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Item 1. Financial Statements

2022-05-16 compared with 2021-11-15 · 493 added, 639 removed, 440 unchanged (72% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

September 30,

CURRENT ASSETS:

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Operating lease right-of-use assets

Intangible assets

Other assets, net

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CURRENT LIABILITIES:

Accounts payable and accrued expenses

Accounts payable and accrued liabilities

Convertible notes, net of discount $ 0 and $ 35,525 respectively

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Operating lease liabilities – non-current

Other liabilities – non-current

TOTAL NON-CURRENT LIABILITIES

TOTAL LIABILITIES

Commitments and contingencies

STOCKHOLDERS’ DEFICIT:

Common Stock, Par Value $ 0.0001 , 20,000,000,000 shares authorized 4,922,968,442 and 4,088,762,156 shares issued and outstanding respectively

Treasury Stock, 100,000 shares

Convertible Preferred Stock, Series D, par value $ 0.01 , 100,000

Convertible preferred stock - Class D (par value $ 0.01 ;

100,000 shares authorized;

shares issued and outstanding

88,235 issued and outstanding at March 31, 2022 and December 31, 2021, respectively)

Common stock (par value $ 0.0001 ), 20,000,000,000 shares authorized, 5,397,942,946 and 5,197,821,885 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

Treasury stock, 100,000 shares at March 31, 2022 and December 31, 2021

Paid-in capital in excess of par value

Distributions

Non-controlling interest in a variable interest entity and subsidiary

Non-controlling interest in variable interest entity and subsidiary

Accumulated other comprehensive income

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( 11,276,490 )

TOTAL STOCKHOLDERS' EQUITY (DEFICIT)

( 3,932,205 )

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

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

TOTAL STOCKHOLDERS’ DEFICIT

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT

See accompanying notes to consolidated financial

DARKPULSE, INC.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE THREE MONTHS

FOR THE NINE MONTHS

ENDED SEPTEMBER 30,

Consolidated Statements of Operations

For the Three Months Ended

COST OF GOODS SOLD

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TOTAL OPERATING EXPENSES

NET OPERATING LOSS

( 2,485,484 )

OPERATING LOSS

( 5,047,226 )

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Interest expense

Gain on settlement of debt

Change in fair market of derivative liabilities

Gain (Loss) on change in fair market value of derivative liabilities

Gain (Loss) on convertible notes

Gain on forgiveness of debt

Foreign currency exchange rate variance

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( 5,384,270 )

( 1,924,311 )

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

Net loss attributable to non-controlling interests in variable interest entity and subsidiary

Net loss attributable to Company stockholders

$ ( 5,270,589 )

$ ( 174,022 )

$ ( 1,908,473 )

$ ( 388,561 )

LOSS PER SHARE

Basic and Diluted

WEIGHTED AVERAGE SHARES OUTSTANDING:

Basic and Diluted

5,290,107,585

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4,457,294,486

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

See accompanying notes to consolidated financial

DARKPULSE, INC.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE THREE MONTHS

FOR THE NINE MONTHS

ENDED SEPTEMBER 30,

$ ( 1,670,991 )

$ ( 174,022 )

$ ( 1,908,473 )

Consolidated Statements of Comprehensive Loss

For the Three Months Ended

$ ( 5,270,589 )

OTHER COMPREHENSIVE GAIN (LOSS)

OTHER COMPREHENSIVE LOSS

Unrealized Gain (Loss) on Foreign Exchange

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$ ( 5,490,158 )

$ ( 213,967 )

$ ( 1,915,997 )

$ ( 374,905 )

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

See accompanying notes to consolidated financial

DARKPULSE, INC.

Statement of Stockholders' Deficit

the Periods Ended September 30, 2021 and 2020

Consolidated Statement of Stockholders' Deficit

For the Three Months Ended March 31, 2022 and

Preferred Stock

Paid in Capital in Excess of Par

Balance, December 31, 2020

4,088,762,156

Conversion of convertible notes

Foreign currency adjustment

Balance, March 31, 2021

4,689,762,151

Conversion of convertible notes

Stock based loan acquisition cost

Foreign currency adjustment

Balance, June 30, 2021

4,770,327,191

Conversion of convertible notes

Issuance of common stock for public offering

Issuance of common stock for Wildlife Specialist acquisition

Issuance of common stock for Remote Intelligence acquisition

Share-based compensation

Distributions

Foreign currency adjustment - NCI

Foreign currency adjustment

Balance, September 30, 2021

4,922,968,442

Balance, December 31, 2019

1,392,042,112

$ ( 11,877,864 )

Conversion of convertible notes

Foreign currency adjustment

Balance, March 31, 2020

1,392,042,112

$ ( 11,877,864 )

Conversion of convertible notes

( 2,156,228 )

Foreign currency adjustment

Balance, June 30, 2020

1,609,184,970

$ ( 14,034,092 )

Conversion of convertible notes

1,785,632,186

( 17,739,248 )

Foreign currency adjustment

Balance, September 30, 2020

3,394,817,156

$ ( 31,773,340 )

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

DARKPULSE, INC.

