What changed in this filing

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Item 1. Financial Statements

2021-05-17 compared with 2020-11-16 · 606 added, 595 removed, 166 unchanged (88% of the section changed)

1 unchanged sentence

DARKPULSE, INC.

Condensed Consolidated Balance Sheets

September 30,

Condensed Consolidated Balance

CURRENT ASSETS:

Prepaid expenses

TOTAL CURRENT ASSETS

6 unchanged sentences

Accrued liabilities

Contract liability, related party

Related party notes payable

TOTAL CURRENT LIABILITIES

7 unchanged sentences

Paid in capital in excess of par value

(31,773,340 )

(11,877,864 )

Non-controlling interest in a variable interest entity and subsidiary

3 unchanged sentences

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements.

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

DARKPULSE, INC.

Condensed Consolidated Statements of

September 30,

Condensed Consolidated Statements

of Operations

FOR THE THREE MONTHS

ENDED MARCH 31,

OPERATING EXPENSES:

1 unchanged sentence

Payroll and compensation

Legal expenses

Amortization of patents

4 unchanged sentences

Interest expense

Loss on convertible notes

Gain on the forgiveness of debt

Gain(loss) on change in fair market values of derivative liabilities

TOTAL OTHER INCOME (EXPENSE)

NET INCOME (LOSS)

Gain/loss on convertible notes

Loss on change in fair market values of derivative liabilities

TOTAL OTHER EXPENSE

Net Loss attributable to noncontrolling interests in variable interest entity and subsidiary

Net loss attributable to Company stockholders

GAIN (LOSS) PER SHARE:

LOSS PER SHARE:

Basic and Diluted

3 unchanged sentences

1,392,042,112

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements.

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

DARKPULSE, INC.

Condensed Consolidated Statements of

Comprehensive Gain/Loss

THREE MONTHS ENDED

SEPTEMBER 30,

NINE MONTHS ENDED

SEPTEMBER 30,

NET INCOME (LOSS)

Condensed Consolidated Statements

of Comprehensive Gain/Loss

FOR THE THREE MONTHS

ENDED MARCH 31,

OTHER COMPREHENSIVE GAIN (LOSS)

1 unchanged sentence

COMPREHENSIVE GAIN (LOSS)

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements.

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

DARKPULSE, INC.

Consolidated Statement of Stockholders'

For the Periods Ended September 30, 2020

Non-Controlling

Other Comprehensive

Total Stockholders’

Consolidated Statement of

Stockholders' Deficit

For the Years Ended March 31, 2021 and 2020

Preferred Stock

Controlling Interest in

Accumulated Other Compre-

holders’

Balance, December 31, 2020

2 unchanged sentences

$ (3,932,205 )

$ (3,807,552 )

Conversion of convertible

Conversion of convertible notes

Foreign currency adjustment

3 unchanged sentences

$ (3,752,048 )

$ (3,789,204 )

Conversion of convertible

Foreign currency adjustment

Balance, June 30, 2020

1,609,184,970

$ (14,034,092 )

$ (6,388,867 )

$ (3,953,291 )

Conversion of convertible

1,785,632,186

(17,739,248 )

Foreign currency adjustment

Balance, September 30,

3,394,817,156

$ (31,773,340 )

$ (6,562,889 )

$ (4,050,184 )

Balance, December 31, 2019

1 unchanged sentence

$ (11,877,864 )

Conversion of convertible

Foreign currency adjustment

Balance, March 31, 2019

$ (6,174,328 )

$ (3,807,552 )

Conversion of convertible

Foreign currency adjustment

Balance, June 30, 2019

Balance, March 31, 2020

1,392,042,112

$ (11,877,864 )

Conversion of convertible

Foreign currency adjustment

Balance, September 30,

$ (6,248,626 )

$ (3,789,204 )

The accompanying notes are an integral

part of these unaudited condensed consolidated financial statements.

DARKPULSE, INC.

Condensed Consolidated Statement of Cash

NINE MONTHS ENDED

SEPTEMBER 30,

Condensed Consolidated Statement

of Cash Flows

FOR THE THREE MONTHS

ENDED MARCH 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

Net Gain/(Loss)

Adjustments to reconcile net loss to net cash used by operating activities:

1 unchanged sentence

Loan acquisition costs

Gain on reduction of loan default penalty

Interest on notes payable

Debt discount

Amortization of debt discount

5 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES:

Investment in patents

Investment in demo box

Net Cash Used by Investing Activities

6 unchanged sentences

CASH, end of period

Noncash investing and financing activities for the quarter ending September 30:

Noncash investing and financing activities for the quarter ending March 31:

Stock issued for convertible notes payable and accrued interest

2 unchanged sentences

Taxes paid in cash

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements.

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

DARKPULSE, INC.

Notes to Condensed Financial Statements

Notes to Condensed Financial

NOTE 1 –

BASIS OF PRESENTATION

AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited condensed consolidated

interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States

for interim financial statements and do not include all the information and footnotes required by accounting principles generally

accepted in the United States for complete financial statements.

The information furnished reflects all adjustments, consisting

only of normal recurring items which are, in the opinion of management, necessary in order to make the financial statements not

The consolidated financial statements as of December 31, 2019 have been audited by an independent registered public

accounting firm.

The accounting policies and procedures employed in the preparation of these condensed consolidated financial statements

have been derived from the audited financial statements of the Company for the year ended December 31, 2019, which are contained

in Form 10-K as filed with the Securities and Exchange Commission on June 8, 2020.

The consolidated balance sheet as of December

31, 2019 was derived from those financial statements.

Basis of Presentation and Principles

of Consolidation

The consolidated financial statements and

accompanying notes are prepared in accordance with generally accepted accounting principles of the United States of America (“U.S.

GAAP”) and the rules and regulations of the U.S Securities and Exchange Commission for Interim Financial Information.

condensed consolidated financial statements of the Company include the Company and its wholly owned subsidiaries.

All intercompany

transactions and balances have been eliminated.

All adjustments (consisting of normal recurring items) necessary to present fairly

the Company’s financial position as of September 30, 2020, and the results of operations for three and nine months and cash

flows for the nine months ended September 30, 2020 have been included.

The results of operations for the three and nine months

ended September 30, 2020 are not necessarily indicative of the results to be expected for the full year.

interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim

financial statements and do not include all the information and footnotes required by accounting principles generally accepted in the

United States for complete financial statements.

The information furnished reflects all adjustments, consisting only of normal recurring

items which are, in the opinion of management, necessary in order to make the financial statements not misleading.

The consolidated financial

statements as of December 31, 2020 have been audited by an independent registered public accounting firm.

The accounting policies and

procedures employed in the preparation of these condensed consolidated financial statements have been derived from the audited financial

statements of the Company for the year ended December 31, 2020, which are contained in Form 10-K as filed with the Securities and Exchange

Commission on April 15, 2021.

The consolidated balance sheet as of December 31, 2020 was derived from those financial statements.

Basis of Presentation and Principles of

Consolidation

The consolidated financial statements and accompanying

notes are prepared in accordance with generally accepted accounting principles of the United States of America (“U.S.

and the rules and regulations of the U.S Securities and Exchange Commission for Interim Financial Information.

The condensed consolidated

financial statements of the Company include the Company and its wholly owned subsidiaries.

All intercompany transactions and balances

have been eliminated.

All adjustments (consisting of normal recurring items) necessary to present fairly the Company’s financial

position as of March 31, 2021, and the results of operations and cash flows for the three months ended March 31, 2021 have been included.

The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the

Description of Business

2 unchanged sentences

("Klever").

The Company’s wholly-owned subsidiary, DarkPulse Technologies Inc.

("DPTI"), originally started as a technology

spinout from the University of New Brunswick (the “University”) located in Fredericton, Canada.

The Company’s

security and monitoring systems will initially be delivered in applications for border security, pipelines, the oil and gas industry

and mine safety.

Current uses of fiber optic distributed sensor technology have been limited to quasi-static, long-term structural

health monitoring due to the time required to obtain the data and its poor precision.

The Company’s patented BOTDA

dark-pulse sensor technology allows for the monitoring of highly dynamic environments due to its greater resolution and accuracy.

On April 27, 2018, Klever entered into

an Agreement and Plan of Merger (the “Merger Agreement”

or the “Merger”) involving Klever as the surviving

parent corporation and acquiring a privately held New Brunswick corporation known as DarkPulse Technologies Inc.

as its wholly

owned subsidiary.

On July 18, 2018, the parties closed the Merger Agreement, as amended on July 7, 2018, and the name of the Company

was subsequently changed to DarkPulse, Inc.

