Filed 2023-04-18 · Period ending 2022-12-31 · 61,773 words · SEC EDGAR
← DSGT Profile · DSGT JSON API
# DSG Global Inc. (DSGT) — 10-K **Filed:** 2023-04-18 **Period ending:** 2022-12-31 **Accession:** 0001493152-23-012658 **Source:** [SEC EDGAR](https://www.sec.gov/Archives/edgar/data/1413909/000149315223012658/) **Origin leaf:** 53a99abdea09d0e2aca100e9d6dbae72749e3cdbea711014c25b177d1d61ca41 **Words:** 61,773 --- ** UNITED STATES** **SECURITIES AND EXCHANGE COMMISSION** **Washington, D.C. 20549** **FORM 10-K** **(Mark One)** ** ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** **For the fiscal year ended December 31, 2022** **OR** ** TRANSITION REPORT PURSUANT TO 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 0Z5, Canada** (Address of Principal Executive Offices) (Zip Code) **(604) 575-3848** (Registrants Telephone Number, Including Area Code) Securities registered pursuant to Section 12(b) of the Act: **None** Securities registered pursuant to Section 12(g) of the Act: **Common Stock, $0.001 par value** (Title of Class) Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes No 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 (232.405 of this chapter) 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 checkmark if the registrant has not elected 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 has filed a report on and attestation to its managements assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrants executive officers during the relevant recovery period pursuant to 240.10D-1(b). Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No As of June 30, 2022, the aggregate market value of the voting and non-voting common equity held by non-affiliates was $10,011,073 based on the closing price on that date. For purposes of calculating the aggregate market value of shares held by non-affiliates, we have assumed that all outstanding shares are held by non-affiliates, except for shares held by each of our executive officers, directors. These assumptions should not be deemed to constitute an admission that all executive officers and directors, are, in fact, affiliates of our company, or that there are not other persons who may be deemed to be affiliates of our company. Further information concerning shareholdings of our officers, directors, and principal stockholders is included or incorporated by reference in Part III, Item 12 of this Annual Report on Form 10-K. As of March XX, 2022, the registrant had 145,429,993 shares of common stock issued and outstanding. | | | **DSG GLOBAL INC.** **FORM 10-K** **TABLE OF CONTENTS** | | | Page | | | | | | | | Special Note Regarding Forward-Looking Statements | 3 | | | | | | | | PART I | | | | | | | | Item 1. | Business | 4 | | | Item 1A. | Risk Factors | 25 | | | Item 1B. | Unresolved Staff Comments | 38 | | | Item 2. | Properties | 38 | | | Item 3. | Legal Proceedings | 38 | | | Item 4. | Mine Safety Disclosures | 39 | | | | | | | | PART II | | | | | | | | Item 5. | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 39 | | | Item 6. | Selected Financial Data | 40 | | | Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations | 40 | | | Item 7A. | Quantitative and Qualitative Disclosures about Market Risk | 53 | | | Item 8. | Financial Statements and Supplementary Data | 54 | | | Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 81 | | | Item 9A. | Controls and Procedures | 82 | | | Item 9B. | Other Information | 83 | | | | | | | | PART III | | | | | | | | Item 10. | Directors, Executive Officers and Corporate Governance | 85 | | | Item 11. | Executive Compensation | 91 | | | Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 93 | | | Item 13. | Certain Relationships and Related Transactions and Director Independence | 95 | | | Item 14. | Principal Accountant Fees and Services | 95 | | | | | | | | PART IV | | | | | | | | Item 15. | Exhibits and Financial Statement Schedules | 96 | | | Signatures | | S-1 | | | 2 | | | | | **SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS** This Annual Report on Form 10-K contains forward-looking statements that include information relating to future events, future financial performance, strategies, expectations, competitive environment, regulation, and availability of resources. 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. Forward-looking statements are based on our assumptions, estimates, analysis, and opinions made in light of our experience and our perception of market trends, current conditions and expected developments, as well as other factors that we believe to be relevant and reasonable in the circumstances at the date that such statements are made, but which are subject to known and unknown risks, and may prove to be incorrect. Such risks are discussed in Item 1.A Risk Factors. In particular, without limiting the generality of the foregoing disclosure, the forward-looking statements contained in this Annual Report 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 a dealership network for our electric vehicles; | | | | | our ability to attract and retain customers; | | | | | 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 Companys 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; and | | | | | our ability to comply with evolving legal standards and regulations, particularly concerning requirements for being a public company. | | Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used. These forward-looking statements speak only as of the date of this Form 10-K 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 I, 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-K 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-K to conform these statements to actual results or to changes in our expectations, except as required by law. You should read this Annual Report on Form 10-K and the documents that we reference in this Annual Report on Form 10-K and have filed with the Securities and Exchange Commission as exhibits thereto with the understanding that our actual future results and circumstances may be materially different from what we expect. | 3 | | | | | **PART I** | ITEM 1. | BUSINESS | | **Business Overview** When used in the Annual Report, the terms Company, we, our, us, DSG, or VTS mean DSG Global, Inc., its subsidiary Vantage Tag Systems Inc., and its wholly owned subsidiaries DSG Tag Systems International, Ltd. and Imperium Motor Company and Imperium Motor of Canada Corporation (together Imperium). DSG Global Inc. is a technology development company based in Surrey, British Columbia, Canada, engaged in the design, manufacture, and marketing of fleet management solutions for the golf industry, as well as commercial, government and military applications. In 2020, we established an electric vehicle marketing and distribution division, Imperium Motor Company (Imperium USA) and its Canadian counterpart in 2021, Imperium Motor of Canada Corporation (Imperium Canada), and in 2021 we formed a golf cart division, AC Golf Carts, Inc. with exclusive world-wide rights of Shelby Cobra golf carts. The principal activities of our fleet management and golf division are the development, sale and rental of GPS tracking devices and interfaces for golf vehicles, and related support services. More recently, our subsidiary Vantage Tag (Vantage) expanded from its original purpose of producing and marketing GPS systems, to leading DSGs golf industry presence by supplying a comprehensive package of electric vehicles, fleet management systems, and back of house support services to the golf industry, and to commercial customers in the last mile delivery, tourism and resort, education, agriculture, and corporate markets. Meanwhile, our electric vehicle division is engaged in the importation, marketing and distribution of a range 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 industrys 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 automotive retail, wholesale, distribution, and manufacturing. 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. We report in three segments, Golf Carts, TAG systems, and Electric Vehicles. Any assets, revenues or expenses that are not the result of the three reporting segments are reported as Head Office administrative activities. The Companys stock symbol is DSGT. Our CUSIP number is 23340C104. **Corporate History** DSG Global, Inc. (formerly Boreal Productions Inc.) was incorporated under the laws of the State of Nevada on September 24, 2007. We were formed to option feature films and TV projects to be packaged and sold to movie studios and production companies. In January 2015, we changed our name to DSG Global, Inc. and effected a one-for-three reverse stock split of our issued and outstanding common stock in anticipation of entering in a share exchange agreement with DSG TAG Systems, Inc., a corporation incorporated under the laws of the State of Nevada on April 17, 2008 and extra provincially registered in British Columbia, Canada in 2008. On April 13, 2015, we entered into a share exchange agreement with Vantage Tag Systems Inc. (VTS) (formerly DSG Tag Systems Inc.) and the shareholders of VTS who become parties to the agreement. Pursuant to the terms of the share exchange agreement, we agreed to acquire not less than 75% and up to 100% of the issued and outstanding common shares in the capital stock of VTS in exchange for the issuance to the selling shareholders of up to 20,000,000 pre-reverse split shares of our common stock on the basis of 1 common share for 5.4935 common shares of VTS. On May 6, 2015, we completed the acquisition of approximately 75% (82,435,748 common shares) of the issued and outstanding common shares of VTS as contemplated by the share exchange agreement by issuing 15,185,875 pre-reverse split shares of our common stock to shareholders of VTS who became parties to the agreement. In addition, concurrent with the closing of the share exchange agreement, we issued an additional 179,823 pre-reverse split shares of our common stock to Westergaard Holdings Ltd. in partial settlement of accrued interest on outstanding indebtedness of VTS. Following the initial closing of the share exchange agreement and through October 22, 2015, we acquired an additional 101,200 shares of common stock of VTS from shareholders who became parties to the share exchange agreement and issued to these shareholders an aggregate of 18,422 pre-reverse split shares of our common stock. Following completion of these additional purchases, DSG Global Inc. owns approximately 100% of the issued and outstanding shares of common stock of VTS. An aggregate of 4,229,384 shares of Series A Convertible Preferred Stock of VTS were exchanged for 51 Series B and 3,000,000 Series E preferred shares during the year ended December 31, 2018 by Westergaard Holdings Ltd., an affiliate of Keith Westergaard, a previous member of our board of directors which have not been issued as of September 30, 2021. | 4 | | | | | 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. Subsequent to year end, on January 5, 2023, Imperium Motor Corp. had its name changed to Liteborne Motor Corporation. 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. **Recent Financing Activities** 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 has received five payments in the amount of $250,000 on February 28, 2022, $250,000 on March 31, 2022, $90,000 on July 29, 2022, $250,000 on August 29, 2022, $125,000 on September 15, 2022, $125,000 on October 18, 2022, and $285,000 on October 21, 2022, for 1,375 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 total amounts of $1,375,000 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 year ended December 31, 2022, $3,062 was recognized, and recorded as interest expense, included as part of the loan. During the year ended December 31, 2022, the Company made required payments in the amount of $20,411, which was applied against the loan payable. | 5 | | | | | **Electric Vehicle Division** **Imperium Motor Company USA, name changed to Liteborne Motor Corporation (LMC or Liteborne)** **Imperium Motor Company Canada** **Overview** Imperium Motor Company USA and Canada (Imperium) is a global technology company - specializing in fleet management, vehicle charging network, lithium air battery development, and marketing and distribution of electric vehicles. Imperium will hold the exclusive rights to distribute the innovative Skywell Automotive Group lineup of electric vehicles (EV) in the North American market. Skywell is one of the premier EV manufacturers in China, with a full range of advanced passenger vehicles, large and medium-sized buses, light buses, logistics vehicles, and special purpose automobiles. On November 1, 2022, the Company announced the appointment of Alan M. Wagner as chief executive officer of the Imperium USA. Mr. Wagners extensive expertise and reach across the automotive industry. Before joining LMC, Wagner served as executive director of Hyundai Transys and was vice president of product development for Mercedes Benz Tech. Before that, he held multiple executive positions with Lear Corporation. He was the vice president of engineering at Saleen Automotive/SMS Supercars and executive vice president of Saleen Electric. Wagner was also vice president of Entech. Through the years, he has worked with General Motors, Ford, Shelby, Petty Enterprises, Toyota, Chrysler, and BMW among other iconic automotive brands. Imperium offers an opportunity to be part of a potential $500 million EBITDA business in the electric vehicle industry with a well-known, proven partner already exporting superior road ready vehicles worldwide. Among the many proof points to the quality of these vehicles is a five passenger SUV, whose debut at the LA Auto Show, prompted extraordinary reviews and a surprise purchase off the floor by a legendary automotive design expert in addition to pre-orders from attendees. Subsequent to year end, of January 5, 2023, the Company changed the name of Imperium USA to Liteborne Motor Company (Liteborne). Liteborne, now with strong industry leadership and a board of directors of exceptional industry depth, is well-poised to navigate the U.S. certification process (known as homologation) already underway as it continues to build out a sales and dealer network. In short, while others struggle to manufacture and deliver vehicles at an affordable price, Litebornes reasonably priced solutions based on modern, nimble, on-demand manufacturing is unique versus the chaos and cost of American design and build that characterizes the EV landscape. Were proud of the mission to offer North Americans an unprecedented, value driven line of electric vehicles by importing beautifully designed, skillfully manufactured, and reliably-delivered EVs. The rest of the management team include Mr. Daniel Lock and Mr. Jonathan DAgostino. Mr Lock, who is leading Homologation has over 20-years of automotive development and engineering management experience. Prior to Joining Liteborne he was a senior manager and program manager at Hyundai Transys. A program planning manager at Gentherm, program manager and a product design engineer at Visteon. Mr. Lock earned his BS in chemical engineering from Yale University. .Mr. Jonathan DAgostino Started career at Sands Brothers in 1999. After graduating from Fordham University with honors from NYS in legal and ethical studies he joined Lehman Brothers in 2003, spent several years as an investment and merchant banker with several different banks, including Morgan Brothers, which was founded by a Lehman vice chair. He became Professor Luc Montagniers partner in commercializing his preventative healthcare business, during which time he won the 2008 Noble Prize for Medicine. After leaving traditional Merchant Banking he entered the green energy space working to create power-efficient production of Green Hydrogen. Before Liteborne he founded and now is testing and commercializing HydroBoost, a product that creates green hydrogen on demand for automobiles and trucks. | 6 | | | | | **Electric Vehicle Market Overview** **Low Speed Electric Vehicles (LSEV)** | | | The global market size for LSEVs is expected to reach $68B by 2025. | | | | | Imperium LSEV and HSEV sales are on track to reach $132 million by 2023. | | **High Speed Electric Vehicles (HSEV)** | | | The global electric vehicle market size was valued at $11.9B in 2017 and is projected to reach $56.7B by 2025, growing at a CAGR of 22.3% from 2018 to 2025. | | | | | Liteborne is expected to begin importing vehicles in Q4 2023 with initial sales reaching up to $130,000,0000 in Rev and in 2024 Revenues will reach up to $850,000,000. High profitability is expected | | 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. **Production Partners** **Zhejiang Jonway Automobile Co.** Imperium has exclusive distribution rights in the United States, Canada, Mexico and the Carribean 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 Chinas 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. | 7 | | | | | 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 Skywells 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. **Imperiums Green Story** Gas powered combustion engines are not the future of transportation, they are the past. Our line of electric vehicles produces no emissions, almost no heat, little noise, and can be fully powered by renewable electricity producing resources like solar and wind energy. Imperium intends to offer a combination solar/wind home charging station for a 100% sustainable, 100% zero carbon solution. **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 | | | 8 | | | | | **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. **DSG Technologies and ProductsFleet Management and Golf Division** We have developed the TAG suite of products that we believe is the first completely modular fleet management solution for the golf industry. The TAG suite of products is currently sold and installed around the world in golf facilities and as commercial applications through a network of established distributors and partnerships with some of the most notable brands in fleet and equipment manufacture. VTS is giving fleet operators new capabilities to track and control their vehicles through the new INFINITY XL system and the new 3G-4G TAG. We have developed in-house a proprietary combination of hardware and software that is marketed around the world as the INFINITY TAG system. We have primarily focused on the golf industry where the TAG system is deployed to help golf course operators manage their fleet of golf carts, turf equipment, and utility vehicles. We are a leader in the category of fleet management in the golf industry and were awarded Best Technology of the Year in 2010 by *Boardroom* magazine, a publication of the National Golf Course Owners Association. To date, the TAG system is installed on vehicles around the world and has been used to monitor millions of rounds of golf. The TAG system fills a void in the marketplace by offering a modular structure that allows the customer to customize their system to meet desired functionality and budget constraints. In addition to the core TAG system vehicle control functionality, which can operate independently, we offer 3 information display systems to the golf courses management and golfer the alphanumeric TEXT and high definition 12 INFINITY XL, 10 INFINITY RM and 10 INFINITY DM providing the operator with three display options which is unique in the industry. VTS also offers inhouse financing thru purchase or lease. The primary market for our TAG system is the golf industry, with over 40,000 golf operations worldwide. While the golf industry remains the primary focus of our sales and marketing efforts, we have completed several successful pilots of the TAG system in other markets such as agriculture and commercial fleet operations. With appropriate resources, we intend to expand our sales and marketing efforts into these new markets. We are expanding our sales force in North America, which comprises the most significant portion of the golf fleet market and have developed key relationships with privately owned distributors and golf equipment manufacturers such as E-Z-GO, Yamaha and Ransomes Jacobsen to help drive sales through-out Europe, Asia, UK and many other markets worldwide Including our most recent move to New Zealand and Australia. Our most recent Vantage product range includes the Vantage brand Fleet golf cart, and retail golf carts for individual users under the Vantage and Shelby brands. Shelby Golf cart products represent a unique offering within the golf and low speed vehicle industry, emphasizing customization and user brand association. Shelby products will be sold via DSG and a network of licensed Shelby dealers under the AC Golf Carts outlet brand. Those dealers will also act as service agents for both Shelby products and other DSG products in their locality. | 9 | | | | | In order to successfully deliver products, increase sales, and maintain customer satisfaction, we need to have a reliable supplier of our hardware units and components at competitive prices. Presently, we source our TAG and INFINITY fleet from a North American Fortune 200 company with manufacturing in China and our RAPTORS from a supplier operating in the United Kingdom and Asia. This new relationship that has been established provides us with higher quality, newer technology at a competitive price. In addition, VTS recently engaged with a telecommunications provider to provide new technology in hardware and wireless access through-out the world therefor allowing VTS to substantially reduce cellular cost. **Technology Overview** DSG produces a modular suite of products to provide fleet management solution for any vehicle required for a golf operation and provides two golfer information display options to meet the operators budget requirements. DSG believes that it is currently the only company in the golf fleet management industry with these capabilities. The VTS 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, DSG has created patent pending solutions to adapt it to the very specific requirements of the golf environment. Compared to mainstream fleet tracking products, DSG 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. DSGs 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 VTS 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. DSG 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, DSG has maintained the unique nature of its hardware solution by developing a set of proprietary adapters and interfaces specifically for the golf application. DSG has secured an exclusive supply agreement with the third-party hardware manufacturers for the vertical of golf industry. Additionally, DSG 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 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. | 10 | | | | | The web-based Software-as-a-Service (SaaS) model used by VTS 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. DSG 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 DSG 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 companys flagship product is the TAG Control unit. The TAG can operate as a stand alone unit or with one of two displays; the INFINITY 10 alphanumeric display or the INFINITY high definition touch activated screen. The TAG is GPS enabled and communicates with the TAG software using cellular GSM networks. Utilizing the cellular networks rather than erecting a local Wi-Fi network assures carrier grade uptime, and vehicle tracking off- property. GSM is the de facto global standard for mobile communications. The TAG unit itself is discreetly installed usually in the nose of the vehicle to give the GPS clear line of site. It is then connected to the vehicle battery and ignition. The property is then mapped using the latest satellite imagery that is graphically enhanced and loaded into the TAG System as a map. Once installed the vehicle owner utilizes the TAG software to locate the vehicle in real time using any computer, smartphone, or tablet that has an internet connection and perform various management operations. | 11 | | | | | 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 vehicles battery helping to prevent sending out vehicles undercharged batteries which can be an inconvenience for the course and negatively impact the golfer experience. *Features and Benefits:* | | Internal battery utilizing Smart Power technology which charges the battery only when the vehicle is running (gas) or being charged (electric) | | | | | | | | Pace of Play management and reporting which is a critical statistic for the golf operator | | | | | | | | No software to install | | | | | | | | Web based access on any computer, smartphone, or tablet | | | | | | | | Set up restricted zones to protect property, vehicles, and customers | | | | | | | | Real time tracking both on and off property (using Street Maps) | | | | | | | | Email alerts of zone activity | | | | | | | | Cart lockdown | | | | | | | | Detailed usage reporting for improved maintenance, proper vehicle rotation, and staff efficiency | | | | | | | | Geofencing security features | | | | | | | | Ability to enforce cart path rules which is key to protecting course on wet weather days | | | | | | | | Modular system allows for hardware and feature options to fit any budget or operations | | **INFINITY 10 Display** The INFINITY 10 is paired with the TAG Control unit as DSGs entry level display system for operators who desire to provide basic hole distance information and messaging to the golf customer. The INFINITY 10 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 10 can be mounted on the steering column or the dash depending on the customers preference. | 12 | | | | | *VTSs entry level alphanumeric golf information display* *Features and Benefits:* | | Hole information display | | | | | | | | Yardage displays for front, middle, back locations of the pin | | | | | | | | Messaging capabilities to individual carts or fleet broadcast | | | | | | | | Zone violation warnings | | | | | | | | Pace of Play notifications | | | | | | | | Smart battery technology to prevent power drain | | | | | | | | Versatile mounting option | | **INFINITY XL 12 Display** The INFINITY XL 12 is a solution for operators who desire to provide a high-level visual information experience to their customers. The INFINITY XL 12 is a high definition Infinity XL 12 activated display screen mounted in the golf cart integrated with the TAG Control unit to provide a full back/front end Fleet Management solution. The INFINITY XL 12 displays hole graphics, yardage, and detailed course information to the golfer and provides interactive features such as Food and Beverage ordering and scorekeeping. *The industry leading Infinity XL 12 HD the most sophisticated display in 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 | | | 13 | | | | | **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 companys future marketing and sales strategy. **DSG R3 Advertising Platform** The DSG R3 program delivers advance ROI (Revenue Optimization Intelligence). Utilizing all streams of advertising delivery, such as automated, direct, and self-serve. The R3 program has the ability to deliver relevant advertising to golfers the moment they sit in the cart. The R3 model is more effective than the previous advertising model of One to One, these are local ads only sold through direct sales by courses, or 3 rd party advertising sales firms. The new R3 model offers Many to one advertising options, delivering thousands of national, regional, and local advertisers an opportunity to advertise on our screens through our R3 Marketplace. *Previous One to One model vs the new R3 model Many to One* **TAG TURF/ECO TAG** The TAG Turf and the new ECO TAG were developed to give course operators the same back end management features for their turf equipment and utility vehicles. Turf equipment is expensive, and a single piece can run over $100,000 and represents a large portion of a golf course operating budget. The TAG Turf and ECO TAG have comprehensive reporting that the operator can utilize to implement programs that can increase efficiencies, reduce labor costs, help lower idle times, provide fuel consumption and equipment performance, provide historical data on cutting patterns, and reduce pollution from emissions by monitoring idle times. Since the golf course needs to be maintained regardless of volume these cost saving measures directly impact the operators 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 | | | 14 | | | | | *The TAG Turf provides detailed trail history and cutting patterns* ** **Golf Carts** **** **Should add commentary on Golf Cart Division** **Vantage BayCar** **Motor:**Industry leading maintenance free 5kw AC. Highly efficient, smooth, high torque motor. **Battery Pack.:** Extended range from larger 105ah LITHIUM battery pack. **Battery Charger:** Opportunity on board charge anywhere theres access to regular 110v power outlet. **Braking System:** Regenerative engine braking with auto park brake system **Suspension:**McPherson Strut front suspension. **Full electrics.**LED Headlights, taillights, Sequential turn lights, LCD Screen. 10 Display. Speedo, Battery State of Charge. Trip and Total Milage, Gear selection indicator. **USB outlets**. 4 x on-dash USB jacks, 10 Alloy wheels with ProTour or radial tires **Convertible rear seat.**Folds out to handy flat bed for groceries, guest luggage or equipment. Extended canopy to protect rear seat occupants **Warranty**. The industrys most comprehensive 5-year Bumper to bumper warranty **Telemetry.**Your service technician has Password protected App connect Bluetooth Smart Phone access to vehicle controller. Change vehicle setting, Diagnostics, fault history and reports. **Telemetry.**Password protected App connect Bluetooth access to Lithium Battery Management System. AC Smart Drive maintenance free motor. Integrated onboard Smart Charger **VantagePro** **Motor:**Industry leading maintenance free 5kw AC. Highly efficient, smooth, high torque motor. **Battery Pack.:**Extended range from larger 105ah LITHIUM battery pack. **Battery Charger:**Opportunity on board charge anywhere theres access to regular 110v power outlet. **GPS Fleet Management System:**Level 1 GPS Fleet management included in lease or rental. (Pace of play alerts, Geo Fencing, Security lockdown and more) **Braking System:**Regenerative engine braking with auto park brake system **Suspension:**Automotive McPherson Strut front suspension. USB outlets. 4 x on-dash USB jacks **Accessories**. 2 x sand bottles, Beverage Cool Box, Club and Ball Washer **Warranty**. The industrys most comprehensive 7-year Bumper to bumper warranty **Service & Maintenance.** Level 1 on-site service included in lease or rental. **Vantage Tag GPS fleet management system**from the world leaders in Golf Cart Fleet Management. **Telemetry.**Password protected App connect Bluetooth Smart Phone access to vehicle controller. Change vehicle setting, Diagnostics, fault history and reports. **Telemetry**. Password protected App connect Bluetooth access to Lithium Battery Management System. AC Smart Drive maintenance free motor. Integrated onboard Smart Charger. | 15 | | | | | **Vantage Tour** **Motor:**Industry leading maintenance free 5kw AC. Highly efficient, smooth, high torque motor. **Battery Pack.:**Extended range from larger 105ah LITHIUM battery pack. **Battery Charger:**Opportunity on board charge anywhere theres access to regular 110v power outlet. **Braking System:**Regenerative engine braking with auto park brake system **Suspension**: McPherson Strut front suspension. **Full electrics.**LED Headlights, taillights, Sequential turn lights, LCD Screen. 10 Display. Speedo, Battery State of Charge. Trip and Total Milage, Gear selection indicator. **USB outlets**. 4 x on-dash USB jacks 10 Alloy wheels with ProTour or radial tires **Warranty**. The industrys most comprehensive 7 year Bumper to bumper warranty **Service & Maintenance**. Complimentary first on-site cart service (your home or golf course) Meet your service tech. The comfort of knowing you have professional parts and service support. **Telemetry.**Your service technician has Password protected App connect Bluetooth Smart Phone access to vehicle controller. Change vehicle setting, Diagnostics, fault history and reports. **Telemetry.