ITEM 5.06 CHANGE IN SHELL COMPANY STATUS
As a result of the consummation of the Share Exchange described in Item 2.01 of this Current Report on Form 8-K, we believe that we are no longer a “shell company”, as that term is defined in Rule 405 under the Securities Act and Rule 12b-2 under the Exchange Act.
FORM 10 DISCLOSURE
As disclosed elsewhere in this report, on May 6, 2015, we acquired DSG TAG as a majority owned subsidiary in a reverse acquisition transaction. Item 2.01(f) of Form 8-K states that if the registrant was a shell company, as we were immediately before the reverse acquisition transaction disclosed under Item 2.01, then the registrant must disclose the information that would be required if the registrant were filing a general form for registration of securities on Form 10.
Accordingly, we are providing below the information that would be included in a Form 10 if we were to file a Form 10. Please note that the information provided below relates to the combined enterprises after the acquisition of DSG TAG that information relating to periods prior to the date of the reverse acquisition only relate to DSG Global (formerly Boreal Production Inc.), unless otherwise specifically indicated.
DESCRIPTION OF BUSINESS
Our Corporate History and Background
Prior to the Closing of the Share Exchange Agreement
Boreal Productions Inc. (the Company) was incorporated under the laws of the State of Nevada on September 24, 2007. Andrea Fehsenfeld was then appointed sole officer and director. The Company was formed to option feature films and TV projects and then package them to sell at a profit to various studios and production companies.
At that time the board of directors voted to seek capital and begin development of our business plan. We received our initial funding of $9,000 through the sale of common stock to Ms. Fehsenfeld who purchased 3,000,000 shares of common stock at $0.003 per share and $45,000 from the sale of 3,000,000 shares of common stock issued to 30 un-affiliated investors at $0.015 per share. On June 11, 2008, we effected a five for one forward stock split of our authorized and issued and outstanding common stock. As a result, our authorized capital increased from 75,000,000 to 375,000,000 shares of common stock and our outstanding share capital increased from 6,000,000 shares of common stock to 30,000,000 shares of common stock.
We have not achieved revenues and have accrued a Net Loss of $118,663since inception through December 31, 2014. We have been issued a going concern opinion by our auditors and rely upon the sale of our securities to fund operations. To date we have been unable to raise sufficient capital to finance the production of any film or television production and, consequently, our management has sought alternative strategies, such as business combinations or acquisitions, to create value for our shareholders.
On April 13, 2015, we entered into a share exchange agreement with DSG TAG and the shareholders of DSG TAG who become parties to the share exchange 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 shares of DSG TAG’s common stock in exchange for the issuance by our company of up to 20,000,000 shares of our common stock to the shareholders of DSG TAG on the basis of one of our common shares for 5.4935 common shares of DSG TAG.
Previously, in anticipation of the share exchange agreement with DSG TAG, we undertook to change our name and effect a reverse stock split of our authorized and issued common stock. Accordingly, on January 19, 2015, our board of directors approved an agreement and plan of merger to merge with our wholly-owned subsidiary DSG Global Inc., a Nevada corporation, to effect a name change from Boreal Productions Inc. to DSG Global Inc. Our company remains the surviving company. DSG Global Inc. was formed solely for the change of name.
Also on January 19, 2015, our company's board of directors approved a resolution to effect a reverse stock split of our authorized and issued and outstanding shares of common stock on a three (3) old for one (1) new basis. Upon effect of the reverse split, our authorized capital will decrease from 375,000,000 shares of common stock to 125,000,000 shares of common stock and correspondingly, our issued and outstanding shares of common stock will decrease from 30,000,000 to 10,000,000 shares of common stock, all with a par value of $0.001.
Articles of Merger to effect the merger and change of name and a Certificate of Change to effect the reverse stock split were filed with the Nevada Secretary of State on January 22, 2015, with an effective date of February 2, 2015. The name change and forward split were reviewed by the Financial Industry Regulatory Authority (FINRA) were approved for filing with an effective date of February 23, 2015.
The name change became effective with the Over-the-Counter Bulletin Board and OTC Markets quotation system at the opening of trading on February 23, 2015 under the symbol "BRPOD". Effective March 19, 2015 our stock symbol changed to "DSGT". Our new CUSIP number following the symbol change is 23340C104.
On May 6, 2015, we completed the acquisition of 75% of the issued and outstanding common shares of DSG TAG (82,435,748 shares) as contemplated by the share exchange agreement by issuing 15,185,875 shares of our common stock to 12 shareholders of DSG TAG Systems who became parties to the agreement. As a result of our acquisition on May 6, 2015 of the common shares of DSG TAG, we have voting and dispositive control over 75% of the issued and outstanding securities of DSG TAG, making it our majority-owned subsidiary. We may continue to acquire additional outstanding common shares of DSG TAG pursuant to the April 13, 2015 share exchange agreement as additional shareholders of DSG TAG become parties to the agreement and tender their shares for exchange.
Our principal executive office is located at 214 - 5455 152nd Street, Surrey, BC, V3S 5A5 Canada. The telephone number at our principal executive office is 1 (877) 589 - 8806. We also have an international sales office at Avondale House, 262 Uxbridge Road, Pinner, Middlesex, HA5 4HS, United Kingdom.
Business Subsequent to the Closing of the Share Exchange Agreement
Subsequent to the closing of the share exchange agreement with DSG Tag Systems, Inc. (“DSG TAG”), we have adopted the business and operations of DSG TAG.
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.
DSG TAG 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. Its principal activities are the sale and rental of GPS tracking devices and interfaces for golf vehicles, and related support services. The company was 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. The company has developed the TAG suite of products that represents a major breakthrough as the first completely modular fleet management solution for the golf industry. The Executive Team has over 50 years' experience in the design and manufacture of wireless, GPS, and fleet tracking solutions. The TAG suite of products is currently sold and installed around the world in golf facilities and commercial applications through a network of established distributors and partnerships with some of the most notable brands in fleet and equipment manufacture.
The company specializes in the vehicle fleet management industry. DSG stands for “Digital Security Guard” which is the company’s primary value statement giving fleet operator’s new capabilities to track and control their vehicles. The company has developed a proprietary combination of hardware and software that is marketed around the world as the TAG System. The company has 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. DSG is now a leader in the category of Fleet Management in the golf industry and was awarded “Best Technology of the Year” by Boardroom magazine the publication of the National Golf Course Owners Association in 2010. To date the TAG is installed on over 8,000 vehicles and the company has monitored over 6,000,000 rounds.
The TAG system fills a void in the marketplace by offering a modular structure which allows the customer to customize their system depending on desired functionality and budget constraints. In addition to the core TAG vehicle control functionality which can operate independently, DSG has two golfer information display systems; the alphanumeric TEXT and high definition TOUCH providing the operator two options which is unique in the industry.
The market for the TAG System is the 40,000 golf operations worldwide, while the golf industry is still the primary sales and marketing focus, the company has completed several successful pilots of the TAG in other vertical markets such as agriculture, and commercial fleet deployments. With appropriate resources in place the company will implement a sales and marketing strategy expanding into these markets.