With the change of control of the Company, the Merger was accounted for as a recapitalization

in a manner similar to a reverse acquisition.

On July 20, 2018, the Company filed a

Certificate of Amendment to its Certificate of Incorporation with the State of Delaware, changing the name of the Company to DarkPulse,

The Company filed a corporate action notification with the Financial Industry Regulatory Authority (FINRA), and the Company's

ticker symbol was changed to DPLS.

wholly-owned subsidiary, DarkPulse Technologies Inc.

("DPTI"), originally started as a technology spinout from the

University of New Brunswick, Fredericton, Canada.

The Company’s security and monitoring systems will initially be delivered in applications

for border security, pipelines, the oil and gas industry and mine safety.

Current uses of fiber optic distributed sensor technology have

been limited to quasi-static, long-term structural health monitoring due to the time required to obtain the data and its poor precision.

The Company’s patented BOTDA dark-pulse sensor technology allows for the monitoring of highly dynamic environments due to

its greater resolution and accuracy.

On April 27, 2018, Klever entered into an Agreement

and Plan of Merger (the “Merger Agreement”

or the “Merger”) involving Klever as the surviving parent corporation

and acquiring a privately held New Brunswick corporation known as DarkPulse Technologies Inc.

as its wholly owned subsidiary.

18, 2018, the parties closed the Merger Agreement, as amended on July 7, 2018, and the name of the Company was subsequently changed to

DarkPulse, Inc.

With the change of control of the Company, the Merger is being be accounted for as a recapitalization in a manner similar

to a reverse acquisition.

On July 20, 2018, the Company filed a Certificate

of Amendment to its Certificate of Incorporation with the State of Delaware, changing the name of the Company to DarkPulse, Inc.

Company filed a corporate action notification with the Financial Industry Regulatory Authority (FINRA), and the Company's ticker symbol

was changed to DPLS.

Going Concern Uncertainty

As shown in the accompanying financial

statements, during the nine months ended September 30, 2020, the Company did not generate any revenues and reported a net loss

As of September 30, 2020, the Company’s current liabilities exceeded its current assets by $3,436,901.

September 30, 2020, the Company had $519 of cash.

The Company will require additional funding

during the next nine months to finance the growth of its operations and achieve its strategic objectives.

These factors, as well

as the uncertain conditions that the Company faces relative to capital raising activities, create substantial doubt as to the Company’s

ability to continue as a going concern.

The Company is seeking to raise additional capital principally through private placement

offerings and is targeting strategic partners in an effort to finalize the development of its products and begin generating revenues.

The ability of the Company to continue as a going concern is dependent upon the success of future capital offerings or alternative

financing arrangements and expansion of its operations.

The accompanying financial statements do not include any adjustments that

might be necessary should the Company be unable to continue as a going concern.

Management is actively pursuing additional sources

of financing sufficient to generate enough cash flow to fund its operations.

However, management cannot make any assurances that

such financing will be secured.

As shown in the accompanying financial statements,

during the three months ended March 31, 2021, the Company did not generate any revenues and reported a net loss of $51,874.

31, 2021, the Company’s current liabilities exceeded its current assets by $3,031,944.

As of March 31, 2021, the Company had $50,714

The Company will require additional funding to

finance the growth of our operations and achieve our strategic objectives.

These factors, as relative to capital raising activities, create

doubt as to our ability to continue as a going concern.

We are seeking to raise additional capital and are targeting strategic partners

in an effort to accelerate the sales and marketing of our products and begin generating revenues.

Our ability to continue as a going concern

is dependent upon the success of future capital offerings or alternative financing arrangements, expansion of our operations and generating

The accompanying financial statements do not include any adjustments that might be necessary should we be unable to continue as

a going concern.

Management is actively pursuing additional sources of financing sufficient to generate enough cash flow to fund its operations

however, management cannot make any assurances that such financing will be secured.

Use of Estimates

In preparing the consolidated financial

statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities

as of the date of the statements of financial condition, and revenues and expenses for the years then ended.

Actual results may

differ significantly from those estimates.

Significant estimates made by management include, but are not limited to, the assumptions

used to calculate stock-based compensation, derivative liabilities, preferred deemed dividend and common stock issued for services.

In preparing the consolidated financial statements,

management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of

the statements of financial condition, and revenues and expenses for the years then ended.

Actual results may differ significantly from

those estimates.

Significant estimates made by management include, but are not limited to, the assumptions used to calculate stock-based

compensation, derivative liabilities, preferred deemed dividend and common stock issued for services.

Cash and Cash Equivalents

The Company considers all highly liquid

investments with a maturity of three months or less when acquired to be cash equivalents.

The Company places its cash with a high

credit quality financial institution.

The Company’s account at this institution is insured by the Federal Deposit Insurance

Corporation (“FDIC”) up to $250,000.

To reduce its risk associated with the failure of such financial institution,

the Company evaluates at least annually the rating of the financial institution in which it holds deposits.

The Company considers all highly liquid investments

with a maturity of three months or less when acquired to be cash equivalents.

The Company places its cash with a high credit quality financial

institutions.

The Company’s account at this institution is insured by the Federal Deposit Insurance Corporation (“FDIC”)

up to $250,000.

To reduce its risk associated with the failure of such financial institution, the Company evaluates at least annually

the rating of the financial institution in which it holds deposits.

Intangible Assets

The Company reviews intangibles held and

used for possible impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not

be recoverable.

In evaluating the fair value and future benefits of its intangible assets, management performs an analysis of the

anticipated undiscounted future net cash flow of the individual assets over the remaining amortization period.

The Company recognizes

an impairment loss if the carrying value of the asset exceeds the expected future cash flows.

The Company reviews intangibles held and used

for possible impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

In evaluating the fair value and future benefits of its intangible assets, management performs an analysis of the anticipated undiscounted

future net cash flow of the individual assets over the remaining amortization period.

The Company recognizes an impairment loss if the

carrying value of the asset exceeds the expected future cash flows.

Foreign Currency Translation

The company translates monetary assets

and liabilities (any item paid for or settled in foreign currency) into the United States Dollar at exchange rates prevailing on

the balance sheet date.

Non-monetary assets and liabilities are translated at the historical rate in effect when the transaction

Revenues and expenses are translated at the spot rate on the date the transaction occurred.

Exchange gains and losses

from the translation of monetary items are included in unrealized gain/loss on Foreign Exchange as Other Comprehensive Loss.

The following table discloses the dates

and exchange rates used for converting Canadian Dollar amounts to U.S.

Dollar amounts disclosed in the balance sheet and the statement

of operations.

The spot exchange rate between the Canadian

Dollar and the U.S.

The company translates monetary assets and liabilities

(any item paid for or settled in foreign currency) into the United States Dollar at exchange rates prevailing on the balance sheet date.

Non-monetary assets and liabilities are translated at the historical rate in effect when the transaction occurred.

Revenues and expenses

are translated at the spot rate on the date the transaction occurred.

Exchange gains and losses from the translation of monetary items

are included in unrealized gain/loss on Foreign Exchange as Other Comprehensive Loss.

The following table discloses the dates and exchange rates used for

converting Canadian Dollar amounts to U.S.

Dollar amounts disclosed in the balance sheet and the statement of operations.

The spot exchange rate between the Canadian Dollar

Dollar on, December 31, 2020 closing rate at 1.2754 US$:

CAD, average rate at 1.3388 US$:

CAD and for the three

months ended September 30, 2020 closing rate at 1.3141 US$:

CAD and for the three months ended

March 31, 2021 closing rate at 1.2558 US$:

CAD, average rate at 1.2691 US$.

The Company accounts for income taxes in

accordance with ASC 740, Accounting for Income Taxes, as clarified by ASC 740-10, Accounting for Uncertainty in Income Taxes.

this method, deferred income taxes are determined based on the estimated future tax effects of differences between the financial

statement and tax basis of assets and liabilities given the provisions of enacted tax laws.

Deferred income tax provisions and

benefits are based on changes to the assets or liabilities from year to year.

In providing for deferred taxes, the Company considers

tax regulations of the jurisdictions in which the Company operates, estimates of future taxable income, and available tax planning

If tax regulations, operating results or the ability to implement tax-planning strategies vary, adjustments to the

carrying value of deferred tax assets and liabilities may be required.

Valuation allowances are recorded related to deferred tax

assets based on the "more likely than not"

criteria of ASC 740.

The Company accounts for income taxes in accordance

with ASC 740, Accounting for Income Taxes, as clarified by ASC 740-10, Accounting for Uncertainty in Income Taxes.