**Password protected App connect Bluetooth access to Lithium Battery Management System. AC Smart Drive maintenance free motor. Integrated onboard Smart Charger **Shelby Golf Cart** Motor: Enormous power from true 6.3kw AC Motor. Battery Pack. 110ah Lithium Battery pack. Onboard integrated battery charger. Electrics. LED Headlights, tail lights, blinkers and turn lights. USB outlets on dash. 9 Bluetooth Touchscreen. Hands free phone calls, audio and video streaming, backup camera, inbuilt radio 14 alloy wheels with radial Tires Front trunk. Distinctive styling and colour options from the Officially Licensed Shelby GT500 Golf Cart. **Revenue Model** DSG derives revenue from five 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. | 16 | | | | | *Monthly Rental Fees* are paid by those customers that rent the TAG system hardware. The amount of a customers monthly payment varies based on the type of equipment rented (a TAG, a TAG and INFINITY 10, or a TAG and INFINITY XL 12). *Golf Cart Sales Revenue,*which consist of the sales price paid by the customers who purchase our Vantage and licensed Shelby golf carts. *Programmatic Advertising Revenue* is a new source of revenue that we believe has the potential to be strategic for us in the future. We are in the process of implementing and designing software to provide advertising and other media functionality on our INFINITY. We recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is reasonably assured. In instances where final acceptance of the product is specified by the customer, revenue is deferred until all acceptance criteria have been met. We accrue for warranty costs, sales returns, and other allowances based on its historical experience. Our revenue recognition policies are discussed in more detail under *Note 2 Summary of Significant Accounting Policies* in the notes to our Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K. **Markets** **Sales and Marketing Plan** The market for the TAG System is the worldwide golf cart and Turf equipment fleets. There are 40,000 golf courses around the world with North America being the largest individual market with 20,000. This represents over 3,000,000 vehicles. The golf market has five distinct types of operations. Municipal, Private Country Clubs, Destination Resorts, Public Commercial, Military and University affiliated. VTS has deployed and has case studies developed TAG systems in each of these categories. Our marketing strategy is focused on building brand awareness, generating quality leads, and providing excellent customer service. **North America Sales** Since the largest market is North America the Company employs a direct sales team and sales agents that provide full sales coverage. Our sales agents are experienced golf industry professionals who maintain established relationships with the golf industry and carry multiple golf lines. Our sales objective is to offer our existing and prospective customers a dedicated, knowledgeable, and outstanding customer service team. In addition, our team is dedicated to existing accounts that focus on up-selling and cross-selling additional products to our current customer base, securing renewal agreements, and providing excellent customer service. The current regions are: | | Western Canada | | | | | | | | Central Canada | | | | | | | | Eastern Canada | | | | | | | | Northeast USA | | | | | | | | Western USA | | | | | | | | Southeastern USA | | | | | | | | Midwest USA | | | 17 | | | | | **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 worlds largest player in golf course management, has over 200 courses under management. The management companies provide everything from branding, staffing, management systems, marketing, and procurement. DSG is currently providing products and services to Troon, OB Sports, Kemper Sports, Trump, Marriott Golf, Blue Green, Crown Golf, American Golf, Billy Casper, Club Corp, and Club Link. DSG has been successful in completing installations and developing relationships with several of the key players who control a substantial number of courses. DSG will continue to implement system developments that are driven by the needs of these management companies such as combined reporting, multiple course access through a centralized dashboard. This development will become a competitive advantage for DSG in the management company market. DSG has dedicated a team to create specific collateral for this market and has assigned a senior executive to have direct responsibility to manage these relationships. **Competition** We compete with a number of established producers and distributors of vehicle fleet management systems. Our competitors include producers of golf specific applications, such as GPS Industries, LLC., one of the leading suppliers of golf cart fleet management systems, as well as producers of non-golf specific utility vehicle fleet management systems, such as Toro. Many of our competitors have longer operating histories, better brand recognition and greater financial resources than we do. In order for us to successfully compete in our industry we must: | | | demonstrate our products competitive advantages; | | | | | | | | | | develop a comprehensive marketing system; and | | | | | | | | | | increase our financial resources. | | However, there can be no assurance that even if we do these things, we will be able to compete effectively with the other companies in our industry. | 18 | | | | | We believe that we will be able to compete effectively in our industry because of the versatility, reliability, and relative affordability of our products when compared to those of our competitors. We will attempt to build awareness of our competitive advantages among existing and potential customers through trade shows, sales visits and demonstrations, online marketing, and positive word of mouth advertising. However, as we are a newly established company relative to our competitors, we face the same problems as other new companies starting up in an industry, such as limited access to capital. Our competitors may be substantially larger and better funded than us, and have significantly longer histories of research, operation and development than us. In addition, they may be able to provide more competitive products than we can and generally be able to respond more quickly to new or emerging technologies and changes in legislation and regulations relating to the industry. Additionally, our competitors may devote greater resources to the development, promotion and sale of their products or services than we do. Increased competition could also result in loss of key personnel, reduced margins or loss of market share, any of which could harm our business. Our primary competitor in the field of golf course fleet management is GPS Industries, a company that was founded in 1996 by our sole officer, founder and one of our directors, Mr. Bob Silzer. GPS Industries is currently the largest player in the marketplace with an installed base of approximately 750 golf courses worldwide. GPS Industries was consolidated by various mergers and acquisitions with a diversity of hardware platforms and application software. Since 2009, when GPS Industries has introduced their latest product offering called the Visage, in an exclusive partnership with Club Car, their strategy has been to target mostly their existing customers and motivate them into replacing their existing, older GPS system, with the Visage system. GPS Industries is leveraging very heavily their partnership with Club Car, which is one of the three largest golf cart manufacturers in the world and at times is benefiting from golf operators preference for Club Car and their vehicles when they select their management system. **Market Mix** Since the introduction of the DSG product line, we have shown golf course operators that they have now access to a budget-friendly fleet management tool that works not only on golf carts but also with all other vehicles used on the golf course such as turf maintenance, shuttles, and other utility vehicles. Marketing studies have identified that half of the golf course operators only need a fleet management system and only 15% need a high-end GPS golf system. This illustrates the strong competitive advantage that VTS TAG Systems has versus GPS Industries since their product can only address the needs of a relatively small fraction of the marketplace. Consequently, GPS Industries installed base has steadily declined since most of their new product installations have replaced older product for existing customers and some customers have opted for a lower budget system and switched over to VTS TAG Systems. **Marketing Activities** The Company has a multi-layered approach marketing the TAG suite of products. One of the foundations of this plan is attending industry trade shows which are well attended by golf operators. The two largest shows are the PGA Merchandise Show and the Golf Industry Show which are held in Florida at the end of January. The Company also attends a number of regional shows around North America. International events are attended by our distributors and partners. The second layer of marketing is memberships in key organizations such as the National Golf Course Owners Association, Golf Course Superintendents Association, and Club Managers Association of America. These are very influential in the industry and have marketing channels such as publications, email blasts, and web-based marketing. The Company also markets directly to course operators through email, surveys direct mail programs. | 19 | | | | | **Lead Generation** One of the primary sources of lead generation is through the Companys 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 10, 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 systems 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 manufacturers warranty. **Operational Plan** Our Operations Departments main functions are outlined below: **Product Supply Chain Management** | | Product procurement, lead-time management | | | | Inventory Control | | **Customer Service** | | Training | | | | Troubleshooting & Support | | | | Hardware Repairs | | **Installations** | | Content & graphics procurement | | | | System configurations | | | | Shipping and Installation | | **Infrastructure Management** | | Communication Servers Management | | | | Cellular Data Carriers | | | | Service and administration tools | | | 20 | | | | | **Product Supply Chain** In order to maintain high product quality and control, and to optimize production costs, the Company is currently procuring all main hardware components offshore. Final assembly is locally performed to ensure product quality. Other key components are also procured directly from local manufacturers or suppliers to keep the price as low as possible. The Company is requesting the suppliers to perform a complete set of quality testing and minimum 24 hours burn-in before the product is delivered. The local hardware assembler and components supplier offers a 12-month warranty. The main hardware components offshore supplier offers a warranty plan of 15 months from the date the product is shipped. With an extended 90 days beyond the current warranty, such repair service would be paid by the supplier except for component replacement costs, which would be paid by DSG. Another important activity related to the management of the product supply chain is working closely with the suppliers and ensuring that we have alternate sources for the main components and identify well in advance any components that may go end-of-life and find suitable replacements before product shortages may occur. **Inventory Control** The Company has implemented strict inventory management procedures that govern the inbound flow of products from suppliers, the outgoing flow to customers as well as the internal movement of inventory between warehouses (Canada, US and UK). There are also procedures in place to control the flow of equipment returning from customers for repairs and their replacements. **Installation** The Company is utilizing a small number of its own field engineers, geographically positioned to be in close proximity of areas with high concentrations of current and future customers. Occasionally, when new installations exceed the internal capacity, the company employs a number of external contractors, on a project-by-project basis. Each contractor has been trained extensively to perform product installations and the Company has created an extensive collection of Installation Manuals for all products and vehicle types. The product was designed with ease of installation as one of its features. Additionally, the installation process includes a pre-shipping configuration process that prepares each device with all the settings and graphics content (if applicable) required for the specific location it will be deployed. This makes the installation process a lot simpler and less time consuming in the field which reduces costs (accommodations, food, travel) for internal staff as well as external contractor cost (less billable time). Another benefit of the simplified installation procedure is increased scalability in anticipation of increased number of installs in the future by reducing the skill level and training time requirements for additional contractors. **Customer Service** The Company has deployed its Customer Service staff strategically, so it has at least one service representative active during business hours in North America, Europe and South Africa. The Company is handling Customer Service directly in North America and UK, offering telephone and on-line support to end-customers. In other international markets, the first-line customer service is handled by local distributors 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. | 21 | | | | | 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. **Material Contracts** On March 2, 2020, we entered into an advisory services agreement with a third party. Under the terms of this five-year agreement, the third party has agreed to provide the Company with strategic brand and business positioning, strategic marketing, concept development and ongoing strategic consulting services. In consideration of the services to be rendered by the third party, the Company has agreed to (1) make a cash payment in the amount of $350,000 payable in several tranches following the Companys completion of future financings of the Company, and monthly payments of $10,000 following the first twelve months of the engagement, and (2) issue a five-year warrant to purchase 2,829,859 at an exercise price of $0.25 per share, upon the execution of the agreement (the First Warrant), and a five-year warrant to purchase such number of shares of the Companys common stock that is equal to 10% of the Companys shares of common stock calculated on a fully diluted basis as of the closing date of the future financing, at an exercise price per share equal to the 80% of the price of the Companys securities in such future financing *less*the number of shares represented by the First Warrant. The warrants contains, among other provisions customary for the instruments of this nature, provisions pertaining to cashless exercise, and two-year piggy-back registration rights which allows the holders of the warrants to have the shares of the Companys common stock underlying the warrants registered alongside other registrable securities of the Company, subject to underwriter cutbacks in case of underwritten public offering(s) of the Companys securities, if any. On April 17, 2020, the Company received a loan in the principal amount of $29,890 (CDN$40,000) under the Canada Emergency Business Account program. The loan is non-interest bearing and eligible for CDN$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. On April 21, 2020, the Company received a loan in the principal amount of $29,889 (CDN$40,000) under the Canada Emergency Business Account program. The loan is non-interest bearing and eligible for CDN$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. | 22 | | | | | 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. On July 10, 2020, we signed a two-year operating lease agreement for retail, showroom and warehouse space in Fairfield, CA expiring on August 31, 2022 and with the first right of refusal for a 35-year lease extension, if written notice is provided prior to the expiration of the current term. The annual rent for the premises starts at $93,000. The lease includes a rent-free period with rent payments commencing on October 1, 2020. On July 14, 2020, we signed a three-year operating lease agreement expiring on July 31, 2023 for office space in Surrey, BC with 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 CDN$51,552, with additional rent of CDN$1,551 per month for operating expenses. The lease includes a rent-free period with rent payments commencing on November 1, 2020. On December 23, 2020, we entered into a two-year redeemable stock purchase agreement (the Series F SPA) with a third party for the purchase of shares of the Companys Series F Preferred Stock (Series F) 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 shares of Series F in exchange for $1,500,000. Further, under the terms of the SPA, the third party agreed to purchase an additional 1,500 shares of Series F upon the filing by the Company of a registration statement with the Securities and Exchange Commission (the Registration Statement) registering the shares underlying the Series F and underlying the Warrants. At the Companys request, the third party agrees to purchase an additional 1,000 shares of Series F every thirty days (an Additional Closing) as long as the Registration Statement remains effective and the Companys average daily trading volume for the third trading days prior to an Additional Closing is at least $500,000 per day. 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 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 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 note remains unpaid. Any principal or interest on the 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 Companys common shares during the 30-day trading period prior to the conversion date. On December 1, 2022, the Company issued a promissory note in the principal amount of $1,000,000. The note is unsecured, bears interest at 10% per annum, and is due on December 1, 2025. Any principal or interest on the note that is not paid when due or during any period of default bears interest at 18% per annum. **Description of Property** On July 14, 2020, the Company entered into a three-year operating lease agreement expiring on July 31, 2023 for office space in Surrey, BC (the Croyden Lease) with 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 CDN$51,552, with additional rent of CDN$1,551 per month for operating expenses. The lease includes a rent-free period with rent payments commencing on November 1, 2020. On October 13, 2019, we signed a three-year operating lease agreement expiring on November 30, 2022 with the right to renew for an additional two-year term if written notice is provided within 10 months prior to the expiration of the current term. The annual rent for the premises started at approximately $47,400 and commenced on December 1, 2019. On April 1, 2020, the Company terminated this lease. | 23 | | | | | On July 10, 2020, the Company entered into a two-year operating lease agreement for retail, showroom and warehouse space in Fairfield, CA (the Fairfield Lease) expiring on August 31, 2022 and with the first right of refusal for a 35-year lease extension, if written notice is provided prior to the expiration of the current term. The annual rent for the premises starts at $93,000. The lease includes a rent-free period with rent payments commencing on October 1, 2020. For the year ended December 31, 2021, the Company made gross operating lease payments of $144,758 which are included in general and administration expense. For the year ended December 31, 2022, the Company made gross operating lease payments of $130,066 which are included in general and administration expense. **Intellectual Property** *General* Our success will depend in part on our ability to protect our products and product candidates by obtaining and maintaining a strong proprietary position both in the United States and in other countries. To develop and maintain our proprietary position, we will rely on patent protection, trade secrets, know-how, continuing technological innovations and licensing opportunities. In that regard, we retain and rely on the advice of legal counsel specialized in the field of intellectual property. *Patents* DSG owns two U.S. patents | | US Patent No. 8,836,490 for a Vehicle Management was issued September 16, 2014 and expires June 29, 2031. | | | | | | | | US Patent No. 9,280,902 for a Facilities Management was issued March 8, 2016 and expires January 24, 2032. | | *Domain Names* We have registered and own the domain name of our websites www.vantage-tag.com, www.dsgtglobal.com, and www.imperiummotorcompany.com. *Copyright* We own the common law copyright in the contents of our websites (www.vantage-tag.com, www.dsgtglobal.com, www.imperiummotorcompany.com) and our various promotional materials. *Trademarks* We own the common-law trademark rights in our corporate name, product names, and associated logos, including DSG TAG, TAG Golf, ECO TAG, TAG Text, TAG Touch, TAG Turf, TAG Commercial and TAG Military. We have not applied to register any trademarks with the U.S. Patent and Trademark Office or with any other national or multi-national trademark authority. We assert common law trademark rights in our corporate name and those of our subsidiaries. | 24 | | | | | **Employees** As of March 31, 2023, we have forty full-time employees and contractors in general and administrative, operations, engineering, research and development, business development, sales and marketing, and finance. We also engage independent contractors and consultants from time to time on an as-needed basis to supplement our core staff. | ITEM 1A. | RISK FACTORS | | *Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information in this Form 10-K, including our consolidated financial statements and related notes, before investing in our common stock. If any of the following risks materialize, our business, financial condition, results of operations and prospects could be materially and adversely affected. In that event, the price of our common stock could decline, and you could lose part or all of your investment.* **Risks Related to Our Business** **We have limited cash on hand and we will require a significant amount of capital to carry out our proposed business plan to import, market and sell electric vehicles, to continue to expand our fleet management technology sales and service operations, and to manufacture, market and sell our new line of VANTAGE golf carts. There is no assurance that we will raise sufficient capital to execute our business plan or to continue to fund operations of our Company. There is substantial doubt as to the ability of our Company to continue as a going concern.** We incurred a comprehensive loss of $7,574,834 during the year ended December 31, 2022 ($6,347,178 December 31, 2021). We had cash of $48,713 as at December 31, 2022, and our working capital deficit was $6,948,675. As at December 31, 2021 we had cash of $275,383 and a working capital deficit of $2,314,163. We believe that we will need significant additional equity financing to execute our business plan and to continue as a going concern, given that, among other things: | | | we have begun the importation and homologation of our range of electric vehicles, and we expect to incur significant ramp-up in costs and expenses through the establishment and supply of our dealership network and the fulfilment of anticipated product orders; | | | | | | | | | | we have endeavoured to manufacture and assemble our new line of Vantage golf carts in North America, and we anticipate significant ramp-up costs and expenses through the establishment of a manufacturing facility; | | | | | | | | | | we anticipate that the gross profit generated from the sale of our electric vehicle and golf cart offerings will not be sufficient to cover our operating expenses until we achieve a high volume of sales, and our achieving profitability will depend, in part, on our ability to materially reduce the bill of materials and per unit manufacturing cost of our products; and | | | | | | | | | | we do not anticipate that we will be eligible to obtain bank loans, or other forms of debt financing on terms that would be acceptable to us. | | We anticipate generating a significant loss for the current fiscal year. The report of independent registered public accounting firm on our audited financial statements includes an explanatory paragraph relating to our ability to continue as a going concern. We expect significant increases in costs and expenses to forestall profits for the foreseeable future, even if we generate increased revenues in the near term. Our recently introduced and planned products might not become commercially successful. If we are to ever achieve profitability, we must have a successful introduction and acceptance of our electric vehicles and golf carts, which may not occur. We expect that our operating losses will increase substantially in 2022, and thereafter, and we also expect to continue to incur operating losses and to experience negative cash flows for the next several years. | 25 | | | | | There is no assurance that any amount raised through this offering will be sufficient to continue to fund the operations of our Company. **We will need additional financing to implement our business plan.** The Company will need additional financing to fully implement its business plan in a manner that not only continues to expand an already established direct-to-consumer approach, but also allows the Company to establish a stronger brand name in all the areas in which it operates. In particular, the Company will need additional financing to: | | | Effectuate its business plan and further develop its golf products and service division, and its electric vehicle marketing and distribution division; | | | | | | | | | | Expand its facilities, human resources, and infrastructure; and | | | | | | | | | | Increase its marketing efforts and lead generation. | | There are no assurances that additional financing will be available on favourable terms, or at all. If additional financing is not available, the Company will need to reduce, defer or cancel development programs, planned initiatives and overhead expenditures. The failure to adequately fund our capital requirements could have a material adverse effect on the Companys business, financial condition and results of operations. Moreover, the sale of additional equity securities to raise financing will result in additional dilution to the Companys stockholders and incurring additional indebtedness could involve the imposition of covenants that restrict the Companys operations. **We currently have negative operating cash flows, and if we are unable to generate positive operating cash flows in the future our viability as an operating business will be adversely affected.** We have made significant up-front investments in research and development, sales and marketing, and general and administrative expenses to rapidly develop and expand our business. We are currently incurring expenditures related to our operations that have generated a negative operating cash flow. Operating cash flow may decline in certain circumstances, many of which are beyond our control. We might not generate sufficient revenues in the near future. Because we continue to incur such significant future expenditures for research and development, sales, marketing, general, and administrative expenses, we may continue to experience negative cash flow until we reach a sufficient level of sales with positive gross margins to cover operating expenses. An inability to generate positive cash flow until we reach a sufficient level of sales with positive gross margins to cover operating expenses or raise additional capital on reasonable terms will adversely affect our viability as an operating business. **To carry out our proposed business plan for the next 12 months to develop, manufacture, sell and service electric vehicles we will require additional capital.** To carry out our proposed business plan for the next 12 months, we estimate that we will need approximately $35 million in addition to cash on hand as of December 31, 2022. If cash on hand, revenue from the sale of our cars, if any, and cash received upon the exercise of outstanding warrants, if any are exercised, are not sufficient to cover our cash requirements, we will need to raise additional funds through the sale of our equity securities, in either private placements or registered offerings and/or shareholder loans. If we are unsuccessful in raising enough funds through such capital-raising efforts we may review other financing possibilities such as bank loans. Financing might not be available to us or, if available, may not be available on terms that are acceptable to us. Our ability to obtain the necessary financing to carry out our business plan is subject to a number of factors, including general market conditions and investor acceptance of our business plan. These factors may make the timing, amount, terms and conditions of such financing unattractive or unavailable to us. If we are unable to raise sufficient funds, we will have to significantly reduce our spending, delay or cancel our planned activities or substantially change our current corporate structure. We might not be able to obtain any funding, and we might not have sufficient resources to conduct our business as projected, either of which could mean that we would be forced to curtail or discontinue our operations. | 26 | | | | | **Terms of future financings may adversely impact your investment.** We may have to engage in common equity, debt or preferred stock financing in the future. Your rights and the value of your investment in our securities could be reduced. Interest on debt securities could increase costs and negatively impacts operating results. Preferred stock could be issued in series from time to time with such designation, rights, preferences and limitations as needed to raise capital. The terms of preferred stock could be more advantageous to those investors than to the holders of common shares. In addition, if we need to raise equity capital from the sale of common shares, institutional or other investors may negotiate terms at least as, and possibly more, favourable than the terms of your investment. Common shares which we sell could be sold into any market which develops, which could adversely affect the market price. **Our future growth depends upon consumers willingness to adopt our range of electric vehicles.** Our growth highly depends upon the adoption by consumers of, and we are subject to an elevated risk of, any reduced demand for alternative fuel vehicles in general and electric vehicles in particular. If the market for low speed or for high speed electric vehicles does not develop as we expect, or develops more slowly than we expect, our business, prospects, financial condition and operating results will be negatively impacted. The market for alternative fuel vehicles is relatively new, rapidly evolving, characterized by rapidly changing technologies, price competition, additional competitors, evolving government regulation and industry standards, frequent new vehicle announcements and changing consumer demands and behaviours. Factors that may influence the adoption of alternative fuel vehicles, and specifically electric vehicles, include: | | | perceptions about electric vehicle quality, safety (in particular with respect to lithium-ion battery packs), design, performance and cost, especially if adverse events or accidents occur that are linked to the quality or safety of electric vehicles; | | | | | | | | | | the limited range over which electric vehicles may be driven on a single battery charge; | | | | | | | | | | the decline of an electric vehicles range resulting from deterioration over time in the batterys ability to hold a charge; | | | | | | | | | | concerns about electric grid capacity and reliability, which could derail our efforts to promote electric vehicles as a practical solution to vehicles which require gasoline; | | | | | | | | | | the availability of alternative fuel vehicles, including plug-in hybrid electric vehicles; | | | | | | | | | | the availability of service for electric vehicles; | | | | | | | | | | volatility in the cost of oil and gasoline; | | | | | | | | | | government regulations and economic incentives promoting fuel efficiency and alternate forms of energy; | | | | | | | | | | access to charging stations, standardization of electric vehicle charging systems and consumers perceptions about convenience and cost to charge an electric vehicle; | | The influence of any of the factors described above may cause current or potential customers not to purchase our electric vehicles, which would materially adversely affect our business, operating results, financial condition and prospects. **The range of our electric vehicles on a single charge declines over time which may negatively influence potential customers decisions whether to purchase our vehicles.