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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For
the quarterly period ended June 30, 2023
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 August 28, 2023 the issuer had 157,257,212 shares of common stock issued and outstanding.
DSG
GLOBAL, INC.
TABLE
OF CONTENTS
PART
I: FINANCIAL INFORMATION
ITEM
1: Financial Statements (unaudited)
The
accompanying unaudited interim condensed consolidated financial statements of DSG Global Inc. as at June 30, 2023, have been prepared
by our management in conformity with accounting principles generally accepted in the United States of America and in accordance with
the instructions to Form 10-Q and Rule 8-03 of Regulation S-X and, therefore, do not include all information and footnotes necessary
for a complete presentation of financial position, results of operations, cash flows, and stockholders’ equity in conformity with
generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation
of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature.
Operating
results for the six-month period ended June 30, 2023, are not necessarily indicative of the results that can be expected for the year
ending December 31, 2023.
DSG
GLOBAL, INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
AS
AT JUNE 30, 2023, AND DECEMBER 31, 2022
(Expressed
in U.S. dollars)
(UNAUDITED)
| |
June
30, 2023
| | |
December 31, 2022 | |
| |
| | |
| |
ASSETS | |
| | | |
| | |
CURRENT ASSETS | |
| | | |
| | |
Cash | |
$ | 19,546 | | |
$ | 53,779 | |
Trade receivables, net | |
| 353,381 | | |
| 711,028 | |
Lease receivable | |
| 3,772 | | |
| 3,627 | |
Inventories | |
| 865,149 | | |
| 1,204,577 | |
Prepaid expenses and deposits | |
| 443,135 | | |
| 189,884 | |
TOTAL CURRENT ASSETS | |
| 1,684,983 | | |
| 2,162,895 | |
| |
| | | |
| | |
Lease receivable | |
| 14,052 | | |
| 15,918 | |
Fixed assets, net | |
| 18,534 | | |
| 25,546 | |
Right-of-use assets, net | |
| 266,144 | | |
| 29,561 | |
Intangible assets, net | |
| 9,761 | | |
| 10,376 | |
TOTAL ASSETS | |
$ | 1,993,474 | | |
$ | 2,244,296 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |
| | | |
| | |
CURRENT LIABILITIES | |
| | | |
| | |
Trade and other payables | |
$ | 4,872,259 | | |
$ | 3,356,256 | |
Deferred revenue | |
| 512,321 | | |
| 481,474 | |
Lease liability | |
| 86,350 | | |
| 35,670 | |
Due to related party | |
| 55,334 | | |
| - | |
Loans payable | |
| 2,550,370 | | |
| 2,416,692 | |
Convertible notes payable | |
| 2,719,488 | | |
| 2,719,514 | |
TOTAL CURRENT LIABILITIES | |
| 10,796,122 | | |
| 9,009,606 | |
| |
| | | |
| | |
Lease liability | |
| 203,289 | | |
| 4,982 | |
Loans payable | |
| 150,000 | | |
| 150,000 | |
TOTAL LIABILITIES | |
| 11,149,411 | | |
| 9,164,588 | |
| |
| | | |
| | |
Contingencies (Note 16) | |
| - | | |
| - | |
| |
| | | |
| | |
MEZZANINE EQUITY | |
| | | |
| | |
Redeemable preferred stock, $0.001 par value, 24,010,000 shares authorized (2022 – 24,010,000), 52,451 issued and outstanding, 1,118 to be issued (2022 – 52,023 issued and outstanding, 860 to be issued) | |
| 3,157,555 | | |
| 2,635,345 | |
| |
| | | |
| | |
STOCKHOLDERS’ DEFICIT | |
| | | |
| | |
Preferred stock, $0.001 par value, 3,010,000 shares authorized (2022 – 3,010,000), 200,750 issued and outstanding (2022 – 200,780 issued and outstanding) | |
| 2,874,180 | | |
| 3,087,180 | |
Common stock, $0.001 par value, 1,000,000,000 shares authorized, (2022 – 350,000,000); 154,413,610 issued and outstanding (2022 – 145,429,993) | |
| 154,414 | | |
| 145,430 | |
Additional paid in capital, common stock | |
| 51,209,956 | | |
| 50,916,150 | |
Discounts on common stock | |
| (69,838 | ) | |
| (69,838 | ) |
Obligation to issue warrants | |
| 261,934 | | |
| 261,934 | |
Accumulated other comprehensive income | |
| 1,345,593 | | |
| 1,345,593 | |
Accumulated deficit | |
| (68,089,731 | ) | |
| (65,242,086 | ) |
TOTAL STOCKHOLDERS’ DEFICIT | |
| (12,313,492 | ) | |
| (9,555,637 | ) |
| |
| | | |
| | |
TOTAL LIABILITIES MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT | |
$ | 1,993,474 | | |
$ | 2,244,296 | |
The
accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
DSG
GLOBAL, INC.
