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, 2017

[ ]	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.)

214 - 5455 152nd Street

Surrey, British Columbia V3S 5A5, 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 [X] No [ ]

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 21, 2017, the issuer had 38,640,656 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

	Condensed Consolidated Balance Sheets	4

	Condensed Consolidated Statements of Operations	5

	Condensed Statements of Comprehensive Loss	6

	Condensed Consolidated Statements of Stockholders’ Deficit	7

	Condensed Consolidated Statements of Cash Flows	8

	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35

Item 4.	Controls and Procedures	35

PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	36

Item 1A.	Risk Factors	36

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36

Item 3.	Defaults Upon Senior Securities	36

Item 4.	Mine Safety Disclosures	36

Item 5.	Other Information	36

Item 6.	Exhibits	37

Signatures		40

PART I: FINANCIAL INFORMATION

ITEM 1: Financial Statements (unaudited)

The accompanying unaudited consolidated interim financial statements of DSG Global Inc. as at June 30, 2017, 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, 2017 are not necessarily indicative of the results that can be expected for the year ending December 31, 2017.

DSG GLOBAL, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	June 30, 2017			December 31, 2016
		(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash	$	-		$	-
Trade receivables, net		145,258			90,038
Inventories		72,121			80,573
Funds held in trust		-			-
Prepaid expenses and deposits		64,885			56,076
TOTAL CURRENT ASSETS		282,264			226,687

NON-CURRENT ASSETS
Intangible assets, net		15,988			16,580
Fixed assets, net		2,918			4,741
Equipment on lease, net		25,522			42,763
TOTAL NON-CURRENT ASSETS		44,428			64,084

TOTAL ASSETS	$	326,692		$	290,771

LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES
Bank overdraft	$	2,986		$	5,316
Trade and other payables		2,954,662			2,568,792
Payable to related party		-			1,526
Deferred revenue		158,117			149,147
Warranty reserve		115,589			111,715
Convertible note payable to related party		310,000			339,791
Loans payable		876,630			866,269
Derivative liability		568,449			365,944
Convertible loans payable		1,596,538			1,398,961
TOTAL CURRENT LIABILITIES		6,582,971			5,807,461

Commitments and contingencies		-			-

MEZZANINE EQUITY
Redeemable Noncontrolling Interest - Preferred Shares		5,286,731			5,286,731

STOCKHOLDERS’ DEFICIT
Common stock, $0.001 par value, 125,000,000 shares authorized 37,426,236 and 30,291,187 outstanding at June 30, 2017 and December 31, 2016, respectively.		37,426			30,291
Additional paid in capital		16,542,702			15,982,222
Shares issued as deposit		(220,000	)		-
Other accumulated comprehensive income		1,082,045			1,296,652
Accumulated deficit		(27,776,111	)		(27,013,446	)
Total shareholders’ deficit attributable to DSG Global		(10,333,938	)		(9,704,281	)
Noncontrolling interest		(1,209,072	)		(1,099,140	)
TOTAL STOCKHOLDERS’ DEFICIT		(11,543,010	)		(10,803,421	)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	326,692		$	290,771

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

DSG GLOBAL, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2017 AND 2016

(UNAUDITED)

	Three Months Ended						Six Months Ended
	June 30, 2017			June 30, 2016			June 30, 2017			June 30, 2016

Revenue	$	434,202		$	482,317		$	682,472		$	737,245
Cost of revenue		135,940			140,519			205,445			235,067
Gross profit		298,262			341,798			477,027			502,178

Operating expenses
Compensation expense		231,086			187,215			420,395			383,059
Research and development expense		-			19,311			-			36,348
General and administration expense		165,472			199,877			438,459			505,796
Warranty expense		4,738			67,155			7,362			112,372
Bad debt		45,377			1,178			45,377			4,283
Depreciation and amortization expense		7,686			22,353			15,510			27,937
Total operating expenses		454,359			497,089			927,103			1,069,795
Loss from operations		(156,097	)		(155,291	)		(450,076	)		(567,617	)

Other income (expense)
Foreign currency exchange		149,943			(20,938	)		160,946			51,202
Other (expenses) income		(1,401	)		(1,053	)		(5,419	)		(1,543	)
Unrealized gains (losses) on derivative instruments, net		1,946,087			-			91,670			-
Finance costs		(339,254	)		(173,477	)		(669,718	)		(294,782	)
Total other income (expense)		1,755,375			(195,468	)		(422,521	)		(245,123	)

Loss from continuing operations before income taxes		1,599,278			(350,759	)		(872,597	)		(812,740	)

Provision for income taxes		-			-			-			-

Net income (loss)		1,599,278			(350,759	)		(872,597	)		(812,740	)

Less attributed to non-controlling interest		(267,926	)		55,586			109,932			130,147

Net income (loss) attributable to DSG Global	$	1,331,352		$	(295,173	)	$	(762,665	)	$	(682,593	)

Net income (loss) per share

Basic and Diluted:
Basic	$	0.04		$	(0.01	)	$	(0.02	)	$	(0.03	)
Diluted	$	0.04		$	(0.01	)	$	(0.02	)	$	(0.03	)

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

Basic		37,430,450			30,291,187			33,428,275			27,103,068
Diluted		37,430,450			30,291,187			33,428,275			27,103,068

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

DSG GLOBAL, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2017 AND 2016

(UNAUDITED)

	Three Months Ended						Six Months Ended
	June 30, 2017			June 30, 2016			June 30, 2017			June 30, 2016

Net income (loss)	$	1,599,278		$	(350,759	)	$	(872,597	)	$	(812,740	)
Other comprehensive income (loss)

Change in foreign currency translation adjustments		(160,775	)		33,130			(210,649	)		(167,695	)
Comprehensive income (loss)		1,438,503			(317,630	)		(1,083,246	)		(980,435	)
Less: Comprehensive income (loss) attributable to noncontrolling interest		(271,884	)		54,264			105,974			127,115

Total comprehensive income (loss) attributable to DSG Global, Inc,	$	1,166,619		$	(263,365	)	$	(977,272	)	$	(853,320	)

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

DSG GLOBAL, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(UNAUDITED)

							Equity Attributable to Common Shareholders’
					Additional		Shares Issued						Accumulated			Total Deficit Attributable						Total
	Common Stock				Paid in		As			Accumulated			Comprehensive			Common to			Noncontrolling			Stockholders’
	Shares		Amount		Capital		Deposit			Deficit			Income			Shareholders’			Interest			Deficit

Balance December 31, 2016		30,291,187	$	30,291	$	15,982,222	$	-		$	(27,013,446	)	$	1,296,652		$	(9,704,281	)	$	(1,099,140	)	$	(10,803,421	)

Shares issued for services		2,250,000		2,250		110,250		-			-			-			112,500			-			112,500
Shares issued for cash		500,000		500		49,500		-			-			-			50,000			-			50,000
Redeemable shares issued for commitment fee		550,000		550		219,450		(220,000	)		-			-			-			-			-
Shares issued on conversion of debt		3,835,049		3,835		181,280		-			-			-			185,115			-			185,115
Net (loss) for 2017		-		-		-		-			(762,665	)		(214,607	)		(977,272	)		(109,932	)		(1,087,204	)

Balance June 30, 2017		37,426,236	$	37,426	$	16,542,702	$	(220,000	)	$	(27,776,111	)	$	1,082,045		$	(10,333,938	)	$	(1,209,072	)	$	(11,543,010	)

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

DSG GLOBAL INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Six Months Ended
	June 30, 2017			June 30, 2016

Net loss attributable to the Company	$	(872,597	)	$	(812,740	)

Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		15,510			27,937
Inventory write-off		1,580			-
Depreciation included in cost of goods sold		5,216			-
Amortization on deferred financing fees		10,015			-
Interest on discount of convertible debt		328,690			-
Non-cash fair value adjustment on derivative		(91,670	)		-
Reserve for bad debt		16,140			-
Shares issued for services		112,500			-
Notes issued for services		-			(17,479	)
Unrealized foreign exchange		(52,317	)		-
(Increase) decrease in assets:
Trade receivables, net		(71,360	)		(120,144	)
Inventories		6,872			115,044
Funds held in trust		-			3,549
Prepaid expense and deposits		(8,809	)		69,008
Related party receivable		-			33,964
Other assets		-			34,058
Increase (decrease) in current liabilities:
Trade payables and accruals		387,484			250,202
Warranty reserve		3,874			-
Deferred revenue		8,970			86,974
Net cash used in operating activities		(199,902	)		(329,627	)

Cash flows from investing activities
Purchase of property, plant, and equipment		-			(2,524	)
Return of equipment on lease		-			1,173
Purchase of intangible assets		-			(823	)
Net cash used in investing activities		-			(2,174	)

Cash flows from financing activities
Bank overdraft		(2,986	)		(16,395	)
Proceeds from issuing shares		50,000			-
Payments on notes payable		-			(69,664	)
Proceeds from note payable		338,000			387,264
Repayments on related party loans payable		(11,886	)
Net cash provided by financing activities		373,128			301,205

Net increase (decrease) in cash and cash equivalents		173,226			(30,596	)

Effect of exchange rate changes on cash and cash equivalents		(173,226	)		30,596

Cash and cash equivalents at beginning of period		-			-
Cash and cash equivalents at the end of the period	$	-		$	-

Supplemental disclosures
Cash paid during the period for:
Income tax payments	$	-		$	-
Interest payments	$	22,110		$	4,039

Supplemental schedule of non-cash financing activities:
Shares issued for services	$	112,500		$	-
Shares issued for convertible notes payable	$	165,000		$	-
Shares issued for convertible related party note payable	$	19,615		$	-
Returnable shares issued for commitment fee	$	220,000		$	-
Noncontrolling interest change to mezzanine equity	$	-		$	-

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

DSG GLOBAL, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – ORGANIZATION

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 for sale to movie studios and production companies.

