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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q/A
☒ |
Quarterly
Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 |
For
the quarterly period ended
March 31,
2022
or
☐ |
Transition
Report Pursuant Section 13 or 15(d) of the Securities Exchange Act
of 1934 |
For
the transition period from _____________ to
_____________.
Commission
file number
000-53988
DSG GLOBAL, INC.
(Exact
name of registrant as specified in its charter)
Nevada |
|
26-1134956 |
(State
or other jurisdiction of
incorporation
or organization)
|
|
(I.R.S.
Employer
Identification
No.)
|
207 - 15272 Croydon Drive
Surrey,
British Columbia,
V3Z 6T3,
Canada
(Address
of principal executive offices, zip code)
(604)
575-3848
(Registrant’s
telephone number, including area code)
Indicate
by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically
and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405
of Regulation S-T during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post
such files). Yes ☐
No ☒
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,”
“accelerated filer,” “smaller reporting company,” and "emerging
growth company" in Rule 12b-2 of the Exchange Act.
Large
accelerated filer |
☐ |
|
Accelerated
filer |
☐ |
Non-accelerated filer |
☒ |
|
Smaller
reporting company |
☒ |
Emerging
growth company |
☒ |
|
|
|
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes ☐
No ☒
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each classes |
|
Trading
Symbols(s) |
|
Name
of each exchange on which registered |
None |
|
N/A |
|
N/A |
As at
June 10, 2022, the issuer had
131,515,955 shares of common stock issued and
outstanding.
EXPLANATORY
NOTE
The purpose of this Amendment No. 1 (this “Amendment”) to our
Quarterly Report on Form 10-Q for the period ended March 31, 2022
(the “Form 10-Q”), as filed with the Securities and Exchange
Commission (the “SEC”) on June 14, 2022, is solely to incorporate
the hyperlink to the iXBRL data related to Form 10Q as
filed.
This
Amendment makes no other changes to the Form 10-Q as filed with the
SEC on June 14, 2022, and no attempt has been made in this
Amendment to modify or update the other disclosures presented in
the Form 10-Q. This Amendment does not reflect subsequent events
occurring after the original filing of the Form 10-Q (i.e., those
events occurring after June 14, 2022) or modify or update in any
way those disclosures that may be affected by subsequent events.
Accordingly, this Amendment should be read in conjunction with the
Form 10-Q and our other filings with the SEC.
No
other changes have been made to the Quarterly Report, except that
Part II, Item 6 of the Quarterly Report is also being amended to
refer to the updated Exhibit Index that is included herein for the
purpose of including abbreviated officer certifications that are
being filed herewith. This Form 10-Q/A speaks as of the original
filing date of the Quarterly Report and has not been updated to
reflect events occurring subsequent to the original filing
date.
DSG
GLOBAL, INC.
TABLE
OF CONTENTS
PART I: FINANCIAL INFORMATION
ITEM 1: Financial
Statements (unaudited)
The
accompanying unaudited interim condensed consolidated financial
statements of DSG Global Inc. as at March 31, 2022, 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 three-month period ended March 31, 2022, are not
necessarily indicative of the results that can be expected for the
year ending December 31, 2022.
DSG GLOBAL, INC.
CONDENSED
CONSOLIDATED
BALANCE SHEETS
AS
AT MARCH 31, 2022, AND DECEMBER 31, 2021
(Expressed
in U.S. dollars)
(UNAUDITED)
The
accompanying notes are an integral part of these unaudited interim
condensed consolidated financial statements.
DSG GLOBAL, INC.
INTERIM
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE
LOSS
FOR
THE THREE ENDED MARCH 31, 2022 AND 2021
(Expressed
in U.S. dollars)
(UNAUDITED)
The
accompanying notes are an integral part of these unaudited interim
condensed consolidated financial statements.
DSG
GLOBAL, INC.
INTERIM
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
LOSS
FOR
THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021
(Expressed
in U.S. dollars)
(UNAUDITED)
The
accompanying notes are an integral part of the unaudited interim
condensed consolidated financial statements
DSG GLOBAL, INC.
INTERIM
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’
DEFICIT
(Expressed
in U.S. dollars)
(UNAUDITED)
The
accompanying notes are an integral part of these unaudited interim
condensed consolidated financial statements.
DSG GLOBAL INC.
INTERIM
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR
THE THREE MONTHS ENDED MARCH 31, 2022, AND 2021
(Expressed
in U.S. Dollars)
(UNAUDITED)
The
accompanying notes are an integral part of these unaudited interim
condensed consolidated financial statements.
DSG GLOBAL, INC.
NOTES
TO INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Expressed
in U.S. Dollars)
(UNAUDITED)
Note
1 – ORGANIZATION
DSG
Global, Inc. (the “Company”) was incorporated under the laws of the
State of Nevada on September 24, 2007.
The
Company is a technology development company engaged in the design,
manufacture, and marketing of fleet management solutions in the
golf industry. The Company’s principal activities are the sale and
rental of GPS tracking devices and interfaces for golf vehicles and
related support services. Starting during the year ended December
31, 2021, the Company began to market low speed electric vehicles,
and e-bikes, recognizing its first sales in this space. Sales from
these product lines have not reached a level of materiality to be
disclosed as separate segments of the business. The Company also
began the start of the homologation project for electric
vehicles.
On
April 13, 2015, the Company entered into a share exchange agreement
with DSG Tag Systems Inc. (“DSG”), now a wholly-owned subsidiary of
the Company, incorporated under the laws of the State of Nevada on
April 17, 2008 and extra provincially registered in British
Columbia, Canada in 2008. In March 2011, DSG formed DSG Tag Systems
International, Ltd. in the United Kingdom (“DSG UK”). DSG UK is a
wholly owned subsidiary of DSG.
On
September 15, 2020, the Company incorporated Imperium Motor Corp.
(“Imperium”), under the laws of the State of Nevada on September
10, 2020, for which it subscribed to all authorized capital stock,
100
shares of Preferred Class A Stock, at a price of $0.001 per share.
Imperium is a wholly owned subsidiary of the Company.
On
August 12, 2021, the Company incorporated Imperium Motor of Canada
Corporation (“Imperium Canada”), under the laws of British
Columbia, Canada, for which it subscribed to all authorized capital
stock, 100
shares of Class A Voting Participating common shares, at a price of
$0.10 per share.
Imperium Canada is a wholly owned subsidiary of the
Company.
On
September 17, 2021, The Company incorporated AC Golf Carts, Inc.
(“AC Golf Carts”), under the laws of the State of Nevada, for which
it subscribed to all authorized stock,
100 common
shares at a price of $0.001
par
value per share. AC Golf Carts is a wholly owned subsidiary of the
Company.
Note
2 – GOING
CONCERN
These
unaudited interim condensed consolidated financial statements have
been prepared on a going concern basis, which implies the Company
will continue to realize its assets and discharge its liabilities
in the normal course of business. The continuation of the Company
as a going concern is dependent upon the continued financial
support from its shareholders and note holders, the ability of the
Company to obtain necessary equity financing to continue
operations, and ultimately the attainment of profitable
operations.
The
outbreak of the coronavirus, also known as “COVID-19”, has spread
across the globe and is impacting worldwide economic activity.
Conditions surrounding the coronavirus continue to rapidly evolve
and government authorities have implemented emergency measures to
mitigate the spread of the virus. The outbreak and the related
mitigation measures may have an adverse impact on global economic
conditions as well as on the Company’s business activities. The
extent to which the coronavirus may impact the Company’s business
activities will depend on future developments, such as the ultimate
geographic spread of the disease, the duration of the outbreak,
travel restrictions, business disruptions, and the effectiveness of
actions taken in Canada and other countries to contain and treat
the disease. These events are highly uncertain and as such, the
Company cannot determine their financial impact at this time. While
certain restrictions are presently in the process of being relaxed,
it is unclear when the world will return to the previous normal, if
ever. This may adversely impact the expected implementation of the
Company’s plans moving forward.
As of
March 31, 2022, the Company had working capital deficit of
$3,498,092
and had an accumulated deficit of $59,161,370since
inception. Furthermore, the Company incurred a net loss of
$1,466,675 and
used $750,481
of
cash flows for operating activities during the three months ended
March 31, 2022. These factors raise substantial doubt regarding the
Company’s ability to continue as a going concern. These unaudited
interim condensed consolidated financial statements do not include
any adjustments to the recoverability and classification of
recorded asset amounts and classification of liabilities that might
be necessary should the Company be unable to continue as a going
concern. These adjustments could be material.
Note
3 – SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
Basis of
Presentation
The
accompanying interim condensed consolidated financial statements
were prepared in conformity with generally accepted accounting
principles in the United States (“U.S. GAAP”) and with the
instructions to Form 10-Q.
Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with U.S. GAAP have been
condensed or omitted pursuant to U.S. GAAP rules and regulations
for presentation of interim financial information. Therefore, the
unaudited interim condensed 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, 2021. 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, 2021 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 three months ended March 31, 2022 are not necessarily
indicative of the results that may be expected for the year ending
December 31, 2022.
Principles of
Consolidation
The
interim condensed consolidated financial statements include the
accounts of DSG Global Inc., its subsidiary VTS, and its wholly
owned subsidiaries Imperium Motor Corp., Imperium Motor Company of
Canada Corporation, DSG UK, and AC Golf Carts, collectively
referred to as the “Company”. All intercompany accounts,
transactions and profits were eliminated in the consolidated
financial statements.
Use of
Estimates
The
preparation of interim condensed consolidated financial statements
in conformity with U.S. GAAP requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities
at the date of the interim condensed consolidated financial
statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates. Estimates and assumptions are reviewed periodically, and
the effects of revisions are reflected in the condensed
consolidated financial statements in the period they are
determined. There were no new estimates in the period.
Recently Adopted
Accounting Pronouncements
Recent
accounting pronouncements issued by 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 interim condensed consolidated financial
statements.
Significant Accounting Policies
Revenue
from Contracts with Customers
The
Company recognizes revenue when it satisfies a performance
obligation by transferring control over a product to a customer.
Revenue is measured based on the consideration the Company expects
to receive in exchange for those products. In instances where final
acceptance of the product is specified by the customer, revenue is
deferred until all acceptance criteria have been met. Revenues are
recognized under Topic 606 in a manner that reasonably
reflects the delivery of its products and services to customers in
return for expected consideration and includes the following
elements:
|
● |
executed
contracts with the Company’s customers that it believes are legally
enforceable; |
|
● |
identification
of performance obligations in the respective contract; |
|
● |
determination
of the transaction price for each performance obligation in the
respective contract; |
|
● |
allocation
the transaction price to each performance obligation;
and |
|
● |
recognition
of revenue only when the Company satisfies each performance
obligation. |
Performance
Obligations and Signification Judgments
The
Company’s revenue streams can be categorized into the following
performance obligations and recognition patterns:
1.
Sale, delivery and installation of Tag, Text and Infinity products,
along with digital mapping and customer training. The Company
recognizes revenue at a point in time when final sign-off on the
installation is obtained from the General Manager and/or Director
of Golf.
2.
Provision of internet connectivity, regular software updates,
software maintenance and basic customer support service. The
Company recognizes revenue over time, evenly over the term of the
service.
3.
Sale and delivery of Fairway Rider products. The Company recognizes
revenue at a point in time when control transfers to the
customer.
4.
Sale and delivery of Electric Vehicles. The Company recognizes
revenue at a point in time when control transfers to the
customer.
Transaction
prices for performance obligations are explicitly outlined in
relevant agreements, therefore, the Company does not believe that
significant judgments are required with respect to the
determination of the transaction price, including any variable
consideration identified.
Inventory
Inventories
are valued at the lower of cost or net realizable value. Cost is
determined using the first-in-first-out basis for finished goods.
Net realizable value is determined on the basis of anticipated
sales proceeds less the estimated selling expenses. Management
compares the cost of inventories with the net realizable value and
an allowance is made to write down inventories to net realizable
value, if lower.
Warranty
Reserve
The
Company accrues for warranty costs, sales returns, and other
allowances based on its historical experience. During the periods
ended March 31, 2022 and 2021, the Company did not provide a
warranty for any of its products sold during those periods. The
warranty reserve was $Nil
as at March 31, 2022 and March 31,2021.
Re-classification
During the period ended March 31, 2022, the Company re-classified
dividends that were accrued on its redeemable preferred shares
during the year ended December 31, 2021. An amount of $455,500 was
re-classified from additional paid in capital on common stock, to
additional paid in capital preferred stock – mezzanine equity (Note
13). This change is reflected in the interim condensed consolidated
statement of changes in stockholders’ deficit.