** The range of our electric vehicles on a single charge declines principally as a function of usage, time and charging patterns. For example, a customers use of their vehicle as well as the frequency with which they charge the battery of their vehicle can result in additional deterioration of the batterys ability to hold a charge. Battery deterioration will be variable as between our various offered vehicles. Such battery deterioration and the related decrease in range may negatively influence potential customer decisions whether to purchase our vehicles, which may harm our ability to market and sell our vehicles. | 27 | | | | | **If we are unable to keep up with advances in electric vehicle technology, we may suffer a decline in our competitive position.** We may be unable to keep up with changes in electric vehicle technology and, as a result, may suffer a decline in our competitive position. Any failure to keep up with advances in electric vehicle technology would result in a decline in our competitive position which would materially and adversely affect our business, prospects, operating results and financial condition. Our research and development efforts may not be sufficient to adapt to changes in electric vehicle technology. As technologies change we plan to upgrade or adapt our vehicles and introduce new models to continue to provide vehicles with the latest technology and, in particular, battery cell technology. However, our vehicles may not compete effectively with alternative vehicles if we are not able to source and integrate the latest technology into our vehicles. For example, we do not manufacture battery cells which makes us depend upon other suppliers of battery cell technology for our battery packs. **Demand in the vehicle industry is highly volatile.** Volatility of demand in the vehicle industry may materially and adversely affect our business, prospects, operating results and financial condition. The markets in which we will be competing have been subject to considerable volatility in demand in recent periods. Demand for automobile sales depends to a large extent on general, economic, political and social conditions in a given market and the introduction of new vehicles and technologies. As a new start-up manufacturer we will have fewer financial resources than more established vehicle manufacturers to withstand changes in the market and disruptions in demand. **We depend on third-parties for our electric vehicle manufacturing needs.** The delivery of our licensed vehicles to future customers and the revenue derived therefrom depends on the ability of our suppliers, including Jonway and Skywell, to fulfil their obligations under their respective license and distribution agreement with our company. Fulfilment of these obligations is outside of our control and depends on a variety of factors, including their respective operations, financial condition and geopolitical and economic risks that could affect China.. If they are unable to fulfil their obligations or are only able to partially fulfil their obligations under our existing agreements with them, or if they are forced to terminate our agreements with them, either as a result of the coronavirus outbreak, the Chinese governments measures relating thereto or otherwise, we will not be able to produce or sell our licensed vehicles in the volumes anticipated and on the timetable that we anticipate, if at all. **We do not currently have all arrangements in place that are required to fully execute our business plan.** To sell our electric vehicles and VANTAGE golf carts as envisioned we must enter into certain additional agreements and arrangements that are not currently in place. These include entering into agreements with distributors, arranging for the transportation and storage for our planned electric vehicles, arranging for a facility for the assembly of our electric vehicles, and obtaining battery and other essential supplies in the quantities that we require. If we are unable to enter into such agreements or are only able to do so on terms that are unfavourable to us, we may not be able to fully carry out our business plans. **We are subject to numerous environmental, and health and safety laws and any breach of such laws may have a material adverse effect on our business and operating results.** We are subject to numerous environmental and health and safety laws, including statutes, regulations, bylaws and other legal requirements. These laws relate to the generation, use, handling, storage, transportation and disposal of regulated substances, including hazardous substances (such as batteries), dangerous goods and waste, emissions or discharges into soil, water and air, including noise and odors (which could result in remediation obligations), and occupational health and safety matters, including indoor air quality. These legal requirements vary by location and can arise under federal, provincial, state or municipal laws. Any breach of such laws and/or requirements would have a material adverse effect on our Company and its operating results. | 28 | | | | | **Our vehicles are subject to motor vehicle standards and the failure to satisfy such mandated safety standards would have a material adverse effect on our business and operating results.** All vehicles sold must comply with federal, state and provincial motor vehicle safety standards. In both Canada and the United States vehicles that meet or exceed all federally mandated safety standards are certified under the federal regulations. In this regard, Canadian and U.S. motor vehicle safety standards are substantially the same. Rigorous testing and the use of approved materials and equipment are among the requirements for achieving federal certification. Failure by us to have the SOLO, the Tofino or any future model EV satisfy motor vehicle standards would have a material adverse effect on our business and operating results. **If we are unable to reduce and adequately control the costs associated with operating our business, including our costs of manufacturing, sales and materials, our business, financial condition, operating results and prospects will suffer.** If we are unable to reduce and/or maintain a sufficiently low level of costs for designing, manufacturing, marketing, selling and distributing and servicing our electric vehicles relative to their selling prices, our operating results, gross margins, business and prospects could be materially and adversely impacted. **We have very limited experience servicing our vehicles. If we are unable to address the service and warranty requirements of our future customers our business will be materially and adversely affected.** If we are unable to address the service requirements of our future customers our business and prospects will be materially and adversely affected. In addition, we anticipate the level and quality of the service we will provide our customers will have a direct impact on the success of our future vehicles. If we are unable to offer satisfactory service to our customers, our ability to generate customer loyalty, grow our business and sell additional vehicles could be impaired. **We will continue to encounter substantial competition in our business.** The Company believes that existing and new competitors will continue to improve their products and services, as well as introduce new products and services with competitive price and performance characteristics. The Company expects that it must continue to innovate, and to invest in product development and productivity improvements, to compete effectively in the several markets in which the Company participates. The Companys competitors could develop a more efficient product or service or undertake more aggressive and costly marketing campaigns than those implemented by the Company, which could adversely affect the Companys marketing strategies and have an adverse effect on the Companys business, financial condition and results of operations. Important factors affecting the Companys current ability to compete successfully include: | | | lead generation and marketing costs; | | | | | | | | | | service delivery protocols; | | | | | | | | | | branded name advertising; and | | | | | | | | | | product and service pricing. | | In periods of reduced demand for the Companys products and services, the Company can either choose to maintain market share by reducing product and service pricing to meet the competition, or maintain its product and service pricing, which would likely sacrifice market share. Sales and overall profitability may be reduced in either case. In addition, there can be no assurance that additional competitors will not enter the Companys existing markets, or that the Company will be able to continue to compete successfully against its competition. | 29 | | | | | **The unavailability, reduction or elimination of government and economic incentives could have a material adverse effect on our business, financial condition, operating results and prospects.** Any reduction, elimination or discriminatory application of government subsidies and economic incentives that are offered to purchasers of EVs or persons installing home charging stations, the reduced need for such subsidies and incentives due to the perceived success of the electric vehicle, fiscal tightening or other reasons may result in the diminished competitiveness of the alternative fuel vehicle industry generally or our electric vehicles in particular. This could materially and adversely affect the growth of the alternative fuel automobile markets and our business, prospects, financial condition and operating results. **If we fail to manage future growth effectively, we may not be able to market and sell our vehicles successfully.** Any failure to manage our growth effectively could materially and adversely affect our business, prospects, operating results and financial condition. We plan to expand our operations in the near future in connection with the planned marketing and sale of our licensed vehicles and our VANTAGE golf carts. Our future operating results depend to a large extent on our ability to manage this expansion and growth successfully. Risks that we face in undertaking this expansion include: | | | training new personnel | | | | | | | | | | forecasting production, sales and revenue; | | | | | | | | | | controlling expenses and investments in anticipation of expanded operations; | | | | | | | | | | establishing or expanding design, manufacturing, sales and service facilities; | | | | | | | | | | implementing and enhancing administrative infrastructure, systems and processes; | | | | | | | | | | addressing new markets; and | | | | | | | | | | establishing international operations. | | We intend to continue to hire a number of additional personnel, including design and manufacturing personnel and service technicians, for our electric vehicles and golf carts. Competition for individuals with experience in designing, manufacturing and servicing electric vehicles is intense, and we may not be able to attract, assimilate, train or retain additional highly qualified personnel in the future. The failure to attract, integrate, train, motivate and retain these additional employees could seriously harm our business and prospects. **Our business may be adversely affected by labour and union activities.** Although none of our employees are currently represented by a labour union, it is common throughout the automobile industry generally for many employees at automobile companies to belong to a union, which can result in higher employee costs and increased risk of work stoppages. We will also directly and indirectly depend upon other companies with unionized work forces, such as parts suppliers and trucking and freight companies, and work stoppages or strikes organized by such unions could have a material adverse impact on our business, financial condition or operating results. If a work stoppage occurs within our business, or that of our key suppliers, it could delay the manufacture and sale of our electric vehicles and have a material adverse effect on our business, prospects, operating results or financial condition. Additionally, if we expand our business to include full in-house manufacturing of our vehicles, our employees might join or form a labour union and we may be required to become a union signatory. | 30 | | | | | **We may become subject to product liability claims, which could harm our financial condition and liquidity if we are not able to successfully defend or insure against such claims.** We may become subject to product liability claims, which could harm our business, prospects, operating results and financial condition. The automobile industry experiences significant product liability claims and we face inherent risk of exposure to claims in the event our vehicles do not perform as expected or malfunction resulting in personal injury or death. Our risks in this area are particularly pronounced given we have limited field experience of our vehicles. A successful product liability claim against us could require us to pay a substantial monetary award. Moreover, a product liability claim could generate substantial negative publicity about our vehicles and business and inhibit or prevent commercialization of other future vehicle candidates which would have a material adverse effect on our brand, business, prospects and operating results. We plan to maintain product liability insurance for all our vehicles, but any such insurance might not be sufficient to cover all potential product liability claims. Any lawsuit seeking significant monetary damages either in excess of our coverage or outside of our coverage may have a material adverse effect on our reputation, business and financial condition. We may not be able to secure additional product liability insurance coverage on commercially acceptable terms or at reasonable costs when needed, particularly if we do face liability for our products and are forced to make a claim under our policy. **We rely on key executive officers, and their knowledge of our business and technical expertise would be difficult to replace.** We are highly dependent on our executive officer. If the Companys senior executive or other key personnel are unable or unwilling to continue in their present positions, the Company may not be able to replace them easily or at all, and the Companys business may be disrupted. Competition for senior management personnel is intense, the pool of qualified candidates is very limited, and we may not be able to retain the services of our senior executives or attract and retain high-quality senior executives in the future. Such failure could have a material adverse effect on the Companys business, financial condition and results of operations. **We may never pay dividends to our common stockholders.** The Company currently intends to retain its future earnings to support operations and to finance expansion; accordingly, the Company does not anticipate paying any cash dividends in the foreseeable future. The declaration, payment and amount of any future dividends on common stock will be at the discretion of the Companys Board of Directors, and will depend upon, among other things, earnings, financial condition, capital requirements, level of indebtedness and other considerations the Board of Directors considers relevant. There is no assurance that future dividends will be paid on common stock or, if dividends are paid, the amount thereof. **Our common stock is quoted through the OTC Markets, which may have an unfavourable impact on our stock price and liquidity.** The Companys common stock is quoted on the OTC Markets, which is a significantly more limited market than the New York Stock Exchange or NASDAQ. The trading volume may be limited by the fact that many major institutional investment funds, including mutual funds, follow a policy of not investing in OTC Markets stocks and certain major brokerage firms restrict their brokers from recommending OTC Markets stocks because they are considered speculative and volatile. The trading volume of the Companys common stock has been and may continue to be limited and sporadic. As a result, the quoted price for the Companys common stock on the OTC Markets may not necessarily be a reliable indicator of its fair market value. Additionally, the securities of small capitalization companies may trade less frequently and in more limited volume than those of more established companies. The market for small capitalization companies is generally volatile, with wide price fluctuations not necessarily related to the operating performance of such companies. **Our stock price has been volatile, and your investment in our common stock could suffer a decline in value.** There has been significant volatility in the market price and trading volume of equity securities, which is unrelated to the financial performance of the companies issuing the securities. These broad market fluctuations may negatively affect the market price of our common stock. We have, and may in the future, incur rapid and substantial increases or decreases in our stock price that do not coincide in timing with the disclosure of news or developments by us. The stock market in general, and the market for mining companies in particular, has experienced extreme volatility that has often been unrelated to the operating performance of particular companies. You may not be able to resell your shares at or above the price you pay for those shares due to fluctuations in the market price of our Common Stock caused by changes in our operating performance or prospects and other factors. | 31 | | | | | Some specific factors that may have a significant effect on our Common Stock market price include: | | | actual or anticipated fluctuations in our operating results or future prospects; | | | | | | | | | | our announcements or our competitors announcements of new products; | | | | | | | | | | the publics reaction to our press releases, our other public announcements and our filings with the SEC; | | | | | | | | | | strategic actions by us or our competitors, such as acquisitions or restructurings; | | | | | | | | | | new laws or regulations or new interpretations of existing laws or regulations applicable to our business; | | | | | | | | | | changes in accounting standards, policies, guidance, interpretations or principles; | | | | | | | | | | changes in our growth rates or our competitors growth rates; | | | | | | | | | | developments regarding our patents or proprietary rights or those of our competitors; | | | | | | | | | | our inability to raise additional capital as needed; | | | | | | | | | | substantial sales of Common Stock underlying warrants and preferred stock; | | | | | | | | | | concern as to the efficacy of our products; | | | | | | | | | | changes in financial markets or general economic conditions; | | | | | | | | | | sales of Common Stock by us or members of our management team; and | | | | | | | | | | changes in stock market analyst recommendations or earnings estimates regarding our Common Stock, other comparable companies or our industry generally. | | **Our future sales of our Common Stock could adversely affect its price and our future capital-raising activities could involve the issuance of equity securities, which would dilute shareholders investments and could result in a decline in the trading price of our Common Stock.** We may sell securities in the public or private equity markets if and when conditions are favourable, even if we do not have an immediate need for additional capital at that time. Sales of substantial amounts of our common stock, or the perception that such sales could occur, could adversely affect the prevailing market price of our common stock and our ability to raise capital. We may issue additional common stock in future financing transactions or as incentive compensation for our executive management and other key personnel, consultants and advisors. Issuing any equity securities would be dilutive to the equity interests represented by our then-outstanding shares of common stock. The market price for our common stock could decrease as the market takes into account the dilutive effect of any of these issuances. Furthermore, we may enter into financing transactions at prices that represent a substantial discount to the market price of our common stock. A negative reaction by investors and securities analysts to any discounted sale of our equity securities could result in a decline in the trading price of our common stock. **Our common stock is classified as a penny stock.** Rule 3a51-1 of the Securities Exchange Act of 1934 establishes the definition of a penny stock, for purposes relevant to us, as any equity security that has a minimum bid price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to a limited number of exceptions which are not available to us. It is likely that the Companys common stock will be considered to be a penny stock for the immediately foreseeable future. | 32 | | | | | For any transaction involving a penny stock, unless exempt, the penny stock rules require that a broker or dealer approve a persons account for transactions in penny stocks and the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve a persons account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience and objectives of the investor, make a reasonable determination that transactions in penny stocks are suitable for that person, and make a reasonable determination that that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also provide disclosure to its customers, prior to executing trades, about the risks of investing in penny stocks in both public offerings and in secondary trading, the commissions payable to both the broker-dealer and the registered representative, and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Because of these regulations, broker-dealers may not wish to furnish the necessary paperwork and disclosures and/or may encounter difficulties in their attempt to buy or sell shares of the Companys common stock, which may in turn affect the ability of Company stockholders to sell their shares. Accordingly, the penny stock classification adversely affects any market liquidity for the Companys common stock and subjects the shares to certain risks associated with trading in penny stocks. These risks include difficulty for investors in purchasing or disposing of shares, difficulty in obtaining accurate bid and ask quotations, difficulty in establishing the market value of the shares, and a lack of securities analyst coverage. **Our success depends on attracting and retaining key personnel.** Our future plans could be harmed if we are unable to attract or retain key personnel, and our future success will depend, in part, on our ability to attract and retain qualified management and technical personnel. Equally, our success depends on the ability of our management and employees to interpret market data correctly and to interpret and respond to economic market and other conditions in order to locate and adopt appropriate investment opportunities, monitor such investments, and ultimately, if required, to successfully divest such investments. Further, no assurance can be given that our key personnel will continue their association or employment with us or that replacement personnel with comparable skills can be found. We have sought to and will continue to ensure that management and any key employees are appropriately compensated, however, their services cannot be guaranteed. If we are unable to attract and retain key personnel, our business may be adversely affected. We do not know whether we will be successful in hiring or retaining qualified personnel, and our inability to hire qualified personnel on a timely basis, or the departure of key employees, could materially and adversely affect our development and profitable commercialization plans, our business prospects, results of operations, and financial condition. Should we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud, which could harm our brand and operating results. Our compliance with the annual internal control report requirement for each fiscal year will depend on the effectiveness of our financial reporting and data systems and controls. Inferior internal controls could cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock and our access to capital. In addition, our internal control systems rely on people trained in the execution of the controls. Loss of these people or our inability to replace them with similarly skilled and trained individuals or new processes in a timely manner could adversely impact our internal control mechanisms. The requirements of being a public company may strain our resources, divert managements attention and affect our ability to attract and retain qualified board members and officers. Compliance with these rules and regulations increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources. | 33 | | | | | **Protecting our intellectual property is necessary to protect our brand.** We may not be able to protect important intellectual property and we could incur substantial costs defending against claims that our products infringe on the proprietary rights of others. Our ability to compete effectively will depend, in part, on our ability to protect our proprietary system-level technologies, systems designs, and manufacturing processes. We will rely on patents, trademarks, and other policies and procedures related to confidentiality to protect our intellectual property. However, some of our intellectual property is not covered by any patent or patent application. We could incur substantial costs in prosecuting or defending patent infringement suits or otherwise protecting our intellectual property rights. While we have attempted to safeguard and maintain our proprietary rights, we do not know whether we have been or will be completely successful in doing so. Moreover, patent applications and enforcement, thereof, filed in foreign countries may be subject to laws, rules and procedures that are substantially different from those of the United States, and any resulting foreign patents may be difficult and expensive to enforce. We could incur substantial costs in prosecuting or defending trademark infringement suits. Further, our competitors may independently develop or patent technologies or processes that are substantially equivalent or superior to ours. In the event we are found to be infringing third party patents, we could be required to pay substantial royalties and/or damages, and we do not know whether we will be able to obtain licenses to use such patents on acceptable terms, if at all. Failure to obtain needed licenses could delay or prevent the development, manufacture, or sale of our products, and could necessitate the expenditure of significant resources to develop or acquire non-infringing intellectual property. Asserting, defending and maintaining our intellectual property rights could be difficult and costly and failure to do so may diminish our ability to compete effectively and may harm our operating results. As a result, we may need to pursue legal action in the future to enforce our intellectual property rights, to protect our trade secrets and domain names, and to determine the validity and scope of the proprietary rights of others. If third parties prepare and file applications for trademarks used or registered by us, we may oppose those applications and be required to participate in proceedings to determine the priority of rights to the trademark. Similarly, competitors may have filed applications for patents, may have received patents and may obtain additional patents and proprietary rights relating to products or technology that block or compete with ours. We may have to participate in interference proceedings to determine the priority of invention and the right to a patent for the technology. Confidentiality agreements to which we are party may be breached, and we may not have adequate remedies for any breach. Also, our trade secrets may also be known without breach of such agreements or may be independently developed by competitors. Inability to maintain the proprietary nature of our technology and processes could allow our competitors to limit or eliminate any competitive advantages we may have. As part of our business strategy, we intend to consider acquisitions of companies, technologies and products that we believe could improve our ability to compete in our core markets or allow us to enter new markets. Acquisitions, involve numerous risks, any of which could harm our business, including, difficulty in integrating the technologies, products, operations and existing contracts of a target company and realizing the anticipated benefits of the combined businesses; difficulty in supporting and transitioning customers, if any, of the target company; inability to achieve anticipated synergies or increase the revenue and profit of the acquired business; potential disruption of our ongoing business and distraction of management; the price we pay or other resources that we devote may exceed the value we realize; or the value we could have realized if we had allocated the purchase price or other resources to another opportunity and inability to generate sufficient revenue to offset acquisition costs. If we finance acquisitions by issuing equity securities, our existing stockholders may be diluted; and as a result, if we fail to properly evaluate acquisitions or investments, we may not achieve the anticipated benefits of any such acquisitions, and we may incur costs in excess of what we anticipate. | 34 | | | | | **Risks Relating to Ownership of Our Securities** **If we issue additional shares in the future our existing shareholders will experience dilution.** Our certificate of incorporation authorizes the issuance of up to 350,000,000 shares of common stock with a par value of $0.001. Our board of directors may choose to issue some or all of such shares to acquire one or more businesses or to provide additional financing in the future. The issuance of any such shares will result in a reduction of the book value and market price of the outstanding shares of our common stock. If we issue any such additional shares, such issuance will cause a reduction in the proportionate ownership and voting power of all current shareholders. Further, such issuance may result in a change of control of our corporation. **The price of our common stock could be volatile and could decline following the Offering at a time when you want to sell your holdings.** Numerous factors, many of which are beyond our control, may cause the market price of our common stock to fluctuate significantly. These factors include: | | | quarterly variations in our results of operations or those of our competitors; | | | | | | | | | | delays in the establishment of manufacturing, assembly, and storage facilities for the distribution of our products; | | | | | | | | | | announcements by us or our competitors of acquisitions, new products, significant contracts, commercial relationships or capital commitments; | | | | | | | | | | intellectual property infringements; | | | | | | | | | | our ability to develop and market new and enhanced products on a timely basis; | | | | | | | | | | commencement of, or our involvement in, litigation; | | | | | | | | | | major changes in our Board of Directors or management, including the departure of Mr. Silzer; | | | | | | | | | | changes in governmental regulations; | | | | | | | | | | changes in earnings estimates or recommendations by securities analysts; | | | | | | | | | | the impact of the COVID-19 pandemic on capital markets; | | | | | | | | | | our failure to generate material revenues; | | | | | | | | | | our public disclosure of the terms of this financing and any financing which we consummate in the future; | | | | | | | | | | any acquisitions we may consummate; | | | | | | | | | | announcements by us or our competitors of significant contracts, new services, acquisitions, commercial relationships, joint ventures or capital commitments; | | | | | frustration or cancellation of key contracts; | | | | | | | | | | short selling activities; | | | | | | | | | | changes in market valuations of similar companies; and | | | | | | | | | | general economic conditions and slow or negative growth of end markets. | | | 35 | | | | | Securities class action litigation is often instituted against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs to us and divert our managements attention and resources. Moreover, securities markets may from time to time experience significant price and volume fluctuations for reasons unrelated to operating performance of particular companies, such as the uncertainty associated with the COVID-19 pandemic. These market fluctuations may adversely affect the price of our common stock and other interests in our company at a time when you want to sell your interest in us. **Our common stock may be affected by limited trading volume and price fluctuations, which could adversely impact the value of our common stock.