Previously, in anticipation of the share exchange agreement with DSG Tag Systems, Inc. (“DSG TAG”), we undertook to change our name and effect a reverse stock split of our authorized and issued common stock. Accordingly, on January 19, 2015, our board of directors approved an agreement and plan of merger to merge with our wholly-owned subsidiary DSG Global Inc., a Nevada corporation, to affect a name change from Boreal Productions Inc. to DSG Global, Inc. Our company remains the surviving company. DSG Global, Inc. was formed solely for the change of our name.

Subsequent to the closing of the share exchange agreement with DSG TAG, we have adopted the business and operations of DSG TAG.

DSG TAG was 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, DSG TAG formed DSG Tag Systems International, Ltd. in the United Kingdom (“DSG UK”). DSG UK is a wholly owned subsidiary of DSG TAG.

Note 2 – 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 (“US 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, 2016. 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, 2016 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, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017.

Principles of Consolidation

The consolidated financial statements include the accounts of DSG Global Inc. and its subsidiary DSG Tag Systems, Inc., and its wholly owned subsidiary DSG Tag Systems International, Ltd., collectively referred to as the Company. All material intercompany accounts, transactions and profits were eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles 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 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.

Exchange (Loss) Gain

During the six months ended June 30, 2017, and 2016, the transactions of the Company and its subsidiaries were denominated in foreign currencies and were recorded in Canadian dollar (CAD), or British Pounds (GBP), at the rates of exchange in effect when the transactions occurred. Exchange gains and losses are recognized for the different foreign exchange rates applied when the foreign currency assets and liabilities are settled.

Foreign Currency Translation and Comprehensive (Loss) Income

The accounts of the Company and its subsidiaries were maintained, and its financial statements were expressed, in CAD and GBP. Such financial statements were translated into United States dollars (USD) with the CAD or GBP as the functional currency. All assets and liabilities were translated at the exchange rate at the balance sheet date, stockholders’ deficit is translated at the historical rates and income statement items are translated at the average exchange rate for the period. Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of transaction. Any differences between the initially recorded amount and the settlement amount are recorded as a gain or loss on foreign currency transaction in the consolidated statements of operations. The resulting translation adjustments are reported under other comprehensive income as a component of shareholders’ equity.

Reportable Segment

The Company has one reportable segment. The Company’s activities are interrelated and each activity is dependent upon and supportive of the other. Accordingly, all significant operating decisions are based on analysis of financial products provided as a single global business.

Revenue Recognition

The Company recognizes 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. The Company accrues for warranty costs, sales returns, and other allowances based on its historical experience.

Research and Development

Research and development expenses include payroll, employee benefits, and other headcount-related expenses associated with product development. Research and development expenses also include third-party development and programming costs, localization costs incurred to translate software for international markets, and the amortization of purchased software code and services content. Such costs related to software development are included in research and development expense until the point that technological feasibility is reached. Research and development is expensed and is included in operating expenses.

Income Taxes

The Company utilizes the liability method of accounting for income tax. Under the liability method, deferred income tax assets and liabilities are provided based on the difference between the financial statements and tax basis of assets and liabilities measured by the current enacted tax rates in effect for the years in which these differences are expected to reverse.

The Company has adopted accounting standards for the accounting for uncertain income taxes. These standards provide guidance for the accounting and disclosure about uncertain tax positions taken. Management believes that all of the positions taken in its federal and states income tax returns are more likely than not to be sustained upon examination.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk are cash, accounts receivable and other receivables arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions. The Company has a diversified customer base, most of which are in Canada. The Company controls credit risk related to accounts receivable through credit approvals, credit limits and monitoring procedures. The Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited.

Risks and Uncertainties

The Company is subject to risks from, among other things, competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing customer requirements, limited operating history, foreign currency exchange rates and the volatility of public markets.

Contingencies

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and legal counsel assess such contingent liabilities, and such assessment inherently involves judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought.

If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed. Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.

Cash and Cash Equivalents

Cash and equivalents include cash in hand and cash in demand deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less. At June 30, 2017 and December 31, 2016, there were no uninsured balances for accounts in Canada, the United States, and the United Kingdom. The Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts.

Trade Receivable

All trade receivables are due thirty (30) days from the date billed. If the funds are not received within thirty (30) days the customer is contacted to arrange payment. The Company uses the allowance method to account for uncollectable trade receivables. The allowance for doubtful accounts as of June 30, 2017, and December 31, 2016 was $16,140 and $47,289, respectively.

Financing Receivables and Guarantees

The Company provides financing arrangements, including operating leases, and financed service contracts for certain qualified customers. Lease receivables primarily represent sales-type and direct-financing leases. Leases typically have two- to three-year terms and are collateralized by a security interest in the underlying assets. The Company makes an allowance for uncollectible financing receivables based on a variety of factors, including the risk rating of the portfolio, macroeconomic conditions, historical experience, and other market factors. At June 30, 2017 and December 31, 2016 management determined that there was no allowance necessary. The Company also provides financing guarantees, which are generally for various third-party financing arrangements to channel partners and other customers. The Company could be called upon to make payment under these guarantees in the event of nonpayment to the third party.

Advertising and Promotion Costs

The Company expenses all advertising costs as incurred. Advertising and promotion costs were $119,616 and $170,191 for the six months ended June 30, 2017 and 2016, respectively.

Inventory

Inventories are valued at the lower of cost (determined on a weighted average basis) or market. Management compares the cost of inventories with the market value and allowance is made to write down inventories to market value, if lower. As of June 30, 2017, and December 31, 2016, inventory only consisted of finished goods.

Fixed Assets

Fixed assets are stated at cost and depreciated using the straight-line method over the shorter of the estimated useful life of the asset or the lease term. The useful life for rental equipment was adjusted for the tag to 5 years from 10 years, and for the Touch/Text, the useful life was adjusted to 5 years from 8 years. The adjustment properly reflects the average lease term for the rental equipment and the average life of the product. The estimated useful lives of our property and equipment are generally as follows:

Rental equipment
Tag	5-year useful life
Touch/Text	5-year useful life
Office furniture and equipment	5-year useful life
Computer equipment	3-year useful life

As of June 30, 2017, and December 31, 2016, fixed assets consisted of the following:

	June 30, 2017			December 31, 2016
Furniture and equipment	$	21,560		$	20,838
Computer equipment		28,352			23,317
Accumulated Depreciation		(46,994	)		(39,414	)
	$	2,918		$	4,741

As of June 30, 2017, and December 31, 2016, leased equipment consisted of the following:

	June 30, 2017			December 31, 2016
Tags	$	127,198		$	122,935
Text		28,113			27,171
Touch		23,287			22,507
Accumulated Depreciation		(153,078	)		(129,850	)
	$	25,522		$	42,763

For the three months ended June 30, 2017 and 2016, total depreciation expense was $7,390 and $23,057 for the fixed assets and leased equipment, respectively.

For the six months ended June 30, 2017 and 2016, total depreciation expense was $14,918 and $27,345 for the fixed assets and leased equipment, respectively.

Fair Value of Financial Instruments

For certain of the Company’s financial instruments, including cash and equivalents, restricted cash, accounts receivable, accounts payable, accrued liabilities and short-term debt, the carrying amounts approximate their fair values due to their short maturities. ASC Topic 820, “ Fair Value Measurements and Disclosures ,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “ Financial Instruments ,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:

Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The Company analyzes all financial instruments with features of both liabilities and equity under ASC Topic 480, “ Distinguishing Liabilities from Equity ,” and ASC Topic 815, “ Derivatives and Hedging .”

The Company’s financial instruments consist of cash, trade receivables, trades payable, loans payable, and convertible notes payable. Other than convertible notes, the fair values of these financial instruments approximate their respective carrying values because of the short maturity of these instruments. The Company determined that the aggregate fair value of loans payable outstanding at June 30, 2017 and December 31, 2016, based on Level 2 inputs in the fair value hierarchy, was equal to their aggregate book value based on the short maturities and current borrowing rates available to the Company.

The fair value of the Company’s convertible notes is based on Level 3 inputs in the fair value hierarchy. The Company calculated the fair value of the potential derivative liability on these notes by using the Binomial method to determine the fair value of the conversion feature (see Note 7).

Debt issuance costs

The Company incurs costs in connection with debt issuances, such as commissions and professional fees. Debt issuance costs are initially recorded as a reduction of the related debt on the consolidated balance sheets, and are amortized to financing expense over the term of the respective borrowings using the effective interest method.

Any costs incurred or paid to the lender in connection with the issuance of debt represent a reduction in the proceeds received by the Company. The resulting discount is amortized as accretion expense over the term of the debt using the effective interest method.

Basic and Diluted Net Loss per Common Share

Basic and diluted net loss per share attributable to common stockholders is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Our potentially dilutive shares, which include outstanding convertible loans and notes, have not been included in the computation of diluted net loss per share attributable to common stockholders for all periods presented, as the results would be antidilutive. Such potentially dilutive shares are excluded when the effect would be to reduce net loss per share.