Statement of Stockholders' Deficit

the Periods Ended September 30, 2021 and 2020 (continued)

Non-Controlling Interest in

Controlling Interest

Accumulated Other Comprehensive

Total Stockholders’

Distributions

Balance, December 31, 2021

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$ ( 284,463 )

Conversion of convertible notes

Foreign currency adjustment

Balance, March 31, 2021

$ ( 11,276,490 )

$ ( 3,752,049 )

Conversion of convertible notes

Stock based loan acquisition cost

Common stock issued for cash

Foreign currency adjustment

Balance, June 30, 2021

( 5,384,270 )

Conversion of convertible notes

Issuance of common stock for public offering

Issuance of common stock for Wildlife Specialist acquisition

Issuance of common stock for Remote Intelligence acquisition

Share-based compensation

Distributions

Foreign currency adjustment - NCI

Foreign currency adjustment

Balance, March 31, 2022

5,397,942,946

$ ( 504,032 )

Balance, September 30, 2021

$ ( 16,660,760 )

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$ ( 6,450,170 )

Conversion of convertible notes

Foreign currency adjustment

Balance, March 31, 2020

$ ( 3,932,205 )

$ ( 3,789,204 )

Conversion of convertible notes

Foreign currency adjustment

Balance, June 30, 2020

$ ( 6,388,866 )

Balance, March 31, 2021

4,689,762,151

Conversion of convertible notes

Foreign currency adjustment

Balance, September 30, 2020

$ ( 6,502,044 )

$ ( 3,752,049 )

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

See accompanying notes to consolidated financial

DARKPULSE, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS

ENDED SEPTEMBER 30,

Consolidated Statements of Cash Flows

For the Three Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

$ ( 5,384,270 )

$ ( 388,561 )

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

Depreciation and amortization

Loan acquisition costs

Gain on extinguishment of debt

Stock based compensation

Operating lease expense

Loan acquisition costs

Derivative liability

Amortization of debt discount

Depreciation and amortization

Derivative liability

Changes in operating assets and liabilities:

Accounts receivable

( 2,523,210 )

( 1,017,178 )

Unbilled revenue

Customer Deposits

Contract liability

( 1,439,504 )

Customer deposits

Accounts payable and accrued expenses

( 4,362,016 )

Operating lease liabilities

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CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment

Business acquisitions, net of cash received

Investment in patents

Capitalized patents

Net cash used by investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from sale of common stock from offering

Proceeds from convertible notes payable

Payments on convertible notes

Proceeds from notes payable

Proceeds from sale of common stock

Proceeds from convertible debentures

Net cash provided by financing activities

Net Cash Increase (Decrease)

NET INCREASE (DECREASE) IN CASH

Effect of exchange rate on cash

Cash, Beginning of Period

Cash, End of Period

Supplementary Cash Flow Information:

Interest paid in cash

Taxes paid in cash

Non-cash finance and investing activities for the quarter ending September 30:

Issuance of common stock for convertible notes payable and accrued interest

Issuance of common stock for Wildlife Specialists

Issuance of common stock for Remote Intelligence

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

CASH, beginning of year

CASH, end of year

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the three months ended March 31:

See accompanying notes to consolidated financial

DARKPULSE, INC.

Notes to Condensed Financial Statements

Notes to the Consolidated Financial Statements

NOTE 1 – BASIS OF PRESENTATION AND SUMMARY

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

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

position as of March 31, 2022, and the results of operations for three months and cash flows for the three months ended March 31, 2022

have been included.

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

of the results to be expected for the full year.

The results of operations for the three months ended March 31, 2022 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.

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.

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.

DarkPulse, Inc.

(“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,

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

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DarkPulse, Inc.

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

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.

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

The Company has recently completed several acquisitions.

See Note 2 – Business Acquisitions for more information.

Concern Uncertainty

Reclassifications

Certain amounts in the Company’s prior period consolidated financial

statements have been reclassified to conform to the current period presentation.

These reclassifications have not changed the results

of operations of prior periods.

