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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

 

    Page No.
PART I — FINANCIAL INFORMATION  
     
Item 1. Financial Statements (unaudited) 3
     
  Interim Condensed Consolidated Balance Sheets 4
     
  Interim Condensed Consolidated Statements of Operations and Comprehensive Loss 5
     
  Interim Condensed Consolidated Statements of Stockholders’ Deficit 7
     
  Interim Condensed Consolidated Statements of Cash Flows 8
     
  Notes to Interim Condensed Consolidated Financial Statements 9
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 19
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk 54
     
Item 4. Controls and Procedures 54
     
PART II — OTHER INFORMATION  
     
Item 1. Legal Proceedings 55
     
Item 1A. Risk Factors 55
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 69
     
Item 3. Defaults Upon Senior Securities 69
     
Item 4. Mine Safety Disclosures 69
     
Item 5. Other Information 69
     
Item 6. Exhibits 70
     
Signatures 73

 

2

 

 

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.

 

3

 

 

DSG GLOBAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS AT MARCH 31, 2022, AND DECEMBER 31, 2021

(Expressed in U.S. dollars)

(UNAUDITED)

 

   

March 31, 2022

    December 31, 2021  
             
ASSETS                
CURRENT ASSETS                
Cash   $ 285,433     $ 275,383  
Trade receivables, net     398,065       239,822  
Lease receivable     169,616       87,020  
Inventories     739,475       712,678  
Prepaid expenses and deposits     316,490       385,323  
TOTAL CURRENT ASSETS     1,909,079       1,700,226  
                 
Lease receivable     817,181       723,216  
Fixed assets, net     138,300       177,194  
Intangible assets, net     11,297       11,604  
TOTAL ASSETS   $ 2,875,857     $ 2,612,240  
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIT                
CURRENT LIABILITIES                
Trade and other payables   $ 1,816,091     $ 1,202,598  
Deferred revenue     342,174       255,984  
Lease liability     101,452       121,270  
Loans payable     2,827,940       2,115,049  
Convertible notes payable     319,514       319,488  
TOTAL CURRENT LIABILITIES     5,407,171       4,014,389  
                 
Lease liability     23,942       38,696  
Loans payable     150,000       212,898  
TOTAL LIABILITIES     5,581,113       4,265,983  
                 
Contingencies (Note 16)     -       -  
                 
MEZZANINE EQUITY                
Redeemable preferred stock, $0.001 par value, 24,010,000 shares authorized (2021 – 24,010,000), 50,914 issued and outstanding, 1,290 to be issued (2021 – 50,804 issued and outstanding, 1,206 to be issued)     2,869,583       3,143,402  
                 
STOCKHOLDERS’ DEFICIT                
Preferred stock, $0.001 par value, 3,010,000 shares authorized (2021 – 3,010,000), 200,454 issued and outstanding (2021 – 200,454 issued and outstanding)     1,199,480       1,199,480  
Common stock, $0.001 par value, 350,000,000 shares authorized, (2021 – 350,000,000); 131,515,955 issued and outstanding (2021 – 128,345,183)     131,521       128,350  
Additional paid in capital, common stock     50,750,826       50,068,418  
Discounts on common stock     (69,838 )     (69,838 )
Common stock to be issued     -       19,647  
Obligation to issue warrants     261,934       261,934  
Accumulated other comprehensive income     1,312,608       1,289,559  
Accumulated deficit     (59,161,370 )     (57,694,695 )
TOTAL STOCKHOLDERS’ DEFICIT     (5,574,839 )     (4,797,145 )
                 
TOTAL LIABILITIES MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT   $ 2,875,857     $ 2,612,240  

 

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

 

4

 

 

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)

 

    March 31, 2022     March 31, 2021  
    Three months ending  
    March 31, 2022     March 31, 2021  
             
Revenue   $ 744,251     $ 387,106  
Cost of revenue     486,957       130,692  
Gross profit     257,294       256,414  
                 
Operating expenses                
Compensation expense     455,954       1,263,384  
General and administration expense     678,489       401,543  
Bad debt expense     12,482       4,580  
Depreciation and amortization expense     3,137       5,123  
Total operating expense     1,150,062       1,674,630  
Loss from operations     (892,768 )     (1,418,216 )
                 