The following table sets forth the computation of basic and diluted earnings per share for the three and six months ended June 30, 2017 and 2016:

	Three Months Ended					Six Months Ended
	June 30, 2017		June 30, 2016			June 30, 2017			June 30, 2016

Net income (loss) attributable to DSG Global	$	1,331,352	$	(295,173	)	$	(762,665	)	$	(682,593	)

Net income (loss) per share
Basic and Diluted:
Basic	$	0.04	$	(0.01	)	$	(0.02	)	$	(0.03	)
Diluted	$	0.04	$	(0.01	)	$	(0.02	)	$	(0.03	)

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

Basic		37,430,450		30,291,187			33,428,275			27,103,068
Diluted		37,430,450		30,291,187			33,428,275			27,103,068

Intangible Assets

The Company records identifiable intangible assets at fair value on the date of acquisition and evaluates the useful life of each asset. Finite-lived intangible assets primarily consist of software development capitalized. Finite-lived intangible assets are amortized on a straight-line basis and are tested for recoverability if events or changes in circumstances indicate that their carrying amounts may not be recoverable. These intangibles have useful lives ranging from 1 to 20 years.

Stock-Based Compensation

We recognize all share-based payments to employees and to non-employee directors as compensation for service on our board of directors as compensation expense in the consolidated financial statements based on the fair values of such payments. Stock-based compensation expense recognized each period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

For share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. We record compensation expense based on the fair value of the award at the reporting date. The awards to consultants and other third-parties are then revalued, or the total compensation is recalculated based on the then current fair value, at each subsequent reporting date.

Recently Issued Accounting Pronouncements

For fiscal years beginning after December 15, 2018:

In March 2017, the Financial Accounting Standards Board (“FASB”) issued ASC 2017-08 “ Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20) – Premium Amortization on Purchased Callable Debt Securities” an amendment to shorten the amortization period for certain callable debt securities held at a premium to the earliest call date. The amendments do not require an accounting change for securities held at a discount.

For fiscal years beginning after December 15, 2018:

In July 2017, the Financial Accounting Standards Board (“FASB”) issued ASC 2017-11 “ Earnings Per Share (Topic 260), Distinguishing Liability from Equity (Topic 480), and Derivatives and Hedging (Topic 815) – (i) Accounting for Certain Financial Instruments with Down Round Features (ii) Replace of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments. ” The amendments in (i) change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features and to help clarify existing disclosure requirements. The amendments in (ii) recharacterize the indefinite deferral of certain provisions and do not have an accounting effect.

The Company is currently evaluating the impact of the above standards on their consolidated financial statements. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.

Going Concern

As reflected in the accompanying financial statements, the Company had an accumulated deficit of $27,776,111 as of June 30, 2017 and had a net loss of $762,665 for the six months ended June 30, 2017.

While the Company is attempting to grow revenues, improve margins, and lower costs, the Company’s cash position may not be sufficient to support the Company’s daily operations. Management is seeking to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to generate revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate revenues.

The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

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 3 – TRADE RECEIVABLES, NET

As of June 30, 2017 and December 31, 2016, trade receivables consist of the following:

	June 30, 2017			December 31, 2016
Trade receivables	$	161,398		$	137,327
Allowance for bad debt		(16,140	)		(47,289	)
Total trade receivables, net	$	145,258		$	90,038

Note 4 – INTANGIBLE ASSETS

Intangible assets consist of the following as of June 30, 2017 and December 31, 2016:

	June 30, 2017			December 31, 2016
Intangible Asset - Patent	$	21,253		$	21,253
Accumulated Depreciation		(5,265	)		(4,673	)
	$	15,988		$	16,580

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, 2017 and 2016, total depreciation expense was $296 and $296, respectively. For the six months ended June 30, 2017 and 2016, total depreciation expense was $592 and $592, respectively.

The following table summarizes our five-year estimated amortization of intangible assets as of June 30, 2017:

June 30,
2017	$	1,184
2018		1,184
2019		1,184
2020		1,184
2021		1,184
2022 & Thereafter		10,068
	$	15,988

Note 5 – TRADE AND OTHER PAYABLES

As of June 30, 2017 and December 31, 2016, trade and other payables consist of the following:

	June 30, 2017		December 31, 2016
Trade payables	$	981,744	$	940,722
Accrued expenses		423,260		388,331
Accrued interest		1,545,315		1,222,151
Other liabilities		4,343		17,588
Total trade and other payables	$	2,954,662	$	2,568,792

Note 6 – LOANS PAYABLE

As of June 30, 2017 and December 31, 2016, loans payable consisted of the following:

Loans Payable	June 30, 2017		December 31, 2016

Unsecured, due on demand, interest 15% per annum	$	192,649	$	186,192
Unsecured, due on demand, interest 36% per annum		47,128		45,548
Unsecured, loan payable, interest 18% per annum		317,500		317,500
Unsecured, loan payable, fee for services payable on the original loan amount of 5% by May 6, 2016, 10% payable by June 5, 2016, or 20% payable by July 5, 2016		69,353		67,029
Unsecured, loan payable, interest 10% per annum, with a minimum interest amount of $25,000, due July 22, 2016.		250,000		250,000

Total current portion	$	876,630	$	866,269

Note 7 – CONVERTIBLE NOTES

As of June 30, 2017 and December 31, 2016, convertible loans payable consisted of the following:

Convertible Notes

	June 30, 2017			December 31, 2016

Unsecured, interest 15.2% per annum, mature from February 28, 2015 to December 31, 2015. Principal is repayable in cash or Tags units. Convertible at the average closing price of the 60 days period prior to conversion date	$	948,700		$	916,905

Unsecured, interest 10% per annum. Principal plus interest repayable in cash or common shares due on demand. Convertible at the average closing price of the 60 days period prior to conversion date		250,000			250,000

Unsecured, interest 2% per month. Principal plus interest repayable in cash or common shares. Due 45 days from August 5 2016 or upon filing of registration statement, convertible at $0.27 per share ⁽⁷⁾		-			150,000

Senior secured, interest 8% per annum. Principal plus interest 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 ⁽¹⁾		245,889			261,389

Unsecured, interest 12% per annum. Matures 1 year from execution date. Principal plus interest is repayable in cash or common shares at the lower of current market price and 50% of the lowest trading price of Common Stock during the 25 Trading Days immediately preceding conversion ⁽²⁾		74,500			-

Unsecured, interest 12% per annum. Matures on October 18, 2017. Principal is repayable in cash or common shares at the lower of (i) three cents ($0.03) and (ii) 50% of the lowest trading price during the 25 Trading Days immediately preceding the date of conversion ⁽³⁾		75,000			-

Unsecured, interest 10% per annum. Matures on October 3, 2017. 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 25 Trading Days immediately preceding the date of conversion ⁽⁴⁾		110,000			-

Unsecured, interest 10% per annum. Matures on December 5, 2017. Principal is repayable in cash or common shares at the lower of (i) eight cents ($0.08) (ii) 55% of the lowest trading price during the 25 Trading Days immediately preceding the date of conversion ⁽⁵⁾		110,000			-

Less: debt discount ^(1-5)		(203,131	)		(179,333	)
Less: deferred financing fees ^(2-5)		(14,420	)		-

Total	$	1,596,538		$	1,398,961
Current portion		1,596,538			1,398,961
Long term portion	$	-		$	-

Convertible Notes to Related Party
	June 30, 2017		December 31, 2016
Unsecured, 8% annual rate for one month; if not paid in one month, 4% per month thereafter; convertible at $0.05 per share ⁽⁶⁾		-		29,791

Unsecured, interest 5% per annum, matures March 30, 2016, and is convertible at $1.25/per share	$	310,000	$	310,000

Total current portion	$	310,000	$	339,791

(1)

On November 7, 2016, we entered into a securities purchase agreement with Coastal Investment Partners (the “Lendor”). Pursuant to the agreement, the Lendor provided us with cash proceeds of $125,000 on November 10, 2016. In exchange, we issued a secured convertible promissory note in the principal amount of $138,888.89 (the “$138,888.89 Note”), inclusive of an 8% original issue discount, which bears interest at 8% per annum to the holder. The $138,888.89 Note matures six months from issuance and is convertible at the option of the holder into our common shares at a price per share that is the lower of $0.12 or the closing price of our 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 of cash proceeds of $10,000 and another secured convertible note of $75,000 in consideration of cash proceeds of $10,000. Under the agreements, the Company has the right to redeem $62,500 and $40,000 of the notes in consideration of $1 each at any time prior to the maturity date in the event that the $138,888.89 Note is exchanged or converted into a revolving credit facility with Coastal Investment, whereupon the two $10,000 convertible note balances shall be rolled into such credit facility. Discount on the notes was $116,389 and is being amortized over life of the notes.

On May 7, 2017, the Company triggered an event of default, under Section 6(a)(i) of the convertible note agreement with the Lendor dated November 7, 2016, by failing to repay the full principal amount and all accrued interest. The entire principal amount of the loan is due on demand and shall continue to accrue interest at an increased rate of 1.5% per month (18% per annum) or the maximum rate permitted under applicable law until the note is repaid in full.

On May 8, 2017, the Lendor provided conversion notice for $5,000 of the $72,500 convertible note dated November 7, 2016. The Company issued 100,000 common shares at a conversion price of $0.05 pursuant to this conversion.

On May 24, 2017, the Lendor provided conversion notice for $10,500 of the $72,500 convertible note dated November 7, 2016. The Company issued 210,000 common shares at a conversion price of $0.05 pursuant to this conversion.

