The following discussion and analysis is based on, and should be read in
conjunction with, the condensed, consolidated interim financial statements and
the related notes thereto of
As used in this section, unless the context otherwise requires, references to
"we," "our," "us," and "our company" refer to
FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words "believe," "may," "will," "potentially," "estimate," "continue," "anticipate," "intend," "could," "would," "project," "plan," "expect" and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements.
In particular, without limiting the generality of the foregoing disclosure, the forward-looking statements contained in this Quarterly Report on Form 10-Q and which are inherently subject to a variety of risks and uncertainties that could cause actual results, performance or achievements to differ significantly include but are not limited to:
? our ability to successfully homologate our electric vehicles offerings; ? anticipated timelines for product deliveries; ? the production capacity of our manufacturing partners and suppliers; ? the stability, availability and cost of international shipping services; ? our ability to establish and maintain dealership network for our electric vehicles; ? our ability to attract and retain customers; ? the availability of adequate manufacturing facilities for our PACER golf carts; ? the consistency of current labor and material costs; ? the availability of current government economic incentives for electric vehicles; ? the expansion of our business in our core golf market as well as in new markets like electric vehicles, commercial fleet management and agriculture; ? the stability of general economic and business conditions, including changes in interest rates; ? the Company's ability to obtain financing to execute our business plans, as and when required and on reasonable terms; ? our ability to accurately assess and respond to market demand in the electric vehicle and golf industries; ? our ability to compete effectively in our chosen markets; ? consumer willingness to accept and adopt the use of our products; ? the anticipated reliability and performance of our product offerings; ? our ability to attract and retain qualified employees and key personnel; ? our ability to maintain, protect and enhance our intellectual property; ? our ability to comply with evolving legal standards and regulations, particularly concerning requirements for being a public company. ? the ability of our Chairman, President and Chief Executive Officer to control a significant number of shares of our voting capital; ? the impact of the COVID-19 pandemic on capital markets; ? frustration or cancellation of key contracts; ? short selling activities; ? our ability to complete an offering of our common stock and warrants pursuant to the Registration Statement on Form S-1 filed by with theSecurities and Exchange Commission onApril 21, 2021 (the "Offering") and the concurrent listing of our common stock and of the warrants on the Nasdaq Capital Market.. ? the immediate and substantial dilution of the net tangible book value of our common stock by the Offering; ? our ability to meet the initial or continuing listing requirements of the Nasdaq Capital Market; and ? our intention to effect a reverse stock split of our outstanding common stock immediately following the effective date of the Offering but prior to the closing of the Offering.
Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions, which may have been used.
19
These forward-looking statements speak only as of the date of this Form 10-Q and
are subject to uncertainties, assumptions and business and economic risks. As
such, our actual results could differ materially from those set forth in the
forward-looking statements as a result of the factors set forth below in Part
II, Item 1A, "Risk Factors," and in our other reports filed with the
You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances described in the forward-looking statements will be achieved or occur. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Form 10-Q to conform these statements to actual results or to changes in our expectations, except as required by law.
Our unaudited financial statements are stated in
ABOUTDSG GLOBAL INC.
We were founded by a group of individuals who have dedicated their careers to fleet management technologies and have been at the forefront of the industry's most innovative developments. Our executive team has over 50 years of experience in the design and manufacture of wireless, GPS, and fleet tracking solutions, and over 40 years of experience in automotive retail, wholesale, distribution, and manufacturing.
Powered by patented analytics and an extraordinary depth of industry knowledge, DSG's mandate is to improve lives and businesses with intelligent, affordable, adaptable and environmentally responsible transportation technologies and electric vehicles.
Our principal executive office is located at 207 - 15272 Croydon Drive
Corporate History
In
On
20
On
Following the initial closing of the share exchange agreement and through
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
On
On
About our Business Divisions
VANTAGE TAG FLEET MANAGEMENT AND GOLF DIVISION
Vantage Tag Golf and Fleet Management Technologies
Vantage TAG Systems has developed a patented combination of hardware and software which we believe is the first completely modular and scalable fleet management solution for the golf industry and beyond. Marketed around the world, the TAG System and suite of products are deployed to help golf course operators manage their fleets of golf carts, turf equipment, and utility vehicles, providing real time vehicle global positioning, geofencing, remote control, and remote vehicle lockdown security features. The TAG System optimizes course efficiencies and pace of play, all while integrating a customizable array of player experience features such as player messaging, course mapping and 3d flyover, course & tournament marshalling, pro tips, food & beverage ordering, and ad streaming, among others.
The Vantage TAG System is designed from the ground up to be a golf/turf vehicle fleet management system. Its main function is addressing the golf course operator needs. While employing same core technology (cellular wireless and GPS) as traditional commercial vehicle fleet management systems, Vantage TAG has created patent pending solutions to adapt it to the very specific requirements of the golf environment. Compared to mainstream fleet tracking products, Vantage TAG collects 10 to 50 times more data points per MB (megabyte) of cellular data due to its proprietary data collection and compression algorithms. Also, the relative positioning accuracy is improved by almost one order of magnitude by the use of application-specific geo-data validation and correction methods.