Under this method,

deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax

basis of assets and liabilities given the provisions of enacted tax laws.

Deferred income tax provisions and benefits are based on changes

to the assets or liabilities from year to year.

In providing for deferred taxes, the Company considers tax regulations of the jurisdictions

in which the Company operates, estimates of future taxable income, and available tax planning strategies.

If tax regulations, operating

results or the ability to implement tax-planning strategies vary, adjustments to the carrying value of deferred tax assets and liabilities

may be required.

Valuation allowances are recorded related to deferred tax assets based on the "more likely than not"

ASC 740-10 requires that the Company recognize

the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than

not sustain the position following an audit.

the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain

the position following an audit.

For tax positions meeting the "more-likely-than-not"

threshold, the amount

recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon

ultimate settlement with the relevant tax authority.

threshold, the amount recognized in the

financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with

the relevant tax authority.

Accounting for Derivatives

The Company evaluates all of its financial

instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives.

For derivative

financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value

and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations.

For stock-based

derivative financial instruments, the Company uses a probability weighted average series Binomial lattice formula pricing models

to value the derivative instruments at inception and on subsequent valuation dates.

The Company evaluates all of its financial instruments

to determine if such instruments are derivatives or contain features that qualify as embedded derivatives.

For derivative financial instruments

that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each

reporting date, with changes in the fair value reported in the statements of operations.

For stock-based derivative financial instruments,

the Company uses a probability weighted average series Binomial lattice formula pricing models to value the derivative instruments at

inception and on subsequent valuation dates.

The classification of derivative instruments,

including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period.

Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash

settlement of the derivative instrument could be required within 12 months of the balance sheet date.

instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the

derivative instrument could be required within 12 months of the balance sheet date.

Fair Value of Financial Instruments

The carrying amounts of the Company's financial

assets and liabilities, such as cash, prepaid expenses, and accruals approximate their fair values because of the short maturity

of these instruments.

The Company believes the carrying value of its secured debenture payable approximates fair value because

the terms were negotiated at arm’s length.

assets and liabilities, such as cash, prepaid expenses, and accruals approximate their fair values because of the short maturity of these

The Company believes the carrying value of its secured debenture payable approximates fair value because the terms were negotiated

at arms length.

Recent Accounting Pronouncements

There were no new accounting pronouncements

issued or proposed by the Financial Accounting Standards Board during the three months ended September 30, 2020, and through the

date of filing of this report that the Company believes has had or will have a material impact on its financial position or results

of operations, including the recognition of revenue, cash flow, the merger that was consummated on July 18, 2018.

The Company has

no lease obligations.

There were no new accounting pronouncements issued

or proposed by the Financial Accounting Standards Board during the three months ended March 31, 2021, and through the date of filing

of this report that the Company believes has had or will have a material impact on its financial position or results of operations, including

the recognition of revenue, cash flow, the merger that was consummated on July 18, 2018.

The Company has no lease obligations.

Income (Loss) Per Common Share

Basic net income (loss) per share of common

stock is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period.

Diluted net income (loss) per share of common stock is computed by dividing net income (loss) by the sum of the weighted average

number of common shares outstanding and the dilutive potential common share equivalents outstanding.

Potential dilutive common

share equivalents consist of shares issuable upon exercise of outstanding convertible preferred stock and stock options.

For the three and nine months ended September

30, 2020, there were no stock options nor convertible preferred stock outstanding.

For the three and nine months ended September

30, 2020, common stock equivalents related to convertible preferred stock and convertible debt have not been included in the calculation

of diluted loss per common share because they are anti-dilutive.

Therefore, basic loss per common share is the same as diluted

loss per common share.

There are 2,138,539,986 common shares reserved for the potential conversion of the Company's convertible

Basic net income (loss) per share of common stock

is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period.

Diluted net income

(loss) per share of common stock is computed by dividing net income (loss) by the sum of the weighted average number of common shares

outstanding and the dilutive potential common share equivalents outstanding.

Potential dilutive common share equivalents consist of shares

issuable upon exercise of outstanding convertible preferred stock and stock options.

For the three months ended March 31, 2021, there

were no stock options outstanding.

For the three months ended March 31, 2021, common stock equivalents

related to convertible preferred stock and convertible debt have not been included in the calculation of diluted loss per common share

because they are anti-dilutive.

Therefore, basic loss per common share is the same as diluted loss per common share.

There are 4,689,762,151

common shares reserved for the potential conversion of the Company's convertible debt.

NOTE 2 - DEBENTURE

DPTI issued a convertible debenture to

the University in exchange for the patents (the “Patents”) assigned to the Company, in the amount of CAD$1,500,000,

or USD$1,491,923 on December 16, 2010, the date of the convertible debenture.

On April 24, 2017 DPTI issued a replacement secured

term convertible debenture (the “Debenture”) in the same CAD$1,500,000 amount as the original convertible debenture.

DPTI issued a convertible Debenture to the University

in exchange for the Patents assigned to the Company, in the amount of Canadian $1,500,000, or US $1,491,923 on December 16, 2010, the

date of the Debenture.

On April 24, 2017 DPTI issued a replacement secured term Debenture in the same C$1,500,000 amount as the original

The interest rate is the Bank of Canada Prime overnight rate plus 1% per annum.

The Debenture had an initial required payment of

CAD $42,000 (USD$33,385) due on April 24, 2018 for reimbursement to the University for its research and development costs, and

this has been paid.

The Debenture had an initial required payment

of Canadian $42,000 (US$33,385) due on April 24, 2018 for reimbursement to the University of its research and development costs, and this

has been paid.

Interest-only maintenance payments are due annually starting after April 24, 2018.

Payment of the principal

begins on the earlier of (a) three years following two consecutive quarters of positive earnings before interest, taxes, depreciation

and amortization, (b) six years from April 24, 2017, or (c) in the event DPTI fails to raise defined capital amounts or secure

defined contract amounts by April 24 in the years 2018, 2019, and 2020.

The principal repayment amounts will be due quarterly over

a six year period in the amount of CAD$62,500.

Based on the exchange rate between the Canadian Dollar and the U.S.

Dollar on September

30, 2020, the quarterly principal repayment amounts will be USD$44,271.

On May 1, 2020, the Company received an extension for this

payment until July 23, 2020.

Additionally on July 16, 2020, the Company received a further four month extension until November

The Debenture is secured by the Patents assigned by the University to DPTI by an Assignment Agreement on December 16, 2010.

DPTI has pledged the Patents and granted a lien on them pursuant to an escrow agreement dated April 24, 2017, between DPTI and

the University.

The Debenture was initially recorded at

USD$1,491,923 equivalent to CAD$1,500,000 as of December 16, 2010, the date of the original convertible debenture.

The liability

is being adjusted quarterly based on the current exchange value of the Canadian dollar to the US dollar at the end of each quarter.

The adjustment is recorded as unrealized gain or loss in the change of the value of the two currencies during the quarter.

amounts recorded as an unrealized gain (loss) for the three months ended September 30, 2020 and 2019, were ($39,945) and 12,671

respectively.

These amounts are included in Accumulated Other Comprehensive Loss in the Equity section of the consolidated balance

sheet, and as Unrealized Loss on Foreign Exchange on the consolidated statement of comprehensive loss.

The Debenture also includes

a provision requiring DPTI to pay the University a two percent (2%) royalty on sales of any and all products or services which

incorporate the Patents for a period of five (5) years from April 24, 2018.

For the three months ended September 30,

2020, and 2019, the Company recorded interest expense of $12,255 and $12,745, respectively.

As of September 30, 2020, the Debenture

liability totaled $1,141,494, all of which was long term.

Future minimum required payments over

the next five years and thereafter are as follows:

Period ending September 30,

Payment of the principal begins on the

earlier of (a) three years following two consecutive quarters of positive earnings before interest, taxes, depreciation and amortization,

(b) six years from April 24, 2017, or (c) in the event DPTI fails to raise defined capital amounts or secure defined contract amounts

by April 24 in the years 2018, 2019, and 2020.

The Company has raised funds in excess of the amount required by April 24, 2018.

The principal

repayment amounts will be due quarterly over a six year period in the amount of Canadian Dollars $62,500.

Based on the exchange rate between

the Canadian Dollar and the U.S.

Dollar on March 31, 2021, the quarterly principal repayment amounts will be US$49,750.

The Debenture

is secured by the Patents assigned by the University to DPTI by an Assignment Agreement on December 16, 2010.