Currently the company has a direct North American sales force which comprises the most significant portion of the golf fleet market and has forged key relationships with distributors and major market players such as E-Z-GO, Yamaha and Ransomes Jacobsen to help drive sales for the North American and worldwide markets.
Emerging Growth Company
We are an Emerging Growth Company as defined in the Jumpstart Our Business Startups (JOBS) Act.
We shall continue to be deemed an emerging growth company until the earliest of
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(A) the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more;
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(B) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective registration statement under this title;
(C) the date on which such issuer has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or
(D) the date on which such issuer is deemed to be a ‘large accelerated filer’, as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto.’.
As an emerging growth company we are exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures.
Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting.
As an emerging growth company we are exempt from Section 14A and B of the Securities Exchange Act of 1934 which require the shareholder approval of executive compensation and golden parachutes.
We have elected not to opt out of the extended transition period for complying with any new or revised accounting standards pursuant to Section 107(b) of the JOBS Act.
DSG TAG Technologies and Products
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 TAG believes that it is currently the only company in the golf fleet management industry with these capabilities.
The DSG 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 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.
DSG 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 DSG 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 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, DSG TAG has maintained the unique nature of its hardware solution by developing a set of proprietary adapters and interfaces specifically for the golf application.
DSG TAG has secured an exclusive supply agreement with the third-party hardware manufacturers for the vertical of golf industry. Additionally, DSG TAG owns the design of all proprietary adapters and interfaces. This removes the risk of a potential competitor utilizing the same hardware platform. Competitors could attempt to reverse engineer or copycat the TAG technology and equipment. This risk factor is mitigated by the fact that our product does not rely on a particular technology or hardware platform to be successful but on a very specific vertical software application that is far more difficult to copy (and respectively easier to protect).
The application software contains patent features implemented in every core component of the system. The TAG device runs DSG proprietary firmware incorporating unique data collection and compression algorithms. The web server software which powers the end-user application is also proprietary and incorporates the industry knowledge accumulated through the over 70 years of collective experience of the DSG TAG team.
This approach has given the product line a high level of endurance against technology obsolescence. At any point in time, if a hardware component is discontinued or a better/less expensive hardware platform becomes available, the software application can be easily adapted to operate on the new platform or with the new component. The company benefits from the constant increase of performance and cost reduction of mainstream hardware technology without any additional cost.
The web-based Software-as-a-Service (SaaS) model used by DSG 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 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 DSG 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 TOUCH 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 TEXT alphanumeric display or the TOUCH high definition “touch activated” screen. The TAG is GPS enabled and communicates with the TAG software using cellular GSM networks. Utilizing the cellular networks rather than erecting a local Wi-Fi network assures carrier grade uptime, and vehicle tracking “off- property”. GSM is the de facto global standard for mobile communications.
The TAG unit itself is discreetly installed usually in the nose of the vehicle to give the GPS clear line of site. It is then connected to the vehicle battery and ignition. The property is then mapped using the latest satellite imagery that is graphically enhanced and loaded into the TAG System as a map.
Once installed the vehicle owner utilizes the TAG software to locate the vehicle in real time using any computer, smartphone, or tablet that has an internet connection and perform various management operations.
The operator can use the geo-fencing capabilities to create “zones” on the property where they can control the vehicles behavior such as shutting down a vehicle that is entering a sensitive or dangerous area. The TAG System also monitors the strength of the vehicle’s battery helping to prevent sending out vehicles undercharged batteries which can be an inconvenience for the course and negatively impact the golfer experience.
Features and Benefits
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Internal battery utilizing Smart Power technology which charges the battery only when the vehicle is running (gas) or being charged (electric)
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Pace of Play management and reporting which is a critical statistic for the golf operator
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Web based access on any computer, smartphone, or tablet
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Set up restricted zones to protect property, vehicles, and customers
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Real time tracking both on and off property (using Street Maps)
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Email alerts of zone activity
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Detailed usage reporting for improved maintenance and proper vehicle rotation
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Geo fencing security features
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Ability to enforce cart path rules which is key to protecting course on wet weather days
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TEXT Display
The TEXT 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 TEXT 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 TEXT can be mounted on the steering column or the dash depending on the customer’s preference.
DSG’s entry level alphanumeric golf informations display
Features and benefits
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Hole information display
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Yardage displays for front, middle, back locations of the pin
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Messaging capabilities – to individual carts or fleet broadcast
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Zone violation warnings
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Pace of Play notifications
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Smart battery technology to prevent power drain
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Versatile mounting option
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TOUCH Display
The TOUCH is a solution for operators who desire to provide a high level visual information experience to their customers. The TOUCH is a high definition “Touch” 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 TOUCH 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 Touch HD – the most sophisticated display in the market.
Features and Benefits
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Integrated Food and Beverage ordering
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Daily pin placement display
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Interactive Scorecard with email capability
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Multiple language choices
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No power drain with Smart Battery technology
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Full broadcast messaging capabilities
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Option of steering or roof mount
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Advertising Platform
A unique feature of the TOUCH 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 TOUCH 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 Touch System can also display animated GIF files or play video for added impact.
Advertising displayed in multiple formats including animated GIF and video
DSG TAG has developed proprietary “Ad Manager” software which is used to place and change the ads on the system(s) from a central NOC (Network Operations Center) in real time. The Ad Manager can deploy to a single system or multiple systems. This creates a network of screens that is also very desirable to advertisers as ad content can be deployed locally, regionally, or nationally. The advertising platform is an important part of the company’s future marketing and sales strategy.
TAG TURF
The TAG Turf was 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 has comprehensive reporting that the operator can utilize to implement programs that can increase efficiencies, reduce labor costs, and help lower idle times. Since the golf course needs to be maintained regardless of volume these cost saving measures directly impact the operator’s bottom line.
Features and Benefits
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Can be installed on any turf, utility, or service vehicle
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Work activity tracking and management
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Work breakdown and analysis per area, work group, activity type or specific vehicle
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Detailed travel (cutting patterns) history
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Detailed usage reports with mileage and hours
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The TAG Turf provides detailed trail history and cutting patterns
Revenue Model
DSG TAG derives revenue from 4 different sources. There are 3 monthly recurring revenue streams in Monthly Service Fees which are paid by all customers, Monthly Rental Fees if the customer has selected that option to acquire the system, and Advertising Revenue share which is an important strategic component of the company plan going forward. Finally, there are fees derived from outright system purchases for those customers who prefer and have the resources to make a one-time cash payment.
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. DSG has deployed and has case studies developed TAG systems in each of these categories.
North America Sales
Since the largest market is North America the company employs a direct sales team that provides full sales coverage. Current regions are;
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Georgia & the Carolina’s & Military applications
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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. While we do not select distributors solely based on their golf car affiliation, we do 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 Europe, Asia and South Africa. The company is looking to expand next into Australia and Latin America.
Management Companies
In the golf industry many facilities are managed by management companies. The portfolios of these companies vary from a few to dozens of golf courses or more. 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 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:
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demonstrate our products’ competitive advantages;
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develop a comprehensive marketing system; and
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increase our financial resources.
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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 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 Mr. Bob Silzer, the founder of DSG TAG Systems. 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 cars 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
However that limits their offering to certain models and types of Club Car vehicles.