INTERIM
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE
LOSS
FOR
THE THREE AND SIX MONTHS ENDED JUNE 30, 2023 AND 2022
(Expressed
in U.S. dollars)
(UNAUDITED)
| |
June
30, 2023 | | |
June
30, 2022 | | |
June
30, 2023 | | |
June
30, 2022 | |
| |
Three months ended | | |
Six months ended | |
| |
June
30, 2023 | | |
June
30, 2022 | | |
June
30, 2023 | | |
June
30, 2022 | |
| |
| | |
| | |
| | |
| |
Revenue | |
$ | 1,016,037 | | |
$ | 1,174,878 | | |
$ | 1,315,485 | | |
$ | 1,919,129 | |
Cost of revenue | |
| 395,285 | | |
| 814,882 | | |
| 545,377 | | |
| 1,301,839 | |
Gross profit | |
| 620,752 | | |
| 359,996 | | |
| 770,108 | | |
| 617,290 | |
| |
| | | |
| | | |
| | | |
| | |
Operating expenses | |
| | | |
| | | |
| | | |
| | |
Compensation expense | |
| 321,644 | | |
| 1,211,309 | | |
| 684,562 | | |
| 1,667,263 | |
General and administration expense | |
| 755,452 | | |
| 566,176 | | |
| 1,665,851 | | |
| 1,244,665 | |
Research and development | |
| - | | |
| 36,750 | | |
| - | | |
| 36,750 | |
Bad debt expense | |
| - | | |
| - | | |
| 104,124 | | |
| 12,482 | |
Inventory write-down | |
| 64,680 | | |
| - | | |
| 64,680 | | |
| - | |
Depreciation and amortization expense | |
| 2,779 | | |
| 3,093 | | |
| 5,770 | | |
| 6,230 | |
Total operating expenses | |
| 1,144,555 | | |
| 1,817,328 | | |
| 2,524,987 | | |
| 2,967,390 | |
Loss from operations | |
| (523,803 | ) | |
| (1,457,332 | ) | |
| (1,754,879 | ) | |
| (2,350,100 | ) |
| |
| | | |
| | | |
| | | |
| | |
Other income (expense) | |
| | | |
| | | |
| | | |
| | |
Foreign currency exchange | |
| (2,401 | ) | |
| 1,721 | | |
| (6,225 | ) | |
| (26,712 | ) |
Loss on sale of lease receivable | |
| - | | |
| (3,923 | ) | |
| - | | |
| (3,923 | ) |
Gain on lease modification | |
| - | | |
| - | | |
| 6,932 | | |
| | |
Gain on extinguishment of debt | |
| - | | |
| - | | |
| - | | |
| 10,240 | |
Gain on disposal | |
| - | | |
| - | | |
| - | | |
| 3,960 | |
Redemption premium on preferred shares | |
| - | | |
| - | | |
| - | | |
| (3,062 | ) |
Finance costs | |
| (551,389 | ) | |
| (527,937 | | |
| (1,093,473 | ) | |
| (1,084,549 | ) |
Total other income (expense) | |
| (553,790 | ) | |
| (530,139 | ) | |
| (1,092,766 | ) | |
| (1,104,046 | ) |
Net loss | |
$ | (1,077,593 | ) | |
$ | (1,987,471 | ) | |
$ | (2,847,645 | ) | |
$ | (3,454,146 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net loss per share | |
| | | |
| | | |
| | | |
| | |
Basic and diluted | |
$ | (0.01 | ) | |
$ | (0.02 | ) | |
$ | (0.02 | ) | |
$ | (0.03 | ) |
| |
| | | |
| | | |
| | | |
| | |
Weighted average number of shares used in computing basic and diluted net income (loss) per share: | |
| | | |
| | | |
| | | |
| | |
Basic and diluted | |
| 153,344,790 | | |
| 131,515,955 | | |
| 154,413,610 | | |
| 130,622,598 | |
The
accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
DSG
GLOBAL, INC.
INTERIM
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
FOR
THE THREE AND SIX MONTHS ENDED JUNE 30, 2023 AND 2022
(Expressed
in U.S. dollars)
(UNAUDITED)
| |
June
30, 2023 | | |
June
30, 2022 | | |
June
30, 2023 | | |
June
30, 2022 | |
| |
Three months ended | | |
Six months ended | |
| |
June
30, 2023 | | |
June
30, 2022 | | |
June
30, 2023 | | |
June
30, 2022 | |
| |
| | |
| | |
| | |
| |
Net loss | |
$ | (1,077,593 | ) | |
$ | (1,987,471 | ) | |
$ | (2,847,645 | ) | |
$ | (3,454,146 | ) |
Other comprehensive (loss) income | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
Foreign currency translation adjustments | |
| - | | |
| (27,236 | ) | |
| - | | |
| (50,285 | ) |
| |
| | | |
| | | |
| | | |
| | |
Comprehensive loss | |
| (1,077,593 | ) | |
| (1,960,235 | ) | |
| (2,847,645 | ) | |
| (3,403,861 | ) |
The
accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements
DSG
GLOBAL, INC.
INTERIM
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT FOR THE
THREE AND SIX MONTHS ENDED JUNE 30, 2023
(Expressed
in U.S. dollars)
(UNAUDITED)
| |
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 | |
| |
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, 2021 | |
| 128,345,183 | | |
$ | 128,345 | | |
$ | 50,068,418 | | |
$ | (69,838 | ) | |
$ | 19,647 | | |
$ | 261,934 | | |
| 200,454 | | |
$ | 200 | | |
$ | 1,199,280 | | |
$ | - | | |
$ | 1,289,564 | | |
$ | (57,694,695 | ) | |
$ | (4,797,145 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
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 | | |
$ | 131,516 | | |
$ | 50,705,826 | | |
$ | (69,838 | ) | |
$ | - | | |
$ | 261,934 | | |
| 200,454 | | |
$ | 200 | | |
$ | 1,199,280 | | |
| - | | |
$ | 1,312,613 | | |
$ | (59,161,370 | ) | |
$ | (5,574,839 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Shares issued for services | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 105 | | |
| - | | |
| 777,000 | | |
| - | | |
| - | | |
| - | | |
| 777,000 | |
Net loss for the period | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 27,236 | | |
| (1,960,235 | ) | |
| (1,987,471 | ) |
Balance, June 30, 2022 | |
| 131,515,955 | | |
$ | 131,516 | | |
$ | 50,705,826 | | |
$ | (69,838 | ) | |
$ | - | | |
$ | 261,934 | | |
| 200,559 | | |
$ | 200 | | |
$ | 1,976,280 | | |
| - | | |
$ | 1,339,849 | | |
$ | (61,148,841 | ) | |
$ | (6,758,074 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance, December 31, 2022 | |
| 145,429,993 | | |
$ | 145,430 | | |
$ | 50,916,150 | | |
$ | (69,838 | ) | |
$ | - | | |
$ | 261,934 | | |
| 200,780 | | |
$ | 200 | | |
$ | 3,086,980 | | |
| - | | |
$ | 1,345,593 | | |
$ | (65,242,086 | ) | |
$ | (9,555,637 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Shares issued on conversion of preferred shares | |
| 8,983,617 | | |
| 8,984 | | |
| 293,806 | | |
| - | | |
| - | | |
| - | | |
| (30 | ) | |
| - | | |
| (213,000 | ) | |
| - | | |
| - | | |
| - | | |
| 89,790 | |
Net loss for the period | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (1,770,052 | ) | |
| (1,770,052 | ) |
Balance,March 31, 2023 | |
| 154,413,610 | | |
$ | 154,414 | | |
$ | 51,209,956 | | |
$ | (69,838 | ) | |
$ | - | | |
$ | 261,934 | | |
| (200,750 | ) | |
$ | 200 | | |
$ | 2,873,980 | | |
| - | | |
$ | 1,345,593 | | |
$ | (67,012,138 | ) | |
$ | (11,235,899 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net loss for the period | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (1,077,593 | ) | |
| (1,077,593 | ) |
Balance,June 30, 2023 | |
| 154,413,610 | | |
$ | 154,414 | | |
$ | 51,209,956 | | |
$ | (69,838 | ) | |
$ | - | | |
$ | 261,934 | | |
| (200,750 | ) | |
$ | 200 | | |
$ | 2,873,980 | | |
| - | | |
$ | 1,345,593 | | |
$ | (68,089,731 | ) | |
$ | (12,313,492 | ) |
The
accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
DSG
GLOBAL INC.