DPTI has pledged the Patents,

and granted a lien on them pursuant to an Escrow Agreement dated April 24, 2017, between DPTI and the University.

The Debenture was initially recorded at the $1,491,923

equivalent US Dollar amount of Canadian $1,500,000 as of December 16, 2010, the date of the original Debenture.

The liability is being

adjusted quarterly based on the current exchange value of the Canadian dollar to the US dollar at the end of each quarter.

The adjustment

is recorded as unrealized gain or loss in the change of the value of the two currencies during the quarter.

The amounts recorded as an

unrealized gain (loss) for the three months ended March 31, 2021 and 2020, were $(17,909) and $92,648 respectively.

These amounts are

included in Accumulated Other Comprehensive Loss in the Equity section of the consolidated balance sheet, and as Unrealized Loss on Foreign

Exchange on the consolidated statement of comprehensive loss.

The Debenture also includes a provision requiring DPTI to pay the University

a two percent (2%) royalty on sales of any and all products or services which incorporate the Patents for a period of five (5) years from

April 24, 2018.

For the three months ended March 31, 2021, and

2020, the Company recorded interest expense of $13,283 and $11,820, respectively.

As of March 31, 2021 the debenture liability

totaled $1,194,000, all of which was long term.

Future minimum required payments over the

next 5 years and thereafter are as follows:

Period ending March 31,

2026 and after

1 unchanged sentence

CONVERTIBLE DEBT SECURITIES

The Company uses the Black-Scholes Model

to calculate the derivative value of its convertible debt.

The valuation result generated by this pricing model is necessarily

driven by the value of the underlying common stock incorporated into the model.

The values of the common stock used were based

on the price at the date of issue of the debt security as of September 30, 2020.

Management determined the expected volatility

between 489.35-582.90%, a risk free rate of interest between 0.12-0.13%, and contractual lives of the debt varying from six months

to two years.

The table below details the Company's nine outstanding convertible notes, with totals for the face amount, amortization

of discount, initial loss, change in the fair market value, and the derivative liability.

Derivative Balance

The Company uses the Black-Scholes Model to calculate

the derivative value of its convertible debt.

The valuation result generated by this pricing model is necessarily driven by the value

of the underlying common stock incorporated into the model.

The values of the common stock used were based on the price at the date of

issue of the debt security as of March 31, 2021.

Management determined the expected volatility of 468.68%, a risk free rate of interest

of 0.07%, and contractual lives of the debt varying from six months to two years.

The table below details the Company's nine outstanding

convertible notes, with totals for the face amount, amortization of discount, initial loss, change in the fair market value, and the derivative

Transaction expense

During the three months ended September

30, 2020, a total of $103,257 in principal and $10,754 interest was converted into 1,785,632,186 shares of the Company’s

common stock.

As of September 30, 2020 and 2019 respectively,

there was $944,306 and $928,702 of convertible debt outstanding, net of debt discount of $0, and $93,138, As of September 30, 2020

and 2019 respectively, there was derivative liability of $1,320,184 and $341,209 related to convertible debt securities.

recorded interest expense related to the outstanding convertible debt of $21,366 and $22,059 for the three months ended September

30, 2020 and 2019 respectively.

On January 4, 2021, the Company entered into a

securities purchase agreement with Geneva Roth Remark Holdings, Inc.

(“Geneva”) issuing to Geneva a convertible promissory

note in the aggregate principal amount of $42,350 with a $3,850 original issue discount and $3,500 in transactional expenses due to Geneva

and its counsel.

The note bears interest at 8% per annum and may be converted into common shares of the Company's common stock at a conversion

price equal to 70% of the lowest trading price of the Company's common stock during the 20 prior trading days.

The Company received $35,000

On February 3, 2021, the Company entered into

a securities purchase agreement with Geneva Roth Remark Holdings, Inc.

(“Geneva”) issuing to Geneva a convertible promissory

note in the aggregate principal amount of $94,200 with a $15,700 original issue discount and $3,500 in transactional expenses due to Geneva

and its counsel.

The note bears interest at 4.5% per annum and may be converted into common shares of the Company's common stock at a

conversion price equal to 81% of the lowest 2 trading prices of the Company's common stock during the 10 prior trading days.

received $75,000 net cash.

On February 18, 2021, the Company entered into

a securities purchase agreement with Geneva Roth Remark Holdings, Inc.

(“Geneva”) issuing to Geneva a convertible promissory

note in the aggregate principal amount of $76,200 with a $12,700 original issue discount and $3,500 in transactional expenses due to Geneva

and its counsel.

The note bears interest at 4.5% per annum and may be converted into common shares of the Company's common stock at a

conversion price equal to 81% of the lowest 2 trading prices of the Company's common stock during the 10 prior trading days.

received $60,000 net cash.

As of March 31, 2021 and 2020 respectively, there

was $969,881 and $1,068,460 of convertible debt outstanding, net of debt discount of $205,806, and $4,203, As of March 31, 2021 and 2020

respectively, there was derivative liability of $1,251,824 and $1,220,789 related to convertible debt securities.

NOTE 4 - STOCKHOLDERS' DEFICIT

of September 30, 2020, there were 3,394,817,156 shares of common stock and 88,235

shares of preferred stock issued and outstanding.

31, 2021, there were 4,689,762,151 shares of common stock and 88,235 shares of preferred

stock issued and outstanding.

NOTE 5 - COMMITMENTS & CONTINGENCIES

Potential Royalty Payments

The Company, in consideration of the terms

of the debenture to the University, shall pay to the University a two percent royalty on sales of any and all products or services

which incorporate the Company's Patents for a period of five years from April 24, 2018.

The Company, in consideration of the terms of

the debenture to the University of New Brunswick, shall pay to the University a two percent royalty on sales of any and all products or

services which incorporate the Company's patents for a period of five years from April 24, 2018.

Legal Matters

On March 27, 2019, Thomas A.

Cellucci, et al.

DarkPulse, Inc.

(the “Complaint”) was filed in the United States District Court for the Southern District

of New York by certain of the Company’s former executive officers, one also being a former director, and a non-employee shareholder

(collectively, the “Plaintiffs”), against the Company, its sole officer and director, and others, claiming that the

Plaintiffs brought the action to protect their individual rights as minority shareholders, as improperly-ousted officers (other

than the non-employee shareholder), and as an improperly-ousted director, seeking equitable relief, damages, recovery of unpaid

salaries and other relief.

It is the Company's position that the Complaint represents a frivolous harassment lawsuit.

has filed a motion to dismiss all claims made in the Complaint and intends to otherwise defend itself vigorously in this matter.

The Company is also considering filing counterclaims against the Plaintiffs in the action.

From time to time, we may become involved

in litigation relating to claims arising out of our operations in the normal course of business.

We are not currently involved

in any pending legal proceeding or litigation and, to the best of our knowledge, no governmental authority is contemplating any

proceeding to which we are a party or to which any of our properties is subject, which would reasonably be likely to have a material

adverse effect on our business, financial condition and operating results.

On March 11, 2020, the World Health Organization

announced that infections of the novel Coronavirus (COVID-19) had become pandemic, and on March 13, the U.S.

President announced

a National Emergency relating to the disease.

There is a possibility of continued widespread infection in the United States and

abroad, with the potential for catastrophic impact.

National, state and local authorities have required or recommended social distancing

and imposed or are considering quarantine and isolation measures on large portions of the population, including mandatory business

These measures, while intended to protect human life, are expected to have serious adverse impacts on domestic and foreign

economies of uncertain severity and duration.

(the “Complaint”) was filed in the United States District Court for the Southern District of New

York by certain of the Company’s former executive officers, one also being a former director, and a non-employee shareholder (collectively,

the “Plaintiffs”), against the Company, its sole officer and director, and others, claiming that the Plaintiffs brought the

action to protect their individual rights as minority shareholders, as improperly-ousted officers (other than the non-employee shareholder),

and as an improperly-ousted director, seeking equitable relief, damages, recovery of unpaid salaries and other relief.

It is the Company's

position that the Complaint represents a frivolous harassment lawsuit, and the Company intends to file a motion to dismiss all claims

made in the Complaint and intends to otherwise defend itself vigorously in this matter.

The Company is also exploring filing counterclaims

against the Plaintiffs in the action.

From time to time, we may become involved in litigation

relating to claims arising out of our operations in the normal course of business.

We are not currently involved in any pending legal

proceeding or litigation and, to the best of our knowledge, no governmental authority is contemplating any proceeding to which we are

a party or to which any of our properties is subject, which would reasonably be likely to have a material adverse effect on our business,

financial condition and operating results.