Since the introduction of the DSG TAG product line, the golf course operators realized that they have now access to a budget-friendly fleet management tool that works not only on golf cars 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 DSG 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 DSG 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 is memberships in key organizations such as the National Golf Course Owners Association, Golf Course Superintendents Association, and Club Managers Association of America. These are very influential in the industry and have marketing channels such as publications, email blasts, and web based marketing. The company also markets directly to course operators through email, surveys direct mail programs.
Lead Generation
One of the primary sources of lead generation is through the company’s strategic partnerships with EZ-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. Refer to the table below to see how the TAG System solutions compare to the primary offering from GPSI Visage.
Functional advantages
Aside from the price differences, 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.
Strategic Initiatives
Several unique factors are now in place that has created a substantial opportunity for the company to leverage the Advertising platform to build a Digital Out Of Home (DOOH) media network specific to the golf demographic.
The capabilities of the Touch System has the greatest appeal to higher end courses and destination facilities, these facilities also attract the most desired profile of this consumer base. The Ad Management platform allows these facilities to be networked together with consistent content displayed on each screen. The ads can be static or dynamically rotated through the screens.
Management has created a strategy to leverage this configuration to rapidly deploy systems in quantities that would create instant critical mass in specific media hubs such as Los Angeles, Miami, New York etc. In order to lower the barrier to entry for the courses, the individual price of the Touch unit would be lowered from the current market favorable $50-$60 per unit per month. In exchange for this consideration the course would grant DSG the right to sell advertising on the system and receive a revenue share. To sell the ads DSG intends to partner with a major advertising agency that is well established in DOOH media sales. The company has already begun discussion with several major potential partners, however no definitive agreements have been reached.
Achieving DOOH revenue basically reduces the cost of the system to the operator by over 50%. The best analogy for this business model is the highly successful elevator advertising program where advertising is sold on the screens placed in the elevators of high end office buildings. The DSG DOOH media network has the same attributes; closed environment, desired demographic, dynamic ability to deliver and change content in real time. We believe that no other company in the Fleet Management industry has this capability.
Operational Plan
Our Operations Department’s main functions are outlined below:
Product Supply Chain Management
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Product procurement, lead-time management
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Customer Service
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Troubleshooting & Support
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Installations
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Content & graphics procurement
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Shipping and Installation
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Infrastructure Management
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Communication Servers Management
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Service and administration tools
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Product Supply Chain
In order to maintain a high product quality while benefiting from cost savings through outsourcing, the company is procuring all the hardware components from a local supplier that sources the main components offshore and performs final assembly and quality assurance locally.
Other main components are procured directly from manufacturers 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. Additionally, both vendors offer 12 months warranty for all the supplied hardware.
Another important activity related to the management of the product supply chain is working closely with the suppliers and ensuring that we have alternate sources for the main components and identify well in advance any components that may go “end-of-life” and find suitable replacements before product shortages may occur.
Inventory Control
The Company has implemented strict inventory management procedures that govern the inbound flow of products from suppliers, the outgoing flow to customers as well as the internal movement of inventory between warehouses (Canada, US and UK). There are also procedures in place to control the flow of equipment returning from customers for repairs and their replacements.
Installation
The Company is utilizing a small number of its own field engineers, geographically positioned to be in close proximity of areas with high concentrations of current and future customers. Occasionally, when new installations exceed the internal capacity, the company employs a number of external contractors, on a project by project basis. Each contractor has been trained extensively to perform product installations and the Company has created an extensive collection of Installation Manuals for all products and vehicle types.
The product was designed with ease of installation as one of its features. Additionally the installation process includes a pre-shipping configuration process that prepares each device with all the settings and graphics content (if applicable) required for the specific location it will be deployed. This makes the installation process a lot simpler and less time consuming in the field which reduces costs (accommodations, food, travel) for internal staff as well as external contractor cost (less billable time).
Another benefit of the simplified installation procedure is increased scalability in anticipation of increased number of installs in the future by reducing the skill level and training time requirements for additional contractors.
Customer Service
The company has deployed its Customer Service staff strategically so it has at least one service representative active during business hours in North America, Europe and South Africa.
The company is handling Customer Service directly in North America and UK, offering telephone and on-line support to end-customers. In other international markets, the first-line customer service is handled by local distributor’s staff while DSG is supplying training and more advanced support to the distributors.
For the management of the customer service activities, the company is utilizing SalesForce.com CRM system which allows creating, updating, closing and escalation of service cases, including the issuance of RMA (Return Material Authorization) numbers for defective equipment.
Using SalesForce.com also allows generation of management reports for service issues, customer satisfaction, and equipment failures in order to quickly identify trends, problem accounts or systemic issues.
Product Development and Engineering
The company employs a core Software Development group covering the main components of the server software and firmware. The rest of the development resources are outsourced as needed in order to maintain a low operational overhead.
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 Development group is 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 July 8, 2011 DSG TAG entered into a Distributor Agreement and Joint Development Agreement with Yamaha Golf-Car Company (“YGC”) pursuant to which YGC will act as a distribution of DSG TAG products and will co-develop with DSG TAG a new product resulting from the integration of DSG TAG’s fleet management and tracking system into YGC’s golf car products. The agreement is for a term of three years subject to an automatic 1 year renewal unless earlier terminated.
On January 19, 2012 DSG TAG entered into a Sales Commission and Co-Marketing Agreement with E-Z-GO Division of Textron Inc. whereby DSG TAG has appointed E-Z-GO as its non-exclusive sales representative for sales of DSG TAG products within the territories of North America, South America, Australia, Africa and Asia (east of Bangladesh). E-Z-GO is a leading global manufacturer of golf cars, utility vehicles and personal transportation. The terms of the agreement is five years subject to voluntary termination by either party with 6 months’ notice or termination for cause with 30 days’ notice.
On January 17, 2014 DSG TAG entered into a Lease Modification (Agreement) regarding the lease DSG TAG’s offices located at 5455-152
nd
Street, Surrey, British Columbia. Pursuant to the agreement DSG has leased the approximately 3,000 square foot space on a month to month basis at the rate of CAD$5,518,63 (Approximately USD $4,384.39) per month. DSG TAG may terminate the lease with 30 days’ notice.
On February 15, 2014 DSG TAG entered into an agreement with DSG Canadian Manufacturing Corp., a British Columbia corporation, which was hired to develop an accessory product called the “TAG Touch” for the Company. DSG TAG retains the exclusive right to manufacture and sell the TAG Touch after the development was completed. The Contractor has agreed to transfer all of the intellectual property (IP) related to the TAG Touch product to the Company in exchange for $1,231,128. The amount is to be paid by the transfer of ownership of 804 Tag Touch units to the Contractor. The Company will assist in the rental of these units and the collection of the rental fees and has agreed to provide Contractor with $22 per unit, out of the usual $50 per unit the Company charges the customer, per month, starting in October 2014. The agreement is for 48 months. At the end of the term the Company can purchase the units back by the issuance of $1,275,000 worth of its common shares to the Contractor with the number of shares calculated on the average closing value of the previous 120 days trading of DSG’s common stock. The terms of this agreement are currently being renegotiated. As of the date of this report no monthly payment amounts have been paid to the Contractor nor has title to the units been transferred.