Note
4 – TRADE
RECEIVABLES, NET
As of
March 31, 2022, and December 31, 2021, trade receivables consist of
the following:
SCHEDULE OF TRADE
RECEIVABLES
|
|
March
31, 2022 |
|
|
December 31, 2021 |
|
Accounts receivable |
|
$ |
442,267 |
|
|
$ |
271,950 |
|
Allowance for
doubtful accounts |
|
|
(44,202 |
) |
|
|
(32,128 |
) |
Total trade
receivables, net |
|
$ |
398,065 |
|
|
$ |
239,822 |
|
Note
5 – INVENTORIES
As of
March 31, 2022, and December 31, 2021, inventories consist of the
following:
SCHEDULE OF INVENTORIES
|
|
March
31, 2022 |
|
|
December 31, 2021 |
|
Parts and accessories |
|
$ |
239,678 |
|
|
$ |
226,230 |
|
Golf carts |
|
|
229,624 |
|
|
|
158,588 |
|
E-bikes |
|
|
35,060 |
|
|
|
35,060 |
|
Electric
vehicles |
|
|
235,113 |
|
|
|
292,800 |
|
Total
inventories |
|
$ |
739,475 |
|
|
$ |
712,678 |
|
Note
6 – FIXED ASSETS AND
EQUIPMENT ON LEASE
As of
March 31, 2022, and December 31, 2021, fixed assets consisted of
the following:
SCHEDULE OF FIXED ASSETS
|
|
March 31,
2022 |
|
|
December 31,
2021 |
|
Machinery |
|
$ |
5,040 |
|
|
$ |
5,040 |
|
Furniture and equipment |
|
|
2,387 |
|
|
|
2,350 |
|
Computer equipment |
|
|
43,838 |
|
|
|
41,784 |
|
Vehicles |
|
|
19,989 |
|
|
|
28,360 |
|
Right-of-use assets |
|
|
312,544 |
|
|
|
312,410 |
|
Accumulated
depreciation |
|
|
(245,498 |
) |
|
|
(212,750 |
) |
|
|
$ |
138,300 |
|
|
$ |
177,194 |
|
For
the three months ended March 31, 2022, total depreciation expense
for fixed assets was $2,830
(March
31, 2021
- $4,816)
and is included in depreciation and amortization expense. For the
three months ended March 31, 2022, total depreciation for
right-of-use assets was $31,651
(March
31, 2021 - $27,525)
and is included in general and administration expense as operating
lease expense.
Note
7 – INTANGIBLE
ASSETS
As of
March 31, 2022, and December 31, 2021, intangible assets consist of
the following:
SCHEDULE OF INTANGIBLE
ASSETS
|
|
March
31, 2022 |
|
|
December 31, 2021 |
|
Intangible asset –
Patent |
|
$ |
22,353 |
|
|
$ |
22,353 |
|
Accumulated
amortization |
|
|
(11,056 |
) |
|
|
(10,749 |
) |
Intangible asset, net |
|
$ |
11,297 |
|
|
$ |
11,604 |
|
Patents
are amortized on a straight-line basis over their estimated useful
life of 20 years.
For the three months ended March 31, 2022, total amortization
expense for intangible assets was $307
(March
31, 2021-
$307).
Note
8 – TRADE AND OTHER
PAYABLES
As of
March 31, 2022, and December 31, 2021, trade and other payables
consist of the following:
SCHEDULE OF TRADE AND OTHER
PAYABLES
|
|
March
31, 2022 |
|
|
December 31, 2021 |
|
Accounts payable and
accrued expenses |
|
$ |
1,201,341 |
|
|
$ |
949,937 |
|
Accrued interest |
|
|
608,892 |
|
|
|
248,610 |
|
Other
liabilities |
|
|
5,858 |
|
|
|
4,051 |
|
Total
payables |
|
$ |
1,816,091 |
|
|
$ |
1,202,598 |
|
Note
9 – LOANS
PAYABLE
As of
March 31, 2022, and December 31, 2021, loans payable consisted of
the following:
SCHEDULE OF LOANS PAYABLE
|
|
March 31,
2022 |
|
|
December 31,
2021 |
|
Unsecured
loan payable in the amount of CAD$40,000, due on or before December
31, 2025(a) |
|
$ |
31,935 |
|
|
$ |
31,449 |
|
Unsecured
loan payable in the amount of CAD$40,000,due on
or before
December 31, 2025(a) |
|
$ |
31,935 |
|
|
$ |
31,449 |
|
Unsecured
loan payable in the amount of CAD$40,000,
due on or before
December 31, 2025(b) |
|
|
31,935 |
|
|
|
31,449 |
|
Unsecured
loan payable, due on
May 21, 2022, interest at
1% per annum(c) |
|
|
30,115 |
|
|
|
30,115 |
|
Secured
loan payable, due on
June 5, 2050, interest at
3.75% per annum(d) |
|
|
150,000 |
|
|
|
150,000 |
|
Unsecured
loan payable, due on
June 20, 2022, interest at
9% per annum(e) |
|
|
2,251,304 |
|
|
|
2,084,934 |
|
Preferred
F series shares issued with mandatory redemption(f) |
|
|
482,651 |
|
|
|
- |
|
|
|
|
2,977,940 |
|
|
|
2,327,947 |
|
Current
portion |
|
|
(2,827,940 |
) |
|
|
(2,115,049 |
) |
Loans payable,
Long term |
|
$ |
150,000 |
|
|
$ |
212,898 |
|
(a) |
On
April 17, 2020, the Company received a loan in the principal amount
of $31,935
(CAD$40,000)
under the Canada Emergency Business Account program. The loan is
non-interest bearing and eligible for CAD$10,000 forgiveness if
repaid by December 31, 2022. If not repaid by December 31, 2022,
the loan bears interest at
5% per annum and is due on
December 31, 2025. |
|
|
(b) |
On
April 21, 2020, the Company received a loan in the principal amount
of $31,935
(CAD$40,000)
under the Canada Emergency Business Account program. The loan is
non-interest bearing and eligible for CAD$10,000
forgiveness if repaid by December 31, 2022. If not repaid by
December 31, 2022, the loan bears interest at
5% per annum and is due on
December 31, 2025. |
|
|
(c) |
On
May 21, 2020, the Company received a loan in the principal amount
of $30,115
under the Paycheck Protection Program. The loan bears interest at
1% per annum and is due on
May 21, 2022 with payments deferred for the first six months
of the term. |
|
|
(d) |
On
June 5, 2020, the Company received a loan in the principal amount
of $150,000.
The loan bears interest at
3.75% per annum and is due on
June 5, 2050. The loan is secured by all tangible and
intangible assets of Company. Fixed payments of $731 are due monthly and begin 12
months from the date of the loan. The payments are applied against
any accrued interest before principal amounts are
repaid. |
|
|
(e) |
On
September 13, 2021, the Company entered into a securities purchase
agreement with a non-related party. Pursuant to the agreement, the
Company received cash proceeds of $2,000,000
on September 13, 2021 in exchange for the issuance of an unsecured
convertible promissory note in the principal amount of
$2,400,000,
which was inclusive of a $400,000
original issue discount and bears interest at 9%
per annum to the holder and matures June 20, 2022. If
the convertible note is not paid in full before December 12, 2021,
an additional $100,000 of guaranteed interest will be added to the
note. An additional $100,000 of guaranteed interest will be added
to the note on the 12th day of each succeeding month during which
any portion of the convertible note remains unpaid. Any
principal or interest on the convertible note that is not paid when
due or during any period of default bears interest at 24%
per annum. |
|
|
|
In the event of a default, the note is convertible at the price
that is equal to a 40% discount to the lowest trading price of the
Company’s common shares during the 30 day trading period prior to
the conversion date. |
|
|
|
During
the three months ended March 31, 2022, the Company recorded
$166,369
in interest expense including $354,000
of additional interest. As at March 31, 2022, the carrying value of
the convertible promissory note was $2,251,304
(December 31, 2021 - $2,084,935). |
|
|
(f) |
On
February 17, 2022, the Company entered into a Waiver of Conditions
(the “Waiver”) to the Share Purchase Agreement (the “SPA”) dated
December 13, 2021. The Company received two payments in the amount
of $250,000 on
each of February 28, 2022 and March 31, 2022 for
500
preferred
series F shares in total. Under the Waiver, the Company
agrees to repay these amounts, on an ongoing basis, by remitting
20% of
all gross sales back to the subscriber until such time that
the 500
shares
of the Series F Preferred Stock issued pursuant to this Waiver
agreement are redeemed in full. As these preferred F series shares
subscribed for under the Waiver are mandatorily redeemable, the two
amounts of $250,000
were
recorded as liabilities, as per ASC 480-10. Under
the original terms of the SPA, redemption of preferred F series
shares requires a
15% premium
payment on the face value. As such, a total Redemption Premium of
$75,000
will
be paid on the redemption as
part of the
20% gross sales remittance, and will be amortized as the
repayments are made. During the period ended March 31, 2022,
$3,062 was recognized, and
recorded as interest expense, included as part of the
loan. |
|
|
|
During
the three months ended March 31, 2022, the Company made required
payments in the amount of $20,411,
which was applied against the loan payable. |
|
|
|
The
total outstanding balance as at March 31, 2022 was $482,651. |
Note
10 – CONVERTIBLE
NOTES
As of
March 31, 2022, and December 31, 2021, convertible loans payable
consisted of the following:
Third Party Convertible Notes Payable
(a) |
On
March 31, 2015, the Company issued a convertible promissory note in
the principal amount of $310,000 to a company
owned by a former director of the Company for marketing services.
The note is unsecured, bears interest at 5% per annum, is
convertible at $1.25 per common
share, and is due on demand. As at March 31, 2022, the carrying
value of the convertible promissory note was $310,000 (December 31,
2021 - $310,000). |
|
|
(b) |
On
June 5, 2017, the Company issued a convertible promissory note in
the principal amount of $110,000.
As at March 31, 2022, the carrying value of the note was $9,514
(December
31, 2021 - $9,439),
relating to an outstanding penalty. |
Note
11 - LEASES
Lessor
During
the year ended December 31, 2020, the Company began financing the
lease of certain assets under rental revenue contracts with its
customers and accounts for them in accordance with ASC 842 as
outlined under “Leases” in Note 3 of the consolidated financial
statements for the year ended December 31, 2020.
During
the three months ended March 31, 2022, the Company recognized new
lease receivables of $177,893, net
of the $nil
of
leases transferred to third party management (December 31, 2021 -
$817,619 net
of $120,231 of
leases transferred to third party management). The lease receivable
reflects lease payments expected to be received over the terms of
the agreements and derecognized $97,350
(December
31, 2021 - $492,096)
in inventory related to the underlying assets, being recorded to
cost of goods sold.
SCHEDULE OF LEASE RECEIVABLES
RECOGNIZED
Lease receivable |
|
March 31,
2022 |
|
|
December 31,
2021 |
|
Balance, beginning of the period |
|
$ |
810,236 |
|
|
$ |
42,856 |
|
Additions |
|
|
177,893 |
|
|
|
937,850 |
|
Transfer to third party |
|
|
- |
|
|
|
(120,231 |
) |
Interest on lease receivables |
|
|
10,092 |
|
|
|
19,452 |
|
Receipt of payments |
|
|
(17,607 |
) |
|
|
(60,445 |
) |
Foreign
exchange |
|
|
6,183 |
|
|
|
(9,246 |
) |
Balance, end of the period |
|
|
986,797 |
|
|
|
810,236 |
|
Current portion
of lease receivables |
|
|
(169,616 |
) |
|
|
(87,020 |
) |
Long term
potion of lease receivables |
|
$ |
817,181 |
|
|
$ |
723,216 |
|
Lease
receivables are measured at the commencement date based on the
present value of future lease payments less the present value of
the unguaranteed residual asset. The Company uses the rate implicit
in the rental revenue contracts to calculate the present value of
future payments and unguaranteed residual asset at the date of
commencement.
Lessee
The
Company leases certain assets under lease agreements.
On
October 1, 2019, the Company entered into a 5-year lease agreement for a
photocopier (the “Copier Lease”). Upon recognition of the lease,
the Company recognized right-of-use assets of $8,683 and lease
liabilities of $8,683. As of March 31,
2022, the Copier Lease had a remaining term of 2.5 years.
On
July 10, 2020, the Company entered into a lease agreement for
retail, showroom and warehouse space in Fairfield, CA (the
“Fairfield Lease”). Upon initial recognition of the lease, the
Company recognized right-of-use assets of $164,114 and
lease liabilities of $156,364. The difference
between the recorded operating lease assets and lease liabilities
is due to prepaid rent deposits to be applied to first months’ rent
of $7,750. The lease included a rent-free
period with rent payments commencing on October 1, 2020. The
Fairfield Lease also included a refundable security deposit of
$7,750 which is included in prepaid
expenses and deposits at March 31, 2022. As of March 31, 2022,
Fairfield Lease had a remaining term of 0.42 years.
On
July 14, 2020, the Company entered into a lease agreement for
office space in Surrey, BC (the “Croydon Lease”). Upon initial
recognition of the lease, the Company recognized right-of-use
assets of $133,825
(CAD$175,843) and
lease liabilities of $125,014 (CAD$163,895). The difference
between the recorded operating lease assets and lease liabilities
is due to prepaid rent deposits to be applied to first months’ rent
of $8,811 (CAD$11,948). The lease included a rent-free
period with rent payments commencing on September 1, 2020. As of
March 31, 2022, the Croydon Lease had a remaining term of 1.33 years.
On
April 1, 2021, the Company entered into a lease agreement for a
credit card processing machine (the “FD 150 Lease”). Upon initial
recognition of the lease, the Company recognized right-of-use
assets of $1,018 and lease
liabilities of $1,018. As of March 31,
2022, the FD 150 Lease had a remaining term of 2.08 years.
On
June 2, 2021, the Company entered into a lease agreement for a
trailer (the “Trailer Lease”). Upon recognition of the lease, the
Company recognized right-of-use assets of $8,886
(CAD$11,016) and
lease liabilities of $8,886 (CAD$11,016). As of March 31,
2022, the Trailer Lease had a remaining term of 3.17 years.
Right-of-use
assets have been included within fixed assets, net and lease
liabilities have been included in operating lease liability on the
Company’s consolidated balance sheet.
