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Item 1A. Risk Factors

2021-04-15 compared with 2020-06-08 · 407 added, 434 removed, 60 unchanged (93% of the section changed)

Readers should carefully consider the risks

and uncertainties described below.

Our failure to successfully address the

risks and uncertainties described below would have a material adverse effect on our business, financial condition and/or results

of operations, and the trading price of our common stock may decline and investors may lose all or part of their investment.

cannot assure you that we will successfully address these risks or other unknown risks that may affect our business.

As an enterprise engaged in the development

of new technology, our business is inherently risky.

Our common shares are considered speculative during the development

of our new business operations.

Readers should carefully consider the risks and

uncertainties described below.

Our failure to successfully address the risks

and uncertainties described below would have a material adverse effect on our business, financial condition and/or results of operations,

and the trading price of our common stock may decline and investors may lose all or part of their investment.

We cannot assure you that

we will successfully address these risks or other unknown risks that may affect our business.

As an enterprise engaged in the development of

new technology, our business is inherently risky.

Our common shares are considered speculative during the development of our new

business operations.

Prospective investors should consider carefully the risk factors set out below.

Business interruptions, including

any interruptions resulting from COVID-19, could significantly disrupt our operations and could have a material adverse impact

on us if the situation continues .

Business interruptions, including any interruptions

resulting from COVID-19, could significantly disrupt our operations and could have a material adverse impact on the Company if

the situation continues.

resulting from COVID-19, could significantly disrupt our operations and could have a material adverse impact on us if the situation continues .

Further, all employees, including our specialized

technical staff, are working from home or in a virtual environment.

The Company always maintains the ability for team members to

work virtual and we will continue to stay virtual, until the State and or the Federal government indicate the environment is safe

The Company always maintains the ability for team members to work

virtual and we will continue to stay virtual, until the applicable State and or the Federal government indicate the environment is safe

to return to work.

The ongoing coronavirus outbreak which

began in China at the beginning of 2020 has impacted various businesses throughout the world, including travel restrictions and

the extended shutdown of certain businesses in impacted geographic regions.

If the coronavirus outbreak situation should worsen,

we may experience disruptions to our business including, but not limited to equipment, to our workforce, or to our business relationships

with other third parties.

The extent to which the coronavirus impacts our operations or

those of our third-party partners will depend on future developments, which are highly uncertain and cannot be predicted with confidence,

including the duration of the outbreak, new information that may emerge concerning the severity of the coronavirus and the actions

to contain the coronavirus or treat its impact, among others.

Any such disruptions or losses we incur could have a material adverse

effect on our financial results and our ability to conduct business as expected.

We need to continue as a going concern if our business

is to succeed.

Our independent registered public accounting

firm reports on our audited financial statements for the years ended December 31, 2019 and 2018, indicate that there are a number

of factors that raise substantial risks about our ability to continue as a going concern.

Such factors identified in the report

are our accumulated deficit since inception, no sales recorded to date, our failure to attain profitable operations, the excess

of liabilities over assets, and our dependence upon obtaining adequate additional financing to pay our liabilities.

If we are not

able to continue as a going concern, investors could lose their investments.

Because of the unique difficulties

and uncertainties inherent in technology development, we face a risk of business failure.

Potential investors should be aware of

the difficulties normally encountered by companies developing new technology and the high rate of failure of such enterprises.

The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered

in connection with the development of new technology with limited personnel and financial means.

These potential problems include,

but are not limited to, unanticipated technical problems that extend the time and cost of product development, or unanticipated

problems with the operation of our technology or that with which we are licensing that also extend the time and cost of product

The ongoing coronavirus outbreak which began in

China at the beginning of 2020 has impacted various businesses throughout the world, including travel restrictions and the extended shutdown

of certain businesses in impacted geographic regions.

If the coronavirus outbreak situation should worsen, we may experience disruptions

to our business including, but not limited to equipment, to our workforce, or to our business relationships with other third parties.

The extent to which the coronavirus impacts our

operations or those of our third-party partners will depend on future developments, which are highly uncertain and cannot be predicted

with confidence, including the duration of the outbreak, new information that may emerge concerning the severity of the coronavirus and

the actions to contain the coronavirus or treat its impact, among others.

Any such disruptions or losses we incur could have a material

adverse effect on our financial results and our ability to conduct business as expected.

If we default on the Convertible Debenture, the secured

holder could take possession of our assets, including our patents and other intellectual property.

The Convertible Debenture (Secured) issued April 24, 2017, is secured

by our assets, which includes our patents and other intellectual property.

In the event that we default on the obligations in the Debenture,

the secured holder could take possession of our assets, including our patents and other intellectual property.

If this were to occur,

investors would likely lose all of their investment.

We need to continue as a going concern if our business is to

Our independent registered public accounting firm

reports on our audited financial statements for the years ended December 31, 2020 and 2019, indicate that there are a number of factors

that raise substantial risks about our ability to continue as a going concern.

Such factors identified in the report are our accumulated

deficit since inception, no sales recorded to date, our failure to attain profitable operations, the excess of liabilities over assets,

and our dependence upon obtaining adequate additional financing to pay our liabilities.

If we are not able to continue as a going concern,

investors could lose their investments.

Because of the unique difficulties and uncertainties

inherent in technology development, we face a risk of business failure.

Potential investors should be aware of the difficulties

normally encountered by companies developing new technology and the high rate of failure of such enterprises.

The likelihood of success

must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the development

of new technology with limited personnel and financial means.

These potential problems include, but are not limited to, unanticipated

technical problems that extend the time and cost of product development, or unanticipated problems with the operation of our technology

or that with which we are licensing that also extend the time and cost of product development.

If we do not obtain additional financing

or sufficient revenues, our business will fail.

Our current operating funds are less than

necessary to complete the full development and marketing of our DarkPulse Technology-based systems, and we will need to obtain

additional financing in order to complete our business plan.