Going Concern Uncertainty

As shown in the accompanying financial statements,

during the nine months ended September 30, 2021, the Company reported a net loss of $ 1,924,311 .

As of September 30, 2021, the Company’s

current liabilities exceeded its current assets by $ 12,139,502 .

As of September 30, 2021, the Company had $ 2,564,492 of cash.

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.

during the three months ended March 31, 2022, the Company reported a net loss of $ 5,384,270 .

As of March 31, 2022, the Company’s current liabilities exceeded its current assets by $ 7,610,707 .

As of March 31, 2022, the Company had $4,785,797 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

or 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 2022.

However, management cannot make any assurances that such financing

will be secured.

Use of Estimates

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

On January 30, 2020, the World Health Organization

(WHO) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 outbreak”)

and the risks to the international community as the virus spread globally beyond the point of origin.

On March 20, 2020 the WHO classified

the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally.

The full impact of the COVID-19 outbreak continues

to evolve as of the date of these condensed consolidated financial statements.

As such, it is uncertain as to the full magnitude that

the pandemic will have on the Company’s combined financial condition, liquidity and future results of operations.

Management is

actively monitoring the impact of the global situation on its consolidated financial condition, liquidity, operations, suppliers, industry

and workforce.

Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, the Company is not able

to estimate the effects of the COVID-19 outbreak on its results of operations, financial condition, or liquidity for fiscal year 2021

beyond the results presented in these condensed consolidated financial statements and this quarterly report.

Due to the impacts of COVID-19 we have seen an

increase in recruiting and labor costs as well as delays in supply chain.

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 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.

Foreign Currency Translation

The Company’s reporting currency is US Dollars.

The accounts of one of the Company’s subsidiaries is maintained using the appropriate local currency, British Pound (“GBP”)

as the functional currency.

The accounts of one of the Company’s subsidiaries is maintained using the appropriate local currency,

Canadian Dollar (“CAD”) as the functional currency.

All assets and liabilities are translated into U.S.

Dollars at balance

sheet date, shareholders' equity is translated at historical rates and revenue and expense accounts are translated at the average exchange

rate for the year or the reporting period.

The translation adjustments are reported as a separate component of stockholders’ equity,

captioned as accumulated other comprehensive (loss) gain.

Transaction gains and losses arising from exchange rate fluctuations on transactions

denominated in a currency other than the functional currency are included in the statements of operations.

The relevant translation rates are as follows:

for the three months ended March 31, 2022 closing rate at 1.31524 US$:GBP, average rate at 1.342089 US$:GBP and for the year ended December

31, 2021 closing rate at 1.353583 US$:

GBP, average rate at 1.375671 US$:GBP.

The relevant translation rates are as follows:

for the three months ended March 31, 2022 closing rate at 1.2484 US$:CAD, average rate at 1.2614 US$:CAD and for the year ended December

31, 2021 closing rate at 1.2794 US$:

CAD, average rate at 1.2534 US$:CAD.

Long-Lived Assets and Goodwill

In accordance with ASC 350-30-65, “Intangibles

- Goodwill and Others”, the Company assesses the impairment of identifiable intangibles whenever events or changes in circumstances

indicate that the carrying value may not be recoverable.

Factors the Company considers to be important

which could trigger an impairment review include the following:

Significant underperformance relative to expected historical or projected future operating results;

Significant changes in the manner of use of the acquired assets or the strategy for the overall business;

Significant negative industry or economic trends.

When the Company determines that the carrying

value of intangibles may not be recoverable based upon the existence of one or more of the above indicators of impairment and the carrying

value of the asset cannot be recovered from projected undiscounted cash flows, the Company records an impairment charge.

The Company measures

any impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with

the risk inherent in the current business model.

Significant management judgment is required in determining whether an indicator of impairment

exists and in projecting cash flows.

Property and Equipment

Property and equipment are carried at historical

cost less accumulated depreciation.

Depreciation is based on the estimated service lives of the depreciable assets and is calculated using

the straight-line method.

Expenditures that increase the value or productive capacity of assets are capitalized.

Fully depreciated assets

are retained in the property and equipment, and accumulated depreciation accounts until they are removed from service.

When property and

equipment are retired, sold or otherwise disposed of, the asset’s carrying amount and related accumulated depreciation are removed

from the accounts and any gain or loss is included in operations.

Repairs and maintenance are expensed as incurred.

The estimated useful lives of property and equipment

are generally as follows:

Schedule of estimated useful lives

Office furniture and fixtures

Plant and equipment

Leasehold Improvements

Motor Vehicles

Revenue Recognition

The Company’s revenues are generated primarily

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over the term of the customer contract.