21
Vantage TAG's proprietary methods make it possible to offer a solution suitable for use on golf courses at a price low enough to be affordable in the industry. Every system component incorporates state-of-the-art technology (server, mobile trackers, display). In developing its products vantage TAG Systems has adopted an application-oriented approach placing the most emphasis (and research & development) on server and end-user software by taking advantage of the commodity level reached by mainstream technologies such as Global Positioning (GPS) and M2M (Machine to Machine) Cellular Data in the wider context of Commercial Fleet Management.
Vantage TAG leveraged the existence of an abundance of very cost-effective telematics solutions by selecting an "off-the-shelf" hardware platform that meets all the main performance and environmental requirements for operation in the harsh, outdoor golf course environment. While removing all risk and cost associated with developing a proprietary hardware platform, Vantage TAG has maintained the unique nature of its hardware solution by developing a set of proprietary adapters and interfaces specifically for the golf application.
Vantage TAG has secured an exclusive supply agreement with the third-party hardware manufacturers for the vertical of golf industry. Additionally, Vantage TAG owns the design of all proprietary adapters and interfaces. This removes the risk of a potential competitor utilizing the same hardware platform. Competitors could attempt to reverse engineer or copycat the TAG technology and equipment. This risk factor is mitigated by the fact that our product does not rely on a particular technology or hardware platform to be successful but on a very specific vertical software application that is far more difficult to copy (and respectively easier to protect).
The application software contains patent features implemented in every core
component of the system. The TAG device runs DSG proprietary firmware
incorporating unique data collection and compression algorithms. The web server
software which powers the end-user application is also proprietary and
incorporates the industry knowledge accumulated through the over 70 years of
collective experience of the
This approach has given the product line a high level of endurance against technology obsolescence. At any point in time, if a hardware component is discontinued or a better/less expensive hardware platform becomes available, the software application can be easily adapted to operate on the new platform or with the new component. The company benefits from the constant increase of performance and cost reduction of mainstream hardware technology without any additional cost.
The web-based Software-as-a-Service (SaaS) model used by the Vantage TAG System is optimal for low operating and support costs and rapid-cycle release for software updates. It is also a major factor in eliminating or substantially reducing the need for any end-user premises equipment. Customers have access to the service through any internet connected computer or mobile device, there is no need for a local wireless network on the facility and installation time and cost are minimal.
Vantage TAG is positioned to take advantage of mainstream technology and utilize "best of breed" hardware platforms to create new generations of products. Our software is designed to be "portable" to future new platforms with better GPS and wireless technology in order to maintain the Company competitive edge.
All new product development effort of Vantage TAG is following the same model: select the best of breed third-party hardware platform, design and produce custom proprietary accessories while focusing the bulk of the development efforts on vertical software application to address a very specific set of end-customer needs.
The latest addition to the TAG family of products, the TAG INFINITY is a perfect example of this development philosophy in action: the main component is a last-generation Android tablet PC wrapped in a custom designed outdoor enclosure containing the power supply and interface components required for the golf environment. The software application is taking advantage of all the advanced high-resolution graphics, touch user interface and computing power of the Android OS delivering a vastly superior user experience compared to competitive systems. The time to market for this product was 30% of how long it took to develop and launch this type of products in the past.
The TAG Control Unit
The company's flagship product is the TAG Control unit. The TAG can operate as a "stand alone" unit or with one of two displays; the INFINITY 7" alphanumeric display or the INFINITY high definition "touch activated" screen. The TAG is GPS enabled and communicates with the TAG software using cellular GSM networks. Utilizing the cellular networks rather than erecting a local Wi-Fi network assures carrier grade uptime, and vehicle tracking "off- property". GSM is the de facto global standard for mobile communications.
22
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.
[[Image Removed]]
The operator can use the geo-fencing capabilities to create "zones" on the property where they can control the vehicles behavior such as shutting down a vehicle that is entering a sensitive or dangerous area. The TAG System also monitors the strength of the vehicle's battery helping to prevent sending out vehicles undercharged batteries which can be an inconvenience for the course and negatively impact the golfer experience.
Features and Benefits:
? Internal battery utilizing
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 23 INFINITY 7" Display
The INFINITY 7" is paired with the TAG Control unit as DSG's entry level display system for operators who desire to provide basic hole distance information and messaging to the golf customer. The INFINITY 7" is a very cost-effective solution for operators who desire to give their customers GPS services with the benefits of a Fleet Management back end. The INFINITY 7" can be mounted on the steering column or the dash depending on the customer's preference.
[[Image Removed]]
VTS's entry level alphanumeric golf information display
Features and Benefits: ? Hole information display
? Yardage displays for front, middle, back locations of the pin
? Messaging capabilities - to individual carts or fleet broadcast
? Zone violation warnings
? Pace of Play notifications
? Smart battery technology to prevent power drain
? Versatile mounting option 24 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
[[Image Removed]]
The industry leading Infinity XL 12" HD - the most sophisticated display on the market.