11, 2020, the World Health Organization announced that infections of the novel Coronavirus (COVID-19) had become pandemic, and on March

President announced a National Emergency relating to the disease.

There is a possibility of continued widespread infection

in the United States and abroad, with the potential for catastrophic impact.

National, state and local authorities have required or recommended

social distancing and imposed or are considering quarantine and isolation measures on large portions of the population, including mandatory

business closures.

These measures, while intended to protect human life, are expected to have serious adverse impacts on domestic and

foreign economies of uncertain severity and duration.

Some economists are predicting the United States will soon enter a recession.

sweeping nature of the coronavirus pandemic makes it extremely difficult to predict how the Company’s business and operations

will be affected in the longer run, but we expect that it may materially affect our business, financial condition and results of

The extent to which the coronavirus impacts our results will depend on future developments, which are highly uncertain

and cannot be predicted, including new information which may emerge concerning the severity of the coronavirus and the actions

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

Moreover, the coronavirus outbreak has begun to have indeterminable

adverse effects on general commercial activity and the world economy, and our business and results of operations could be adversely

affected to the extent that this coronavirus or any other epidemic harms the global economy generally and/or the markets in which

we operate specifically.

Any of the foregoing factors, or other cascading effects of the coronavirus pandemic that are not currently

foreseeable, could materially increase our costs, negatively impact our revenues and damage the Company’s results of operations

and its liquidity position, possibly to a significant degree.

sweeping nature of the coronavirus pandemic makes it extremely difficult to predict how the Company’s business and operations will

be affected in the longer run, but we expect that it may materially affect our business, financial condition and results of operations.

The extent to which the coronavirus impacts our results will depend on future developments, which are highly uncertain and cannot be

predicted, including new information which may emerge concerning the severity of the coronavirus and the actions to contain the coronavirus

or treat its impact, among others.

Moreover, the coronavirus outbreak has begun to have indeterminable adverse effects on general commercial

activity and the world economy, and our business and results of operations could be adversely affected to the extent that this coronavirus

or any other epidemic harms the global economy generally and/or the markets in which we operate specifically.

Any of the foregoing factors,

or other cascading effects of the coronavirus pandemic that are not currently foreseeable, could materially increase our costs, negatively

impact our revenues and damage the Company’s results of operations and its liquidity position, possibly to a significant degree.

The duration of any such impacts cannot be predicted.

1 unchanged sentence

INTANGIBLE ASSETS

Intangible Assets - Intrusion Detection

Intellectual Property

Intangible Assets - Intrusion Detection Intellectual

The Company relies on patent laws and restrictions

on disclosure to protect its intellectual property rights.

As of September 30, 2020, the Company held three U.S.

and foreign patents

on its intrusion detection technology, which expire in calendar years 2025 through 2034 (depending on the payment of maintenance

For the three

months ended September 30, 2020 and 2019, the Company amortized $12,757, respectively.

Future amortization of intangible assets

is as follows:

As of March 31, 2021, the Company held 3 U.S.

and foreign patents on its intrusion

detection technology, which expire in calendar years 2025 through 2034 (depending on the payment of maintenance fees).

The DPTI issued patents cover a System and Method

for Brillouin Analysis, a System and Method for Resolution Enhancement of a Distributed Sensor, and a Flexible Fiber Optic Deformation

System Sensor and Method.

Maintenance of intellectual property rights and the protection thereof is important to our business.

that may be issued may not sufficiently protect the Company's intellectual property and third parties may challenge any issued patents.

Other parties may independently develop similar or competing technology or design around any patents that may be issued to the Company.

The Company cannot be certain that the steps it has taken will prevent the misappropriation of its intellectual property, particularly

in foreign countries where the laws may not protect proprietary rights as fully as in the United States.

Further, the Company may be required

to enforce its intellectual property or other proprietary rights through litigation, which, regardless of success, could result in substantial

costs and diversion of management's attention.

Additionally, there may be existing patents of which the Company is unaware that could

be pertinent to its business, and it is not possible to know whether there are patent applications pending that the Company's products

might infringe upon, since these applications are often not publicly available until a patent is issued or published.

For the three months

ended March 31, 2021 and 2020, the Company amortized $12,757 and $12,757, respectively.

Future amortization of intangible assets is as

NOTE 7 –

1 unchanged sentence

The Company follows

subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related

party transactions.

subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party

transactions.

Pursuant to Section 850-10-20 the related parties include a) affiliates of the Company;

b) Entities for

which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value

Option Subsection of Section 825-10-15, to be accounted for by the equity method by the investing entity;

c) trusts for the benefit

of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management;

owners of the Company;

e) management of the Company;

f) other parties with which the Company may deal if one party controls or

can significantly influence the management or operating policies of the other to an extent that one of the transacting parties

might be prevented from fully pursuing its own separate interests;

and g) Other parties that can significantly influence the management

or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly

influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate

The financial statements shall include disclosures of material related party transactions, other than compensation

arrangements, expense allowances, and other similar items in the ordinary course of business.

However, disclosure of transactions

that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements.

disclosures shall include:

a) the nature of the relationship(s) involved;

b) a description of the transactions, including transactions

to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such

other information deemed necessary to an understanding of the effects of the transactions on the financial statements;

c) the dollar

amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the

method of establishing the terms from that used in the preceding period;

and d) amounts due from or to related parties as of the

date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

In May 2018, the JV Entity received $42,000

for an order from Bravetek and the JV Entity then placed a corresponding order with the Company.

The Company’s former executive

office is also the CEO of Bravatek.

The proceeds were to be used for marketing efforts to generate sales of our intrusion detection

The order has been recorded as a prepaid sale and is a current liability as of September 30, 2020.

b) Entities for which investments

in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of

Section 825-10-15, to be accounted for by the equity method by the investing entity;

c) trusts for the benefit of employees, such as

pension and profit-sharing trusts that are managed by or under the trusteeship of management;

d) principal owners of the Company;

management of the Company;

f) other parties with which the Company may deal if one party controls or can significantly influence the

management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing

its own separate interests;

and g) Other parties that can significantly influence the management or operating policies of the transacting

parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that

one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

The financial statements

shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other

similar items in the ordinary course of business.

However, disclosure of transactions that are eliminated in the preparation of consolidated

or combined financial statements is not required in those statements.

The disclosures shall include:

a) the nature of the relationship(s)

b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each

of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects

of the transactions on the financial statements;

c) the dollar amounts of transactions for each of the periods for which income statements

are presented and the effects of any change in the method of establishing the terms from that used in the preceding period;

and d) amounts

due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of

During the three months ended March 31, 2021 and

2020, the Company’s Chief Executive Officer advanced personal funds in the amount of $493 and $7,405 for Company expenses.

March 31, 2021, the Company’s Chief Executive Officer is owed a total of $98.930 for advanced personal funds.

NOTE 8 –

PREFERRED STOCK

In accordance with the Company’s

bylaws, the Company has authorized a total of 2,000,000 shares of preferred stock, par value $0.01 per share, for all classes.

As of September 30, 2020 and December 31, 2019, there were 88,235 total preferred shares issued and outstanding for all classes.

During the three months ended September

In accordance with the Company’s bylaws,

the Company has authorized a total of 2,000,000 shares of preferred stock, par value $0.01 per share, for all classes.

As of March 31,

2021, and December 31, 2020, there were 88,235 total preferred shares issued and outstanding for all classes.

During the three months ended March 31, 2021,

the Company issued no shares of preferred stock .

NOTE 9 –

In accordance with the Company’s

bylaws, the Company has authorized a total of 20,000,000,000 shares of common stock, par value $0.01 per share.

As of September

30, 2020 and December 31, 2019, there were 3,394,817,156 and 1,392,042,112 common shares issued and outstanding, respectively.

During the three months ended September

In accordance with the Company’s bylaws,

the Company has authorized a total of 20,000,000,000 shares of common stock, par value $0.0001 per share.

As of March 31, 2021 and December

31, 2020, there were 1,392,042,112 common shares issued and outstanding.