We currently have minimal operations and we are not currently

generating revenue or net income.

Our business plan calls for significant

expenses in connection with developing our DarkPulse Technology-based systems and paying our current obligations.

The Company currently

does not have sufficient funds to pay its obligations.

As a result, the Company will require additional financing to execute its

business plan through raising additional capital and/or beginning to generate revenue.

We do not currently have any firm arrangements

for financing, and we can provide no assurance to investors that we will be able to find such additional financing if required.

Obtaining additional financing is subject to a number of factors, including investor acceptance of our DarkPulse Technology and

current financial condition as well as general market conditions.

These factors affect the timing, amount, terms or conditions

of additional financing unavailable to us.

And if additional financing is not arranged, the company faces the risk of going out

The Company’s management is currently engaged in actively pursuing multiple financing options in order to obtain

the capital necessary to execute the Company’s business plan.

The most likely source of future funds

presently available to us is through the additional sale of private equity capital or through a convertible debt instrument.

Any sale of share capital or conversion of convertible debt will most likely result in dilution to existing shareholders.

There is no history upon which to base

any assumption as to the likelihood we will prove successful, and we can provide investors with no assurance that we will generate

any operating revenues or achieve profitable operations.

If we are unsuccessful in addressing these risks, our business will most

Because the SEC imposes additional

sales practice requirements on brokers who deal in our shares that are penny stocks, some brokers may be unwilling to trade them.

This means that investors may have difficulty reselling their shares and may cause the price of the shares to decline.

Our shares qualify as penny stocks and

are covered by Section 15(g) of the Securities Exchange Act of 1934, which imposes additional sales practice requirements on broker/dealers

who sell our securities in this offering or in the aftermarket.

In particular, prior to selling a penny stock, broker/dealers must

give the prospective customer a risk disclosure document that:

contains a description of the nature and level of risk in the market

for penny stocks in both public offerings and secondary trading;

contains a description of the broker/dealers’

the customer and of the rights and remedies available to the customer with respect to violations of such duties or other requirements

of Federal securities laws;

contains a brief, clear, narrative description of a dealer market, including “bid”

“ask”

prices for penny stocks and the significance of the spread between the bid and ask prices;

contains the toll

free telephone number for inquiries on disciplinary actions established pursuant to section 15(A)(i);

defines significant terms

used in the disclosure document or in the conduct of trading in penny stocks;

and contains such other information, and is in such

form (including language, type size, and format), as the SEC requires by rule or regulation.

Further, for sales of our securities,

the broker/dealer must make a special suitability determination and receive from you a written agreement before making a sale to

Because of the imposition of the foregoing additional sales practices, it is possible that brokers will not want to make a

market in our shares.

This could prevent reselling of shares and may cause the price of the shares to decline.

Technology companies face intense

We will have to compete with our competitors for financing and for qualified managerial and technical employees.

The technology industry is intensely competitive

in all of its phases.

Competition includes large established technology companies with substantial capabilities and with greater

financial and technical resources than we have.

As a result of this competition, we may be unable to become a leader in our industry

and attract and retain qualified managerial and technical employees.

If we are unable to successfully compete for financing or

for qualified employees, our technology development and commercialization efforts may be slowed down or suspended.

Product development is a long, expensive and uncertain

Our current operating funds are less than necessary

to complete the full development and marketing of our DarkPulse Technology-based systems, and we will need to obtain additional financing

in order to complete our business plan.

We currently have minimal operations and we are not currently generating revenue or net

Our business plan calls for significant expenses

in connection with developing our DarkPulse Technology-based systems and paying our current obligations.

The Company will require additional

financing to execute its business plan through raising additional capital and/or beginning to generate revenue.

additional financing is subject to a number of factors, including investor acceptance of our DarkPulse Technology and current financial

condition as well as general market conditions.

These factors affect the timing, amount, terms or conditions of additional financing

unavailable to us.

And if additional financing is not arranged, the Company faces the risk of going out of business.

The Company’s

management is currently engaged in actively pursuing multiple financing options in order to obtain the capital necessary to execute the

Company’s business plan.

The most likely source of future funds presently

available to us is through the additional sale of private equity capital or through a convertible debt instrument.

Any sale of share

capital or conversion of convertible debt will most likely result in dilution to existing shareholders.

There is no history upon which to base any assumption

as to the likelihood we will prove successful, and we can provide investors with no assurance that we will generate any operating revenues

or achieve profitable operations.

If we are unsuccessful in addressing these risks, our business will most likely fail.

Product development is a long, expensive and uncertain process.

The development of DarkPulse Technology-based

systems is a costly, complex and time-consuming process, and the investment in product development often involves a long wait until

a return, if any, is achieved on such investment.

We continue to make significant investments in research and development relating

to our DarkPulse Technology-based systems and our other businesses.

Investments in new technology and processes are inherently

We have experienced numerous setbacks and delays in our research and development efforts and may encounter further

obstacles in the course of the development of additional technologies and products.

We may not be able to overcome these obstacles

or may have to expend significant additional funds and time.

Technical obstacles and challenges we encounter in our research and

development process may result in delays in or abandonment of product commercialization, may substantially increase the costs of

development, and may negatively affect our results of operations.

Successful technical development of our products does

not guarantee successful commercialization.

We may successfully complete the technical

development for one or all of our product development programs, but still fail to develop a commercially successful product for

a number of reasons, including among others the following:

failure to obtain the required regulatory approvals for their use;

prohibitive production costs;

systems is a costly, complex and time-consuming process, and the investment in product development often involves a long wait until a

return, if any, is achieved on such investment.

We continue to make significant investments in research and development relating to our

DarkPulse Technology-based systems and our other businesses.

Investments in new technology and processes are inherently speculative.

Successful technical development

of our products does not guarantee successful commercialization.