Features and Benefits:
? Integrated
? 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
25
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
[[Image Removed]]
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 (
[[Image Removed]]
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
26 [[Image Removed]]
Previous 'One to One' model vs the new R3 model 'Many to One'
[[Image Removed]] 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
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
27 [[Image Removed]]
The TAG Turf provides detailed trail history and cutting patterns
Revenue Model
DSG derives revenue from four different sources.
Systems Sales Revenue, which consists of the sales price paid by those customers who purchase our TAG system hardware lease our TAG system hardware.
Monthly Service Fees are paid by all customers for the wireless data fee charges required to operate the GPS tracking on the TAG systems.
Monthly Rental Fees are paid by those customers that rent the TAG system hardware. The amount of a customer's monthly payment varies based on the type of equipment rented (a TAG, a TAG and INFINITY 7", or a TAG and INFINITY XL 12").
Programmatic Advertising Revenue is a new source of revenue that we believe has the potential to be strategic for us in the future. We are in the process of implementing and designing software to provide advertising and other media functionality on our INFINITY.
We recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is reasonably assured. In instances where final acceptance of the product is specified by the customer, revenue is deferred until all acceptance criteria have been met. We accrue for warranty costs, sales returns, and other allowances based on its historical experience.
Our revenue recognition policies are discussed in more detail under "Note 2 - Summary of Significant Accounting Policies" in the notes to our Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K.
Markets Sales and Marketing Plan
The market for the TAG System is the worldwide golf cart and Turf equipment
fleets. There are 40,000 golf courses around the world with
28
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
In addition, our team is dedicated to existing accounts that focus on up-selling and cross-selling additional products to our current customer base, securing renewal agreements, and providing excellent customer service. The current regions are:
?Western Canada ?Central Canada ?Eastern Canada ?Northeast USA ?Western USA ?Southeastern USA ?Midwest USA International Sales
DSG focuses on select global golf markets that offer significant volume opportunities and that value the benefits that our products deliver.
We utilize strategic distributor partnerships in each targeted region/country to
sell, install and service our products. Distributors are selected based on
market strength, market share, technical and selling capability, and overall
reputation. We believe that DSG solutions appeal to all distributors because
they are universal and fit any make or model of vehicle. We maintain and
leverage our strong relationship with Yamaha, E-Z-GO and
Currently DSG is focused on expanding in
Management Companies
Many golf facilities are managed by management companies. The portfolios of
these companies vary from a few to hundreds of golf courses. Troon®, the world's
largest player in golf course management, has over 200 courses under management.
The management companies provide everything from branding, staffing, management
systems, marketing, and procurement. DSG is currently providing products and
services to Troon,
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.
29
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
? demonstrate our products' competitive advantages; ? develop a comprehensive marketing system; and ? increase our financial resources.
However, there can be no assurance that even if we do these things, we will be able to compete effectively with the other companies in our industry.
We believe that we will be able to compete effectively in our industry because of the versatility, reliability, and relative affordability of our products when compared to those of our competitors. We will attempt to build awareness of our competitive advantages among existing and potential customers through trade shows, sales visits and demonstrations, online marketing, and positive word of mouth advertising.
However, as we are a newly established company relative to our competitors, we face the same problems as other new companies starting up in an industry, such as limited access to capital. Our competitors may be substantially larger and better funded than us, and have significantly longer histories of research, operation and development than us. In addition, they may be able to provide more competitive products than we can and generally be able to respond more quickly to new or emerging technologies and changes in legislation and regulations relating to the industry. Additionally, our competitors may devote greater resources to the development, promotion and sale of their products or services than we do. Increased competition could also result in loss of key personnel, reduced margins or loss of market share, any of which could harm our business.
Our primary competitor in the field of golf course fleet management is
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
Consequently,
30 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
The second layer of marketing is memberships in key organizations such as the
Lead Generation
One of the primary sources of lead generation is through the Company's strategic partnerships with E-Z-GO, Yamaha, and Ransomes Jacobson. These relationships provide the Company with a great deal of market intelligence. The sales forces of the partners work in tandem with the DSG sales team by passing on the leads, creating joint proposals, and distributing TAG sales material. The Company has also created co-branded materials for specific value items of interest to operators such as Pace of Play solutions. DSG sale s and marketing staff attend partner sales events to conduct training and discuss marketing strategies.
The Company is in the process of testing an internal telemarketing program in several key markets to gauge whether this particular channel warrants larger scale implementation.
Competitive Advantages Pricing
One of the "heroes" of the TAG System is providing the course operator a range of modular fleet management options that are very competitively priced. Pricing options range from the TURF, TAG, Infinity 7", and Infinity XL 12" System, giving the customer a wide range of pricing options.
Functional advantages
DSG has the distinctive advantage of being able to offer a true fleet management system, encompassing all the vehicles on the golf course, not just the golf carts. Due to the modular nature of the system, customers have now the option to configure their system's configuration to match exactly their needs and their budget.
Product advantages
DSG products are the robust, reliable, and user-friendly systems in the world. DSG is the only company currently providing systems that are waterproof with internal batteries to ensure our partners retain the full golf cart manufacturer's warranty.
