

Not Applicable.

 

34
 

 

Item 6. Exhibits

 

Exhibit

Number

  Exhibit Description  

Filed

Form

  Exhibit   Filing Date   Herewith
3.1.1   Articles of Incorporation of the Registrant   SB-2   3.1   10-22-07    
                     
3.1.2   Certificate of Change of the Registrant   8-K   3.1   06-24-08    
                     
3.1.3   Articles of Merger of the Registrant   8-K   3.1   02-23-15    
                     
3.1.4   Certificate of Change of the Registrant   8-K   3.2   02-23-15    
                     
3.1.5   Certificate of Correction of the Registrant   8-K   3.3   02-23-15    
                     
3.1.6   Certificate of Change of the Registrant   8-K   3.1   03-26-19    
                     
3.1.7   Certificate of Correction of the Registrant   8-K   3.2   03-26-19    
                     
3.2.1   Bylaws of the Registrant   SB-2   3.2   10-22-07    
                     
3.2.2   Amendment No. 1 to Bylaws of the Registrant   8-K   3.2   06-19-15    
                     
4.1.2   DSG Global, Inc. 2015 Omnibus Incentive Plan   10-Q   10.3   11-16-15    
                     
10.1   Subscription Agreement / Debt Settlement, dated September 26, 2014, between DSG TAG Systems Inc. and Westergaard Holdings Ltd.   8-K   10.1   08-17-15    
                     
10.2   Addendum to Subscription Agreement / Debt Settlement, dated October 7, 2014, between DSG TAG Systems Inc. and Westergaard Holdings Ltd.   8-K   10.2   08-17-15    
                     
10.3   Second Addendum to Subscription Agreement / Debt Settlement, dated April 29, 2015, between DSG TAG Systems Inc. and Westergaard Holdings Ltd.   8-K   10.3   08-17-15    
                     
10.4   Third Addendum to Subscription Agreement / Debt Settlement, dated August 11, 2015, between DSG TAG Systems Inc. and Westergaard Holdings Ltd.   8-K   10.4   08-17-15    
                     
10.5   Letter from Westergaard Holdings Ltd., dated September 1, 2015, extending dates of redemption obligations.   8-K   10.1   09-08-15    

 

35
 

 

Exhibit

Number

  Exhibit Description  

Filed

Form

  Exhibit   Filing Date   Herewith
                     
10.6   Letter from Westergaard Holdings Ltd., dated November 10, 2015, extending dates of redemption obligations   10-Q   10.1   11-16-15    
                     
10.7   Letter from Westergaard Holdings Ltd., dated December 31, 2015, extending dates of redemption obligations   8-K   10.1   03-09-16    
                     
10.8   Convertible Note of DSG TAG Systems Inc., dated March 31, 2015, payable to Adore Creative Agency, Inc.   8-K   10.5   08-17-15    
                     
10.9   Convertible Note Agreement, dated August 25, 2015, between the Registrant and Jerry Katell, Katell Productions, LLC and Katell Properties, LLC   10-Q   10.2   11-16-15    
                     
10.10   Agreement (TAG Touch) dated February 15, 2014 between DSG TAG Systems Inc. and DSG Canadian Manufacturing Corp.   8-K   10.2   05-12-15    
                     
10.11   Loan agreement, dated October 24, 2014 between DSG TAG Systems Inc. and A.Bosa & Co (Kootenay) Ltd.   10-K   10.5   05-02-16    
                     
10.12   Lease agreement (Modified), dated January 21, 2016 and February 1, 2016 between DSG TAG Systems Inc. and Benchmark Group   10-K   10.6   05-02-16    
                     
10.13   Loan agreement, dated February 11, 2016 between DSG TAG Systems Inc. and Jeremy Yaseniuk   10-K   10.7   05-02-16    
                     
10.14   Loan agreement, dated March 31, 2016 between DSG TAG Systems Inc. and E. Gary Risler   10-K   10.8   05-02-16    
                     
10.15   Letter from Westergaard Holdings Ltd., dated April 29, 2016   10-K   10.15   05-20-16    
                     
10.16   Security purchase agreement between DSG Global Inc. and Coastal Investment Partners, dated November 7 2016   8-K   10.1   11-23-16    
                     
10.17   Letter of Resignation by Board Member Keith Westergaard   10-Q   10.17   12-16-16    
                     
21   List of Subsidiary:   10-K   21.1   05-02-16    

 

36
 

 

Exhibit

Number

  Exhibit Description   Filed Form   Exhibit   Filing Date   Herewith
31.1   Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002               X
                     
32.1#   Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002               X
                     
101*   Interactive Data File                
                     
101.INS   XBRL Instance Document               X
                     
101.SCH   XBRL Taxonomy Extension Schema Document               X
                     
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document               X
                     
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document               X
                     
101.LAB   XBRL Taxonomy Extension Label Linkbase Document               X
                     
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document               X

 

#* The information in this exhibit is furnished and deemed not filed with the Securities and Exchange Commission for purposes of section 18 of the Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of DSG Global Inc. under the Securities Act of 1933, as amended, or the Exchange Act of 1934, as amended, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

 

37
 

 

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.

 

Date: August 16, 2019 DSG Global Inc.
  (Registrant)
     
  By: /s/ Robert Silzer
    Robert Silzer
    Chief Executive Officer and Chief Financial Officer
    (Principal Executive Officer and
    Principal Financial and Accounting Officer)

 

38
 

 

DSG Global Inc (USOTC:DSGT)
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1 Year : From Nov 2018 to Nov 2019

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DSG Global Inc (USOTC:DSGT)
Intraday Stock Chart

Today : Tuesday 19 November 2019

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