SCHEDULE OF CONSOLIDATED BALANCE SHEET OF
LEASE
Right-of-use assets |
|
March
31, 2022 |
|
|
December 31, 2021 |
|
Cost |
|
$ |
312,545 |
|
|
$ |
312,318 |
|
Accumulated depreciation |
|
|
(202,238 |
) |
|
|
(170,530 |
) |
Foreign
exchange |
|
|
- |
|
|
|
29 |
|
Total
right-of-use assets |
|
$ |
110,307 |
|
|
$ |
141,880 |
|
Lease liability |
|
March
31, 2022 |
|
|
December 31, 2021 |
|
Current portion |
|
$ |
101,452 |
|
|
$ |
121,270 |
|
Long-term
portion |
|
|
23,942 |
|
|
|
38,696 |
|
Total lease
liability |
|
$ |
125,394 |
|
|
$ |
159,966 |
|
Lease
liabilities are measured at the commencement date based on the
present value of future lease payments. As the Company’s leases did
not provide an implicit rate, the Company used its incremental
borrowing rate based on the information available at the
commencement date in determining the present value of future
payments. The Company used a weighted average discount rate of
11.98% in
determining its lease liabilities. The discount rate was derived
from the Company’s assessment of borrowings.
Right-of-use
assets include any prepaid lease payments and exclude any lease
incentives and initial direct costs incurred. Lease expense for
minimum lease payments is recognized on a straight-line basis over
the lease term. The lease terms may include options to extend or
terminate the lase if it is reasonably certain that the Company
will exercise that option.
Lease
expense for the three months ended March 31, 2022, was $34,098
(2021
- $27,525
and
is recorded in general and administration expense).
Future
minimum lease payments to be paid by the Company as a lessee for
operating leases as of March 31, 2022, for the next three years are
as follows:
SCHEDULE OF FUTURE MINIMUM LEASE
PAYMENTS
Lease commitments and lease liability |
|
March
31, 2022 |
|
2022 |
|
$ |
88,219 |
|
2023 |
|
|
40,395 |
|
2024 |
|
|
4,650 |
|
2025 |
|
|
1,159 |
|
Total
future minimum lease payments |
|
|
134,423 |
|
Discount |
|
|
(9,029 |
) |
Total |
|
|
125,394 |
|
|
|
|
|
|
Current
portion of operating lease liabilities |
|
|
(101,452 |
) |
Long-term
portion of operating lease liabilities |
|
$ |
23,942 |
|
Note
12 – MEZZANINE
EQUITY
Authorized
5,000,000 shares
of redeemable Series C preferred shares, authorized, each having a
par value of $0.001 per share. Each
share of Series C preferred shares is convertible into shares of
common stock at a conversion rate equal to the lowest traded price
for the fifteen trading days immediately preceding the date of
conversion.
1,000,000 shares
of redeemable Series D preferred shares, authorized, each having a
par value of $0.001 per share. Each
share of Series D preferred shares is convertible into 5
shares of common stock.
5,000,000 shares
of redeemable Series E preferred shares, authorized, each having a
par value of $0.001 per share. Each
share of Series E preferred shares is convertible into 4
shares of common stock.
10,000
shares
of redeemable Series F preferred shares, authorized, each having a
par value of $0.001
per
share.
Each share of Series F preferred shares is convertible into common
stock at an amount equal to the lesser of (a) one hundred percent
of the lowest traded price for the Company’s stock for the fifteen
trading days immediately preceding the relevant Conversion and (b)
a twenty percent discount to the price of the common stock in an
offering with gross proceeds of at least
$10,000,000.
The
following table summarizes the Company’s redeemable preferred share
activities for the period ended March 31, 2022, and for the
comparative March 31, 2021 period.
SCHEDULE OF REDEEMABLE PREFERRED SHARE
ACTIVITIES
|
|
|
1 |
|
|
|
2 |
|
|
|
3 |
|
|
|
4 |
|
|
|
5 |
|
|
|
Shares |
|
|
Par |
|
|
Additional
paid in capital |
|
|
To be
issued |
|
|
Total |
|
Balance December 31, 2020 |
|
|
49,230 |
|
|
$ |
49 |
|
|
$ |
1,007,895 |
|
|
$ |
1,265,799 |
|
|
$ |
2,273,743 |
|
Issuance |
|
|
3,000 |
|
|
|
3 |
|
|
|
2,231,989 |
|
|
|
(731,991 |
) |
|
|
1,500,001 |
|
Converted for common shares |
|
|
(762 |
) |
|
|
(1 |
) |
|
|
(762,295 |
) |
|
|
- |
|
|
|
(762,296 |
) |
Accrued preferred stock dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2021 |
|
|
51,468 |
|
|
|
51 |
|
|
|
2,477,589 |
|
|
|
533,808 |
|
|
$ |
3,011,448 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance December 31, 2021 |
|
|
50,804 |
|
|
$ |
51 |
|
|
$ |
2,201,786 |
|
|
$ |
975,373 |
|
|
$ |
3,177,210 |
|
Issuance |
|
|
250 |
|
|
|
- |
|
|
|
- |
|
|
|
250,000 |
|
|
|
250,000 |
|
Converted for common shares |
|
|
(140 |
) |
|
|
- |
|
|
|
(68,319 |
) |
|
|
(33,808 |
)(2) |
|
|
(102,127 |
) |
Accrued
preferred stock dividends(1) |
|
|
- |
|
|
|
- |
|
|
|
(539,213 |
) |
|
|
83,713 |
|
|
|
(455,500 |
) |
Balance, March 31, 2022 |
|
|
50,914 |
|
|
$ |
51 |
|
|
$ |
1,594,254 |
|
|
$ |
1,275,278 |
|
|
$ |
2,896,583 |
|
|
(1) |
The
amount of $539,213
accrued against additional paid in capital includes the $455,500
of accrued dividends on redeemable preferred stock related to the
year ended December 31, 2021, and is the reclass described
above in Note 3. |
|
(2) |
$33,808
was a balance carried in the redeemable preferred shares to be
issued from prior years, but does not relate to any shares that are
required to be issued. It should have been cleared out in fiscal
2019 when the Company completed its reverse stock split. It has
been adjusted in the current quarter. |
Mezzanine Preferred Equity Transactions
During
the three months ended March 31, 2022:
|
● |
140 Series F Preferred
Shares were converted into common shares (see note 13). |
|
|
|
|
● |
On
February 7, 2022, pursuant to the December Series F SPA, the
Company received $250,000
for
the subscription of
250 Series
F preferred shares (see note 9(f)). |
|
|
|
|
● |
On
March 31, 2022, pursuant to the December Series F SPA, the Company
received $250,000
for
the subscription of
250 Series
F preferred shares (see note 9(f)). The shares were issued
subsequent to the period end on April 1, 2022. |
|
|
|
|
● |
On
January 4, 2022, pursuant to the December Series F SPA, the Company
received $250,000
for
the subscription of
250 Series
F preferred shares (see note 9(f)). The shares were not issued, and
the subscription has been recorded as shares to be
issued. |
During
the year ended December 31, 2021:
|
● |
1,512
Series C Preferred Shares were converted into common shares, see
note 14. |
|
|
|
|
● |
On
November 6, 2020, the Company received gross proceeds of $300,000
for 300 Series C
Preferred Shares in lieu of the Second Closing for the Series C
Share Purchas Agreement (the “Series C SPA”). The shares were
included in preferred shares to be issued at December 31, 2020. The
preferred shares were issued April 13, 2021. |
|
|
|
|
● |
On
December 7, 2020, the Company received gross proceeds of $200,000
for 200 Series C
Preferred Shares in lieu of the Second Closing for the Series C
SPA. The shares are included in preferred shares to be issued as at
December 31, 2020. The preferred shares were issued April 13,
2021. |
|
|
|
|
● |
On
December 23, 2020, the Company entered into a Securities Purchase
Agreement (the “Series F SPA”) whereby the Company agreed to sell
and the Purchaser agrees to purchase, in a series of closings (the
“Closings”) of at least 1,000 Series F
preferred shares at a price of $1,000 per share. The
First and Second Closings, will each be for 1,500 Preferred
Shares at a purchase price of $1,500,000, the Second Closing
which will follow the filing of the Registration Statement. Any
Additional Closings will be for the purchase of at least 1,000 Series F
preferred shares, every thirty calendar days, and shall follow the
Registration Statement being declared effective. The Company
granted 3,000,000 warrants, with a relative
fair value of $768,008, concurrently with
the execution of the Series F SPA and First Closing. The First
Closing shares were included in preferred shares to be issued at
December 31, 2020 with a relative fair value of $731,992. |
|
|
|
|
● |
On
February 4, 2021, the Company issued 1,500 Series F
preferred shares pursuant to the First Closing of the Series F SPA
with a relative fair value of $731,992.
Additionally, the Company issued 1,500 Series F
preferred shares pursuant to the Second Closing of the Series F SPA
for gross proceeds for $1,500,000. |
|
|
|
|
● |
On
June 10, 2021, pursuant to the Series F SPA, the Company received
$350,000 for the
subscription of an additional 350 Series F
preferred shares to be issued. |
|
|
|
|
● |
On
July 20, 2021, pursuant to another Securities Purchase Agreement
(the “July Series F SPA”), the Company received $400,000 for the subscription
of 400 Series F preferred
shares with a relative fair value of $138,066 and 1,180,000 warrants with a relative
fair value of $261,934 valued on the
agreement date which are recorded as obligation to issue shares and
obligation to issue warrants respectively at December 31, 2021, see
note 14. |
|
|
|
|
● |
On
August 3, 2021, 275
Series F Preferred Shares were converted into common shares, see
note 14. |
|
|
|
|
● |
On
October 22, 2021, 210
Series F Preferred Shares were converted into common shares, see
note 14. |
|
|
|
|
● |
On
November 30, 2021, 491
Series F Preferred Shares were converted into common shares, see
note 14. |
|
|
|
|
● |
On
December 14, 2021, pursuant to another Securities Purchase
Agreement (the “December Series F SPA”), the Company received
$312,000 for the
subscription of 312 Series F
preferred shares. $12,000 was
incurred as share issuance costs. |
|
|
|
|
● |
On
December 31, 2021, pursuant to the December Series F SPA, the
Company received $250,000 for the
subscription of 250 Series F
preferred shares. |
Mezzanine preferred
equity, series C and series F, carry a dividend policy which
entitles each preferred share to receive, and the Company to pay,
cumulative dividends of 10% per
annum, payable quarterly, beginning on the original issuance date
and ending on the date that such preferred shares has been
converted or redeemed. At the option of the Company, accrued
dividends can be settled in preferred shares of the same series, or
in cash. Any dividends that are not paid quarterly on the dividend
payment date shall entail a late fee, which must be paid in cash at
the rate of 18% per annum, which accrues and compounds daily from
the dividend payment date, through to and including the date of the
actual payment in full. As at March 31, 2022 the Company
recorded $83,713
in dividends to be settled in preferred shares, and $20,498 in penalty
interest.
Note
13 – PREFERRED
STOCK
Authorized
3,000,000 shares
of Series A preferred shares authorized each having a par value of
$0.001 per
share.
10,000 shares of
Series B convertible preferred shares authorized each having a par
value of $0.001 per share. Each
share of Series B convertible preferred shares is convertible into
100,000
shares of common stock.
Preferred Stock Transactions
During
the three months ended March 31, 2022:
No
preferred stock transactions took place in the three months ended
March 31, 2022.
During
the year ended December 31, 2021:
|
● |
On
October 26, 2020, the Company agreed to issue Series B preferred
shares that are convertible into 1,000,000 common
shares and 1,000,000 warrants for
investor relations services. The preferred shares were valued at
$1,340,000 based on
the fair value of the underlying common stock and included in
preferred shares to be issued at December 31, 2020. On February 17,
2021, the Company issued 100 shares of Series
B preferred shares and 1,000,000 warrants, see note 14.
1 Series B preferred
share is convertible into 100,000 shares of
common stock, which meant that only 10 shares of Series B
preferred shares should have been issued. On May 26, 2021,
50 shares of Series B
preferred shares, instead of 5 shares of Series B
preferred shares, were converted into 500,000 shares of
common stock with a fair value of $670,000. On
September 16, 2021, the Company cancelled 45 shares of Series B preferred
shares and 5 shares of Series B
preferred shares were converted into 500,000 shares of
common stock with a fair value of $670,000. |
|
|
|
|
● |
On
March 4, 2021, the Company issued an aggregate of 16 shares of
Series B preferred shares to the Company’s board of directors for
past services. These preferred shares were valued at $849,600
based on the fair value of the underlying common stock. |
|
|
|
|
● |
125 Series B preferred
shares with a fair value of $1,734,800,
were converted into common shares, inclusive of the conversion
noted above, see note 14. |
Note
14 – COMMON STOCK AND
ADDITIONAL PAID IN CAPITAL
Authorized
350,000,000 common
shares, authorized, each having a par value of $0.001 per share.
Common Stock Transactions
During
the three months ended March 31, 2022:
|
● |
The
Company issued an aggregate of 500,000 shares of common
stock to satisfy shares to be issued at December 31, 2021 for
investor relations. The shares had a fair value of $101,000 of which
$24,904 of expense was recognized
for the period, $19,647 of expense was recorded
during the year ended December 31, 2021 and $56,449 was recorded as
prepaid. |
|
|
|
|
● |
The
Company issued 160,000 shares of common
stock with a fair value of $13,760 for investor
relations services. |
|
|
|
|
● |
The
Company issued 500,000 shares
of common stock with a fair value of $47,000
for prepaid legal services. |
|
|
|
|
● |
The
Company issued 2,010,772 shares of common
stock with a fair value of $68,319 for
conversion of 140
Series F Preferred Shares. |
During
the year ended December 31, 2021:
|
● |
The
Company issued an aggregate of 8,138,975 shares of common
stock with a fair value of $1,436,044, to satisfy
shares to be issued at December 31, 2020 for debt
settlement. |
|
|
|
|
● |
The
Company issued 715,000 shares of
common stock with a fair value of $191,235 pursuant to a
legal settlement, see note 17. |
|
|
|
|
● |
The
Company issued 2,430,000 shares
of common stock with a fair value of $565,250
for consulting services. |
|
|
|
|
● |
The
Company issued 23,046,760 shares of
common stock with a fair value of $3,822,829 and share
issue costs of $2,000 for conversion of
125
Series B Preferred Shares with a fair value of $1,734,800,
conversion of 1,512
Series C Preferred Shares with a fair value of $1,462,296,
and conversion of 976
Series F Preferred Shares with a fair value of $625,803. |
|
|
|
|
● |
The
Company cancelled 1,751,288
shares of common stock which were returned to treasury due to a
duplicated issuance for share settled debt during the year ended
December 31, 2020. |
Common Stock to be Issued
Common
stock to be issued as at March 31, 2022 consists of:
None
Common
stock to be issued as at December 31, 2021 consists of:
|
● |
97,260
shares
valued at $19,647
to be
issued pursuant to a service agreement. These were issued February
11, 2022. |
Warrants
During
the three months ended March 31, 2022:
No
warrant activity took place in the three months ended March 31,
2022.