Operational Plan
Our
Product
? Product procurement, lead-time management ? Inventory Control Customer Service ? Training ? Troubleshooting & Support ? Hardware Repairs 31 Installations ? Content & graphics procurement ? System configurations ? Shipping and Installation Infrastructure Management ? Communication Servers Management ? Cellular Data Carriers ? Service and administration tools Product Supply Chain
In order to maintain high product quality and control, as well as benefiting from cost savings, the Company is currently procuring all main hardware components offshore. Final assembly is locally performed in order to ensure product quality. Other main components are also procured directly from manufacturers or from local suppliers that outsource components office in order to keep the price as low as possible.
The Company is requesting the suppliers to perform a complete set of quality testing and minimum 24 hours' burn-in before the product is delivered. The local hardware assembler and components supplier offers a 12-month warranty. The main hardware components offshore supplier offers a warranty plan of 15 months from the date the product is shipped. With an extended 90 days beyond the current warranty, such repair service would be paid by the supplier except for component replacement costs, which would be paid by DSG.
Another important activity related to the management of the product supply chain is working closely with the suppliers and ensuring that we have alternate sources for the main components and identify well in advance any components that may go "end-of-life" and find suitable replacements before product shortages may occur.
Inventory Control
The Company has implemented strict inventory management procedures that govern
the inbound flow of products from suppliers, the outgoing flow to customers as
well as the internal movement of inventory between warehouses (
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
32
The Company is handling Customer Service directly in
For the management of the customer service activities, the Company is utilizing SalesForce.com CRM system which allows creating, updating, closing and escalation of service cases, including the issuance of RMA (Return Material Authorization) numbers for defective equipment. Using SalesForce.com also allows generation of management reports for service issues, customer satisfaction, and equipment failures in order to quickly identify trends, problem accounts or systemic issues.
In addition, DSG began offering the DSG Par 72 Service & Support Plan to guarantee service and support to client courses in the golf business, during fiscal 2016. This program for client courses which guarantees service and support programs within 24 hours of a problem arising.
Product Development and Engineering
The Company employs a team of software engineers in house to develop and maintain the main components of the server software and firmware. All product development is derived from business needs assessment and customer requests. The Product Manager is reviewing periodically the list of feature requests with the Sales, establishes priorities and updates the Product Roadmap. The software engineers are also responsible for developing specialized tools and systems utilized increase efficiency in the operation of the Company. These projects include functionality such as: automated system monitoring, automatic service alerts, improved remote troubleshooting tools, cellular data monitoring and reporting. All these tools are critical in future ability to support more customers with less resources, streamline support, and improve internal efficiency.
All hardware development (electronics and mechanical) is generally outsourced, however small projects like mounting solutions or cabling are handled in house.
Vantage TAG Golf Carts PACER Single Rider Golf Cart
In 2021, after rigorous testing and consultation with industry leaders and
partners, DSG has introduced the PACER Single Rider Golf Cart. The PACER
furthers Vantage TAG's mandate to optimize the game for players and operators
alike, increasing pace of play, comfort, accessibility, and performance. The
PACER can complete up to four rounds of golf on a single charge, is factory
equipped with the
[[Image Removed]] 33
The Vantage TAG PACER Golf Cart
In 2020, DSG/Vantage Tag was working with manufacturers in
100E Golf Cart
Most recently, Vantage TAG has also introduced the premium 100E Golf Cart, built
for serious and casual riders seeking a luxury experience. Available for sale or
lease, the 100E combines real world range, performance, and safety into a
premium Low Speed Vehicle that only Vantage Tag can offer. Our first low speed,
street legal vehicle, the 100E achieves a 90 mile range per charge, is
[[Image Removed]] The Vantage 100E Golf Cart.