On May 25, 2017, the Lendor 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 Lendor. In response, the Company received legal notification pursuant to the refusal to process further conversion notices, see note 14.

The fair market value of the potential derivative liability was $365,944, recorded as of December 31, 2016, and was calculated using the binomial method with a volatility rate of 171% and discount interest rate of 0.62%. Derivative liability applied as discount on the notes was $145,000 and is being amortized over the life of the notes. As at June 30, 2017, a derivative gain of $218,411 was recorded for the change in fair value.

(2)

On December 21, 2016, the Company entered into a convertible note agreement for the principal amount of $74,500 in consideration of cash proceeds of $72,250 received January 10, 2017. The terms are payable at the date of maturity, December 21, 2017, together with interest of 12% per annum. Interest will be accrued and payable at the time of promissory note repayment. The Holder shall have the right to convert all or any part of the outstanding and unpaid principal amount into fully paid and non-assessable shares of Common Stock at a conversion price equal to the lessor of (i) the closing sale price of the Common Stock on the Trading Day immediately preceding the Closing Date, and (ii) 50% of the lowest sale price for the Common Stock during the twenty-five (25) consecutive Trading Days immediately preceding the Conversion Date. Discounts and deferred financing fees on the note were $2,250 and $4,750, respectively, and are being amortized over life of the note.

The fair market value of the potential derivative liability was $413,937 calculated using the binomial method with a volatility rate of 255% and discount interest rate of 0.82%. Derivative liability applied as discount on the notes was $72,250 and is being amortized over the life of the notes. As at June 30, 2017, a derivative gain of $399,022 was recorded for the change in fair value.

(3)

On January 18, 2017, the Company issued a convertible promissory note in the principal amount of $75,000. The terms are payable at the date of maturity, October 18, 2017, together with interest of 12% per annum. Interest will be accrued and payable at the time of promissory note repayment. The Holder shall have the right to convert all or any part of the outstanding and unpaid principal amount into fully paid and non-assessable shares of Common Stock at a conversion price equal to the lessor of (i) 60% multiplied by the lowest Trading Price (representing a discount rate of 40%) during the previous twenty five (25) Trading Day period ending on the latest complete Trading Day prior to the date of this Note and (ii) the Variable Conversion Price which means 50% multiplied by the lowest Trading Price (representing a discount rate of 50%) during the previous twenty five (25) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. Debt issuance costs and deferred financing fees on the note were $4,750 and $2,750, respectively, and are being amortized over life of the note.

The fair market value of the potential derivative liability was $1,005,000 calculated using the binomial method with a volatility rate of 283% and discount interest rate of 0.73%. Derivative liability applied as discount on the notes was $75,000 and is being amortized over the life of the notes. As at June 30, 2017, a derivative gain of $949,250 was recorded for the change in fair value.

(4)

On April 3, 2017, the Company issued a convertible promissory note in the principal amount of $110,000. The terms are payable at the date of maturity, October 3, 2017, together with interest of 10% per annum. Interest will be accrued and payable at the time of promissory note repayment. In connection with the issuance of this convertible promissory note, the Borrower shall issue 550,000 shares of common stock as a commitment fee provided, however, these shares must be returned if the Note is fully repaid and satisfied prior to the date which is 180 days following the issuance. The Holder shall have the right to convert all or any part of the outstanding and unpaid principal amount into fully paid and non-assessable shares of Common Stock at a conversion price equal to the lessor of (i) 55% multiplied by the lowest Trading Price (representing a discount rate of 45%) during the previous twenty five (25) 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 (representing a discount rate of 50%) during the previous twenty five (25) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. Deferred financing fees on the note were $10,000 and are being amortized over the life of the note.

The fair market value of the potential derivative liability was $653,200 calculated using the binomial method with a volatility rate of 372% and discount interest rate of 0.92%. Derivative liability applied as discount on the notes was $100,000 and is being amortized over the life of the notes. As at June 30, 2017, a derivative gain of $653,200 was recorded for the change in fair value.

(5)

On June 5, 2017, the Company issued a convertible promissory note in the principal amount of $110,000. The terms are payable at the date of maturity, December 5, 2017, together with interest of 10% per annum. Interest will be accrued and payable at the time of promissory note repayment. The Holder shall have the right to convert all or any part of the outstanding and unpaid principal amount into fully paid and non-assessable shares of Common Stock at a conversion price equal to the lessor of (i) 55% multiplied by the lowest Trading Price (representing a discount rate of 45%) during the previous twenty five (25) 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 (representing a discount rate of 50%) during the previous twenty five (25) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. Deferred financing fees on the note were $7,000 and are being amortized over the life of the note.

The fair market value of the potential derivative liability was $118,600 calculated using the binomial method with a volatility rate of 362% and discount interest rate of 1.06%. Derivative liability applied as discount on the notes was $103,000 and is being amortized over the life of the notes. As at June 30, 2017, a derivative gain of $118,600 was recorded for the change in fair value.

(6)	On April 3, 2017, this related party convertible debenture and all unpaid interest and penalties was settled in cash of $45,500 CDN and the issuance of 525,049 shares of common stock pursuant to a debt settlement and subscription agreement as described in note 9.

(7)	On May 17, 2017, this convertible debenture was settled in 3,000,000 shares of common stock pursuant to a debt settlement and subscription agreement as described in note 9.

Note 8 – MEZZANINE EQUITY

DSG TAG has 150,000,000 shares of undesignated preferred stock authorized, each having a par value of $0.001 as of June 30, 2017 and December 31, 2016. DSG TAG designated 5,000,000 shares as Series A Convertible Preferred Stock (“Series A Shares”) and issued 4,309,384 Series A Shares to a company controlled by a director of DSG TAG for conversion of its debt of $5,386,731 on October 24, 2014. The Series A Shares have no general voting rights and carry a 5% per annum interest rate. Series A Shares that are converted to common shares are entitled to the same voting rights as other common shareholders. At any time on or after the issuance date any holder of Series A Shares may convert to common stock based on predetermined conversion price of $1.25 per share. The preferred shares are recorded in the consolidated financial statements as Mezzanine Equity. The Series A Shares are subject to a redemption obligation pursuant to which the Company must redeem at a price of $1.25 per share the following amounts on the following dates if it is successful in raising financing capital of $2,500,000 as of August 1, 2016, $2,500,000 as of September 1, 2016 and $5,000,000 as of October 1, 2016; 900,000 Series A Shares ($1,250,000) by May 1, 2016, an additional 900,000 Series A Shares ($1,250,000) by June 1, 2016, and the remaining 2,429,384 Series A Shares ($3,136,730) by July 1, 2016.

As of June 30, 2017, 80,000 preferred shares have been purchased by an unrelated third-party and exchanged for 80,000 shares of common stock of DSG Global, Inc.

Note 9 – STOCKHOLDERS’ DEFICIT

Common Stock

The Company has 125,000,000 shares of common stock authorized, each having a par value of $0.001, as of June 30, 2017 and December 31, 2016. According to the Share Exchange Agreement dated April 13, 2015, we agreed to acquire not less than 75% and up to 100% of the issued and outstanding common shares of DSG TAG in exchange for the issuance to the subscribing shareholders of up to 20,000,000 shares of our common stock on the basis of 1 common share of DSG Global, Inc. for 5.4935 common shares of DSG TAG. The Company also issued an additional 179,823 common shares to a director of DSG TAG to meet debt agreement obligations.

On December 23, 2016, the Company entered into an investor relations agreement with Chesapeake Group Inc., to assist the Company in all phases of investor relations including broker/dealer relations. The contract commenced on January 3, 2017 and will end on July 2, 2017. In consideration for the agreement, the Company is committed to providing 1,800,000 restricted common shares within 10 days of the agreement, plus an additional 450,000 restricted common shares representing a monthly fee of $3,750. These restricted common shares are to be issued in monthly installments of 75,000 restricted common shares on the 2nd of each month beginning on February 2, 2017 and ending on July 2, 2017. On February 15, 2017, the Company has issued 2,250,000 shares of common stock at a purchase price of $0.051 per common stock satisfying the full terms of the agreement.

On April 3, 2017, the Company entered into an agreement to issue 481,836 shares of common stock pursuant to the conversion of a $24,092 CDN convertible note balance at a conversion price of $0.05 per share of common stock. The Company also agreed to issue 43,213 shares of common stock pursuant to the conversion of interest outstanding totaling $2,161 CDN at a conversion price of $0.05 per share of common stock.

On April 6, 2017, the Company issued 550,000 shares of common stock as a commitment fee, pursuant to the terms of the convertible promissory note issued on April 3, 2017, see note 7. These shares are contingently redeemable, at the issuers control, pursuant to the agreement that the shares must be returned if the Note is fully repaid and satisfied prior to the date which is 180 days following the issuance.

On April 7, 2017, the Company issued 500,000 shares of common stock pursuant to the Securities Purchase Agreement dated March 15, 2017 at $0.10 per common share for total consideration of $50,000.

On May 4, 2017, the Company approved the conversion of a $150,000 convertible note held by Gemini Holdings, Inc with the Company. Pursuant to this conversion, on May 17, 2017, the Company issued 3,000,000 free-trading shares of common stock to settle the note at a price of $0.05 per common share.

On May 8, 2017, the Company received a notice for the conversion of $5,000 of a $72,500 convertible note held with Coastal Investment Partners. The Company issued 100,000 restricted shares of common stock pursuant to this conversion notice at a price of $0.05 per common share.