Description of Property
On January 17, 2014 DSG TAG entered into a Lease Modification (Agreement) regarding the lease DSG TAG’s offices located at 5455-152nd Street, Surrey, British Columbia. Pursuant to the agreement DSG TAG has leased the approximately 3,000 square foot space on a month to month basis at the rate of CAD$5,518,63 (Approximately USD $4,384.39) per month. DSG TAG may terminate the lease with 30 days’ notice.
For the year ended December 31, 2014, the aggregate rental expense was $89,855. Rent expense included other amounts paid in Canada and the United Kingdom for warehouse storage and offices under month to month or as needed basis.
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 TAG has two patent applications with the US Patents Office for a “Vehicle Management” and a “Facilities Management” inventions. Patent #8836490B2 was issued November 2014.
On December 30, 2012 a corporation filed an action against DSG TAG in the United States courts claiming patent infringement. On March 8, 2013 the parties agreed to a settlement, with the Company admitting no wrong doing, in the amount of $125,000. The settlement is to be paid over an 18 month period in equal installments of $7,500 with annual interest rate of 8%. DSG TAG has accrued all liabilities related to this matter in the financial statements.
Domain Names
We have registered and own the domain name of our website www.dsgtag .com.
Copyright
We own the common law copyright in the contents of our website (
www.dsgtag.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”, “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.
Employees
As of May 6, 2015, we have 13 full-time employees and 1 part-time employee 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.
RISK FACTORS
An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below, together with all of the other information included in this report, before making an investment decision. If any of the following risks actually occurs, our business, financial condition or results of operations could suffer. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment. You should read the section entitled “Special Note Regarding Forward Looking Statements” above for a discussion of what types of statements are forward-looking statements, as well as the significance of such statements in the context of this report.
RISKS RELATED TO OUR BUSINESS
You should carefully consider the risks described below together with all of the other information included in this report before making an investment decision with regard to our securities. The statements contained in or incorporated into this current report on Form 8-K that are not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. If any of the following risks actually occur, our business, financial condition or results of operations could be harmed. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.
We have a limited operating history with significant losses and expect losses to continue for the foreseeable future.
We have yet to establish any history of profitable operations and have incurred net losses of since our inception. We have generated only nominal revenues since our inception and do not anticipate that we will generate revenues which will be sufficient to sustain our operations in the near future. Our profitability will require the successful commercialization and sales of our products. We may not be able to successfully achieve any of these requirements or ever become profitable.
There is doubt about our ability to continue as a going concern due to recurring losses from operations, accumulated deficit and insufficient cash resources to meet our business objectives, all of which means that we may not be able to continue operations.
Our independent auditors have added an explanatory paragraph to their audit opinion issued in connection with the financial statements for the years ended December 31, 2014 and 2013 with respect to their doubt about our ability to continue as a going concern. As discussed in Note 3 to our financial statements for the years ended December 31, 2014 and 2013, we have generated operating losses since inception, and our cash resources are insufficient to meet our planned business objectives, which together raises doubt about our ability to continue as a going concern.
Our inability to complete our future research and development and engineering projects in a timely manner could have a material adverse effect of our results of operations, financial condition and cash flows.
If our research and development projects are not completed in a timely fashion we could experience:
·
|
substantial additional cost to obtain a marketable product;
|
·
|
additional competition resulting from competitors in the surveillance and facial recognition market, and;
|
·
|
delay in obtaining future inflow of cash from financing or partnership activities.
|
We face intense competition, which could result in lower revenues and higher research and development expenditures and could adversely affect our results of operations.
Unless we keep pace with changing technologies, we could lose existing customers and fail to win new customers. In order to compete effectively in the fleet management systems market, we must continually design, develop and market new and enhanced technologies. Our future success will depend, in part, upon our ability to address the changing and sophisticated needs of the marketplace. Fleet management technologies have achieved widespread commercial acceptance and our strategy of expanding our fleet management technologies business could adversely affect our business operations and financial condition.
Further, we expect to derive over a significant amount of revenue from government contracts, which are often non-standard, involve competitive bidding, may be subject to cancellation with or without penalty and may produce volatility in earnings and revenue.
The market for our technologies is still developing and if the industry adopts technology standards that are different from our own our competitive position would be negatively affected.
Parts of our company’s business plan are dependent on business relationships with various parties
We expect to rely in part upon original equipment manufacturers (OEM), and distribution partners to sell and install our products, and we may be adversely affected if those parties do not actively promote their products or pursue installations that use our software. Further, if our software is not timely delivered or does not perform as promised, we could experience increased costs, lower margins, liquidated damage payment obligations and reputational harm.
We must attract and maintain key personnel or our business will fail.
Success depends on the acquisition of key personnel. We will have to compete with other companies both within and outside the electronics industry to recruit and retain competent employees. If we cannot maintain qualified employees to meet the needs of our anticipated growth, this could have a material adverse effect on our business and financial condition.
We may not be able to secure additional financing to meet our future capital needs due to changes in general economic conditions.
We anticipate requiring significant capital to fulfill our contractual obligations (as noted in our audited financial statements), continue development of our planned products to meet market evolution, and execute our business plan, generally. We may use capital more rapidly than currently anticipated and incur higher operating expenses than currently expected, and we may be required to depend on external financing to satisfy our operating and capital needs. We may need new or additional financing in the future to conduct our operations or expand our business. Any sustained weakness in the general economic conditions and/or financial markets in the United States and Europe, or globally could adversely affect our ability to raise capital on favorable terms or at all. From time to time we have relied, and may also rely in the future, on access to financial markets as a source of liquidity to satisfy working capital requirements and for general corporate purposes. We may be unable to secure debt or equity financing on terms acceptable to us, or at all, at the time when we need such funding. If we do raise funds by issuing additional equity or convertible debt securities, the ownership percentages of existing stockholders would be reduced, and the securities that we issue may have rights, preferences or privileges senior to those of the holders of our common stock or may be issued at a discount to the market price of our common stock which would result in dilution to our existing stockholders. If we raise additional funds by issuing debt, we may be subject to debt covenants, which could place limitations on our operations including our ability to declare and pay dividends. Our inability to raise additional funds on a timely basis would make it difficult for us to achieve our business objectives and would have a negative impact on our business, financial condition and results of operations.
Our business and operating results could be harmed if we fail to manage our growth or change.
Our business may experience periods of rapid change and/or growth that could place significant demands on our personnel and financial resources. To manage possible growth and change, we must continue to try to locate skilled engineers and professionals and adequate funds in a timely manner.
Our business depends on GPS technology owned and controlled by others. If we do not have continued access to GPS technology and satellites, we will be unable to deliver our services and our revenues will decrease.
Our services rely on signals from GPS satellites built and maintained by the U.S. Department of Defense. GPS satellites and their ground support systems are subject to electronic and mechanical failures and sabotage. If one or more satellites malfunction, there could be a substantial delay before they are repaired or replaced, if at all, and our services may cease and customer satisfaction would suffer.
