What changed in this filing

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Item 1. Financial Statements

2021-08-16 compared with 2021-05-17 · 328 added, 423 removed, 349 unchanged (68% of the section changed)

1 unchanged sentence

DARKPULSE, INC.

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets

CURRENT ASSETS:

19 unchanged sentences

Accumulated deficit

( 6,687,651 )

( 6,450,170 )

TOTAL STOCKHOLDERS' DEFICIT

( 3,577,557 )

( 3,932,205 )

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 Operations

FOR THE THREE MONTHS

ENDED MARCH 31,

Condensed Consolidated Statements of Operations

OPERATING EXPENSES:

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Payroll and compensation

Legal expenses

Amortization of patents

4 unchanged sentences

Interest expense

Gain/loss on convertible notes

Loss on change in fair market values of derivative liabilities

TOTAL OTHER 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 loss attributable to noncontrolling interests in variable interest entity and subsidiary

Net loss attributable to Company stockholders

$ ( 185,607 )

$ ( 140,240 )

$ ( 237,481 )

$ ( 214,538 )

LOSS PER SHARE:

4 unchanged sentences

1,511,053,102

4,599,529,434

1,451,547,607

The accompanying notes are an integral part of

1 unchanged sentence

DARKPULSE, INC.

Condensed Consolidated Statements

of Comprehensive Gain/Loss

FOR THE THREE MONTHS

ENDED MARCH 31,

OTHER COMPREHENSIVE GAIN (LOSS)

Condensed Consolidated Statements of Comprehensive

THREE MONTHS ENDED

SIX MONTHS ENDED

$ ( 185,607 )

$ ( 140,240 )

$ ( 237,481 )

$ ( 214,538 )

OTHER COMPREHENSIVE LOSS

Unrealized Gain (Loss) on Foreign Exchange

COMPREHENSIVE GAIN (LOSS)

$ ( 201,761 )

$ ( 179,286 )

$ ( 271,544 )

$ ( 160,937 )

The accompanying notes are an integral part of

1 unchanged sentence

DARKPULSE, INC.

Consolidated Statement of

Stockholders' Deficit

For the Years Ended March 31, 2021 and 2020

Preferred Stock

Controlling Interest in

Accumulated Other Compre-

holders’

Consolidated Statement of Stockholders' Deficit

For the Periods Ended June 30, 2021 and 2020

Non-Controlling

Other Comprehensive

Stockholders’

Balance, December 31, 2020

8 unchanged sentences

$ ( 3,752,049 )

Conversion of convertible notes

Stock based loan acquisition cost

Foreign currency adjustment

Balance, June 30, 2021

4,770,327,191

$ ( 6,687,651 )

$ ( 3,577,557 )

Balance, December 31, 2019

3 unchanged sentences

$ ( 3,807,552 )

Conversion of convertible notes

Foreign currency adjustment

4 unchanged sentences

$ ( 3,789,204 )

Conversion of convertible notes

( 2,156,228 )

Foreign currency adjustment

Balance, June 30, 2020

1,609,184,970

$ ( 14,034,092 )

$ ( 6,388,866 )

$ ( 3,953,290 )

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

DARKPULSE, INC.

Condensed Consolidated Statement

of Cash Flows

FOR THE THREE MONTHS

ENDED MARCH 31,

Condensed Consolidated Statement of Cash Flows

SIX MONTHS ENDED

CASH FLOWS FROM OPERATING ACTIVITIES:

$ ( 237,481 )

$ ( 214,538 )

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

Stock based loan acquisition costs

Amortization of debt discount

3 unchanged sentences

Accrued liabilities

Net cash used by operating activities

Net cash (Used by) Provided by operating

CASH FLOWS FROM INVESTING ACTIVITIES:

3 unchanged sentences

Proceeds from convertible notes payable

Payments on convertible notes

Payments on notes payable

Net Cash Provided by Financing Activities

NET INCREASE (DECREASE) IN CASH

NET INCREASE IN CASH

CASH, beginning of period

CASH, end of period

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

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

Stock issued for convertible notes payable and accrued interest

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DARKPULSE, INC.

Notes to Condensed Financial

NOTE 1 –

BASIS OF PRESENTATION AND SUMMARY

Notes to Condensed Financial Statements

NOTE 1 – BASIS OF PRESENTATION AND SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES

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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.

3 unchanged sentences

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

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

position as of June 30, 2021, and the results of operations for three and six months and cash flows for the six months ended June 30,

2021 have been included.

The results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of

the results to be expected for the full year.

Description of Business

("DPI"

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

("Klever").

wholly-owned subsidiary, DarkPulse Technologies Inc.

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

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

Its’ 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.