On May 8, 2017, the Company received a notice for the conversion of $10,500 of a $72,500 convertible note held with Coastal Investment Partners. The Company issued 210,000 restricted shares of common stock pursuant to this conversion notice.

There were 37,426,236 and 30,291,187 shares of common stock of the Company issued and outstanding as of June 30, 2017 and December 31, 2016, respectively. Each share of common stock is entitled to one (1) vote.

Noncontrolling Interest

Note 10 – RELATED PARTY TRANSACTIONS

On March 31, 2015 the Company entered into an agreement with a marketing firm that is owned by one of the directors of the Company. The terms included cash payment of $17,500 and a note in the amount of $310,000, with 5% interest per annum, convertible at the election of the holder into 248,000 shares of Common Stock of DSG Global, Inc. at a price of $1.25 per share, maturing on March 30, 2016. As of September 30, 2016, it was estimated that approximately 90% of the marketing services related to the agreement have been expensed in the amount of $280,000 and the remaining $30,000 is recorded as a prepaid deposit. As of June 30, 2017, the Director of the Company has filed a notice of default in regard to the related party convertible note on the financial statements of DSG TAG. The note was issued in lieu of marketing services, the note maturity date is March 31, 2016. Adore and DSG TAG are currently in arbitration in regard to this matter. (See Note 13).

On December 16, 2016, a convertible loan was received from a related party in the amount of $30,053 ($40,000 CAD). Interest is 8% annual rate for one month and 4% monthly rate thereafter if not paid in one month. The note is convertible at $0.05 per share. On April 3, 2017, this Note was settled in full, including all accrued interest and penalties, for cash of $45,500 CDN and the issuance of 525,049 shares of common stock pursuant to a debt settlement and subscription agreement as described in note 9.

Amounts due to related parties at June 30, 2017 and December 31, 2016 was $0 and $1,526, respectively. The amounts consist of advances to a director and officer of the Company. These amounts are unsecured, non-interest bearing and due on demand.

Note 11 – INCOME TAX

The following is the income tax expense reflected in the Statement of Operations for the three and six months ended June 30, 2017 and 2016.

Income Tax Expense

Three Months Ended

Six Months Ended

June 30, 2017

June 30, 2016

June 30, 2017

June 30, 2016

Current

Deferred

Total

The following are the components of income (loss) before income tax reflected in the Statement of Operations for the three and six months ended June 30, 2017 and 2016:

Component of Income (Loss) Before Income Tax and Noncontrolling Interest

	Three Months Ended						Six Months Ended
	June 30, 2017			June 30, 2016			June 30, 2017			June 30, 2016
Income (loss) before income tax and noncontrolling Interest	$	1,599,278		$	(350,759	)	$	(872,597	)	$	(812,740	)
Income Tax	$	-		$	-		$	-		$	-
Effective tax rate			%			%			%			%

Deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue and expense. In evaluating the ability to recover the deferred tax assets within the jurisdiction from which they arise, the Company considered all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In projecting future taxable income, the Company began with historical results adjusted for changes in accounting policies and incorporates assumptions including the amount of future pretax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimate the Company are using to manage the underlying businesses. In evaluating the objective evidence that historical results provide, the Company consider three years of cumulative operating income (loss).

As of June 30, 2017, the Company had net operating losses, or NOLs, of approximately $28.0 million to offset future taxable income in Canada and the United Kingdom. The deferred tax assets at June 30, 2017 were fully reserved. Management believes it is more likely than not that these assets will not be realized in the near future.

Note 12 – COMMITMENTS AND CONTINGENCIES

Lease Obligations

The Company leases offices in Canada under a renewable operating lease which originally expired on April 30, 2016, following which the term of the lease is month to month, with 30 days’ notice to terminate. If no agreement is signed, the Landlord reserves the right to terminate the Lease on March 31, 2016.

On April 7, 2016, the Company signed an additional two-month extension on the current lease with a term of May 1, 2016 to July 31, 2016. During the year ended December 31, 2016, the lease was extended and will expire on January 31, 2017.

On February 15, 2017, an additional six-month extension on the lease was signed with the term beginning on February 1, 2017 and ending on July 31, 2017.

The annual rent for the premises in Canada is approximately $66,000 CDN or $5,500 CDN a month. For the six months ended June 30, 2017 and 2016, the aggregate rental expense was $34,971 and $35,670, respectively. Rent expense included other amounts paid in Canada for warehouse storage and offices on a month-to-month or as-needed basis.

The Company signed an operating lease agreement through National Leasing for a photocopier. The lease terms are for 60 months commencing on May 22, 2015 and ending April 22, 2020 with a monthly lease payment of approximately $183.

The following table summarizes our future minimum payments under these arrangements as of June 30, 2017:

June 30:
2017	$	11,731
2018		2,200
2019		2,200
2020		917
	$	17,048

Product Warranties

The Company’s product warranty costs are part of its cost of sales based on associated material product costs, labor costs for technical support staff, and associated overhead. The products sold are generally covered by a warranty for a period of one year. As of June 30, 2017, the Company has set up a reserve for future warranty costs of $115,589. The Company’s past experience with warranty related costs was used as a basis for the reserve. Prior to December 31, 2015 the Company expensed warranty costs as incurred. The warranty expense incurred was $7,362 and $112,372 for the six months ended June 30, 2017 and 2016, respectively.

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 13 – LEGAL MATTERS

On December 30, 2012, a corporation filed an action against the Company in the United States courts claiming patent infringement. On March 8, 2013, the parties agreed to a settlement, with the Company admitting no wrongdoing, in the amount of $125,000. The settlement is to be paid over an 18-month period in equal installments of $7,500 with annual interest at a rate of 8%. The Company has accrued all liabilities related to this matter in the financial statements.

On June 4, 2015, a shareholder of the Company’s subsidiary filed a lawsuit to recover a loan of CAD$100,000 which was made on October 16, 2012 and was due on July 16, 2013 with accrued interest. A response to the claim was submitted on June 29, 2015. On August 13, 2015, a settlement was reached between both parties to pay the loan amount remaining plus interest, for a total of $119,700. In addition, the shareholder’s outstanding shares of DSG TAG were converted into 18,422 shares of common stock of DSG Global, Inc. on October 22, 2015. On February 16, 2016, a new agreement was reached after a breach of the settlement agreement dated August 13, 2015. DSG TAG defaulted on the settlement agreement and both parties agreed to new terms. DSG TAG Systems agreed to pay the plaintiff $86,780 CDN in monthly installations of $5,423.75 CDN over a period of sixteen consecutive months, the first payment commencing April 20, 2016. DSG TAG failed to make further payments after 2 scheduled payments in May and June 2016. On September 27, the shareholder filed a Subpoena to Debtor at the Supreme Court of British Columbia for a hearing on October 17, 2016.

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. DSG TAG 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. The Company has accrued liabilities related to this matter in the financial statements. As of June 30, 2017, the Company has not yet made any payments.

A Director of the Company, representing their company Adore Creative Agency Inc. (Adore) has filed a notice of default in regards to the related party convertible note on the financial statements of DSG TAG. The note was issued in lieu of marketing services, the note maturity date is March 31, 2016. Adore and DSG TAG are currently in arbitration in regards to this matter.

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. The invoice was not paid due to a dispute that DSG TAG 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, 2017, the Company not yet made any payments.

On May 31, 2017, in response to the Company’s refusal to process further conversion notices, the Company received legal notice that a lendor of the Company would be commencing all collection efforts to recover convertible loans of $245,889. The letter also served as notice of an obligation to maintain all documents and records, including electronic information.

Note 14 – SUBSEQUENT EVENTS

Management has evaluated events subsequent through August 21, 2017, for transactions and other events that may require adjustment of and/or disclosure in such financial statements.

On July 17, 2017, the Company issued a convertible promissory note in the principal amount of $135,000. The terms are payable on demand of the Holder at any time on or after the date of maturity July 17, 2018, together with interest of 10% per annum accruing daily and, after maturity, compound quarterly. The Holder shall have the right to convert all or any part of the outstanding and unpaid principal and accrued interest into fully paid and non-assessable shares of Common Stock at a conversion price equal to the lessor of (i) 55% multiplied by the lowest trading price (representing a discount rate of 45%) during the previous twenty (20) trading days to the date of a Conversion Notice; or (ii) six point one cents ($0.061). In the event that the number of shares reserved with the Transfer Agent in consideration for this note is not increased to 22,000,000 shares by November 1, 2017, the conversion price shall change ot the lower of (i) 45% multiplied by the lowest trading price (representing a discount rate of 55%) during the period thirty (30) days to the date of a conversion Notice; or (ii) six point one cents ($0.061).

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.

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 state 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 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 DSG TAG Systems Inc. and the shareholders of DSG TAG Systems 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 DSG TAG Systems 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 DSG TAG Systems.

On May 6, 2015, we completed the acquisition of approximately 75% (82,435,748 common shares) of the issued and outstanding common shares of DSG TAG Systems as contemplated by the share exchange agreement by issuing 15,185,875 shares of our common stock to shareholders of DSG TAG Systems 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 DSG TAG Systems.

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 DSG TAG Systems 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 DSG TAG Systems. An aggregate of 4,229,384 shares of Series A Convertible Preferred Stock of DSG TAG Systems 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 DSG TAG Systems 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 DSG TAG Systems upon the closing of the share exchange agreement.