We may successfully complete the technical development

for one or all of our product development programs, but still fail to develop a commercially successful product for a number of reasons,

including among others the following:

competing products;

lack of innovation of the product;

ineffective distribution and marketing;

1 unchanged sentence

demonstrations of the products not aligning with or meeting customer needs.

Our success in the market for the products

we develop will depend largely on our ability to prove our products’

Our success in the market for the products we

develop will depend largely on our ability to prove our products’

capabilities.

Upon demonstration, our products and/or

technology may not have the capabilities they were designed to have or that we believed they would have.

Furthermore, even if we

do successfully demonstrate our products’

capabilities, potential customers may be more comfortable doing business with a

larger, more established, more proven company than us.

Moreover, competing products may prevent us from gaining wide market acceptance

of our products.

Significant revenue from new product investments may not be achieved for a number of years, if at all.

If we fail to protect our intellectual property rights,

we could lose our ability to compete in the marketplace.

Our intellectual property and proprietary

rights are important to our ability to remain competitive and for the success of our products and our business.

We rely on a combination

of patent, trademark and trade secret laws as well as confidentiality agreements and procedures, non-compete agreements and other

contractual provisions to protect our intellectual property, other proprietary rights and our brand.

We have confidentiality agreements

in place with our consultants, customers and certain business suppliers and plan to require future employees to enter into confidentiality

and non-compete agreements.

Upon demonstration, our products and/or technology

may not have the capabilities they were designed to have or that we believed they would have.

Furthermore, even if we do successfully

demonstrate our products’

capabilities, potential customers may be more comfortable doing business with a larger, more established,

more proven company than us.

Moreover, competing products may prevent us from gaining wide market acceptance of our products.

revenue from new product investments may not be achieved for a number of years, if at all.

If we fail to protect our intellectual property rights, we could

lose our ability to compete in the marketplace.

Our intellectual property and proprietary rights

are important to our ability to remain competitive and for the success of our products and our business.

We rely on a combination of patent,

trademark and trade secret laws as well as confidentiality agreements and procedures, non-compete agreements and other contractual provisions

to protect our intellectual property, other proprietary rights and our brand.

We have confidentiality agreements in place with our consultants,

customers and certain business suppliers and plan to require future employees to enter into confidentiality and non-compete agreements.

We have little protection when we must rely on trade secrets and nondisclosure agreements.

Our intellectual

property rights may be challenged, invalidated or circumvented by third parties.

We may not be able to prevent the unauthorized

disclosure or use of our technical knowledge or other trade secrets by employees or competitors.

Furthermore, our competitors may

independently develop technologies and products that are substantially equivalent or superior to our technologies and/or products,

which could result in decreased revenues.

Moreover, the laws of foreign countries may not protect our intellectual property rights

to the same extent as the laws of the U.S.

Litigation may be necessary to enforce our intellectual property rights which could

result in substantial costs to us and substantial diversion of management attention.

If we do not adequately protect our intellectual

property, our competitors could use it to enhance their products.

Our inability to adequately protect our intellectual property

rights could adversely affect our business and financial condition, and the value of our brand and other intangible assets.

Other companies may claim that we

infringe their intellectual property, which could materially increase our costs and harm our ability to generate future revenue

We do not believe that we infringe the

proprietary rights of any third party, but claims of infringement are becoming increasingly common and third parties may assert

infringement claims against us.

It may be difficult or impossible to identify, prior to receipt of notice from a third party, the

trade secrets, patent position or other intellectual property rights of a third party, either in the United States or in foreign

jurisdictions.

Any such assertion may result in litigation or may require us to obtain a license for the intellectual property

rights of third parties.

If we are required to obtain licenses to use any third party technology, we would have to pay royalties,

which may significantly reduce any profit on our products.

In addition, any such litigation could be expensive and disruptive to

our ability to generate revenue or enter into new market opportunities.

Our intellectual property rights may be challenged,

invalidated or circumvented by third parties.

We may not be able to prevent the unauthorized disclosure or use of our technical knowledge

or other trade secrets by employees or competitors.

Furthermore, our competitors may independently develop technologies and products that

are substantially equivalent or superior to our technologies and/or products, which could result in decreased revenues.

Moreover, the

laws of foreign countries may not protect our intellectual property rights to the same extent as the laws of the U.S.

Litigation may be

necessary to enforce our intellectual property rights which could result in substantial costs to us and substantial diversion of management

If we do not adequately protect our intellectual property, our competitors could use it to enhance their products.

Our inability

to adequately protect our intellectual property rights could adversely affect our business and financial condition, and the value of our

brand and other intangible assets.

Other companies may claim that we infringe

their intellectual property, which could materially increase our costs and harm our ability to generate future revenue and profit.

We do not believe that we infringe the proprietary

rights of any third party, but claims of infringement are becoming increasingly common and third parties may assert infringement claims

It may be difficult or impossible to identify, prior to receipt of notice from a third party, the trade secrets, patent position

or other intellectual property rights of a third party, either in the United States or in foreign jurisdictions.

Any such assertion may

result in litigation or may require us to obtain a license for the intellectual property rights of third parties.

If we are required to

obtain licenses to use any third party technology, we would have to pay royalties, which may significantly reduce any profit on our products.

In addition, any such litigation could be expensive and disruptive to our ability to generate revenue or enter into new market opportunities.

If any of our products were found to infringe other parties’

proprietary rights and we are unable to come to terms regarding a license with such parties, we may be forced to modify our products

to make them non-infringing or to cease production of such products altogether.

The nature of our business involves

significant risks and uncertainties that may not be covered by insurance or indemnity.

We develop and sell products where insurance

or indemnification may not be available, including:

proprietary rights and we are unable to come to terms regarding a license

with such parties, we may be forced to modify our products to make them non-infringing or to cease production of such products altogether.

The nature of our business involves significant

risks and uncertainties that may not be covered by insurance or indemnity.