Contract liabilities is shown separately in

the unaudited consolidated balance sheets as current liabilities.

At September 30, 2021 and December 31, 2020, we had contract

liabilities of $ 2,699,688 and $ 0 , respectively.

Contract liabilities is shown separately in the

unaudited consolidated balance sheets as current liabilities.

At March 31, 2022 and December 31, 2021, we had contract liabilities of

$ 4,667,905 and $ 3,216,562 , respectively.

Cost of Product Sales and Services

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Refer to revenue recognition above as to what constitutes deferred revenue.

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 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.

Goodwill and other intangible assets

In accordance with ASC 350-30-65, “Intangibles

- Goodwill and Others”, the Company assesses the impairment of identifiable intangibles whenever events or changes in circumstances

indicate that the carrying value may not be recoverable.

Factors the Company considers to be important

which could trigger an impairment review include the following:

· Significant underperformance relative to expected historical or projected

future operating results;

· Significant changes in the manner of use of the acquired assets or the strategy

for the overall business;

· Significant negative industry or economic trends.

When the Company determines that the carrying

value of intangibles may not be recoverable based upon the existence of one or more of the above indicators of impairment and the carrying

value of the asset cannot be recovered from projected undiscounted cash flows, the Company records an impairment charge.

The Company measures

any impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with

the risk inherent in the current business model.

Significant management judgment is required in determining whether an indicator of impairment

exists and in projecting cash flows.

Foreign Currency Translation

The Company’s reporting

currency is U.S.

The accounts of one of the Company’s subsidiaries, Optilan, is maintained using the appropriate local

currency, Great British Pound, as the functional currency.

All assets and liabilities are translated into U.S.

Dollars at balance sheet

date, shareholders’ equity is translated at historical rates and revenue and expense accounts are translated at the average exchange

rate for the year or the reporting period.

The translation adjustments are reported as a separate component of stockholders’ equity,

captioned as accumulated other comprehensive (loss) gain.

Transaction gains and losses arising from exchange rate fluctuations on transactions

denominated in a currency other than the functional currency are included in the statements of operations.

The relevant translation rates are as follows:

for the three and nine months ended September 30, 2021, closing rate at 1.3468

GBP, quarterly average rate at 1.3787

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" criteria

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.

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.

Concentration of Credit Risk

The Company has no significant concentrations

of credit risk.

Related Parties

The Company accounts for related party transactions

in accordance with ASC 850 (“Related Party Disclosures”).

A party is considered to be related to the Company if the party

directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company.

Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of

the Company and its management and 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.

A party which can significantly influence the management or operating policies of the transacting parties

or if it has 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 is also a related party.

Effective January 1, 2019, the Company accounts

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the lease term.

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 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.

Derivative Financial Instruments

The Company evaluates the embedded conversion

feature within its convertible debt instruments under ASC 815-15 and ASC 815-40 to determine if the conversion feature meets the definition

of a liability and, if so, whether to bifurcate the conversion feature and account for it as a separate derivative liability.

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 lattice model, in accordance with ASC 815-15 “Derivative and Hedging” 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 net-cash settlement of the derivative instrument

could be required within 12 months after the balance sheet date.

Beneficial Conversion Features

The Company evaluates the conversion feature for

whether it was beneficial as described in ASC 470-30.

The intrinsic value of a beneficial conversion feature inherent to a convertible

note payable, which is not bifurcated and accounted for separately from the convertible note payable and may not be settled in cash upon

conversion, is treated as a discount to the convertible note payable.

This discount is amortized over the period from the date of issuance

to the date the note is due using the effective interest method.

If the note payable is retired prior to the end of its contractual term,

the unamortized discount is expensed in the period of retirement to interest expense.

In general, the beneficial conversion feature is

measured by comparing the effective conversion price, after considering the relative fair value of detachable instruments included in

the financing transaction, if any, to the fair value of the shares of common stock at the commitment date to be received upon conversion.

Fair Value of Financial Instruments

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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 September 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.

The Company has no lease obligations.

Stock-based Compensation

Stock-based compensation is accounted for based

on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the consolidated financial statements of

the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director

is required to perform the services in exchange for the award (presumptively, the vesting period).

The ASC also requires measurement of

the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

Pursuant to ASC Topic 718, for share-based payments

to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized

over the vesting period of the award.

Until the measurement date is reached, the total amount of compensation expense remains uncertain.

The Company initially records compensation expense based on the fair value of the award at the reporting date.