** Our common stock has experienced, and is likely to experience in the future, significant price and volume fluctuations, which could adversely affect the market price of our common stock without regard to our operating performance. In addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the overall economy or the condition of the financial markets could cause the price of our common stock to fluctuate substantially. These fluctuations may also cause short sellers to periodically enter the market in the belief that we will have poor results in the future. We cannot predict the actions of market participants and, therefore, can offer no assurances that the market for our common stock will be stable or appreciate over time. **Future sales or perceived sales of our common stock could depress our stock price.** If the holders of our presently issued our future issued common stock were to attempt to sell a substantial amount of their holdings at once, the market price of our common stock could decline. Moreover, the perceived risk of this potential dilution could cause shareholders to attempt to sell their shares and investors to short the common stock, a practice in which an investor sells shares that he or she does not own at prevailing market prices, hoping to purchase shares later at a lower price to cover the sale. As each of these events would cause the number of shares of our common stock being offered for sale to increase, our common stock market price would likely further decline. All of these events could combine to make it very difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate. **Trading on the OTC Markets may be volatile and sporadic, which could depress the market price of our common stock and make it difficult for our stockholders to resell their shares.** Our common stock is quoted on OTC Markets. Trading in stock quoted on OTC Markets is often thin and characterized by wide fluctuations in trading prices due to many factors that may have little to do with our operations or business prospects. This volatility could depress the market price of our common stock for reasons unrelated to operating performance. Moreover, OTC Markets is not a stock exchange, and trading of securities on the OTC Markets is often more sporadic than the trading of securities listed on a quotation system like NASDAQ or a stock exchange like the American Stock Exchange. Accordingly, our shareholders may have difficulty reselling any of their shares. **Our stock is a penny stock. Trading of our stock may be restricted by the SECs penny stock regulations and FINRAs sales practice requirements, which may limit a stockholders ability to buy and sell our stock.** Our stock is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines penny stock to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and accredited investors. The term accredited investor refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customers account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customers confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchasers written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe the penny stock rules discourage investor interest in, and limit the marketability of, our common stock. | 36 | | | | | **FINRA sales practice requirements may also limit a stockholders ability to buy and sell our stock.** In addition to the penny stock rules promulgated by the Securities and Exchange Commission (see above for a discussion of penny stock rules), FINRA rules require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customers financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares. **Our business is subject to changing regulations related to corporate governance and public disclosure that have increased both our costs and the risk of noncompliance.** Because our common stock is publicly traded, we are subject to certain rules and regulations of federal, state and financial market exchange entities charged with the protection of investors and the oversight of companies whose securities are publicly traded. These entities, including the Public Company Accounting Oversight Board, the SEC and FINRA, have issued requirements and regulations and continue to develop additional regulations and requirements in response to corporate scandals and laws enacted by Congress, most notably the Sarbanes-Oxley Act of 2002. Our efforts to comply with these regulations have resulted in, and are likely to continue resulting in, increased general and administrative expenses and diversion of management time and attention from revenue-generating activities to compliance activities. Because new and modified laws, regulations and standards are subject to varying interpretations in many cases due to their lack of specificity, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This evolution may result in continuing uncertainty regarding compliance matters and additional costs necessitated by ongoing revisions to our disclosure and governance practices. **Provisions in our articles of incorporation and bylaws could discourage a change in control, or an acquisition of us by a third party, even if the acquisition would be favourable to you, thereby adversely affecting existing shareholders.** Our articles of incorporation and bylaws contain provisions that may have the effect of making more difficult or delaying attempts by others to obtain control of our Company, even when these attempts may be in the best interests of our shareholders. For example, our articles of incorporation authorize our Board of Directors, without stockholder approval, to issue one or more series of preferred stock, which could have voting and conversion rights that adversely affect or dilute the voting power of the holders of common stock. These provisions and others that could be adopted in the future could deter unsolicited takeovers or delay or prevent changes in our control or management, including transactions in which stockholders might otherwise receive a premium for their shares over then-current market prices. These provisions may also limit the ability of stockholders to approve transactions that they may deem to be in their best interests. | 37 | | | | | **Because Robert Silzer, our Chief Executive Officer and Chairman, controls a significant number of shares of our voting capital stock, he has effective control over actions requiring stockholder approval.** Robert Silzer, our Chairman and Chief Executive Officer, holds 2,019 shares of our common stock and 150,376 shares of Series A Preferred stock, which are entitled to vote with holders of the common stock as a class at the rate of 665 votes per share of Series A Preferred stock (100,000,040 votes, or approximately 75.0% of votes). In addition, our Directors James Singerling and Stephen Johnston each holds 25,000 shares of Series A Preferred stock (16,625,000 votes, or approximately 12.5% of aggregate votes each). As a result, Mr. Silzer, Singerling and Johnston control 133,250,040 or approximately 92% of shares entitled to vote, and have the ability to control the outcome of matters submitted to our stockholders for approval, including the election of directors and any merger, consolidation or sale of all or substantially all of our assets. In addition, they have the ability to control the management and affairs of our company. Accordingly, any investors who purchase shares will be minority shareholders and as such will have little to no say in the direction of us and the election of directors. Additionally, this concentration of ownership might harm the market price of our common stock by: | | | delaying, deferring or preventing a change in corporate control; | | | | | impeding a merger, consolidation, takeover or other business combination involving us; or | | | | | discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us. | | **We may never pay dividends to our common stockholders.** So long as any shares of our senior ranking Series A, B, C, D, or E Preferred Stock are outstanding, the Company may not declare, pay or set apart for payment any dividend or make any distribution on the common stock. Furthermore, each of the 3,805 shares of Series F Preferred stock outstanding as of the date of this Quarterly report is entitled, until converted or redeemed, to receive cumulative dividends of 10% per annum, payable quarterly, in cash or Preferred Shares. Subject to our obligation to pay Series F Preferred stock dividends, and regardless of restrictions imposed by our other series of Preferred Stock, we currently intend to retain all available funds and any future earnings for use in the operation of our business and do not anticipate paying any non-compulsory dividends on our preferred stock or common stock in the foreseeable future, if at all. Any future determination to declare dividends will be made at the discretion of our Board of Directors and will depend on our financial condition, results of operations, capital requirements, general business conditions and other factors that our Board of Directors may deem relevant. Any return to stockholders will therefore be limited to the increase, if any, of our share price that stockholders may be able to realize if they sell their shares. | ITEM 1B. | UNRESOLVED STAFF COMMENTS | | None. | ITEM 2. | PROPERTIES | | Our principal executive office is located at 207-15272 Croydon Drive, Surrey, BC, V3Z 0Z5 Canada, where we lease approximately 2,024 square feet of office space. On July 14, 2020, the Company entered into a three-year operating lease agreement expiring on July 31, 2023 for office space in Surrey, BC with 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 CDN$51,552, with additional rent of CDN$1,551 per month for operating expenses. The lease includes a rent-free period with rent payments commencing on November 1, 2020. | ITEM 3. | LEGAL PROCEEDINGS | | On September 7, 2016, Chetu Inc. has filed a Complaint for Damage in Florida to recover unpaid invoice amounts of $27,335 plus interest of $4,939. The invoice was not paid due to a dispute that the Company did not think that vendor had delivered the service according to the agreement between the two parties. As at December 31, 2022, included in trade and other payables is $17,983 (December 31, 2021 - $29,329) related to this unpaid invoice, interest and legal fees. | 38 | | | | | We may, from time to time, be party to litigation and subject to claims incident to the ordinary course of business. As our growth continues, we may become party to an increasing number of litigation matters and claims. The outcome of litigation and claims cannot be predicted with certainty, and the resolution of any future matters could materially affect our future financial position, results of operations or cash flows. | ITEM 4. | MINE SAFETY DISCLOSURES | | Not applicable. **PART II** | ITEM 5. | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES | | **Market Information for Common Stock** Our common stock is currently quoted on the OTC Markets OTCQB Venture Marketplace (OTCQB) under the symbol DSGT. The following table sets forth for the periods indicated the high and low bid price per share of our common stock as reported on the OTCQB. The following quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions: **OTC Markets Group Inc. OTCQB (1)** | Quarter Ended | | High $ | | | Low $ | | | | | | | | | | | | | December 31, 2022 | | | 0.10 | | | | 0.04 | | | | September 30, 2022 | | | 0.17 | | | | 0.05 | | | | June 30, 2022 | | | 0.08 | | | | 0.04 | | | | March 31, 2022 | | | 0.15 | | | | 0.07 | | | | December 31, 2021 | | | 0.35 | | | | 0.13 | | | | September 30, 2021 | | | 0.33 | | | | 0.13 | | | | June 30, 2021 | | | 0.48 | | | | 0.18 | | | | March 31, 2021 | | | 1.23 | | | | 0.34 | | | (1) Over-the-counter market quotations reflect inter-dealer prices without retail mark-up, mark-down or commission, and may not represent actual transactions. **Holders of Record** As of December 31, 2022, there were 98 holders of record of our common stock. The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees. **Dividend Policy** We have never declared or paid cash dividends on our common stock. We currently intend to retain all available funds and any future earnings for use in the operation of our business and do not anticipate paying any dividends on our common stock in the foreseeable future, if at all. Any future determination to declare dividends will be made at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, general business conditions and other factors that our board of directors may deem relevant. **Purchases of Equity Securities by the Issuer and Affiliated Purchasers** We did not purchase any of our shares of common stock or other securities during 2021 and 2020. | 39 | | | | | **Recent Sale of Unregistered Securities** 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. These shares were issued on April 1, 2022, and were recorded as such. 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. 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. The shares were issued on April 1, 2022. 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 August 29, 2022, pursuant to the December 2021 Series F SPA, the Company received $250,000 for the subscription of 250 Series F preferred shares. 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. The shares were issued on October 18, 2022. 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, as well as issued 96 Series F preferred shares to settle $96,000 in dividends payable. | ITEM 6. | SELECTED FINANCIAL DATA | | We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item. | ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | | *You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the consolidated financial statements and the related notes to the consolidated financial statements included later in this Annual Report on Form 10-K. In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, beliefs, and expectations that involve risks and uncertainties. Our actual results and the timing of events could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in Risk Factors and Special Note Regarding Forward-Looking Statements.* **Business Overview** DSG Global, Inc., under the brand name Vantage Tag Systems Inc. (VTS) provides patented electronic tracking systems and fleet management solutions to golf courses and other avenues that allow for remote management of the courses fleet of golf carts, turf equipment and utility vehicles. Their clients use VTSs unique technology to significantly reduce operational costs, improve the efficiency plus profitability of their fleet operations, increase safety, and enhance customer satisfaction. VTS has grown to become a leader in the category of Fleet Management in the golf industry, with its technology installed in vehicles worldwide. VTS is now aggressively branching into several new streams of revenue, through programmatic advertising, licensing and distribution, as well as expanding into Commercial Fleet Management, a single rider golf cart and Agricultural applications. Additional information is available at http://vantage-tag.com/ | 40 | | | | | Ready Golf Ready: Our roots as a company are in golf, and our technology is changing the way golf is being played and driving new revenue for courses. | | Vantage TAG equipped golf carts enhance fleet management. | | | | | | | | Single rider carts speed up pace of play and drive rental revenue. | | | | | | | | Onboard touchscreens drive revenue and offer an enhanced course experience. | | | | | | | | Combination of technology and single rider carts has the ability to decrease average play time to 2:20 and drive numerous extra plays per hour. | | | | | | | | Our Pennies A Day, Pennies A Round model provides easy entry to leasing single-rider vehicles. | | *In Development: DSGs Infinity On-Board Screen Offers Gaming Revenue Potential* | | In the next 2 years, sports betting will generate $10B / licensed in 20+ States. | | | | | | | | In negotiations with leading mobile gaming developers. | | | | | | | | DSGs existing infinity screens work with current gaming technology. | | *Business Unit Overview: On Board Media* | | 38,000 courses globally. | | | | | | | | 26,000 courses capable of installing the DSG TAG SYSTEM with the TAG and INFINITIY. | | | | | | | | Courses with INFINITY screens in carts can generate $90,000 - $110,000 in additional revenue. | | | | Screens for free and own revenue generated by 250 golf courses. | | | | | | | | DSG single-rider golf cars are available in any quantity for most courses on a revenue share basis with no upfront cost to the golf course. | | | | | | | | Programmatic Advertising has the ability to increase revenue 4x more than standard advertising, an average increase of $200,000 - $300,000 per course. | | *Business Unit Overview: TAG / Fleet Management Vantage Golf Potential:* | | 38,000 courses globally. | | | | | | | | 4 Million golf carts in the world market. | | | | | | | | DSG Tech on 300 courses now, with an additional 500 courses added in 2020 driving $15 million in sales. | | | | | | | | Key component of our Pennies A Day, Pennies A Round program. | | **Reverse Acquisition** 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. | 41 | | | | | In January 2015, we changed our name to DSG Global, Inc. and effected a one-for-three reverse stock split of our issued and outstanding common stock in anticipation of entering in a share exchange agreement with DSG TAG Systems, Inc., a corporation incorporated under the laws of the State of Nevada on April 17, 2008 and extra provincially registered in British Columbia, Canada in 2008. On April 13, 2015, we entered into a share exchange agreement with Vantage Tag Systems Inc. (VTS) (formerly DSG Tag Systems Inc.) and the shareholders of VTS who become parties to the agreement. Pursuant to the terms of the share exchange agreement, we agreed to acquire not less than 75% and up to 100% of the issued and outstanding common shares in the capital stock of VTS in exchange for the issuance to the selling shareholders of up to 20,000,000 pre-reverse split shares of our common stock on the basis of 1 common share for 5.4935 common shares of VTS. On May 6, 2015, we completed the acquisition of approximately 75% (82,435,748 common shares) of the issued and outstanding common shares of VTS as contemplated by the share exchange agreement by issuing 15,185,875 pre-reverse split shares of our common stock to shareholders of VTS who became parties to the agreement. In addition, concurrent with the closing of the share exchange agreement, we issued an additional 179,823 pre-reverse split shares of our common stock to Westergaard Holdings Ltd. in partial settlement of accrued interest on outstanding indebtedness of VTS. Following the initial closing of the share exchange agreement and through October 22, 2015, we acquired an additional 101,200 shares of common stock of VTS from shareholders who became parties to the share exchange agreement and issued to these shareholders an aggregate of 18,422 pre-reverse split shares of our common stock. Following completion of these additional purchases, DSG Global Inc. owns approximately 100% of the issued and outstanding shares of common stock of VTS. An aggregate of 4,229,384 shares of Series A Convertible Preferred Stock of VTS were exchanged for 51 Series B and 3,000,000 Series E preferred shares during the year ended December 31, 2018 by Westergaard Holdings Ltd., an affiliate of Keith Westergaard, a previous member of our board of directors which have not been issued as of December 31, 2020. 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. **Factors Affecting Our Performance** We believe that the growth of our business and our future success depend on various opportunities, challenges, and other factors, including the following: **Inventory Sourcing** In order to successfully deliver products, increase sales, and maintain customer satisfaction, we continue to source new, reliable suppliers of our hardware units and components at competitive prices. Presently, we out-source our INFINITY, TAG and Vantage Golf Carts from suppliers in China, which continues to provide us with higher quality, newer technology at competitive pricing. In addition, DSG is currently in negotiations with a telecommunications provider to provide new technology in hardware and wireless access. However, there is no guarantee that we will conclude any agreement in this regard. **Competition** We compete with a number of established producers and distributors of vehicle fleet management systems, as well as producers of non-golf specific utility vehicle fleet management systems. 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 strategy, and increase our financial resources. | 42 | | | | | 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, 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. **Additional Capital** We require additional capital to continue to develop software and products, meet our contractual obligations, and execute our business plan. There can be no assurances that we will be able to raise additional capital on acceptable terms or at all, which would adversely affect our ability to achieve our business objectives. **Components of Our Results of Operations** **Revenue** We derive revenue from five different sources, as follows: **Systems sales revenue**, which consists of the sales price paid by those customers who purchase or lease our TAG system hardware. **Monthly service fees** are paid by all customers for the wireless data fee charges required to operate the GPS tracking on the TAG systems. **Monthly rental Fees** are paid by those customers that rent the TAG system hardware. The amount of a customers monthly payment varies based on the type of equipment rented (a TAG, a TAG and TEXT, or a TAG and INFINITY). **** **Golf Cart Sales Revenue,** which consist of the sales price paid by the customers who purchase our Vantage and licensed Shelby golf carts. **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 units. No costs have been incurred yet for this project. We recognize 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. 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 3 Summary of Significant Accounting Policies* in the notes to our Consolidated Financial Statements included in Part I, Item 1 of this Form 10-K. **Cost of Revenue** Our cost of revenue consists primarily of hardware purchases, wireless data fees, mapping, installation costs, freight expenses and inventory adjustments. **Hardware purchases.** Our equipment purchases consist primarily of TAG system control units, TEXT display, and INFINITY displays. The TAG system control unit is sold as a stand-alone unit or in conjunction with our TEXT alphanumeric display or INFINITY high definition touch activated display. Hardware purchases also include costs of components used during installations, such as cables, mounting solutions, and other miscellaneous equipment. | 43 | | | | | **Wireless data fees.** Our wireless data fees consist primarily of the data fees charged by outside providers of GPS tracking used in all of our TAG system control units. **Mapping.**Our mapping costs consist of aerial mapping, course map, geofencing, and 3D flyovers for golf courses. This cost is incurred at the time of hardware installation. **Installation.**Our installation costs consist primarily of costs incurred by our employed service technicians for the cost of travel, meals, and miscellaneous components required during installations. In addition, these costs also include fees paid to external contractors for installations on a project-by-project basis. **Freight expenses and Inventory adjustments.** Our freight expenses consist primarily of costs to ship hardware to courses for installations. Our inventory adjustments include inventory write offs, write downs, and other adjustments to the cost of inventory. **Operating expenses & other income (expenses)**We classify our operating expenses and other income (expenses) into six categories: compensation, general and administrative, warranty, foreign currency exchange, and finance costs. Our operating expenses consist primarily of sales and marketing, salaries and wages, consulting fees, professional fees, trade shows, software development, and allocated costs. Allocated costs include charges for facilities, office expenses, telephones and other miscellaneous expenses. Our other income (expenses) primarily consists of financing costs and foreign exchange gains or losses. **Compensation expense.**Our compensation expenses consist primarily of personnel costs, such as employee salaries, payroll expenses, and employee benefits. This includes salaries for management, administration, engineering, sales and marketing, and service support technicians. Salaries and wages directly related to projects or research and development are expensed as incurred to their operating expense category. **General and administrative**. Our general and administrative expenses consist primarily of sales and marketing, commissions, travel, trade shows, consultant fees, insurance, and compliance and other administrative functions, as well as accounting and legal professional services fees, allocated costs and other corporate expenses. Sales and marketing includes brand marketing, marketing materials, and media management. **Warranty expense (recovery).**Our warranty expenses consist primarily of associated material product costs, labour costs for technical support staff, and other associated overhead. Warranty costs are expensed as they are incurred. **Bad debt.**Our bad debt expense consists primarily of amounts written down for doubtful accounts recorded on trade receivables. **Depreciation and amortization.**Our depreciation and amortization costs consist primarily of depreciation and amortization on fixed assets, equipment on lease and intangible assets. **Foreign currency exchange.**Our foreign currency exchange consists primarily of foreign exchange fluctuations recorded in Canadian dollar (CAD), British Pounds (GBP), or Euro (EUR) at the rates of exchange in effect when the transaction occurred. **Finance costs.**Our finance costs consist primarily of investor interest expense, investor commission fees, and other financing charges for obtaining debt financing. We expect to continue to invest in corporate infrastructure and incur additional expenses associated with being a public company, including increased legal and accounting costs, investor relations costs, higher insurance premiums and compliance costs associated with Section 404 of the Sarbanes-Oxley Act of 2002. In addition, we expect sales and marketing expenses to increase in absolute dollars in future periods. In particular, we expect to incur additional marketing costs to support the expansion of our offerings in new markets like commercial fleet management and agriculture. | 44 | | | | | **Results of Operations** The following tables set forth our consolidated results of operations as a percentage of revenue for the periods presented: | | | For the year ended | | | | | | December 31, 2022 | | | December 31, 2021 | | | | Revenue | | | 100.0 | % | | | 100.0 | % | | | Cost of revenue | | | 54.4 | % | | | 53.1 | % | | | Gross profit | | | 45.6 | % | | | 46.9 | % | | | Operating expenses | | | | | | | | | | | Compensation expense | | | 90.2 | % | | | 144.2 | % | | | General and administration expense | | | 89.4 | % | | | 165.7 | % | | | Research and development | | | 1.4 | % | | | 18.5 | % | | | Bad debt | | | (0.8 | )% | | | 2.4 | % | | | Depreciation and amortization expense | | | 0.3 | % | | | 0.6 | % | | | Total operating expense | | | 182.6 | % | | | 331.4 | % | | | Loss from operations | | | (136.9 | )% | | | (284.5 | )% | | | Other income (expense) | | | | | | | | | | | Foreign currency exchange | | | (0.7 | )% | | | (2.9 | )% | | | Other (expenses) income | | | - | % | | | 0.6 | % | | | Redemption premium | | | (0.1 | )% | | | - | % | | | Gain (loss) on sale | | | (0.1 | )% | | | - | % | | | Gain (loss) on disposal | | | 0.1 | % | | | - | % | | | Gain (loss) on extinguishment of debt | | | 1.1 | % | | | 1.7 | % | | | Finance costs | | | (60.2 | )% | | | (20.1 | )% | | | Total other expense | | | (59.9 | )% | | | (20.6 | )% | | | Loss before income taxes | | | (196.9 | )% | | | (305.1 | )% | | | Provision for income taxes | | | - | % | | | - | % | | | Net loss | | | (196.9 | )% | | | (305.1 | )% | | | Other comprehensive income (expense) | | | | | | | | | | | Foreign currency translation adjustments | | | 1.5 | % | | | 1.8 | % | | | Comprehensive loss | | | (195.4 | )% | | | (303.3 | )% | | **** **Comparison of the Years Ended December 31, 2022 and 2021** **Revenue** | | | For the Years Ended December 31, | | | | | | | | | 2022 | | | 2021 | | | % Change | | | | Revenue | | $ | 3,833,853 | | | $ | 2,092,819 | | | | 83.2 | % | | | 45 | | | | | Revenue increased by $1,741,034 or 83.2%, for the year ended December 31, 2022 as compared to year ended December 31, 2021. Sales increased for the year ended, year over year, as the result of overcoming challenges related to COVID-19 and aggressive marketing and installation of new product. This compares to the comparative period in which the Company experienced a decreased of revenue due to Covid-19. **Cost of Revenue** | | | For the Years Ended December 31, | | | | | | | | | 2022 | | | 2021 | | | % Change | | | | Cost of revenue | | $ | 2,085,171 | | | $ | 1,110,698 | | | | 87.7 | % | | Cost of revenue increased by $974,473 or 87.7%, for the year ended December 31, 2022 as compared to the year ended December 31, 2021. The table below outlines the differences in detail: | | | For the Years Ended | | | | | | December 31, 2022 | | | December 31, 2021 | | | Difference | | | % Difference | | | | Cost of goods | | $ | 1,988,216 | | | $ | 993,869 | | | $ | 994,347 | | | | 100.0 | % | | | Mapping & freight costs | | | 25,474 | | | | 41,143 | | | | (15,669 | ) | | | (38.1 | )% | | | Wireless fees | | | 71,481 | | | | 75,686 | | | | (4,205 | ) | | | (5.6 | )% | | | | | | | | | | | | | | | | | | | | | | | | $ | 2,085,171 | | | $ | 1,110,698 | | | $ | 952,303 | | | | 85.7 | % | | Cost of sales increased for the years ended, year over year, primarily due to increase of price of product sold. This increase was consistent with the increase in revenue for the same period. **Compensation Expense** | | | For the Years Ended December 31, | | | | | | | | | 2022 | | | 2021 | | | % Change | | | | Compensation expense | | $ | 3,459,553 | | | $ | 3,017,181 | | | | 14.7 | % | | Compensation expense increased by $442,372 or 14.7%, for the year ended December 31, 2022 as compared to the year ended December 31, 2021 primarily as a result of non-cash warrants and shares issued for consulting services during the period, and hire new employees for sales. **General and Administration Expense** | | | For the Years Ended December 31, | | | | | | | | | 2022 | | | 2021 | | | % Change | | | | General & administration expense | | $ | 3,429,075 | | | $ | 3,467,995 | | | | (1.1 | )% | | | 46 | | | | | General & administration expense decreased by $38,920 or 1.1% for the year ended December 31, 2022 as compared to the year ended December 31, 2021. The table below outlines the differences in detail: | | | For the Years Ended | | | | | | December 2022 | | | December 2021 | | | Difference | | | % Difference | | | | Accounting & legal | | $ | 302,143 | | | $ | 212,659 | | | $ | 89,484 | | | | 42.1 | % | | | Marketing & advertising | | | 286,717 | | | | 134,856 | | | | 151,861 | | | | 112.6 | % | | | Subcontractor & commissions | | | 644,575 | | | | 1,601,963 | | | | (957,388 | ) | | | (59.8 | )% | | | Hardware | | | 57,861 | | | | 49,808 | | | | 8,053 | | | | 16.2 | % | | | | | | 111,465 | | | | 117,386 | | | | (5,921 | ) | | | (5.0 | )% | | | Office expense, rent, software, design, bank & credit card charges, telephone & meals | | | 2,019,874 | | | | 1,351,323 | | | | 668,551 | | | | 49.5 | % | | | | | $ | 3,429,075 | | | $ | 3,467,995 | | | $ | (38,920 | ) | | | (1.1 | )% | | | | | | | | | | | | | | | | | | | | | The overall increased of general and admin expenses was primarily due to decreases in subcontractors and commission, offset by substantial increase in marketing and advertising and other expenses. Subcontractors and commissions decreased as a result of reduction of contractors due to delays in homologation process. General office expenses increased as a result of greater trade show presentations, new software implementation, design of SR1 and operating lease expenses in the current period. Accounting and legal expenses increased because of switching audit firms, and legal representation for the company. **Research and Development Expense** | | | For the Years Ended December 31, | | | | | | | | | 2022 | | | 2021 | | | % Change | | | | Research and development | | $ | 52,344 | | | $ | 388,035 | | | | (86.5 | )% | | Research and development expense decreased by $335,691, for the year ended December 31, 2022, as compared to the year ended December 31, 2021, primarily as a result of delays on the homologation process. **Foreign Currency Exchange** | | | For the Years Ended December 31, | | | | | | | | | 2022 | | | 2021 | | | % Change | | | | Foreign currency exchange (gain) loss | | $ | (28,241 | ) | | $ | (59,793 | ) | | | (52.8 | )% | | For the year ended December 31, 2022, we recognized a $28,241 gain in foreign exchange gain as compared to $59,793 in foreign exchange gain for the year ended December 31, 2021. The change was primarily due to beneficial movements in foreign currency rates and a reduction on payables, receivables and other foreign exchange transactions denominated in currencies other than the functional currencies of the legal entities in which the transactions are recorded. Foreign currency fluctuations are primarily from the Canadian dollar, Euro, and British pound. | 47 | | | | | **(Gain) loss on extinguishment of debt** | | | For the Years Ended December 31, | | | | | | | | | 2022 | | | 2021 | | | % Change | | | | (Gain) loss on extinguishment of debt | | $ | (40,355 | ) | | $ | (35,169 | ) | | | 14.7 | % | | The Company recorded a gain of $40,355 for the year ended December 31, 2022, compared to a gain of $35,169 for the year ended December 31, 2021. The Company recorded a gain for amounts owing to various vendors as not deemed payable or as settled. **Research and development** | | | For the Years Ended December 31, | | | | | | | | | 2022 | | | 2021 | | | % Change | | | | Research and development | | $ | 52,344 | | | $ | 388,035 | | | | (86.5 | )% | | Research and development expense decreased by $335,691 or 86.5% for the year ended December 31, 2022 as compared to the year ended December 31, 2021. The decrease is the result of delays in the homologations process of our High speed vehicles. **Finance Costs** | | | For the Years Ended December 31, | | | | | | | | | 2022 | | | 2021 | | | % Change | | | | Finance costs | | $ | 2,306,849 | | | $ | 420,102 | | | | 449.1 | % | | Finance costs increased by $1,886,747 or 449.1%, for the year ended December 31, 2022 as compared to the year ended December 31, 2021. The increase is as a result of interest on new convertible debt being recorded for the year ended December 31, 2022. **Net Loss** | | | For the Years Ended December 31, | | | | | | | | | 2022 | | | 2021 | | | % Change | | | | Net loss | | $ | (7,547,391 | ) | | $ | (6,384,655 | ) | | | 19.5 | % | | As a result of the above factors, net loss increased by $1,144,184 or 18.0% for the year ended December 31, 2022 as compared to the year ended December 31, 2021. | 48 | | | | | **Liquidity and Capital Resources** From our incorporation in April 17, 2008 through December 31, 2022, we have financed our operations, capital expenditures and working capital needs through the sale of common shares and preferred shares and the incurrence of indebtedness, including term loans, convertible loans, revolving lines of credit and purchase order financing. At December 31, 2022, we had $8,960,165 in outstanding current liabilities which has either already reached maturity or matures within the next twelve months. The Company had cash of $48,713 at December 31, 2022, compared to $275,383 as at December 31, 2021. And a working capital deficit of $6,846,711 as of December 31, 2022 compared to working capital deficit of $2,314,163 as of December 31, 2021. **Liquidity and Financial Condition** | | | At December 31, 2022 | | | At December 31, 2021 | | | Percentage Increase/(Decrease) | | | | Current assets | | $ | 2,162,895 | | | $ | 1,700,226 | | | | 27.2 | % | | | Current liabilities | | $ | 9,009,606 | | | $ | 4,014,389 | | | | 124.4 | % | | | Working capital | | $ | (6,846,711 | ) | | $ | (2,314,163 | ) | | | 195.9 | % | | **Cash Flow Analysis** Our cash flows from operating, investing, and financing activities are summarized as follows: | | | December 31 | | | | | | 2022 | | | 2021 | | | | | | | | | | | | | Net cash (used in) provided by operating activities | | $ | (3,627,148 | ) | | $ | (5,613,568 | ) | | | Net cash (used in) provided by investing activities | | | 1,333 | | | | (26,541 | ) | | | Net cash (used in) provided by financing activities | | | 3,343,116 | | | | 4,496,907 | | | | Effect of exchange rate changes on cash | | | 56,029 | | | | 46,568 | | | | Net (decrease) increase in cash | | | (221,604 | ) | | | (1,096,633 | ) | | | Cash at beginning of year | | | 275,383 | | | | 1,372,016 | | | | Cash at end of year | | $ | 48,713 | | | $ | 275,383 | | | **Net Cash Used in Operating Activities** During the year ended December 31, 2022, cash used in operations totaled $3,627,148. This consists of the net loss of $7,547,391, adjusted by $3,925,309 for non-cash items and changes in non-cash working capital. Non-cash and working capital adjustments consisted primarily of non-cash change in accretion of discounts on debt of $315,065, offset by increase in prepaid expenses of $195,439, increase in trade payables and accruals of $2,277,657, decrease in accounts receivable and other receivables of $496,881, an increase in deferred revenue of $225,490, decrease in inventories of $499,031, and the settlement of payables for services with preferred shares in the amount of $1,887,700. During the year ended December 31, 2021, cash used in operations totaled $5,613,568. This consists of the net loss of $6,384,655, adjusted by $771,087 for non-cash items and changes in non-cash working capital. Changes in non-cash working capital items consisted primarily of increases in; lease receivables of $763,592, inventories of $457,817, prepaids of $259,909, and trade receivables of $259,437, and a reduction in trade payables and accruals of $362,792. | 49 | | | | | **Net Cash Used in Investing Activities**. During the year ended December 31, 2022, cash used in investing activities consisted of $8,892 for the acquisition of fixed assets, and the disposal of fixed assets for proceeds of $10,225. During the year ended December 31, 2021, cash used in investing activities consisted of $26,541 for the acquisition of fixed assets. **Net Cash Provided by Financing Activities**. Net cash provided by financing activities during the year ended December 31, 2022, totaled $3,343,116 which consisted primarily of $1,000,000 in proceeds from the issuance of preferred shares, $1,000,000 in proceeds from notes payable, $500,000 from loans payable, and $863,527 from the sale of lease receivables, partially offset by repayments made of $20,411 on loans payable. Net cash provided by financing activities during the year ended December 31, 2021, totaled $4,496,907 which consisted primarily of $2,536,066 in proceeds from the issuance of preferred shares, $261,934 in proceeds from issuing warrants and warrants to be issued, and $1,897,500 in proceeds from the loan facility entered into during the year, partially offset by payments on outstanding notes payable of $193,889. **Outstanding Indebtedness** Our current indebtedness as of December 31, 2022, is comprised of the following: | | | Unsecured, convertible note payable to a former related party with an outstanding principal amount of $310,000, bearing interest at 5% per annum, mature and in default; | | | | | | | | | | Senior secured, convertible note payable with an outstanding principal amount of $Nil, and a carrying value of $9,514 relating to an outstanding penalty; | | | | | | | | | | Unsecured, promissory note with outstanding principal amount of $2,400,000, bearing interest at 9% per annum and 24% per annum in default, maturing June 20, 2022. If not repaid by December 12, 2021, an additional $100,000 of guaranteed interest will be added on December 12, 2021 and the 12th day of each succeeding month during which any portion of the convertible note remains unpaid. 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 Companys common shares during the 30 day trading period prior to the conversion date; As at December 31, 2022, the note is in default. During the year ended December 31, 2022, the Company recorded $1,918,065 in interest expense including $1,603,000 of additional interest. As at December 31, 2022, the carrying value of the convertible promissory note was $2,400,000 (December 31, 2021 - $2,084,935). As the note is in default, it has become convertible at the holders request. The fair value of the loan approximates carrying value as it is now short term in nature, effectively due on demand. | | | | | Unsecured loan payable with an outstanding principal amount of $29,520 (CAD$40,000). 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; | | | | | | | | | | Unsecured loan payable with an outstanding principal amount of $29,520 (CAD$40,000). 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; | | | | | | | | | | Secured loan payable with an outstanding 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 which is applied against any accrued interest first. | | | 50 | | | | | | | | Series F Preferred Stock payments, five payments in the amount of $250,000 on February 28, 2022, $250,000 on March 31, 2022, $90,000 on July 29, 2022, $250,000 on August 26, 2022, $125,000 on September 15, 2022, $125,000 on October 21, 2022, and $285,000 on October 21, 2022. Until such time that the 965 shares of the Series F Preferred Stock are redeemed in full, an amount equal to 20% of any gross proceeds collected by the Company are also required to be remitted. 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 Redemption Premium of $75,000 was recognized, and recorded as interest expense, included as part of the loan, and will be repaid as part of the 20% gross sales remittance. As at December 31, 2022, there was a balance of $1,357,651 outstanding. | | | | | | | | | | Unsecured promissory note payable with an outstanding principal amount of $1,000,000 on December 1, 2022. The note bears interest at 10% per annum and is due on December 1, 2025. If not repaid by December 1, 2025, the note bears interest at 18% per annum on all interest and outstanding principal amounts. | | **Related Party Transactions** During the year ended December 31, 2022, the Company incurred $412,573 (2021 - $409,038) in salaries, bonuses of $120,000, and $241,284 (2021 - $197,906) in consulting fees to the President and CEO, and CFO of the Company, and the President, CEOs, and CFOs of the Companys subsidiaries. As at December 31, 2022, the Company owed $nil (2021 - $28,118 ($35,710 CDN)) to the President, CEO, and CFO of the Company and the $49,441 (2021 - $nil) to the President, CEOs, and CFOs of the Companys subsidiaries for management fees and salaries, which is recorded in trade and other payables. The amounts owed and owing are unsecured, non-interest bearing, and due on demand. On March 4, 2021, the Company issued an aggregate of 16 shares of Series B convertible preferred shares to the Companys board of directors for past services. These preferred shares were valued at $849,600 based on the fair value of the underlying common stock. The issuance is recorded under compensation expense. | Director | | # of Preferred Shares | | | | Stephen Johnston | | | 4 | | | | James B Singerling | | | 4 | | | | Robert Silzer | | | 4 | | | | Carol Cookerly | | | 2 | | | | Michael Leemhuis | | | 2 | | | | Total | | | 16 | | | The Series B preferred stock convertible on a 1 for 100,000 basis into common shares. On June 27, 2022, the Company issued an aggregate of 105 shares of Series B convertible preferred shares to the Companys board of directors for past services. These preferred shares were valued at $777,000 based on the fair value of the underlying common stock. The issuance is recorded under compensation expense. | Director | | # of Preferred Shares | | | | Stephen Johnston | | | 25 | | | | James B Singerling | | | 25 | | | | Robert Silzer | | | 25 | | | | Carol Cookerly | | | 15 | | | | Michael Leemhuis | | | 15 | | | | Total | | | 105 | | | | 51 | | | | | The Series B preferred stock is convertible on a 1 for 100,000 basis into common shares. On August 1, 2022, the Company issued an aggregate of 191 shares of Series B convertible preferred shares to the CEO of the Company. These preferred shares were value at $897,700 based on the fair value of the underlying common stock. **Prospective Capital Needs** We estimate our operating expenses and working capital requirements for the twelve-month period to be as follows: | Estimated Expenses for the Twelve-Month Period ending December 31, 2023 | | | General and administrative | | $ | 5,929,500 | | | | Research and development | | | 4,230,600 | | | | Marketing | | | 1,500,000 | | | | Sales and dealer network | | | 785,000 | | | | Payroll overhead | | | 2,449,000 | | | | Service and maintenance | | | 2,355,900 | | | | Assembly facility | | | 2,750,000 | | | | Inventory | | | 15,700,500 | | | | Total | | $ | 35,700,500 | | | During the year ended December 31, 2022, cash used in operating activities totaled $3,627,148. The relatively normal level of cash used compared to our estimated working capital needs in the future was the result of an accumulation of lease receivable that increased due to in house finance of selected customers. We need to reduce the current level of payables in the future to maintain a good relationship with our vendors and expand our sales and service team to achieve our operational objectives. At present, our cash requirements for the next 12 months outweigh the funds available. Of the $35,700,500 that we require for the next 12 months, we had $48,713 in cash as of December 31, 2022, and a working capital deficit of $6,874,764. Our principal sources of liquidity are cash generated from product sales and debt financings. As of December 31, 2022, the Company had secured signed contracts of over $10.5 million of which approximately $3 million was recognized the fiscal year 2022. The Company expects to satisfy the majority of its performance obligations on the remaining contracts during fiscal 2023 totaling approximately $7.5 million. To achieve sustained profitability and positive cash flows from operations, we will need to increase revenue and/or reduce operating expenses. Our ability to maintain, or increase, current revenue levels to achieve and sustain profitability will depend, in part, on demand for our products. In order to improve our liquidity, we also plan to pursue additional equity financing from private investors or possibly a registered public offering. We do not currently have any definitive arrangements in place for the completion of any further private placement financings and there is no assurance that we will be successful in completing any further private placement financings. To help finance our day to day working capital needs, the founder and CEO of the Company has made total payments of $113,475 since late 2015. If we are unable to achieve the necessary additional financing, then we plan to reduce the amounts that we spend on our business activities and administrative expenses in order to be within the amount of capital resources obligations and execute our business plan. There can be no assurances that we will be able to raise additional capital on acceptable terms or at all, which would adversely affect our ability to achieve our business objectives. **Off-Balance Sheet Transactions** We do not have any off-balance sheet arrangements. | 52 | | | | | **** **Contractual Obligations and Known Future Cash Requirements** **** **Indemnification Agreements** In the ordinary course of business, we enter into agreements of varying scope and terms pursuant to which we agree to indemnify customers, vendors, lessors, business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements, services to be provided by us or from intellectual property infringement claims made by third parties. In addition, we have entered into indemnification agreements with directors and certain officers and employees that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or employees. No demands have been made upon us to provide indemnification under such agreements and there are no claims that we are aware of that could have a material effect on our consolidated balance sheet, consolidated statements of operations, consolidated statements of comprehensive loss or consolidated statements of cash flows. **Operating Leases** We currently lease our corporate headquarters in Surrey, British Columbia under an operating lease agreement that expire on July 31, 2023, respectively. The terms of the lease agreement provides for rental payments on a graduated basis. **Critical Accounting Policies and Estimates** We prepare our consolidated financial statements in accordance with U.S. GAAP. The preparation of consolidated financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from the estimates made by our management. To the extent that there are differences between our estimates and actual results, our future financial statements presentation, financial condition, results of operations, and cash flows will be affected. We believe that the assumptions and estimates associated with revenue recognition, derivative liabilities, foreign currency and foreign currency transactions and comprehensive loss have the greatest potential impact on our consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates. For further information on all of our significant accounting policies, see the notes to our consolidated financial statements. **Recently Issued and Adopted Accounting Pronouncements** Recently Issued Accounting Pronouncements Applicable to the Company *Applicable for fiscal years beginning after December 15, 2022:* ** In July 2022, FASB issued ASU 2022-03, *Fair Value Measurement (Topic 820); Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.*The FASB issued final guidance to clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered when measuring fair value. Recognizing a contractual sale restriction as a separate unit of account is not permitted. The guidance will be applied prospectively, with special transition provisions for entities that qualify as investment companies under ASC 946. The guidance is effective in 2024 for calendar-year public business entities and in 2025 for all other calendar-year companies. Early adoption is permitted. In October 3, 2022, FASB issued ASU 2022-04, *Liabilities Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations.*The FASB issued final guidance that requires entities that use supplier finance programs in connection with the purchase of goods and services to disclose the key terms of the programs and information about their obligations outstanding at the end of the reporting period, including a rollforward of those obligations. The guidance does not affect the recognition, measurement or financial statement presentation of supplier finance program obligations. The guidance should be applied retrospectively to all periods in which a balance sheet is presented, except for the rollforward requirement, which should be applied prospectively. The guidance is effective for all entities for fiscal years beginning after 15 December 2022, including interim periods within those fiscal years, except for the rollforward requirement, which is effective for fiscal years beginning after 15 December 2023. Early adoption is permitted. | ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | | Not applicable. | 53 | | | | | | ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA | | **DSG GLOBAL INC.** **INDEX TO CONSOLIDATED FINANCIAL STATEMENTS** | | Page | | | | | | | Report of Independent Registered Public Accounting Firm (PCAOB ID: 5041) | 55 | | | Report of Independent Registered Public Accounting Firm (PCAOB ID: 6498) | | | | | | | | Consolidated Financial Statements: | | | | Consolidated Balance Sheets | 56 | | | Consolidated Statements of Operations | 57 | | | Consolidated Statements of Comprehensive Loss | 58 | | | Consolidated Statements of Stockholders Deficit | 59 | | | Consolidated Statements of Cash Flows | 60 | | | Notes to Consolidated Financial Statements | 61 | | | 54 | | | | | **Report of Independent Registered Public Accounting Firm** To the Board of Directors and Shareholders of DSG Global, Inc. **Opinion on the Financial Statements** We have audited the accompanying consolidated balance sheet of DSG Global, Inc. (the Company) as of December 31, 2022, the related consolidated statements of operations, stockholders equity (deficit), and cash flows for the year then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America. **** **Substantial Doubt about the Companys Ability to Continue as a Going Concern** The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Companys significant operating losses raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. **Basis for Opinion** These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on the Companys financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. **** **Critical Audit Matter** The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. *Revenue recognition identification of contractual terms in certain customer arrangements* As described in Note 3 to the consolidated financial statements, management applies FASB Topic 606, *Revenue from Contacts with Customers*(ASC 606) to recognize revenue. Management recognizes revenue upon transfer of control of promised goods or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. In instances where final acceptance of the product is specified by the customer, revenue is deferred until all acceptance criteria have been met. The principal considerations for our determination that performing procedures over the full completion of revenue contracts and subsequent payment collections is a critical audit matter. This in turn led to significant effort in performing our audit procedures which were designed to evaluate whether the contractual terms, the timing of revenue recognition and the subsequent collections were appropriately identified and accounted for by management under ASC 606. Our audit procedures included, among others, understanding of controls relating to managements revenue recognition process, examining transaction related documents, confirming revenues and outstanding receivables at the balance sheet date with a sample of the customers, and testing collections subsequent to the balance sheet date. **Other Matter** The consolidated financial statements for the year ended December 31, 2021 which are presented for comparative purposes, was audited by another auditor who expressed an unmodified opinion on those consolidated financial statements on March 31, 2022. /s/ BF Borgers CPA PC **BF Borgers CPA PC** Served as Auditor since 2022 Lakewood, CO April 17, 2023 | 55 | | | | | **DSG GLOBAL, INC.** **CONSOLIDATED BALANCE SHEETS** **AS AT DECEMBER 31, 2022 AND 2021** **(Expressed in U.S. Dollars)** | | | December 31, 2022 | | | December 31, 2021 | | | | | | | | | | | | | ASSETS | | | | | | | | | | | CURRENT ASSETS | | | | | | | | | | | Cash | | $ | 48,713 | | | $ | 275,383 | | | | Trade receivables | | | 711,028 | | | | 239,822 | | | | Lease receivable | | | 3,627 | | | | 87,020 | | | | Inventories, net of inventory allowance of $nil and $32,128, respectively | | | 1,202,375 | | | | 712,678 | | | | Prepaid expenses and deposits | | | 189,884 | | | | 385,323 | | | | TOTAL CURRENT ASSETS | | | 2,162,895 | | | | 1,700,226 | | | | | | | | | | | | | | | Lease receivable | | | 15,918 | | | | 723,216 | | | | Fixed assets, net | | | 25,546 | | | | 35,314 | | | | Equipment on lease, net | | | 29,561 | | | | 141,880 | | | | Intangible assets, net | | | 10,376 | | | | 11,604 | | | | TOTAL ASSETS | | $ | 2,244,296 | | | $ | 2,612,240 | | | | | | | | | | | | | | | LIABILITIES AND STOCKHOLDERS DEFICIT | | | | | | | | | | | CURRENT LIABILITIES | | | | | | | | | | | Trade and other payables | | $ | 3,356,256 | | | $ | 1,202,598 | | | | Deferred revenue | | | 481,474 | | | | 255,984 | | | | Lease liability | | | 35,670 | | | | 121,270 | | | | Loans payable | | | 1,416,692 | | | | 2,115,049 | | | | Note payable | | | 1,000,000 | | | | - | | | | Convertible notes payable | | | 2,719,514 | | | | 319,488 | | | | TOTAL CURRENT LIABILITIES | | | 9,009,606 | | | | 4,014,389 | | | | | | | | | | | | | | | Lease liability | | | 4,982 | | | | 38,696 | | | | Loans payable | | | 150,000 | | | | 212,898 | | | | TOTAL LIABILITIES | | | 9,164,588 | | | | 4,265,983 | | | | | | | | | | | | | | | Going concern (Note 2) | | | | | | | | | | | Commitments (Note 17) | | | | | | | | | | | Contingencies (Note 18) | | | | | | | | | | | Subsequent events (Note 21) | | | | | | | | | | | | | | | | | | | | | | MEZZANINE EQUITY | | | | | | | | | | | Redeemable preferred stock, $0.001 par value, 24,010,000 shares authorized (2021 24,010,000), 52,023 issued and outstanding, 860 to be issued (2021 50,804 issued and outstanding, 1,206 to be issued | | | 2,635,345 | | | | 3,143,402 | | | | | | | | | | | | | | | STOCKHOLDERS DEFICIT | | | | | | | | | | | Preferred stock, $0.001 par value, 3,010,000 shares authorized (2021 3,010,000), 200,780 issued and outstanding (2021 - 200,454 issued and outstanding) | | | 3,015,180 | | | | 1,199,480 | | | | Common stock, $0.001 par value, 350,000,000 shares authorized, (2021 350,000,000); 145,429,993 issued and outstanding (2021 128,345,183 issued and outstanding) | | | 145,435 | | | | 128,350 | | | | Additional paid in capital, common stock | | | 50,916,150 | | | | 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 | | | | Other accumulated comprehensive income | | | 1,345,588 | | | | 1,289,559 | | | | Accumulated deficit | | | (65,242,086 | ) | | | (57,694,695 | ) | | | TOTAL STOCKHOLDERS DEFICIT | | | (9,555,637 | ) | | | (4,797,145 | ) | | | | | | | | | | | | | | TOTAL LIABILITIES MEZZANINE EQUITY AND STOCKHOLDERS DEFICIT | | $ | 2,244,296 | | | $ | 2,612,240 | | | The accompanying notes are an integral part of the audited consolidated financial statements | 56 | | | | | **DSG GLOBAL, INC.** **CONSOLIDATED STATEMENTS OF OPERATIONS** **FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021** **(Expressed in U.S. Dollars)** | | | 2022 | | | 2021 | | | | | | | | | | | | | Revenue | | $ | 3,833,853 | | | $ | 2,092,819 | | | | Cost of revenue | | | 2,085,171 | | | | 1,110,698 | | | | Gross profit | | | 1,748,682 | | | | 982,121 | | | | | | | | | | | | | | | Operating expenses | | | | | | | | | | | Compensation expense | | | 3,459,553 | | | | 3,017,181 | | | | General and administration expense | | | 3,429,075 | | | | 3,467,995 | | | | Research and development | | | 52,344 | | | | 388,035 | | | | Bad debt expense (recovery) | | | (29,389 | ) | | | 49,586 | | | | Depreciation and amortization expense | | | 13,670 | | | | 12,837 | | | | Total operating expense | | | 7,000,516 | | | | 6,935,634 | | | | Loss from operations | | | (5,249,631 | ) | | | (5,953,513 | ) | | | | | | | | | | | | | | Other income (expense) | | | | | | | | | | | Foreign currency exchange | | | (28,241 | ) | | | (59,793 | ) | | | Other (expense) income | | | - | | | | 13,584 | | | | Loss on sale of lease receivable | | | (3,923 | ) | | | - | | | | (Loss) Gain on extinguishment of debt | | | 40,355 | | | | 35,169 | | | | Gain on disposal | | | 3,960 | | | | - | | | | Interest on preferred shares | | | (3,062 | ) | | | - | | | | Finance costs | | | (2,306,849 | ) | | | (420,102 | ) | | | Total other income (expense) | | | (2,297,760 | ) | | | (431,142 | ) | | | Net loss | | $ | (7,547,391 | ) | | $ | (6,384,655 | ) | | | | | | | | | | | | | | Net loss per share | | | | | | | | | | | Basic and diluted | | $ | (0.06 | ) | | $ | (0.06 | ) | | | | | | | | | | | | | | Weighted average number of shares used in computing basic and diluted net loss per share: | | | | | | | | | | | Basic and diluted | | | 136,607,605 | | | | 114,897,055 | | | The accompanying notes are an integral part of the audited consolidated financial statements | 57 | | | | | **DSG GLOBAL, INC.** **CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS** **FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021** **(Expressed in U.S. Dollars)** | | | 2022 | | | 2021 | | | | | | | | | | | | | Net loss | | $ | (7,547,391 | ) | | $ | (6,384,655 | ) | | | Other comprehensive income (loss) | | | | | | | | | | | Foreign currency translation adjustments | | | 56,029 | | | | 37,477 | | | | | | | | | | | | | | | Comprehensive loss | | $ | (7,491,362 | ) | | $ | (6,347,178 | ) | | The accompanying notes are an integral part of the audited consolidated financial statements | 58 | | | | | **** **DSG GLOBAL, INC.** **CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIT** **AS AT DECEMBER 31, 2022 AND 2021** **(Expressed in U.S. Dollars)** | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 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 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Shares issued for debt settlement | | | 8,968,975 | | | | 8,854 | | | | 1,618,425 | | | | - | | | | (1,436,044 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 191,235 | | | | Shares and warrants issued for services | | | 2,430,000 | | | | 2,430 | | | | 1,805,704 | | | | - | | | | 19,647 | | | | 97,936 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 1,925,717 | | | | Cancellation of shares due to duplicate issuance | | | (1,866,288 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (45 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | Preferred shares issued for services | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 116 | | | | - | | | | 2,189,600 | | | | (1,340,000 | ) | | | - | | | | - | | | | 849,600 | | | | Shares issued on conversion of preferred shares | | | 23,046,760 | | | | 23,048 | | | | 3,799,852 | | | | - | | | | - | | | | - | | | | (125 | ) | | | - | | | | (1,734,800 | ) | | | - | | | | - | | | | - | | | | 2,088,100 | | | | Dividends to be settled with preferred shares | | | - | | | | - | | | | (455,500 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (455,500 | ) | | | Net loss for the period | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 37,477 | | | | (6,384,655 | ) | | | (6,347,178 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 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 | ) | | | Beginning balance, value | | | 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 and warrants issued for services | | | 1,160,000 | | | | 1,160 | | | | 105,600 | | | | - | | | | (19,647 | ) | | | - | | | | 326 | | | | - | | | | 1,815,700 | | | | - | | | | - | | | | | | | | 1,974,813 | | | | Dividends | | | - | | | | - | | | | 455,500 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 455,500 | | | | Shares issued on conversion of preferred shares | | | 15,924,810 | | | | 15,925 | | | | 286,632 | | | | - | | | | - | | | | - | | | | | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 302,557 | | | | Net loss for the period | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 56,029 | | | | (7,547,391 | ) | | | (7,491,362 | ) | | | Balance, December 31, 2022 | | | 145,429,993 | | | $ | 145,435 | | | $ | 50,916,150 | | | $ | (69,838 | ) | | $ | - | | | $ | 261,934 | | | | 200,780 | | | $ | 200 | | | $ | 3,014,980 | | | | - | | | $ | 1,345,588 | | | $ | (65,242,086 | ) | | $ | (9,555,637 | ) | | | Ending balance, value | | | 145,429,993 | | | $ | 145,435 | | | $ | 50,916,150 | | | $ | (69,838 | ) | | $ | - | | | $ | 261,934 | | | | 200,780 | | | $ | 200 | | | $ | 3,014,980 | | | | - | | | $ | 1,345,588 | | | $ | (65,242,086 | ) | | $ | (9,555,637 | ) | | The accompanying notes are an integral part of the audited consolidated financial statements | 59 | | | | | **DSG GLOBAL INC.