DSG Global Inc. - FORM 10-Q

Attached files

file	filename
EX-32.1 - DSG Global Inc.	ex32-1.htm
EX-31.1 - DSG Global Inc.	ex31-1.htm
EX-10.17 - DSG Global Inc.	ex10-17.htm
EX-10.16 - DSG Global Inc.	ex10-16.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[X]	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2016

[ ]	Transition Report Pursuant Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from __________________ to ______________________.

Commission file number 000-53988

DSG GLOBAL, INC.

(Exact name of registrant as specified in its charter)

Nevada

26-1134956

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer

Identification No.)

214 - 5455 152nd Street

Surrey, British Columbia V3S 5A5, Canada

(Address of principal executive offices, zip code)

(604) 575-3848

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller” reporting company” in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer	[ ]		Accelerated filer	[ ]
Non-accelerated filer	[ ]	(Do not check if smaller reporting company)	Smaller reporting company	[X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

As August 18, 2016, the issuer had 30,291,187 shares of common stock issued and outstanding.

DSG GLOBAL, INC.
TABLE OF CONTENTS

		Page No.
PART I — FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)	3

	Condensed Consolidated Balance Sheets	3

	Condensed Consolidated Statements of Operations	4

	Condensed Statements of Comprehensive Loss	5

	Condensed Consolidated Statements of Stockholders’ Deficit	6

	Condensed Consolidated Statements of Cash Flows	7

	Notes to Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35

Item 4.	Controls and Procedures	35

PART II — OTHER INFORMATION		36

Item 1.	Legal Proceedings	36

Item 1A.	Risk Factors	36

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40

Item 3.	Defaults Upon Senior Securities	40

Item 4.	Mine Safety Disclosures	40

Item 5.	Other Information	40

Item 6.	Exhibits	41

Signatures		44

PART I: FINANCIAL INFORMATION

ITEM 1: Financial Statements (unaudited)

DSG GLOBAL, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30, 2016			December 31, 2015
	(UNAUDITED)
ASSETS

CURRENT ASSETS
Cash	$	-		$	-
Trade receivables, net		200,831			73,212
Inventories		240,110			306,648
Funds held in trust		-			3,414
Prepaid expenses and deposits		61,728			155,932
Other current assets		-			26,902
Receivable from related party		62,831			91,727
TOTAL CURRENT ASSETS		565,500			657,835

NON-CURRENT ASSETS
Intangible assets, net		17,172			16,984
Fixed assets, net		7,257			6,971
Equipment on lease, net		85,591			105,526
TOTAL NON-CURRENT ASSETS		110,020			129,481

TOTAL ASSETS	$	675,520		$	787,316

LIABILITIES AND STOCKHOLDERS’ DEFICIT

CURRENT LIABILITIES
Bank overdraft	$	9,399		$	25,269
Trade and other payables		1,781,079			1,428,509
Deferred revenue		195,110			99,739
Warranty reserve		115,305			108,381
Loan payable to related party		23,061			-
Convertible note payable to related party		310,000			310,000
Loans payable		898,930			546,137
Convertible loans payable		1,196,366			1,139,543
TOTAL CURRENT LIABILITIES		4,529,250			3,657,579

MEZZANINE EQUITY
Redeemable Noncontrolling Interest - Preferred Shares	$	5,286,731		$	5,286,731

STOCKHOLDERS’ DEFICIT
Common stock, $0.001 par value, 125,000,000 shares authorized and 30,291,187 outstanding at June 30, 2016 and December 31, 2015.		30,291			30,291
Additional paid in capital		15,849,683			15,873,724
Other accumulated comprehensive income		1,136,232			1,306,959
Accumulated deficit		(25,389,790	)		(24,707,197	)
Total sharesholders’ deficit attributable to DSG Global		(8,373,584	)		(7,496,223	)
Noncontrolling interest		(766,877	)		(660,771	)
TOTAL STOCKHOLDERS’ DEFICIT		(9,140,461	)		(8,156,994	)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	675,520		$	787,316

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

DSG GLOBAL, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended						Six Months Ended
	June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015

Revenue	$	482,317		$	469,035		$	737,245		$	1,259,215
Cost of revenue		140,519			240,997			235,067			729,044
Gross profit		341,798			228,038			502,178			530,171

Operating Expenses
Compensation expense		187,215			173,397			383,059			326,317
Research and development expense		19,311			15,416			36,348			34,849
General and administration expense		201,401			414,925			520,065			746,153
Warranty expense		67,155			46,494			112,372			105,337
Bad debt		1,178			8,861			4,283			8,861
Depreciation and amortization expense		22,353			9,749			27,937			18,453
Total operating expense		498,613			668,841			1,084,064			1,239,969
Loss from operations		(156,815	)		(440,803	)		(581,886	)		(709,798	)

Other Income (Expense)
Foreign currency exchange		(20,938	)		(14,387	)		51,202			(35,382	)
Other (expenses) Income		(1,053	)		(4,677	)		(1,543	)		(7,130	)
Finance costs		(171,953	)		(93,910	)		(280,513	)		(141,708	)
Total Other Expense		(193,944	)		(112,974	)		(230,854	)		(184,220	)

Loss from continuing operations before income taxes		(350,759	)		(553,777	)		(812,740	)		(894,018	)

Provision for income taxes		-			-			-			-

Net loss		(350,759	)		(553,777	)		(812,740	)		(894,018	)

Less attributed to noncontolling interest		55,586			90,150			130,147			146,971

Net loss attributable to DSG Global	$	(295,173	)	$	(463,627	)	$	(682,593	)	$	(747,047	)

Net loss per share

Basic and Diluted:
Basic	$	(0.010	)	$	(0.020	)	$	(0.025	)	$	(0.034	)
Diluted	$	(0.010	)	$	(0.020	)	$	(0.025	)	$	(0.034	)

Weighted average number of shares used in computing basic and diluted net loss per share:

Basic		30,291,187			23,265,074			27,103,068			21,990,586
Diluted		30,291,187			23,265,074			27,103,068			21,990,586

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

DSG GLOBAL, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)

	Three Months Ended						Six Months Ended
	June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015

Net loss	$	(350,759	)	$	(553,777	)	$	(812,740	)	$	(894,018	)
Other comprehensive income

Change in foreign currency translation adjustments		33,130			(12,888	)		(167,695	)		53,531
Comprehensive loss		(317,630	)		(566,665	)		(980,435	)		(840,487	)
Less: Comprehensive loss attributable to noncontrolling interest		54,264			89,265			127,115			148,405

Total comprehensive loss attributable to DSG Global	$	(263,365	)	$	(477,399	)	$	(853,320	)	$	(692,082	)

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

DSG GLOBAL, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(UNAUDITED)

Equity Attributable to Common Shareholders’

Total Deficit

Common Stock

Additional Paid in

Accumulated

Accumulated
Comprehensive

Attributable to Common

Noncontrolling

Total
Stockholders’

Shares

Amount

Capital

Deficit

Income

Shareholders’

Interest

Deficit

Balance December 31, 2015

30,291,187

30,291

15,873,724

(24,707,197

)

1,306,959

(7,496,223

)

(660,771

)

(8,156,994

)

Adjustment to paid in capital for minority interest

(24,041

)

(24,041

)

24,041

Net (loss) income for the six months ended June 30, 2016

(682,593

)

(170,727

)

(853,320

)

(130,147

)

(983,467

)

Balance June 30, 2016

30,291,187

30,291

15,849,683

(25,389,790

)

1,136,232

(8,373,584

)

(766,877

)

(9,140,461

)

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

DSG GLOBAL INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Six Months Ended
	June 30, 2016			June 30, 2015

Net loss		(812,740	)		(894,018	)

Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		27,937			18,453
Notes issued for services		(17,479	)		234,791

(Increase) decrease in assets:
Trade receivables, net		(120,144	)		43,306
Inventories		115,044			96,647
Funds held in trust		3,549			-
Prepaid expense and deposits		69,008			210,068
Related party receivable		33,964			(4,054	)
Other assets		34,058			3,212
Increase (decrease) in current liabilities:
Trade payables and accruals		250,202			374,066
Deferred revenue		86,974			15,214
Net cash (used in) provided by operating activities		(329,627	)		97,685

Cash flows from investing activities
Purchase of property, plant and equipment		(2,524	)		(7,605	)
Return (purchase) of equipment on lease		1,173			17,153
Purchase of intangible assets		(823	)		(2,943	)
Cash acquired from merger		-			81,420
Net cash (used in) provided by investing activities		(2,174	)		88,025

Cash flows from financing activities
Bank overdraft		(16,395	)		-
Proceeds from issuance of shares		-			126,695
Payments on notes payable		(69,664	)		(126,192	)
Proceeds from note payable		387,264			-
Related party loan payable, net		-			(164	)
Net cash provided by financing activities		301,205			339

Net (decrease) increase in cash and cash equivalents		(30,596	)		186,049

Effect of exchange rate changes on cash and cash equivalents		30,596			(11,064	)

Cash and cash equivalents at beginning of period		-			91,840

Cash and cash equivalents at the end of the period	$	-		$	266,825

Supplemental disclosures
Cash paid during the period for:
Income tax payments	$	-		$	-
Interest payments	$	4,039		$	5,803

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

DSG GLOBAL, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – ORGANIZATION

DSG Global, Inc. (formerly Boreal Productions Inc.) was incorporated under the laws of the State of Nevada on September 24, 2007. We were formed to option feature films and TV projects to be packaged for sale to movie studios and production companies.

Previously, in anticipation of the share exchange agreement with DSG Tag Systems, Inc. (“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 our name.

Subsequent to the closing of the share exchange agreement with 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.