During
the year ended December 31, 2021:
|
● |
The
Company granted 1,000,000 warrants with a
contractual life of three years and exercise price of
$0.25 per share pursuant to
an investor relations agreement dated October 26, 2020. The
warrants were valued at $163,998. |
|
|
|
|
● |
The
Company granted 500,000 warrants with a
contractual life of four years and exercise price of
$1.00 per share. The warrants
were valued at $668,461. |
|
|
|
|
● |
The
Company granted 2,000,000 warrants with a
contractual life of five years and exercise price of
$0.35 per share. The warrants
were valued at $410,425. |
|
|
|
|
● |
On
July 20, 2021, pursuant to the July Series F SPA, the Company is to
issue 1,180,000 warrants with a
relative fair value of $138,066 valued on
the agreement date, see note 11. The warrants have a contractual
life of 5 years and exercise price of
$0.30
per share. As at September 30, 2021, these warrants have not been
issued. |
The
fair values of the warrants were calculated using the following
assumptions for the Black Sholes Option Pricing Model:
SCHEDULE OF WARRANTS
ASSUMPTIONS
|
|
December 31, 2021 |
|
Risk-free interest rate |
|
|
0.18 –
0.82 |
% |
Expected life |
|
|
3.29 –
5.11
years |
|
Expected dividend
rate |
|
|
0 |
% |
Expected volatility |
|
|
285.40
– 300.18 |
% |
The
continuity of the Company’s common stock purchase warrants issued
and outstanding is as follows:
SCHEDULE OF WARRANTS
OUTSTANDING
|
|
Warrants |
|
|
Weighted
average
exercise price
|
|
Outstanding
at year December 31, 2021 |
|
|
16,439,813 |
|
|
$ |
0.56 |
|
Outstanding
as of March 31, 2022 |
|
|
16,439,813 |
|
|
$ |
0.56 |
|
As of
March 31, 2022, the weighted average remaining contractual life of
warrants outstanding was 2.28
years with an intrinsic value of $nil (December 31,
2021 - $nil).
Note
15 – RELATED PARTY
TRANSACTIONS
During
the three months ended March 31, 2022 the Company incurred
$191,531 (2021 - $162,362) in salaries which
includes a bonus of $30,000 (2021 - $87,362) in fees to the President,
CEO, and CFO of the Company. The Company also repaid $28,118 of management
fees and salaries previously owing to the President, CEO, and CFO
of the Company as of December 31, 2021. As at March 31, 2022, the
Company owed $72,645 (December 31, 2021 -
$28,118) to the President,
CEO, and CFO of the Company for management fees and salaries.
Amounts owed and owing are unsecured, non-interest bearing, and due
on demand.
Indemnifications
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
16 – CONTINGENCIES
On
September 7, 2016, Chetu Inc. filed a Complaint for Damage in
Florida to recover an unpaid invoice amount of $27,335
plus
interest of $4,939. The
invoice was not paid due to a service dispute. As at March 31,
2022, included in trade and other payables is $21,416 (December
31, 2021 - $29,329)
related to this unpaid invoice, interest and legal fees.
Note
17 – SUPPLEMENTAL CASH
FLOW INFORMATION
SCHEDULE OF SUPPLEMENTAL CASH FLOW
INFORMATION
|
|
March 31, 2022 |
|
|
March 31, 2021 |
|
|
|
Three-months ended |
|
|
|
March 31, 2022 |
|
|
March 31, 2021 |
|
|
|
|
|
|
|
|
Cash paid during the period for: |
|
|
|
|
|
|
|
|
Taxes
|
|
$ |
- |
|
|
$ |
- |
|
Interest payments |
|
$ |
- |
|
|
|
56,111 |
|
|
|
|
|
|
|
|
|
|
Non-cash investing and financing
transactions: |
|
|
|
|
|
|
|
|
Shares issued for
debt settlement |
|
$ |
44,551 |
|
|
$ |
60,835 |
|
Dividends payable
with preferred shares to be issued |
|
|
83,713 |
|
|
|
- |
|
Initial
recognition of lease assets |
|
|
177,893 |
|
|
|
- |
|
Initial
recognition of lease liabilities |
|
|
177,893 |
|
|
|
- |
|
Shares issued on conversion of
preferred shares |
|
|
68,319 |
|
|
|
- |
|
Note
18 – SUBSEQUENT
EVENTS
Management
has evaluated events subsequent to the period ended for
transactions and other events that may require adjustment of and/or
disclosure in such interim condensed consolidated financial
statements.
Subsequent
to March 31, 2022:
|
● |
The
Company issued
250 shares
of preferred F stock on April 1, 2022, related to the $250,000
received
under waiver and recorded as a liability, as noted above in Note
9(f) on March 31, 2022. |
Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations
The
following discussion and analysis is based on, and should be read
in conjunction with, the condensed, consolidated interim financial
statements and the related notes thereto of DSG Global, Inc.
contained in this Quarterly Report on Form 10-Q (this
“Report”).
As
used in this section, unless the context otherwise requires,
references to “we,” “our,” “us,” and “our company” refer to DSG
Global, Inc. a Nevada corporation, together with our consolidated
subsidiaries,
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.
In
particular, without limiting the generality of the foregoing
disclosure, the forward-looking statements contained in this
Quarterly Report on Form 10-Q and which are inherently subject to a
variety of risks and uncertainties that could cause actual results,
performance or achievements to differ significantly include but are
not limited to:
|
● |
our
ability to successfully homologate our electric vehicles
offerings; |
|
● |
anticipated
timelines for product deliveries; |
|
● |
the
production capacity of our manufacturing partners and
suppliers; |
|
● |
the
stability, availability and cost of international shipping
services; |
|
● |
our
ability to establish and maintain dealership network for our
electric vehicles; |
|
● |
our
ability to attract and retain customers; |
|
● |
the
availability of adequate manufacturing facilities for our PACER
golf carts; |
|
● |
the
consistency of current labor and material costs; |
|
● |
the
availability of current government economic incentives for electric
vehicles; |
|
● |
the
expansion of our business in our core golf market as well as in new
markets like electric vehicles, commercial fleet management and
agriculture; |
|
● |
the
stability of general economic and business conditions, including
changes in interest rates; |
|
● |
the
Company’s ability to obtain financing to execute our business
plans, as and when required and on reasonable terms; |
|
● |
our
ability to accurately assess and respond to market demand in the
electric vehicle and golf industries; |
|
● |
our
ability to compete effectively in our chosen markets; |
|
● |
consumer
willingness to accept and adopt the use of our
products; |
|
● |
the
anticipated reliability and performance of our product
offerings; |
|
● |
our
ability to attract and retain qualified employees and key
personnel; |
|
● |
our
ability to maintain, protect and enhance our intellectual
property; |
|
● |
our
ability to comply with evolving legal standards and regulations,
particularly concerning requirements for being a public
company. |
|
● |
the
ability of our Chairman, President and Chief Executive Officer to
control a significant number of shares of our voting
capital; |
|
● |
the
impact of the COVID-19 pandemic on capital markets; |
|
● |
frustration
or cancellation of key contracts; |
|
● |
short
selling activities; |
|
● |
our
ability to complete an offering of our common stock and warrants
pursuant to the Registration Statement on Form S-1 filed by with
the Securities and Exchange Commission on April 21, 2021 (the
“Offering”) and the concurrent listing of our common stock and of
the warrants on the Nasdaq Capital Market.. |
|
● |
the
immediate and substantial dilution of the net tangible book value
of our common stock by the Offering; |
|
● |
our
ability to meet the initial or continuing listing requirements of
the Nasdaq Capital Market; and |
|
● |
our
intention to effect a reverse stock split of our outstanding common
stock immediately following the effective date of the Offering but
prior to the closing of the Offering. |
Readers
are cautioned that the foregoing list is not exhaustive of all
factors and assumptions, which may have been used.
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 stated in United States Dollars
(US$) and are prepared in accordance with United States Generally
Accepted Principles. The following discussion should be read in
conjunction with our unaudited condensed consolidated financial
statements and notes thereto appearing elsewhere in this Quarterly
Report on Form 10-Q with the understanding that our actual future
results, levels of activity, performance and events and
circumstances may be materially different from what we
expect.
ABOUT DSG GLOBAL INC.
DSG
Global Inc. is a technology development, manufacturing and
distribution company based in British Columbia, Canada and
Fairfield, California. DSG stands for “Digital Security Guard”, our
first fleet management technology and primary value statement.
Through Vantage TAG, our golf and fleet management division, we are
engaged in the design, manufacture, and sale of fleet and player
experience management solutions for the golf industry, and for
commercial, government and military applications. More recently,
Vantage TAG has introduced a range of innovative single player and
luxury golf carts. In 2020, we established an electric vehicle
division, Imperium Motor Company, headquartered at our Imperium
Experience Centre in Fairfield, California. Imperium Motors is
engaged in the importation, marketing and distribution of a wide
range a low-speed and high-speed electric passenger vehicles for
commuter, family, commercial, and public use.
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. Our
executive team has over 50 years of experience in the design and
manufacture of wireless, GPS, and fleet tracking solutions, and
over 40 years of experience in automotive retail, wholesale,
distribution, and manufacturing.
Powered
by patented analytics and an extraordinary depth of industry
knowledge, DSG’s mandate is to improve lives and businesses with
intelligent, affordable, adaptable and environmentally responsible
transportation technologies and electric vehicles.
Our
principal executive office is located at 207 - 15272 Croydon Drive
Surrey, British Columbia, V3Z 0Z5, Canada. The telephone number at
our principal executive office is 1 (877) 589-8806. Our electric
vehicle division, Imperium Motor Company, is headquartered at our
Imperium Experience Center, Located at 4670 Central Way, Suite D,
Fairfield, CA 95605. Imperium’s telephone number is 1 (707)
266-7575. The Company’s stock symbol is DSGT.
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
Vantage Tag Systems Inc. (“VTS”) (formerly DSG Tag Systems Inc.)
and the shareholders of VTS who become parties to the agreement.
Pursuant to the terms of the share exchange agreement, we agreed to
acquire not less than 75% and up to 100% of the issued and
outstanding common shares in the capital stock of VTS in exchange
for the issuance to the selling shareholders of up to 20,000,000
pre-reverse split shares of our common stock on the basis of 1
common share for 5.4935 common shares of VTS.
On
May 6, 2015, we completed the acquisition of approximately 75%
(82,435,748 common shares) of the issued and outstanding common
shares of VTS as contemplated by the share exchange agreement by
issuing 15,185,875 pre-reverse split shares of our common stock to
shareholders of VTS who became parties to the agreement. In
addition, concurrent with the closing of the share exchange
agreement, we issued an additional 179,823 pre-reverse split shares
of our common stock to Westergaard Holdings Ltd. in partial
settlement of accrued interest on outstanding indebtedness of
VTS.
Following
the initial closing of the share exchange agreement and through
October 22, 2015, we acquired an additional 101,200 shares of
common stock of VTS from shareholders who became parties to the
share exchange agreement and issued to these shareholders an
aggregate of 18,422 pre-reverse split shares of our common stock.
Following completion of these additional purchases, DSG Global Inc.
owns approximately 100% of the issued and outstanding shares of
common stock of VTS. An aggregate of 4,229,384 shares of Series A
Convertible Preferred Stock of VTS were exchanged for 51 Series B
and 3,000,000 Series E preferred shares during the year ended
December 31, 2018 by Westergaard Holdings Ltd., an affiliate of
Keith Westergaard, a previous member of our board of directors
which have not been issued as of September 30, 2021.
The
reverse acquisition was accounted for as a recapitalization
effected by a share exchange, wherein VTS is considered the
acquirer for accounting and financial reporting purposes. The
assets and liabilities of the acquired entity have been brought
forward at their book value and no goodwill has been recognized. We
adopted the business and operations of VTS upon the closing of the
share exchange agreement.
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.
On
March 26, 2019, we effected a reverse stock split of our authorized
and issued and outstanding shares of common stock on a four
thousand (4,000) for one (1) basis. Upon effect of the reverse
split, our authorized capital decreased from 3,000,000,000
pre-reverse split shares of common stock to 750,000 shares of
common stock and correspondingly, our issued and outstanding shares
of common stock decreased from 2,761,333,254 pre-reverse split to
690,403 shares of common stock, all with a par value of $0.001. Our
outstanding shares of Preferred Stock remain unchanged.
On
December 22, 2020, we amended our Articles of Incorporation to
increase our authorized common shares from 150,000,000 to
350,000,000, and to designate 14,010,000 shares of preferred stock,
par value $0.001 per share, including 3,000,000 Series A Preferred
stock, 10,000 Series B Convertible Preferred stock, 10,000 Series C
Convertible Preferred stock, 1,000,000 Series D Convertible
Preferred stock, 5,000,000 Series E Convertible Preferred stock and
10,000 Series F Convertible Preferred Stock.