Overview of Our Business

DSG Global, Inc. 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.

DSG stands for “Digital Security Guard”, which is our primary value statement giving fleet operator’s new capabilities to track and control their vehicles. We have developed a proprietary combination of hardware and software that is marketed around the world as the 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 over 8,000 vehicles and has been used to monitor over 6,000,000 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 two golfer information display systems — the alphanumeric TEXT and high definition TOUCH — providing the operator with two display options which is unique in the industry.

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 have a direct sales force in North America, which comprises the most significant portion of the golf fleet market, and have developed key relationships with distributors and golf equipment manufacturers such as E-Z-GO, Yamaha and Ransomes Jacobsen to help drive sales for the North American and worldwide markets.

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 TOUCH units from one supplier in China and our TAG units from one supplier in the United Kingdom. We have recently established a new relationship with a supplier for our TOUCH units in China to provide us with higher quality, newer technology at competitive pricing. We are also exploring the opportunity of a partnership with a US manufacturer.

In addition, DSG is currently in negotiations with a telecommunications provider to provide new technology in hardware and wireless access.

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 TOUCH).

	●	*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 TOUCH units.

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 TOUCH display tablets. The TAG system control unit is sold as a stand-alone unit or in conjunction with our TEXT alphanumeric display or TOUCH 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.

	●	*Research and development* . Our research and development expenses consist primarily of personnel costs and professional services associated with the ongoing development and maintenance of our technology.

	●	Research and development expenses include payroll, and other headcount-related expenses associated with product development. Research and development expenses also include third-party development and programming costs. Such costs related to software development are included in research and development expense until the point that technological feasibility is reached. Research and development is expensed and is included in operating expenses.

	●	*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.

	●	*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 had a net income of $1,331,352 for the three-month period ended June 30, 2017, which was $1,644,251 or 557.0% more than the net loss of $295,173 for the three-month period ended June 30, 2016. The primary reason for the net income compared to the net loss in the prior period is attributable to the $1,946,087 derivative gain recorded in the current quarter end relating to the change in fair value on convertible notes.

We had a net loss of $744,939 for the six-month period ended June 30, 2017, which was $62,346 or 9.1% more than the net loss of $682,593 for the six-month period ended June 30, 2016. The primary reason for the increase in net loss is attributable to the increase of $389,205 in finance costs in the current six months ended relating to convertible notes and partially offset by decreases in operating expenses.

The following table summarizes key items of comparison and their related increase (decrease) for the three and six-month periods ended June 30, 2017 and 2016:

	Three Months ended			Three Months ended			Increase (Decrease) 2017 from			Six Months ended			Six Months ended			Increase (Decrease) 2017 from
	30-Jun-17			30-Jun-16			2016			30-Jun-17			30-Jun-16			2016
	($)			($)			(%)			($)			($)			(%)
Revenues	$	434,202		$	482,317			-9.98	%	$	682,472		$	737,245			-7.43	%
Cost of revenue		135,940			140,519			-3.26	%		205,445			235,067			-12.60	%
Gross profit		298,262			341,798			-12.74	%		477,027			502,178			-5.01	%

Operating Expenses:
Compensation expense		231,086			187,215			23.43	%		420,395			383,059			9.75	%
Research and development expense		-			19,311			-100.00	%		-			36,348			-100.00	%
General and administrative expense		165,472			199,877			-17.21	%		438,459			505,796			-13.31	%
Warranty expense		4,738			67,155			-92.94	%		7,362			112,372			-93.45	%
Bad Debt		45,377			1,178			3,752.04	%		45,377			4,283			959.47	%
Depreciation and amortization expense		7,686			22,353			-65.62	%		15,510			27,937			-44.48	%
Total Operating Expenses		454,359			497,089			-8.60	%		927,103			1,069,745			-13.34	%
Loss from operations		(156,097	)		(155,291	)		-0.52	%		(450,076	)		(567,617	)		-20.71	%

Other Income (Expense):
Foreign currency exchange		149,943			(20,938	)		-816.13	%		160,946			51,202			214.34	%
Other (expenses) income		(1,401	)		(1,053	)		33.05	%		(5,419	)		(1,543	)		251.20	%
Unrealized gain (loss) on derivative instruments, net		1,946,087						100.00	%		91,670						100.00	%
Finance costs		(339,254	)		(173,477	)		95.56	%		(669,718	)		(294,782	)		127.19	%
Total Other Income (Expense)		1,755,375			(195,468	)		-998.04	%		(422,521	)		(245,123	)		72.37	%

Provision for income taxes expense (benefit)		-			-			-			-			-			-
Net income (loss)		1,599,278			(350,759	)		-555.95	%		(872,597	)		(812,740	)		7.36	%
Net income (loss) attributable to noncontrolling interest		(267,926	)		55,586			-582.00	%		109,932			130,147			-15.53	%
Net income (loss) attributable to DSG Global	$	1,331,352		$	(295,173	)		-551.04	%	$	(762,665	)	$	(682,593	)		11.73	%

Net income (loss) per share (basic and diluted)		0.04			(0.01	)		-500.00	%		(0.02	)		(0.03	)		-33.33	%

Comparison of the three and six months ended June 30, 2017 and 2016:

Revenue

		For the Three Months Ended June 30,						For the Six Months Ended June 30,
		2017		2016	% Change			2017		2016	% Change

Revenue	$	434,202	$	482,317	(10.0	)%	$	682,472	$	737,245	(7.4	)%

Revenue decreased by $48,115 or 10.0%, for the three months ended June 30, 2017 as compared to the three months ended June 30, 2016. Revenue decreased by $54,773, or 7.4%, for the six months ended June 30, 2017 as compared to the six months ended June 30, 2016. The decrease was primarily due to lower sales in 2017 and continued design and redevelopment of our product line.

Due to the redevelopment of our product line, it has created lower sales overall than anticipated. We have been forced to move to a 3G/4G GPS cellular device, require redevelopment of our advertising, and also software development delays in integrating the tournament software onto the TOUCH screen, all of which that has caused delays in sales. Our company along with the new sales team is aggressively building its pipeline for the next year.

Cost of Revenue

	For the Three Months Ended June 30,							For the Six Months Ended June 30,
	2017		2016		% Change			2017		2016		% Change

Cost of revenue	$	135,940	$	140,519		(3.3	)%	$	205,445	$	235,067		(12.6	)%

Cost of revenue decreased by $4,579, or 3.3%, for the three months ended June 30, 2017 as compared to the three months June 30, 2016. The table below outlines the differences in detail:

	For the Three Months Ended
	June 30, 2017		June 30, 2016		Difference			% Difference
Cost of Goods	$	56,365	$	26,312	$	30,053			114.2	%
Labour		-		-		-			0.0	%
Mapping & Freight Costs		8,845		6,797		2,048			30.1	%
Wireless Fees		69,282		83,366		(14,084	)		(16.9	)%
Inventory Write-off/Adjustments		1,448		24,044		(22,596	)		(94.0	)%
	$	135,9401	$	140,519	$	(4,578	)		(3.3	)%

For the three months ended June 30, 2017 as compared to the three months ended June 30, 2016, the overall decrease was primarily due to lower level of rental and service revenues. As a result, cost of goods increased by $30,053 for the three months ended June 30, 2017 in comparison to the three months ended June 30, 2016 while installation costs such as wireless fees decreased by $14,084 and inventory write-offs decreased by $22,596 due to higher product sales. Depreciation of $5,216 included directly in cost of goods sold related to a cancelled equipment rental agreement also contributed to the increase in cost of goods sold as the equipment was refurbished and utilized in a new installation.

Cost of revenue decreased by $29,622, or 12.6%, for the six months ended June 30, 2017 as compared to the six months June 30, 2016. The table below outlines the differences in detail:

	June 30, 2017		June 30, 2016		Difference			% Difference
Cost of Goods	$	60,029	$	48,979	$	11,050			22.6	%
Labour		81		-		81			100.0	%
Mapping & Freight Costs		10,562		10,352		210			2.0	%
Wireless Fees		133,193		149,750		(16,557	)		(11.1	)%
Inventory Write-off/Adjustments		1,580		25,986		(24,406	)		(93.9	)%
	$	205,445	$	235,067	$	(29,622	)		(12.6	)%

For the six months ended June 30, 2017 as compared to the six months ended June 30, 2016, the overall decrease was primarily due to lower level of rental and service revenues. As a result, cost of goods increased by $11,050 for the six months ended June 30, 2017 in comparison to the six months ended June 30, 2016 while installation costs such as wireless fees decreased by $16,557 and inventory write-offs decreased by $24,406 due to higher product sales.

Compensation Expense

	For the Three Months Ended June 30,							For the Six Months Ended June 30,
	2017		2016		% Change			2017		2016		% Change

Compensation Expense	$	231,086	$	187,215		23.4	%	$	420,395	$	383,059		9.7	%

Compensation expense increased by $43,871, or 23.4%, for the three months ended June 30, 2017 as compared to the three months ended June 30, 2016. Compensation expense increased by $37,336, or 9.7%, for the six months ended June 30, 2017 as compared to the six months ended June 30, 2016. The overall increase was due to the hiring of more contract workers. Subcontractor’s and contractors’ wages increased by $72,710 for the six months ending June 30, 2017.