Note 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed consolidated financial statements were prepared in conformity with generally accepted accounting principles in the United States (“US GAAP”) and with the instructions to Form 10-Q.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to U.S. GAAP rules and regulations for presentation of interim financial information. Therefore, the unaudited condensed interim consolidated financial statements should be read in conjunction with the financial statements and the notes thereto, included in the Company’s Annual Report on the Form 10-K for the year ended December 31, 2015. Current and future financial statements may not be directly comparable to the Company’s historical financial statements. However, except as disclosed herein, there have been no material changes in the information disclosed in the notes to the financial statements for the year ended December 31, 2015 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission. In the opinion of Management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the three and six months ended June 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.

Principles of Consolidation

The consolidated financial statements include the accounts of DSG Global Inc. and its subsidiary DSG Tag Systems, Inc. and its wholly owned subsidiary DSG Tag Systems International, Ltd., collectively referred to as the Company. All material intercompany accounts, transactions and profits were eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the condensed consolidated financial statements in the period they are determined.

Exchange (Loss) Gain

During the three and six months ended June 30, 2016, and 2015, the transactions of the Company and its subsidiaries 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 the Company and its subsidiaries 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, stockholders’ deficit 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.

Reportable Segment

The Company has one reportable segment. The Company’s activities are interrelated and each activity is dependent upon and supportive of the other. Accordingly, all significant operating decisions are based on analysis of financial products provided as a single global business.

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.

Research and Development

Research and development expenses include payroll, employee benefits, and other headcount-related expenses associated with product development. Research and development expenses also include third-party development and programming costs, localization costs incurred to translate software for international markets, and the amortization of purchased software code and services content. Such costs related to software development are included in research and development expense until the point that technological feasibility is reached. Research and development is expensed and is included in operating expenses.

Income Taxes

The Company utilizes the liability method of accounting for income tax. Under the liability method, deferred income tax assets and liabilities are provided based on the difference between the financial statements and tax basis of assets and liabilities measured by the current enacted tax rates in effect for the years in which these differences are expected to reverse.

The Company has adopted accounting standards for the accounting for uncertain income taxes. These standards provide guidance for the accounting and disclosure about uncertain tax positions taken. Management believes that all of the positions taken in its federal and states income tax returns are more likely than not to be sustained upon examination.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk are cash, accounts receivable and other receivables arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions. The Company has a diversified customer base, most of which are in Canada, United States and the United Kingdom. The Company controls credit risk related to accounts receivable through credit approvals, credit limits and monitoring procedures. The Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited.

Risks and Uncertainties

The Company is subject to risks from, among other things, competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing customer requirements, limited operating history, foreign currency exchange rates and the volatility of public markets.

Contingencies

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and legal counsel assess such contingent liabilities, and such assessment inherently involves judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought.

If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed. Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.

Cash and Cash Equivalents

Cash and equivalents include cash in hand and cash in demand deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less. At June 30, 2016 and December 31, 2015, there were no uninsured balances for accounts in Canada, the United States and the United Kingdom. The Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts.

Trade Receivable

All trade receivables 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 trade receivables. The allowance for doubtful accounts as of June 30, 2016 and December 31, 2015 was $14,401 and $14,368, respectively.

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 June 30, 2016 and December 31, 2015 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.

Advertising Costs

The Company expenses all advertising costs as incurred. Advertising costs were $170,191 and $278,516 for the six months ended June 30, 2016 and 2015, respectively.

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 June 30, 2016 and December 31, 2015, inventory only consisted of finished goods.

Fixed Assets

Fixed assets are stated at cost and depreciated using the straight line method over the shorter of the estimated useful life of the asset or the lease term. The useful life for rental equipment was adjusted for the tag to 5 years from 10 years, and for the Touch/Text, the useful life was adjusted to 5 years from 8 years. The adjustment properly reflects the average lease term for the rental equipment and the average life of the product. The estimated useful lives of our property and equipment are generally as follows:

Rental equipment
Tag	5 year useful life
Touch/Text	5 year useful life
Office furniture and equipment	5 year useful life
Computer equipment	3 year useful life

As of June 30, 2016 and December 31, 2015, fixed assets consisted of the following:

	June 30, 2016			December 31, 2015
Furniture and equipment	$	21,507		$	20,216
Computer equipment		28,282			24,695
Accumulated Depreciation		(42,532	)		(37,940	)
	$	7,257		$	6,971

As of June 30, 2016 and December 31, 2015, leased equipment consisted of the following:

	June 30, 2016			December 31, 2015
Tags	$	135,390		$	141,400
Text		23,587			26,195
Touch		41,586			20,386
Accumulated Depreciation		(114,972	)		(82,455	)
	$	85,591		$	105,526

For the three months ended June 30, 2016 and 2015, total depreciation expense was $22,353 and $9,749 for the fixed assets and leased equipment, respectively.

For the six months ended June 30, 2016 and 2015, total depreciation expense was $27,937 and $18,453 for the fixed assets and leased equipment, respectively.

Fair Value of Financial Instruments

For certain of the Company’s financial instruments, including cash and equivalents, restricted cash, accounts receivable, accounts payable, accrued liabilities and short-term debt, the carrying amounts approximate their fair values due to their short maturities. ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:

Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The Company analyzes all financial instruments with features of both liabilities and equity under ASC Topic 480, “Distinguishing Liabilities from Equity,” and ASC Topic 815, “Derivatives and Hedging.”

As of June 30, 2016 and December 31, 2015, the Company did not identify any assets and liabilities that are required to be presented on the balance sheet at fair value.

Basic and Diluted Net Loss per Common Share

Basic and diluted net loss per share attributable to common stockholders is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Our potentially dilutive shares, which include outstanding convertible loans and notes, have not been included in the computation of diluted net loss per share attributable to common stockholders for all periods presented, as the results would be antidilutive. Such potentially dilutive shares are excluded when the effect would be to reduce net loss per share.

The following table sets forth the computation of basic and diluted earnings per share for the three and six months ended June 30, 2016 and 2015:

	Three Months Ended						Six Months Ended
	June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015

Net loss attributable to DSG Global	$	(295,173	)	$	(463,627	)	$	(682,593	)	$	(747,047	)

Net loss per share
Basic and Diluted:
Basic	$	(0.010	)	$	(0.020	)	$	(0.025	)	$	(0.034	)
Diluted	$	(0.010	)	$	(0.020	)	$	(0.025	)	$	(0.034	)

Weighted average number of shares used in computing basic and diluted net loss per share:

Basic		30,291,187			23,265,074			27,103,068			21,990,586
Diluted		30,291,187			23,265,074			27,103,068			21,990,586

Intangible Assets

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 20 years.

Stock-Based Compensation

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.

Recently Issued Accounting Pronouncements

There have been no new accounting pronouncements during the six months ended June 30, 2016 that we believe would have a material impact on our financial position or results of operations.

Going Concern

As reflected in the accompanying financial statements, the Company had an accumulated deficit of $25,389,790 as of June 30, 2016 and had a net loss of $812,740 for the six months ended June 30, 2016.

While the Company is attempting to grow revenues, improve margins and lower costs, the Company’s cash position may not be sufficient to support the Company’s daily operations. Management is seeking to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to generate revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate revenues.

The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Reclassification

Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations or cash flow.

Note 3 – TRADE RECEIVABLES, NET

As of June 30, 2016 and December 31, 2015, trade receivables consist of the following:

	June 30, 2016			December 31, 2015
Trade receivables	$	215,232		$	87,580
Allowance for bad debt		(14,401	)		(14,368	)
Total trade receivables, net	$	200,831		$	73,212

Note 4 – OTHER ASSETS

Other assets consist of the following as of June 30, 2016 and December 31, 2015:

	June 30, 2016		December 31, 2015
GST/VAT Receivable	$	-	$	26,902
	$	-	$	26,902

Note 5 – INTANGIBLE ASSETS

Intangible assets consist of the following as of June 30, 2016 and December 31, 2015:

	June 30, 2016			December 31, 2015
Intangible Asset - Patent	$	21,253		$	20,473
Accumulated Depreciation		(4,081	)		(3,489	)
	$	17,172		$	16,984

The estimated useful life of the Patent is 20 years. Patents are amortized on a straight-line basis. For the three months ended June 30, 2016 and 2015, total depreciation expense was $296 and $283, respectively. For the six months ended June 30, 2016 and 2015, total depreciation expense was $592 and $566, respectively.