INTERIM
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR
THE SIX MONTHS ENDED JUNE 30, 2023, AND 2022
(Expressed
in U.S. Dollars)
(UNAUDITED)
| |
June
30, 2023 | | |
June
30, 2022 | |
| |
| | |
| |
Net loss | |
$ | (2,847,645 | ) | |
$ | (3,454,146 | ) |
| |
| | | |
| | |
Adjustments to reconcile net loss to net cash used in operating activities: | |
| | | |
| | |
Depreciation and amortization | |
| 5,771 | | |
| 70,189 | |
Change in ROU assets | |
| 42,646 | | |
| - | |
Accretion of discounts on debt | |
| - | | |
| 315,065 | |
Loss on sale of lease receivable | |
| - | | |
| 3,923 | |
Gain on lease modification | |
| (6,932 | ) | |
| - | |
Bad debt expense | |
| 104,124 | | |
| 12,482 | |
Accretion on lease liability | |
| - | | |
| 27,224 | |
Gain on extinguishment of debt | |
| - | | |
| (10,240 | ) |
Preferred shares issued for services | |
| - | | |
| 777,000 | |
Shares and warrants issued for services | |
| - | | |
| 76,276 | |
Unrealized foreign exchange loss | |
| 101 | | |
| 2,997 | |
Inventory write down | |
| 64,680 | | |
| - | |
Gain on asset disposal | |
| - | | |
| (3,960 | ) |
| |
| | | |
| | |
Changes in non-cash working capital: | |
| | | |
| | |
Trade receivables, net | |
| 255,942 | | |
| (177,714 | ) |
Inventories | |
| 274,748 | | |
| 110,467 | |
Prepaid expense and deposits | |
| (253,251 | ) | |
| 183,783 | |
Lease receivable | |
| (698 | ) | |
| (21,641 | ) |
Trade payables and accruals | |
| 1,516,003 | | |
| 1,629,447 | |
Deferred revenue | |
| 30,847 | | |
| 213,458 | |
Lease liabilities | |
| (21,581 | ) | |
| (101,051 | ) |
Interest on mandatorily redeemable preferred shares | |
| - | | |
| 3,062 | |
Net cash used in operating activities | |
| (835,245 | ) | |
| (343,399 | ) |
| |
| | | |
| | |
Cash flows from investing activities | |
| | | |
| | |
Purchase of equipment | |
| - | | |
| (8,892 | ) |
Disposal of property and equipment | |
| - | | |
| 10,225 | |
Net cash provided by investing activities | |
| - | | |
| 1,333 | |
| |
| | | |
| | |
Cash flows from financing activities | |
| | | |
| | |
Proceeds from issuing preferred shares, and shares to be issued | |
| 612,000 | | |
| 250,000 | |
Proceeds from related party loans payable | |
| 71,570 | | |
| - | |
Proceeds from loans payable | |
| 159,986 | | |
| 500,000 | |
Proceeds from sale of lease receivable | |
| - | | |
| 863,527 | |
Payments on related party loans payable | |
| (14,236 | ) | |
| - | |
Payments on loans payable | |
| (26,307 | ) | |
| (20,411 | ) |
Net cash provided by financing activities | |
| 803,013 | | |
| 1,593,116 | |
| |
| | | |
| | |
Effect of exchange rate changes on cash | |
| (2,001 | ) | |
| 50,285 | |
| |
| | | |
| | |
Net increase (decrease) in cash | |
| (34,233 | ) | |
| 1,301,335 | |
Cash at beginning of period | |
| 53,779 | | |
| 275,383 | |
| |
| | | |
| | |
Cash at the end of the period | |
$ | 19,546 | | |
$ | 1,576,718 | |
| |
| | | |
| | |
Supplemental Cash Flow Information (Note 17) | |
| | | |
| | |
The
accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
DSG
GLOBAL, INC.
NOTES
TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Expressed
in U.S. Dollars)
(UNAUDITED)
Note
1 – ORGANIZATION
DSG
Global, Inc. (the “Company”) was incorporated under the laws of the State of Nevada on September 24, 2007.
The
Company is a technology development company engaged in the design, manufacture, and marketing of fleet management solutions in the golf
industry. The Company’s principal activities are the sale and rental of GPS tracking devices and interfaces for golf vehicles and
related support services. Starting during the year ended December 31, 2021, the Company began to market low speed electric vehicles,
and e-bikes, recognizing its first sales in this space. Sales from these product lines have not reached a level of materiality to be
disclosed as separate segments of the business. The Company also began the start of the homologation project for electric vehicles.