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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 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.

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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.

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

Going Concern Uncertainty

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

during the six months ended June 30, 2021, the Company did not generate any revenues and reported a net loss of $ 237,481 .

As of June 30,

2021, the Company’s current liabilities exceeded its current assets by $ 2,915,206 .

As of June 30, 2021, the Company had $ 148,562

The Company will require additional funding to

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institutions.

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

up to $ 250,000 .

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CAD and for the three months ended

March 31, 2021 closing rate at 1.2558 US$:

June 30, 2021 closing rate at 1.2395 US$:

CAD, average rate at 1.2249 US$.

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may be required.

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

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

ASC 740-10 requires that the Company recognize

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the position following an audit.

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

threshold, the amount recognized in the

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

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

at arms length.

at arm’s length.

Recent Accounting Pronouncements

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

or proposed by the Financial Accounting Standards Board during the three months ended June 30, 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.

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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.

For the three and six months ended June 30, 2021,

there were no stock options outstanding.

For the three and six months ended June 30, 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.

There are 1,970,029,676 common shares reserved for

the potential conversion of the Company's convertible debt.

NOTE 2 - DEBENTURE

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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.

Dollar on June 30, 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,

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$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

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

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 loss for the three months ended June 30, 2021 and 2020, were $ 16,154

39,046 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 years from April 24, 2018.

For the three months ended June 30, 2021, and

2020, the Company recorded interest expense of $ 13,463 and $ 12,255 , respectively.

As of March 31, 2021 the debenture liability

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

As of June 30, 2021 the debenture liability totaled

$ 1,210,155 , all of which was long term.

Future minimum required payments over the

next 5 years and thereafter are as follows:

Period ending March 31,

Future minimum required payments

Period ending June 30,

2026 and after

NOTE 3 –

CONVERTIBLE DEBT SECURITIES

NOTE 3 – CONVERTIBLE DEBT SECURITIES

The Company uses the Black-Scholes Model to calculate

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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

issue of the debt security as of June 30, 2021.

Management determined the expected volatility of 425.68 %,

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 liability.

Schedule of convertible debt

Transaction expense

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

$ ( 235,737 )

On April 5, 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 $ 64,200 with a $10,700 original issue discount and $ 3,500 in transactional expenses due to Geneva

1 unchanged sentence

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.

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

received $ 50,000 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

On April 26, 2021, the Company 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

(the “ FirstFire Note ”).

The SPA closed on April 30, 2021.

The 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

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

The FirstFire Note is subject to various “Events of Default,” which are disclosed in the FirstFire Note.

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.

In addition, on April 30, 2021, the Company issued 60,000,000

shares of common stock valued at $ 1,122,000

as compensation for loan acquisition costs, which will be amortized over the life of the note.

For the three months ended June 30,

2021, the Company expensed $ 249,333

to interest expense.

The Registration Rights Agreement provides that

the Company shall (i) use its 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.

On May 19, 2021, the Company entered into a Stipulation

of Settlement with four note holders pursuant to which the Company agreed to pay $173,000 to the note holders.

On June 3, 2021, the Company entered into a

Settlement and Mutual Release Agreement with Auctus Fund, LLC (the “Lender”).

Pursuant to the Agreement, the Lender

agreed to convert the Promissory Note issued on September 25, 2018 by the Company to the Lender in the principal amount of $ 100,000

(the “Auctus Note”) into 12,500,000

shares of the Company’s Common stock (the “Shares”) as consideration for full and complete satisfaction of and

settlement of the Auctus Note, which also terminates all obligations owing under both the Auctus Note and the corresponding

Securities Purchase Agreement dated September 25, 2018 between the Company and the Lender.

The Lender also agreed to limit the

resales of the Shares in the public market to no more than 2,500,000

shares per calendar week until all of the Shares have been sold.

As of June 30, 2021 and 2020 respectively, there

was 1,584,574 and $ 1,072,663 of convertible debt outstanding, net of debt discount of $ 965,921 , and $ 1,313 , As of June 30, 2021 and 2020

respectively, there was derivative liability of $ 893,381 and $ 1,232,344 related to convertible debt securities.

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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, 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.

Carebourn Capital, L.P.

On January 29, 2021, Carebourn Capital, L.P.

(“ Carebourn ”)

commenced suit against the Company in the 4th Judicial District (Hennepin County District Court) (Minnesota), alleging the Company breached

the terms and conditions of two convertible promissory notes and accompanying securities purchase agreements Carebourn and the Company

entered into on July 17, 2018 and July 24, 2018, respectively.

Also on January 29, 2021, Carebourn moved for

a temporary injunction to enjoin the Company from transferring any shares of its common stock to any third parties.