The following table summarizes our five year estimated amortization of intangible assets as of June 30, 2016:

June 30:
	2017	$	887
	2018		1,184
	2019		1,184
	2020		1,184
	2021		1,184
	2022 & Thereafter		11,549
		$	17,172

Note 6 – TRADE AND OTHER PAYABLES

As of June 30, 2016 and December 31, 2015, trade and other payables consist of the following:

	June 30, 2016		December 31, 2015
Accounts payable	$	779,991	$	742,256
Accrued expenses		24,316		35,113
Accrued interest		939,631		622,902
Other liabilities		37,141		28,238
Total payables	$	1,781,079	$	1,428,509

Note 7 – LOANS PAYABLE

Loans Payable	June 30, 2016		December 31, 2015

Unsecured, due on demand, interest 15% per annum	$	192,175	$	180,636

Unsecured, due on demand, interest 36% per annum		47,012		50,501

Unsecured, loan payable, interest 18% per annum		317,500		315,000

Unsecured, loan payable, fee for services payable on the original loan amount of 5% by May 6, 2016, 10% payable by June 5, 2016, or 20% payable by July 5, 2016		92,243		-

Unsecured, loan payable, interest 10% per annum, with a minimum interest amount of $25,000, due July 22, 2016.		250,000		-

Total current portion	$	898,930	$	546,137

Loans Payable to Related Party

		June 30, 2016		December 31, 2015

Unsecured, due on demand, interest 20% per annum		23,061		-

Total current portion	$	23,061	$	-

Note 8 – CONVERTIBLE LOAN

Convertible Loans
	June 30, 2016		December 31, 2015

Unsecured, interest 15.2% per annum, mature from February 28, 2015 to December 31, 2015. Principal is repayable in cash or Tags units. Repayment can also be requested to be converted to shares of the company	$	946,366	$	889,543

Unsecured, interest 10% per annum. Principal plus interest repayable in cash or common shares due on demand		250,000		250,000

Total	$	1,196,366	$	1,139,543

Current portion		1,196,366		1,139,543

Long term portion	$	-	$	-

Convertible Loans to Related Party

		June 30, 2016		December 31, 2015

Unsecured, interest 5% per annum, matures March 30, 2016, and is convertible at $1.25/per share	$	310,000	$	310,000

Total current portion	$	310,000	$	310,000

Note 9 – MEZZANINE EQUITY

DSG TAG has 150,000,000 shares of undesignated preferred stock authorized, each having a par value of $0.001 as of June 30, 2016 and December 31, 2015. DSG TAG designated 5,000,000 shares as Series A Convertible Preferred Stock (“Series A Shares”) and issued 4,309,384 Series A Shares to a company controlled by a director of DSG TAG for conversion of its debt of $5,386,731 on October 24, 2014. The Series A Shares have no general voting rights and carry a 5% per annum interest rate. Series A Shares that are converted to common shares are entitled to the same voting rights as other common shareholders. At any time on or after the issuance date any holder of Series A Shares may convert to common stock based on predetermined conversion price of $1.25 per share. The preferred shares are recorded in the consolidated financial statements as Mezzanine Equity. The Series A Shares are subject to a redemption obligation pursuant to which the Company must redeem at a price of $1.25 per share the following amounts on the following dates if it is successful in raising financing capital of $2,500,000 as of August 1, 2016, $2,500,000 as of September 1, 2016 and $5,000,000 as of October 1, 2016; 900,000 Series A Shares ($1,250,000) by May 1, 2016, an additional 900,000 Series A Shares ($1,250,000) by June 1, 2016, and the remaining 2,429,384 Series A Shares ($3,136,730) by July 1, 2016. As of December 31, 2015, 80,000 preferred shares were purchased by an unrelated third-party and exchanged for 80,000 shares of common stock of DSG Global, Inc.

Note 10 – STOCKHOLDERS’ DEFICIT

Common Stock

The Company has 125,000,000 shares of common stock authorized, each having a par value of $0.001, as of June 30, 2016 and December 31, 2015. According to the Share Exchange Agreement dated April 13, 2015, we agreed to acquire not less than 75% and up to 100% of the issued and outstanding common shares of DSG TAG in exchange for the issuance to the subscribing shareholders of up to 20,000,000 shares of our common stock on the basis of 1 common share of DSG Global, Inc. for 5.4935 common shares of DSG TAG. The Company also issued an additional 179,823 common shares to a director of DSG TAG to meet debt agreement obligations. There were 30,291,187 shares of common stock of the Company issued and outstanding as of June 30, 2016 and December 31, 2015. Each share of common stock is entitled to one (1) vote.

Noncontrolling Interest

Note 11 – STOCK OPTIONS AND WARRANTS

Stock Compensation to employees and officers

On March 1, 2013, the Company extended warrants issued in 2008 to five employees and officers that were to expire on March 31, 2013 to December 31, 2016. The Company issued warrants to these individuals to purchase an aggregate of 7,006,098 shares of common stock. The warrants had an exercise price of $0.23 per share. The fair value of the warrants at the time they were extended was estimated at $769,760 using a Black-Scholes model with the following assumptions: expected volatility of 17%, risk free interest of 0.38%, expected life of 3 years and no dividends. The fair value of the warrants were recorded as equity and compensation expense. On January 18, 2015, DSG TAG cancelled 5,913,898 of the warrants. The remaining 1,092,200 of the warrants have not yet been exercised and are currently outstanding as of June 30, 2016. These warrants are exercisable into shares of common stock of DSG Global, Inc. at the rate of 1 share of DSG Global for each 5.4935 shares of DSG TAG.

Note 12 – RELATED PARTY TRANSACTIONS

On March 31, 2015 the Company entered into an agreement with a marketing firm that is owned by one of the directors of the Company. The terms included cash payment of $17,500 and a note in the amount of $310,000, with 5% interest per annum, convertible at the election of the holder into 248,000 shares of Common Stock of DSG Global, Inc. at a price of $1.25 per share, maturing on March 30, 2016. As of June 30, 2016, it was estimated that approximately 90% of the marketing services related to the agreement have been expensed in the amount of $280,000 and the remaining $30,000 is recorded as a prepaid deposit. As of June 30, 2016, the Director of the Company has filed a notice of default on March 31, 2016 in regards to the related party convertible note on the financial statements of DSG TAG. The note was issued in lieu of marketing services, the note maturity date is March 31, 2016. Adore and DSG TAG are currently in arbitration in regards to this matter. (See Note 16).

On June 16, 2016, a loan was received from a related party in the amount of $23,061, the loan is payable on demand. (See Note 7).

Amount due from related party at June 30, 2016 and December 31, 2015 was $62,831 and $91,727, respectively. The amounts consist of advances to a director and officer of the Company. These amounts are unsecured, non-interest bearing and due on demand.

Note 13 – INCOME TAX

The following is the income tax expense reflected in the Statement of Operations for the six months ended June 30, 2016 and 2015.

Income Tax Expense

Three month ended

Six month ended

June 30, 2016

June 30, 2015

June 30, 2016

June 30, 2015

Current

Deferred

Total

The following are the components of income before income tax reflected in the Statement of Operations for the six months ended June 30, 2016 and 2015:

Component of Loss Before Income Tax and Noncontrolling Interest

	Three month ended						Six month ended
		June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015
Loss before income tax and noncontrolling Interest	$	(350,759	)	$	(553,777	)	$	(812,740	)	$	(894,018	)

Income Tax	$	-		$	-		$	-		$	-

Effective tax rate		0	%		0	%		0	%		0	%

Deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue and expense. In evaluating the ability to recover the deferred tax assets within the jurisdiction from which they arise, the Company considered all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In projecting future taxable income, the Company began with historical results adjusted for changes in accounting policies and incorporates assumptions including the amount of future pretax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimate the Company are using to manage the underlying businesses. In evaluating the objective evidence that historical results provide, the Company consider three years of cumulative operating income (loss).

As of June 30, 2016, the Company had net operating losses, or NOLs, of approximately $25.4 million to offset future taxable income in Canada and the United Kingdom. The deferred tax assets at June 30, 2016 were fully reserved. Management believes it is more likely than not that these assets will not be realized in the near future.

Note 14 – GEOGRAPHIC SEGMENT INFORMATION

As a result of the reverse merger on May 6, 2015, the Company operates in three regions: Canada, United Kingdom and the United States of America. All inter-company transactions are eliminated in consolidation. Prior to the merger, the Company operated in two regions.

For the six months ended June 30, 2016 and 2015, geographic segment information is as follows:

For the Six Months Ended June 30, 2016
	Canada			United Kingdom			United States			Elimination			Consolidated

Revenue	$	576,076		$	168,050			-		$	(6,881	)	$	737,245
Cost of Revenue		180,109			61,839			-			(6,881	)		235,067
Total Expenses		876,603			201,044			6,417			-			1,084,064
Other Income (Expenses)		(207,318	)		(21,715	)		(1,823	)		-			(230,856	)
Noncontrolling Interest		130,147			-			-			-			130,147
Net (Loss) Income		(557,807	)		(116,548	)		(8,240	)		-			(682,595	)
Assets		800,783			114,140			62,243			(301,646	)		675,520
Liabilities		4,468,228			348,108			14,560			(301,646	)		4,529,250

For the Six Months Ended June 30, 2015
	Canada			United Kingdom			Elimination			Consolidated

Revenue	$	1,027,177		$	470,639		$	(238,601	)	$	1,259,215
Cost of Revenue		660,964			306,681			(238,601	)		729,044
Total Expenses		1,098,327			141,642			-			1,239,969
Other Income (Expenses)		(166,342	)		(17,878	)		-			(184,220	)
Non-controlling Interest		146,971			-			-			146,971
Net (Loss) Income		(751,485	)		4,438			-			(747,047	)
Assets		1,179,457			107,501			(97,977	)		1,188,981
Liabilities		2,837,365			132,641			(97,977	)		2,872,029

Note 15 – COMMITMENTS AND CONTINGENCIES

Lease Obligations

The Company leases offices in Canada under a renewable operating lease which will expire on January 31, 2017, following which the term of the lease is month to month, with 30 days’ notice to terminate. The lease term was extended by an additional six months subject to leasing our current space or another office in the building. The annual rent for the premises in Canada is approximately $66,000. For the six months ended June 30, 2016 and 2015, the aggregate rental expense was $35,670 and $40,066, respectively. Rent expense included other amounts paid in Canada and the United Kingdom for warehouse storage and offices on a month-to-month or as-needed basis.

The Company signed an operating lease agreement through National Leasing for a photocopier. The lease terms are for 60 months commencing on May 22, 2015 and ending April 22, 2020 with a monthly lease payment of approximately $183.