We develop and sell products where insurance or

indemnification may not be available, including:

designing and developing products using advanced and unproven technologies in intelligence and homeland security applications that are intended to operate in high demand, high risk situations;

designing and developing products to collect, distribute and analyze various types of information.

Failure of certain of our products could

result in loss of life or property damage.

Certain products may raise questions with respect to issues of privacy rights, civil

liberties, intellectual property, trespass, conversion and similar concepts, which may raise new legal issues.

Indemnification

to cover potential claims or liabilities resulting from a failure of technologies developed or deployed may be available in certain

circumstances but not in others.

We are not able to maintain insurance to protect against all operational risks and uncertainties.

Substantial claims resulting from an accident, failure of our product, or liability arising from our products in excess of any

indemnity or insurance coverage (or for which indemnity or insurance is not available or was not obtained) could harm our financial

condition, cash flows, and operating results.

Any accident, even if fully covered or insured, could negatively affect our reputation

among our customers and the public, and make it more difficult for us to compete effectively.

We are heavily reliant on Dennis

O’Leary, our Chairman and Chief Executive Officer, and the departure or loss of Dennis O’Leary could disrupt our business.

The Company depends heavily on the continued

efforts of Dennis O’Leary, Chairman, Chief Executive Officer and a director.

O’Leary is essential to the Company’s

strategic vision and day-to-day operations and would be difficult to replace.

We currently do not have an employment agreement

O’Leary, thus we cannot be certain that he will desire to continue with us for the necessary time it will to complete

the product development and initial sales channel development.

Failure of certain of our products could result

in loss of life or property damage.

Certain products may raise questions with respect to issues of privacy rights, civil liberties, intellectual

property, trespass, conversion and similar concepts, which may raise new legal issues.

Indemnification to cover potential claims or liabilities

resulting from a failure of technologies developed or deployed may be available in certain circumstances but not in others.

able to maintain insurance to protect against all operational risks and uncertainties.

Substantial claims resulting from an accident,

failure of our product, or liability arising from our products in excess of any indemnity or insurance coverage (or for which indemnity

or insurance is not available or was not obtained) could harm our financial condition, cash flows, and operating results.

Any accident,

even if fully covered or insured, could negatively affect our reputation among our customers and the public, and make it more difficult

for us to compete effectively.

We are heavily reliant on Dennis O’Leary,

our Chairman and Chief Executive Officer, and the departure or loss of Dennis O’Leary could disrupt our business.

The Company depends heavily on the continued efforts

of Dennis O’Leary, Chairman, Chief Executive Officer and director.

O’Leary is essential to the Company’s strategic

vision and day-to-day operations and would be difficult to replace.

We currently do not have an employment agreement with Mr.

O’Leary,

thus we cannot be certain that he will desire to continue with us for the necessary time it will to complete the product development and

initial sales channel development.

The departure or loss of Mr.

O’Leary, or the inability to

hire and retain a qualified replacement, could negatively impact the Company’s ability to manage its business.

If we are unable to recruit and retain

key management, technical and sales personnel, our business would be negatively affected.

For our business to be successful, we need

to attract and retain highly qualified technical, management and sales personnel.

The failure to recruit additional key personnel

when needed with specific qualifications and on acceptable terms or to retain good relationships with our partners might impede

our ability to continue to develop, commercialize and sell our products.

To the extent the demand for skilled personnel exceeds

supply, we could experience higher labor, recruiting and training costs in order to attract and retain such employees.

competition for qualified personnel from other companies with significantly more resources available to them and thus may not be

able to attract the level of personnel needed for our business to succeed.

The control deficiencies in our internal

control over financial reporting may until remedied cause errors in our financial statements or cause our filings with the SEC

to not be timely.

The Company believes that control deficiencies exist

O’Leary, or the inability to hire and retain a qualified replacement,

could negatively impact the Company’s ability to manage its business.

If we are unable to recruit and retain key

management, technical and sales personnel, our business would be negatively affected.

For our business to be successful, we need to

attract and retain highly qualified technical, management and sales personnel.

The failure to recruit additional key personnel when needed

with specific qualifications and on acceptable terms or to retain good relationships with our partners might impede our ability to continue

to develop, commercialize and sell our products.

To the extent the demand for skilled personnel exceeds supply, we could experience higher

labor, recruiting and training costs in order to attract and retain such employees.

We face competition for qualified personnel from other

companies with significantly more resources available to them and thus may not be able to attract the level of personnel needed for our

business to succeed.

Material weaknesses in our internal control

over financial reporting may, until remedied, cause errors in our financial statements or cause our filings with the SEC to not be timely.

The Company believes that material weaknesses exist

in our internal control over financial reporting as of December 31, 2020, including those related to (i) our

internal audit functions and (ii) a lack of segregation of duties within accounting functions.

If our internal control over

financial reporting or disclosure controls and procedures are not effective, there may be errors in our financial statements that

could require a restatement or our filings may not be timely made with the SEC.

We intend to implement additional corporate governance

and control measures to strengthen our control environment as we are able, but we may not achieve our desired objectives.

no control environment, no matter how well designed and operated, can prevent or detect all errors or fraud.

We may identify material

weaknesses and control deficiencies in our internal control over financial reporting in the future that may require remediation

and could lead investors losing confidence in our reported financial information, which could lead to a decline in our stock price.

Risks Related to Our Organization and

Our Common Stock

Certain shareholders will be

able to exert significant influence over us to the detriment of minority stockholders.

Our largest shareholder beneficially owns

approximately 81.29% of our outstanding common stock as of May 29, 2020, as calculated according to voting power.

stockholders, if they act together, will be able to exert significant influence on our management and affairs and all matters

requiring stockholder approval, including significant corporate transactions.

This concentration of ownership may have the effect

of delaying or preventing our change in control and might affect the market price of our common stock.