Imperium
Motor Corp. was incorporated under the laws of the State of Nevada
on September 15, 2020. Imperium Motor of Canada Corporation was
incorporated under the laws of British Columbia, Canada, on August
12, 2021.
About
our Business Divisions
VANTAGE TAG FLEET MANAGEMENT AND GOLF DIVISION
Vantage Tag Golf and Fleet Management
Technologies
Vantage
TAG Systems has developed a patented combination of hardware and
software which we believe is the first completely modular and
scalable fleet management solution for the golf industry and
beyond. Marketed around the world, the TAG System and suite of
products are deployed to help golf course operators manage their
fleets of golf carts, turf equipment, and utility vehicles,
providing real time vehicle global positioning, geofencing, remote
control, and remote vehicle lockdown security features. The TAG
System optimizes course efficiencies and pace of play, all while
integrating a customizable array of player experience features such
as player messaging, course mapping and 3d flyover, course &
tournament marshalling, pro tips, food & beverage ordering, and
ad streaming, among others.
The
Vantage TAG System is designed from the ground up to be a golf/turf
vehicle fleet management system. Its main function is addressing
the golf course operator needs. While employing same core
technology (cellular wireless and GPS) as traditional commercial
vehicle fleet management systems, Vantage TAG has created patent
pending solutions to adapt it to the very specific requirements of
the golf environment. Compared to mainstream fleet tracking
products, Vantage TAG collects 10 to 50 times more data points per
MB (megabyte) of cellular data due to its proprietary data
collection and compression algorithms. Also, the relative
positioning accuracy is improved by almost one order of magnitude
by the use of application-specific geo-data validation and
correction methods.
Vantage
TAG’s proprietary methods make it possible to offer a solution
suitable for use on golf courses at a price low enough to be
affordable in the industry. Every system component incorporates
state-of-the-art technology (server, mobile trackers, display). In
developing its products vantage TAG Systems has adopted an
application-oriented approach placing the most emphasis (and
research & development) on server and end-user software by
taking advantage of the commodity level reached by mainstream
technologies such as Global Positioning (GPS) and M2M (Machine to
Machine) Cellular Data in the wider context of Commercial Fleet
Management.
Vantage
TAG leveraged the existence of an abundance of very cost-effective
telematics solutions by selecting an “off-the-shelf” hardware
platform that meets all the main performance and environmental
requirements for operation in the harsh, outdoor golf course
environment. While removing all risk and cost associated with
developing a proprietary hardware platform, Vantage TAG has
maintained the unique nature of its hardware solution by developing
a set of proprietary adapters and interfaces specifically for the
golf application.
Vantage
TAG has secured an exclusive supply agreement with the third-party
hardware manufacturers for the vertical of golf industry.
Additionally, Vantage TAG owns the design of all proprietary
adapters and interfaces. This removes the risk of a potential
competitor utilizing the same hardware platform. Competitors could
attempt to reverse engineer or copycat the TAG technology and
equipment. This risk factor is mitigated by the fact that our
product does not rely on a particular technology or hardware
platform to be successful but on a very specific vertical software
application that is far more difficult to copy (and respectively
easier to protect).
The
application software contains patent features implemented in every
core component of the system. The TAG device runs DSG proprietary
firmware incorporating unique data collection and compression
algorithms. The web server software which powers the end-user
application is also proprietary and incorporates the industry
knowledge accumulated through the over 70 years of collective
experience of the DSG Global team.
This
approach has given the product line a high level of endurance
against technology obsolescence. At any point in time, if a
hardware component is discontinued or a better/less expensive
hardware platform becomes available, the software application can
be easily adapted to operate on the new platform or with the new
component. The company benefits from the constant increase of
performance and cost reduction of mainstream hardware technology
without any additional cost.
The
web-based Software-as-a-Service (SaaS) model used by the Vantage
TAG System is optimal for low operating and support costs and
rapid-cycle release for software updates. It is also a major factor
in eliminating or substantially reducing the need for any end-user
premises equipment. Customers have access to the service through
any internet connected computer or mobile device, there is no need
for a local wireless network on the facility and installation time
and cost are minimal.
Vantage
TAG is positioned to take advantage of mainstream technology and
utilize “best of breed” hardware platforms to create new
generations of products. Our software is designed to be “portable”
to future new platforms with better GPS and wireless technology in
order to maintain the Company competitive edge.
All
new product development effort of Vantage TAG is following the same
model: select the best of breed third-party hardware platform,
design and produce custom proprietary accessories while focusing
the bulk of the development efforts on vertical software
application to address a very specific set of end-customer
needs.
The
latest addition to the TAG family of products, the TAG INFINITY is
a perfect example of this development philosophy in action: the
main component is a last-generation Android tablet PC wrapped in a
custom designed outdoor enclosure containing the power supply and
interface components required for the golf environment. The
software application is taking advantage of all the advanced
high-resolution graphics, touch user interface and computing power
of the Android OS delivering a vastly superior user experience
compared to competitive systems. The time to market for this
product was 30% of how long it took to develop and launch this type
of products in the past.
The TAG Control Unit
The
company’s flagship product is the TAG Control unit. The TAG can
operate as a “stand alone” unit or with one of two displays; the
INFINITY 7” alphanumeric display or the INFINITY high definition
“touch activated” screen. The TAG is GPS enabled and communicates
with the TAG software using cellular GSM networks. Utilizing the
cellular networks rather than erecting a local Wi-Fi network
assures carrier grade uptime, and vehicle tracking “off- property”.
GSM is the de facto global standard for mobile
communications.
The
TAG unit itself is discreetly installed usually in the nose of the
vehicle to give the GPS clear line of site. It is then connected to
the vehicle battery and ignition. The property is then mapped using
the latest satellite imagery that is graphically enhanced and
loaded into the TAG System as a map.
Once
installed the vehicle owner utilizes the TAG software to locate the
vehicle in real time using any computer, smartphone, or tablet that
has an internet connection and perform various management
operations.

The
operator can use the geo-fencing capabilities to create “zones” on
the property where they can control the vehicles behavior such as
shutting down a vehicle that is entering a sensitive or dangerous
area. The TAG System also monitors the strength of the vehicle’s
battery helping to prevent sending out vehicles undercharged
batteries which can be an inconvenience for the course and
negatively impact the golfer experience.
Features
and Benefits:
● |
Internal
battery utilizing Smart Power technology which charges the battery
only when the vehicle is running (gas) or being charged
(electric) |
|
|
● |
Pace
of Play management and reporting which is a critical statistic for
the golf operator |
|
|
● |
No
software to install |
|
|
● |
Web
based access on any computer, smartphone, or tablet |
|
|
● |
Set
up restricted zones to protect property, vehicles, and
customers |
|
|
● |
Real
time tracking both on and off property (using Street
Maps) |
|
|
● |
Email
alerts of zone activity |
|
|
● |
Cart
lockdown |
|
|
● |
Detailed
usage reporting for improved maintenance, proper vehicle rotation,
and staff efficiency |
|
|
● |
Geofencing
security features |
|
|
● |
Ability
to enforce cart path rules which is key to protecting course on wet
weather days |
|
|
● |
Modular
system allows for hardware and feature options to fit any budget or
operations |
INFINITY 7” Display
The
INFINITY 7” is paired with the TAG Control unit as DSG’s entry
level display system for operators who desire to provide basic hole
distance information and messaging to the golf customer. The
INFINITY 7” is a very cost-effective solution for operators who
desire to give their customers GPS services with the benefits of a
Fleet Management back end. The INFINITY 7” can be mounted on the
steering column or the dash depending on the customer’s
preference.

VTS’s
entry level alphanumeric golf information display
Features
and Benefits:
● |
Hole
information display |
|
|
● |
Yardage
displays for front, middle, back locations of the pin |
|
|
● |
Messaging
capabilities – to individual carts or fleet broadcast |
|
|
● |
Zone
violation warnings |
|
|
● |
Pace
of Play notifications |
|
|
● |
Smart
battery technology to prevent power drain |
|
|
● |
Versatile
mounting option |
INFINITY XL 12” Display
The
INFINITY XL 12” is a solution for operators who desire to provide a
high-level visual information experience to their customers. The
INFINITY XL 12” is a high definition “Infinity XL 12” “ activated
display screen mounted in the golf cart integrated with the TAG
Control unit to provide a full back/front end Fleet Management
solution. The INFINITY XL 12” displays hole graphics, yardage, and
detailed course information to the golfer and provides interactive
features such as Food and Beverage ordering and
scorekeeping.

The
industry leading Infinity XL 12” HD – the most sophisticated
display on the market.
Features
and Benefits:
● |
Integrated
Food and Beverage ordering |
|
|
● |
Pro
Tips |
|
|
● |
Flyover
capability |
|
|
● |
Daily
pin placement display |
|
|
● |
Interactive
Scorecard with email capability |
|
|
● |
Multiple
language choices |
|
|
● |
No
power drain with Smart Battery technology |
|
|
● |
Full
broadcast messaging capabilities |
|
|
● |
Pace
of Play display |
|
|
● |
Vivid
hole graphics |
|
|
● |
Option
of steering or roof mount |
|
|
● |
Generate
advertising revenue and market additional services |
PROGRAMMATIC Advertising Platform
A
unique feature of the INFINITY XL 12” system is the advertising
display capability. This can be used by the operator for internal
promotion of services or for generating revenue by selling the ad
real estate since the golf demographic is very desirable to
advertisers. The INFINITY XL 12” displays banner, panel, full page,
pro tip, and Green view ads. There is also ad real estate on the
interactive feature screens for Food and Beverage ordering and the
scorecard. The Infinity XL 12” System can also display animated GIF
files or play video for added impact.

Advertising
displayed in multiple formats including animated GIF and
video
DSG
has developed proprietary “Ad Manager” software which is used to
place and change the ads on the system(s) from a central NOC
(Network Operations Center) in real time. The Ad Manager can deploy
to a single system or multiple systems. This creates a network of
screens that is also very desirable to advertisers as ad content
can be deployed locally, regionally, or nationally. The advertising
platform is an important part of the company’s future marketing and
sales strategy.

DSG R3 Advertising Platform
The
DSG R3 program delivers advance ROI (Revenue Optimization
Intelligence). Utilizing all streams of advertising delivery, such
as automated, direct, and self-serve. The R3 program has the
ability to deliver relevant advertising to golfers the moment they
sit in the cart. The R3 model is more effective than the previous
advertising model of ‘One to One’, these are local ads only sold
through direct sales by courses, or 3 rd party
advertising sales firms. The new R3 model offers ‘Many to one’
advertising options, delivering thousands of national, regional,
and local advertisers an opportunity to advertise on our screens
through our R3 Marketplace.

Previous
‘One to One’ model vs the new R3 model ‘Many to One’

TAG TURF/ECO TAG
The
TAG Turf and the new ECO TAG were developed to give course
operators the same back end management features for their turf
equipment and utility vehicles. Turf equipment is expensive, and a
single piece can run over $100,000 and represents a large portion
of a golf course operating budget. The TAG Turf and ECO TAG have
comprehensive reporting that the operator can utilize to implement
programs that can increase efficiencies, reduce labor costs, help
lower idle times, provide fuel consumption and equipment
performance, provide historical data on cutting patterns, and
reduce pollution from emissions by monitoring idle times. Since the
golf course needs to be maintained regardless of volume these cost
saving measures directly impact the operator’s bottom
line.
Features
and Benefits:
● |
Can
be installed on any turf, utility, or service vehicle |
|
|
● |
Work
activity tracking and management |
|
|
● |
Work
breakdown and analysis per area, work group, activity type or
specific vehicle |
|
|
● |
Vehicle
idling alerts |
|
|
● |
Zone
entry alerts |
|
|
● |
Detailed
travel (cutting patterns) history |
|
|
● |
Detailed
usage reports with mileage and hours |
|
|
● |
Protection
for ecological areas through geo fencing |
|
|
● |
Vehicle
lock down and ‘off property’ locating features |

The
TAG Turf provides detailed trail history and cutting
patterns
Revenue Model
DSG
derives revenue from four different sources.
Systems
Sales Revenue, which consists of the sales price paid by those
customers who purchase our TAG system hardware 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 INFINITY
7”, or a TAG and INFINITY XL 12”).
Programmatic
Advertising Revenue is a new source of revenue that we believe
has the potential to be strategic for us in the future. We are in
the process of implementing and designing software to provide
advertising and other media functionality on our
INFINITY.
We
recognize revenue when persuasive evidence of an arrangement
exists, delivery has occurred, the fee is fixed or determinable,
and collectability is reasonably assured. In instances where final
acceptance of the product is specified by the customer, revenue is
deferred until all acceptance criteria have been met. We accrue for
warranty costs, sales returns, and other allowances based on its
historical experience.
Our
revenue recognition policies are discussed in more detail under
“Note 2 – Summary of Significant Accounting Policies” in the
notes to our Consolidated Financial Statements included in Part II,
Item 8 of this Form 10-K.
Markets
Sales
and Marketing Plan
The
market for the TAG System is the worldwide golf cart and Turf
equipment fleets. There are 40,000 golf courses around the world
with North America being the largest individual market with 20,000.
This represents over 3,000,000 vehicles. The golf market has five
distinct types of operations. Municipal, Private Country Clubs,
Destination Resorts, Public Commercial, Military and University
affiliated. VTS has deployed and has case studies developed TAG
systems in each of these categories.
Our
marketing strategy is focused on building brand awareness,
generating quality leads, and providing excellent customer
service.