Research and Development

	For the Three Months Ended June 30,							For the Six Months Ended June 30,
	2017		2016		% Change			2017		2016		% Change

Research and development expense	$	0	$	19,311		(100.0	)%	$	0	$	36,348		(100.0	)%

Research and development expense decreased by $19,311, or 100% for the three months ended June 30, 2017 as compared to the three months ended June 30, 2016. Research and development expense decreased by $36,348, or 100% for the six months ended June 30, 2017 as compared to the six months ended June 30, 2016. In order to reduce costs, no research and development occurred during the fiscal year.

General and Administration Expense

	For the Three Months Ended June 30,										For the Six Months Ended June 30,
	2017		2016		% Change			$ Change			2017		2016		% Change			$ Change

General & administration expense	$	165,472	$	199,877		(17.2	)%		(34,405	)	$	438,459	$	505,796		(13.3	)%		(67,337	)

General & administration expense decreased by $34,453 or 17.2% for the three months ended June 30, 2017 compared to the three months ended June 30, 2016. The table below outlines the differences in detail:

	For the Three Months Ended
	June 30, 2017		June 30, 2016		Difference			% Difference
Accounting & Legal	$	14,057	$	28,738	$	(14,681	)		(51.1	)%
Marketing & Advertising		17,395		24,713		(7,318	)		(29.6	)%
Subcontractor & Commissions		38,128		20,041		18,087			90.2	%
Hardware Design		373		412		(39	)		(9.6	)%
Office Expense, Rent, Software, Bank & Credit Card Charges, Telephone, Travel, & Meals		95,520		125,973		(30,453	)		(24.2	)%
	$	165,472	$	199,877	$	(34,405	)		(17.2	)%

For the three months ended June 30, 2017 as compared to the three months ended June 30, 2016, the overall decrease in expenses is primary related to decreases in accounting and legal of $14,681 or 51.1%. Subcontractors and commissions increased by $18,087 due to the hiring of more contract workers. Office expenses, travel, and other miscellaneous operational expenses also decreased by $30,453 or 24.2% as a result of the Company’s continuing efforts to reduce operating costs.

General & administration expense decreased by $67,337 or 13.3% for the six months ended June 30, 2017 compared to the six months ended June 30, 2016. The table below outlines the differences in detail:

	For the Six Months Ended
	June 30, 2017		June 30, 2016		Difference			% Difference
Accounting & Legal	$	25,927	$	47,772	$	(21,845	)		(45.7	)%
Marketing & Advertising		119,616		170,191		(50,575	)		(29.7	)%
Subcontractor & Commissions		81,836		44,513		37,323			83.8	%
Hardware Design		1,246		13,157		(11,911	)		(90.5	)%
Office Expense, Rent, Software, Bank & Credit Card Charges, Telephone, Travel, & Meals		209,835		230,163		(20,328	)		(8.8	)%
	$	438,459	$	505,796	$	(67,337	)		(13.3	)%

For the six months ended June 30, 2017 as compared to the six months ended June 30, 2016, the overall decrease in expenses is primary related to decreases in accounting and legal of $21,845 or 45.7%, marketing and advertising of $50,575 or 29.7%, as a result of the Company reducing operating costs. Subcontractors and commissions increased by $37,323 due to the hiring of more contract workers. Hardware design decreased by $11,911 and office and other operational expenses decreased by $20,328 both as a result of the Company’s continuing efforts to reduce operating costs.

Warranty Expense

	For the Three Months Ended June 30,							For the Six Months Ended June 30,
	2017		2016		% Change			2017		2016		% Change

Warranty Expense	$	4,738	$	67,155		(92.9	)%	$	7,362	$	112,372		(93.4	)%

Warranty expense decreased by $62,417, or 92.9% for the three months ended June 30, 2017 as compared to the three months ended June 30, 2016. The decrease in warranty expense was mostly due to the additional repairs required because of the technical issues with our touch tablets that we ordered in 2015 from a supplier in China during the quarter ended June 30, 2016.

Warranty expense decreased by $105,010 or 93.4% for the six months ended June 30, 2017 as compared to the six months ended June 30, 2016. The decrease in warranty expense was mostly due to the additional repairs required because of the technical issues with our touch tablets that we ordered in 2015 from a supplier in China during the quarter ended June 30, 2016.

As of June 30, 2017, our balance sheet included a reserve of $115,589 for future warranty costs. No reserve was used in prior periods, and warranty costs were expensed as incurred.

Foreign Currency Exchange

	For the Three Months Ended June 30,										For the Six Months Ended June 30,
	2017		2016			% Change			$ Change		2017		2016		% Change			$ Change

Foreign currency exchange gain (loss)	$	149,943	$	(20,938	)		(816.1	)%		170,881	$	160,946	$	51,202		214.3	%		109,744

For the three months ended June 30, 2017, we recognized a $149,943 gain in foreign currency transaction as compared to $20,938 in foreign currency transaction loss for the three months ended June 30, 2016. The increase in gain was primarily due to unrealized exchange gains on the change in derivative liabilities for the three months ending June 30, 2017 due to exchange rate fluctuations 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, 2017, we recognized a $160,946 gain in foreign currency transaction as compared to $51,202 in foreign currency transaction gain for the six months ended June 30, 2016. The increase in gain was due to exchange rate fluctuations 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.

Finance Costs

	F or the Three Months Ended June 30,									For the Six Months Ended June 30,
	2017		2016		% Change			$ Change		2017		2016		% Change			$ Change

Finance costs	$	339,254	$	173,477		95.6	%		165,777	$	669,718	$	294,782		127.2	%		374,936

Finance costs increased by $165,777 or 95.6%, for the three months ended June 30, 2017 as compared to the three months ended June 30, 2016. Finance costs increased by $374,936 or 127.2%, for the six months ended June 30, 2017 as compared to the six months ended June 30, 2016. The increase was primarily due to increased interest costs recorded in the current period ending on convertible notes payable.

Derivative Expense

	For the Three Months Ended June 30,							For the Six Months Ended June 30,
	2017		2016		% Change			2017		2016		% Change
Unrealized gain (loss) on derivative	$	1,946,087	$	-		100.0	%	$	91,670	$	-		100.0	%

Derivative expense increased by $1,943,087 or 100%, for the three months ended June 30, 2017 as compared to the three months ended June 30, 2016 due to the change in fair value as of June 30, 2017 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 expense increased by $91,670 or 100%, for the six months ended June 30, 2017 as compared to the six months ended June 30, 2016 due to the triggering of derivative instruments in the current quarter ending on convertible notes payable netted against the change in fair value on derivative instruments as of June 30, 2017.

Net Loss Attributable to DSG Global

	For the Three Months Ended June 30,										For the Six Months Ended June 30,
	2017		2016			% Change			$ Change		2017			2016			% Change			$ Change

Net income (loss) attributable to	$	1,331,352	$	(295,173	)		(551.0	)%		1,626,525	$	(762,665	)	$	(682,593	)		11.7	%		(80,072	)

As a result of the above factors, net income after noncontrolling interest attributable to DSG Global increased by $1,626,525 or 551.0% for the three months ended June 30, 2017 as compared to the three months ended June 30, 2016. The overall increase was primarily due to unrealized gains on derivative expense and from the change in fair value as at June 30, 2017.

As a result of the above factors, net loss after noncontrolling interest attributable to DSG Global increased by $80,072 or 11.7% for the six months ended June 30, 2017 as compared to the six months ended June 30, 2016. The overall increase was primarily due to increased finance costs and from the recording of derivative expense on convertible notes.

Liquidity and Capital Resources

From our incorporation in April 17, 2008 through June 30, 2017, 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, 2017, we had $6,558,533 in outstanding indebtedness, which all matures within the next twelve months.

We had cash in the amount of $0 as of June 30, 2017, as compared to $0 as of June 30, 2016. We had a working capital deficit of $6,278,962 as of June 30, 2017 compared to working capital deficit of $3,963,750 as of June 30, 2016.

Liquidity and Financial Condition

Our financial position as of June 30, 2017 and 2016, and the changes for the periods then ended are as follows:

Working Capital

	At June 30, 2017			At June 30, 2016
Current Assets	$	282,264		$	565,500
Current Liabilities	$	6,582,971		$	4,529,250
Working Capital	$	(6,300,707	)	$	(3,963,750	)

Cash Flow Analysis

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

	June 30,
	2017			2016

Net cash (used in) provided by operating activities	$	(199,902	)	$	(329,627	)
Net cash (used in) provided by investing activities		-			(2,174	)
Net cash provided by financing activities		373,128			301,205
Net (decrease) increase in cash		173,226			(30,596	)
Cash at beginning of period		0.00			0.00
Cash at end of period	$	0.00		$	0.00

Net Cash (Used in) Provided by Operating Activities . During the six months ended June 30, 2017, cash used in operations totaled $199,902. This reflects the net loss of $872,598 less $672,696 provided by changes in operating assets and liabilities and adjustments for non-cash items. Cash provided by working capital items was primarily impacted by interest on discount of convertible debt of $328,690, non-cash fair value adjustment on derivative of $91,670, shares issued for services of $112,500, an increase in trade receivables of $71,360 and an increase in trade payables of $387,485.

During the six months ended June 30, 2016, cash used in operations totaled $329,627. This reflects a net loss of $812,740 less $483,113 provided by changes in operating assets and liabilities and adjustments for non-cash items. Cash provided by working capital items was primarily impacted by $17,479 for notes issued for services, an increase of prepaid expense and deposits of $69,008, an increase of inventory of $115,044, an increase in trade receivables of $120,144, an increase in trade payables of $250,202, and an increase in deferred revenue of $86,974.