You may experience dilution of your

ownership interests because of the future issuance of additional shares of our common or preferred stock or other securities that

are convertible into or exercisable for our common or preferred stock.

On July 1, 2019, the majority stockholders

holding a majority of the issued and outstanding voting shares of the Company approved an amendment to the Company’s Certificate

of Incorporation, to increase the number of authorized shares of Common Stock from 3,000,000,000 to 20,000,000.

We are authorized

to issue an aggregate of 20,000,000,000 shares of common stock and 2,000,000 shares of “blank check”

If our internal control over financial

reporting or disclosure controls and procedures are not effective, there may be errors in our financial statements that could require

a restatement or our filings may not be timely made with the SEC.

We intend to implement additional corporate governance and control measures

to strengthen our control environment as we are able, but we may not achieve our desired objectives.

Moreover, no control environment,

no matter how well designed and operated, can prevent or detect all errors or fraud.

We may identify material weaknesses and control deficiencies

in our internal control over financial reporting in the future that may require remediation and could lead investors losing confidence

in our reported financial information, which could lead to a decline in our stock price.

Risks Related to Our Organization and Our Common

Certain shareholders will be able to

exert significant influence over us to the detriment of minority stockholders.

Our largest shareholder beneficially owns approximately

81.29 % of our outstanding common stock as of April 10, 2021, as calculated according to voting power.

This stockholder will be able

to exert significant influence on our management and affairs and all matters requiring stockholder approval, including significant corporate

transactions.

This concentration of ownership may have the effect of delaying or preventing our change in control and might affect the

market price of our common stock.

You may experience dilution of your ownership

interests because of the future issuance of additional shares of our common or preferred stock or other securities that are convertible

into or exercisable for our common or preferred stock.

On July 1, 2019, the majority stockholders holding

a majority of the issued and outstanding voting shares of the Company approved an amendment to the Company’s Certificate of Incorporation,

to increase the number of authorized shares of Common Stock from 3,000,000,000 to 20,000,000,000.

We are authorized to issue an aggregate

of 20,000,000,000 shares of common stock and 2,000,000 shares of “blank check”

preferred stock.

In the future, we may issue our authorized but previously unissued equity securities, resulting in the dilution of the ownership

interests of our present stockholders.

We may issue additional shares of our common stock or other securities that are convertible

into or exercisable for our common stock in connection with hiring or retaining employees, future acquisitions, future sales of

our securities for capital raising purposes, or for other business purposes.

The future issuance of any such additional shares

of our common stock may create downward pressure on the trading price of the common stock.

We will need to raise additional capital

in the near future to meet our working capital needs, and there can be no assurance that we will not be required to issue additional

shares, warrants or other convertible securities in the future in conjunction with these capital raising efforts, including at

a price (or exercise or conversion prices) below the price an investor paid for stock.

We do not expect to declare or pay

any dividends.

We have not declared or paid any dividends

on our common stock since our inception, and we do not anticipate paying any such dividends for the foreseeable future.

In the future, we may issue

our authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our present stockholders.

We may issue additional shares of our common stock or other securities that are convertible into or exercisable for our common stock in

connection with hiring or retaining employees, future acquisitions, future sales of our securities for capital raising purposes, or for

other business purposes.

The future issuance of any such additional shares of our common stock may create downward pressure on the trading

price of the common stock.

We will need to raise additional capital in the near future to meet our working capital needs, and there can

be no assurance that we will not be required to issue additional shares, warrants or other convertible securities in the future in conjunction

with these capital raising efforts, including at a price (or exercise or conversion prices) below the price an investor paid for stock.

Because the SEC imposes additional sales

practice requirements on brokers who deal in our shares that are penny stocks, some brokers may be unwilling to trade them.

that investors may have difficulty reselling their shares and may cause the price of the shares to decline.

Our shares qualify as penny stocks and are covered

by Section 15(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which imposes additional sales practice

requirements on broker/dealers who sell our securities in this offering or in the aftermarket.

In particular, prior to selling a penny

stock, broker/dealers must give the prospective customer a risk disclosure document that:

contains a description of the nature and level

of risk in the market for penny stocks in both public offerings and secondary trading;

contains a description of the broker/dealers’

duties to the customer and of the rights and remedies available to the customer with respect to violations of such duties or other requirements

of Federal securities laws;

contains a brief, clear, narrative description of a dealer market, including “bid”

and “ask”

prices for penny stocks and the significance of the spread between the bid and ask prices;

contains the toll free telephone number for

inquiries on disciplinary actions established pursuant to section 15(A)(i);

defines significant terms used in the disclosure document

or in the conduct of trading in penny stocks;

and contains such other information, and is in such form (including language, type size,

and format), as the SEC requires by rule or regulation.

Further, for sales of our securities, the broker/dealer must make a special suitability

determination and receive from you a written agreement before making a sale to you.

Because of the imposition of the foregoing additional

sales practices, it is possible that brokers will not want to make a market in our shares.

This could prevent reselling of shares and

may cause the price of the shares to decline.

We do not expect to declare or pay any dividends.

We have not declared or paid any dividends on

our common stock since our inception, and we do not anticipate paying any such dividends for the foreseeable future.

Volatility of Stock Price.

Our common shares are currently publicly

traded on the OTC Markets under the symbol DPLS.

Our common shares are currently publicly traded

on the OTC Markets under the symbol “DPLS.”

In the future, the trading price of our common shares may be subject to wide fluctuations.

Trading prices of the common shares may fluctuate in response to a number of factors, many of which will be beyond our control.

In addition, the stock market in general, and the market for sensor technology companies in particular, has experienced extreme

price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of such companies.

Market and industry factors may adversely affect the market price of the common shares, regardless of our operating performance.

Readers should carefully consider the risks and uncertainties described below before deciding whether to invest in shares of our

common stock.