** **CONSOLIDATED STATEMENTS OF CASH FLOWS** **FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021** **(Expressed in U.S. Dollars)** | | | December 31, 2022 | | | December 31, 2021 | | | | | | | | | | | | | Net loss | | $ | (7,547,391 | ) | | $ | (6,384,655 | ) | | | | | | | | | | | | | | Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | Depreciation and amortization | | | 13,670 | | | | 130,059 | | | | Change in ROU assets | | | 161,804 | | | | 27,360 | | | | Accretion of discounts on debt | | | 315,065 | | | | 187,435 | | | | Bad debt expense (recovery) | | | (29,389 | ) | | | 49,586 | | | | Loss on sale of lease receivable | | | 3,923 | | | | - | | | | Preferred shares issued for services | | | 1,815,700 | | | | 849,600 | | | | Common shares and warrants issued for services | | | 97,353 | | | | 1,644,136 | | | | Obligation to issue warrants | | | - | | | | 19,647 | | | | (Gain) loss on extinguishment of debt | | | (40,355 | ) | | | (35,169 | ) | | | Unrealized foreign exchange gain | | | (2,304 | ) | | | (1,857 | ) | | | Gain on asset disposal | | | (3,960 | ) | | | | | | | | | | | | | | | | | | Changes in non-cash working capital: | | | | | | | | | | | Trade receivables, net | | | (499,031 | ) | | | (259,437 | ) | | | Inventories | | | (514,167 | ) | | | (457,817 | ) | | | Prepaid expense and deposits | | | 195,439 | | | | (259,909 | ) | | | Lease receivable | | | (19,545 | ) | | | (763,592 | ) | | | Trade payables and accruals | | | 2,228,216 | | | | (362,792 | ) | | | Deferred revenue | | | 225,490 | | | | 155,508 | | | | Interest on mandatorily redeemable preferred shares | | | 3,062 | | | | - | | | | Lease liabilities | | | (169,371 | ) | | | (151,671 | ) | | | Net cash used in operating activities | | | (3,627,148 | ) | | | (5,613,568 | ) | | | | | | | | | | | | | | Cash flows from investing activities | | | | | | | | | | | Purchase of equipment | | | (8,892 | ) | | | (26,541 | ) | | | Disposal of property and equipment | | | 10,225 | | | | - | | | | Net cash used in investing activities | | | 1,333 | | | | (26,541 | ) | | | | | | | | | | | | | | Cash flows from financing activities | | | | | | | | | | | Proceeds from issuing preferred shares, and shares to be issued | | | 1,000,000 | | | | 2,536,066 | | | | Proceeds from loan payable | | | 500,000 | | | | - | | | | Proceeds on warrants issued | | | - | | | | 261,934 | | | | Repayment on lease liabilities | | | - | | | | (4,704 | ) | | | Proceeds from sale of lease receivable | | | 863,527 | | | | - | | | | Proceeds from notes payable | | | 1,000,000 | | | | 1,897,500 | | | | Payments on loans payable | | | (20,411 | ) | | | (193,889 | ) | | | Net cash provided by financing activities | | | 3,343,116 | | | | 4,496,907 | | | | | | | | | | | | | | | Effect of exchange rate changes on cash | | | 56,029 | | | | 46,568 | | | | Net increase in cash | | | (226,670 | ) | | | (1,096,633 | ) | | | Cash at beginning of period | | | 275,383 | | | | 1,372,016 | | | | | | | | | | | | | | | Cash at the end of the period | | $ | 48,713 | | | $ | 275,383 | | | | | | | | | | | | | | | Supplemental Cash Flow Information (Note 20) | | | | | | | | | | The accompanying notes are an integral part of the audited consolidated financial statements | 60 | | | | | **DSG GLOBAL, INC.** **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** **(Expressed in U.S. Dollars)** **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 Companys 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. See Note X for segmented reporting. The Company continued 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 incorporate AC Golf Carts Inc. (AC Golf Carts), under the laws of the Sate 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. Subsequent to year end, on January 5, 2023, Imperium Motor Corp. had its name changed to Liteborne Motor Corporation. | 61 | | | | | **** **Note 2 GOING CONCERN** These 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, spread across the globe and has impacted worldwide economic activity. During the year ended December 31, 2022, conditions surrounding the coronavirus continued to rapidly evolve and government authorities 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 Companys business activities going forward. The extent to which the coronavirus may impact the Companys 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 Companys plans moving forward. As at December 31, 2022, the Company has a working capital deficit of $6,846,711 and has an accumulated deficit of $65,242,086 since inception. Furthermore, the Company incurred a net loss of $7,547,391 and used $3,627,148 of cash flows for operating activities during the twelve months ended December 31, 2022. These factors raise substantial doubt regarding the Companys ability to continue as a going concern. These audited consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. **Note 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** Basis of Presentation The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and are expressed in U.S. dollars. These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. Certain comparative information has been reclassified to conform with the financial statement presentation adopted in the current year. Principles of Consolidation The consolidated financial statements include the accounts of DSG Global Inc. and its subsidiary VTS and its wholly owned subsidiaries DSG UK, Imperium Canada, Imperium, and AC Golf Carts, collectively referred to as the Company. All intercompany accounts, transactions and profits were eliminated in the consolidated financial statements. | 62 | | | | | Use of Estimates The preparation of 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 financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to revenue recognition, the collectability of accounts receivable, valuation of inventory, useful lives and recoverability of long-lived assets, fair value derivative liabilities, the Companys incremental borrowing rate, leases and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from those estimates. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the consolidated financial statements in the period they are determined. The Companys policy for equipment requires judgment in determining whether the present value of future expected economic benefits exceeds capitalized costs. The policy requires management to make certain estimates and assumptions about future economic benefits related to its operations. Estimates and assumptions may change if new information becomes available. If information becomes available suggesting that the recovery of capitalized cost is unlikely, the capitalized cost is written off to the consolidated statement of operations. The assessment of whether the going concern assumption is appropriate requires management to take into account all available information about the future, which is at least, but is not limited to, 12 months from the date the financial statements are issued. The Company is aware that material uncertainties related to events or conditions may cast substantial doubt upon the Companys ability to continue as a going concern. Foreign Currency Translation The Companys functional and reporting currency is the U.S. dollar. The functional currency of VTS is the Canadian dollar. The functional currency of DSG UK is the British pound. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Non-monetary assets, liabilities, and items recorded in income arising from transactions denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income. The accounts of VTS and DSG UK are translated to U.S. dollars using the current rate method. Accordingly, assets and liabilities are translated into U.S. dollars at the period-end exchange rate while revenues and expenses are translated at the average exchange rates during the period. Related exchange gains and losses are included in a separate component of stockholders equity as accumulated other comprehensive income (loss). Reportable Segment The Company has four reportable segments: those related to its sales and rentals of GPS tracking devices and interfaces for golf vehicles and related support services, the sale of golf vehicles, and the sale of electric vehicles. The Companys activities are interrelated, and each activity is dependent upon and supportive of the other. Accordingly, all significant operating decisions are based on analysis of financial products provided as a single global business. | 63 | | | | | Revenue Recognition and Warranty Reserve *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 Companys 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 Companys 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. The Company matches its warranty period for parts and products to that of the manufacturers warranty period. Therefore, any defect will result in a warranty claim to the manufacturer and not the Company. During the years ended December 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 December 31, 2022 and 2021. Research and Development Research and development expenses include payroll, employee benefits, and other headcount-related expenses associated with product development. Research and development expenses also include third-party development and programming costs, localization costs incurred to translate software for international markets, and the amortization of purchased software code and services content. Such costs related to software development are included in research and development expense until the point that technological feasibility is reached. Research and development is expensed and is included in operating expenses. Income Taxes The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, Income Taxes. The asset and liability method provides that deferred income tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carryforwards. Deferred income tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred income tax assets to the amount that is believed more likely than not to be realized. As of December 31, 2022 and 2021, the Company did not have any amounts recorded pertaining to uncertain tax positions. The Company recognizes interest and penalties related to uncertain tax positions in general and administrative expense. The Company did not incur any penalties or interest during the years ended December 31, 2022 and 2021. On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the Tax Act) which significantly changed U.S. tax law. The Tax Act lowered the Companys statutory federal income tax rate from a maximum of 39% to a rate of 21% effective January 1, 2018. The Company has deferred tax losses and assets and they were adjusted as a result of the change in tax law reducing the federal income tax rate. The Companys tax years 2015 and forward remain open. | 64 | | | | | Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk are cash, and trade receivables arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions. The Company has a diversified customer base, most of which are in Canada, United States and the United Kingdom. The Company controls credit risk related to trade receivables through credit approvals, credit limits and monitoring procedures. The Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited. Risks and Uncertainties The Company is subject to risks from, among other things, competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing customer requirements, limited operating history, foreign currency exchange rates and the volatility of public markets. Contingencies Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Companys management and legal counsel assess such contingent liabilities, and such assessment inherently involves judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Companys legal counsel evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought. If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Companys consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed. Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed. Cash and Cash Equivalents Cash and equivalents include cash in hand and cash in demand deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less. At December 31, 2022 and 2021, there were no uninsured balances for accounts in Canada, the United States and the United Kingdom. The Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts. At December 31, 2022 and 2021, the Company did not hold any cash equivalents. Accounts Receivable 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. Currently, the Company does not provide for an allowance for uncollectable accounts receivable due to its history of not having any collectability issues from customers. | 65 | | | | | Financing Receivables and Guarantees The Company provides financing arrangements, including operating leases and financed service contracts for certain qualified customers. Lease receivables primarily represent sales-type and direct-financing leases. Leases typically have two- to three-year terms and are collateralized by a security interest in the underlying assets. The Company makes an allowance for uncollectible financing receivables based on a variety of factors, including the risk rating of the portfolio, macroeconomic conditions, historical experience, and other market factors. At December 31, 2022 and 2021 management determined that there was no allowance necessary. The Company also provides financing guarantees, which are generally for various third-party financing arrangements to channel partners and other customers. The Company could be called upon to make payment under these guarantees in the event of non-payment to the third party. As at December 31, 2022 and 2021, no financing receivables are outstanding. Advertising Costs The Company expenses all advertising costs as incurred. Advertising and marketing costs were $286,717 and $134,856 for the years ended December 31, 2022 and 2021, respectively. 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. Fixed Assets and Equipment on Lease Fixed assets and equipment on lease are stated at cost less accumulated depreciation. Fixed assets and equipment on lease are depreciated using the straight-line method over the shorter of the estimated useful life of the asset or the lease term. The estimated useful lives of fixed assets are generally as follows: SCHEDULE OF ESTIMATED USEFUL LIVES OF EQUIPMENT | Furniture and equipment | 5-years straight-line | | | Vehicles | 5-years straight-line | | | Computer equipment | 3-years straight-line | | | Machinery | 5-years straight-line | | | Equipment on lease | 5-years straight-line | | Intangible Assets Intangible assets are stated at cost less accumulated amortization and are comprised of patents. The patents are amortized straight-line over the estimated useful life of 20 years and are reviewed annually for impairment. Impairment of Long-Lived Assets The Company reviews long-lived assets such as equipment, equipment on lease, and intangible assets with finite useful lives for impairment whenever events or changes in circumstance indicate that the carrying amount may not be recoverable. If the total of the expected undiscounted future cash flows is less than the carrying value of the asset, a loss is recognized for the excess of the carrying amount over the fair value of the asset. Financial Instruments and Fair Value Measurements The Company analyzes all financial instruments with features of both liabilities and equity under ASC 480, *Distinguishing Liabilities from Equity*, and ASC 815 *Derivatives and Hedging*. ASC 820, *Fair Value Measurements and Disclosures*, requires disclosure of the fair value of financial instruments held by the Company. ASC 825, *Financial Instruments*, defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows: *Level 1* Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. | 66 | | | | | *Level 2* Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. *Level 3* Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The Companys financial instruments consist of cash, trade receivables, trade and other payables, lease liabilities, convertible note payable to related party, loans payable, derivative liabilities and convertible notes payable. Except for cash, loans payable, and derivative liabilities, the Companys financial instruments carrying amounts, excluding any unamortized discounts, approximate their fair values due to their short term to maturity. The fair value of long-term lease liabilities approximates their carrying value due to minimal changes in interest rates and the Companys credit risk since initial recognition. Cash and derivative liabilities are measured and recognized at fair value based on level 1 and level 2 inputs, respectively, for all periods presented. Government Grants Government grants are recognized where there is reasonable assurance that the grant will be received, and all attached conditions will be complied with. When the grant relates to an expense item, it is recognized as income over the period necessary to match the grant on a systematic basis to the costs that it is intended to compensate. The Canadian Emergency Business Account (CEBA) are recognized as government grants. See Note 8 (a) and (b). Loss per Share The Company computes net income (loss) per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the consolidated statement of operations. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. Stock-Based Compensation The Company records stock-based compensation in accordance with ASC 718, Compensation Stock Compensation, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The Company uses the Black-Scholes option pricing model to calculate the fair value of stock-based awards. This model is affected by the Companys stock price as well as assumptions regarding a number of subjective variables. These subjective variables include but are not limited to the Companys expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the consolidated statement of operations over the requisite service period. During the years ended December 31, 2022, and 2021 there was no stock-based compensation. | 67 | | | | | Leases The Company accounts for leases in accordance with ASC 842 Leases. *Lessee Arrangements* The Company determines if an arrangement is a lease at inception. Operating and financing right-of-use assets and lease liabilities are included within fixed assets on the consolidated balance sheets. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company uses its incremental borrowing rate, based on the information available at the commencement date, in determining the present value of future lease payments. Right-of-use assets include any prepaid lease payments and exclude any lease incentives and initial direct costs incurred. Operating lease expenses are recognized on a straight-line basis over the term of the lease, consisting of interest accrued on the lease liability and depreciation of the right-of-use asset. The lease terms may include options to extend or terminate the lease if it is reasonably certain the Company will exercise that option. *Lessor Arrangements* The Company determines if an arrangement is a lease at inception. The Company then determines whether to classify the lease as a sales-type or direct financing lease. At commencement date, a lessor shall derecognize the underlying asset and recognize the net investment in the lease, selling profit or loss arising from the lease, and initial direct directs as an expense if the fair value of the underlying asset is different from it carrying amount. The lease receivable (or net investment in the lease) is included on the consolidated balance sheets. The lease receivable amount is recognized based on the present value of lease payments over the lease term and the present value of the unguaranteed residual asset, except when the lease is a direct financing lease, whereby the net investment in the lease should be reduced by the amount of any selling profit. The unguaranteed residual asset is the amount the lessor expects to derive from the underlying asset following the end of the lease term. The Company uses the rate implicit in the lease agreement at the date of commencement, in determining the present value of the future lease payments and unguaranteed residual asset. Interest income is recognized over the term of the lease and lease payments are recognized against the lease receivable balance when received. Currently, the Company only has sales-type operating leases. Recently Issued Accounting Pronouncements *Applicable for fiscal years beginning after December 15, 2022:* ** In July 2022, FASB issued ASU 2022-03, *Fair Value Measurement (Topic 820); Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.*The FASB issued final guidance to clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered when measuring fair value. Recognizing a contractual sale restriction as a separate unit of account is not permitted. The guidance will be applied prospectively, with special transition provisions for entities that qualify as investment companies under ASC 946. The guidance is effective in 2024 for calendar-year public business entities and in 2025 for all other calendar-year companies. Early adoption is permitted. In October 3, 2022, FASB issued ASU 2022-04, *Liabilities Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations.*The FASB issued final guidance that requires entities that use supplier finance programs in connection with the purchase of goods and services to disclose the key terms of the programs and information about their obligations outstanding at the end of the reporting period, including a rollforward of those obligations. The guidance does not affect the recognition, measurement or financial statement presentation of supplier finance program obligations. The guidance should be applied retrospectively to all periods in which a balance sheet is presented, except for the rollforward requirement, which should be applied prospectively. The guidance is effective for all entities for fiscal years beginning after 15 December 2022, including interim periods within those fiscal years, except for the rollforward requirement, which is effective for fiscal years beginning after 15 December 2023. Early adoption is permitted. | 68 | | | | | **Note 4 TRADE RECEIVABLES** As of December 31, 2022 and 2021, trade receivables consist of the following: SCHEDULE OF TRADE RECEIVABLES | | | December 31, 2022 | | | December 31, 2021 | | | | Accounts receivables | | $ | 725,796 | | | $ | 271,950 | | | | Allowance for doubtful accounts | | | - | | | | (32,128 | ) | | | Total trade receivables, net | | $ | 711,028 | | | $ | 239,822 | | | **Note 5 INVENTORIES** As of December 31, 2022, and December 31, 2021, inventories consist of the following: SCHEDULE OF INVENTORIES | | | December 31, 2022 | | | December 31, 2021 | | | | Parts and accessories | | $ | 215,380 | | | $ | 226,230 | | | | Golf carts | | | 799,035 | | | | 158,588 | | | | E-bikes | | | 123,280 | | | | 35,060 | | | | Electric vehicles | | | 64,680 | | | | 292,800 | | | | Total inventories | | $ | 1,202,375 | | | $ | 712,678 | | | **** **Note 6 FIXED ASSETS AND EQUIPMENT ON LEASE** As of December 31, 2022 and 2021, fixed assets consisted of the following: SCHEDULE OF FIXED ASSETS | | | December 31, 2022 | | | December 31, 2021 | | | | Machinery | | $ | 5,040 | | | $ | 5,040 | | | | Furniture and equipment | | | 2,587 | | | | 2,350 | | | | Computer equipment | | | 50,781 | | | | 41,784 | | | | Vehicles | | | 19,989 | | | | 28,360 | | | | Fixed assets, gross | | | 19,989 | | | | 28,360 | | | | Accumulated depreciation | | | (52,851 | ) | | | (42,220 | ) | | | Fixed assets, net | | $ | 25,546 | | | $ | 35,314 | | | For the year ended December 31, 2022, total depreciation expense for fixed assets and equipment on lease was $12,442 (2021 - $12,225) and is included in general and administration expense. For the year ended December 31, 2022, total depreciation for right-of-use assets was $111,465 (2021 - $117,386) and is included in general and administration expense as operating lease expense. **Note 7 INTANGIBLE ASSETS** As of December 31, 2022 and 2021, intangible assets consisted of the following: SCHEDULE OF INTANGIBLE ASSETS | | | December 31, 2022 | | | December 31, 2021 | | | | Intangible asset - Patents | | $ | 22,353 | | | $ | 22,353 | | | | Accumulated amortization | | | (11,977 | ) | | | (10,749 | ) | | | Intangible asset, net | | $ | 10,376 | | | $ | 11,604 | | | Patents are amortized on a straight-line basis over their estimated useful life of 20 years. For the year ended December 31, 2022, total amortization expense for intangible assets was $1,228 (2021 - $1,229). | 69 | | | | | **** **Note 8 TRADE AND OTHER PAYABLES** As of December 31, 2022, and 2021, trade and other payables consist of the following: SCHEDULE OF TRADE AND OTHER PAYABLES | | | December 31, 2022 | | | December 31, 2021 | | | | Accounts payable and accrued expenses | | $ | 1,413,116 | | | $ | 949,937 | | | | Accrued interest | | | 1,880,463 | | | | 248,610 | | | | Other liabilities | | | 13,236 | | | | 4,051 | | | | Total trade and other payables | | $ | 3,306,815 | | | $ | 1,202,598 | | | **Note 9 LOANS PAYABLE** As of December 31, 2022 and 2021, loans payable consisted of the following: SCHEDULE OF LOANS PAYABLE | | | December 31, 2022 | | | December 31, 2021 | | | | Unsecured loan payable in the amount of CDN$40,000, due on or before December 31, 2025(a) | | $ | 29,520 | | | | 31,449 | | | | Unsecured loan payable in the amount of CDN$40,000, due on or before December 31, 2025(a) | | $ | 29,520 | | | | 31,449 | | | | Unsecured loan payable in the amount of CDN$40,000, due on or before December 31, 2025 (b) | | | 29,520 | | | | 31,449 | | | | Unsecured loan payable, due on May 21, 2022, interest at 1% per annum(c) | | | - | | | | 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) | | | - | | | | 2,084,934 | | | | Preferred F series shares issued with mandatory redemption(f) | | | 1,357,651 | | | | - | | | | | | | 1,566,692 | | | | 2,327,947 | | | | Current portion | | | (1,416,692 | ) | | | (2,115,049 | ) | | | Loans payable, long-term portion | | $ | 150,000 | | | $ | 212,898 | | | | (a) | On April 17, 2020, the Company received a loan in the principal amount of $29,520 (CDN$40,000) under the Canada Emergency Business Account program. The loan is non-interest bearing and eligible for CDN$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 $29,520 (CDN$40,000) under the Canada Emergency Business Account program. The loan is non-interest bearing and eligible for CDN$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. This loan was forgiven and was recorded to gain on debt extinguishment during the year ended December 31, 2022 | | | | | | | (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. | | | 70 | | | | | | (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 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 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 note remains unpaid. Any principal or interest on the 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 Companys common shares during the 30-day trading period prior to the conversion date. | | | | | | | | During the year ended December 31, 2022, the Company recorded $1,918,065 in interest expense including $1,603,000 of additional interest. As at December 31, 2022, the carrying value of the convertible promissory note was $2,400,000 (December 31, 2021 - $2,084,935). | | | | | | | | As the note is in default, it has become convertible at the holders request. The fair value of the loan approximates carrying value as it is now short term in nature, effectively due on demand. | | | | | | | (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 has received five payments in the amount of $250,000 on February 28, 2022, $250,000 on March 31, 2022, $90,000 on July 29, 2022, $250,000 on August 29, 2022, $125,000 on September 15, 2022, $125,000 on October 18, 2022, and $285,000 on October 21, 2022, for 1,375 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 total amounts of $1,375,000 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 year ended December 31, 2022, $3,062 was recognized, and recorded as interest expense, included as part of the loan. | | | | | | | | During the year ended December 31, 2022, the Company made required payments in the amount of $20,411, which was applied against the loan payable. | | **Note 10 CONVERTIBLE LOANS** As of December 31, 2022, and 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 December 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 December 31, 2022, the carrying value of the note was $9,488 (December 31, 2021 - $9,439), 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 holders request. The fair value of the loan approximates carrying value as it is now short term in nature, effectively due on demand. | | | 71 | | | | | **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 year ended December 31, 2022, the Company recognized new lease receivables of $143,630, 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 $12,240 (December 31, 2021 - $492,096) 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 | | December 31, 2022 | | | December 31, 2021 | | | | Balance, beginning of the period | | $ | 810,236 | | | $ | 42,856 | | | | Additions | | | 143,630 | | | | 937,850 | | | | Transfer to third party | | | (867,450 | ) | | | (120,231 | ) | | | Interest on lease receivables | | | 20,841 | | | | 19,452 | | | | Receipt of payments | | | (81,979 | ) | | | (60,445 | ) | | | Foreign exchange | | | (5,733 | ) | | | (9,246 | ) | | | Balance, end of the period | | | 19,545 | | | | 810,236 | | | | Current portion of lease receivables | | | (3,627 | ) | | | (87,020 | ) | | | Long term potion of lease receivables | | $ | 15,918 | | | $ | 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 used 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 December 31, 2022, the Copier lease had a remaining term of 1.75 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. 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 and lease liabilities of $125,014. 