In addition, the U.S. government could decide not to continue to operate and maintain GPS satellites over a long period of time or to charge for the use of GPS. Furthermore, because of ever-increasing commercial applications of GPS, other U.S. government agencies may become involved in the administration or the regulation of the use of GPS signals in the future. If the foregoing factors affect GPS, such as by affecting the availability and pricing of GPS technology, our business will suffer.
DSG TAG’s GPS technology depends on the use of radio frequency spectrum controlled by others.
Our GPS technology is dependent on the use of radio frequency spectrum. The assignment of spectrum is controlled by an international organization known as the International Telecommunications Union or ITU. The Federal Communications Commission or FCC is responsible for the assignment of spectrum for non-government use in the United States in accordance with ITU regulations. Any ITU or FCC reallocation of radio frequency spectrum, including frequency band segmentation or sharing of spectrum, could cause interference with the reception of GPS signals and may materially and adversely affect the utility and reliability of our products, which would, in turn, cause a material adverse effect on our operating results. In addition, emissions from mobile satellite service and other equipment operating in adjacent frequency bands or inband may materially and adversely affect the utility and reliability of our products, which could result in a material adverse effect on our operating results.
Government regulations and standards may harm our business and could increase our costs or reduce our opportunities to earn revenues.
In addition to regulations applicable to businesses in general, we may also be subject to direct regulation by governmental agencies, including the FCC and Department of Defense. A number of legislative and regulatory proposals under consideration by federal, state, provincial, local and foreign governmental organizations may lead to laws or regulations concerning various aspects of wireless communications and GPS technology. Additionally, it is uncertain how existing laws governing issues such as taxation, intellectual property, libel, user privacy and property ownership, will be applied to our services. The adoption of new laws or the application of existing laws may expose us to significant liabilities and additional operational requirements, which could decrease the demand for our services and increase our cost of doing business
.
If we are not able to adequately protect our intellectual property, then we may not be able to compete effectively and we may not be profitable.
Our commercial success may depend, in part, on obtaining and maintaining patent protection of our technologies and product as well as successfully defending third-party challenges to such technologies and products. We will be able to protect our technologies and product candidates from use by third parties only to the extent that valid and enforceable patents cover them and we have exclusive rights to use them. The ability of our licensors, collaborators and suppliers to maintain their patent rights against third-party challenges to their validity, scope or enforceability will also play an important role in determining our future.
The copyright and patent positions of software and technology related companies can be highly uncertain and involve complex legal and factual questions that include unresolved principles and issues. No consistent policy regarding the breadth of claims allowed regarding such companies’ patents has emerged to date in the United States, and the patent situation outside the United States is even more uncertain. Changes in either the patent laws or in interpretations of patent laws in the United States or other countries may diminish the value of our intellectual property. Accordingly, we cannot predict with any certainty the range of claims that may be allowed or enforced concerning our patents.
We may also rely on trade secrets to protect our technologies, especially where we do not believe patent protection is appropriate or obtainable. However, trade secrets are difficult to protect. While we seek to protect confidential information, in part, through confidentiality agreements with our consultants and scientific and other advisors, they may unintentionally or willfully disclose our information to competitors. Enforcing a claim against a third party related to the illegal acquisition and use of trade secrets can be expensive and time consuming, and the outcome is often unpredictable. If we are not able to maintain patent or trade secret protection on our technologies and product candidates, then we may not be able to exclude competitors from developing or marketing competing products, and we may not be able to operate profitability.
If we are the subject of an intellectual property infringement claim, the cost of participating in any litigation could cause us to go out of business.
There has been, and we believe that there will continue to be, significant litigation and demands for licenses in our industry regarding patent and other intellectual property rights. Although we anticipate having a valid defense to any allegation that our current products, production methods and other activities infringe the valid and enforceable intellectual property rights of any third parties, we cannot be certain that a third party will not challenge our position in the future. Other parties may own patent rights that we might infringe with our products or other activities, and our competitors or other patent holders may assert that our products and the methods we employ are covered by their patents. These parties could bring claims against us that would cause us to incur substantial litigation expenses and, if successful, may require us to pay substantial damages. Some of our potential competitors may be better able to sustain the costs of complex patent litigation, and depending on the circumstances, we could be forced to stop or delay our research, development, manufacturing or sales activities. Any of these costs could cause us to go out of business.
Risks Relating to Ownership of Our Securities
Trading on the OTC Bulletin Board 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 the OTC Bulletin Board service of the Financial Industry Regulatory Authority. Trading in stock quoted on the OTC Bulletin Board 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, the OTC Bulletin Board is not a stock exchange, and trading of securities on the OTC Bulletin Board 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 SEC's penny stock regulations and FINRA's sales practice requirements, which may limit a stockholder's 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 customer's 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 customer's 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 purchaser's 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 that the penny stock rules discourage investor interest in, and limit the marketability of, our common stock.
In addition to the "penny stock" rules promulgated by the Securities and Exchange Commission, FINRA has adopted rules that 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 customer's 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.
We do not anticipate paying any cash dividends to our common shareholders.
We presently do not anticipate that we will pay dividends on any of our common stock in the foreseeable future. If payment of dividends does occur at some point in the future, it would be contingent upon our revenues and earnings, if any, capital requirements, and general financial condition. The payment of any common stock dividends will be within the discretion of our Board of Directors. We presently intend to retain all earnings after paying the interest for the preferred stock, if any, to implement our business plan; accordingly, we do not anticipate the declaration of any dividends for common stock in the foreseeable future.
Volatility in Our Common Share Price May Subject Us to Securities Litigation.
The market for our common stock is characterized by significant price volatility as compared to seasoned issuers, and we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We may, in the future, be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management's attention and resources.
The Elimination of Monetary Liability Against our Directors, Officers and Employees under Nevada law and the Existence of Indemnification Rights of our Directors, Officers and Employees May Result in Substantial Expenditures by our Company and may Discourage Lawsuits Against our Directors, Officers and Employees.
Our articles of incorporation do not contain any specific provisions that eliminate the liability of our directors for monetary damages to our company and shareholders; however, we are prepared to give such indemnification to our directors and officers to the extent provided for by Nevada law. We may also have contractual indemnification obligations under our employment agreements with our officers. The foregoing indemnification obligations could result in our company incurring substantial expenditures to cover the cost of settlement or damage awards against directors and officers, which we may be unable to recoup. These provisions and resultant costs may also discourage our company from bringing a lawsuit against directors and officers for breaches of their fiduciary duties, and may similarly discourage the filing of derivative litigation by our shareholders against our directors and officers even though such actions, if successful, might otherwise benefit our company and shareholders.
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.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (DSG TAG)
The following discussion should be read in conjunction with the audited consolidated financial statement and the related notes of DSG Tag Systems, Inc. and its wholly owned subsidiary, DSG Tag Systems International, Ltd., for the years ended December 31, 2014 and 2013 which appear elsewhere in this current report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this annual report, particularly in the section entitled “Risk Factors” beginning on page 11 of this current report.