The following table summarizes our future minimum payments under these arrangements as of June 30, 2016:

June 30:
2017	$	1,651
2018		2,200
2019		2,200
2020		2,567
	$	8,618

Product Warranties

The Company’s product warranty costs are part of its cost of sales based on associated material product costs, labor costs for technical support staff, and associated overhead. The products sold are generally covered by a warranty for a period of one year. As of December 31, 2015 the Company has set up a reserve for future warranty costs, at June 30, 2016 the recorded reserve was $115,305. The Company’s past experience with warranty related costs was used as a basis for the reserve. Prior to December 31, 2015 the Company expensed warranty costs as incurred. The warranty expense incurred was $112,372 and $105,337 for the six months ended June 30, 2016 and 2015, respectively.

In the normal course of business, the Company indemnifies other parties, including customers, lessors, and parties to other transactions with the Company, with respect to certain matters. The Company has agreed to hold the other parties harmless against losses arising from a breach of representations or covenants, or out of intellectual property infringement or other claims made against certain parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. In addition, the Company has entered into indemnification agreements with its officers and directors, and the Company’s bylaws contain similar indemnification obligations to the Company’s agents. It is not possible to determine the maximum potential amount under these indemnification agreements due to the Company’s limited history with prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, payments made by the Company under these agreements have not had a material effect on the Company’s operating results, financial position, or cash flows.

Note 16 – LEGAL MATTERS

On December 30, 2012 a corporation filed an action against the Company in the United States courts claiming patent infringement. On March 8, 2013 the parties agreed to a settlement, with the Company admitting no wrongdoing, 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 at a rate of 8%. The Company has accrued all liabilities related to this matter in the financial statements.

On June 4, 2015, a shareholder of the Company’s subsidiary filed a lawsuit to recover a loan of CAD$100,000 which was made on October 16, 2012 and was due on July 16, 2013 with accrued interest. A response to the claim was submitted on June 29, 2015. On August 13, 2015 a settlement was reached between both parties to pay the loan amount remaining plus interest, for a total of $119,700. In addition, the shareholder’s outstanding shares of DSG TAG were converted into 18,422 shares of common stock of DSG Global, Inc. on October 22, 2015. On February 16, 2016, a new agreement was reached after a breach of the settlement agreement dated August 13, 2015. DSG TAG defaulted on the settlement agreement and both parties agreed to new terms. The balance owing on February 16, 2106 was CAD$86,780 payable ratably over 16 months. The shareholder’s loan and accrued interest is appropriately recorded in these financial statements.

A Director of the Company, representing their company Adore Creative Agency Inc. (Adore) has filed a notice of default in regards to the related party convertible note on the financial statements of DSG TAG. The note was issued in lieu of marketing services, the note maturity date is March 31, 2016. Adore and DSG TAG are currently in arbitration in regards to this matter.

Note 17 – SUBSEQUENT EVENTS

Management has evaluated events subsequent through August 22, 2016 for transactions and other events that may require adjustment of and/or disclosure in such financial statements.

On July 26, 2016, DSG TAG has signed an additional six month extension on the current lease. The term will begin on August 1, 2016 and end on January 31, 2017.

On August 5, 2016, DSG Global signed a convertible note agreement for $150,000 USD. The term of the note is 45 days from the date of contract with interest accrued at 2% per month. The principal and interest will be repaid in full by way of cash repayment or Class A common shares.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “plan,” “expect” and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements. These forward-looking statements include, but are not limited to, statements concerning the following:

	●	our future financial and operating results;

	●	our intentions, expectations and beliefs regarding anticipated growth, market penetration and trends in our business;

	●	the timing and success of our business plan;

	●	our plans regarding future financings;

	●	our ability to attract and retain customers;

	●	our dependence on growth in our customers’ businesses;

	●	the effects of market conditions on our stock price and operating results;

	●	our ability to maintain our competitive technological advantages against competitors in our industry;

	●	the expansion of our business in our core golf market as well as in new markets like commercial fleet management and agriculture;

	●	our ability to timely and effectively adapt our existing technology and have our technology solutions gain market acceptance;

	●	our ability to introduce new offerings and bring them to market in a timely manner;

	●	our ability to maintain, protect and enhance our intellectual property;

	●	the effects of increased competition in our market and our ability to compete effectively;

	●	the attraction and retention of qualified employees and key personnel;

	●	future acquisitions of or investments in complementary companies or technologies; and

	●	our ability to comply with evolving legal standards and regulations, particularly concerning requirements for being a public company.

These forward-looking statements speak only as of the date of this Form 10-Q and are subject to uncertainties, assumptions and business and economic risks. As such, our actual results could differ materially from those set forth in the forward-looking statements as a result of the factors set forth below in Part II, Item 1A, “Risk Factors,” and in our other reports filed with the Securities and Exchange Commission. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Form 10-Q may not occur, and actual results could differ materially and adversely from those anticipated or implied in our forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances described in the forward-looking statements will be achieved or occur. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Form 10-Q to conform these statements to actual results or to changes in our expectations, except as required by law.

Our unaudited financial statements are state in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Principles. The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.

Corporate History

DSG Global, Inc. (formerly Boreal Productions Inc.) was incorporated under the laws of the State of Nevada on September 24, 2007. We were formed to option feature films and TV projects to be packaged and sold to movie studios and production companies.

In January 2015, we changed our name to DSG Global, Inc. and effected a one-for-three reverse stock split of our issued and outstanding common stock in anticipation of entering in a share exchange agreement with DSG TAG Systems, Inc., a corporation incorporated under the laws of the State of Nevada on April 17, 2008 and extra provincially registered in British Columbia, Canada in 2008.

On April 13, 2015, we entered into a share exchange agreement with DSG TAG Systems Inc. and the shareholders of DSG TAG Systems who become parties to the agreement. Pursuant to the terms of the share exchange agreement, we agreed to acquire not less than 75% and up to 100% of the issued and outstanding common shares in the capital stock of DSG TAG Systems in exchange for the issuance to the selling shareholders of up to 20,000,000 shares of our common stock on the basis of 1 common share for 5.4935 common shares of DSG TAG Systems.

On May 6, 2015, we completed the acquisition of approximately 75% (82,435,748 common shares) of the issued and outstanding common shares of DSG TAG Systems as contemplated by the share exchange agreement by issuing 15,185,875 shares of our common stock to shareholders of DSG TAG Systems who became parties to the agreement. In addition, concurrent with the closing of the share exchange agreement, we issued an additional 179,823 shares of our common stock to Westergaard Holdings Ltd. in partial settlement of accrued interest on outstanding indebtedness of DSG TAG Systems.

Following the initial closing of the share exchange agreement and through October 22, 2015, we acquired an additional 101,200 shares of common stock of DSG TAG Systems from shareholders who became parties to the share exchange agreement, and issued to these shareholders an aggregate of 18,422 shares of our common stock. Following completion of these additional purchases, DSG Global owns approximately 100% of the issued and outstanding shares of common stock of DSG TAG Systems. An aggregate of 4,229,384 shares of Series A Convertible Preferred Stock of DSG TAG Systems continues to be held by Westergaard Holdings Ltd., an affiliate of Keith Westergaard, a member of our board of directors.

The reverse acquisition was accounted for as a recapitalization effected by a share exchange, wherein DSG TAG Systems is considered the acquirer for accounting and financial reporting purposes. The assets and liabilities of the acquired entity have been brought forward at their book value and no goodwill has been recognized. We adopted the business and operations of DSG TAG Systems upon the closing of the share exchange agreement.

Overview of Our Business

DSG Global, Inc. is a technology development company based in Surrey, British Columbia, Canada, engaged in the design, manufacture, and marketing of fleet management solutions for the golf industry, as well as commercial, government and military applications. Our principal activities are the sale and rental of GPS tracking devices and interfaces for golf vehicles, and related support services. We were founded by a group of individuals who have dedicated their careers to fleet management technologies and have been at the forefront of the industry’s most innovative developments, and our executive team has over 50 years of experience in the design and manufacture of wireless, GPS, and fleet tracking solutions. We have developed the TAG suite of products that we believe is the first completely modular fleet management solution for the golf industry. The TAG suite of products is currently sold and installed around the world in golf facilities and as commercial applications through a network of established distributors and partnerships with some of the most notable brands in fleet and equipment manufacture.

DSG stands for “Digital Security Guard”, which is our primary value statement giving fleet operator’s new capabilities to track and control their vehicles. We have developed a proprietary combination of hardware and software that is marketed around the world as the TAG system. We have primarily focused on the golf industry where the TAG system is deployed to help golf course operators manage their fleet of golf carts, turf equipment, and utility vehicles. We are a leader in the category of fleet management in the golf industry and were awarded “Best Technology of the Year” in 2010 by Boardroom magazine, a publication of the National Golf Course Owners Association. To date the TAG system is installed on over 8,000 vehicles and has been used to monitor over 6,000,000 rounds of golf.

The TAG system fills a void in the marketplace by offering a modular structure that allows the customer to customize their system to meet desired functionality and budget constraints. In addition to the core TAG system vehicle control functionality, which can operate independently, we offer two golfer information display systems — the alphanumeric TEXT and high definition TOUCH — providing the operator with two display options which is unique in the industry.

The primary market for our TAG system is the 40,000 golf operations worldwide. While the golf industry remains the primary focus of our sales and marketing efforts, we have completed several successful pilots of the TAG system in other markets such as agriculture and commercial fleet operations. With appropriate resources, we intend to expand our sales and marketing efforts into these new markets.

We have a direct sales force in North America, which comprises the most significant portion of the golf fleet market, and have developed key relationships with distributors and golf equipment manufacturers such as E-Z-GO, Yamaha and Ransomes Jacobsen to help drive sales for the North American and worldwide markets.