On
April 13, 2015, the Company entered into a share exchange agreement with DSG Tag Systems Inc. (“DSG”), now a wholly-owned
subsidiary of the Company, incorporated under the laws of the State of Nevada on April 17, 2008 and extra provincially registered in
British Columbia, Canada in 2008. In March 2011, DSG formed DSG Tag Systems International, Ltd. in the United Kingdom (“DSG UK”).
DSG UK is a wholly owned subsidiary of DSG.
On
September 15, 2020, the Company incorporated Imperium Motor Corp. (“Imperium”), under the laws of the State of Nevada on
September 10, 2020, for which it subscribed to all authorized capital stock, 100 shares of Preferred Class A Stock, at a price of $0.001
per share. Imperium is a wholly owned subsidiary of the Company.
On
August 12, 2021, the Company incorporated Imperium Motor of Canada Corporation (“Imperium Canada”), under the laws of British
Columbia, Canada, for which it subscribed to all authorized capital stock, 100 shares of Class A Voting Participating common shares,
at a price of $0.10 per share. Imperium Canada is a wholly owned subsidiary of the Company.
On
September 17, 2021, the Company incorporated AC Golf Carts, Inc. (“AC Golf Carts”), under the laws of the State of Nevada,
for which it subscribed to all authorized stock, 100 common shares at a price of $0.001 par value per share. AC Golf Carts is a wholly
owned subsidiary of the Company.
On
January 5, 2023, Imperium Motor Corp. had its name changed to Liteborne Motor Corporation.
Note
2 – GOING CONCERN
These
unaudited interim condensed consolidated financial statements have been prepared on a going concern basis, which implies the Company
will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as
a going concern is dependent upon the continued financial support from its shareholders and note holders, the ability of the Company
to obtain necessary equity financing to continue operations, and ultimately the attainment of profitable operations.
As
of June 30, 2023, the Company had working capital deficit of $9,111,139 and had an accumulated deficit of $68,089,731 since inception.
Furthermore, the Company incurred a net loss of $2,847,645 and used $835,245 of cash flows for operating activities during the six months
ended June 30, 2023. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These
unaudited interim condensed consolidated financial statements do not include any adjustments to the recoverability and classification
of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going
concern. These adjustments could be material.
Note
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accompanying interim condensed consolidated financial statements were prepared in conformity with generally accepted accounting principles
in the United States (“U.S. GAAP”) and with the instructions to Form 10-Q.
Certain
information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed
or omitted pursuant to U.S. GAAP rules and regulations for presentation of interim financial information. Therefore, the unaudited interim
condensed consolidated financial statements should be read in conjunction with the financial statements and the notes thereto, included
in the Company’s Annual Report on the Form 10-K for the year ended December 31, 2022. 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, 2022 included
in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission. In the opinion of Management, all
adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made. Operating
results for the six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year ending
December 31, 2023.
Principles
of Consolidation
The
interim condensed consolidated financial statements include the accounts of DSG Global Inc., its subsidiary VTS, and its wholly owned
subsidiaries Liteborne Motor Corp., DSG Tag Systems Inc., 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. |
Accounts
Receivable and provision for current expected credit losses (“CECLs”)
All
accounts receivable under standard terms are due thirty (30) days from the date billed. If the funds are not received within thirty (30)
days, the customer is contacted to arrange payment. The company assesses its receivables at each period end in accordance with ASC 326-20.
This exercise requires considerable judgement, including consideration of how changes in economic factors affect CECLs which are determined
on a probability-weighted basis. The Company measures provision for ECLs on its trade receivables at an amount equal to lifetime ECLs.
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.
Warranty
Reserve
The
Company accrues for warranty costs, sales returns, and other allowances based on its historical experience. During the period ended June
30, 2023 and the comparable period of June 30, 2022, the Company did not provide a warranty for any of its products sold during those
periods. The warranty reserve was $Nil as at June 30, 2023 and 2022.
Re-classification
During
the period ended June 30, 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 June 30, 2023, and December 31, 2022, trade receivables consist of the following:
SCHEDULE
OF TRADE RECEIVABLES
| |
June 30,
2023 | | |
December 31, 2022 | |
Accounts receivable | |
$ | 440,235 | | |
$ | 711,028 | |
Allowance for doubtful accounts | |
| (86,854 | ) | |
| - | |
Total trade receivables, net | |
$ | 353,381 | | |
$ | 711,028 | |
Note
5 – INVENTORIES
As
of June 30, 2023, and December 31, 2022, finished goods inventories consist of the following:
SCHEDULE
OF INVENTORIES
| |
June 30,
2023 | | |
December 31, 2022 | |
Parts and accessories | |
$ | 87,638 | | |
$ | 217,582 | |
Golf carts | |
| 664,581 | | |
| 799,035 | |
E-bikes | |
| 112,930 | | |
| 123,280 | |
Electric vehicles | |
| - | | |
| 64,680 | |
Total inventories | |
$ | 865,149 | | |
$ | 1,204,577 | |
During
the period ended June 30, 2023, the Company recorded an inventory write-down of $64,680 on the Electric Vehicles that they hold. These
vehicles are low speed electric vehicles that were imported from China and have been going through homologation since the year ended
December 31, 2021. Due to the Company being unsure if these vehicles will now clear the approval process to be used in North America,
they have been written down in their full amount.