Our consolidated financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
Liquidity, Capital Resources and Plan of Operation
We anticipate that we will incur the following operating expenses during the 12 month period this period beginning May 1, 2014:
Estimated Funding Required During the Next 12 Months
(Beginning May 1, 2015)
Expense
|
|
Amount
|
|
|
|
|
|
Management and Employee Compensation
|
|
|
1,050,000
|
|
Research and Development
|
|
|
300,000
|
|
Warranty Fulfillment(contingency)
|
|
|
125,000
|
|
Professional Fees
|
|
|
250,000
|
|
Rent
|
|
|
130,000
|
|
Sales, Travel and Marketing
|
|
|
450,000
|
|
Depreciation and Amortization Expense
|
|
|
80,000
|
|
Finance Costs
|
|
|
200,000
|
|
Other general administrative expenses
|
|
|
600,000
|
|
Total
|
|
$
|
3,185,000
|
|
Based on our current cash position, we will require funds of approximately $3,185,000 over the next twelve months (beginning May 1, 2015) to operate our business. These funds may be raised through equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of our shares. There is no assurance that we will be able to maintain operations at a level sufficient for an investor to obtain a return on their investment in our common stock. Further, we may continue to be unprofitable.
Purchase of Significant Equipment
We do not anticipate the purchase or sale of any plant or significant equipment during the next 12 months.
Going Concern
There is significant doubt about our ability to continue as a going concern.
Our company has incurred a net loss of $22,615,013 (comprehensive income of $1,006,129), for the period from inception on April 17, 2008 through the 12 month period ended December 31, 2014 and has generated only nominal revenues. The continuity of our future operations is dependent upon our ability to obtain financing and upon future acquisition, successful research, development, and regulatory approval of our planned products, and development of profitable operations from the establishment of facial recognition software. These conditions raise substantial doubt about our ability to continue as a going concern. We intend to continue relying upon the issuance of equity securities to finance our operations. However there can be no assurance we will be successful in raising the funds necessary to maintain operations, or that a self-supporting level of operations will ever be achieved. The likely outcome of these future events is indeterminable. The financial statement does not include any adjustment to reflect the possible future effect on the recoverability and classification of the assets or the amounts and classification of liabilities that may result should we cease to continue as a going concern.
Results of Operations for the Fiscal Years Ended December 31, 2014 and 2013.
The following summary of our results of operations should be read in conjunction with the audited consolidated financial statements of DSG TAG Systems, Inc. for the fiscal year ended December 31, 2014 and 2013.
Our operating results for the fiscal years ended December 31, 2014 and 2013are summarized as follows:
|
|
Year Ended
|
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
3,251,964
|
|
|
$
|
3,755,894
|
|
Operating Expenses
|
|
$
|
2,088,499
|
|
|
$
|
3,423,349
|
|
Other Expenses
|
|
$
|
2,998,258
|
|
|
$
|
3,742,730
|
|
Net Income (Loss)
|
|
$
|
(3,542,417
|
)
|
|
$
|
(5,654,496
|
)
|
Net Loss
We incurred a net loss of $3,542,417 for the fiscal year ended December 31, 2014, as compared to a net loss of $5,654,496 for the fiscal year ended December 31, 2013, a change of $2,112,079. The change in net loss was primarily due to a decrease in operating expenses and other expense during the fiscal year ended December 31, 2014.
Expenses
Our operating expenses for the fiscal years ended December 31, 2014 and 2013 are outlined in the table below:
|
|
Year Ended
|
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
Compensation Expenses
|
|
$
|
724,801
|
|
|
$
|
1,953,686
|
|
General administrative
|
|
$
|
1,286,728
|
|
|
$
|
1,249,618
|
|
Warranty expense
|
|
$
|
58,876
|
|
|
$
|
57,427
|
|
Research and development
|
|
$
|
6,775
|
|
|
$
|
84,158
|
|
Depreciation and amortization
|
|
$
|
11,318
|
|
|
$
|
78,460
|
|
Operating Expenses for the year ended December 31, 2014, were $
2,088,499
compared to $
3,423,349
for the year ended December 31, 2013. Our expenses were incurred in respect of our business operations. Revenues for the year ended December 31, 2014, were $
3,251,964
as compared to $
3,755,894 f
or the year ended December 31, 2013.
Liquidity and Financial Condition
Working Capital
|
|
Year Ended
December
31,
2014
|
|
|
Year Ended
December
31,
2013
|
|
|
|
|
|
|
|
|
Current Assets
|
|
$
|
1,109,529
|
|
|
$
|
595,338
|
|
Current Liabilities
|
|
$
|
2,062,503
|
|
|
$
|
9,884,257
|
|
Working Capital (deficit)
|
|
$
|
(952,974
|
)
|
|
$
|
(9,288,919
|
)
|
Cash Flows
|
|
Year Ended
December 31,
|
|
|
Year Ended
December 31,
|
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
Net Cash used in Operating Activities
|
|
$
|
(1,446,356
|
)
|
|
$
|
(200,181
|
)
|
Net Cash provided by Financing Activities
|
|
$
|
1,674,811
|
|
|
$
|
534,106
|
|
Net Cash used in Investing Activities
|
|
$
|
(94,112
|
)
|
|
$
|
(142,254
|
)
|
Increase in Cash during the Period
|
|
$
|
91,840
|
|
|
$
|
-
|
|
Cash and Cash Equivalents, End of Period
|
|
$
|
91,840
|
|
|
$
|
-
|
|
As of December 31, 2014 we had working capital deficit of $952,974, $1,109,529 in total current assets and $2,062,503 in total current liabilities.
We are dependent on funds raised through equity financings and proceeds from shareholder loans. Our net loss of $22,615,013 from our inception on April 17, 2008 was funded primarily by financing and loans, as well as other capital contributions.
Operating Activities
Net cash used in operating activities was $1,446,356 for the year ended December 31, 2014 compared with net cash used in operating activities of $200,181 in the same period in 2013.
Investing Activities
Net cash used in investing activities was $94,112 for the year ended December 31, 2014 compared to net cash used in investing activities of $142,254 in the same period in 2013.
Financing Activities
Net cash provided by financing activities was $1,674,811 for the year ended December 31, 2014 compared to $534,106 in financing activities in the same period in 2013.
Contractual Obligations
As a “smaller reporting company”, we are not required to provide tabular disclosure obligations.
Inflation
Inflation and changing prices have not had a material effect on our business and we do not expect that inflation or changing prices will materially affect our business in the foreseeable future.
Off Balance Sheet Arrangements
We do not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity or capital expenditures or capital resources that is material to an investor in our securities.
Seasonality
Our operating results and operating cash flows historically have not been subject to seasonal variations. This pattern may change, however, in the event that we succeed in bringing our planned products to market.
Critical Accounting Policies of DSG TAG Systems Inc.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act. This election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial conditions and results of operations and require management's difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management's current judgments. We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements:
Principles
of
Consolidation
The consolidated financial statements include the accounts of DSG Tag Systems, Inc. (“DSG”) and its wholly owned subsidiary DSG UK, collectively referred to as the Company. All material intercompany accounts, transactions and profits were eliminated in consolidation.
Exchange (Loss) Gain
During the years ended December 31, 2014 and 2013, the transactions of DSG and its wholly owned subsidiary were denominated in foreign currencies and were recorded in Canadian dollar (CAD), or British Pounds (GBP), at the rates of exchange in effect when the transactions occurred. Exchange gains and losses are recognized for the different foreign exchange rates applied when the foreign currency assets and liabilities are settled.