North
America Sales
Since
the largest market is North America, the Company employs a direct
sales team and sales agents that provide full sales coverage. Our
sales agents are experienced golf industry professionals who
maintain established relationships with the golf industry and carry
multiple golf lines. Our sales objective is to offer our existing
and prospective customers a dedicated, knowledgeable, and
outstanding customer service team.
In
addition, our team is dedicated to existing accounts that focus on
up-selling and cross-selling additional products to our current
customer base, securing renewal agreements, and providing excellent
customer service. The current regions are:
● |
Western
Canada |
|
|
● |
Central
Canada |
|
|
● |
Eastern
Canada |
|
|
● |
Northeast
USA |
|
|
● |
Western
USA |
|
|
● |
Southeastern
USA |
|
|
● |
Midwest
USA |
International
Sales
DSG
focuses on select global golf markets that offer significant volume
opportunities and that value the benefits that our products
deliver.
We
utilize strategic distributor partnerships in each targeted
region/country to sell, install and service our products.
Distributors are selected based on market strength, market share,
technical and selling capability, and overall reputation. We
believe that DSG solutions appeal to all distributors because they
are universal and fit any make or model of vehicle. We maintain and
leverage our strong relationship with Yamaha, E-Z-GO and Ransomes
Jacobsen (sister company to E-Z-GO) in developing our distributor
network around the world. Today, many of our distributor partners
are the leading distributors for E-Z-GO and RJ and hold a dominant
position in their respective markets. While they are Yamaha or
E-Z-GO distributors, most sell DSG products to all courses
regardless of their choice of golf car as a value add to their
customers and to generate additional revenue. We complement this
distributor base with independent distributors as needed to ensure
we have sufficient coverage in critical markets.
Currently
DSG is focused on expanding in Europe, Asia and South Africa. The
Company plans to expand next into Australia, New Zealand and Latin
America.
Management
Companies
Many
golf facilities are managed by management companies. The portfolios
of these companies vary from a few to hundreds of golf courses.
Troon®, the world’s largest player in golf course
management, has over 200 courses under management. The management
companies provide everything from branding, staffing, management
systems, marketing, and procurement. DSG is currently providing
products and services to Troon, OB Sports, Kemper Sports, Trump,
Marriott Golf, Blue Green, Crown Golf, American Golf, Billy Casper,
Club Corp, and Club Link.
DSG
has been successful in completing installations and developing
relationships with several of the key players who control a
substantial number of courses. DSG will continue to implement
system developments that are driven by the needs of these
management companies such as combined reporting, multiple course
access through a centralized dashboard. This development will
become a competitive advantage for DSG in the management company
market.
DSG
has dedicated a team to create specific collateral for this market
and has assigned a senior executive to have direct responsibility
to manage these relationships.
Competition
We
compete with a number of established producers and distributors of
vehicle fleet management systems. Our competitors include producers
of golf specific applications, such as GPS Industries, LLC., one of
the leading suppliers of golf cart fleet management systems, as
well as producers of non-golf specific utility vehicle fleet
management systems, such as Toro. Many of our competitors have
longer operating histories, better brand recognition and greater
financial resources than we do. In order for us to successfully
compete in our industry we must:
|
● |
demonstrate
our products’ competitive advantages; |
|
|
|
|
● |
develop
a comprehensive marketing system; and |
|
|
|
|
● |
increase
our financial resources. |
However,
there can be no assurance that even if we do these things, we will
be able to compete effectively with the other companies in our
industry.
We
believe that we will be able to compete effectively in our industry
because of the versatility, reliability, and relative affordability
of our products when compared to those of our competitors. We will
attempt to build awareness of our competitive advantages among
existing and potential customers through trade shows, sales visits
and demonstrations, online marketing, and positive word of mouth
advertising.
However,
as we are a newly established company relative to our competitors,
we face the same problems as other new companies starting up in an
industry, such as limited access to capital. Our competitors may be
substantially larger and better funded than us, and have
significantly longer histories of research, operation and
development than us. In addition, they may be able to provide more
competitive products than we can and generally be able to respond
more quickly to new or emerging technologies and changes in
legislation and regulations relating to the industry. Additionally,
our competitors may devote greater resources to the development,
promotion and sale of their products or services than we do.
Increased competition could also result in loss of key personnel,
reduced margins or loss of market share, any of which could harm
our business.
Our
primary competitor in the field of golf course fleet management is
GPS Industries, a company that was founded in 1996 by our sole
officer, founder and one of our directors, Mr. Bob Silzer. GPS
Industries is currently the largest player in the marketplace with
an installed base of approximately 750 golf courses worldwide. GPS
Industries was consolidated by various mergers and acquisitions
with a diversity of hardware platforms and application software.
Since 2009, when GPS Industries has introduced their latest product
offering called the Visage, in an exclusive partnership with Club
Car, their strategy has been to target mostly their existing
customers and motivate them into replacing their existing, older
GPS system, with the Visage system.
GPS
Industries is leveraging very heavily their partnership with Club
Car, which is one of the three largest golf cart manufacturers in
the world and at times is benefiting from golf operators’
preference for Club Car and their vehicles when they select their
management system.
Market
Mix
Since
the introduction of the DSG product line, we have shown golf course
operators that they have now access to a budget-friendly fleet
management tool that works not only on golf carts but also with all
other vehicles used on the golf course such as turf maintenance,
shuttles, and other utility vehicles.
Marketing
studies have identified that half of the golf course operators only
need a fleet management system and only 15% need a high-end GPS
golf system. This illustrates the strong competitive advantage that
VTS TAG Systems has versus GPS Industries since their product can
only address the needs of a relatively small fraction of the
marketplace.
Consequently,
GPS Industries’ installed base has steadily declined since most of
their new product installations have replaced older product for
existing customers and some customers have opted for a lower budget
system and switched over to VTS TAG Systems.
Marketing Activities
The
Company has a multi-layered approach marketing the TAG suite of
products. One of the foundations of this plan is attending industry
trade shows which are well attended by golf operators. The two
largest shows are the PGA Merchandise Show and the Golf Industry
Show which are held in Florida at the end of January. The Company
also attends a number of regional shows around North America.
International events are attended by our distributors and
partners.
The
second layer of marketing is memberships in key organizations such
as the National Golf Course Owners Association, Golf Course
Superintendents Association, and Club Managers Association of
America. These are very influential in the industry and have
marketing channels such as publications, email blasts, and
web-based marketing. The Company also markets directly to course
operators through email, surveys direct mail programs.
Lead
Generation
One
of the primary sources of lead generation is through the Company’s
strategic partnerships with E-Z-GO, Yamaha, and Ransomes Jacobson.
These relationships provide the Company with a great deal of market
intelligence. The sales forces of the partners work in tandem with
the DSG sales team by passing on the leads, creating joint
proposals, and distributing TAG sales material. The Company has
also created co-branded materials for specific value items of
interest to operators such as Pace of Play solutions. DSG sale s
and marketing staff attend partner sales events to conduct training
and discuss marketing strategies.
The
Company is in the process of testing an internal telemarketing
program in several key markets to gauge whether this particular
channel warrants larger scale implementation.
Competitive Advantages
Pricing
One
of the “heroes” of the TAG System is providing the course operator
a range of modular fleet management options that are very
competitively priced. Pricing options range from the TURF, TAG,
Infinity 7”, and Infinity XL 12” System, giving the customer a wide
range of pricing options.
Functional
advantages
DSG
has the distinctive advantage of being able to offer a true fleet
management system, encompassing all the vehicles on the golf
course, not just the golf carts. Due to the modular nature of the
system, customers have now the option to configure their system’s
configuration to match exactly their needs and their
budget.
Product
advantages
DSG
products are the robust, reliable, and user-friendly systems in the
world. DSG is the only company currently providing systems that are
waterproof with internal batteries to ensure our partners retain
the full golf cart manufacturer’s warranty.
Operational Plan
Our
Operations Department’s main functions are outlined
below:
Product
Supply Chain Management
|
● |
Product
procurement, lead-time management |
|
|
|
|
● |
Inventory
Control |
Customer
Service
|
● |
Training |
|
|
|
|
● |
Troubleshooting
& Support |
|
|
|
|
● |
Hardware
Repairs |
Installations
|
● |
Content
& graphics procurement |
|
|
|
|
● |
System
configurations |
|
|
|
|
● |
Shipping
and Installation |
Infrastructure
Management
|
● |
Communication
Servers Management |
|
|
|
|
● |
Cellular
Data Carriers |
|
|
|
|
● |
Service
and administration tools |
Product Supply Chain
In
order to maintain high product quality and control, as well as
benefiting from cost savings, the Company is currently procuring
all main hardware components offshore. Final assembly is locally
performed in order to ensure product quality. Other main components
are also procured directly from manufacturers or from local
suppliers that outsource components office in order to keep the
price as low as possible.
The
Company is requesting the suppliers to perform a complete set of
quality testing and minimum 24 hours’ burn-in before the product is
delivered. The local hardware assembler and components supplier
offers a 12-month warranty. The main hardware components offshore
supplier offers a warranty plan of 15 months from the date the
product is shipped. With an extended 90 days beyond the current
warranty, such repair service would be paid by the supplier except
for component replacement costs, which would be paid by
DSG.
Another
important activity related to the management of the product supply
chain is working closely with the suppliers and ensuring that we
have alternate sources for the main components and identify well in
advance any components that may go “end-of-life” and find suitable
replacements before product shortages may occur.
Inventory
Control
The
Company has implemented strict inventory management procedures that
govern the inbound flow of products from suppliers, the outgoing
flow to customers as well as the internal movement of inventory
between warehouses (Canada, US and UK). There are also procedures
in place to control the flow of equipment returning from customers
for repairs and their replacements.
Installation
The
Company is utilizing a small number of its own field engineers,
geographically positioned to be in close proximity of areas with
high concentrations of current and future customers. Occasionally,
when new installations exceed the internal capacity, the company
employs a number of external contractors, on a project-by-project
basis. Each contractor has been trained extensively to perform
product installations and the Company has created an extensive
collection of Installation Manuals for all products and vehicle
types.
The
product was designed with ease of installation as one of its
features. Additionally, the installation process includes a
pre-shipping configuration process that prepares each device with
all the settings and graphics content (if applicable) required for
the specific location it will be deployed. This makes the
installation process a lot simpler and less time consuming in the
field which reduces costs (accommodations, food, travel) for
internal staff as well as external contractor cost (less billable
time).
Another
benefit of the simplified installation procedure is increased
scalability in anticipation of increased number of installs in the
future by reducing the skill level and training time requirements
for additional contractors.
Customer Service
The
Company has deployed its Customer Service staff strategically, so
it has at least one service representative active during business
hours in North America, Europe and South Africa.
The
Company is handling Customer Service directly in North America and
UK, offering telephone and on-line support to end-customers. In
other international markets, the first-line customer service is
handled by local distributor’s staff while DSG is supplying
training and more advanced support to the distributors.
For
the management of the customer service activities, the Company is
utilizing SalesForce.com CRM system which allows creating,
updating, closing and escalation of service cases, including the
issuance of RMA (Return Material Authorization) numbers for
defective equipment. Using SalesForce.com also allows generation of
management reports for service issues, customer satisfaction, and
equipment failures in order to quickly identify trends, problem
accounts or systemic issues.
In
addition, DSG began offering the DSG Par 72 Service & Support
Plan to guarantee service and support to client courses in the golf
business, during fiscal 2016. This program for client courses which
guarantees service and support programs within 24 hours of a
problem arising.
Product Development and Engineering
The
Company employs a team of software engineers in house to develop
and maintain the main components of the server software and
firmware. All product development is derived from business needs
assessment and customer requests. The Product Manager is reviewing
periodically the list of feature requests with the Sales,
establishes priorities and updates the Product Roadmap. The
software engineers are also responsible for developing specialized
tools and systems utilized increase efficiency in the operation of
the Company. These projects include functionality such as:
automated system monitoring, automatic service alerts, improved
remote troubleshooting tools, cellular data monitoring and
reporting. All these tools are critical in future ability to
support more customers with less resources, streamline support, and
improve internal efficiency.
All
hardware development (electronics and mechanical) is generally
outsourced, however small projects like mounting solutions or
cabling are handled in house.
Vantage TAG Golf Carts
PACER
Single Rider Golf Cart
In
2021, after rigorous testing and consultation with industry leaders
and partners, DSG has introduced the PACER Single Rider Golf Cart.
The PACER furthers Vantage TAG’s mandate to optimize the game for
players and operators alike, increasing pace of play, comfort,
accessibility, and performance. The PACER can complete up to four
rounds of golf on a single charge, is factory equipped with the TAG
Control Unit, and upgradable to the TAG Infinity Display at any
time. DSG’s PACER program allows operators to buy, lease, or
install a PACER fleet on a zero overhead, revenue-sharing basis,
making it accessible to the widest range of golf courses, venues,
campuses and communities.

The
Vantage TAG PACER Golf Cart
In
2020, DSG/Vantage Tag was working with manufacturers in China to
develop and launch our planned single rider “PACER” golf carts for
a 2021 launch. After testing several prototypes and consulting with
industry leaders and partners, we have delayed launch of the PACER
in order to undertake PACER manufacturing in North America, under
the close supervision of our designers and marketing partners, and
in proximity to our largest anticipated customer base. We believe
this decision will allow us to produce an industry-leading product,
maintain quality control, reduce fulfillment delays and capitalize
on manufacturing synergies between our divisions. We anticipate
that we will secure PACER manufacturing capacity within 90 days
based on general availability of commercial space and labor. We
continue to proceed with PACER sales development and during this
transition.