Other income (expense)                
Foreign currency exchange     (28,433 )     (14,826 )
Other income     -       16,645  
Gain on extinguishment of debt     10,240       76,316  
Gain on disposal     3,960       -  
Redemption premium     (3,062 )     -  
Finance costs     (556,612 )     (11,490 )
Total other income (expense)     (573,907 )     66,645  
                 
Net loss   $ (1,466,675 )   $ (1,351,571 )
                 
Net loss per share                
                 
Basic and diluted:                
Basic and diluted   $ (0.01 )   $ (0.01 )
                 
Weighted average number of shares used in computing basic and diluted net loss per share:                
Basic and diluted     129,729,242       101,999,610  

 

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

 

5

 

 

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)

 

    March 31, 2022     March 31, 2021  
    Three months ending  
    March 31, 2022     March 31, 2021  
             
Net loss   $ (1,466,675 )   $ (1,351,571 )
Other comprehensive (loss) income                
                 
Foreign currency translation adjustments     23,049       (5,920 )
                 
Comprehensive loss   $ (1,443,626 )   $ (1,357,491 )

 

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

 

6

 

 

DSG GLOBAL, INC.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(Expressed in U.S. dollars)

(UNAUDITED)

 

                                                                               
    Common Stock     Preferred stock (equity)                    
    Shares     Amount     Additional paid in capital     Discount on common stock     To be issued     Obligation to issue warrants     Shares     Par value     Additional paid in capital     To be issued     Accumulated other comprehensive income     Accumulated deficit     Total
stockholders’ deficit
 
Balance, December 31, 2020     95,765,736     $ 94,018     $ 43,299,937     $ (69,838 )   $ 1,436,044     $ 163,998       200,508     $ 200     $ 744,480     $ 1,340,000     $ 1,252,082     $ (51,310,040 )   $ (3,049,119 )
                                                                                                         
Issuance for cash     -       -       -       -       -       -       -       -       -       -       -       -       -  
Shares issued for debt settlement     8,253,975       8,254       1,488,625       -       (1,436,044 )     -       -       -       -       -       -       -       60,835  
Shares and warrants issued for services     150,000       150       302,598       -       -       (163,998 )     -       -       -       -       -       -       138,750  
Cancellation of shares due to duplicate issuance     (1,751,288       -       -       -       -       -       -       -       -       -       -       -       -  
Preferred shares issued for services     -       -       -       -       -       -       116       -        2,189,600       (1,340,200 )     -       -       849,600  
Shares issued on conversion of preferred shares     7,118,548       7,119       963,857       -       -       -       (37 )     -        (208,680 )     -       -       -       762,296  
Net loss for the period     -       -       -       -       -       -       -       -       -       -       (5,920 )     (1,351,571 )     (1,357,491 )
Balance, March 31, 2021     109,536,971     $ 109,541     $ 46,055,017     $ (69,838 )   $ -     $ -       200,587     $ 200     $ 2,725,400       -     $ 1,246,162     $ (52,661,611 )   $ (2,595,129 )
                                                                                                         
Balance, December 31, 2021     128,345,183     $ 128,350     $ 50,068,418     $ (69,838 )   $ 19,647     $ 261,934       200,454     $ 200     $ 1,199,280       -     $ 1,289,559     $ (57,694,695 )   $ (4,797,145 )
                                                                                                         
Shares issued for cash     -       -       -       -       -       -       -       -       -       -       -       -          
Shares issued for debt settlement     500,000       500       46,500       -       (500 )     -       -       -       -       -       -       -       46,500  
Shares and warrants issued for services     660,000       660       114,100       -       (19,147 )     -       -       -       -       -       -       -       95,613  
Dividends     -       -       455,500       -       -       -       -       -       -       -       -      

-

    455,500
Shares issued on conversion of preferred shares     2,010,772       2,011       66,308       -       -       -               -       -       -       -       -       68,319  
Net loss for the period     -       -       -       -       -       -       -       -       -       -       23,049       (1,466,675 )     (1,443,626 )