In order to successfully deliver products, increase sales, and maintain customer satisfaction, we need to have a reliable supplier of our hardware units and components at competitive prices. Presently, we source our TOUCH units from one supplier in China and our TAG units from one supplier in the United Kingdom. We have recently established a new relationship with a supplier for our TOUCH units in China to provide us with higher quality, newer technology at competitive pricing.

In addition, DSG is currently in negotiations with a telecommunications provider to provide new technology in hardware and wireless access.

Our Revenue Model

We derive revenue from four different sources, as follows:

	●	*Systems Sales Revenue*, which consists of the sales price paid by those customers who purchase or lease our TAG system hardware.

	●	*Monthly Service Fees* are paid by all customers for the wireless data fee charges required to operate the GPS tracking on the TAG systems.

	●	*Monthly Rental Fees* are paid by those customers that rent the TAG system hardware. The amount of a customer’s monthly payment varies based on the type of equipment rented (a TAG, a TAG and TEXT, or a TAG and TOUCH).

	●	*Advertising Revenue* is a new source of revenue that we believe has the potential to be strategic for us in the future. We are in the process of implementing and designing software to provide advertising and other media functionality on our TOUCH units.

We recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is reasonably assured. In instances where final acceptance of the product is specified by the customer, revenue is deferred until all acceptance criteria have been met. We accrue for warranty costs, sales returns, and other allowances based on its historical experience.

Our revenue recognition policies are discussed in more detail under “Note 2 – Summary of Significant Accounting Policies” in the notes to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

Cost of Revenue

Our cost of revenue consists primarily of hardware purchases, wireless data fees, mapping, installation costs, freight expenses and inventory adjustments.

	●	*Hardware purchases.* Our equipment purchases consist primarily of TAG system control units, TEXT display, and TOUCH display tablets. The TAG system control unit is sold as a stand-alone unit or in conjunction with our TEXT alphanumeric display or TOUCH high definition “touch activated” display. Hardware purchases also include costs of components used during installations, such as cables, mounting solutions, and other miscellaneous equipment.

	●	*Wireless data fees.* Our wireless data fees consist primarily of the data fees charged by outside providers of GPS tracking used in all of our TAG system control units.

	●	*Mapping.* Our mapping costs consist of aerial mapping, course map, geofencing, and 3D flyovers for golf courses. This cost is incurred at the time of hardware installation.

	●	*Installation.* Our installation costs consist primarily of costs incurred by our employed service technicians for the cost of travel, meals, and miscellaneous components required during installations. In addition, these costs also include fees paid to external contractors for installations on a project by project basis.

	●	*Freight expenses and Inventory adjustments.* Our freight expenses consist primarily of costs to ship hardware to courses for installations. Our inventory adjustments include inventory write offs, write downs, and other adjustments to the cost of inventory.

	●	*Operating Expenses & Other Income (Expenses)* We classify our operating expenses and other income (expenses) into six categories: compensation, research and development, general and administrative, warranty, foreign currency exchange, and finance costs. Our operating expenses consist primarily of sales and marketing, salaries and wages, consulting fees, professional fees, trade shows, software development, and allocated costs. Allocated costs include charges for facilities, office expenses, telephones and other miscellaneous expenses. Our other income (expenses) primarily consists of financing costs and foreign exchange gains or losses.

	●	*Compensation expense.* Our compensation expenses consist primarily of personnel costs, such as employee salaries, payroll expenses, and employee benefits. This includes salaries for management, administration, engineering, sales and marketing, and service support technicians. Salaries and wages directly related to projects or research and development are expensed as incurred to their operating expense category.

	●	*Research and development*. Our research and development expenses consist primarily of personnel costs and professional services associated with the ongoing development and maintenance of our technology.

	●	Research and development expenses include payroll, and other headcount-related expenses associated with product development. Research and development expenses also include third-party development and programming costs. Such costs related to software development are included in research and development expense until the point that technological feasibility is reached. Research and development is expensed and is included in operating expenses.

	●	*General and administrative*. Our general and administrative expenses consist primarily of sales and marketing, commissions, travel, trade shows, consultant fees, insurance, and compliance and other administrative functions, as well as accounting and legal professional services fees, allocated costs and other corporate expenses. Sales and marketing includes brand marketing, marketing materials, and media management.

	●	*Warranty expense.* Our warranty expenses consist primarily of associated material product costs, labor costs for technical support staff, and other associated overhead. Warranty costs are expensed as they are incurred.

	●	*Foreign currency exchange.* Our foreign currency exchange consist primarily of foreign exchange fluctuations recorded in Canadian dollar (CAD), British Pounds (GBP), or Euro (EUR) at the rates of exchange in effect when the transaction occurred.

	●	*Finance costs.* Our finance costs consist primarily of investor interest expense, investor commission fees, and other financing charges for obtaining debt financing.

We expect to continue to invest in corporate infrastructure and incur additional expenses associated with being a public company, including increased legal and accounting costs, investor relations costs, higher insurance premiums and compliance costs associated with Section 404 of the Sarbanes-Oxley Act of 2002. In addition, we expect sales and marketing expenses to increase in absolute dollars in future periods. In particular, we expect to incur additional marketing costs to support the expansion of our offerings in new markets like commercial fleet management and agriculture.

Additional Capital

We require additional capital to continue to develop software and products, meet our contractual obligations, and execute our business plan. There can be no assurances that we will be able to raise additional capital on acceptable terms or at all, which would adversely affect our ability to achieve our business objectives.

Results of Operations

We had a net loss of $295,173 for the three month period ended June 30, 2016, which was $168,454 less than the net loss of $463,627 for the three month period ended June 30, 2015.

We had a net loss of $682,593 for the six month period ended June 30, 2016, which was $64,454 less than the net loss of $747,047 for the six month period ended June 30, 2015.

The following table summarizes key items of comparison and their related increase (decrease) for the three and six month periods ended June 30, 2016 and 2015:

	Three Months ended			Three Months ended			Increase (Decrease) 2016 from			Six Months ended			Six Months ended			Increase (Decrease) 2016 from
	30-Jun-16			30-Jun-15			2015			30-Jun-16			30-Jun-15			2015
	($)			($)			(%)			($)			($)				(%)
Revenues	$	482,317		$	469,035			2.8	%	$	737,245		$	1,259,215			-41.5	%
Cost of revenue		140,519			240,997			-41.7	%		235,067			729,044			-67.8	%
Gross profit		341,798			228,038			49.9	%		502,178			530,171			-5.3	%

Operating Expenses:
Compensation expense		187,215			173,397			8.0	%		383,059			326,317			17.4	%
Research and development expense		19,311			15,416			25.3	%		36,348			34,849			4.3	%
General and administrative expense		201,401			414,925			-51.5	%		520,065			746,153			-30.3	%
Warranty expense		67,155			46,494			44.4	%		112,372			105,337			6.7	%
Bad Debt		1,178			8,861			-86.7	%		4,283			8,861			-51.7	%
Depreciation and amortization expense		22,353			9,749			129.3	%		27,937			18,453			51.4	%
Total Operating Expenses		498,613			668,841			-25.5	%		1,084,064			1,239,969			-12.6	%
Loss from operations		(156,815	)		(440,803	)		-64.4	%		(581,886	)		(709,798	)		-18.0	%

Other Income (Expense):
Foreign currency exchange		(20,938	)		(14,387	)		45.5	%		51,202			(35,382	)		-244.7	%
Other (expenses) income		(1,053	)		(4,677	)		-77.5	%		(1,543	)		(7,130	)		-78.4	%
Finance costs		(171,953	)		(93,910	)		83.1	%		(280,513	)		(141,708	)		98.0	%
Total Other Expense		(193,944	)		(112,974	)		71.7	%		(230,854	)		(184,220	)		25.3	%

Provision for income taxes expense (benefit)		-			-			-			-			-			-
Net loss		(350,759	)		(553,777	)		-36.7	%		(812,740	)		(894,018	)		-9.1	%
Net loss attributable to noncontrolling interest		55,586			90,150			-38.3	%		130,147			146,971			-11.4	%
Net loss attributable to DSG Global	$	(295,173	)	$	(463,627	)		-36.3	%	$	(682,593	)	$	(747,047	)		-8.6	%

Net loss per share (basic and diluted)		(0.010	)		(0.020	)		-50.0	%		(0.025	)		(0.034	)		-26.5	%

Comparison of the three and six months ended June 30, 2016 and 2015:

Revenue

	For the Three Months Ended June 30,							For the Six Months Ended June 30,
	2016		2015		% Change			2016		2015		% Change

Revenue	$	482,317	$	469,035		2.8	%	$	737,245	$	1,259,215		(41.5	)%

Revenue increased by $13,282, or 2.8%, for the three months ended June 30, 2016 as compared to the three months ended June 30, 2015 and decreased by $521,970, or 41.5% for the six months ended June 30, 2016 as compared to the six months ended June 30, 2015. The increase for the three months ended for June 30, 2016 in comparison to June 30, 2015 was primarily due to the increase in hardware sales and the return of TOUCHs from our Asian Distributor in the June 30, 2015 quarter. The decrease for the six months ended for June 30, 2016 in comparison to June 30, 2015 was primarily due to lower sales in the first quarter of 2016 and continued design and redevelopment of our product line.

In addition, 30% of sales included for the six months ended June 30, 2015 were from a product return from our distributor that is currently recognized on the financial statements as a deferred revenue. The revenue on the return will be recognized each quarter towards monthly service fees and new inventory purchases made. As well, some of the sales in the second quarter of 2016 included the monthly system access fees to be prepaid in full, this has been recorded in the deferred revenue, and will be recognized each quarter towards monthly service fees.