In 2020, DSG/Vantage Tag was working with manufacturers in
IMPERIUM MOTOR COMPANY®-MAKING GREEN TRANSPORTATION AVAILABLE TO EVERYONE
In 2019,
34
On
Pursuant to the Agreement, the Company was to place an initial order of 17
sample vehicles by
On
On
On
Effective
Effective
35
Imperium EV Passenger Vehicles
[[Image Removed]] 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 [[Image Removed]] IMPERIUM Terra-e by ZXAUTO in development ? SEATING for five passengers ? MOTOR 135 kW max power ? SPEED up to 145 km/h ? RANGE up to 322 to 435 km estimate ? BATTERY 53.84 or 75.22 kWh Li-ion ? EQUIPPED with Automatic Transmission, Air Conditioning, Heater, Power Windows, Power Door Locks, Rear Camera, Push Button Start, Alloy Wheels, Am-Fm USB/SD Stereo and more [[Image Removed]] IMPERIUM W Coupe ? SEATING for four andUnibody Construction ? MOTOR 4.5 kW or optional 7.5 kW Brushless DC Motor available ? SPEED of 40 km/h for LSV model or 75 km/h for mid speed model ? RANGE of up to 120km on Lead Acid Battery Pack or up to 150km with optional Lithium Battery Pack ? BATTERY 72-volt 720Ah Battery Power with Lead Acid or Optional Lithium Battery Pack available ? EQUIPPED with Automatic Transmission, Air Conditioning, Heater, Power Windows, Power Door Locks, Rear Camera, Push Button Start, Alloy Wheels, Am-Fm USB/SD Stereo and more 36 [[Image Removed]] IMPERIUM Maxi "SUV" Style ? SEATING for four withSteel Safety Cell Construction ? MOTOR 4.5 kW or optional 7.5 kW Brushless DC Motor available ? SPEED up to 40 km/h for LSV model or 60 km/h for mid speed model ? RANGE up to 120 km on Lead Acid Battery Pack or up to 150 km with optional Lithium Battery Pack ? BATTERY 72-volt 720 Ah with Lead Acid or Optional Lithium Battery Pack available ? EQUIPPED with Automatic Transmission, Alloy Wheels, Air Conditioning, Heater, Power Windows, Power Door Locks, Rear Camera, Push Button Start, Am-Fm USB/SD Stereo,Rear Mounted Spare Tire and more [[Image Removed]] IMPERIUM Maxi Sport Sedan ? SEATING for four withSteel Safety Cell Construction ? MOTOR 4.5 kW or optional 7.5 kW Brushless DC Motor available ? SPEED up to 40 km/h for LSV model or 60 km/h for mid speed model ? RANGE up to 120 km on Lead Acid Battery Pack or up to 150 km with optional Lithium Battery Pack ? BATTERY 72-volt 720 Ah with Lead Acid or Optional Lithium Battery Pack available ? EQUIPPED with Automatic Transmission, Alloy Wheels, Air Conditioning, Heater, Power Windows, Power Door Locks, Rear Camera, Push Button Start, Am-Fm USB/SD Stereo,Rear Mounted Spare Tire and more [[Image Removed]] IMPERIUMEuro Coupe ? SEATING for four with Steel Safety Cell Construction ? MOTOR 4.5 kW to 7.5 kW Brushless DC ? SPEED of up to 45 km/h or up to 55 km/h with optional Performance Package 37 ? RANGE up to 120 km on a single charge ? BATTERY 60-volt 600 Ah Maintenance Free Lead Acid or Lithium Battery Pack with Optional Performance Package ? EQUIPPED with Automatic Transmission, Alloy Wheels, Air Conditioning, Heater, Power Windows, Power Door Locks, Rear Camera, Push Button Start, Rear Hatch Am-Fm USB/SD Stereo and more [[Image Removed]] IMPERIUM Urbee 4S ? SEATING for four withSteel Safety Cell Construction ? MOTOR 4.0 kW Brushless DC ? SPEED up to 40 km/h ? RANGE up to 120 km on a single charge ? BATTERY 60-volt 600 Ah Maintenance Free Lead Acid ? EQUIPPED with Alloy Wheels, Sunroof, Rear Locking Trunk Heater, Power Windows,Optional Air Conditioning , Alloy Wheels, Am-Fm USB/SD Stereo and more [[Image Removed]] IMPERIUM Urbee 2S ? SEATING for two withSteel Safety Cell Construction ? MOTOR 2.8 kW or optional 4.0 kW Brushless DC ? SPEED up to 55 km/h ? RANGE up to 140 km on a single charge ? BATTERY 60-volt 600 Ah Maintenance Free Lead Acid ? EQUIPPED with Sunroof, Lockable Rear Trunk, Heater, Power Windows,Optional Air Conditioning , Alloy Wheels, Am-Fm USB/SD Stereo and more [[Image Removed]] IMPERIUM Urbee Cargo Van ? SEATING for two withSteel Safety Cell Construction ? MOTOR 4.5 kW Brushless DC Motor Standard ? SPEED up to 45 km/h ? RANGE up to 120 km on a single charge ? BATTERY 60-volt 600 Ah Maintenance Free Lead Acid ? EQUIPPED with Large All Steel LockingCargo Box with Dual Doors, Heater, Power Windows,Optional Air Conditioning , Alloy Wheels, Am-Fm USB/SD Stereo and more 38 [[Image Removed]] IMPERIUM Five Star Van ? SEATING for two or five Passengers for Cargo Van ? MOTOR up to 18 kW and 320 volt rated ? SPEED up to 55 km/h for LSV and 100 km/h for Mid Speed Model ? RANGE up to 150 km for Lead Acid Battery Pack or up to 300 km with optional Lithium Battery Pack ? BATTERY Quick Change Swappable Battery Packs with level one, two and optional level 3 DC Fast Charging ? EQUIPPED withDual Air Conditioning , Heater, Power Windows, Power Door Locks, Am-Fm USB/SD Stereo and more [[Image Removed]] IMPERIUM T-Truck ? READY for the road or use inside a warehouse with no tailpipe emissions ?CARGO BED with fold down tailgate ? PERSONAL transportation or commercial ready ? MOTOR 2.0 kW Permanent Magnet DC ? ADJUSTABLE SPEED up to 55 kp/h ? BATTERY Maintenance Free Lead Acid or optional Lithium ? EQUIPPED with Alloy Wheels and Radial Tires, Full Lighting, Turn Signals, Windshield Wiper,Motorcycle Style Front Controls and more [[Image Removed]] IMPERIUM T-Van ? READY for the road or use inside a warehouse with no tailpipe emissions ? STEELVAN BOX with HD locking dual doors ? PERSONAL transportation or commercial use ? MOTOR 2.0 kW Permanent Magnet DC ? ADJUSTABLE SPEED up to 