During the three months ended March 31, 2021,

the Company issued the following shares of common stock :

On July 9, 2020, the Company issued an

aggregate of 80,000,000 shares of common stock upon the conversion of convertible debt, as issued on May 3, 2019, in the amount

On July 16, 2020, the Company issued an

aggregate of 82,857,143 shares of common stock upon the conversion of convertible debt, as issued on May 3, 2019, in the amount

On July 28, 2020, the Company issued an

aggregate of 82,857,143 shares of common stock upon the conversion of convertible debt, as issued on May 3, 2019, in the amount

On August 3, 2020, the Company issued an

aggregate of 91,428,571 shares of common stock upon the conversion of convertible debt, as issued on May 3, 2019, in the amount

On August 6, 2020, the Company issued an

aggregate of 91,428,571 shares of common stock upon the conversion of convertible debt, as issued on May 3, 2019, in the amount

On August 10, 2020, the Company issued

an aggregate of 91,428,571 shares of common stock upon the conversion of convertible debt, as issued on May 3, 2019, in the amount

On August 13, 2020, the Company issued

an aggregate of 91,428,571 shares of common stock upon the conversion of convertible debt, as issued on May 3, 2019, in the amount

On August 18, 2020, the Company issued

an aggregate of 110,000,000 shares of common stock upon the conversion of convertible debt, as issued on May 3, 2019, in the amount

On August 20, 2020, the Company issued

an aggregate of 115,714,286 shares of common stock upon the conversion of convertible debt, as issued on May 3, 2019, in the amount

On August 31, 2020, the Company issued

an aggregate of 115,714,286 shares of common stock upon the conversion of convertible debt, as issued on May 3, 2019, in the amount

On September 1, 2020, the Company issued

an aggregate of 115,714,286 shares of common stock upon the conversion of convertible debt, as issued on May 3, 2019, in the amount

On September 1, 2020, the Company issued

an aggregate of 119,157,924 shares of common stock upon the conversion of interest of convertible debt, as issued on July 17, 2018,

in the amount of $6,315.

On September 1, 2020, the Company issued

an aggregate of 85,000,000 shares of common stock upon the conversion of convertible debt, as issued on September 24, 2018, in

the amount of $7,000.

On September 2, 2020, the Company issued

an aggregate of 123,474,262 shares of common stock upon the conversion of interest of convertible debt, as issued on September

24, 2018, in the amount of $4,439.

On September 3, 2020, the Company issued

an aggregate of 115,714,286 shares of common stock upon the conversion of convertible debt, as issued on May 3, 2019, in the amount

On September 11, 2020, the Company issued

an aggregate of 115,714,286 shares of common stock upon the conversion of convertible debt, as issued on May 3, 2019, in the amount

On September 30, 2020, the Company issued

an aggregate of 158,000,000 shares of common stock upon the conversion of convertible debt, as issued on September 25, 2018, in

the amount of $5,257.

On January 14, 2021, the Company issued an aggregate

of 100,000,000 shares of common stock upon the conversion of convertible debt, as issued on September 24, 2018, in the amount of $28,000.

On January 25, 2021, the Company issued an aggregate

of 150,000,000 shares of common stock upon the conversion of convertible debt, as issued on September 24, 2018, in the amount of $42,000.

On February 1, 2021, the Company issued an aggregate

of 30,999,995 shares of common stock upon the conversion of convertible debt, as issued on February 12, 2019, in the amount of $8,116.

On February 11, 2021, the Company issued an aggregate

of 100,000,000 shares of common stock upon the conversion of convertible debt, as issued on September 24, 2018, in the amount of $56,000.

On February 18, 2021, the Company issued an aggregate

of 220,000,000 shares of common stock upon the conversion of convertible debt, as issued on September 24, 2018, in the amount of $75,436

for principal and $39,638 for interest.

NOTE 10 –

STOCK OPTIONS

The Company’s shareholders previously

approved, by a majority vote, the adoption of the 1998 Stock Incentive Plan (the “Plan”).

As amended on August 11,

2003, the Plan reserves 20,000,000 shares of common stock for issuance upon the exercise of options which may be granted from time-to-time

to officers, directors, certain employees and consultants of the Company or its subsidiaries by the Board of Directors.

permits the award of both qualified and non-qualified incentive stock options.

During the three months ended September

30, 2020, the Company did not issue any stock options and had no stock options outstanding at September 30, 2020.

During the three months ended March 31, 2021,

the Company did not issue any stock options and had no stock options outstanding at March 31, 2021.

NOTE 11 –

SUBSEQUENT EVENTS

The Company evaluated events occurring

after the date of the accompanying unaudited condensed consolidated balance sheets through the date the financial statements were

issued and has identified the following subsequent events that it believes require disclosure:

On October 7, 2020, the Company issued

an aggregate of 161,428,571 shares of common stock upon the conversion of convertible debt, as issued on May 3, 2019, in the amount

On October 7, 2020, the Company issued

an aggregate of 169,000,000 shares of common stock upon the conversion of convertible debt, as issued on February 12, 2019, in

the amount of $6,855.

On October 7, 2020, the Company issued

an aggregate of 143,519,000 shares of common stock upon the conversion of convertible debt, as issued on September 25, 2018, in

the amount of $4,677.

On October 12, 2020, the Company issued

an aggregate of 142,374,429 shares of common stock upon the conversion of convertible debt, as issued on May 3, 2019, in the amount

of $600 in principal and $9,366 in interest.

On October 22, 2020, the Company issued

an aggregate of 77,623,000 shares of common stock upon the conversion of convertible debt, as issued on September 25, 2018, in

the amount of $2,041.

On September 2, 2020, the Company entered

into a securities purchase agreement with Geneva Roth Remark Holdings, Inc.

(“Geneva”) issuing to Geneva a convertible

promissory note in the aggregate principal amount of $47,850 (the “Financing”) with a $4,350 original issue discount

and $3,500 in transactional expenses due to Geneva and its counsel.

The note bears interest at 9% per annum and may be converted

into common shares of the Company's common stock at a conversion price equal to 70% of the lowest trading price of the Company's

The Company evaluated events occurring after the

date of the accompanying unaudited condensed consolidated balance sheets through the date the financial statements were issued and has

identified the following subsequent events that it believes require disclosure:

On April 15, 2021, the Company issued an aggregate

of 8,065,040 shares of common stock upon the conversion of convertible debt, as issued on October 7, 2020, in the amount of $47,850 and

interest of $2,153.25.

On April 26, 2021, we entered a Securities Purchase

Agreement (the “

SPA ”) and Registration Rights Agreement (the “

Registration Rights Agreement ”) with

FIRSTFIRE GLOBAL OPPORTUNITIES FUND, LLC, a Delaware limited liability company (the “

FirstFire ”), pursuant to which

we issued to FirstFire a Convertible Promissory Note in the principal amount of $825,000 (the “

FirstFire Note ”).

purchase price of the FirstFire Note is $750,000.

The FirstFire Note matures on January 26, 2022 upon which time all accrued and unpaid

interest will be due and payable.

Interest accrues on the FirstFire Note at 10% per annum guaranteed until the FirstFire Note becomes

due and payable, whether at maturity or upon acceleration or by prepayment or otherwise.

The FirstFire Note is convertible at any time

after 180 days from issuance, upon the election of the FirstFire, into shares of our Common Stock at $0.015 per share.

The FirstFire Note

is subject to various “Events of Default,”

which are disclosed in the FirstFire Note.

Upon the occurrence of an “Event

of Default,”

the conversion price will become $0.005.

In the event of a DTC “chill”

on our shares, an additional discount

of 10% will apply to the conversion price while the “chill”

is in effect.

Upon the issuance of the FirstFire Note, we have

initially agreed to reserve 550,000,000 shares of Common Stock.

The Registration Rights Agreement provides that

we shall (i) use our best efforts to file with the Securities and Exchange Commission (the “

Commission ”) an S-1 Registration

Statement within 90 days of the date of the Registration Rights Agreement to register the shares into which the FirstFire Note is convertible;

and (ii) have the Registration Statement declared effective by the Commission within 180 days after the date the Registration Statement

is filed with the Commission.

Management’s Discussion and Analysis

of Financial Condition and Results of Operations

This Management’s Discussion and Analysis

of Financial Condition and Results of Operations contain certain forward-looking statements.

Historical results may not indicate future

Our forward-looking statements reflect our current views about future events;

are based on assumptions and are subject to

known and unknown risks and uncertainties that could cause actual results to differ materially from those contemplated by these statements.

Factors that may cause differences between actual results and those contemplated by forward-looking statements include, but are not limited

to, those discussed in the “Risk Factors”

section of our Annual Report on Form 10-K for the year ended December 31, 2020.

We undertake no obligation to publicly update or revise any forward-looking statements, including any changes that might result from any

facts, events, or circumstances after the date hereof that may bear upon forward-looking statements.

Furthermore, we cannot guarantee

future results, events, levels of activity, performance, or achievements

Critical Accounting Policies

The following discussions are based upon our financial

statements, which have been prepared in accordance with accounting principles generally accepted in the United States.