Foreign
Currency Translation
and
Comprehensive
(Loss) Income
The accounts of DSG and its wholly owned subsidiary were maintained, and its financial statements were expressed, in CAD and GBP. Such financial statements were translated into United States dollars (USD) with the CAD or GBP as the functional currency. All assets and liabilities were translated at the exchange rate at the balance sheet date, stockholder’s equity is translated at the historical rates and income statement items are translated at the average exchange rate for the period. Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of transaction. Any differences between the initially recorded amount and the settlement amount are recorded as a gain or loss on foreign currency transaction in the consolidated statements of operations. The resulting translation adjustments are reported under other comprehensive income as a component of shareholders’ equity.
Revenue Recognition
The Company recognizes 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. The Company accrues for warranty costs, sales returns, and other allowances based on its historical experience.
Income
Taxes
The Company accounts for income taxes in accordance with ASC 740, "Income Taxes". Under ASC 740, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial statement reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax expense for the period, if any, and the change during the period in deferred tax assets and liabilities.
The Company has significant income tax net operating losses; however, due to the uncertainty of the realize-ability of the related deferred tax asset and other deferred tax assets, a valuation allowance equal to the amount of deferred tax assets has been established at December 31, 2014 and 2013.
ASC 740 also provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax positions. A tax benefit from an uncertain position may be recognized only if it is “more likely than not” that the position is sustainable based on its technical merit.
Accounts
Receivable
All accounts receivable are due thirty (30) days from the date billed. If the funds are not received within thirty (30) days the customer is contacted to arrange payment. The Company uses the allowance method to account for uncollectable accounts receivable.
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, 2014 and 2013 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 nonpayment to the third party.
Inventory
Inventories are valued at the lower of cost (determined on a weighted average basis) or market. Management compares the cost of inventories with the market value and allowance is made to write down inventories to market value, if lower. As of December 31, 2014 and 2013, inventory only consisted of finished goods.
The Company records identifiable intangible assets at fair value on the date of acquisition and evaluates the useful life of each asset. Finite-lived intangible assets primarily consist of software development capitalized. Finite-lived intangible assets are amortized on a straight-line basis and are tested for recoverability if events or changes in circumstances indicate that their carrying amounts may not be recoverable. These intangibles have useful lives ranging from 1 to 10 years.
We recognize all share-based payments to employees and to non-employee directors as compensation for service on our board of directors as compensation expense in the consolidated financial statements based on the fair values of such payments. Stock-based compensation expense recognized each period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.
For share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. We record compensation expense based on the fair value of the award at the reporting date. The awards to consultants and other third-parties are then revalued, or the total compensation is recalculated based on the then current fair value, at each subsequent reporting date.
DESCRIPTION OF PROPERTIES
Our principal executive office is located at 214 - 5455 152nd Street, Surrey, BC, V3S 5A5 Canada. The telephone number at our principal executive office is 1 (877) 589 - 8806. We also have an international sales office at Avondale House, 262 Uxbridge Road, Pinner, Middlesex, HA5 4HS, United Kingdom.
We lease offices in Canada under a renewable operating lease which expired on January 31, 2014. The terms of the lease as if February 1, 2015 is month to month, with 30 days’ notice to terminate. The annual rent for the premises in Canada is approximately CAD$87,552. For the years ended December 31, 2014 and 2013, the aggregate rental expense was USD$89,885 and USD $131,821, respectively. Rent expense included other amounts paid in Canada and the United Kingdom for warehouse storage and offices under month to month or as needed basis. Future minimum rental payments required under operating leases as of May 6, 2015 is $6,785.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding beneficial ownership of our common stock as of May 5, 2015 (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
|
Andrea Fehsenfeld
8017 Kenyon Avenue
Los Angeles, CA 90045
|
Director, former president, chief executive officer, chief financial officer, secretary and treasurer
|
Common Stock
|
5,000,000
|
19.71
|
|
|
|
|
|
Robert Silzer
214 - 5455 152nd Street
Surrey, British Columbia, Canada V3S 5A5
|
Director (proposed), president, chief executive officer, chief financial officer, secretary and treasurer
|
Common Stock
|
4,457,632
|
17.57%
|
|
|
|
|
|
Keith Westergaard
214 - 5455 152nd Street
Surrey, British Columbia, Canada V3S 5A5
|
Director (proposed)
|
Common Stock
|
3,428,486
(3)
|
13.51%
|
|
|
|
|
|
Jason Sugarman
214 - 5455 152nd Street
Surrey, British Columbia, Canada V3S 5A5
|
Director (proposed)
|
Common Stock
|
Nil
|
Nil
|
|
|
|
|
|
Rupert Wainwright
214 - 5455 152nd Street
Surrey, British Columbia, Canada V3S 5A5
|
Director (proposed)
|
Common Stock
|
Nil
|
Nil
|
|
|
|
|
|
Stephen Johnston
214 - 5455 152nd Street
Surrey, British Columbia, Canada V3S 5A5
|
Director, (proposed)
|
Common Stock
|
Nil
|
Nil
|
|
|
|
|
|
James Singerling
214 - 5455 152nd Street Surrey, British Columbia, Canada V3S 5A5
|
Director, (proposed)
|
Common Stock
|
Nil
|
Nil
|
|
|
|
|
|
All officers and directors as a group
|
|
Common stock, $0.001 par value
|
12,886,118
|
50.79%
|
|
|
|
|
%
|
5%+ Security Holders
|
|
|
|
|
|
Gary Risler
(4)
214 - 5455 152nd Street
Surrey, British Columbia, Canada V3S 5A5
|
n/a
|
Common Stock
|
1,753,018
|
6.91%
|
|
|
|
|
|
616796 B.C. Ltd.
(4)
214 - 5455 152nd Street
Surrey, British Columbia, Canada V3S 5A5
|
n/a
|
Common Stock
|
2,943,665
|
11.60%
|
Bruno Benedet
214 - 5455 152nd Street
Surrey, British Columbia, Canada V3S 5A5
|
n/a
|
Common Stock
|
1,444,427
|
5.69%
|
|
|
Common stock, $0.001 par value
|
|
|
All 5%+ Security Holders
|
|
6,141,110
|
24.21%
|
(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 25,365,698 shares of our company’s common stock issued and outstanding as of the date of this report there were.
|
(3)
|
Includes 3,428,486
common shares held by by Westergaard Holdings Ltd. Mr. Westergaard has voting and dispositive control over securities held by Westergaard Holdings Ltd.
|
(4)
|
Dianne Risler has voting and dispositive control over securities held by 616796 B.C. Ltd. Dianne Risler is the daughter of Gary Risler
|
DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
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
|
|
|
|
Andrea Fehsenfeld
|
45
|
Director,
|
|
|
|
Stephen Johnston
|
64
|
Director (proposed)
|
|
|
|
Robert Silzer
|
67
|
Director, President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer
|
|
|
|
Jason Sugarman
|
43
|
Director (proposed)
|
|
|
|
Rupert Wainwright
|
53
|
Director (proposed)
|
|
|
|
Keith Westergaard
|
67
|
Director(proposed)
|
|
|
|
James Singerling
|
70
|
Director (proposed)
|
Our director 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 (proposed), 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 world’s 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 Silzer’s 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 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.