Note
6 – FIXED ASSETS
As
of June 30, 2023, and December 31, 2022, fixed assets consisted of the following:
SCHEDULE OF FIXED ASSETS
| |
June 30, 2023 | | |
December 31, 2022 | |
Machinery | |
$ | 5,040 | | |
$ | 5,040 | |
Furniture and equipment | |
| 2,403 | | |
| 2,587 | |
Computer equipment | |
| 47,312 | | |
| 50,781 | |
Vehicles | |
| 18,450 | | |
| 19,989 | |
Fixed assets, gross | |
| 18,450 | | |
| 19,989 | |
Accumulated depreciation | |
| (54,671 | ) | |
| (52,851 | ) |
Fixed assets, net | |
$ | 18,534 | | |
$ | 25,546 | |
For
the three and six months ended June 30, 2023, total depreciation expense for fixed assets was $2,779 and $5,770, respectively (June 30,
2022 - $3,093 and $6,230, respectively) and is included in depreciation and amortization expense.
Note
7 – INTANGIBLE ASSETS
As
of June 30, 2023, and December 31, 2022, intangible assets consist of the following:
SCHEDULE OF INTANGIBLE ASSETS
| |
June 30, 2023 | | |
December 31, 2022 | |
Intangible asset – Patent | |
$ | 22,353 | | |
$ | 22,353 | |
Accumulated amortization | |
| (12,592 | ) | |
| (11,977 | ) |
Intangible asset, net | |
$ | 9,761 | | |
$ | 10,376 | |
Patents
are amortized on a straight-line basis over their estimated useful life of 20 years. For the three and six months ended June 30, 2023,
total amortization expense for intangible assets was $307 and $614, respectively (June 30, 2022 - $307 and $614, respectively).
Note
8 – TRADE AND OTHER PAYABLES
As
of June 30, 2023, and December 31, 2022, trade and other payables consist of the following:
SCHEDULE OF TRADE AND OTHER PAYABLES
| |
June 30, 2023 | | |
December 31, 2022 | |
Accounts payable and accrued expenses | |
$ | 2,025,234 | | |
$ | 1,462,557 | |
Accrued interest | |
| 2,826,669 | | |
| 1,880,462 | |
Other liabilities | |
| 20,356 | | |
| 12,236 | |
Total payables | |
$ | 4,872,259 | | |
$ | 3,356,256 | |
Note
9 – LOANS PAYABLE
As
of June 30, 2023, and December 31, 2022, loans payable consisted of the following:
SCHEDULE OF LOANS PAYABLE
| |
June 30, 2023 | | |
December 31, 2022 | |
Unsecured loan payable in the amount of CAD$40,000, due on or before December 31, 2025(a) | |
$ | 30,187 | | |
$ | 29,520 | |
Unsecured loan payable in the amount of CAD$40,000, due on or before December 31, 2025(a) | |
$ | 30,187 | | |
$ | 29,520 | |
Unsecured loan payable in the amount of CAD$40,000, due on or before December 31, 2025(b) | |
| 30,187 | | |
| 29,520 | |
Secured loan payable, due on June 5, 2050, interest at 3.75% per annum(c) | |
| 150,000 | | |
| 150,000 | |
Unsecured loan payable, due on December 1, 2025, interest at 10% per annum(d) | |
| 1,000,000 | | |
| 1,000,000 | |
Preferred F series shares issued with mandatory redemption(f) | |
| 1,331,344 | | |
| 1,357,652 | |
Unsecured
loan payable (g) | |
| 159,985 | | |
| - | |
Foreign exchange | |
| (1,333 | ) | |
| - | |
Total | |
| 2,700,370 | | |
| 2,566,692 | |
Current portion | |
| (2,550,370 | ) | |
| (2,416,692 | ) |
Loans payable, Long term | |
$ | 150,000 | | |
$ | 150,000 | |
(a) |
|
|
|
(b) |
|
|
|
(c) |
|
|
|
(d) |
|
|
|
(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 was 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 and six months ended June 30, 2023, the Company recorded $445,600 and $889,600 in interest expense including $300,000 and
$600,000 of additional interest, respectively. As at June 30, 2023, the carrying value of the convertible promissory note was $2,400,000
(December 31, 2022 - $2,400,000).
As
the note is now in default, it has become convertible. See Note 10.
|
|
|
(f) |
|
|
|
|
During
the six months ended June 30, 2023, the Company made required payments in the amount of $26,307, which was applied against the loan
payable. |
|
|
(g) |
|
Note
10 – CONVERTIBLE NOTES
As
of June 30, 2023, and December 31, 2022, 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 June 30, 2023, the carrying value of the convertible promissory note was $310,000 (December
31, 2022 - $310,000). |
|
|
(b)
|
On
June 5, 2017, the Company issued a convertible promissory note in the principal amount of $110,000. As at June 30, 2023, the carrying
value of the note was $9,488 (December 31, 2022 - $9,488), relating to an outstanding penalty. |
|
|
(c) |
As
per Note 9 (e) above, the $2,400,000 convertible note went into default, and therefore it has become convertible at the holder’s
request. The fair value of the loan approximates carrying value as it is now short term in nature, effectively due on demand. |
Note
11 - LEASES
Lessor
During
the six months ended June 30, 2023, the Company recognized new lease receivables of $nil, net of the $nil of leases transferred to third
party management (December 31, 2022 - $143,630 net of $nil 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 $nil (December 31, 2022 - $12,240) in inventory
related to the underlying assets, being recorded to cost of goods sold. During the year ended December 31, 2022, the Company sold $867,450
of lease receivables to a third party for $863,527. As a result of the sale, the Company derecognized the carrying value of $867,450
for the leases sold on the date of the transaction and recognized a loss of $3,923 in other income and expenses.