These financial

statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States.

The preparation of these financial statements

requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and

expenses, and related disclosures of contingencies.

We continually evaluate the accounting policies and estimates used to prepare the

financial statements.

We base our estimates on historical experiences and assumptions believed to be reasonable under current facts and

circumstances.

Actual amounts and results could differ from these estimates made by management.

DarkPulse, Inc., a Delaware corporation (the “

Company ”),

is a technology-security company created to develop, market and distribute a full suite of engineering, monitoring, installation and security

management solutions for critical infrastructure/key resources to both industries and governments.

Coupled with our patented BOTDA dark-pulse

technology (the “

DarkPulse Technology ”), DarkPulse provides its customers a comprehensive data stream of critical metrics

for assessing the health and security of their infrastructure.

Our comprehensive system provides for rapid, precise analysis and responsive

activities predetermined by the end-user customer.

Our activities since inception have consisted of developing various solutions, obtaining

patents and trademarks related to its technology, raising capital, creating key partnerships to expand our suite of products and services.

Our activities have evolved to a sales focused mission since the successful completion of our BOTDA system in December 2020.

Recent Events

On January 4, 2021, we entered into a securities

purchase agreement with Geneva Roth Remark Holdings, Inc.

Geneva ”) issuing to Geneva a convertible promissory note

in the aggregate principal amount of $42,350 with a $3,850 original issue discount and $3,500 in transactional expenses due to Geneva

and its counsel.

The note bears interest at 8% per annum and may be converted into common shares of the Company's common stock at a conversion

price equal to 70% of the lowest trading price of our common stock during the 20 prior trading days.

We received $35,000 net cash.

On February 3, 2021, we entered into a securities

purchase agreement with Geneva issuing to Geneva a convertible promissory note in the aggregate principal amount of $94,200 with a $15,700

original issue discount and $3,500 in transactional expenses due to Geneva and its counsel.

The note bears interest at 4.5% per annum

and may be converted into common shares of our common stock at a conversion price equal to 81% of the lowest two trading prices of our

common stock during the 10 prior trading days.

The Company received $40,000 net cash in the Financing which closed on October

On September 2, 2020, the Company entered

into a securities purchase agreement with Geneva Roth Remark Holdings, Inc.

(“Geneva”) issuing to Geneva a convertible

promissory note in the aggregate principal amount of $47,850 (the “Financing”) with a $4,350 original issue discount

and $3,500 in transactional expenses due to Geneva and its counsel.

The note bears interest at 9% per annum and may be converted

into common shares of the Company's common stock at a conversion price equal to 70% of the lowest trading price of the Company's

We received $75,000 net cash.

On February 18, 2021, we entered into a securities

purchase agreement with Geneva issuing to Geneva a convertible promissory note in the aggregate principal amount of $76,200 with a $12,700

original issue discount and $3,500 in transactional expenses due to Geneva and its counsel.

The note bears interest at 4.5% per annum

and may be converted into common shares of our common stock at a conversion price equal to 81% of the lowest two trading prices of our

common stock during the 10 prior trading days.

The Company received $40,000 net cash in the Financing which closed on October 7,

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

("DPI"

or the "Company") is a technology-security company incorporated in 1989 as Klever Marketing, Inc.

("Klever").

The Company’s wholly-owned subsidiary, DarkPulse Technologies Inc.

("DPTI"), originally started

as a technology spinout from the University of New Brunswick, Fredericton, Canada.

The Company’s security and monitoring

systems will initially be delivered in applications for border security, pipelines, the oil and gas industry and mine safety.

uses of fiber optic distributed sensor technology have been limited to quasi-static, long-term structural health monitoring due

to the time required to obtain the data and its poor precision.

The Company’s patented BOTDA dark-pulse sensor technology

allows for the monitoring of highly dynamic environments due to its greater resolution and accuracy.

On April 27, 2018, Klever entered into

an Agreement and Plan of Merger (the “Merger Agreement”

or the “Merger”) involving Klever as the surviving

parent corporation and acquiring a privately held New Brunswick corporation known as DarkPulse Technologies Inc.

as its wholly

owned subsidiary.

On July 18, 2018, the parties closed the Merger Agreement, as amended on July 7, 2018, and the name of the Company

was subsequently changed to DarkPulse, Inc.

With the change of control of the Company, the Merger was accounted for as a recapitalization

in a manner similar to a reverse acquisition.

On July 20, 2018, the Company filed a Certificate

of Amendment to its Certificate of Incorporation with the State of Delaware, changing the name of the Company to DarkPulse, Inc.

The Company filed a corporate action notification with the Financial Industry Regulatory Authority (FINRA), and the Company's ticker

symbol was changed to DPLS.

We received $60,000 net cash .

On April 26, 2021, we entered a Securities Purchase

Agreement (the “

SPA ”) and Registration Rights Agreement (the “

Registration Rights Agreement ”) with

FIRSTFIRE GLOBAL OPPORTUNITIES FUND, LLC, a Delaware limited liability company (the “

FirstFire ”), pursuant to which

we issued to FirstFire a Convertible Promissory Note in the principal amount of $825,000 (the “

FirstFire Note ”).

purchase price of the FirstFire Note is $750,000.

The FirstFire Note matures on January 26, 2022 upon which time all accrued and unpaid

interest will be due and payable.

Interest accrues on the FirstFire Note at 10% per annum guaranteed until the FirstFire Note becomes

due and payable, whether at maturity or upon acceleration or by prepayment or otherwise.

The FirstFire Note is convertible at any time

after 180 days from issuance, upon the election of the FirstFire, into shares of our Common Stock at $0.015 per share.

The FirstFire Note

is subject to various “Events of Default,”

which are disclosed in the FirstFire Note.

Upon the occurrence of an “Event

of Default,”

the conversion price will become $0.005.

In the event of a DTC “chill”

on our shares, an additional discount

of 10% will apply to the conversion price while the “chill”

is in effect.

Upon the issuance of the FirstFire Note, we have

initially agreed to reserve 550,000,000 shares of Common Stock.

The Registration Rights Agreement provides that

we shall (i) use our best efforts to file with the Securities and Exchange Commission (the “

Commission ”) an S-1 Registration

Statement within 90 days of the date of the Registration Rights Agreement to register the shares into which the FirstFire Note is convertible;

and (ii) have the Registration Statement declared effective by the Commission within 180 days after the date the Registration Statement

is filed with the Commission.

We have entered into a consulting agreement with

the Bachner Group to assist in the successful transformation from an R&D focused company to a sales focused company, and assist us

with federal contract opportunities.

We have entered into a partnership with Remote

Intelligence to expand our service offerings to include “eye in the sky”

drone capabilities.

We have entered into a partnership with Unleash

Live to expand our service offerings to include AI enhanced image evaluation and secure private networking capabilities.

We continue to evaluate partnership and licensing

opportunities it deems important to its transformation to a sales focused.

Going Concern Uncertainty

As shown in the accompanying financial

statements, during the nine months ended September 30, 2020, the Company did not generate any revenues and reported a net loss

As of September 30, 2020, the Company’s current liabilities exceeded its current assets by $3,436,901.

September 30, 2020, the Company had $519 of cash.

The Company will require additional funding

during the next nine months to finance the growth of its operations and achieve its strategic objectives.

These factors, as well

as the uncertain conditions that the Company faces relative to capital raising activities, create substantial doubt as to the Company’s

ability to continue as a going concern.

The Company is seeking to raise additional capital principally through private placement

offerings and is targeting strategic partners in an effort to finalize the development of its products and begin generating revenues.

The ability of the Company to continue as a going concern is dependent upon the success of future capital offerings or alternative

financing arrangements and expansion of its operations.

The accompanying financial statements do not include any adjustments that

might be necessary should the Company be unable to continue as a going concern.

Management is actively pursuing additional sources

of financing sufficient to generate enough cash flow to fund its operations.

However, management cannot make any assurances that

such financing will be secured.

As shown in the accompanying financial statements,

during the three months ended March 31, 2021, the Company did not generate any revenues and reported a net loss of $51,874.

31, 2021, the Company’s current liabilities exceeded its current assets by $3,031,944.

As of March 31, 2021, the Company had $50,714

The Company will require additional funding to

finance the growth of our operations and achieve our strategic objectives.

These factors, as relative to capital raising activities,

create doubt as to our ability to continue as a going concern.

We are seeking to raise additional capital and are targeting strategic

partners in an effort to accelerate the sales and marketing of our products and begin generating revenues.