55 kp/h ? BATTERY Maintenance Free Lead Acid or optional Lithium ? EQUIPPED with Alloy Wheels and Radial Tires, Full Lighting, Turn Signals, Windshield Wiper,Motorcycle Style Front Controls and more 39 [[Image Removed]] IMPERIUM T01 ? SEATING for three passengers or Taxi open style model ? MOTOR 1.0 kW Permanent Magnet DC with optional 1.5 kW Motor Available ? SPEED up to 40 km/h ? RANGE up to 80 km ? BATTERY 60V 225 Ah Maintenance Free Lead Acid or Optional Lithium Ion Battery. ? EQUIPPED withAuto Trans , Stereo, Heater, Alloy Wheels, Full or Half Doors, DOT Lighting, Turn Signals and more [[Image Removed]] IMPERIUM e-Rickshaw Extended Deluxe ? SEATING for five ? MOTOR 1.5kW or optional 2.0kW Permanent Magnet Motor ? SPEED 32 km/h ? RANGE 60 km or 80 km with optional Battery ? BATTERY 45Ah or 60Ah Optional Colloid Battery Maintenance Free ? E-TAXI style with side seating, roof rack, stereo, alloy wheels, safety steel frame and more [[Image Removed]] Imp-Moto Product Lineup ? Full Lineup of Electric Scooters, ATVs, UTVs and Motorbikes ? Lithium Battery power available on most models ? Off-Road or on road models ? Low Maintenance EV Units ? Units for most every purpose including specialized delivery models and ride share Scooters with quick change battery packs 40
Imperium's
Imperium has exclusive distribution rights in
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,
Skywell owns
Skywell has granted to the Company the exclusive right to distribute Skywell's
electric passenger cars, trucks (including but not limited to the ET5 sport
utility vehicle), buses and spare parts in
Imperium Motor Company Experience Center
Our Imperium Electric Vehicle Northern California Experience Center is located
in
The Experience Center will feature the various models of new Electric Cars, Trucks, Vans, UTVs, ATVs and Scooters arriving soon from the manufacturer. The new building will not only display our new selection of Electric Vehicles but will also host the center for Dealer training and Parts and Service support.
Imperium Distribution Network
We are currently marketing and offering direct sales of our electric vehicles at
our Imperium Motor Company Experience Center. However, it is our objective to
establish a network of experienced, authorized automotive dealers across
41
Electric Vehicle Market Overview
United States
The number of electric vehicles (EVs) on
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
Mexico
EV sales in
Companies are also increasing their activity. BYD Co. now sells electric buses
across the region and Tesla Inc. recently launched its best-selling Model 3 in
Caribbean
While most
The case for EVs is strong in
Competition in the EV Market
The EV market is highly competitive and evolving rapidly, with new manufacturers and distributors consistently entering the industry to satisfy actual and expected growth in the demand for competitively priced vehicles. As a result, we expect that we will experience significant competition from new and established manufacturers, marketers and distributors. These include niche manufacturers of specialty electric vehicles, and large established manufacturers of automobiles. These, including manufacturers of EVs such as the Tesla Model S, the Chevrolet Volt and the Nissan Leaf.
Most of our current and potential competitors have significantly greater financial, technical, manufacturing, marketing and other resources than we do and may be able to devote greater resources to the design, development, manufacturing, distribution, promotion, sale and support of their products. Virtually all of our competitors have more extensive customer bases and broader customer and industry relationships than we do. In addition, almost all of these companies have longer operating histories and greater name recognition than we do. Our competitors may be in a stronger position to respond quickly to new technologies and may be able to design, develop, market and sell their products more effectively.
Other Recent Developments
On
On
42
On
On
In connection with the Offering, the Company has applied to list its common
stock and warrants on the Nasdaq Capital Market under the symbols "DSGT" and
"DSGTW". No assurance can be given that the Company's application will be
approved or that the trading prices of its common stock on the OTCQB market will
be indicative of the prices of its common stock if its common stock were traded
on the Nasdaq Capital Market. If the listing application is not approved by the
On
In the event of a default, the note is convertible at the price that is equal to a 40% discount to the lowest trading price of the Company's common shares during the 30 day trading period prior to the conversion date.
On
During the three months ended
Material Contracts
On
On
On
On
On
On
43
On
Description of Property
Our principal executive office is located at
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
Patents DSG owns twoU.S. patents:
? US Patent No. 8,836,490 for a "Vehicle Management" was issued
2014 and expires
? US Patent No. 9,280,902 for a "Facilities Management" was issued
and expires
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 names, product names,
and associated logos, including "DSG TAG", "TAG Golf", "ECO TAG", "TAG Text",
"TAG Touch", "TAG", "TAG Commercial", "TAG Military", "Imperium", and "
44 Employees
As of the date of this quarterly report we have thirty full-time employees 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.