SCHEDULE OF LEASE RECEIVABLES RECOGNIZED
Lease receivable | |
June 30, 2023 | | |
December 31, 2022 | |
Balance, beginning of the period | |
$ | 19,545 | | |
$ | 810,236 | |
Additions | |
| - | | |
| 143,630 | |
Transfer to third party | |
| - | | |
| (867,450 | ) |
Interest on lease receivables | |
| 1,505 | | |
| 20,841 | |
Receipt of payments | |
| (3,226 | ) | |
| (81,979 | ) |
| |
| | | |
| | |
Foreign exchange | |
| - | | |
| (5,733 | ) |
Balance, end of the period | |
| 17,824 | | |
| 19,545 | |
Current portion of lease receivables | |
| (3,772 | ) | |
| (3,627 | ) |
Long term potion of lease receivables | |
$ | 14,052 | | |
$ | 15,918 | |
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 $8,351 and lease liabilities of $8,351. As of June 30, 2023, the Copier Lease
had a remaining term of 1.25 years, a net asset value of $2,574 and lease liability of $2,574. Lease expense
for the period ended June 30, 2023 was $911.
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 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. On August 10, 2022,
the lease ended.
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 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 June 30, 2023, the Croydon Lease had
a remaining term of 0.08
years. On March 1, 2023, the Company entered into a new lease for a portion of the existing office space. As this new agreement
would be for a previously leased space with no additional rights granted, it would be accounted for as a modification of the
existing lease. The company recognized an additional $124,729
(CAD$168,787)
in right-of-use assets and lease liabilities, and recorded a gain on lease modification of $6,932. As at the period ended June 30, 2023, the remaining lease term was 3.08, the net asset value was $114,511 and the
remaining lease liability was $120,088.
The
new lease has a commencement date of August 1, 2023 for a term of three years. The annual base rent for the premises starts at CAD$44,160,
with additional rent of CAD$1,380 per month for operating expenses. The lease contains two rights to renew, each for an additional three-year term, if written notice is provided no later than 9 months prior to the expiration of the current term.
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 June 30,
2023, the FD 150 Lease had a remaining term of 0.83 year, a net asset value of $289 and lease liability of $281.
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 June 30, 2023,
the Trailer Lease had a remaining term of 1.92 years, a net asset value of $4,943 and lease liability of $4,477.
On
March 1, 2023, the Company entered into a lease agreement for additional office and warehouse space in Surrey, BC in the same location
as our initial office space. Upon initial recognition of the lease, the Company recognized right-of-use assets of $162,291 (CAD$220,062)
and lease liabilities of $162,291 (CAD$220,062). The lease contains two rights to renew, each for an additional two year term, if written
notice is provided no later than 9 months prior to the expiration of the current term. The annual base rent for the premises starts at
CAD$65,760, with additional rent of CAD$1,827 per month for operating expenses. The lease includes a rent-free period with rent payments
commencing on June 1, 2023. As of June 30, 2023, the lease had a remaining term of 2.92 years, a net asset value of $143,827 and lease liability of $162,219.
Right-of-use
assets:
SCHEDULE OF CONSOLIDATED BALANCE SHEET OF LEASE
Right-of-use assets | |
June 30, 2023 | | |
December 31, 2022 | |
Opening | |
$ | 312,318 | | |
$ | 312,318 | |
Derecognition of leases | |
| (298,579 | ) | |
| | |
Recognition of new leases | |
| 287,020 | | |
| - | |
Accumulated amortization | |
| (39,131 | ) | |
| (282,251 | ) |
Foreign exchange | |
| 4,516 | | |
| (506 | ) |
Total right-of-use assets, net | |
$ | 266,144 | | |
$ | 29,561 | |
Lease liability | |
June 30, 2023 | | |
December 31, 2022 | |
Current portion | |
$ | 86,350 | | |
$ | 35,670 | |
Long-term portion | |
| 203,289 | | |
| 4,982 | |
Total lease liability | |
$ | 289,639 | | |
$ | 40,652 | |
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 lease if it is reasonably certain that the Company will exercise that option.
Lease
expense for the six months ended June 30, 2023, was $47,473 (2022 - $70,866) and is recorded in general and administration expense. Also
recognized is a $11,717 gain on lease modification that, when viewed with the loss on ROU modification of $4,785, results in the net
gain on lease modification of $6,932 as presented on the interim condensed consolidated statements of operations and comprehensive loss.
Future
minimum lease payments to be paid by the Company as a lessee for leases as of June 30, 2023, for the next four years are as follows:
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS
Lease commitments and lease liability | | |
June 30, 2023 | |
2023 | | |
$ | 57,181 | |
2024 | | |
| 115,593 | |
2025 | | |
| 113,680 | |
2026 | | |
| 47,248 | |
Total future minimum lease payments | | |
| 333,702 | |
Discount | | |
| (44,063 | ) |
Total | | |
| 289,639 | |
| | |
| | |
Current portion of lease liabilities | | |
| (86,350 | ) |
Long-term portion of lease liabilities | | |
$ | 203,289 | |
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 three and six months ended June 30, 2023, and for the
comparative June 30, 2022 periods.