In addition, DSG sales in the second quarter of 2016 increased by 89.2% in comparison to the first quarter of 2016. DSG increased sales in the second quarter of 2016 was due to increased efforts from DSG’s sales team, contract renewals, new software updates, and obtaining new distributors in the European market. However, due to the redevelopment of our product line, it has created lower sales overall than anticipated. The company has been forced to move to a 3G/4G GPS cellular device, require redevelopment of our advertising, and also software development delays in integrating the tournament software onto the TOUCH screen, all of which that has caused delays in sales. The company along with the new sales team is aggressively building its pipeline for next two quarters.

Cost of Revenue

	For the Three Months Ended June 30,							For the Six Months Ended June 30,
	2016		2015		% Change			2016		2015		% Change

Cost of revenue	$	140,519	$	240,997		(41.7	)%	$	235,067	$	729,044		(67.8	)%

Cost of revenue decreased by $100,478, or 41.7%, for the three months ended June 30, 2016 as compared to the three months June 30, 2015 and decreased by $493,977 or 67.8% for the six months ended June 30, 2016 as compared to the six months ended June 30, 2015. The table below outlines the differences in detail:

	For the Three Months Ended											For the Six Months Ended
	June30, 2016		June30, 2015			Difference			% Difference			June30, 2016		June30, 2015		Difference			% Difference
Cost of Goods	$	26,312	$	107,611		$	(81,299	)		(75.5	)%	$	48,979	$	444,757	$	(395,778	)		(89.0	)%
Labour		-		12,270			(12,270	)		(100.0	)%		-		28,639		(28,639	)		(100.0	)%
Mapping & Freight Costs		6,797		16,217			(9,420	)		(58.1	)%		10,352		41,081		(30,729	)		(74.8	)%
Wireless Fees		83,366		108,409			(25,043	)		(23.1	)%		149,750		198,870		(49,120	)		(24.7	)%
Inventory Write-off/Adjustments		24,044		(3,510	)		27,554			(785.0	)%		25,986		15,697		10,289			65.5	%
	$	140,519	$	240,997		$	(100,478	)		(41.7	)%	$	235,067	$	729,044	$	(493,977	)		(67.8	)%

For the three months ended June 30, 2016 as compared to the three months ended June 30, 2015, the decrease was primarily due to a contract lease renewal which resulted in no new hardware costs, only the system access fee and the leased equipment amount which was financed over the term of the contract. The system access fees have been recorded in the deferred revenue and will be recognized each quarter towards monthly service fees. As well, DSG had a new customer lease contract, in which the customer leases our hardware for a monthly payment consisting of hardware and a monthly service fee. This hardware is recorded on our balance sheet, under equipment on lease since the hardware is owned by DSG. As a result, cost of goods decreased by $81,299 for the three months ended June 30, 2016 in comparison to the three months ended June 30, 2015. Installation costs, such as direct labor decreased by $12,270, mapping and freight costs decreased by $9,420, and wireless fees also decreased by $25,043. There was also an increase of $27,554 for inventory adjustments which was primarily due to write-off of obsolete inventory from customer lease returns.

For the six months ended June 30, 2016 as comparted to the six months ended June 30, 2015, the overall decrease of 67.8% was due to the decrease in hardware leases and sales. Lower costs of revenue as mentioned above was also due to a contract lease renewal that had no hardware costs associated. Lower sales also resulted in lower installation costs, freight charges, mapping, and direct labor costs in the six months ended in June 30, 2016 in comparison to the six months ended June 30, 2015. Installation costs, such as direct labor decreased by $28,639, cost of goods decreased by $395,778, mapping and freight costs decreased by $30,729, and inventory adjustments increased by $10,289. Wireless fees also decreased by $49,120 which was also due to new lower negotiated wireless fee rates.

Compensation Expense

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2016		2015		% Change		2016		2015		% Change

Compensation Expense	$	187,215	$	173,397	8.0	%	$	383,059	$	326,317	17.4	%

Compensation expense increased by $13,818, or 8.0%, for the three months ended June 30, 2016 as compared to the three months ended June 30, 2015 and increased by $56,742, or 17.4% for the six months ended June 30, 2016 as compared to the six months ended June 30, 2015. The increase was primarily due to the increase in hiring of employees and contractors to meet projected growth obligations in engineering for software and hardware development.

Research and Development

	For the Three Months Ended June 30,							For the Six Months Ended June 30,
	2016		2015		% Change			2016		2015		% Change

Research and development expense	$	19,311	$	15,416		25.3	%	$	36,348	$	34,849	4.3	%

Research and development expense increased by $3,895, or 25.3% for the three months ended June 30, 2016 as compared to the three months ended June 30, 2015 and increased by $1,449, or 4.3% for the six months ended June 30, 2016 as compared to the six months ended June 30, 2015. The overall increase of 4.3 % over the six months was minimal, however we expect research and development expenses to increase as we enter new markets like commercial fleet management, agriculture, and advertising. In addition, the hiring of additional engineers in the third and last quarter of 2016 will result in even higher research and development costs in future periods. These increase in costs will be required to develop the new 3G/4G GPS cellular device.

General and Administration Expense

	For the Three Months Ended June 30,							For the Six Months Ended June 30,
	2016		2015		% Change			2016		2015		% Change

General & administration expense	$	201,401	$	414,925		(51.5	)%	$	520,065	$	746,153		(30.3	)%

General & administration expense decreased by $213,524, or 51.5% for the three months ended June 30, 2016 compared to the three months ended June 30, 2015 and decreased 226,088, or 30.3% for the six months ended June 30, 2016 compared to the three months ended June 30, 2015. The table below outlines the differences in detail:

	For the Three Months Ended										For the Six Months Ended
	June 30, 2016		June 30, 2015		Difference			% Difference			June 30, 2016		June 30, 2015		Difference			% Difference
Accounting & Legal	$	28,738	$	91,002	$	(62,264	)		(68.4	)%	$	47,772	$	125,047	$	(77,275	)		(61.8	)%
Marketing & Advertising		24,713		90,737		(66,024	)		(72.8	)%		170,191		278,516		(108,325	)		(38.9	)%
Subcontractor & Commissions		20,041		102,218		(82,177	)		(80.4	)%		44,513		108,753		(64,240	)		(59.1	)%
Interest Expense		1,524		9,904		(8,380	)		(84.6	)%		14,269		17,541		(3,272	)		(18.7	)%
Hardware Design		412		1,032		(620	)		(60.1	)%		13,157		1,811		11,346			626.5	%
Office Expense, Rent, Software, Bank & Credit Card Charges, Telephone, Travel, & Meals		125,973		120,032		5,941			4.9	%		230,163		214,485		15,678			7.3	%
	$	201,401	$	414,925	$	(213,524	)		(51.5	)%	$	520,065	$	746,153	$	(226,088	)		(30.3	)%

For the three months ended June 30, 2016 as compared to the three months ended June 30, 2015, the decrease of $62,264 in accounting and legal fees was due to the costs associated with the merger in May 6, 2015, in the three months ended June 30, 2016, the costs primarily consisted of regular fees associated with the filing requirements. Marketing and advertising decreased by $66,024, this was a result of additional marketing costs expensed from the note convertible issued in March 31, 2015 for marketing and advertising services and the majority of the note being expensed in 2015. Subcontractors and commissions also decreased by $82,177, this was due to the hiring of more employees instead of contract workers. Overall, there was also a decrease of $3,059 in interest expense, hardware design, office expense, rent, software, bank & credit card charges, telephone, and travel and meals, this was due to the increased efforts to minimize costs.

For the six months ended June 30, 2016 as compared to the six months ended June 30, 2015, the decrease of $77,275 in accounting and legal fees was overall due to the higher costs associated with the merger in May 2015, as well the decrease was also due to efforts in decreasing legal costs for public filing requirements. There was a decrease of $108,325 in marketing and advertising costs, this was due to the convertible note issued in March 31, 2015 as mentioned above. For the six months ended June 30, 2016 marketing and advertising mainly consisted of tradeshow costs, which provides us with brand recognition and awareness, in order to help generate sales. Tradeshow costs include tradeshow rental space, booth design, travel, meals and entertainment costs, and hiring of additional staff. There was a decrease of $64,240 in subcontractor and commissions due to the hiring of more employees instead of contract workers and lower sales resulting in less commissions being paid. There was an increase of $11,346 in hardware design for the development of the new hardware prototype for the tradeshow. Overall, there was an increase of $15,678 in office and computer expense, rent, operations software, bank and interest charges, travel, and meals for the six months ended June 30, 2016 compared to the six months ended June 30, 2015, this was due to higher warranty shipping and travel costs in the first quarter of 2016.

Warranty Expense

	For the Three Months Ended June 30,							For the Six Months Ended June 30,
	2016		2015		% Change			2016		2015		% Change

Warranty Expense	$	67,155	$	46,494		44.4	%	$	112,372	$	105,337		6.7	%

Warranty expense increased by $20,661, or 44.4% for the three months ended June 30, 2016 as compared to the three months ended June 30, 2015 and increased by $7,035, or 6.7% for the six months ended June 30, 2016 as compared to the six months ended June 30, 2015. The increase in warranty expense over the three months ended June 30, 2016 compared to the three months ended June 30, 2015 was due to the repairing costs of the hardware units that were received back from our customers. These units will be used to replace other defective or broken units in the future, we anticipate that this will help lower warranty costs. Overall, the increase in warranty expense for the six months ended June 30, 2016 compared to the six months ended June 30, 2016 is primarily due to the combination of costs associated with repairing units and replacing older units with new units. In addition, the warranty amount for the six months ended June 30, 2016 includes a reserve of $115,305 on the balance sheet for future warranty costs, no reserve was used in prior periods, and warranty costs were expensed as incurred.