Government Regulation
As a vehicle importer and distributor, we are required to ensure that all
vehicles meet applicable safety and environmental standards. In
In
Automotive dealers, including us and the members of our dealership network, are
also regulated by, among other agencies, the
In addition to federal laws, motor vehicle dealers are subject to rigorous state laws and regulations, licensed in every state, and bonded in virtually in every state. Dealers are subject to state consumer protection statutes, enforced by 50 state consumer protection agencies and state attorneys general.
In addition to regulations applicable to businesses in general, we may also be
subject to direct regulation by governmental agencies, including the
Components of Our Results of Operations
Revenue
We derive revenue from four different sources, as follows:
? Systems sales revenue, which consists of the sales price paid by those customers who purchase or lease our TAG system hardware. ? Monthly service fees are paid by all customers for the wireless data fee charges required to operate the GPS tracking on the TAG systems. ? Monthly rental fees are paid by those customers that rent the TAG system hardware. The amount of a customer's monthly payment varies based on the type of equipment rented (a TAG, a TAG and TEXT, or a TAG and INFINITY). ? 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. ? Electronic fleet sales revenue is a new source of revenue which consists primarily of wholesale distribution sales of our electronic fleet including vehicles, e-bikes and e-scooters. 45
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 Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.
Cost of Revenue
Our cost of revenue consists primarily of hardware purchases, wireless data fees, mapping, installation costs, freight expenses and inventory adjustments.
? Hardware purchases. Our equipment purchases consist primarily of TAG system control units, TEXT display, and 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. ? 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. ? Electronic fleet purchases. Our electronic fleet purchases consists of the landed cost of electronic vehicles, e-bikes and e-scooters which includes the cost of the unit, and any relevant freight and import fees. ? 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, labor costs for technical support staff, and other associated overhead. Warranty costs are expensed as they are incurred. 46 ? 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.
Results of Operations
The following table summarizes key items of comparison and their related
increase (decrease) for the three months ended
For the Three Months Ended Increase 31-Mar-22 31-Mar-21 (Decrease) ($) ($) (%) Revenues 744,251 387,106 92.3 Cost of revenue 486,957 130,692 272.6 Gross profit 257,294 256,414 0.3 Operating expenses: Compensation expense 455,954 1,263,384 (63.9 ) General and administrative expense 678,489 401,543 69.0 Bad debt expense 12,482 4,580 172.5 Depreciation and amortization expense 3,137 5,123 (38.8 ) Total operating expenses 1,150,062 1,674,630 (31.3 ) Loss from operations (892,768 ) (1,418,216 ) (37.0 ) Other income (expense) Foreign currency exchange (28,433 ) (14,826 ) 91.8 Other income - 16,645 (100.0 ) Redemption premium (3,062 ) - - Gain (Loss) on disposal 3,960 - - Gain (Loss) on extinguishment of debt 10,240 76,316 (86.6 ) Finance costs (556,612 ) (11,490 ) 4744.3 Total other expense (573,907 ) 66,645 (961.1 ) Net loss (1,466,675 ) (1,351,571 ) 8.5
As of
47
Comparison of the three months ended
Revenue For the Three Months Ended March 31 % 2022 2021 Change Revenue$ 744,251 $ 387,106 92.3
Revenue increased by
Sales increased for the three months ended, year over year, as a result of the
Company's new licensed Shelby Golf Cart product release, in addition to GPS
Infinity sales. 80% or approximately
Cost of Revenue For the Three Months Ended March 31, % 2022 2021 Change Cost of revenue$ 486,957 $ 130,692 272.6
Cost of revenue increased by
For the Three Months Ended March 31, March 31, % 2022 2021 Difference Difference Cost of goods$ 453,641 $ 109,920 $ 343,721 312.7 Wireless fees 30,417 18,720 11,697 62.5 Mapping & Freight Costs 2,899 2,052 847 41.3$ 486,957 $ 130,692 $ 356,265 272.6
Cost of sales increased by 272.6% for the three months ended
48 Compensation Expense For the Three months ended March 31, % 2022 2021 Change Compensation expense$ 455,954 $ 1,263,384 (63.9 )
Compensation expense decreased by
General and Administration Expense
General & administration expense increased by
For the Three Months Ended March 31, March 31 % 2022 2021 Difference Difference Accounting & legal$ 24,261 $ 54,548 $ (29,928 ) (54.9 ) Marketing & advertising 85,135 8,221 76,914 935.6 Subcontractor & commissions 139,967 168,099 (28,132 ) (16.7 ) Hardware 16,059 8,774 7,285 83.0 Amortization on ROU asset 969 - 969 - Office expense, rent, software, bank & credit card charges, telephone & meals 411,738 161,901 249,838 154.3$ 678,489 $ 401,543 $ 276,946 69.0
The overall increase in general and admin expenses was primarily due to
increases in office expense, rent, software, bank & credit card charges,
telephone & meals, and marketing & advertising expense. The increased of these
general and administration expenses are related to the company's participation
on the annual PGA show, to introduce our Vantage golf cart line of products,
Licensed Shelby golf cart and new 10' Infinity. Due to COVID, by the three
months ended
49 Foreign Currency Exchange For the Three Months Ended March 31, % 2022 2021 Change