Our failure to successfully address the

risks and uncertainties described below would have a material adverse effect on our business, financial condition and/or results

of operations, and the trading price of our common stock may decline and investors may lose all or part of their investment.

cannot assure you that we will successfully address these risks or other unknown risks that may affect our business.

the stock market in general, and the market for sensor technology companies in particular, has experienced extreme price and volume fluctuations

that have often been unrelated or disproportionate to the operating performance of such companies.

Market and industry factors may adversely

affect the market price of the common shares, regardless of our operating performance.

Readers should carefully consider the risks and

uncertainties described below before deciding whether to invest in shares of our common stock.

Our failure to successfully address the risks

and uncertainties described below would have a material adverse effect on our business, financial condition and/or results of operations,

and the trading price of our common stock may decline and investors may lose all or part of their investment.

We cannot assure you that

we will successfully address these risks or other unknown risks that may affect our business.

As an enterprise engaged in the development

of new technology, our business is inherently risky.

Our common shares are considered speculative during the development of our

new business operations.

Prospective investors should consider carefully the risk factors set out below.

As reported herein

in “Item 5.

Market For Common Equity and Related Stockholder Matters ”, the market price of our common

stock has fluctuated significantly.

Being a public company is expensive and administratively

Our common shares are considered speculative during the development of our new

business operations.

Prospective investors should consider carefully the risk factors set out herein.

As reported herein in

“Item 5.

Market For Common Equity and Related Stockholder Matters ”, the market price of our common stock has

fluctuated significantly.

Being a public company is expensive and administratively burdensome.

As a public reporting company, we are subject

to the information and reporting requirements of the Securities Act of 1933, as amended (the “Securities Act”), the

Securities Exchange Act of 1934, as amended (the “Exchange Act”) and other federal securities laws, rules and regulations

related thereto, including compliance with the Sarbanes-Oxley Act.

Complying with these laws and regulations requires the time

and attention of our Board of Directors and management team, and increases our expenses.

We estimate the Company will incur approximately

$200,000 to $300,000 annually in connection with being a public company.

to the information and reporting requirements of the Securities Act of 1933, as amended (the “Securities Act”), the Exchange

Act and other federal securities laws, rules and regulations related thereto, including compliance with the Sarbanes-Oxley Act.

with these laws and regulations requires the time and attention of our Board of Directors and management team, and increases our expenses.

We estimate the Company will incur approximately $200,000 to $300,000 annually in connection with being a public company.

Among other things, we are required to:

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involve, to a greater degree, our outside legal counsel and accountants in the above activities.

The costs of preparing and filing annual

and quarterly reports, proxy statements and other information with the SEC and furnishing audited reports to stockholders are expensive

and much greater than that of a privately-held company, and compliance with these rules and regulations may require us to hire

additional financial reporting, internal controls and other finance personnel, and will involve a material increase in regulatory,

legal and accounting expenses and the attention of management.

There can be no assurance that we will be able to comply with the

applicable regulations in a timely manner, if at all.

In addition, being a public company makes it more expensive for us to obtain

director and officer liability insurance.

In the future, we may be required to accept reduced coverage or incur substantially higher

costs to obtain this coverage.

If we fail to establish and maintain

an effective system of internal control, we may not be able to report our financial results accurately or to prevent fraud.

inability to report and file our financial results accurately and timely could harm our reputation and adversely impact the trading

price of our common stock.

Effective internal control is necessary

for us to provide reliable financial reports and prevent fraud.

If we cannot provide reliable financial reports or prevent fraud,

we may not be able to manage our business as effectively as we would if an effective control environment existed, and our business

and reputation with investors may be harmed.

As a result, our small size and any current internal control deficiencies may adversely

affect our financial condition, results of operation and access to capital.

We have not performed an in-depth analysis to determine

if historical un-discovered failures of internal controls exist, and may in the future discover areas of our internal control that

need improvement.

Public company compliance may make

it more difficult to attract and retain officers and directors.

The costs of preparing and filing annual and quarterly

reports, proxy statements and other information with the SEC and furnishing audited reports to stockholders are expensive and much greater

than that of a privately-held company, and compliance with these rules and regulations may require us to hire additional financial reporting,

internal controls and other finance personnel, and will involve a material increase in regulatory, legal and accounting expenses and the

attention of management.

There can be no assurance that we will be able to comply with the applicable regulations in a timely manner,

In addition, being a public company makes it more expensive for us to obtain director and officer liability insurance.

future, we may be required to accept reduced coverage or incur substantially higher costs to obtain this coverage.

If we fail to establish and maintain an

effective system of internal control, we may not be able to report our financial results accurately or to prevent fraud.

Any inability

to report and file our financial results accurately and timely could harm our reputation and adversely impact the trading price of our

common stock.

Effective internal control is necessary for us

to provide reliable financial reports and prevent fraud.

If we cannot provide reliable financial reports or prevent fraud, we may not

be able to manage our business as effectively as we would if an effective control environment existed, and our business and reputation

with investors may be harmed.

As a result, our small size and any current internal control deficiencies may adversely affect our financial

condition, results of operation and access to capital.

We have not performed an in-depth analysis to determine if historical un-discovered

failures of internal controls exist, and may in the future discover areas of our internal control that need improvement.

Public company compliance may make it more

difficult to attract and retain officers and directors.

The Sarbanes-Oxley Act and new rules subsequently

implemented by the SEC have required changes in corporate governance practices of public companies.

As a public company, we expect

these new rules and regulations to increase our compliance costs in 2019 and beyond and to make certain activities more time consuming

As a public company, we also expect that these new rules and regulations may make it more difficult and expensive for

us to obtain director and officer liability insurance in the future and we may be required to accept reduced policy limits and

coverage or incur substantially higher costs to obtain the same or similar coverage.

As a result, it may be more difficult for

us to attract and retain qualified persons to serve on our Board of Directors or as executive officers.

As a public company, we expect these

new rules and regulations to increase our compliance costs in 2021 and beyond and to make certain activities more time consuming and costly.