Our ability to continue as

a going concern is dependent upon the success of future capital offerings or alternative financing arrangements, expansion of our operations

and generating sales.

The accompanying financial statements do not include any adjustments that might be necessary should we be unable

to continue as a going concern.

Management is actively pursuing additional sources of financing sufficient to generate enough cash flow

to fund its operations however, management cannot make any assurances that such financing will be secured.

Results of Operations

To date, the Company has not generated

any operating revenues.

To date, the Company has not generated any operating

Operating Expenses

General and administrative expenses for

three months ended September 30, 2020, decreased by $5,671 to $34,782 from $40,453 for the three months ended September 30, 2019.

General and administrative expenses for nine months ended September 30, 2020, decreased by $24,099 to $120,866 from $144,965 for

the nine months ended September 30, 2019.

Legal expenses for three months ended September

30, 2020, decreased by $48,868 to $0 from $48,868 for the three months ended September 30, 2019.

Legal expenses for nine months

ended September 30, 2020, decreased by $48,665 to $96,962 from $48,297 for the nine months ended September 30, 2019.

Payroll and compensation expenses for nine

months ended September 30, 2020, decreased by $168,758 to $187 from $168,945 for the nine months ended September 30, 2019.

decrease is related to a significant reduction in payroll related expenses in 2019 because it terminated four employees during

Amortization of Patents expense for three

and nine months ended September 30, 2020, remained the same at $12,757 and $25,514, respectively compared to the three and nine

months ended September 30, 2019.

General and administrative expenses for three

months ended March 31, 2021, decreased by $11,838 to $29,688 from $41,526 for the three months ended March 31, 2020.

Payroll and compensation expenses for three months

ended March 31, 2021, decreased by $35 to $0 from $35 for the three months ended March 31, 2020.

The decrease is related to a reduction

in payroll related expenses.

Amortization of patents expense for three months

ended March 31, 2021, remained the same at $12,757 for the three months ended March 31, 2020.

Other Income (Expense)

Interest expense was $37,318 and $50,649

for the three months ended September 30, 2020 and 2019, respectively.

This $13,331 decrease is primarily related to the decrease

in non-cash expenses related to notes payable issued in 2019.

Interest expense was $97,842 and $399,895

for the nine months ended September 30, 2020 and 2019, respectively.

This $302,053 decrease is primarily related to the decrease

in non-cash expenses related to notes payable issued in 2019.

Loss on convertible notes expense was $1,313

for the three months ended September 30, 2020.

The loss on the change in fair market value of derivative liabilities was $87,853

for the three months ended September 30, 2020.

Loss on convertible notes expense was $39,414

for the nine months ended September 30, 2020.

The loss on the change in fair market value of derivative liabilities was $44,684

for the nine months ended September 30, 2020.

Interest expense was $31,662 and $35,370 for the

three months ended March 31, 2021 and 2020, respectively.

This decrease is primarily related to the decrease in convertible notes payable

Gain on convertible notes expense was $170,281

for the three months ended March 31, 2021.

Loss on change in fair market value of derivative liabilities was $30,944 for the three months

ended March 31, 2021.

Provision for Income Taxes

The provision for income taxes was $0 and

$0 for the three and nine months ended September 30, 2020 and 2019, respectively.

The provision for income taxes was $0 and $0 for

the three months ended March 31, 2021 and 2020, respectively.

Net Income (Loss)

As a result of the above, we reported a

net loss of $174,023 for the three months ended September 30, 2020 compared to $21,886 for the three months ended September 30,

Additionally, as a result of the above,

we reported a net loss of $388,561 for the nine months ended September 30, 2020 compared to a loss of $659,473 for the nine months

ended September 30, 2019.

As a result of the above, we reported a net loss

of $51,874 and $74,298 for the three months ended March 31, 2021 and 2020, respectively.

Liquidity and Capital Resources

The Company requires working capital to

fund the further development and commercialization of its proprietary fiber optic sensing devices, and for operating expenses.

As of September 30, 2020, we had cash of

The Company requires working capital to fund the

further development and commercialization of its proprietary fiber optic sensing devices, and for operating expenses.

During the three

months ended March 31, 2021, the Company had cash proceeds of $212,750 compared to the three months ended March 31, 2020, when the Company

had no new cash proceeds.

As of March 31, 2021, we had cash of $50,714,

compared to $337 as of December 31, 2020.

As of September 30, 2020, our current liabilities exceeded our current assets

by $2,508,467.

As of March 31, 2021, our current liabilities exceeded our current assets by $3,031,944.

Cash Flows From Operating Activities

During the nine months ended September

30, 2020, net cash provided by operating activities was $4,278, resulting from our net loss of $388,561and an increase in expenses

related to our convertible notes payables, including amortization of debt discount of $39,414, increase in derivative liability

of $44,684, increase in accounts payable of $174,938 and accrued liabilities of $105,435.

During the nine months ended September

30, 2019, net cash used by operating activities was $202,128, resulting from our net loss of $659,473 and an increase in expenses

related to our convertible notes payables, including amortization of debt discount of $568,985, debt discount of $205,000, increases

During the three months ended March 31, 2021,

net cash used by operating activities was $161,171, resulting from our net loss of $51,874 and an increase in expenses related to our

convertible notes payables, including loan acquisition costs of $212,750, amortization of debt discount of $42,469, increase in derivative

liability of $30,944, increases in accounts payable of $12,083 and accrued liabilities of $31,363.

By comparison, during the three months ended

March 31, 2020, net cash used by operating activities was $554, resulting from our net loss of $74,298 and an increase in expenses related

to our convertible notes payables, including amortization of debt discount of $35,211, decrease in derivative liability of $54,713, increases

in accounts payable of $45,916 and accrued liabilities of $34,573.

Cash Flows From Investing Activities

During the nine months ended September

30, 2020, Company had net cash used in investing activities of $4,969.

During the nine months ended September 30, 2019, the Company

used $54,930 in investing activities with both periods relating to our patents and trademarks.

During the three months ended March 31, 2021,

the Company had $1,200 net cash used in investing activities comprised on investment in our demonstration box.

During the three months

ended March 31, 2020, the Company had no net cash provided by or used in investing activities.

Cash Flows From Financing Activities

During the nine months ended September

30, 2020, Company had no net cash provided by or used in financing activities.

During the nine months ended September 30, 2019,

net cash provided by financing activities was $155,450, comprised of proceeds from the issuance of convertible debt in the amount

of $180,100, offset by payments on convertible debt of $24,650.

During the three months ended March 31, 2021,

the Company had net cash provided by financing activities was $212,750, comprised of proceeds from the issuances of convertible debt.

During the three months ended March 31, 2020, the Company had no net cash provided by financing activities.

Factors That May Affect Future Results

Management’s Discussion and Analysis

contains information based on management’s beliefs and forward-looking statements that involve a number of risks, uncertainties,

and assumptions.

There can be no assurance that actual results will not differ materially from the forward-looking statements as

a result of various factors, including but not limited to, our ability to obtain the equity funding or borrowings necessary to

market and launch our products, our ability to successfully serially produce and market our products;

our success establishing

and maintaining collaborative licensing and supplier arrangements;

Management’s Discussion and Analysis contains

information based on management’s beliefs and forward-looking statements that involve a number of risks, uncertainties, and assumptions.

There can be no assurance that actual results will not differ materially from the forward-looking statements as a result of various factors,

including but not limited to, our ability to obtain the equity funding or borrowings necessary to market and launch our products, our

ability to successfully serially produce and market our products;

our success establishing and maintaining collaborative licensing and

supplier arrangements;

the acceptance of our products by customers;

our continued ability

to pay operating costs;

our ability to meet demand for our products;

our continued ability to pay operating costs;

our ability to meet

demand for our products;

the amount and nature of competition from our competitors;

the effects of technological changes on products and product demand;

and our ability to successfully adapt to market forces and

technological demands of our customers.

the effects of technological changes on products and

product demand;

and our ability to successfully adapt to market forces and technological demands of our customers.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements

that have or are reasonably likely to have a current or future material effect on our consolidated financial condition, changes in financial

condition, revenues or expenses, results of operations, liquidity capital expenditures or capital resources.

Recent Accounting Pronouncements

The Company has provided a discussion of

recent accounting pronouncements in Note 1 to the Condensed Financial Statements.

Quantitative and Qualitative Disclosures About Market

The Company has provided a discussion of recent

accounting pronouncements in Note 1 to the Condensed Financial Statements.

Quantitative and Qualitative Disclosures

About Market Risk

Not Applicable:

1 unchanged sentence

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-Q

Item 1. Financial Statements