100E
Golf Cart
Most
recently, Vantage TAG has also introduced the premium 100E Golf
Cart, built for serious and casual riders seeking a luxury
experience. Available for sale or lease, the 100E combines real
world range, performance, and safety into a premium Low Speed
Vehicle that only Vantage Tag can offer. Our first low speed,
street legal vehicle, the 100E achieves a 90 mile range per charge,
is Department of Transportation certified, and comes equipped with
a whole package of premium options starting at under $9,998 before
discounts and incentives. Available in a range of colors, the 100E
brings style, performance, sustainability and fun, from the golf
course to town and everywhere in between.

The
Vantage 100E Golf Cart.
In
2020, DSG/Vantage Tag was working with manufacturers in China to
develop and launch our planned single rider “PACER” golf carts for
a 2021 launch. After testing several prototypes and consulting with
industry leaders and partners, we have delayed launch of the PACER
in order to undertake PACER manufacturing in North America, under
the close supervision of our designers and marketing partners, and
in proximity to our largest anticipated customer base. We believe
this decision will allow us to produce an industry-leading product,
maintain quality control, reduce fulfillment delays and capitalize
on manufacturing synergies between our divisions. We anticipate
that we will secure PACER manufacturing capacity within 90 days
based on general availability of commercial space and labor. We
continue to proceed with PACER sales development and during this
transition.
IMPERIUM MOTOR COMPANY®—MAKING GREEN
TRANSPORTATION AVAILABLE TO EVERYONE
In
2019, DSG Global founded Imperium Motor Company with a mission to
bring the worlds most effective and cost-efficient electric
vehicles to North America and beyond. Our range of commuter,
family, and commercial vehicles offer a lower cost alternative to
competitive offerings, with an emphasis on great design,
performance, and functionality. Through our exclusive North
American manufacturing partnership with Zhejiang Jonway Group Co.,
Ltd. (“Jonway Group”), and Skywell New Energy Automobile Group
(“Skywell”), two of the world’s most prolific manufacturers of
electric vehicles and components, Imperium now offers one of the
largest selections of electric vehicles in North America, including
ebikes and scooters, e-rickshaws, low speed cars, trucks, vans and
scooters, high speed SUVs and pickups, as well as buses, cargo
trucks, and sanitation vehicles.
On
October 2, 2019, we entered into an exclusive cooperation agreement
dated September 17, 2019 with Zhejiang Jonway Group Co., Ltd.
(“Jonway Group”), a leading manufacturer of electric vehicles in
China. Pursuant to the Agreement, we have received the exclusive
right to purchase, homologate, and distribute Jonway Group’s range
of electric low speed vehicles in the Americas (including the
United States, Canada, Mexico and the Caribbean) for a term of 10
years. The distribution rights are subject to the inspection and
approval of eligible vehicles by the Company.
Pursuant
to the Agreement, the Company was to place an initial order of 17
sample vehicles by January 30, 2020. The sample vehicles are for
homologation purposes and subject to inspection and approval by the
Company. The initial order was delayed by mutual agreement due to
manufacturing and shipping delays resulting from COVID-19. However,
as of the date of this Annual Report, the initial order of 17
vehicles has been placed and fulfilled. We have since approved and
are currently homologating the vehicles for conformance with North
America road & safety standards. The written agreement between
Jonway Group and the Company does not specify what percentage of
each vehicle purchase price is payable upon order placement.
Currently, the parties have agreed to a 30% payment upon order
placement with the balance payable upon shipping.
On
February 4, 2020, we announced the establishment of our automotive
subsidiary, Imperium Motor Company®, and a planned Electric Vehicle
(EV) Experience Centre in California. Imperium Motor Company was
incorporated in the State of Nevada on September 10,
2020.
On
August 21, 2020, we announced the opening of our Electric Vehicle
Experience and Training Center located in Fairfield, California,
where we plan to offer a range of electric vehicles at the EV
Vehicle Experience Centre and to provide dealer support, training,
and education.
On
October 5, 2020, through Imperium Motor Corp., we entered into a
Memorandum of Understanding dated September 10, 2020 with Skywell
Shenzen Vehicles Co. Ltd. aka Skywell New Energy Automobile Group
Co., Ltd. (“Skywell”), a leading manufacturer of electric vehicles
in China. Pursuant to the Memorandum of Understanding, Imperium has
received the exclusive right, subject to placement of an initial
vehicle order and corresponding payment to Skywell, to purchase,
homologate, and distribute Skywell’s range of ET5 electric sport
utility vehicles in North America and the Caribbean. The Memorandum
of Understanding, while stated to be non-binding, provides for the
conclusion of a definitive agreement by the parties following the
placement of an initial vehicle order by the Company. The
definitive agreement was to have a minimum term of 3 years, and
will renew automatically for successive 3-year terms, subject to
the right of each party to terminate the agreement by giving 30
days notice prior to renewal.
Effective
February 9, 2021, we entered into a definitive OEM Cooperation
Agreement with Skywell dated February 5, 2021, which agreement
modifies and replaces the Memorandum of Understanding. Pursuant to
the OEM Cooperation Agreement, Skywell has granted to the Company
the exclusive right to distribute Skywell’s electric passenger
cars, trucks (including but not limited to the ET5 sport utility
vehicle), buses and spare parts in the United States and Canada for
a term of 5 years. In order to maintain the distributions rights
accorded by the agreement, the Company must purchase and deliver
1,000 units within the first year of the term, 2,000 units in the
second year, 3,000 units in the third year, 4,000 units in the
fourth year, and 5,000 units in the fifth and final year of the
term. Skywell may terminate the agreement in its distribution with
30 days’ notice if the Company fails to satisfy sales quotas.
Product price, terms of payment and logistical matters are subject
to the ongoing approval and agreement of the parties from time to
time.
Effective
February 15, 2021, we entered into a Cooperation Agreement with
Rumble Motors, a manufacturer and distributor of electric bikes and
other vehicles. Pursuant to the Cooperation Agreement, Rumble has
granted to the Company the exclusive right to distribute the Rumble
Rover, Rumble Air, and other electric bikes in India, Pakistan,
Bangladesh, the United States, Canada, Mexico and the Caribbean for
a term of 5 years. The Rumble vehicles remain subject to the
Company’s testing, approval, and homologation in the respective
territories.
Imperium EV Passenger Vehicles
 |
IMPERIUM ET5 by Skywell |
|
|
|
|
|
|
● |
SEATING
for five passengers |
|
|
● |
MOTOR
150 kW max power |
|
|
● |
SPEED
up to 150 kp/h |
|
|
● |
RANGE
up to 404 km or 520 km NEDC estimate |
|
|
● |
BATTERY
55.33 or 71.98 kWh Li-ion |
|
|
● |
EQUIPPED
with Automatic Transmission, Air Conditioning, Heater, Power
Windows, Power Door Locks, Rear Camera, Push Button Start, Alloy
Wheels, Am-Fm USB/SD Stereo and more |
|
|
|
|
 |
|
IMPERIUM Terra-e by ZXAUTO in development |
|
|
|
|
|
|
● |
SEATING
for five passengers |
|
|
● |
MOTOR
135 kW max power |
|
|
● |
SPEED
up to 145 km/h |
|
|
● |
RANGE
up to 322 to 435 km estimate |
|
|
● |
BATTERY
53.84 or 75.22 kWh Li-ion |
|
|
● |
EQUIPPED
with Automatic Transmission, Air Conditioning, Heater, Power
Windows, Power Door Locks, Rear Camera, Push Button Start, Alloy
Wheels, Am-Fm USB/SD Stereo and more |
|
|
|
|
 |
|
IMPERIUM W Coupe |
|
|
|
|
|
|
● |
SEATING
for four and Unibody Construction |
|
|
● |
MOTOR
4.5 kW or optional 7.5 kW Brushless DC Motor available |
|
|
● |
SPEED
of 40 km/h for LSV model or 75 km/h for mid speed model |
|
|
● |
RANGE
of up to 120km on Lead Acid Battery Pack or up to 150km with
optional Lithium Battery Pack |
|
|
● |
BATTERY
72-volt 720 Ah Battery Power with Lead Acid or Optional Lithium
Battery Pack available |
|
|
● |
EQUIPPED
with Automatic Transmission, Air Conditioning, Heater, Power
Windows, Power Door Locks, Rear Camera, Push Button Start, Alloy
Wheels, Am-Fm USB/SD Stereo and more |
 |
|
IMPERIUM Maxi “SUV” Style |
|
|
|
|
|
|
● |
SEATING
for four with Steel Safety Cell Construction |
|
|
● |
MOTOR
4.5 kW or optional 7.5 kW Brushless DC Motor available |
|
|
● |
SPEED
up to 40 km/h for LSV model or 60 km/h for mid speed
model |
|
|
● |
RANGE
up to 120 km on Lead Acid Battery Pack or up to 150 km with
optional Lithium Battery Pack |
|
|
● |
BATTERY
72-volt 720 Ah with Lead Acid or Optional Lithium Battery Pack
available |
|
|
● |
EQUIPPED
with Automatic Transmission, Alloy Wheels, Air Conditioning,
Heater, Power Windows, Power Door Locks, Rear Camera, Push Button
Start, Am-Fm USB/SD Stereo, Rear Mounted Spare Tire and
more |
|
|
|
|
 |
|
IMPERIUM Maxi Sport Sedan |
|
|
|
|
|
|
● |
SEATING
for four with Steel Safety Cell Construction |
|
|
● |
MOTOR
4.5 kW or optional 7.5 kW Brushless DC Motor available |
|
|
● |
SPEED
up to 40 km/h for LSV model or 60 km/h for mid speed
model |
|
|
● |
RANGE
up to 120 km on Lead Acid Battery Pack or up to 150 km with
optional Lithium Battery Pack |
|
|
● |
BATTERY
72-volt 720 Ah with Lead Acid or Optional Lithium Battery Pack
available |
|
|
● |
EQUIPPED
with Automatic Transmission, Alloy Wheels, Air Conditioning,
Heater, Power Windows, Power Door Locks, Rear Camera, Push Button
Start, Am-Fm USB/SD Stereo, Rear Mounted Spare Tire and
more |
 |
|
IMPERIUM Euro Coupe |
|
|
|
|
|
|
● |
SEATING
for four with Steel Safety Cell Construction |
|
|
● |
MOTOR
4.5 kW to 7.5 kW Brushless DC |
|
|
● |
SPEED
of up to 45 km/h or up to 55 km/h with optional Performance
Package |
|
|
● |
RANGE
up to 120 km on a single charge |
|
|
● |
BATTERY
60-volt 600 Ah Maintenance Free Lead Acid or Lithium Battery Pack
with Optional Performance Package |
|
|
● |
EQUIPPED
with Automatic Transmission, Alloy Wheels, Air Conditioning,
Heater, Power Windows, Power Door Locks, Rear Camera, Push Button
Start, Rear Hatch Am-Fm USB/SD Stereo and more |
 |
|
IMPERIUM Urbee 4S |
|
|
|
|
|
|
● |
SEATING
for four with Steel Safety Cell Construction |
|
|
● |
MOTOR
4.0 kW Brushless DC |
|
|
● |
SPEED
up to 40 km/h |
|
|
● |
RANGE
up to 120 km on a single charge |
|
|
● |
BATTERY
60-volt 600 Ah Maintenance Free Lead Acid |
|
|
● |
EQUIPPED
with Alloy Wheels, Sunroof, Rear Locking Trunk Heater, Power
Windows, Optional Air Conditioning, Alloy Wheels, Am-Fm USB/SD
Stereo and more |
|
|
|
|
 |
|
IMPERIUM Urbee 2S |
|
|
|
|
|
|
● |
SEATING
for two with Steel Safety Cell Construction |
|
|
● |
MOTOR
2.8 kW or optional 4.0 kW Brushless DC |
|
|
● |
SPEED
up to 55 km/h |
|
|
● |
RANGE
up to 140 km on a single charge |
|
|
● |
BATTERY
60-volt 600 Ah Maintenance Free Lead Acid |
|
|
● |
EQUIPPED
with Sunroof, Lockable Rear Trunk, Heater, Power Windows, Optional
Air Conditioning, Alloy Wheels, Am-Fm USB/SD Stereo and
more |
 |
|
IMPERIUM Urbee Cargo Van |
|
|
|
|
|
|
● |
SEATING
for two with Steel Safety Cell Construction |
|
|
● |
MOTOR
4.5 kW Brushless DC Motor Standard |
|
|
● |
SPEED
up to 45 km/h |
|
|
● |
RANGE
up to 120 km on a single charge |
|
|
● |
BATTERY
60-volt 600 Ah Maintenance Free Lead Acid |
|
|
● |
EQUIPPED
with Large All Steel Locking Cargo Box with Dual Doors, Heater,
Power Windows, Optional Air Conditioning, Alloy Wheels, Am-Fm
USB/SD Stereo and more |
 |
|
IMPERIUM Five Star Van |
|
|
|
|
|
|
● |
SEATING
for two or five Passengers for Cargo Van |
|
|
● |
MOTOR
up to 18 kW and 320 volt rated |
|
|
● |
SPEED
up to 55 km/h for LSV and 100 km/h for Mid Speed Model |
|
|
● |
RANGE
up to 150 km for Lead Acid Battery Pack or up to 300 km with
optional Lithium Battery Pack |
|
|
● |
BATTERY
Quick Change Swappable Battery Packs with level one, two and
optional level 3 DC Fast Charging |
|
|
● |
EQUIPPED
with Dual Air Conditioning, Heater, Power Windows, Power Door
Locks, Am-Fm USB/SD Stereo and more |
|
|
|
|
 |
|
IMPERIUM T-Truck |
|
|
|
|
|
|
● |
READY
for the road or use inside a warehouse with no tailpipe
emissions |
|
|
● |
CARGO
BED with fold down tailgate |
|
|
● |
PERSONAL
transportation or commercial ready |
|
|
● |
MOTOR
2.0 kW Permanent Magnet DC |
|
|
● |
ADJUSTABLE
SPEED up to 55 kp/h |
|
|
● |
BATTERY
Maintenance Free Lead Acid or optional Lithium |
|
|
● |
EQUIPPED
with Alloy Wheels and Radial Tires, Full Lighting, Turn Signals,
Windshield Wiper, Motorcycle Style Front Controls and
more |
 |
|
IMPERIUM T-Van |
|
|
|
|
|
|
● |
READY
for the road or use inside a warehouse with no tailpipe
emissions |
|
|
● |
STEEL
VAN BOX with HD locking dual doors |
|
|
● |
PERSONAL
transportation or commercial use |
|
|
● |
MOTOR
2.0 kW Permanent Magnet DC |
|
|
● |
ADJUSTABLE
SPEED up to 55 kp/h |
|
|
● |
BATTERY
Maintenance Free Lead Acid or optional Lithium |
|
|
● |
EQUIPPED
with Alloy Wheels and Radial Tires, Full Lighting, Turn Signals,
Windshield Wiper, Motorcycle Style Front Controls and
more |
 |
|
IMPERIUM T01 |
|
|
|
|
|
|
● |
SEATING
for three passengers or Taxi open style model |
|
|
● |
MOTOR
1.0 kW Permanent Magnet DC with optional 1.5 kW Motor
Available |
|
|
● |
SPEED
up to 40 km/h |
|
|
● |
RANGE
up to 80 km |
|
|
● |
BATTERY
60V 225 Ah Maintenance Free Lead Acid or Optional Lithium Ion
Battery. |
|
|
● |
EQUIPPED
with Auto Trans, Stereo, Heater, Alloy Wheels, Full or Half Doors,
DOT Lighting, Turn Signals and more |
 |
|
IMPERIUM e-Rickshaw Extended Deluxe |
|
|
|
|
|
|
● |
SEATING
for five |
|
|
● |
MOTOR
1.5kW or optional 2.0kW Permanent Magnet Motor |
|
|
● |
SPEED
32 km/h |
|
|
● |
RANGE
60 km or 80 km with optional Battery |
|
|
● |
BATTERY
45Ah or 60Ah Optional Colloid Battery Maintenance Free |
|
|
● |
E-TAXI
style with side seating, roof rack, stereo, alloy wheels, safety
steel frame and more |
|
|
|
|
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Imp-Moto Product Lineup |
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Full
Lineup of Electric Scooters, ATVs, UTVs and
Motorbikes |
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Lithium
Battery power available on most models |
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Off-Road
or on road models |
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Low
Maintenance EV Units |
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Units
for most every purpose including specialized delivery models and
ride share Scooters with quick change battery packs |
Imperium’s Production Partners
Zhejiang
Jonway Automobile Co.