Balance, March 31,

2022

    131,515,955     $ 131,521     $ 50,750,826     $ (69,838 )   $ -     $ 261,934       200,454     $ 200     $ 1,199,280       -     $ 1,312,608     $ (59,161,370 )   $ (5,574,839 )

 

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

 

7

 

 

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)

 

    March 31, 2022     March 31, 2021  
             
Net loss   $ (1,466,675 )   $ (1,351,571 )
                 
Adjustments to reconcile net loss to net cash used in operating activities:                
Depreciation and amortization     34,788       5,123  
Accretion of discounts on debt     167,355       -  
Bad debt expense     12,482       4,580  
Accretion on lease liability     12,958       -  
Preferred shares issued for services     -       849,600  
Shares and warrants issued for services     48,904       138,750  
Gain on extinguishment of debt     (10,240 )     (76,316 )
Unrealized foreign exchange (gain) loss     (5,287 )     (4,406 )
Gain on asset disposal     (3,960 )     -  
                 
Changes in non-cash working capital:                
Trade receivables, net     (165,574 )     (58,810 )
Inventories     (19,852 )     (95,128 )
Prepaid expense and deposits     174,650       (53,013 )
Lease receivable     (161,963 )     (244,963 )
Trade payables and accruals     596,277       (604,939 )
Deferred revenue     82,325       (14,509 )
Operating lease liabilities     (49,731 )     95,780  
Interest on mandatorily redeemable preferred shares     3,062       -  
Net cash used in operating activities     (750,481 )     (1,409,822 )
                 
Cash flows from investing activities                
Purchase of equipment     (1,426 )     (10,573 )
Disposal of property and equipment     10,225       -  
Net cash provided by (used in) investing activities     8,799       (10,573 )
                 
Cash flows from financing activities                
Proceeds from issuing preferred shares     -       1,500,000  
Proceeds from notes payable     500,000       -  
Proceeds from shares to be issued     250,000       -  
Payments on notes payable     (20,411 )     (193,889 )
Net cash provided by financing activities     729,589       1,306,111  
                 
Effect of exchange rate changes on cash     22,143       16,076  
                 
Net increase (decrease) in cash     10,050       (98,208 )
Cash at beginning of period     275,383       1,372,016  
                 
Cash at the end of the period   $ 285,433     $ 1,273,808  
                 
Supplemental Cash Flow Information (Note 18)              

 

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

 

8

 

 

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.

 

9

 

 

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:

 

    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:

 

    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  

 

10

 

 

Note 6 – FIXED ASSETS AND EQUIPMENT ON LEASE

 

As of March 31, 2022, and December 31, 2021, fixed assets consisted of the following:

 

    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:

 

    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:

 

    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  

 

11

 

 

Note 9 – LOANS PAYABLE

 

As of March 31, 2022, and December 31, 2021, loans payable consisted of the following:

 

    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.

 

12

 

 

 

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.

 

13

 

 

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.

 

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:

 

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.

 

                               
    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 )
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.

 

14

 

 

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.

 

15

 

 

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.

 

16

 

 

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:

 

    December 31, 2021  
Risk-free interest rate     0.180.82 %
Expected life     3.295.11 years  
Expected dividend rate     0 %
Expected volatility      285.40300.18 %

 

The continuity of the Company’s common stock purchase warrants issued and outstanding is as follows:

 

    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.

 

17

 

 

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

 

    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.

 

18

 

 

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.

 

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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.

 

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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.

 

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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.

 

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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

 

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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

 

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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

 

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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.

 

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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

 

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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.

 

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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.

 

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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.

 

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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

 

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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.

 

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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.

 

 

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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.

 

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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.

 

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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

 

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  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

 

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    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

 

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    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

 

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    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
       
    Imp-Moto Product Lineup
       
    Full Lineup of Electric Scooters, ATVs, UTVs and Motorbikes
    Lithium Battery power available on most models
    Off-Road or on road models
    Low Maintenance EV Units
    Units for most every purpose including specialized delivery models and ride share Scooters with quick change battery packs

 

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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.

 

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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.

 

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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.