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 (CDN$11,948). The lease included a rent-free period with rent payments commencing on September 1, 2020. As of December 31, 2022, the lease had a remaining term of 0.58 years. | 72 | | | | | On April 1, 2021, the Company entered into a lease agreement for equipment (the FD150 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 December 31, 2022, the Copier lease had a remaining term of 1.33 years. On June 2, 2021, the Company entered into a lease agreement for a trailer (the Trailer Lease). Upon initial recognition of the lease, the Company recognized right-of-use assets of $8,886 and lease liabilities of $8,886. As of December 31, 2022, the Copier lease had a remaining term of 2.42 years. Right-of-use assets have been included within fixed assets, net and lease liabilities have been included in lease liability on the Companys consolidated balance sheet. SCHEDULE OF CONSOLIDATED BALANCE SHEET OF LEASE | Right-of-use assets | | December 31, 2022 | | | December 31, 2021 | | | | Cost | | $ | 312,318 | | | $ | 312,318 | | | | Accumulated depreciation | | | (282,251 | ) | | | (170,530 | ) | | | Foreign exchange | | | (506 | ) | | | 29 | | | | Total right-of-use assets | | $ | 29,561 | | | $ | 141,880 | | | | Lease liability | | December 31, 2022 | | | December 31, 2021 | | | | Current portion | | $ | 35,670 | | | $ | 121,270 | | | | Long-term portion | | | 4,982 | | | | 38,696 | | | | Total lease liability | | $ | 40,652 | | | $ | 159,966 | | | Lease liabilities are measured at the commencement date based on the present value of future lease payments. As the Companys 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 Companys 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 year ended December 31, 2022, was $118,843 (2021 - $144,758) and is recorded in general and administration expense. Future minimum lease payments to be paid by the Company as a lessee for leases as of December 31, 2022 for the next three years are as follows: SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS | Lease commitments and lease liability | | December 31, 2022 | | | | 2023 | | $ | 37,814 | | | | 2024 | | | 4,300 | | | | 2025 | | | 1,070 | | | | Total future minimum lease payments | | | 43,184 | | | | Discount | | | (2,532 | ) | | | Total | | | 40,652 | | | | Current portion of lease liabilities | | | (35,670 | ) | | | Long-term portion of lease liabilities | | $ | 4,982 | | | | 73 | | | | | **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 Companys 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 Companys redeemable preferred share activities for the years ended December 31, 2022, and December 31, 2021. SCHEDULE OF REDEEMABLE PREFERRED SHARE ACTIVITIES | | | 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 | | | 3,500 | | | | 4 | | | | 2,731,989 | | | | (745,926 | ) | | | 1,986,067 | | | | Converted for common shares | | | (1,926 | ) | | | (2 | ) | | | (1,538,098 | ) | | | - | | | | (1,538,100 | ) | | | Accrued preferred stock dividends | | | - | | | | - | | | | - | | | | 455,500 | | | | 455,500 | | | | Balance, December 31, 2021 | | | 50,804 | | | $ | 51 | | | $ | 2,201,786 | | | $ | 975,373 | | | $ | 3,177,210 | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance December 31, 2021 | | | 50,804 | | | $ | 51 | | | $ | 2,201,786 | | | $ | 975,373 | | | $ | 3,177,210 | | | | Balance | | | 50,804 | | | $ | 51 | | | $ | 2,201,786 | | | $ | 975,373 | | | $ | 3,177,210 | | | | Issuance | | | 1,839 | | | | - | | | | 714,000 | | | | (464,000 | ) | | | 250,000 | | | | Converted for common shares | | | (620 | ) | | | - | | | | (302,556 | ) | | | (33,808 | )(2) | | | (336,364 | ) | | | Accrued preferred stock dividends(1) | | | - | | | | - | | | | (838,064 | ) | | | 382,563 | | | | (455,501 | ) | | | Balance, December 31, 2022 | | | 52,023 | | | $ | 51 | | | $ | 1,775,166 | | | $ | 860,128 | | | $ | 2,635,345 | | | | Balance | | | 52,023 | | | $ | 51 | | | $ | 1,775,166 | | | $ | 860,128 | | | $ | 2,635,345 | | | | (1) | The amount of $838,064 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 year ended December 31, 2022. | | Mezzanine Preferred Equity Transactions 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. | | | 74 | | | | | | | | 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. | | 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. | | | 75 | | | | | | | | 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 December 31, 2022 the Company recorded $382,563 in dividends to be settled in preferred shares, and $107,081 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 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 $141,000 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 Companys board of directors for past services. These preferred shares were value at $777,000 based on the fair value of the underlying common stock. | | 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. | | | 76 | | | | | | | | On March 4, 2021, the Company issued an aggregate of 16 shares of Series B preferred shares to the Companys 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 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. | | 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 18. | | | | | | | | | | 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. | | | 77 | | | | | Common Stock to be Issued Common stock to be issued as at December 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 year ended December 31, 2022: | | | On December 31, 2022, 6,813,371 warrants of the Company expired. | | 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 12. The warrants have a contractual life of 5 years and exercise price of $0.30 per share. As at December 31, 2021, these warrants have not been issued. | | The fair values of the warrants were calculated using the following assumptions for the Black Scholes Option Pricing Model: SCHEDULE OF WARRANTS ASSUMPTIONS | | | December 31, 2022 | | | December 31, 2021 | | | | Risk-free interest rate | | | 0.18% - 0.82 | % | | | 0.18% - 0.82 | % | | | Expected life | | | 3.29 - 5.11 years | | | | 3.29 - 5.11 years | | | | Expected dividend rate | | | 0 | % | | | 0 | % | | | Expected volatility | | | 285.40 300.18 | % | | | 285.40 300.18 | % | | Continuity of the Companys 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 December 31, 2022 | | | 9,626,442 | | | $ | 0.40 | | | As at December 31, 2022, the weighted average remaining contractual life of warrants outstanding was 2.61 years (2021 2.53 years) with an intrinsic value of $nil (2021 - $nil). | 78 | | | | | **Note 15 RELATED PARTY TRANSACTIONS** As at December 31, 2022 the Company incurred $412,473 (2021 - $409,038) in salaries, bonuses of $120,000 (2021 - $206,556), and $241,284 (2021 - $197,906) in consulting fees to the President and CEO, and CFO of the Company, and the President, CEOs, and CFOs of the Companys subsidiaries. The Company also repaid $28,118 of management fees and salaries previously owing to the President and CEO, of the Company from December 31, 2021 during the year ended December 31, 2022. As at December 31, 2022, the Company owed $49,441 (December 31, 2021 - $28,118 ($ 35,710 CDN)) to the President, CEO, and CFO of the Company and to the President, CEOs, and CFOs of the Companys subsidiaries for management fees and salaries. Amounts owed and owing are unsecured, non-interest bearing, and due on demand. On March 4, 2021, the Company issued an aggregate of 16 shares of Series B convertible preferred shares to the Companys board of directors for past services. These preferred shares were valued at $849,600 based on the fair value of the underlying common stock. The issuance is recorded under compensation expense. On May 21, 2020, the Company issued an aggregate of 136 shares of Series B convertible preferred shares to various parties for past services to the Company, which included 122 issued to related parties and 2 issued to a former director of the Company. These preferred shares were valued at $767,040, based on the fair value of the underlying common stock, discounted for the six months hold period before the preferred shares can be converted. The issuance is recorded under compensation expense. **Note 16 SEGMENT INFORMATION** **** During the year ended December 31, 2022, the Companys 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. The Companys reporting segments are those associated with operating segments above, and the administration of the Company. SCHEDULE OF SEGMENT REPORTING INFORMATION**** | | | Administration | | | Electric Vehicles | | | Golf Carts | | | GPS Units | | | Total | | | | Revenue | | $ | - | | | $ | 221,567 | | | $ | 1,394,964 | | | $ | 2,217,322 | | | $ | 3,833,853 | | | | Cost of revenue | | | - | | | | 191,367 | | | | 827,299 | | | | 1,066,505 | | | | 2,085,171 | | | | Gross profit | | | - | | | | 30,200 | | | | 567,665 | | | | 1,150,817 | | | | 1,748,682 | | | | | | | | | | | | | | | | | | | | | | | | | | | Operating expenses | | | | | | | | | | | | | | | | | | | | | | | Compensation expense | | | 2,079,306 | | | | 277,574 | | | | 126,043 | | | | 976,630 | | | | 3,459,553 | | | | General and administration expense | | | 1,765,303 | | | | 358,900 | | | | 890,052 | | | | 409,071 | | | | 3,429,075 | | | | Research and development | | | - | | | | 17,500 | | | | 34,844 | | | | - | | | | 52,344 | | | | Bad debt expense (recovery) | | | (29,389 | ) | | | - | | | | - | | | | - | | | | (29,389 | ) | | | Depreciation and amortization expense | | | 13,670 | | | | - | | | | - | | | | - | | | | 13,670 | | | | Total operating expense | | | 3,900,891 | | | | 653,974 | | | | 1,050,939 | | | | 1,385,701 | | | | 7,000,516 | | | | Loss from operations | | | (3,900,891 | ) | | | (618,548 | ) | | | (483,274 | ) | | | (234,844 | ) | | | (5,249,631 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | Other income (expense) | | | | | | | | | | | | | | | | | | | | | | | Foreign currency exchange | | | (28,241 | ) | | | - | | | | - | | | | - | | | | (28,241 | ) | | | Loss on sale of lease receivable | | | - | | | | - | | | | - | | | | (3,923 | ) | | | (3,923 | ) | | | (Loss) Gain on extinguishment of debt | | | 40,355 | | | | - | | | | - | | | | - | | | | 40,355 | | | | Gain on disposal | | | - | | | | 3,960 | | | | - | | | | - | | | | 3,960 | | | | Interest on preferred shares | | | (3,062 | ) | | | - | | | | - | | | | - | | | | (3,062 | ) | | | Finance costs | | | (2,055,801 | ) | | | - | | | | - | | | | (251,048 | ) | | | (2,306,849 | ) | | | Total other income (expense) | | | (2,046,749 | ) | | | 3,960 | | | | - | | | | (254,971 | ) | | | (2,297,760 | ) | | | Net loss | | $ | (5,947,640 | ) | | $ | (619,814 | ) | | $ | (483,274 | ) | | $ | (489,855 | ) | | $ | (7,547,391 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | Total Assets | | $ | 164,567 | | | $ | 351,561 | | | $ | 1,007,917 | | | $ | 732,818 | | | $ | 2,244,296 | | | **** | 79 | | | | | **** **Note 17 COMMITMENTS** Product Warranties The Companys warranty policy generally covers a period of two years which is also covered by the manufacturer warranty. Thus, any warranty costs incurred by the Company are immaterial. 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 Companys bylaws contain similar indemnification obligations to the Companys agents. It is not possible to determine the maximum potential amount under these indemnification agreements due to the Companys 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 Companys operating results, financial position, or cash flows. **Note 18 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 December 31, 2022, included in trade and other payables is $17,983 (December 31, 2021 - $29,329) related to this unpaid invoice, interest and legal fees. **Note 19 INCOME TAX** The Company is subject to income taxes in Canada and the US. The statutory income tax rates were 27% in Canada and 27.5% in the US. A reconciliation of the expected income tax recovery is as follows: SCHEDULE OF RECONCILIATION OF INCOME TAX EXPENSE | | | December 31, 2022 | | | December 31, 2021 | | | | | | Year Ended | | | | | | December 31, 2022 | | | December 31, 2021 | | | | | | $ | | | $ | | | | Loss before income taxes | | | (7,547,000 | ) | | | (6,419,000 | ) | | | Income tax rate | | | 27.00 | % | | | 27.00 | % | | | Income tax recovery calculated using statutory rate | | | (2,038,201 | ) | | | (1,733,000 | ) | | | Increase (decrease) in income taxes resulting from: | | | | | | | | | | | Non-deductible (taxable) items | | | 88,000 | | | | 54,000 | | | | Effect of tax rate change | | | (17,000 | ) | | | (2,000 | ) | | | Effect of different tax jurisdiction rates | | | 35,000 | | | | 68,000 | | | | Change in tax assets no recognized | | | 1,926,651 | | | | 1,613,000 | | | | Income tax expense (recovery) | | | - | | | | - | | | The nature and tax effect of the temporary difference giving rise to the deferred tax assets and liabilities at December 31, 2022 and 2021, are summarized as follows: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES | | | December 31, 2022 | | | December 31, 2021 | | | | | | Year Ended | | | | | | December 31, 2022 | | | December 31, 2021 | | | | | | $ | | | $ | | | | Deferred tax assets | | | | | | | | | | | Capital assets | | | 20,000 | | | | 16,000 | | | | ROU assets | | | 31,000 | | | | 5,000 | | | | Non-capital losses | | | 17,317,000 | | | | 15,426,000 | | | | Capital leases | | | 9,000 | | | | 24,000 | | | | Accounts receivable | | | 29,000 | | | | 9,000 | | | | Total deferred tax assets | | | 17,406,000 | | | | 15,480,000 | | | | Unrecognized benefit from income tax losses | | | (17,406,000 | ) | | | (15,480,000 | ) | | | Net deferred tax assets | | | - | | | | - | | | | 80 | | | | | Deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue and expense. In evaluating the ability to recover the deferred tax assets within the jurisdiction from which they arise, the Company considered all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In projecting future taxable income, the Company began with historical results adjusted for changes in accounting policies and incorporates assumptions including the amount of future pretax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimate the Company are using to manage the underlying businesses. In evaluating the objective evidence that historical results provide, the Company consider three years of cumulative operating income (loss). As of December 31, 2022, the Company had aggregate net operating losses of $65,242,086 (2021 - $57,694,695) to offset future taxable income in the United States and the United Kingdom. The deferred tax assets at December 31, 2022 were fully reserved. Management believes it is more likely than not that these assets will not be realized in the near future. **Note 20 SUPPLEMENTAL CASH FLOW INFORMATION** SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION | | | December 31, 2022 | | | December 31, 2021 | | | | | | Year Ended | | | | | | December 31, 2022 | | | December 31, 2021 | | | | | | | | | | | | | Cash paid during the period for: | | | | | | | | | | | Income tax payments | | $ | - | | | $ | - | | | | Interest payments | | | - | | | | 57,111 | | | | | | | | | | | | | | | Non-cash investing and financing transactions: | | | | | | | | | | | Shares issued for convertible notes payable and accrued interest | | $ | - | | | $ | - | | | | Shares issued for debt settlement | | $ | - | | | $ | 191,235 | | | | Shares issued and to be issued for services | | | - | | | | - | | | | Shares issued on conversion of preferred shares | | $ | 302,557 | | | $ | 2,088,100 | | | | Dividends payable with preferred shares to be issued | | | 382,563 | | | | 455,500 | | | | Initial recognition of lease assets | | $ | 143,630 | | | $ | 9,904 | | | | Initial recognition of lease liabilities | | $ | 143,630 | | | $ | 9,904 | | | **Note 21 SUBSEQUENT EVENTS** Management has evaluated events subsequent to the year ended for transactions and other events that may require adjustment of and/or disclosure in such consolidated financial statements. Subsequent to December 31, 2022, the Company issued: | | | 2,991,098 shares of common stock for conversion of 84 Series F Preferred Shares with an aggregate carrying value of $40,991. | | | | | | | | | | 2,992,519 shares of common stock for conversion of 100 Series F Preferred Shares with an aggregate carrying value of $48,799. | | | | | | | | | | On January 18, 2023, the Company received approval to increase the number of common stock authorized from 350,000,000 to 1,000,000,000. | | | ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE | | None. | 81 | | | | | | ITEM 9A. | CONTROLS AND PROCEDURES | | **Evaluation of Disclosure Controls and Procedures** The phrase disclosure controls and procedures refers to controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended, or the Exchange Act, such as this Annual Report on Form 10-K, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the U.S. Securities and Exchange Commission, or SEC. Disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to our management, including our chief executive officer, or CEO, and chief financial officer, or CFO, as appropriate to allow timely decision regarding required disclosure. Our management, with the participation of our CEO and CFO, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a- 15(e) and 15d- 15(e) under the Exchange Act), as of December 31, 2022, the end of the period covered by this Annual Report on Form 10-K. Based on such evaluation, our CEO and CFO have concluded that as of December 31, 2022, our disclosure controls and procedures were designed at a reasonable assurance level and were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. **Managements Report on Internal Control over Financial Reporting** Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles. Our management, with the participation of our CEO and CFO, has assessed the effectiveness of the internal control over financial reporting as of December 31, 2022. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in *Internal Control Integrated Framework (2013 Framework)*. Based on this evaluation, our management has concluded that our internal control over financial reporting was effective as of December 31, 2022. This Annual Report on Form 10-K does not include an attestation report of our registered public accounting firm on our internal control over financial reporting due to an exemption established by the JOBS Act for emerging growth companies. **Changes in Internal Controls over Financial Reporting** There was no change in our internal control over financial reporting identified in managements evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the year ended December 31, 2022, that materially affected, or is reasonable likely to materially affect, our internal control over financial reporting. **Limitations on Effectiveness of Controls and Procedures** In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs. | 82 | | | | | | ITEM 9B. | OTHER INFORMATION | | *Amendment of Series C Preferred Stock* On September 30, 2020, the Company amended its Series C Preferred Stock. The Series C Preferred Stock shall be entitled to vote with the holders of the Companys Common Stock on an as-converted basis. *Designation of Series F Preferred Stock* On December 22, 2020, the Company designated its Series F Preferred Stock. The Series F Preferred Stock shall be entitled to vote with the holders of the Companys Common Stock on an as-converted basis. *Debt Settlement Transactions* On February 16, 2022, the Company settled to settled accounts payable of $24,000 in exchange for 160,000 shares of common stock. On April 23, 2020, the Company agreed to settle principal debt of $150,000 for 3,061,224 shares of common stock at $0.049 per share, a 30% discount to market. On August 25, 2020, the terms of this settlement were amended to settle remaining principal of $120,000 for 10,714,285 common shares at an adjusted exercise price of $0.0112, a 30% discount to market. At December 31, 2020, 8,062,244 shares have been issued and 3,264,285 shares were left to be issued. These shares were issued subsequently on January 5, 2021. *Preferred Stock Transactions* 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 $141,000 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 Companys board of directors for past services. These preferred shares were value at $777,000 based on the fair value of the underlying common stock. 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 Companys board of directors for past services. These preferred shares were valued at $849,600 based on the fair value of the underlying common stock. | 83 | | | | | On January 29, 2021, 17 Series B preferred shares with a fair value of $95,880, were converted into common shares, inclusive of the conversion noted above. On March 30, 2021, 20 Series B preferred shares with a fair value of $112,800, were converted into common shares, inclusive of the conversion noted above On May 26, 2021, 50 Series B preferred shares with a fair value of $670,000, were converted into common shares, inclusive of the conversion noted above On July 20, 2021, 16 Series B preferred shares with a fair value of $90,240, were converted into common shares, inclusive of the conversion noted above On September 16, 2021, 5 Series B preferred shares with a fair value of $670,000, were converted into common shares, inclusive of the conversion noted above On October 5, 2021, 17 Series B preferred shares with a fair value of $95,880, were converted into common shares, inclusive of the conversion noted above On January 15, 2021, 286 Series C Preferred Shares were converted into common shares. On January 19, 2021, 18 Series C Preferred Shares were converted into common shares. On March 4, 2021, 168 Series C Preferred Shares were converted into common shares. On March 31, 2021, 290 Series C Preferred Shares were converted into common shares. On May 4, 2021, 250 Series C Preferred Shares were converted into common shares. On May 28, 2021, 300 Series C Preferred Shares were converted into common shares. On July 06, 2021, 200 Series C Preferred Shares were converted into common shares. 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 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 $261,934 and 1,180,000 warrants with a relative fair value of $138,066 valued on the agreement date which are recorded as obligation to issue shares and warrants respectively at December 31, 2021. On August 3, 2021, 275 Series F Preferred Shares were converted into common shares. On October 22, 2021, 210 Series F Preferred Shares were converted into common shares. On November 30, 2021, 491 Series F Preferred Shares were converted into common shares. 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. | 84 | | | | | **PART III** | ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE | | **Directors and Executive Officers** The following sets forth information about our director and executive officer as of the date of this report: | NAME | | AGE | | POSITION | | | | | | | | | | Robert Silzer | | 74 | | Director, President, Chief Executive Officer, Secretary, Treasurer | | | | | | | | | | Rick Curtis | | 64 | | President, Imperium Motor Company | | | | | | | | | | Zahir Gonzalez Loaiza | | 28 | | Interim Chief Financial Officer | | | | | | | | | | Christian Dubois | | | | President, Imperium Motors Canada | | | | | | | | | | Stephen Johnston | | 69 | | Director | | | | | | | | | | James Singerling | | 76 | | Director | | | | | | | | | | Michael Leemhuis | | 66 | | Director | | | | | | | | | | Carol Cookerly | | 64 | | Director | | | | | | | | | | Alan M. Wagner | | | | CEO, Liteborne Motor Corporation | | | | | | | | | | Daniel Lock | | | | Executive Director of Operations and Homologation, Liteborne Motor Corporation | | | | | | | | | | Jonathan DAgostino | | | | CFO, Liteborne Motor Corporation | | Our directors will serve in that capacity until our next annual shareholder meeting or until his successor is elected and qualified. Officers hold their positions at the will of our Board of Directors. There are no arrangements, agreements or understandings between non-management security holders and management under which non-management security holders may directly or indirectly participate in or influence the management of our affairs. **Executive Management** Our executive management team represents a significant depth of experience in biometrics and facial recognition technologies, intelligent security and surveillance, high-growth and technology marketing, and domestic and international sales and business development. The team represents a cross-disciplinary approach to management and business development. **Robert Silzer**, *Director, President, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer.* Robert Silzer has over 20 years experience in the GPS tracking and fleet solutions industries. He is the founder of DSG TAG Systems Inc. and has served as Chief Executive Officer of DSG TAG since its inception in April 2008. Mr. Silzer is a product designer who has developed multiple new product concepts and successfully introduced these products to market including the worlds first handheld bingo gaming unit, the first handheld and color handheld GPS golf units and the first Wi-Fi enabled GPS golf business solution. Prior to establishing DSG TAG, Mr. Silzers designed and a total golf solution that addressed the growing needs in Golf Course management. Through a series of mergers and acquisitions different companies with diversified hardware and software platforms, he founded GPS Industries (GPSI) in 1996, serving as its president, CEO, Chairman and director until 2007. Under his leadership, it became the largest operator of golf GPS systems in the world and with a remarkable 750 golf courses worldwide using the installed system. Prior to founding GPSI, Mr. Silzer founded XGA, an online golf store and website company in 1993. He also founded Advanced Gaming Technology, Inc. in 1992, an electronic gaming company, where he served as Chief Executive Officer until 1998. From 1986 to 1992, Mr. Silzer founded and operated the private company Supercart International. With over 30 years as an entrepreneur in the technology and other markets, Mr. Silzer has developed expertise in taking companies to market, growing start-up business, initial public offerings, raising funds, operations, marketing and international licensing. | 85 | | | | | **Zahir Loaiza**, *Interim Chief Financial Officer* Zahir assumed the role of the Companys acting CFO in March 2021, after having previously served as its Corporate Controller since 2019. She oversees the management of cash flow and budgeting, financial reporting and preparation of financial statements, as well as the development and implementation of internal financial controls. Her diverse international experience includes working as a staff accountant and controller at a publicly traded mining company, and at several law firms in the U.S., Canada and South America. Prior to her career in accounting she owned and operated multiple retail businesses. Ms. Loaiza holds a Licentiate degree in public accounting from Universidad de Carabobo, Venezuela, and is a Certified Assessment Evaluator. **Stephen Johnston,** *Director* Stephen Johnston is the founding Partner of Global Golf Advisors and one of the leading authorities on operational analysis and financial solutions for golf businesses. Steve began his career at the accounting firm of Thorne Gunn/Thorne Riddell in Toronto in 1973. He earned his Chartered Accountant designation while with Thorne Riddell in 1976 and in 1984 was promoted to Partner and given responsibility for major client accounts. His audit experience with major accounts subsequently expanded into real estate, communications and insurance. When the firm became known as KPMG, Mr. Johnston continued as an Audit Partner and in 1992 created the KPMG Golf Industry Practice and assumed responsibility as National Director. In 2006 he purchased the KPMG Golf Industry Practice and created Global Golf Advisors Inc., bringing with him the entire staff complement and client files to the new firm. Mr. Johnston is a graduate of the University of Toronto with a Bachelor of Science degree and business courses complement relevant to his Chartered Accountant designation. His main focus is developing financial and business solutions for private clubs, public golf courses and resorts, golf communities, investors and lenders. Mr. Johnston provides a keen insight for banking and finance solutions arising from his years of advising numerous international financial institutions. He has completed due diligence and valuation assignments for some of the largest golf-related transactions in North America and has completed multiple market studies to reposition various golf assets. In addition, Mr. Johnston has been actively involved with workouts/receiverships, providing operational and financial guidance. These assignments typically lead to member buyouts/transitions from developers or to an outright disposition of property. He has been recognized as one of the Top Powerbrokers in Canadian Golf by The National Post over the past 15 years. **James Singerling,** *Director* From 1990 until his retirement in 2015, James Singerling, CCM, served as the CEO of Club Managers Association of America (CMAA), the foremost professional association for managers of membership clubs in the US. In this role Mr. Singerling was credited for elevating the professional role of club managers by creating industry-standard development and certification programs. For over two decades, he spearheaded efforts to adopt the general manager/chief operating officer model at clubs nationwide, raising the qualifications and quality of club managers. Mr. Singerling is also recognized for building new relationships for the industry with federal and state governments and within the association community. **** **Michael Leemhuis,***Director* Michael Leemhuis, M.A. Ed., CCM, CCE, PGA Master Professional is known for his extensive leadership and sports experience. Michaels experience has been gained in his roles as the President of the Ocean Reef Club; CEO of Congressional Country Club; President of the Club Managers Association of America in 2009; GM/Director of Golf at the PGA TOUR; General Manager, Sport and Recreation at Sun City Resort; Tournament Director of the Nedbank Million Dollar Golf Challenge and MD of Sports International. One of Mikes career highlights was guiding Congressional Country Club to the #1 spot in the Platinum Clubs of America and into the top 100 of Platinum Clubs in the World. | 86 | | | | | Education combined with certification are what Mike believes are the cornerstones of success in business and in life and to that end Mike is a Certified Club Manager (CCM) and Certified Chief Executive (CCE) through CMAA, as well as a certified PGA member through the PGA of America and the PGA of South Africa (Master Professional). **Carol Cookerly,***Director* Carol Cookerly is a graduate of Duke University and former broadcast journalist, Carol worked in public relations in New York City before founding the agency in Atlanta. Founder and CEO of Cookerly Public Relations has grown the Company into one of the Southeasts leading public relations agencies representing a client roster more typical of national firms. In addition to creating higher visibility for a variety of clients, the agency has built a stellar reputation for its ability to: manage high-profile issues and direct crisis communications strategies; use data driven marketing to create behavioral change; and, drive engagement and brand success in social media. Recent visibility campaign successes include the award-winning introduction of the A-Class line of vehicles for Mercedes-Benz USA and the launch of Novelis Inc.s advanced-design lightweight aluminum battery enclosure for electric vehicles. Active in the community, Carol is a councilwoman serving the city of Milton, Ga. She is a board member of the nations most innovative law enforcement support organization, the Atlanta Police Foundation, for which she serves on two committees. In addition, she was recently appointed to the board of Oglethorpe Universitys Hammock School of Business. **Alan M. Wagner**, *CEO, Liteborne Motor Corporation* Mr. Wagners extensive expertise and reach across the automotive industry. Before joining LMC, Wagner served as executive director of Hyundai Transys and was vice president of product development for Mercedes Benz Tech. Before that, he held multiple executive positions with Lear Corporation. He was the vice president of engineering at Saleen Automotive/SMS Supercars and executive vice president of Saleen Electric. Wagner was also vice president of Entech. Through the years, he has worked with General Motors, Ford, Shelby, Petty Enterprises, Toyota, Chrysler, and BMW among other iconic automotive brands. **Daniel Lock**, *Executive Director of Operations and Homologation, Liteborne Motor Corporation* Mr Lock, who is leading Homologation has over 20-years of automotive development and engineering management experience. Prior to Joining Liteborne he was a senior manager and program manager at Hyundai Transys. A program planning manager at Gentherm, program manager and a product design engineer at Visteon. Mr. Lock earned his BS in chemical engineering from Yale University. **Jonathan DAgostino**, *CFO, Liteborne Motor Corporation* Mr. Jonathan DAgostino Started career at Sands Brothers in 1999. After graduating from Fordham University with honors from NYS in legal and ethical studies he joined Lehman Brothers in 2003, spent several years as an investment and merchant banker with several different banks, including Morgan Brothers, which was founded by a Lehman vice chair. He became Professor Luc Montagniers partner in commercializing his preventative healthcare business, during which time he won the 2008 Noble Prize for Medicine. After leaving traditional Merchant Banking he entered the green energy space working to create power-efficient production of Green Hydrogen. Before Liteborne he founded and now is testing and commercializing HydroBoost, a product that creates green hydrogen on demand for automobiles and trucks. **Significant Employees** Other than Bob Silzer, we have no full-time employees whose services are materially significant to our business and operations who are employed the Company. | 87 | | | | | **Family Relationships** There are no family relationships among any of our directors or officers. **Involvement in Certain Legal Proceedings** To the best of our knowledge, none of our directors or executive officers has, during the past ten years: | 1. | been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences); | | | | | | | 2. | had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time; | | | | | | | 3. | been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity; | | | | | | | 4. | been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; | | | | | | | 5. | been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or | | | | | | | 6. | been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. | | **** **Compliance with Section 16(a) of the Securities Exchange Act of 1934** Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors and persons who own more than 10% of our common stock to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common stock and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders are required by the SEC regulations to furnish us with copies of all Section 16(a) reports that they file. Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that during fiscal year ended December 31, 2022, all filing requirements applicable to our officers, directors and greater than 10% percent beneficial owners were complied with. **Term of Office** Our directors are appointed for a one-year term to hold office until the next annual general meeting of our stockholders or until removed from office in accordance with our bylaws. Our officers are appointed by our Board of Directors and hold office until removed by the Board of Directors. | 88 | | | | | **Board Leadership Structure** The Board does not have an express policy regarding the separation of the roles of Chief Executive Officer and Director as the Board believes it is in the best interests of the Company to make that determination based on the position and direction of the Company and the membership of the Board. The Board has designated Robert Singerling as Lead Independent Director. Currently, Robert Silzer serves as both the Companys Chief Executive Officer and a Director. As Chief Executive Officer, Mr. Silzer is involved in the day-to-day operations of the Company and also provides strategic guidance on the Companys operations. The Board believes Mr. Silzers experience and knowledge are valuable in the oversight of both the Companys operations as well as with respect to the overall oversight of the Company at the Board level. The Board believes that this leadership structure is appropriate as Mr. Silzer is intimately knowledgeable with the Companys current and planned operations. **Role of the Board and the Audit Committee in Risk Oversight** While management is charged with the day-to-day management of risks that the Company faces, the Board of Directors, and the Audit Committee of the Board, have been responsible for oversight of risk management. The full Board, and the Audit Committee since it was formed, have responsibility for general oversight of risks facing the Company. Specifically, the Audit Committee reviews and assesses the adequacy of the Companys risk management policies and procedures with regard to identification of the Companys principal risks, both financial and non-financial, and review updates on these risks from the Chief Financial Officer and the Chief Executive Officer. The Audit Committee also reviews and assesses the adequacy of the implementation of appropriate systems to mitigate and manage the principal risks. **Review and Approval of Transactions with Related Parties** The Board of Directors adopted a policy to comply with Item 404 of Regulation S-K of the Exchange Act as well as the Nasdaq Rules requiring that disinterested directors approve transactions with related parties which are not market-based transactions. Generally, the Board of Directors will approve transactions only to the extent the disinterested directors believe that they are in the best interests of the Company and on terms that are fair and reasonable (in the judgment of the disinterested directors) to the Company. **Audit Committee** The Board of Directors established the Audit Committee on April 1, 2021, Our Audit Committee charter complies with Section 3(a)(58)(A) of the Exchange Act and Nasdaq Rule 5605. The Audit Committee was established to oversee the Companys corporate accounting and financial reporting processes and audits of its financial statements. The members of our Audit Committee are Michael Leemhuis, James Singerling, and Stephen Johnston. Mr. Johnston serves as chair of the Audit Committee. The Board of Directors determined that all members of our Audit Committee were independent under SEC Rule 10A-3(b)(1) and Nasdaq Rule 5605(a)(2). The Board has determined that all current members of the Audit Committee are financially literate as interpreted by the Board in its business judgment. Stephen Johnston has been qualified as an audit committee financial expert, as defined in the applicable rules of the SEC. The Audit Committee meets periodically with our independent accountants and management to review the scope and results of the annual audit and to review our financial statements and related reporting matters prior to the submission of the financial statements to the Board. In addition, the Audit Committee meets with the independent auditors at least on a quarterly basis to review and discuss the annual audit or quarterly review of our financial statements. We have established an Audit Committee Charter that deals with the establishment of the Audit Committee and sets out its duties and responsibilities. The Audit Committee is required to review and reassess the adequacy of the Audit Committee Charter on an annual basis. The Audit Committee Charter is available on our Company website at www.dsgglobal.com and furnished as exhibit 99.2 of the registration statement of which this prospectus forms a part. | 89 | | | | | **Governance and Nominating Committee** The members of our Governance and Nominating Committee are Ms. Cookerly, and Messrs. Singerling, Johnston, and Leemhuis. Ms. Cookerly serves as chair of the Governance and Nominating Committee. This committees responsibilities include, among other things: identifying and evaluating candidates, including the nomination of incumbent directors for re-election and nominees recommended by shareholders, to serve on our Board; considering and making recommendations to our Board regarding the composition and chairship of the committees of our Board; developing and recommending to our Boards corporate governance principles, codes of conduct and compliance mechanisms; and overseeing periodic evaluations of the Boards performance, including committees of the Board. When evaluating director candidates, the Governance and Nominating Committee may consider several factors, including relevant experience, independence, commitment, compatibility with the Chief Executive Officer and the Boards culture, prominence and understanding of the Companys business, as well as any other factors the Governance and Nominating Committee deems relevant at the time. The Governance and Nominating Committee makes a recommendation to the full Board as to any person it believes should be nominated by our Board, and our Board determines the nominees after considering the recommendation and report of the Governance and Nominating Committee. The Governance and Nominating Committee Charter is available on our Company website at www.dsgglobal.com and furnished as exhibit 99.4 of the registration statement of which this prospectus forms a part. **Compensation Committee** The members of our Compensation Committee are Ms. Cookerly, and Messrs. Singerling, Johnston and Leemhuis. Mr. Singerling serves as chair of the Compensation Committee. The Compensation Committee is responsible for making recommendations to the Board regarding the compensation of executive officers, to review and administer our Companys equity compensation plans, to review, discuss, and evaluate at least annually the relationship between risk management policies and practices and compensation, as well as oversee the Companys engagement with shareholders and proxy advisors. In the event that our Nasdaq listing application is approved, effective upon the uplisting of our common stock to Nasdaq (which may not occur), the Compensation Committee will be in compliance with Nasdaq Rule 5605(d). The Compensation Committee consists of only independent directors in accordance with Nasdaq Rule 5605(a)(2) and all non-employee directors for purposes of Rule 16b-3 of the Exchange Act. The compensation of our CEO, Mr. Silzer, must be determined by the Compensation Committee and the CEO may not be present during voting or deliberations for his compensation. Although Nasdaq Rule 5605(d)(3) provides that the Compensation Committee may (in its discretion, not Board discretion) retain compensation consultants, independent legal counsel, and other advisors, the independent directors acting as the Compensation Committee have not decided to do so. Our Compensation Committee Charter is available at our website www.dsgglobal.com and furnished as exhibit 99.3 of the registration statement of which this prospectus forms a part. **Code of Business Conduct and Ethics** On March 31, 2021, our Board of Directors adopted a Code of Business Conduct and Ethics Policy (the Code of Conduct). Our Code of Conduct is applicable to all of the Companys and its subsidiaries employees, including the Companys Chief Executive Officer and Chief Financial Officer. The Code of Conduct contains written standards that are designed to deter wrongdoing and to promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest; full, fair, accurate, timely and understandable public disclosures and communications, including financial reporting; compliance with applicable laws, rules and regulations; prompt internal reporting of violations of the code; and accountability for adherence to the code. A copy of our Code of Business Conduct and Ethics Policy of the Company is posted at our website at www.dsgglobal.com and furnished as exhibit 99.1 of the registration statement of which this prospectus forms a part. | 90 | | | | | **Insider Trading Policy and Supplemental Policy Concerning Trading in Company Securities by Certain Designated Persons** Our Insider Trading Policy and the Supplemental Policy Concerning Trading in Company Securities by Certain Designated Persons apply to all of our officers, directors, and employees, and provide strict guidelines as to restrictions on trading activity in the Companys stock. including provisions for on trading blackout periods, benefit plans and Section 16 Reporting. These policies are posted at our website www.dsgglobal.com and furnished as exhibit 99.5 and 99.6, respectively, of the registration statement of which this prospectus forms a part. **** **Family Relationships** There are no family relationships among any of our directors or officers. | ITEM 11. | EXECUTIVE COMPENSATION | | **Summary Compensation Table** The particulars of the compensation paid to the following persons: | (a) | our principal executive officer; | | | | | | | (b) | our principal financial officer; | | | | | | | (c) | each of our three most highly compensated executive officers who were serving as executive officers at the end of the years ended December 31, 2022 and 2021; and | | | | | | | (d) | up to two additional individuals for whom disclosure would have been provided under (c) but for the fact that the individual was not serving as our executive officer at the end of the years ended December 31, 2022 and 2021, who we will collectively refer to as the named executive officers of our Company, are set out in the following summary compensation table, except that no disclosure is provided for any named executive officer, other than our principal executive officers, whose total compensation did not exceed $100,000 for the respective fiscal year: | | | Name and principal position | | Year | | Salary ($) | | | Bonus ($) | | | Stock Awards ($) | | | All Other Compensation ($) | | | Total ($) | | | | Robert Silzer, Director, President, Chief | | 2022 | | | 300,000 | | | | 120,000 | | | | 1,082,700 | | | | 37,503 | | | | 1,540,203 | | | | | | 2021 | | | 300,000 | | | | 196,556 | | | | 212,400 | | | | 39,038 | | | | 747,994 | | | | Zahir Loaiza, Interim CFO | | 2022 | | | 70,111 | | | | - | | | | - | | | | - | | | | 70,111 | | | | | | 2021 | | | 74,606 | | | | - | | | | - | | | | 10,000 | | | | 84,606 | | | | Christian Dubois, former President Imperium Motor Company, Canada | | 2022 | | | - | | | | - | | | | - | | | | 80,000 | | | | 80,000 | | | | | | 2021 | | | - | | | | - | | | | - | | | | 63,300 | | | | 63,300 | | | | Rick Curtis, former CEO Imperium Motor Company, USA | | 2022 | | | 52,500 | | | | - | | | | - | | | | - | | | | 52,500 | | | | | | 2021 | | | 70,000 | | | | - | | | | - | | | | 60,000 | | | | 130,000 | | | | Alan Wagner, CEO Liteborne | | 2022 | | | - | | | | - | | | | - | | | | 35,000 | | | | 35,000 | | | | Jonathan DAgostino, CFO Liteborne | | 2022 | | | - | | | | - | | | | - | | | | 23,125 | | | | 23,125 | | | | Daniel Lock, Executive Director of Operations Liteborne | | 2022 | | | - | | | | - | | | | - | | | | 33,048 | | | | 33,048 | | | | 91 | | | | | As of December 31, 2022, we had no employment agreements with any of our executive officers or employees. **Summary of Employment Agreements and Material Terms** We have not entered into any employment or consulting agreements with any of our current officers, directors, or employees. **Outstanding Equity Awards.** For the years ended December 31, 2022 and 2021, no director or executive officer has received compensation from the Company pursuant to any compensatory or benefit plan. There is no plan or understanding, express or implied, to pay any compensation to any director or executive officer pursuant to any compensatory or benefit plan, although we anticipate that we will compensate our officers and directors for services to us with stock or options to purchase stock, in lieu of cash. **Compensation of Directors** The particulars of the compensation paid to each of our director during our fiscal years ended December 31, 2022 and 2021 are set out in the following summary compensation table, except that no disclosure is provided for any director whos also a named executive officer and whose compensation is fully reflected in the above Executive Summary Compensation Table: **DIRECTOR COMPENSATION TABLE** **** | Name and principal position | | Year | | Salary ($) | | | Bonus ($) | | | Stock Awards ($) | | | Option Awards ($) | | | Non-Equity Incentive Plan Compensation ($) | | | Nonqualified Deferred Compensation Earnings ($) | | | All Other Compensation ($) | | | Total ($) | | | | Stephen Johnston, | | 2022 | | Nil | | | Nil | | | 185,000 | | | Nil | | | Nil | | | Nil | | | Nil | | | Nil | | | | Director(1) | | 2021 | | Nil | | | Nil | | | 212,400 | | | Nil | | | Nil | | | Nil | | | Nil | | | Nil | | | | James Singerling, | | 2022 | | Nil | | | Nil | | | 185,000 | | | Nil | | | Nil | | | Nil | | | Nil | | | Nil | | | | Director(2) | | 2021 | | Nil | | | Nil | | | 212,400 | | | Nil | | | Nil | | | Nil | | | Nil | | | Nil | | | | Michael Leemhuis, | | 2022 | | Nil | | | Nil | | | 111,000 | | | Nil | | | Nil | | | Nil | | | Nil | | | Nil | | | | Director(3) | | 2021 | | Nil | | | Nil | | | 106,200 | | | Nil | | | Nil | | | Nil | | | Nil | | | Nil | | | | Carol Cookerly, | | 2022 | | Nil | | | Nil | | | 111,000 | | | Nil | | | Nil | | | Nil | | | Nil | | | Nil | | | | Director(4) | | 2021 | | Nil | | | Nil | | | 106,200 | | | Nil | | | Nil | | | Nil | | | Nil | | | Nil | | | | Jason Sugarman, | | 2022 | | Nil | | | Nil | | | Nil | | | Nil | | | Nil | | | Nil | | | Nil | | | Nil | | | | Former Director(5) | | 2021 | | Nil | | | Nil | | | Nil | | | Nil | | | Nil | | | Nil | | | Nil | | | Nil | | | (1) Mr. Johnston has served as a director since June 16, 2015. (2) Mr. Singerling has served as a director since June 16, 2015. (3) Mr. Leemhuis has served as a director since April 8, 2020. (4) Ms. Cookerly has served as a director since April 8, 2020. (5) Mr. Sugarman served as a director from April 8, 2020 until July 11, 2019. | 92 | | | | | | ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS | | The following table sets forth information regarding beneficial ownership of our common stock as of December 31, 2022 (i) by each person who is known by us to beneficially own more than 5% of our common stock; (ii) by each of our officers and directors; and (iii) by all of our officers and directors as a group. | Name and Address of Beneficial Owner | | Office, if Any | | Title of Class | | Amount and Nature of Beneficial Ownership (1) | | | Percent of Class (2) | | | | Officers and Directors | | | | | | | | | | | | | | | Robert Silzer 214 - 5455 152nd Street Surrey, British Columbia, Canada V3S 5A5 | | Director, president, chief executive officer, secretary, and treasurer | | Common Stock | | | 26,002,019 | (3) | | | 13.992 | % | | | Zahir Loaiza 214 - 5455 152nd Street Surrey, British Columbia, Canada V3S 5A5 | | Interim Chief Financial Officer | | Common Stock | | | - | | | | (4 | ) | | | Christian Dubois 214 - 5455 152nd Street Surrey, British Columbia, Canada V3S 5A5 | | Former President, Imperium Motor Company, Canada | | Common Stock | | | - | | | | (4 | ) | | | Rick Curtis 214 - 5455 152nd Street Surrey, British Columbia, Canada V3S 5A5 | | Former Chief Executive Officer, Imperium Motor Company, USA | | Common Stock | | | 1,500,000 | | | | (4 | ) | | | Stephen Johnston 214 - 5455 152nd Street Surrey, British Columbia, Canada V3S 5A5 | | Director | | Common Stock | | | 3,500,000 | (5) | | | 1.883 | % | | | James Singerling 214 - 5455 152nd Street Surrey, British Columbia, Canada V3S 5A5 | | Director | | Common Stock | | | 3,500,000 | (5) | | | 1.883 | % | | | Michael Leemhuis 214 - 5455 152nd Street Surrey, British Columbia, Canada V3S 5A5 | | Director | | Common Stock | | | 1,700,000 | (6) | | | (4 | ) | | | 93 | | | | | | Carol Cookerly 214 - 5455 152nd Street Surrey, British Columbia, Canada V3S 5A5 | | Director | | Common Stock | | | 1,700,000 | (6) | | | (4 | ) | | | All officers and directors as a group | | | | Common stock, $0.001 par value | | | 37,902,019 | | | | 20.396 | % | | | | | | | | | | | | | | | | | | 5%+ Security Holders | | | | | | | - | | | | (4 | ) | | | None | | | | | | | - | | | | - | | | | All 5%+ Security Holders | | | | Common stock, $0.001 par value | | | - | | | | (4 | )- | | | (1) | Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. | | | | | | | (2) | Percentages are based on 185,829,993 shares of our Companys common stock issued and outstanding at December 31, 2022. Does not include: (i) 9,626,442 common shares underlying outstanding warrants; (ii)7,727,556 common shares underlying shares of outstanding Series C, and E Preferred Stock; or (iii) an indeterminate number of common shares underlying outstanding shares of Series F Preferred Stock. | | | | | | | (3) | Includes 2,019 issued common shares and 26,000,000 common shares issuable upon voluntary conversion of 260 Series B Preferred shares. Does not include 150,376 shares of non-convertible Series A Preferred stock carrying voting rights with the common stock equal to 665 votes per Series A Preferred share (100,002,059 votes, or []% of votes in the aggregate). | | | | | | | (4) | Less than 1% | | | | | | | (5) | Includes 3,500,000 common shares issuable upon voluntary conversion of 35 Series B Preferred shares. Does not include 25,000 shares of non-convertible Series A Preferred stock carrying voting rights with the common stock equal to 665 votes per Series A Preferred shares. | | | | | | | (6) | Includes 1,700,000 common shares issuable upon voluntary conversion of 17 Series B Preferred shares. | | | 94 | | | | | | ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE | | **Transactions with Related Persons** Except as disclosed herein, no director, executive officer, shareholder holding at least 5% of shares of our common stock, or any family member thereof, had any material interest, direct or indirect, in any transaction, or proposed transaction since the year ended December 31, 2020, in which the amount involved in the transaction exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at the year-end for the last three completed fiscal years. As at December 31, 2022 the Company incurred $412,573 (2021 - $409,038) in salaries, bonuses of $120,000 (2021 - $196,556), and $241,284 (2021 - $197,906) in consulting fees to the President and CEO, and CFO of the Company, and the President, CEOs, and CFOs of the Companys subsidiaries. The Company also repaid $28,118 of management fees and salaries previously owing to the President and CEO, of the Company from December 31, 2021 during the year ended December 31, 2022. As at December 31, 2022, the Company owed $nil (December 31, 2021 - $28,118) to the President, CEO, and CFO of the Company and $49,441 (December 31, 2021 - $nil) to the President, CEOs, and CFOs of the Companys subsidiaries for management fees and salaries. Amounts owed and owing are unsecured, non-interest bearing, and due on demand. On August 1, 2022, the Company issued an aggregate of 191 shares of Series B convertible preferred shares to the CEO of the Company. These preferred shares were value at $897,700 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 convertible preferred shares to the Companys board of directors for past services. These preferred shares were valued at $777,000 based on the fair value of the underlying common stock. The issuance is recorded under compensation expense. On March 4, 2021, the Company issued an aggregate of 16 shares of Series B convertible preferred shares to the Companys board of directors for past services. These preferred shares were valued at $849,600 based on the fair value of the underlying common stock. The issuance is recorded under compensation expense. **Promoters and Certain Control Persons** We did not have any promoters at any time during the past five fiscal years. **Director Independence** We currently act with five (5) directors consisting of Robert Silzer, Stephen Johnston, James Singerling, Michael Leemhuis and Carol Cookerly. We have not made any determination as to whether any of our directors are independent directors, as that term is used in Rule 4200(a) (15) of the Rules of National Association of Securities Dealers. | ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES | | **Audit Fees, Audit Related Fees, and All Other Fees** The following represents fees for professional services rendered by our independent registered public accounting firm for each of the years ended December 31, 2022 and 2021. | | | 2022 | | | 2021 | | | | Audit fees | | $ | 69,201 | | | $ | 69,201 | | | | Audit related fees | | | Nil | | | | Nil | | | | Tax fees | | | Nil | | | | Nil | | | | All other fees | | | Nil | | | | Nil | | | | Total | | $ | 69,201 | | | $ | 69,201 | | | | 95 | | | | | Audit fees represent amounts billed for professional services rendered for the audit of our annual consolidated financial statements, reviews of our quarterly reports on Form 10-Q and certain additional services associated with accessing capital markets, including reviewing registration statements and the issuance and preparation of comfort letters and consents. Saturna Group Chartered Professional Accountants, LLP served as our independent registered public accounting firm from October 2017 to January 2019. Buckley Dodds, LLP served as our independent registered public accounting firm from March 2019 to January 2022. BF Borgers, Certified Public Accountants, serve as our independent registered public accounting firm since February 2022. **PART IV** | ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES | | | | We have filed the following documents as part of this Annual Report on Form 10-K: | | | | | | | | | 1. | Consolidated Financial Statements | | | | | | | | | | Our consolidated financial statements are listed in the Index to Consolidated Financial Statements under Part II, Item 8 of this Annual Report on Form 10-K. | | | | | | | | | 2. | Financial Statement Schedules | | | | | | | | | | All schedules have been omitted because they are not required, not applicable, not present in amounts sufficient to require submission of the schedule, or the required information is otherwise included in our consolidated financial statements and related notes. | | | | | | | | | 3. | Exhibits | | | | | | | | | | See the Exhibit Index immediately following the signature pages of this Annual Report on Form 10-K. | | | ITEM 16. | FORM 10-K SUMMARY | | None. | 96 | | | | | **SIGNATURES** Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. | Dated: | April 17, 2023 | DSG Global Inc. | | | | | | | | | | By: | /s/ Robert Silzer | | | | | | Robert Silzer | | | | | | Chief Executive Officer and Chief Financial Officer | | | | | | (Principal Executive Officer and Principal Financial and Accounting Officer) | | **POWER OF ATTORNEY** KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Robert Silzer as his true and lawful attorneys-in-fact and agents, with full power of substitution for him, and in his name in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. | Signature | | Title | | Date | | | | | | | | | | /s/ Robert Silzer | | Chief Executive Officer, Chief Financial Officer and Chairman of the | | April 17, 2023 | | | Robert Silzer | | Board of Directors (Principal Executive Officer and Principal Financial and Accounting Officer) | | | | | | | | | | | | /s/ Stephen Johnston | | Director | | April 17, 2023 | | | Stephen Johnston | | | | | | | | | | | | | | /s/ James Singerling | | Director | | April 17, 2023 | | | James Singerling | | | | | | | | | | | | | | /s/ Michael Leemhuis | | Director | | April 17, 2023 | | | Michael Leemhuis | | | | | | | | | | | | | | /s/ Carol Cookerly | | Director | | April 17, 2023 | | | Carol Cookerly | | | | | | | S-1 | | **EXHIBIT INDEX** | Exhibit Number | | Exhibit Description | | Filed Form | | Exhibit | | Filing Date | | Herewith | | | 3.1.1 | | Articles of Incorporation of the Registrant | | SB-2 | | 3.1 | | 10-22-07 | | | | | | | | | | | | | | | | | | 3.1.2 | | Certificate of Change of the Registrant | | 8-K | | 3.1 | | 06-24-08 | | | | | | | | | | | | | | | | | | 3.1.3 | | Articles of Merger of the Registrant | | 8-K | | 3.1 | | 02-23-15 | | | | | | | | | | | | | | | | | | 3.1.4 | | Certificate of Change of the Registrant | | 8-K | | 3.2 | | 02-23-15 | | | | | | | | | | | | | | | | | | 3.1.5 | | Certificate of Correction of the Registrant | | 8-K | | 3.3 | | 02-23-15 | | | | | | | | | | | | | | | | | | 3.1.6 | | Certificate of Change of the Registrant | | 8-K | | 3.1 | | 03-26-19 | | | | | | | | | | | | | | | | | | 3.1.7 | | Certificate of Correction of the Registrant | | 8-K | | 3.2 | | 03-26-19 | | | | | | | | | | | | | | | | | | 3.1.8 | | Series A - Certificates of Amendment and Designation dated November 22, 2019 | | | | | | | | * | | | | | | | | | | | | | | | | 3.1.9 | | Series C - Certificates of Amendment and Designation dated December 22, 2020 | | | | | | | | * | | | | | | | | | | | | | | | | 3.1.10 | | Series F Certificates of Designation dated December 22, 2020 | | | | | | | | * | | | | | | | | | | | | | | | | 3.2.1 | | Bylaws of the Registrant | | SB-2 | | 3.2 | | 10-22-07 | | | | | | | | | | | | | | | | | | 3.2.2 | | Amendment No. 1 to Bylaws of the Registrant | | 8-K | | 3.2 | | 06-19-15 | | | | | | | | | | | | | | | | | | 4.1.2 | | DSG Global, Inc. 2015 Omnibus Incentive Plan | | 10-Q | | 10.3 | | 11-13-15 | | | | | | | | | | | | | | | | | | 10.1 | | Subscription Agreement / Debt Settlement, dated September 26, 2014, between DSG TAG Systems Inc. and Westergaard Holdings Ltd. | | 8-K | | 10.1 | | 08-17-15 | | | | | | | | | | | | | | | | | | 10.2 | | Addendum to Subscription Agreement / Debt Settlement, dated October 7, 2014, between DSG TAG Systems Inc. and Westergaard Holdings Ltd. | | 8-K | | 10.2 | | 08-17-15 | | | | | | | | | | | | | | | | | | 10.3 | | Second Addendum to Subscription Agreement / Debt Settlement, dated April 29, 2015, between DSG TAG Systems Inc. and Westergaard Holdings Ltd. | | 8-K | | 10.3 | | 08-17-15 | | | | | | | | | | | | | | | | | | 10.4 | | Third Addendum to Subscription Agreement / Debt Settlement, dated August 11, 2015, between DSG TAG Systems Inc. and Westergaard Holdings Ltd. | | 8-K | | 10.4 | | 08-17-15 | | | | | | | | | | | | | | | | | | 10.5 | | Letter from Westergaard Holdings Ltd., dated September 1, 2015, extending dates of redemption obligations. | | 8-K | | 10.1 | | 09-08-15 | | | | | EX-1 | | | Exhibit Number | | Exhibit Description | | Filed Form | | Exhibit | | Filing Date | | Herewith | | | | | | | | | | | | | | | | 10.6 | | Letter from Westergaard Holdings Ltd., dated November 10, 2015, extending dates of redemption obligations | | 10-Q | | 10.1 | | 11-16-15 | | | | | | | | | | | | | | | | | | 10.7 | | Letter fromWestergaard Holdings Ltd., dated December 31, 2015, extending dates of redemption obligations | | 8-K | | 10.1 | | 03-09-16 | | | | | | | | | | | | | | | | | | 10.8 | | Convertible Note of DSG TAG Systems Inc., dated March 31, 2015, payable to Adore Creative Agency, Inc. | | 8-K | | 10.5 | | 08-17-15 | | | | | | | | | | | | | | | | | | 10.9 | | Convertible Note Agreement, dated August 25, 2015, between the Registrant and Jerry Katell, Katell Productions, LLC and Katell Properties, LLC | | 10-Q | | 10.2 | | 11-13-15 | | | | | | | | | | | | | | | | | | 10.10 | | Agreement (TAG Infinity XL 12 ) dated February 15, 2014 between DSG TAG Systems Inc. and DSG Canadian Manufacturing Corp. | | 8-K | | 10.2 | | 12-05-15 | | | | | | | | | | | | | | | | | | 10.11 | | Loan agreement, dated October 24, 2014 between DSG TAG Systems Inc. and A.Bosa & Co (Kootenay) Ltd. | | 10-K | | 10.5 | | 05-28-19 | | | | | | | | | | | | | | | | | | 10.12 | | Lease agreement (Modified), dated January 21, 2016 and February 1, 2016 between DSG TAG Systems Inc. and Benchmark Group | | 10-K | | 10.6 | | 05-28-19 | | | | | | | | | | | | | | | | | | 10.13 | | Loan agreement, dated February 11, 2016 between DSG TAG Systems Inc. and Jeremy Yaseniuk | | 10-K | | 10.7 | | 05-28-19 | | | | | | | | | | | | | | | | | | 10.14 | | Loan agreement, dated March 31, 2016 between DSG TAG Systems Inc. and E. Gary Risler | | 10-K | | 10.8 | | 05-28-19 | | | | | | | | | | | | | | | | | | 10.15 | | Letter from Westergaard Holdings Ltd., dated April 29, 2016 | | 10-K | | 10.1 | | 05-20-16 | | | | | | | | | | | | | | | | | | 10.16 | | Security purchase agreement between DSG Global Inc. and Coastal Investment Partners, dated November 7 2016 | | 8-K | | 10.1 | | 11-15-16 | | | | | | | | | | | | | | | | | | 10.17 | | Letter of Resignation by Board Member Keith Westergaard | | 10-Q | | 10.1 | | 12-16-16 | | | | | | | | | | | | | | | | | | 10.18 | | Equity Financing Agreement dated September 18, 2019 between DSG Global, Inc. and GHS Investments, LLC | | S-1 | | 10.9 | | 10-04-19 | | | | | | | | | | | | | | | | | | 10.19 | | Registration Rights Agreement dated September 18, 2019 between DSG Global, Inc. and GHS Investments, LLC | | S-1 | | 10.10 | | 10-04-19 | | | | | | | | | | | | | | | | | | 10.20 | | Advisory Services Agreement dated as of March 2, 2020 Graj + Gustavsen, Inc. | | 8-K | | 10.1 | | 03-06-20 | | | | | | | | | | | | | | | | | | 10.21 | | Stock Purchase Agreement between the Company and GHS dated December 23, 2020 | | 8-k | | 10.1 | | 12-31-20 | | | | | | | | | | | | | | | | | | 10.22 | | Warrant Agreement dated December 23, 2020 | | 8-K | | 10.2 | | 12.31.20 | | | | | | | | | | | | | | | | | | 10.23 | | OEM Cooperation Agreement with Skywell New Energy Automobile Group Co. Ltd. Dated February 5, 2021. | | 8-K | | 10.1 | | 02-23-21 | | | | | | | | | | | | | | | | | | 21 | | List of Subsidiary: | | 10-K | | 21.1 | | 05-02-16 | | | | | EX-2 | | | Exhibit Number | | Exhibit Description | | Filed Form | | Exhibit | | Filing Date | | Herewith | | | 31.1 | | Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | | | | | | | X | | | | | | | | | | | | | | | | 32.1# | | Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | | | | | | | X | | | | | | | | | | | | | | | | 101* | | Interactive Data File | | | | | | | | | | | | | | | | | | | | | | | | 101.INS | | Inline XBRL Instance Document | | | | | | | | X | | | | | | | | | | | | | | | | 101.SCH | | Inline XBRL Taxonomy Extension Schema Document | | | | | | | | X | | | | | | | | | | | | | | | | 101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document | | | | | | | | X | | | | | | | | | | | | | | | | 101.DEF | | Inline XBRL Taxonomy Extension Definition Linkbase Document | | | | | | | | X | | | | | | | | | | | | | | | | 101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase Document | | | | | | | | X | | | | | | | | | | | | | | | | 101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document | | | | | | | | X | | | | | | | | | | | | | | | | 104 | | Cover Page Interactive Data File (embedded within the Inline XBRL document) | | | | | | | | | | *Filed herewith | #* | The information in this exhibit is furnished and deemed not filed with the Securities and Exchange Commission for purposes of section 18 of the Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of DSG Global Inc. under the Securities Act of 1933, as amended, or the Exchange Act of 1934, as amended, whether made before or after the date hereof, regardless of any general incorporation language in such filing. | | | EX-3 | |