SCHEDULE OF REDEEMABLE PREFERRED SHARE ACTIVITIES
| |
Shares | | |
Par | | |
Additional paid in capital | | |
To be issued | | |
Total | |
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 | | |
| 2,869,583 | |
Issuance | |
| 250 | | |
| - | | |
| 250,000 | | |
| (250,000 | ) | |
| - | |
Accrued preferred stock dividends | |
| - | | |
| - | | |
| (89,727 | ) | |
| 89,727 | | |
| - | |
Balance, June 30, 2022 | |
| 51,164 | | |
$ | 51 | | |
$ | 1,754,527 | | |
$ | 1,115,005 | | |
$ | 2,869,583 | |
Balance December 31, 2022 | |
| 52,023 | | |
$ | 51 | | |
$ | 1,775,166 | | |
$ | 860,128 | | |
$ | 2,635,345 | |
Issuance | |
| 612 | | |
| 1 | | |
| 611,999 | | |
| - | | |
| 612,000 | |
Converted for common shares | |
| (184 | ) | |
| - | | |
| (89,790 | ) | |
| - | | |
| (89,790 | ) |
Accrued preferred stock dividends | |
| - | | |
| - | | |
| (129,314 | ) | |
| 129,314 | | |
| - | |
Balance, March 31, 2023 | |
| 52,451 | | |
$ | 52 | | |
$ | 2,168,061 | | |
$ | 989,442 | | |
$ | 3,157,555 | |
Balance | |
| 52,451 | | |
$ | 52 | | |
$ | 2,168,061 | | |
$ | 989,442 | | |
$ | 3,157,555 | |
Accrued preferred stock dividends | |
| | | |
| - | | |
| (128,765 | ) | |
| 128,765 | | |
| - | |
Balance, June 30, 2023 | |
| 52,451 | | |
$ | 52 | | |
$ | 2,039,296 | | |
$ | 1,118,207 | | |
$ | 3,157,555 | |
Balance | |
| 52,451 | | |
$ | 52 | | |
$ | 2,039,296 | | |
$ | 1,118,207 | | |
$ | 3,157,555 | |
Mezzanine
Preferred Equity Transactions
During
the six months ended June 30, 2023:
|
●
|
184
Series F Preferred Shares were converted into common shares (see note 14). |
|
|
|
|
●
|
On
January 18, 2023, pursuant to the January 2023 Series F SPA, the Company received $300,000 for the subscription of 300 Series F preferred
shares. |
|
|
|
|
●
|
On
January 23, 2023, pursuant to the January 2023 Series F SPA, the Company received $312,000 for the subscription of 312 Series F preferred
shares. |
During
the year ended December 31, 2022:
|
●
|
620
Series F Preferred Shares were converted into common shares (see note 14). |
|
|
|
|
●
|
On
October 21, 2022, pursuant to the December 2021 Series F SPA, the Company received $410,000 for the subscription of 410 Series F
preferred shares (see note 9(f)), as well as issued 96 Series F preferred shares to settle $96,000 in dividends payable. |
|
|
|
|
●
|
On
September 15, 2022, pursuant to the December 2021 Series F SPA, the Company received $125,000 for the subscription of 125 Series
F preferred shares (see note 9(f)). The shares were issued on October 18, 2022. |
|
|
|
|
●
|
On
August 26, 2022, pursuant to the December 2021 Series F SPA, the Company received $250,000 for the subscription of 250 Series F preferred
shares (see note 9(f)). |
|
|
|
|
● |
On
July 29, 2022, pursuant to the December 2021 Series F SPA, the Company received $90,000 for the subscription of 90 Series F preferred
shares, as well as issued 368 Series F preferred shares to settle $368,000 in dividends payable. |
|
|
|
|
● |
On
March 31, 2022, pursuant to the December 2021 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 on April 1, 2022. |
|
|
|
|
●
|
On
February 7, 2022, pursuant to the December 2021 Series F SPA, the Company received $250,000 for the subscription of 250 Series F
preferred shares (see note 9(f)). |
|
|
|
|
● |
On
January 4, 2022, pursuant to the December Series 2021 F SPA, the Company received $250,000 for the subscription of 250 Series F preferred
shares (see note 9(f)). These shares were issued April 1, 2022 and recorded as such. |
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 June 30, 2023 the Company recorded $258,079 in dividends to be settled in preferred shares,
and $81,728 in penalty interest.
Note
13 – PREFERRED STOCK
Authorized
3,000,000
shares of Series A preferred shares authorized each having a par value of $0.001 per share.
10,000
shares of Series B convertible preferred shares authorized each having a par value of $0.001 per share. Each share of Series B convertible
preferred shares is convertible into 100,000 shares of common stock.
Preferred
Stock Transactions
During
the six months ended June 30, 2023:
|
●
|
30
Series B preferred shares were converted into 3,000,000 common shares with a fair value of $213,000 (see note 14). |
During
the year ended December 31, 2022:
|
●
|
On
November 3, 2022, the Company issued 30 shares of Series B preferred shares to a consultant of the Company for services to be rendered.
These preferred shares were value at $213,000 based on the fair value of the underlying common stock. |
|
|
|
|
●
|
On
August 1, 2022, the Company issued an aggregate of 191 shares of Series B preferred shares to the CEO of the Company for past services.
These preferred shares were value at $897,000 based on the fair value of the underlying common stock. |
|
|
|
|
●
|
On
June 27, 2022, the Company issued an aggregate of 105 shares of Series B preferred shares to the Company’s board of directors
for past services. These preferred shares were value at $777,000 based on the fair value of the underlying common stock. |
Note
14 – COMMON STOCK
Authorized
On
January 18, 2023, the Company received approval to increase the number of authorized common shares from 350,000,000 to 1,000,000,000.
1,000,000,000
common shares, authorized, each having a par value of $0.001 per share.
Common
Stock Transactions
During
the six months ended June 30, 2023:
|
●
|
The
Company issued 3,000,000 shares of common stock with a fair value of $213,000 for conversion of 30 Series B Preferred Shares. |
|
|
|
|
●
|
The
Company issued 5,983,617 shares of common stock with a fair value of $89,790 for conversion of 184 Series F Preferred Shares. |
During
the year ended December 31, 2022:
|
● |
The
Company issued an aggregate of 500,000 shares of common stock to satisfy shares to be issued for investor relations. The shares had
a fair value of $46,000 of which $26,353 of expense was recognized during the year period ended December 31, 2022. $19,647 of expense
was recorded during the year ended December 31, 2021 and $26,353 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 legal services. |
|
|
|
|
●
|
The
Company issued 15,924,810 shares of common stock with a fair value of $302,557 for conversion of 470 Series F Preferred Shares. |
Common
Stock to be Issued
Common
stock to be issued as at June 30, 2023 consists of:
None.
Common
stock to be issued as at December 31, 2022 consists of:
None.
Warrants
During
the six months ended June 30, 2023:
No
warrant activity took place in the six months ended June 30, 2023.