Following submission

of briefing by both parties and oral arguments on Carebourn’s motion, on March 17, 2021, the Court denied Carebourn’s motion

for a temporary injunction.

On April 14, 2021, Carebourn filed an amended

complaint and asserted new claims.

On May 13, 2021, the Company filed a motion to dismiss Carebourn’s amended complaint, arguing

that Carebourn is conducting itself as an unregistered dealer, in violation of Section 15(a) of the Securities and Exchange Act of 1934

(the “ Act ”), and, pursuant to Section 29(b) of the Act, the Company is entitled to have all contracts arising under

the unlawful securities transaction declared void ab initio and seek rescissionary damages for any unlawful securities transactions effected

by Carebourn.

As of the date hereof, a ruling has not been issued

on the foregoing motions to dismiss filed by the Company and other defendants.

Furthermore, as of the date hereof, the Company and Carebourn

are conducting discovery.

The Company intends to defend itself against the allegations asserted in Carebourn’s amended complaint

and interpose the defenses provided under the Act, including but not limited to asserting that Carebourn is an unregistered dealer acting

in violation of Section 15(a) and, pursuant to Section 29(b), the Company interposing its right to rescind the unlawful securities contracts

in their entirety and, furthermore, seek rescissionary damages for any unlawful securities transactions effected by Carebourn.

contends that its arguments are brought in good faith, particularly in light of recent SEC enforcement actions and the SEC’s ongoing

investigation against Carebourn, among other parties, for violations of federal securities laws, including violations of Section 15(a)

Securities and Exchange Commission v.

Carebourn Capital, LP et al, Case No.

1:20-cv-07162 (N.D.

Former Darkpulse Officers

On June 10, 2021, Stephen Goodman, Mark Banash,

and David Singer (the “ Former Officers ”), all former officers and employees of the Company, commenced suit against

the Company in Arizona Superior Court, Maricopa County.

The complaint alleges the Company breached the rights of the Former Officers in

connection with Series D preferred stock issued to the Former Officers.

The Company intends to defend itself against the allegations asserted

in the Former Officers’ complaint.

if the case progresses the Company will

file countersuits against all plaintiffs.

More Capital, LLC

On June 29, 2021, More Capital, LLC (“ More ”)

commenced suit against the Company, et al., in the 4th Judicial District (Hennepin County District Court) (Minnesota), alleging the Company

breached the terms and conditions of a convertible promissory note and accompanying securities purchase agreement More and the Company

entered into on August 20, 2018.

On July 20, 2018, the Company filed a motion to

dismiss More’s complaint, arguing that the claims asserted against the Company fail to state a claim upon which relief can be granted.

The Company intends to defend itself against the

allegations asserted in More’s complaint and interpose the defenses provided under the Act, including but not limited to asserting

that More is an unregistered dealer acting in violation of Section 15(a) of the Act and, pursuant to Section 29(b) of the Act, the Company

interposing its right to rescind the unlawful securities contracts in their entirety and, furthermore, seek rescissionary damages for

any unlawful securities transactions effected by More.

The Company contends that its arguments are brought in good faith, particularly

in light of recent SEC enforcement actions and the SEC’s ongoing investigation against More, among other parties, for violations

of federal securities laws, including violations of Section 15(a) of the Act.

Securities and Exchange Commission v.

Capital, LP et al, Case No.

1:20-cv-07162 (N.D.

From time to time, we may become involved in litigation

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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.

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 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 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.

NOTE 6 –

INTANGIBLE ASSETS

The 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.

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.

NOTE 6 – INTANGIBLE ASSETS

Intangible Assets - Intrusion Detection Intellectual

1 unchanged sentence

on disclosure to protect its intellectual property rights.

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

As of June 30, 2021, the Company held 3 U.S.

and foreign patents on its intrusion

15 unchanged sentences

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 –

RELATED PARTY TRANSACTIONS

ended June 30, 2021 and 2020, the Company amortized $ 12,757

and $ 12,757 , respectively.

Future amortization of intangible assets is as follows:

Schedule of Intangible Assets

NOTE 7 – RELATED PARTY TRANSACTIONS

The Company follows

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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,

During the three months ended June 30, 2021 and

2020, the Company’s Chief Executive Officer advanced personal funds in the amount of $0 and $33,820 for Company expenses.

June 30, 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 Certificate of Incorporation,

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,

As of June 30,

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,

During the three months ended June 30, 2021, the

Company issued no shares of preferred stock .

NOTE 9 – COMMON STOCK

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 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

As of June 30, 2021 and December

31, 2020, there were 4,770,327,191 and 4,088,762,156 common shares issued and outstanding.

During the three months ended June 30, 2021, the

Company issued the following shares of common stock :

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 30, 2021, the Company issued 60,000,000

shares of common stock as compensation for loan acquisition costs associated with the note issued on the same date for the amount of $ 825,000 .

On June 4, 2021, the Company issued an aggregate

of 12,500,000 shares of common stock upon the conversion of convertible debt, as issued on September 25, 2018, in the amount of $ 76,656 .83

for principal and $39,638 for interest.

NOTE 10 –

STOCK OPTIONS

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

and interest of $ 260 .61.

NOTE 10 – STOCK OPTIONS

During the three months ended June 30, 2021, the

Company did no t issue any stock options and had no stock options outstanding at June 30, 2021.

NOTE 11 – SUBSEQUENT EVENTS

The Company evaluated events occurring after the

1 unchanged sentence

identified the following subsequent events that it believes require disclosure:

On April 15, 2021, the Company issued an aggregate

On July 12, 2021, the Company issued an aggregate

of 1,784,146 shares of common stock upon the conversion of convertible debt, as issued on January 12, 2021, in the amount of $42,350.

On July 14, 2021, the Company issued an aggregate

of 45,037,115 shares of common stock upon the conversion of convertible debt, as issued on October 7, 2020, in the amount of $93,864 and

interest of $26,246.

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.

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.

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 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

Operating Expenses

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

Net Income (Loss)

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.

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

Cash Flows From Operating Activities

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 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 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;

the acceptance of our products by customers;

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.

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 Risk

Not Applicable:

the Company is a “smaller reporting company.”

On July 14, 2021, the Company entered a Securities

Purchase Agreement (the “ GS SPA ”) with GS Capital Partners, LLC (the “Lender”), pursuant to which the

Company issued to the Lender a 6% Redeemable Note in the principal amount of $2,000,000 (the “Note”).

The purchase price

of the Note is $1,980,000.

The Note matures on July 14, 2022 upon which time all accrued and unpaid interest will be due and payable.

Interest accrues on the Note at 6% per annum until the Note becomes due and payable.

The Note is subject to various “Events of

Default,” which are disclosed in the Note.

Upon the occurrence of an “Event of Default,” the interest rate on the Note

The Note is not convertible into shares of the Company’s Common Stock and is not dilutive to existing or future shareholders

and the Company plans on using a portion of the proceeds of the Note to retire existing convertible debt.

On July 19, 2021, the Company issued an aggregate of 2,898,382 shares of common stock upon the conversion of

convertible debt, as issued on October 7, 2020, in the amount of $10,497 and interest of $6,748.

On August 3, 2021, the Company entered into

an Engagement Agreement and Terms and Conditions (the “Agreement”) with Energy & Industrial Advisory Partners, LLC ( “EIAP”).

Pursuant to the Agreement, the Company has engaged EIAP to serve as an advisor to the Company in the proposed transaction for agreed target

company or any of its subsidiaries and/or the whole or any part of its or their business or assets (the “Transaction”).

will receive a monthly retainer of $10,000 per month payable upon receipt of an invoice.

EIAP will also receive a consulting bonus fee

of $350,000 payable upon completion of the Transaction.

In the event of successful completion of the Transaction as a result of EIAP’s

involvement, EIAP agrees to deduct the total retainer fee from the consulting bonus fee.

The Agreement may be terminated, with or without

cause, by either party upon ten days’ written prior notice thereof to the other party.

If (a) during the term of the Agreement,

or (b) within two years following the date of the Agreement’s termination by the Company (provided that such two-year period shall

be extended by the same period of time that the Company takes to settle in full all fees, expenses and/or outlays due or to become due

to EIAP as at the date of the Agreement’s termination), the Company completes a transaction with the target company or a similar

transaction to the Transaction, then the Company shall pay the consulting bonus fee at the completion of the transaction.

On August 9, 2021, the Company entered into a

Share Purchase Agreement with Optilan Guernsey Limited and Optilan Holdco 2 Limited (the “Sellers”), pursuant to which the

Company purchased from the Sellers all of the issued and outstanding equity interests of Optilan HoldCo 3 Limited, a private company incorporated

in England and Wales (“Optilan”) for £1.00 and also a commitment to enter into the Subscription (as defined below).

As of August 9, 2021, the Company owns all of the equity interests of Optilan.

On August 9, 2021, the Company entered into a

Subscription Agreement (the “Subscription”) with Optilan, pursuant to which the Company agreed to purchase an aggregate of

4,000,000 Ordinary Shares of Optilan (the “Shares”) for an aggregate purchase price of £4,000,000.

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-Q

Item 1. Financial Statements