Foreign currency exchange loss
For the three months ended
Gain (Loss) on extinguishment of debt
For the Three Months Ended March 31, % 2022 2021 Change
Gain (Loss) on extinguishment of debt
The Company recorded a gain of
Finance Costs For the Three Months Ended March 31, % 2022 2021 Change Finance costs$ (556,612 ) $ (11,490 ) 4744.3
Finance costs increased by
50 Net Loss For the Three Months ended March 31, % 2022 2021 Change Net loss$ (1,466,675 ) $ (1,351,571 ) 8.5
As a result of the above factors, net loss increased by
Liquidity and Capital Resources
From our incorporation on
We had cash in the amount of
Liquidity and Financial Condition
Our financial position as of
Working Capital
March 31, 2022 December 31, 2021 Current assets$ 1,909,079 $ 1,700,226 Current liabilities$ 5,407,171 $ 4,014,389 Working capital$ (3,498,092 ) $ (2,314,163 ) Cash Flow Analysis Our cash flows from operating, investing, and financing activities are summarized as follows: March 31, 2022 2021
Net cash used in by operating activities
8,799 (10,573 )
Net cash provided by financing activities 729,589 1,306,111 Effect of exchange rate changes on cash 22,143
16,076 Net decrease in cash 10,050 (98,208 ) Cash at beginning of period 275,383 1,372,016 Cash at end of period$ 285,433 $ 1,273,808
During the three months ended
The Company purchased equipment for
51
Net Cash Provided by Financing Activities.
Net cash from financing activities during the three months ended
Outstanding Indebtedness
Our current indebtedness as of
? 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$9,487 relating to an outstanding penalty; ? Unsecured, promissory note with carrying value of$1,926,263 and outstanding principal amount of$1,897,500 , bearing interest at 9% per annum and 24% per annum in default, maturingJune 20, 2022 . If not repaid byDecember 12, 2021 , an additional$100,000 of guaranteed interest will be added onDecember 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 Company's common shares during the 30 day trading period prior to the conversion date; ? Unsecured loan payable with an outstanding principal amount of$31,490 (CAD$40,000 ). The loan is non-interest bearing and eligible forCAD$10,000 forgiveness if repaid byDecember 31, 2022 . If not repaid byDecember 31, 2022 , the loan bears interest at 5% per annum and is due onDecember 31, 2025 ; ? Unsecured loan payable with an outstanding principal amount of$31,490 (CAD$40,000 ). The loan is non-interest bearing and eligible forCAD$10,000 forgiveness if repaid byDecember 31, 2022 . If not repaid byDecember 31, 2022 , the loan bears interest at 5% per annum and is due onDecember 31, 2025 ; ? Unsecured loan payable with an outstanding principal amount of$30,065 . The loan bears interest at 1% per annum and is due onMay 21, 2022 with payments deferred for the first six months of the term; ? Secured loan payable with an outstanding principal amount of$150,000 . The loan bears interest at 3.75% per annum and is due onJune 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. ? Series F Preferred Stock payments, two payments of$250,000 received on each ofFebruary 28, 2022 andMarch 31, 2022 . Until such time that the 5000 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 atMarch 31, 2022 , there was a balance of$482,651 outstanding.
Related Party Transactions
During the three months ended
OnMarch 4, 2021 , the Company issued an aggregate of 16 shares of Series B convertible preferred shares to the Company's board of directors for past services. These preferred shares were valued at$849,600 based on the fair value of the underlying common stock. The issuance is recorded under compensation expense. Director # of Preferred SharesStephen Johnston 4 James B Singerling 4Robert Silzer 4Carol Cookerly 2Michael Leemhuis 2 Total 16
The Series B preferred stock convertible on a 1 for 100,000 basis into common shares.
52 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 endingMarch 31, 2022 General and administrative $ 2,404,000 Research and development 2,043,600 Marketing 755,000 Sales and dealer network 540,000 Payroll overhead 1,259,000 Service and maintenance 785,900 Assembly facility 1,750,000 Inventory 10,700,000 Total $ 20,237,500
As noted earlier, during the three months ended
In order to improve our liquidity, we also plan to pursue additional equity financing from private investors and 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. 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.
On
In connection with the Offering, we have applied to list its common stock and
warrants on the Nasdaq Capital Market under the symbols "DSGT" and "DSGTW". No
assurance can be given that our application will be approved or that the trading
prices of its common stock on the OTCQB market will be indicative of the prices
of its common stock if its common stock were traded on the Nasdaq Capital
Market. If the listing application is not approved by the
Off-Balance Sheet Transactions
We do not have any off-balance sheet arrangements.
Critical Accounting Policies and Estimates
We prepare our consolidated financial statements in accordance with
53
We believe that the assumptions and estimates associated with revenue recognition, foreign currency and foreign currency transactions and comprehensive loss have the greatest potential impact on our consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates. For further information on all of our significant accounting policies, see the notes to our condensed consolidated financial statements.
© Edgar Online, source