Andrea Fehsenfeld,
Director
Andrea Fehsenfeld has been President of Free Form Productions since 1999 and has been active in the production industry during this time. She has overseen over 100 productions with clients from Asia, the US, Canada, Europe and South America. She has been a member of Women in Film, the Motion Picture Industry Association and the AICP (American Commercial Producers).
Ms. Fehsenfeld attended Langara College and received a Sales and Marketing diploma in 1992. Prior to running Free Form Productions, Ms. Fehsenfeld spent seven years in the finance industry, running her own financial planning business.
Prior to February 12, 2015, Ms. Fehsenfeld served as the sole officer and director of DSG Global, Inc. (formerly Boreal Productions Inc.) from our inception on September 25, 2007. We believe that Ms. Fehsenfeld is qualified to sit on our board of directors due to her consulting, management and public company experience.
Stephen Johnston,
Director, (proposed)
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. Mr. Johnston 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 became a partner in 1984. His audit experience with major accounts subsequently expanded into real estate, communications and insurance. When the firm became known as KPMG, he 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.
At Global Golf Advisors, Mr. Johnston’s focus is developing financial and business solutions for private clubs, public golf courses and resorts, golf communities, investors and lenders. He 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, he 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. Mr. Johnston has been recognized as one of the Top Powerbrokers in Canadian Golf by The National Post over the past 15 years.
Mr. Johnston holds a Bachelor of Science from the University of Toronto.
James Singerling,
Director, (proposed)
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.
In addition to his work within the U.S., Mr. Singerling was instrumental in the development of professional club management associations internationally, helping other nations elevate the role of club managers by adopting professional standards and certifications. Regions where his leadership is recognized include South America, Australia, China, South Africa and the Asian-Pacific corridor, among others.
Prior to becoming chief executive at CMAA, Mr. Singerling was a leader in the golf course design and management companies of Robert Trent Jones, Sr., and also served as vice president and general manager of the Coral Ridge Country Club in Ft. Lauderdale, FL.
Mr. Singerling has been recognized as Industry Leader of the Year by the University of Nevada, Las Vegas, and Michigan State University, in addition to receiving awards from Florida State University, Pennsylvania State University, Oklahoma State University and Sun Yat Sen University – China. He also was elected to the Association Committee of 100 by the U.S. Chamber of Commerce, widely recognized as the most prestigious organization of chief executives in the United States.
Jason Sugarman,
Director, (proposed)
Jason Sugarman has over 20 years in the finance business with focus on asset back lending and private equity investments. As the founder of two asset management firms and the lead outside investor in numerous financial service companies and real estate projects, he has funded over $1 billion in direct loan and equity placements and currently oversees Valor Group Holdings .
Beginning in 1993.Mr. Sugarman started developing land and single family real estate in Southern California. He was a founder and principal of a successful regional homebuilding and mortgage company from 1994-1999. During the 7 year period Mr. Sugarman was involved with over a dozen subdivision developments as well as developing many condominiums and townhomes. He sold out his interest in the development company to a Lehman Brother financed entity in 1999. In 2000 Mr. Sugarman started an investment firm which specialized in equity joint ventures and turned it into one of the premier mezz-real estate lending funds in the country with peak assets under management exceeding $700mm. Mr. Sugarman oversaw the expansion into new markets (Nevada, Colorado, Hawaii, Texas, Utah, Oregon, Arizona, Florida, and Washington) and the diversification of real estate assets (office, office condo, storage, hotel, condo-hotel, mixed use and agriculture).
In addition to real estate, he also personally sponsored in a number of highly successful early stage investments which have included the founding of BANC OF CALIFORNIA (a $7B bank holding company), COR Securities Holdings (the owner of the largest independent securities clearing company in the US), COR International Towers Inc (a cell tower developer and manager in Central America), and COR Finance LTD (a company which has both telecom and solar infastracture assets in Asia).
Mr. Sugarman is the founder and currently serves as the Chairman and CEO of Valor Group Holdings ($20 Billion AUM diversified financial service company), a managing partner of Camden Capital, International Tower Group, and COR Finance LTD. He serves as a director of Burnham Financial Group, New Olympia Re, VL Life, DSG TAG, and is an advisor and investor in Banc of California (NASDAQ: BANC), COR Securities Holdings (COR Clearing) and Corum Financial Group.
Mr. Sugarman is on the board of a number of charities with a focus on elementary education, health care research and Jewish causes. He is a Graduate of Stanford University where he was a Scholar Athlete and member of the baseball team. He is married to Elizabeth Guber Sugarman and has three children. He is an active golf and tennis player and is a partner in Marucci Sports, the Oklahoma City Dodgers (AAA affiliate of the Los Angeles Dodgers), and the LA Football Club (MLS franchise).
Rupert Wainwright,
Director, (proposed)
Since 2005 Rupert Wainwright has served as president and chief creative of Adore Creative, an integrated advertising and creative services agency with offices in London, Paris, Moscow, Sao Paolo, and Los Angeles. There he leads a talented staff and top tier production professionals to create has countless commercial TV awards working with global clients. Adore Creative has built a unparalleled record of winning campaigns for the Olympics, the FIFA World Cup, Reebok, AT&T, Fox Sports One TV, and many, many other clients. They are dedicated to producing innovative and successful creative work winning awards in the U.S. and all over the world including two Grand Effies, a Grammy, MTV Awards and several Cannes Dolphins. They are currently working on the Winter Olympics 2022 campaign.
As a director, Mr. Wainwright has shot all over the world and won awards for such US and International Fortune 500 clients as ATT, Sprint, Honda, Sprite, Walmart, Reebok, Footlocker, Gatorade, McDonalds, Converse, GHI, Hong Kong and Shanghai Bank, Deutsche Telekom, Barilla, BP Disney, Fritos, and his campaign for Reebok won Ad week's highest Award, the Grand Effie, for the most effective advertising campaign of 1992. Mr. Wainwright is also the director of the feature films “The Fog” (2005), which was #1 at the US Box Office opening weekend, and “Stigmata” (1999) produced by MGM, among others. From 1990 to 1998 he was the founder and CEO of the independent production company, Fragile Films.
Mr. Wainwrights holds an MA in English Literature from the University of Oxford and an MFA in Film Directing from the University of California, Los Angeles where he was a Fullbright Scholar. He is 54 years of age.
Keith Westergaard
,
Director, (proposed)
Keith Westergaard has over 40 years experience in real estate finance and development. He is the founder and president of Westergaard Holdings Ltd., a diversified mortgage brokerage, real estate investment, and development company with offices in Alberta and British Columbia, Canada. Westergaard Holdings Ltd. has operated continuously since 1980. Its significant projects have included the Gleniffer Lake Resort & Country Club in Central Alberta, a 217 acre bareland condominium recreational & residential land development which included 750 lots, golf course, leisure facilities and marina.
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 at will by DSG Global, Inc.
Family Relationships
There are no family relationships between any of our directors and 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;
|
|
|
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.
|