Imperium
has exclusive distribution rights in the United States, Canada,
Mexico and the Caribbean for Jonway built EVs.
Zhejiang
Jonway Automobile Co., Ltd (“Jonway”) began manufacturing in May
2003. The Taizhou city, Zhejiang province manufacturing plant has
an area of 57.3 hectares with more than 800 employees. It has
invested more than 600 million RMB in producing the three and
five-door SUVs, with a capacity to produce up to 30,000 units per
year. The manufacturing operations include pressing, welding,
painting and assembling lines. It has also gained the TS16949:2009,
GCC, SASO, SONCAP and CCC certification. Jonway offers a network of
more than 500 auto dealerships in China alone and has started a
distribution network in Italy.
As a
national first-class production enterprise, Jonway has passed the
ISO 9001 quality management system certification, the product has
passed the European certification and the American DOT, EPA
certification, and has been exported to more than 80 countries in
the world. Jonway has announced its third assembly plant in the
city of Xuzhou, China.
Skywell
New Energy Automobile Group Co. Ltd.
Sky-well
New Energy Automobile Group Co. Ltd. was founded in 2011. Primarily
engaged in the manufacturing and sales of large, medium and light
buses, passenger cars and related components, it has gradually
become a leading enterprise of China’s new energy automobile
industry. By the end of 2016, the total assets of the company were
7.838 billion Yuan, with the net assets of 1.429 billion
Yuan.
Skywell
owns Nanjing Jinlong Bus Manufacturing Co., Ltd., Wuhan Sky-well
New Energy Automobile Co., Ltd., Shenzhen Sky-well Automobile Co.,
Ltd, Nanjing Sky Source World Power Technology Co., Ltd and Qingdao
Sky-well New Energy Automobile Group Co. Ltd. Its products include
the 3.6-18 m series of electric passenger cars and passenger
vehicles, which are widely sold in many countries and regions in
Southeast Asia and widely used in public transport, tourism,
commuting, leasing and other markets. Skywell is also one of the
first companies to enter the clean energy bus industry. Known for
its emphasis on technology research and development, its skilled
workforce, its innovative designs and high-quality products, it has
achieved excellent results. Since 2014, Skywell has ranked as the
leading seller of new energy passenger cars in the
China.
Skywell
has granted to the Company the exclusive right to distribute
Skywell’s electric passenger cars, trucks (including but not
limited to the ET5 sport utility vehicle), buses and spare parts in
the United States and Canada for a term of 5 years.
Imperium Motor Company Experience Center
Our
Imperium Electric Vehicle Northern California Experience Center is
located in Fairfield, Solano County, California. Solano County is
situated between two of the largest Electric Vehicle markets in
California, the San Francisco Bay Area and Greater Sacramento with
a combined population of over 10 million people. California is
historically the top EV sales volume state with 50% of sales within
the United States. The building sits right next to the crossroads
of Freeway 80 and Freeway 680 in one of the best economic areas in
the nation.
The
Experience Center will feature the various models of new Electric
Cars, Trucks, Vans, UTVs, ATVs and Scooters arriving soon from the
manufacturer. The new building will not only display our new
selection of Electric Vehicles but will also host the center for
Dealer training and Parts and Service support.
Imperium Distribution Network
We
are currently marketing and offering direct sales of our electric
vehicles at our Imperium Motor Company Experience Center. However,
it is our objective to establish a network of experienced,
authorized automotive dealers across the United States and
throughout our territory. We are currently recruiting and vetting
applicant dealerships and expect to announce our inaugural group of
authorized dealers in 2021.
Electric
Vehicle Market Overview
United States
The
number of electric vehicles (EVs) on U.S. roads is projected to
reach 18.7 million in 2030, up from 1 million at the end of 2018.
This is about 7% of the 259 million vehicles (cars and light
trucks) expected to be on U.S. roads in 2030. EV sales in the
United States were up 79% in 2018 while global EV sales grew 64% in
the same year.
Canada
Sales
for 2018 were over 150% higher than 2017 and saw more EVs sold
across the country in 2018 than in the previous three years
combined. Nearly 3% of all new vehicles are electric, a higher rate
than in the United States.
Mexico
EV
sales in Latin America increased by 90% in 2018 due to growing
demand in Mexico, Colombia and Costa Rica. While the Latin American
EV market is far smaller than East Asia, Europe and North America,
accounting for less than 1% of global EV sales in 2018, it is
starting to grow thanks to a handful of incentives and targets.
Mexico and Costa Rica, for example, exempt EVs from numerous taxes
while Colombia has an ambitious target of 600,000 EVs on its roads
by 2030.
Companies
are also increasing their activity. BYD Co. now sells electric
buses across the region and Tesla Inc. recently launched its
best-selling Model 3 in Mexico.
Caribbean
While
most Caribbean islands are rapidly modernizing their electric
grids, the modernization of transportation systems has lagged. Is
change in the air? In November, the government of Bermuda signed a
memorandum of understanding with the Rocky Mountain Institute
(RMI), embracing a plan to fully transition the island’s
transportation sector to EVs.
The
case for EVs is strong in Bermuda, as it is across the Caribbean.
With predominantly flat terrain and driving distances that are
short enough to eliminate “range anxiety,” EVs make perfect
sense.
Caribbean
nations are uniquely positioned to reap major benefits from EVs
with the abundance of sunshine that could provide renewable solar
power on a significant scale. EV adoption would also reduce
reliance on fuel imports, which creates extreme economic
vulnerability linked to oil price fluctuations as well as
contribute to disaster resilience through energy storage—EV
batteries can serve as backup power sources during
hurricanes.
Competition in the EV Market
The
EV market is highly competitive and evolving rapidly, with new
manufacturers and distributors consistently entering the industry
to satisfy actual and expected growth in the demand for
competitively priced vehicles. As a result, we expect that we will
experience significant competition from new and established
manufacturers, marketers and distributors. These include niche
manufacturers of specialty electric vehicles, and large established
manufacturers of automobiles. These, including manufacturers of EVs
such as the Tesla Model S, the Chevrolet Volt and the Nissan
Leaf.
Most
of our current and potential competitors have significantly greater
financial, technical, manufacturing, marketing and other resources
than we do and may be able to devote greater resources to the
design, development, manufacturing, distribution, promotion, sale
and support of their products. Virtually all of our competitors
have more extensive customer bases and broader customer and
industry relationships than we do. In addition, almost all of these
companies have longer operating histories and greater name
recognition than we do. Our competitors may be in a stronger
position to respond quickly to new technologies and may be able to
design, develop, market and sell their products more
effectively.
Other
Recent Developments
On
November 1, 2020, the Company entered into an Advisory Services and
Consulting Agreement with a third party for a term of twelve (12)
months, and which may be terminated by either party after six (6)
months, whereby the Company agrees to pay a non-refundable cash
consulting fee of $3,500 per month as well as consideration of a
number of restricted common shares of the Company’s to be mutually
determined by the parties upon the Company’s listing on a U.S.
national exchange.
On
December 23, 2020, the Company entered into a two-year redeemable
stock purchase agreement (the “Series F SPA”) with a third party
for the purchase of shares of the Company’s Series F Preferred
stock at a price of $1,000 per share. In addition, the Company
agreed to issued 3,000,000 Warrants, exercisable into one common
share per warrant at an exercise price of $0.50, for a term of 5
years and are not eligible for cashless exercise. On the date of
the SPA, the third party purchased 1,500 Series F Preferred shares
in exchange for $1,500,000. Further, under the terms of the SPA,
the third party agreed to purchase an additional 1,500 Series F
Preferred shares upon the filing by the Company of a registration
statement with the Securities and Exchange Commission (the
“Registration Statement”) registering the common shares underlying
the Series F Preferred shares and underlying the warrants. At the
Company’s request, the third party agrees to purchase an additional
1,000 Series F Preferred shares every thirty days (an “Additional
Closing”) as long as the Registration Statement remains effective
and the Company’s average daily trading volume for the third
trading days prior to an Additional Closing is at least $500,000
per day.
On
January 29, 2021, the Company issued a preliminary prospectus (the
“Registration Statement”) to offer and sell up to 10,000,000 common
shares, which will consist of up to 3,000,000 common shares
issuable upon exercise of outstanding warrants, and up to 7,000,000
common shares upon conversion of certain Series F Preferred shares
of the Company.
On
April 21, 2021, the Company filed with the Securities and Exchange
Commission a Registration Statement on Form S-1 to register a firm
commitment underwritten public offering of Units consisting of
common shares and common share purchase warrants in the aggregate
amount of $15,000,000 (the “Offering”). The offering price of the
Units will be determined between the underwriter and the Company at
the time of pricing, considering the Company’s historical
performance and capital structure, prevailing market conditions,
and overall assessment of the Company’s business, and may be at a
discount to the then current market price.
In
connection with the Offering, the Company has applied to list its
common stock and warrants on the Nasdaq Capital Market under the
symbols “DSGT” and “DSGTW”. No assurance can be given that the
Company’s application will be approved or that the trading prices
of its common stock on the OTCQB market will be indicative of the
prices of its common stock if its common stock were traded on the
Nasdaq Capital Market. If the listing application is not approved
by the Nasdaq Stock Market, the Company will not be able to
consummate the Offering and will terminate the Offering.
On
September 13, 2021, the Company entered into a securities purchase
agreement with a third party. Pursuant to the agreement, the
Company received cash proceeds of $2,000,000 on September 13, 2021
in exchange for the issuance of an unsecured convertible promissory
note in the principal amount of $2,400,000, which was inclusive of
a $400,000 original issue discount and bears interest at 9% per
annum to the holder. If the convertible note is not paid in full
before December 12, 2021, an additional $100,000 of guaranteed
interest will be added to the note. An additional $100,000 of
guaranteed interest will be added to the note on the
12th day of each succeeding month during which any
portion of the convertible note remains unpaid. Any principal or
interest on the convertible note that is not paid when due or
during any period of default bears interest at 24% per
annum.
In
the event of a default, the note is convertible at the price that
is equal to a 40% discount to the lowest trading price of the
Company’s common shares during the 30 day trading period prior to
the conversion date.
On
February 17, 2022, the Company entered into a Waiver of Conditions
to the Share Purchase Agreement (the “SPA”) dated December 13,
2021. The Company received two payments in the amount of $250,000
on each of February 28, 2022 and March 31, 2022. The Company agrees
to repay these amounts, on an ongoing basis, with an amount
equaling 20% of any gross proceeds collected by the Company until
such time that 250 shares of the Series F Preferred Stock issued
pursuant to this agreement and the SPA are redeemed in full. Under
the original terms of the SPA, the redemption required a 15%
premium, and due to the redemption being mandatory, the above
transactions were treated as loans and not as mezzanine equity. A
Redemption Premium of $75,000 was recognized, and recorded as part
of the loan.
During
the three months ended March 31, 2022, the Company made required
payments in the amount of $20,411, which was applied against the
loan payable.
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