As a public company, we also expect that these new rules and regulations may make it more difficult and expensive for us to obtain director

and officer liability insurance in the future and we may be required to accept reduced policy limits and coverage or incur substantially

higher costs to obtain the same or similar coverage.

As a result, it may be more difficult for us to attract and retain qualified persons

to serve on our Board of Directors or as executive officers.

You could lose all of your investment.

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and involves a high degree of risk.

Potential investors should be aware that the value of an investment in the Company may go down

as well as up.

In addition, there can be no certainty that the market value of an investment in the Company will fully reflect

its underlying value.

Potential investors should be aware that the value of an investment in the Company may go down as

In addition, there can be no certainty that the market value of an investment in the Company will fully reflect its underlying

You could lose your entire investment.

The ability of our Board of Directors

to issue additional stock may prevent or make more difficult certain transactions, including a sale or merger of the Company.

Our Board of Directors is authorized to

issue up to 2,000,000 shares of preferred stock with powers, rights and preferences designated by it.

See “Preferred

in the section of this Current Report titled “Description of Securities.”

Shares of voting or convertible

preferred stock could be issued, or rights to purchase such shares could be issued, to create voting impediments or to frustrate

persons seeking to effect a takeover or otherwise gain control of the Company.

The ability of the Board of Directors to issue

such additional shares of preferred stock, with rights and preferences it deems advisable, could discourage an attempt by a party

to acquire control of the Company by tender offer or other means.

Such issuances could therefore deprive stockholders of

benefits that could result from such an attempt, such as the realization of a premium over the market price for their shares in

a tender offer or the temporary increase in market price that such an attempt could cause.

Moreover, the issuance of such

additional shares of preferred stock to persons friendly to the Board of Directors could make it more difficult to remove incumbent

officers and directors from office even if such change were to be favorable to stockholders generally.

Our stock may be traded infrequently

and in low volumes, so you may be unable to sell your shares at or near the quoted bid prices if you need to sell your shares.

The ability of our Board of Directors to

issue additional stock may prevent or make more difficult certain transactions, including a sale or merger of the Company.

Our Board of Directors is authorized to issue

up to 2,000,000 shares of preferred stock with powers, rights and preferences designated by it.

Shares of voting or convertible preferred

stock could be issued, or rights to purchase such shares could be issued, to create voting impediments or to frustrate persons seeking

to effect a takeover or otherwise gain control of the Company.

The ability of the Board of Directors to issue such additional shares

of preferred stock, with rights and preferences it deems advisable, could discourage an attempt by a party to acquire control of the Company

by tender offer or other means.

Such issuances could therefore deprive stockholders of benefits that could result from such an attempt,

such as the realization of a premium over the market price for their shares in a tender offer or the temporary increase in market price

that such an attempt could cause.

Moreover, the issuance of such additional shares of preferred stock to persons friendly to the

Board of Directors could make it more difficult to remove incumbent officers and directors from office even if such change were to be

favorable to stockholders generally.

Our stock may be traded infrequently and

in low volumes, so you may be unable to sell your shares at or near the quoted bid prices if you need to sell your shares.

Until our common stock is listed on a national

securities exchange such as the New York Stock Exchange or the Nasdaq Stock Market, we expect our common stock to remain eligible

for quotation on the OTC Markets, or on another over-the-counter quotation system.

In those venues, however, the shares of our

common stock may trade infrequently and in low volumes, meaning that the number of persons interested in purchasing our common

shares at or near bid prices at any given time may be relatively small or non-existent.

An investor may find it difficult to obtain

accurate quotations as to the market value of our common stock or to sell his or her shares at or near bid prices or at all.

addition, if we fail to meet the criteria set forth in SEC regulations, various requirements would be imposed by law on broker-dealers

who sell our securities to persons other than established customers and accredited investors.

Consequently, such regulations may

deter broker-dealers from recommending or selling our common stock, which may further affect the liquidity of our common stock.

This would also make it more difficult for us to raise capital.

There currently is no active public

market for our common stock and there can be no assurance that an active public market will ever develop.

Failure to develop or

maintain a trading market could negatively affect the value of our common stock and make it difficult or impossible for you to

sell your shares.

There is currently no active public market

for shares of our common stock and one may never develop.

securities exchange such as the New York Stock Exchange or the Nasdaq Stock Market, we expect our common stock to remain eligible for

quotation on the OTC Markets, or on another over-the-counter quotation system.

In those venues, however, the shares of our common stock

may trade infrequently and in low volumes, meaning that the number of persons interested in purchasing our common shares at or near bid

prices at any given time may be relatively small or non-existent.

An investor may find it difficult to obtain accurate quotations as to

the market value of our common stock or to sell his or her shares at or near bid prices or at all.

In addition, if we fail to meet the

criteria set forth in SEC regulations, various requirements would be imposed by law on broker-dealers who sell our securities to persons

other than established customers and accredited investors.

Consequently, such regulations may deter broker-dealers from recommending or

selling our common stock, which may further affect the liquidity of our common stock.

This would also make it more difficult for us to

raise capital.

There currently is no active public market

for our common stock and there can be no assurance that an active public market will ever develop.

Failure to develop or maintain a trading

market could negatively affect the value of our common stock and make it difficult or impossible for you to sell your shares.

There is currently no active public market for

shares of our common stock and one may never develop.

Our common stock is quoted on the OTC Markets.

The OTC Markets is a thinly

traded market and lacks the liquidity of certain other public markets with which some investors may have more experience.

not ever be able to satisfy the listing requirements for our common stock to be listed on a national securities exchange, which

is often a more widely-traded and liquid market.

Some, but not all, of the factors which may delay or prevent the listing of our

common stock on a more widely-traded and liquid market include the following:

The OTC Markets is a thinly traded

market and lacks the liquidity of certain other public markets with which some investors may have more experience.