Foreign Currency Exchange

	For the Three Months Ended June 30,							For the Six Months Ended June 30,
	2016		2015		% Change			2016			2015		% Change

Foreign currency exchange	$	20,938	$	14,387		45.5	%	$	(51,202	)	$	35,382		(244.7	)%

For the three months ended June 30, 2016, we recognized a $20,938 loss in foreign currency transaction as compared to $14,387 in foreign currency transaction losses for the three months ended June 30, 2015. For the six months ended June 30, 2016, we recognized $51,202 gain in foreign currency transactions losses as compared to $35,382 in foreign exchange losses for the six months ended June 30, 2016. The decrease and increase was primarily due to the gains or losses arising from exchange rate fluctuations on payables, receivables, and other foreign exchange transactions denominated in currencies other than the functional currencies of the legal entities in which the transactions are recorded. Foreign currency fluctuations are primarily from the Canadian Dollar, Euro and British pound.

Finance Costs

	For the Three Months Ended June 30,							For the Six Months Ended June 30,
	2016		2015		% Change			2016		2015		% Change

Finance costs	$	171,953	$	93,910		83.1	%	$	280,513	$	141,708		98.0	%

Finance costs increased by $78,043 or 83.1%, for the three months ended June 30, 2016 as compared to the three months ended June 30, 2015 and increased $138,805, or 98.0% for the six months ended June 30, 2016 compared to the six months ended June 30, 2015. The increase overall was primarily due to accrued interest expensed from additional loans and note convertible loans obtained after the six months ended June 30, 2015.

Net Loss Attributable to DSG Global

	For the Three Months Ended June 30,							For the Six Months Ended June 30,
	2016		2015		% Change			2016		2015		% Change

Net loss attributable to DSG Global	$	295,173	$	463,627		(36.3	)%	$	682,593	$	747,047		(8.6	)%

As a result of the above factors, net loss after noncontrolling interest attributable to DSG Global decrease $168,454, or

As a result of the above factors, net loss after noncontrolling interest attributable to DSG Global decrease $168,454, or 36.3% for the three months ended June 30, 2016 as compared to the three months ended June 30, 2015 and decreased $64,454, or 8.6% for the six months ended June 30, 2016 as compared to the six months ended June 30, 2015. The overall decrease was primarily due to increased efforts to lower operating costs in general and administrative expenses, and the low cost of revenue from new leased hardware and lease renewal contracts that resulted in no costs for hardware in cost of goods sold.

In addition, for the months ended June 30, 2016, Total Other Expenses represented 65.7% of the net loss, and for the six months ended June 30, 2016, Total Other Expenses represented 33.8% of the net loss. These expenses include foreign exchange differences and fluctuations, and accrued interest on loans payable and other convertible notes.

Liquidity and Capital Resources

From our incorporation in April 17, 2008 through June 30, 2016, we have financed our operations, capital expenditures and working capital needs through the sale of common shares and the incurrence of indebtedness, including term loans, convertible loans, revolving lines of credit and purchase order financing. At June 30, 2016, we had $2,428,357 in outstanding indebtedness, which all matures within the next twelve months.

We had cash in the amount of $0 as of June 30, 2016 as compared to $266,825 as of June 30, 2015. We had a working capital deficit of $3,963,750 as of June 30, 2016 compared to working capital deficit of 1,929,263 as of June 30, 2015.

Liquidity and Financial Condition

Our financial position as of June 30, 2016 and 2015, and the changes for the periods then ended are as follows:

Working Capital

	At June 30,			At June 30,			Percentage
	2016			2015			Increase/(Decrease)
Current Assets	$	565,500		$	942,766			(40.0	)%
Current Liabilities	$	4,529,250		$	2,872,029			57.7	%
Working Capital	$	(3,963,750	)	$	(1,929,263	)		105.5	%

Cash Flow Analysis

Our cash flows from operating, investing and financing activities are summarized as follows:

	June 30
	2016			2015

Net cash (used in) provided by operating activities	$	(329,627	)	$	97,685
Net cash (used in) provided by investing activities		(2,174	)		88,025
Net cash provided by financing activities		301,205			339
Net (decrease) increase in cash		(30,596	)		186,049
Cash at beginning of period		0.00			91,840
Cash at end of period	$	0.00		$	266,825

Net Cash (Used in) Provided by Operating Activities. During the six months ended June 30, 2016, cash used in operations totaled $329,627. This reflects the net loss of $812,740 less $483,113 provided by changes in operating assets and liabilities and adjustments for non-cash items. Cash provided by working capital items was primarily impacted by a decrease in prepaid expense and deposits of $69,008, a decrease in related party receivable of $33,964, an increase in trade receivables of $120,144, a decrease of $115,044 in inventories, an increase in trade payables of $250,202, and an increase in deferred revenue of $86,974.

During the six months ended June 30, 2015, cash used in operations totaled $97,685. This reflects a net loss of $894,018 less $991,703 provided by changes in operating assets and liabilities and adjustments for non-cash items. Cash provided by working capital items was primarily impacted by $234,791 for non-cash financing costs for notes issued for services, a decrease of prepaid expense and deposits of $210,068, a decrease of inventory of $96,647, a decrease of $43,306 in trade receivables, an increase in trade payables of $374,066, and an increase in deferred revenue of $15,214.

Net Cash (Used in) Provided by Investing Activities. Investing activities provided $2,174 of cash in the six months ended June 30, 2016, and $88,025 for the six months ended June 30, 2015 for TAG system units leased to customers. Of which in June 30, 2015, $81,420 was acquired as part of our reverse acquisition transaction.

Net Cash Provided by Financing Activities. Net cash used in financing activities during the six months ended June 30, 2016 totaled $301,205, of which $387,264 was from various note and loan facilities entered into during the period. Net cash provided by financing activities during the six months ended June 30, 2015 was $339, of which was from various note and loan facilities entered into during the period.

Outstanding Indebtedness

Our current indebtedness as of June 30, 2016 is comprised of the following:

	●	Unsecured loan payable in the amount of $192,175 bearing interest at 15% per annum and due on demand;

	●	Unsecured loan payable in the amount of $317,500 bearing interest at 18% per annum;

	●	Unsecured note payable in the amount of $47,012, bearing interest at 36% per annum and due on July 20, 2017;

	●	Secured convertible loan payable in the amount of $946,366, bearing interest at 15.2% per annum and due on December 31, 2015;

	●	Unsecured, convertible note payable to related party in the amount of $310,000, bearing interest at 5% per annum and due on March 30, 2016;

	●	Unsecured, convertible note payable in the amount of $250,000, bearing interest at 10% per annum and due on demand;

	●	Unsecured, loan payable in the amount of $250,000, bearing interest 10% per annum, with a minimum interest amount of $25,000, due July 22, 2016.

	●	Unsecured, loan payable in the amount of $92,243, interest payable of 5% if paid by May 6, 2016, interest payable of 10% by June 6, 2016, or interest payable of 20% payable by July 5, 2016.

	●	Unsecured, loan payable in the amount of $23,061, bearing interest at 20% per annum and due on demand.

Preferred Stock Redemption Obligations

Westergaard Holdings Ltd., an affiliate of Keith Westergaard, a member of our board of directors, owns 4,229,384 shares (the “Series A Shares”) of Series A Convertible Preferred Stock of DSG TAG Systems. Pursuant to a Subscription / Debt Settlement Agreement dated September 26, 2014 between DSG TAG Systems and Westergaard Holdings, as amended on April 29, 2016, DSG TAG Systems has agreed that DSG Global, Inc. will complete financings for gross proceeds of at least $10 million and use a portion of the proceeds to redeem all of the Series A Shares at a price of $1.25 per share, as follows:

	●	On or before August 1, 2016, we must complete a financing for gross proceeds of at least $2.5 million and use at least $1.125 million to redeem a minimum of 900,000 Series A Shares;

	●	On or before September 1, 2016, we must complete an additional financing for gross proceeds of at least $2.5 million and use at least $1.125 million to redeem a minimum of 900,000 additional Series A Shares; and

	●	On or before October 1, 2016, we must complete an additional financing for gross proceeds of at least $5.0 million and use at least $3.14 million to redeem the remaining 2,509,384 Series A Shares.

If we fail to satisfy the above described financing and share redemption schedule, we will be in default of the Subscription and Debt Settlement Agreement which would entitle the holder of the Preferred Shares to convert the Series A Convertible Preferred Shares into common shares in the capital of DSG Global at the price of $1.25 per share.

Prospective Capital Needs

We estimate our operating expenses and working capital requirements for the twelve month period beginning July 1, 2016 to be as follows:

Estimated Expenses for the Twelve Month Period Beginning April 1, 2016
Management compensation	$	600,000
Professional fees	$	120,000
General and administrative	$	2,200,000
Total	$	2,920,000

At present, our cash requirements for the next 12 months outweigh the funds available to maintain our operations or development of any future properties. Of the $2,920,000 that we require for the next 12 months, we had $8,500 in cash as of August 18, 2016, and a working capital deficit of $3,963,750. Our principal sources of liquidity are our existing cash and cash generated from product sales. In order to achieve sustained profitability and positive cash flows from operations, we will need to increase revenue and/or reduce operating expenses. Our ability to maintain, or increase, current revenue levels to achieve and sustain profitability will depend, in part, on demand for our products.

In order to improve our liquidity, we also plan to pursue additional equity financing from private investors or possibly a registered public offering. We do not currently have any definitive arrangements in place for the completion of any further private placement financings and there is no assurance that we will be successful in completing any further private placement financings. If we are unable to achieve the necessary additional financing, then we plan to reduce the amounts that we spend on our business activities and administrative expenses in order to be within the amount of capital resources obligations, and execute our business plan. There can be no assurances that we will be able to raise additional capital on acceptable terms or at all, which would adversely affect our ability to achieve our business objectives.