During
the year ended December 31, 2022:
|
● |
On
December 31, 2022, 6,813,371 warrants of the Company expired. |
The
fair values of the warrants were calculated using the following assumptions for the Black Sholes Option Pricing Model:
SCHEDULE OF WARRANTS ASSUMPTIONS
| |
December 31, 2022 | |
Risk-free interest rate | |
| 0.18% - 0.82 | % |
Expected life | |
| 3.29 - 5.11 years | |
Expected dividend rate | |
| 0 | % |
Expected volatility | |
| 285.40 – 300.18 | % |
The
continuity of the Company’s common stock purchase warrants issued and outstanding is as follows:
SCHEDULE OF WARRANTS OUTSTANDING
| | |
Warrants | | |
Weighted average
exercise price | |
Outstanding as at December 31, 2020 | | |
| 12,939,813 | | |
$ | 0.60 | |
Granted | | |
| 3,500,000 | | |
| 0.41 | |
Outstanding as at December 31, 2021 | | |
| 16,439,813 | | |
$ | 0.56 | |
Expired | | |
| 6,813,371 | | |
| 0.78 | |
Outstanding as at June 30, 2023 and December 31, 2022 | | |
| 9,626,442 | | |
$ | 0.40 | |
As
of June 30, 2023, the weighted average remaining contractual life of warrants outstanding was 2.11 years (December 31, 2022 – 2.61
years) with an intrinsic value of $nil (December 31, 2022 - $nil).
Note
15 – RELATED PARTY TRANSACTIONS
During
the six months ended June, 2023, the Company incurred $204,556 (2022 - $376,153) in salaries, bonuses of $60,000 (2022 - $60,000), and
$284,102 (2022 - $47,990) in consulting fees to the President and CEO, and CFO of the Company, and the President, CEO’s, and CFO’s
of the Company’s subsidiaries. As at June 30, 2023, the Company owed $97,000 (December 31, 2022 - $nil) to the President, CEO,
and CFO of the Company and $200,367 (December 31, 2022 - $49,441) to the President, CEOs, and CFOs of the Company’s subsidiaries
for management fees and salaries, which is recorded in trade and other payables. Amounts owed and owing are unsecured, non-interest bearing,
and due on demand. Recorded in due to related party are $55,334 (2022 - $nil) owed to the President and CEO of the Company. These amounts
are non-interest bearing and due on demand.
On March 15, 2023, the Company received a loan from a related party in the principal amount of $16,040 (CAD$22,000). The loan is non-interest bearing and due on demand. This amount was repaid during the period ended June 30, 2023.
On March 15, 2023, the Company received a loan from a related party in the principal amount of $10,000. The loan is non-interest bearing and due on demand.
On March 17, 2023, the Company received a loan from a related party in the principal amount of $20,000. The loan is non-interest bearing and due on demand.
On March 23, 2023, the Company received a loan from a related party in the principal amount of $3,000. The loan is non-interest bearing and due on demand.
On
April 11, 2023, the Company received a loan from a related party in the principal amount of $2,000. The loan is non-interest bearing
and due on demand.
On
June 21, 2023, the Company received a loan from a related party in the principal amount of $10,000. The loan is non-interest bearing
and due on demand.
On
June 30, 2023, the Company received a loan from a related party in the principal amount of $10,530. The loan is non-interest bearing
and due on demand.
Note
16 – SEGMENT INFORMATION
During
the six months ended June 30, 2023 and June 30, 2022, the Company’s operations included revenue and costs from the sale and rental
of GPS tracking devices and interfaces for golf vehicles and related support services, the sale of golf vehicles, and the sale of electric
vehicles which includes e-bikes. The Company’s reporting segments are those associated with operating segments above, and the administration
of the Company.
SCHEDULE OF SEGMENT REPORTING INFORMATION
Six months ended June 30, 2023 | |
Administration | | |
Electric Vehicles | | |
Golf Carts | | |
GPS Units | | |
Total | |
Revenue | |
$ | - | | |
$ | - | | |
$ | 822,444 | | |
$ | 493,041 | | |
$ | 1,315,485 | |
Cost of revenue | |
| - | | |
| - | | |
| 350,001 | | |
| 195,376 | | |
| 545,377 | |
Gross profit | |
| - | | |
| - | | |
| 472,443 | | |
| 297,665 | | |
| 770,108 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Operating expenses | |
| | | |
| | | |
| | | |
| | | |
| | |
Compensation expense | |
| 138,499 | | |
| (1,977 | ) | |
| 67,188 | | |
| 480,852 | | |
| 684,562 | |
General and administration expense | |
| 758,373 | | |
| 345,065 | | |
| 336,429 | | |
| 225,984 | | |
| 1,665,851 | |
Bad debt expense | |
| - | | |
| 37,433 | | |
| 49,112 | | |
| 17,579 | | |
| 104,124 | |
Inventory write-down | |
| - | | |
| - | | |
| 64,680 | | |
| - | | |
| 64,680 | |
Depreciation and amortization expense | |
| 5,770 | | |
| - | | |
| - | | |
| - | | |
| 5,770 | |
Total operating expense | |
| 902,642 | | |
| 380,521 | | |
| 517,409 | | |
| 724,415 | | |
| 2,524,987 | |
Loss from operations | |
| (902,642 | ) | |
| (380,521 | ) | |
| (44,966 | ) | |
| (426,750 | ) | |
| (1,754,879 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Other income (expense) | |
| | | |
| | | |
| | | |
| | | |
| | |
Foreign currency exchange | |
| (6,225 | ) | |
| - | | |
| - | | |
| - | | |
| (6,225 | ) |
Gain on lease modification | |
| 6,932 | | |
| - | | |
| - | | |
| - | | |
| 6,932 | |
Finance costs | |
| (1,029,068 | ) | |
| - | | |
| - | | |
| (64,405 | ) | |
| (1,093,473 | ) |
Total other income (expense) | |
| (1,028,361 | ) | |
| - | | |
| - | | |
| (64,405 | ) | |
| (1,092,766 | ) |
Net loss | |
$ | (1,931,003 | ) | |
$ | (380,521 | ) | |
$ | (44,966 | ) | |
$ | (491,155 | ) | |
|