Net Cash (Used in) Provided by Investing Activities . Investing activities reduced cash by $0 in the six months ended June 30, 2017, and decreased cash by $2,174 for the six months ended June 30, 2016.

Net Cash (Used in) Provided by Financing Activities . Net cash from financing activities during the six months ended June 30, 2017 totaled $373,128, mostly from various note and loan facilities entered during the period. Net cash provided by financing activities during the six months ended June 30, 2016 was $301,205 from various note and loan facilities entered during the period.

Outstanding Indebtedness

Our current indebtedness as of June 30, 2017 is comprised of the following. For loans that have expired terms, we are in talks with the lenders to extend them. The company must increase revenue or raise more equity capital to meet the payment obligations.

Our current indebtedness as of June 30, 2017 is comprised of the following:

	●	Unsecured loan payable in the amount of $192,649 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 $47,128, bearing interest at 36% per annum and due on July 20, 2017;

	●	Unsecured loan payable in the amount of $69,353 fees for services payable on the original loan amount of 5% by May 6, 2016, 10% payable by June 5, 2016, or 20% payable by July 5, 2016

	●	Unsecured loan payable in the amount of $250,000, bearing interest at 10% per annum, with a minimum interest amount of $25,000, and due on July 22, 2016.

	●	Secured convertible loan payable in the amount of $948,700, bearing interest at 15.2% per annum and due on December 31, 2015;

	●	Unsecured, convertible note payable to related party in the amount of $310,000, bearing interest at 5% per annum and due on March 30, 2016;

	●	Unsecured, convertible note payable in the amount of $250,000, bearing interest at 10% per annum and due on February 25, 2016;

	●	Senior secured discount convertible notes payable in the amount of $245,889, bearing interest at 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 and due on May 7, 2017. Currently in default, due and payable on demand, and bearing interest at an increased rate of 18% per annum;

	●	Unsecured, convertible note payable in the amount of $74,500 bearing interest at 12% per annum. Repayable in cash or common shares at the lower of (i) current market price and (ii) 50% of the lowest trading price of Common Stock during the 25 Trading Days immediately preceding the date of conversion. Matures on January 3, 2018.

	●	Unsecured, convertible note payable in the amount of $75,000 bearing interest at 12% per annum. Repayable in cash or common shares at the lower of (i) three cents and (ii) 50% of the lowest trading price of Common Stock during the 25 Trading Days immediately preceding the date of conversion. Matures on October 18, 2017.

	●	Unsecured, convertible note payable in the amount of $110,000 bearing interest at 10% per annum. Repayable in cash or common shares at the lower of (i) six cents and (ii) 55% of the lowest trading price of Common Stock during the 25 Trading Days immediately preceding the date of conversion. Matures on October 3, 2017.

	●	Unsecured, convertible note payable in the amount of $110,000 bearing interest at 10% per annum. Repayable in cash or common shares at the lower of (i) eight cents and (ii) 55% of the lowest trading price of Common Stock during the 25 Trading Days immediately preceding the date of conversion. Matures on December 5, 2017.

Preferred Stock Redemption Obligations

Westergaard Holdings Ltd., an affiliate of Keith Westergaard, a former member of our board of directors, owns 4,229,384 shares (the “Series A Shares”) of Series A Convertible Preferred Stock of DSG TAG Systems. Pursuant to a Subscription / Debt Settlement Agreement dated September 26, 2014 between DSG TAG Systems and Westergaard Holdings, as amended on April 29, 2016, DSG TAG Systems has agreed that DSG Global, Inc. will complete financings for gross proceeds of at least $10 million and use a portion of the proceeds to redeem all of the Series A Shares at a price of $1.25 per share, as follows:

	●	On or before August 1, 2016, we must complete a financing for gross proceeds of at least $2.5 million and use at least $1.125 million to redeem a minimum of 900,000 Series A Shares;

	●	On or before September 1, 2016, we must complete an additional financing for gross proceeds of at least $2.5 million and use at least $1.125 million to redeem a minimum of 900,000 additional Series A Shares; and

	●	On or before October 1, 2016, we must complete an additional financing for gross proceeds of at least $5.0 million and use at least $3.14 million to redeem the remaining 2,509,384 Series A Shares.

If we fail to satisfy the above described financing and share redemption schedule, we will be in default of the subscription and Debt Settlement Agreement which would entitle the holder of the Preferred Shares to convert the Series A Convertible Preferred Shares into common shares in the capital of DSG Global at the price of $1.25 per share. As of the date of this report, these commitments have not been satisfied and we are currently negotiating an extension on the terms of this agreement.

If we fail to satisfy the above described financing and share redemption schedule, we will be in default of the Subscription and Debt Settlement Agreement which would entitle the holder of the Preferred Shares to convert the Series A Convertible Preferred Shares into common shares in the capital of DSG Global at the price of $1.25 per share.

Prospective Capital Needs

We estimate our operating expenses and working capital requirements for the twelve-month period beginning July 1, 2017 to be as follows:

Estimated Expenses for the Twelve-Month Period ending June 30, 2018
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, 2017, cash used in operations totaled $209,154. 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 $0 in cash as of June 30, 2017, and a working capital deficit of $6,278,962. 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.

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, 2017, 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.

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 2017 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 DSG TAG Systems Inc. in the Supreme Court of British Columbia, captioned Amanda McGuire v. DSG TAG Systems Inc., No. S-154634, Vancouver Registry. The plaintiff alleges that a promissory note in the principal amount of $100,000 CDN issued by DSG TAG Systems was not converted into common shares of DSG TAG Systems, as asserted by DSG TAG Systems, 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 DSG TAG Systems and the plaintiff, pursuant to which DSG TAG Systems 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 DSG Tag Systems for 18,422 shares of common stock of DSG Global, which exchange occurred on October 22, 2015.

On December 3, 2015, a second action lawsuit was commenced against DSG TAG Systems Inc. in the Supreme Court of British Columbia, captioned Amanda McGuire v. DSG TAG Systems and DSG Global Inc., No. S-1510050, Vancouver Registry. The plaintiff filed a claim for default on the settlement agreement entered in on August 13, 2015 due to non-payment. On February 20, 2016, a new agreement was reached between DSG TAG Systems and the plaintiff, pursuant to which DSG TAG Systems agreed to pay the plaintiff $86,780 CDN in monthly installations of $5,423.75 CDN over a period of sixteen consecutive months, the first payment commencing April 20, 2016.

On October 17, 2016, the Supreme Court of British Columbia made a new order after we did not make the above-mentioned payments on schedule to the shareholder per the settlement agreement. DSG TAG 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.

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 DSG TAG 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, 2017, the Company not yet made any payments.

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

On August 16, 2017, the Company issued a Convertible note in the principal amount of $110,250. Interest is accrued at 8% per annum and the note is due on August 16, 2018. The holder of the note is entitled at any time after the six month anniversary of the note to convert into shares of the Company’s common stock at a price for reach share of common stock equal to 58% of the lowest trading price of the common stock for the ten prior trading days. The Company may pay back the principle with the following penalties: <=30 days after note issuance: 115% of the sum of principal plus accrued interest; >30 days <=60 days after note issuance - 120% of the sum of principal plus accrued interest; >60 days <= 90 days after note issuance - 125% of the sum of principal plus accrued interest; >90 days <= 120 days after note issuance - 130% of the sum of principal plus accrued interest; >120 days <= 150 days after issuance of note - 135% of the sum of principal plus accrued interest; >150 days <=180 days after issuance of note - 140% of the sum of principal plus accrued interest.

The Company used the preceding securities issuances for general working capital purposes.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

Not Applicable.

Item 6. Exhibits

Exhibit		Filed		Filing
Number	Exhibit Description	Form	Exhibit	Date	Herewith

1	Agreement with LG Capital Funding LLC				X

2	Agreement with Labrys Fund, LP #1				X

3	Agreement with Labrys Fund, LP #2				X

4	Agreement with JSJ Investments Inc.				X

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

3.2.1	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	Form of the Registrant’s common stock certificate				X

4.1.2	DSG Global, Inc. 2015 Omnibus Incentive Plan	10-Q	10.3	11-13-15

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

10.6	Letter from Westergaard Holdings Ltd., dated November 10, 2015, extending dates of redemption obligations	10-Q	10.1	11-13-15

Exhibit		Filed		Filing
Number	Exhibit Description	Form	Exhibit	Date	Herewith

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	08-14-15

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	11-13-15

10.10	Agreement (TAG Touch) dated February 15, 2014 between DSG TAG Systems Inc. and DSG Canadian Manufacturing Corp.	8-K	10.1	05-06-15

10.11	Loan agreement, dated October 24, 2014 between DSG TAG Systems Inc. and A.Bosa & Co (Kootenay) Ltd.	10-K	10.11	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	10.12	05-02-16

10.13	Loan agreement, dated February 11, 2016 between DSG TAG Systems Inc. and Jeremy Yaseniuk	10-K	10.13	05-02-16

10.14	Loan agreement, dated March 31, 2016 between DSG TAG Systems Inc. and E. Gary Risler	10-K	10.14	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	10.16	11-15-16

10.17	Letter of Resignation by Board Member Keith Westergaard	10-Q	10.17	12-16-16

21.1	List of Subsidiaries	10-K	21.1	05-02-16

Exhibit		Filed		Filing
Number	Exhibit Description	Form	Exhibit	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.

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 21, 2017	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)