We may not ever be

able to satisfy the listing requirements for our common stock to be listed on a national securities exchange, which is often a more widely-traded

and liquid market.

Some, but not all, of the factors which may delay or prevent the listing of our common stock on a more widely-traded

and liquid market include the following:

our stockholders’

equity may be insufficient;

the market value of our outstanding securities may be too low;

the market value of our outstanding securities

may be too low;

our net income from operations may be too low;

our common stock

may not be sufficiently widely held;

we may not be able to secure market makers for our common stock;

and we may fail to meet the

rules and requirements mandated by the several exchanges and markets to have our common stock listed.

Should we fail to satisfy

the initial listing standards of the national exchanges, or our common stock is otherwise rejected for listing, and remains listed

on the OTC Markets or is suspended from the OTC Markets, the trading price of our common stock could suffer and the trading market

for our common stock may be less liquid and our common stock price may be subject to increased volatility, making it difficult

or impossible to sell shares of our common stock.

Our common stock is subject to the

“penny stock”

rules of the SEC and the trading market in the securities is limited, which makes transactions in the

stock cumbersome and may reduce the value of an investment in the stock.

our common stock may not be sufficiently widely held;

we may not be able

to secure market makers for our common stock;

and we may fail to meet the rules and requirements mandated by the several exchanges and

markets to have our common stock listed.

Should we fail to satisfy the initial listing standards of the national exchanges, or our common

stock is otherwise rejected for listing, and remains listed on the OTC Markets or is suspended from the OTC Markets, the trading price

of our common stock could suffer and the trading market for our common stock may be less liquid and our common stock price may be subject

to increased volatility, making it difficult or impossible to sell shares of our common stock.

Our common stock is subject to the “penny

rules of the SEC and the trading market in the securities is limited, which makes transactions in the stock cumbersome and

may reduce the value of an investment in the stock.

Rule 15g-9 under the Exchange Act establishes

the definition of a “penny stock,”

for the purposes relevant to us, as any equity security that has a market price

of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions.

transaction involving a penny stock, unless exempt, the rules require:

(a) that a broker or dealer approve a person’s account

for transactions in penny stocks;

and (b) the broker or dealer receive from the investor a written agreement to the transaction,

setting forth the identity and quantity of the penny stock to be purchased.

In order to approve a person’s account

for transactions in penny stocks, the broker or dealer must:

(a) obtain financial information and investment experience objectives

of the person and (b) make a reasonable determination that the transactions in penny stocks are suitable for that person and the

person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny

The broker or dealer must also deliver,

prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which,

in highlight form:

for the purposes relevant to us, as any equity security that has a market price of less

than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions.

For any transaction

involving a penny stock, unless exempt, the rules require:

(a) that a broker or dealer approve a person’s account for transactions

in penny stocks;

and (b) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity

and quantity of the penny stock to be purchased.

In order to approve a person’s account for

transactions in penny stocks, the broker or dealer must:

(a) obtain financial information and investment experience objectives of the

person and (b) make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient

knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

The broker or dealer must also deliver, prior

to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight

(a) sets forth the basis on which the broker or dealer made the suitability determination;

and (b) confirms

that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

Generally, brokers

may be less willing to execute transactions in securities subject to the “penny stock”

This may make it more

difficult for investors to dispose of our common stock and cause a decline in the market value of our common stock.

Disclosure also has to be made about the

risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both

the broker or dealer and the registered representative, current quotations for the securities and the rights and remedies available

to an investor in cases of fraud in penny stock transactions.

Finally, monthly statements have to be sent disclosing recent

price information for the penny stock held in the account and information on the limited market in penny stocks.

and (b) confirms that the broker or dealer

received a signed, written agreement from the investor prior to the transaction.

Generally, brokers may be less willing to execute

transactions in securities subject to the “penny stock”

This may make it more difficult for investors to dispose of

our common stock and cause a decline in the market value of our common stock.

Disclosure also has to be made about the risks

of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker or

dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in

cases of fraud in penny stock transactions.

Finally, monthly statements have to be sent disclosing recent price information for

the penny stock held in the account and information on the limited market in penny stocks.

Our stock price may be volatile.

The market price of our common stock is

likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control,

including the following:

The market price of our common stock is likely

to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including

the following:

changes in our industry;

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economic and other external factors.

In addition, the securities markets have

from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular

In addition, the securities markets have from

time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies.

These market fluctuations may also materially and adversely affect the market price of our common stock.

Offers or availability for sale of

a substantial number of shares of our common stock may cause the price of our common stock to decline.

If our stockholders sell substantial amounts

of our common stock in the public market, including upon the expiration of any statutory holding period under Rule 144, or issued

upon the conversion of preferred stock or exercise of warrants, it could create a circumstance commonly referred to as an "overhang"

Offers or availability for sale of a substantial

number of shares of our common stock may cause the price of our common stock to decline.

If our stockholders sell substantial amounts of

our common stock in the public market, including upon the expiration of any statutory holding period under Rule 144, or issued upon the

conversion of preferred stock or exercise of warrants, it could create a circumstance commonly referred to as an "overhang"

and in anticipation of which the market price of our common stock could fall.

The existence of an overhang, whether or not sales

have occurred or are occurring, also could make more difficult our ability to raise additional financing through the sale of equity

or equity-related securities in the future at a time and price that we deem reasonable or appropriate.

The existence of an overhang, whether or not sales have

occurred or are occurring, also could make more difficult our ability to raise additional financing through the sale of equity or equity-related

securities in the future at a time and price that we deem reasonable or appropriate.

UNRESOLVED STAFF COMMENTS

On February 12, 2021, we entered into a Commercial Lease Agreement

with the lessor for the lease of 2640 West Medtronic Way, Tempe, Arizona 85281.

The term of the lease is for 12 months and the monthly

rent is $2,000 per month for a total of $24,000.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors