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Item 5. Market for Registrant’s Common Equity

2022-04-15 compared with 2021-04-15 · 41 added, 173 removed, 20 unchanged (91% of the section changed)

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED

STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY

Our common stock is traded on the OTC Markets

under the trading symbol “DPLS.”

The Company has 20,000,000,000 authorized common shares.

under the trading symbol “DPLS.” The Company has 20,000,000,000 authorized common shares.

The following table sets forth the high and low

bid of the Company’s Common Stock for each quarter within the past two completed fiscal years and the current year.

The information

below was provided from the OTC Markets and reflects the highest and lowest closing prices during each quarter.

below was provided by the OTC Markets.

First Quarter

9 unchanged sentences

common stock as of April 11, 2022 was approximately 920.

The Company has not paid any cash dividends to

date and does not anticipate paying cash dividends in the foreseeable future.

It is the present intention of management to utilize any

available funds for the development of the Company's business.

An additional number of stockholders are

beneficial holders of our Common Stock in “street name” through banks, brokers and other financial institutions that are the

record holders.

We have not paid any cash dividends to date and

we do not anticipate paying cash dividends in the foreseeable future.

It is the present intention of management to utilize any available

funds for the development of our business.

Recent Sales of Unregistered Securities.

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 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 common stock during the 20 prior trading days.

The Company received $40,000

This note was issued without registration under the Securities Act of 1933, as amended, by reason of the exemption from registration

afforded by the provisions of Section 4(a)(2) thereof, and Rule 506(b) promulgated thereunder, as a transaction by an issuer not involving

any public offering.

No selling commissions were paid in connection with the issuance of the note.

Equity Finance Agreement with GHS

On November 9, 2021,

we entered an Equity Financing Agreement with GHS, pursuant to which GHS agreed to purchase up to $30,000,000 in shares of our Common

Stock, from time to time over the Contract Period after effectiveness of the Registration Statement of the underlying shares of Common

Pursuant to the Equity Financing Agreement, on

December 21, 2021, we and GHS agreed that we would issue and sell to GHS, and GHS would purchase from us, 43,777,478 shares of Common

Stock for total proceeds to us, net of discounts, of $2,548,326, at an effective price of $0.0696 per share (the “ First EFA

We received approximately $2,296,469 in net proceeds from the First EFA Closing after deducting the fees and other

estimated offering expenses payable by us.

We used the net proceeds from the Second Closing for working capital and for general corporate

The shares issued in reliance upon the exemption

from securities registration afforded by Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D under the Securities Act,

based in part on the representations of the investor.

There were $239,832.68 in sales commissions paid to J.H.

Darbie & Co., LLC

pursuant to this transaction.

Equity Compensation Plan Information

1 unchanged sentence

authorized for issuance under equity compensation plans.

Use of Proceeds

S-3 Registration

On August 18, 2021,

our Registration Statement on Form S-3 (File No.

333-257826) was declared effective by the SEC and the offering was commenced upon effectiveness

and is still ongoing as all of the $25,000,000 of offered shares have not been sold and the offering has not been terminated.

During the quarter ended

December 31, 2021, we sold a total of 51,469,593 shares of Common Stock for gross proceeds of $4,055,000.

We paid $58,025 in fees

Darbie & Co., Inc.

and received net proceeds of $3,996,975.

The net proceeds were used to fund our recent acquisitions, to

fund the CALTRANS project, and for general working capital.

Issuer Purchases of Equity Securities

SELECTED FINANCIAL DATA

FINANCIAL DATA

Not required for smaller reporting companies.

MANAGEMENT’S DISCUSSION

AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

DarkPulse, Inc.

(the “Company”) is

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

solutions to industries and governments and has not commenced its planned principal operations.

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.

The Company’s activities since inception have consisted principally of developing

various solutions which the Company is currently testing, obtaining patents and trademarks related to its technology, and raising capital.

The Company’s activities are subject to significant risks and uncertainties including failing to secure additional funding needed

to finalize development of the Company’s technology and to commercialize its product in a profitable manner.

Recent Events

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.

The Company received $60,000

Going Concern

The Company generated net losses of $275,841 and

$1,825,469 during the years ended December 31, 2020 and 2019, respectively.

The Company did not generate any revenue from product sales

during the years ended December 31, 2020 and 2019, respectively.

As of December 31, 2020, the Company’s current liabilities exceeded

its current assets by $3,241,567.

As of December 31, 2020, the Company had $337 of cash.

The Company will require additional funding during

the next twelve months to finance the growth of its current 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.

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 through calendar year 2021.

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

Operating expenses for the year ended December

31, 2020 decreased by $287,497 or 52.6% to $258,739 from $546,236 for the year ended December 31, 2019.

The primary reason for the overall

decrease in general and administrative expense in the current year is a decrease in payroll and compensation of $168,758.

General and administrative expenses for the year

ended December 31, 2020 decreased by $33,824 or 18.5% to $149,259 from $183,083 for the year ended December 31, 2019.

The primary reason

for the overall decrease in general and administrative expense in the current year is a decrease in professional fees.

Payroll and compensation expenses for the year

ended December 31, 2020 decreased to $187 from $168,945 or 99.9% for the year ended December 31, 2019.

The primary reason for the overall

decrease in payroll and compensation expense in the current year is a decrease in employees and a reduction in stock based compensation.

Amortization expenses for the years ended December

31, 2020 and 2019 remained constant at $51,028.

Legal expenses for the year ended December 31,

2020 decreased $50,415 from $118,281 for the year ended December 31, 2019.

The increase is related to ongoing litigation as described

in more detail in Note 12 of the attached financial statements.

Debt transaction expenses for the year ended December

31, 2020 decreased $17,050 or 68.5% from $24,900 to $7,850.

The primary reason for the decrease is related to the decrease in convertible

notes entered into during 2020.

Other Income (Expense)

Total other expenses totaled $17,102 and $1,279,233 for the years ended

December 31, 2020 and 2019, respectively.

The $1,262,131 decrease is primarily attributed to the decrease recognized due to changes in

the fair value of derivative instruments of $422,787, loss on convertible notes of $401,497 and a decrease in interest expense of $370,619.

As a result, net loss for the year ended December 31, 2020 decreased

by $1,549,627 to $275,842 from $1,825,469 for the year ended December 31, 2019.

Comprehensive (Loss) Gain

The Company recorded a loss for foreign currency

translation adjustments for the year ended December 31, 2020 of $20,941 and a loss of $52,905 for the year ended December 31, 2019.

fluctuations of the increase/decrease is primarily attributed to the change in the value of the note recognized due to exchange rate variances.

Comprehensive loss was $296,785 as compared to $1,878,374 for the years ended December 31, 2020 and 2019, respectively.

Liquidity and Capital Resources

Liquidity is the ability of a company to generate

funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis.

At December 31,

2020, we had a cash balance of $337.

Our working capital deficit is approximately $3,241,567 at December 31, 2020.

As of December 31, 2020, we had cash of $337,

compared to $1,210 as of December 31, 2019.

The Company currently does not have sufficient cash to fund its operations for the next 12

months and will require working capital to complete development, testing and marketing of its products and to pay for ongoing operating

The Company anticipates adding consultants for technology development and the corresponding operations of the Company, but this

will not occur prior to obtaining additional capital.

Management is currently in the process of looking for additional investors.

loans from banks or other lending sources for lines of credit or similar short-term borrowings are not available to the Company.

has been able to raise working capital to fund operations through the issuances of convertible notes or obtained through the issuance

of the Company’s restricted common stock.

As of December 31, 2020, our current liabilities

of $3,241,904 exceeded our current assets of $337 by $3,241,567.

Operating Activities

During the year ended December 31, 2020, net cash

used by operating activities was $8,194, resulting from our net loss of $275,842 partially offset by non-cash expenses totaling $14,446

and increases in accounts payable of $195,951 and accrued liabilities of $72,892.

By comparison, during the year ended December

31, 2019, net cash used by operating activities was $171,604, resulting from our net loss of $1,825,469, partially offset by non-cash

expenses totaling $259,824 and increases in accounts payable of $264,788 and a decrease in accrued liabilities of $145,234.

Investing Activities

During the year ended December 31, 2020, net cash

used by investing activities was $4,969, of capitalized patents costs of $4,969.

During the year ended December 31, 2019, net cash used

by investing activities was $54,930.

Financing Activities

During the year ended December 31, 2020, net cash

used by financing activities was $4,096, comprised of proceeds from issuance of convertible notes payable of $40,000, offset by repayments

of related party notes payable of $44,096.

During the year ended December 31, 2019, net cash provided by financing activities was $155,450,

comprised of proceeds from issuance of convertible notes payable of $180,100, partially offset by repayments of convertible notes payable

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 the following:

The Company may not obtain the equity funding or short-term borrowings necessary to market and launch its products.

The product development and launch may take longer to implement than planned or may not be successful.

QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK

Not applicable.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements of the Company are included

beginning on page F-1 immediately following the signature page to this report.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING

AND FINANCIAL DISCLOSURE

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

What changed 10-K

Item 5. Market for Registrant’s Common Equity