Off-Balance Sheet Transactions

We do not have any off-balance sheet arrangements.

Critical Accounting Policies and Estimates

We prepare our consolidated financial statements in accordance with U.S. GAAP. The preparation of consolidated financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from the estimates made by our management. To the extent that there are differences between our estimates and actual results, our future financial statements presentation, financial condition, results of operations, and cash flows will be affected.

We believe that the assumptions and estimates associated with revenue recognition, foreign currency and foreign currency transactions and comprehensive loss have the greatest potential impact on our consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates. For further information on all of our significant accounting policies, see the notes to our condensed consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not Applicable

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The phrase “disclosure controls and procedures” refers to controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended, or the Exchange Act, such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the U.S. Securities and Exchange Commission, or SEC. Disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to our management, including our interim chief executive officer, or Interim CEO, and chief financial officer, or CFO, as appropriate to allow timely decision regarding required disclosure.

Our management, with the participation of our CEO and CFO, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of June 30, 2016, the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our CEO and CFO have concluded that as of June 30, 2016, our disclosure controls and procedures were designed at a reasonable assurance level and were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the first quarter of 2016 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

PART II: OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On June 4, 2015, a lawsuit was commenced against DSG TAG Systems Inc. in the Supreme Court of British Columbia, captioned Amanda McGuire v. DSG TAG Systems Inc., No. S-154634, Vancouver Registry. The plaintiff alleges that a promissory note in the principal amount of $100,000 CDN issued by DSG TAG Systems was not converted into common shares of DSG TAG Systems, as asserted by DSG TAG Systems, and the plaintiff seeks repayment of indebtedness in the amount of $100,000 CDN plus interest and costs. An agreement was reached on August 13, 2015 between DSG TAG Systems and the plaintiff, pursuant to which DSG TAG Systems agreed to pay the plaintiff $119,700 CDN in monthly installations of $17,100 CDN, the first payment commencing on October 1, 2015, and the plaintiff agreed to exchange 101,200 shares of common stock of DSG Tag Systems for 18,422 shares of common stock of DSG Global, which exchange occurred on October 22, 2015.

On December 3, 2015, a second action lawsuit was commenced against DSG TAG Systems Inc. in the Supreme Court of British Columbia, captioned Amanda McGuire v. DSG TAG Systems and DSG Global Inc., No. S-1510050, Vancouver Registry. The plaintiff filed a claim for default on the settlement agreement entered in on August 13, 2015 due to non-payment. On February 20, 2016, a new agreement was reached between DSG TAG Systems and the plaintiff, pursuant to which DSG TAG Systems agreed to pay the plaintiff $86,780 CDN in monthly installations of $5,423.75 CDN over a period of sixteen consecutive months, the first payment commencing April 20, 2016.

We may, from time to time, be party to litigation and subject to claims incident to the ordinary course of business. As our growth continues, we may become party to an increasing number of litigation matters and claims. The outcome of litigation and claims cannot be predicted with certainty, and the resolution of any future matters could materially affect our future financial position, results of operations or cash flows.

ITEM 1A. RISK FACTORS

Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information in this Form 10-Q, including our consolidated financial statements and related notes, before investing in our common stock. If any of the following risks materialize, our business, financial condition, results of operations and prospects could be materially and adversely affected. In that event, the price of our common stock could decline, and you could lose part or all of your investment.

Risks Related To Our Business

We have 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 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, 2015 and 2014 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, 2015 and 2014, we have generated operating losses since inception, and our cash resources are insufficient to meet our planned business objectives, which together raise 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 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 our products or pursue installations that use our products. Further, if our products are not timely delivered or do 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, 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, 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.

Our 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 OTCQB® Venture Marketplace 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 OTCQB Venture Marketplace operated by the OTC Markets Group. Trading in stock quoted on the OTCQB 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 OTCQB is not a stock exchange, and trading of securities on the OTCQB is often more sporadic than the trading of securities listed on a stock exchange like the Nasdaq Stock Market or New York 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.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

On July 26, 2016, DSG TAG entered into a Lease Modification Agreement with Benchmark Group to obtain a six month extension on the lease of its operating offices located in Surrey, British Columbia. The term of the lease has been extended from August 1, 2016 to January 31, 2017 at the rate of $5,518.63 per month.

On August 5, 2016, DSG Global entered into a convertible note agreement with Gary Risler pursuant to which we issued to which Mr. Risler purchased a $150,000 convertible note for $145,000 cash proceeds. The term of the note is 45 days from the date of contract with interest accruing at 2% per month. The principal amount and accrued interest on the debt are payable on maturity either in cash or by conversion to Class A common shares of our Company valued at $0.27 per share.

Item 6. Exhibits

Exhibit		Filed		Filing
Number	Exhibit Description	Form	Exhibit	Date	Herewith

3.1.1	Articles of Incorporation of the Registrant	SB-2	3.1	10-22-07

3.1.2	Certificate of Change of the Registrant	8-K	3.1	06-24-08

3.1.3	Articles of Merger of the Registrant	8-K	3.1	02-23-15

3.1.4	Certificate of Change of the Registrant	8-K	3.2	02-23-15

3.1.5	Certificate of Correction of the Registrant	8-K	3.3	02-23-15

3.2.1	Bylaws of the Registrant	SB-2	3.2	10-22-07

3.2.2	Amendment No. 1 to Bylaws of the Registrant	8-K	3.2	06-19-15

4.1	Form of the Registrant’s common stock certificate				X

4.1.2	DSG Global, Inc. 2015 Omnibus Incentive Plan	10-Q	10.3	11-13-15

10.1	Subscription Agreement / Debt Settlement, dated September 26, 2014, between DSG TAG Systems Inc. and Westergaard Holdings Ltd.	8-K	10.1	08-17-15

10.2	Addendum to Subscription Agreement / Debt Settlement, dated October 7, 2014, between DSG TAG Systems Inc. and Westergaard Holdings Ltd.	8-K	10.2	08-17-15

10.3	Second Addendum to Subscription Agreement / Debt Settlement, dated April 29, 2015, between DSG TAG Systems Inc. and Westergaard Holdings Ltd.	8-K	10.3	08-17-15

10.4	Third Addendum to Subscription Agreement / Debt Settlement, dated August 11, 2015, between DSG TAG Systems Inc. and Westergaard Holdings Ltd.	8-K	10.4	08-17-15

10.5	Letter from Westergaard Holdings Ltd., dated September 1, 2015, extending dates of redemption obligations.	8-K	10.1	09-08-15

10.6	Letter from Westergaard Holdings Ltd., dated November 10, 2015, extending dates of redemption obligations	10-Q	10.1	11-13-15

Exhibit		Filed		Filing
Number	Exhibit Description	Form	Exhibit	Date	Herewith

10.7	Letter fromWestergaard Holdings Ltd., dated December 31, 2015, extending dates of redemption obligations	8-K	10.1	03-09-16

10.8	Convertible Note of DSG TAG Systems Inc., dated March 31, 2015, payable to Adore Creative Agency, Inc.	8-K	10.5	08-14-15

10.9	Convertible Note Agreement, dated August 25, 2015, between the Registrant and Jerry Katell, Katell Productions, LLC and Katell Properties, LLC	10-Q	10.2	11-13-15

10.10	Agreement (TAG Touch) dated February 15, 2014 between DSG TAG Systems Inc. and DSG Canadian Manufacturing Corp.	8-K	10.1	05-06-15

10.11	Loan agreement, dated October 24, 2014 between DSG TAG Systems Inc. and A.Bosa & Co (Kootenay) Ltd.	10-K	10.11	05-02-16

10.12	Lease agreement (Modified), dated January 21, 2016 and February 1, 2016 between DSG TAG Systems Inc. and Benchmark Group	10-K	10.12	05-02-16

10.13	Loan agreement, dated February 11, 2016 between DSG TAG Systems Inc. and Jeremy Yaseniuk	10-K	10.13	05-02-16

10.14	Loan agreement, dated March 31, 2016 between DSG TAG Systems Inc. and E. Gary Risler	10-K	10.14	05-02-16

10.15	Letter from Westergaard Holdings Ltd., dated April 29, 2016	10-K	10.15	05-20-16

10.16	Lease Modification dated July 26, 2016 between DSG TAG Systems Inc. and Benchmark Estate (2009) (Benchmark Group)				X

10.17	Loan agreement, dated August 5, 2016 between DSG TAG Systems Inc. and E. Gary Risler				X

21.1	List of Subsidiaries	10-K	21.1	05-02-16

Exhibit		Filed		Filing
Number	Exhibit Description	Form	Exhibit	Date	Herewith

31.1	Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				X

32.1#	Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002				X

101*	Interactive Data File

101.INS	XBRL Instance Document				X

101.SCH	XBRL Taxonomy Extension Schema Document				X

101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document				X

101.DEF	XBRL Taxonomy Extension Definition Linkbase Document				X

101.LAB	XBRL Taxonomy Extension Label Linkbase Document				X

101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document				X

The information in this exhibit is furnished and deemed not filed with the Securities and Exchange Commission for purposes of section 18 of the Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of DSG Global, Inc. under the Securities Act of 1933, as amended, or the Exchange Act of 1934, as amended, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 26, 2016	DSG Global Inc.
	(Registrant)

	By:	/s/ Robert Silzer
		Robert Silzer
		Chief Executive Officer and Chief Financial Officer
		(Principal Executive Officer and
		Principal Financial and Accounting Officer)

DSG Global Inc. - FORM 10-Q - August 26, 2016

Attached files

DSG Global Inc. Reports