Further, ASC Topic 718,

provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification

accounting in Topic 718, such as the repricing of share options, which would revalue those options and the accounting for the cancellation

of an equity award whether a replacement award or other valuable consideration is issued in conjunction with the cancellation.

the cancellation is viewed as a replacement and not a modification, with a repurchase price of $0 .

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, 2021, there were no stock options outstanding.

For the three and nine months ended September 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.

The Company accounts for earnings per share pursuant

to ASC 260, Earnings per Share, which requires disclosure on the financial statements of "basic" and "diluted" earnings

(loss) per share.

Basic earnings (loss) per share are computed by dividing net income (loss) by the weighted average number of common

shares outstanding for the year.

Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number

of common shares outstanding plus common stock equivalents (if dilutive) related to stock options and warrants for each year.

where the Company has a net loss, all dilutive securities are excluded.

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 1,970,029,676

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

NOTE 2 – BUSINESS ACQUISITIONS

Optilan Holdco 3 Limited

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.

The Company has accounted for the purchase using

the acquisition method of accounting for business combinations under ASC 805.

Accordingly, the purchase price has been allocated to the

underlying assets and liabilities in proportion to their respective fair values.

The excess of the consideration transferred over the

estimated fair values of the net assets acquired was recorded as goodwill.

The following table summarizes the acquired assets and assumed

liabilities and the preliminary acquisition accounting for the fair value of the assets and liabilities recognized in the Condensed Consolidated

Balance Sheet at September 30, 2021:

Schedule of fair value of assets and liabilities

in acquisition

Accounts receivable

Unbilled revenue

Property & equipment

Accounts payable

Contract deposits

Contract liabilities, current

Lease liabilities, current

Other current liabilities

Lease liabilities, noncurrent

Total purchase consideration

This purchase price allocation is preliminary

and is pending the finalization of the third-party valuation analysis and working capital, as the Company has not yet completed the detailed

valuation analyses as of the filing date of this Form 10-Q.

Wildlife Specialists, LLC and Remote Intelligence,

On August 30, 2021, we closed two separate Membership

Interest Purchase Agreements (the “ MPAs ”) with Remote Intelligence, Limited Liability Company, a Pennsylvania limited

liability company (“ RI ”) and Wildlife Specialists, LLC, a Pennsylvania limited liability company (“ WS ”)

pursuant to which we agreed to pay to the majority shareholder of each of RI and WS an aggregate of 15,000,000 shares of our Common Stock,

$ 500,000 to be paid on the closing date, and an additional $500,000 to be paid 12 weeks from closing date in exchange for 60 % ownership

of each of RI and WS.

RI and WS are now subsidiaries of the Company.

The Company has accounted for the purchase using

the acquisition method of accounting for business combinations under ASC 805.

Accordingly, the purchase price has been allocated to the

underlying assets and liabilities in proportion to their respective fair values.

The excess of the consideration transferred over the

estimated fair values of the net assets acquired was recorded as goodwill.

The following table summarizes the acquired assets and assumed

liabilities and the preliminary acquisition accounting for the fair value of the assets and liabilities recognized in the Condensed Consolidated

Balance Sheet at September 30, 2021:

Schedule of fair value of assets and liabilities

in acquisition

WILDLIFE SPECIALISTS

Accounts receivable

Other current assets

Property & equipment

Accounts payable

Other current liabilities

Total purchase consideration

Schedule of fair value of assets and liabilities

in acquisition

REMOTE INTELLIGENCE

Accounts receivable

Property & equipment

Accounts payable

Other long term liabilities

Total purchase consideration

These purchase price allocations are preliminary

and are pending the finalization of the third-party valuation analysis and working capital, as the Company has not yet completed the detailed

valuation analyses as of the filing date of this Form 10-Q.

TJM Electronics West, Inc.

On September 8, 2021,

we entered into and closed the Stock Purchase Agreement (the “ TJM SPA ”) with TJM Electronics West, Inc., an Arizona

corporation (“ TJM ”), and TJM’s shareholders, pursuant to which we agreed to purchase all of the equity interests

in TJM in exchange for $ 450,000 , subject to adjustments as defined in the TJM SPA.

TJM is now a wholly-owned subsidiary of the Company.

The Company has accounted for the purchase using

the acquisition method of accounting for business combinations under ASC 805.

Accordingly, the purchase price has been allocated to the

underlying assets and liabilities in proportion to their respective fair values.

The excess of the consideration transferred over the

estimated fair values of the net assets acquired was recorded as goodwill.

The following table summarizes the acquired assets and assumed

liabilities and the preliminary acquisition accounting for the fair value of the assets and liabilities recognized in the Condensed Consolidated

Balance Sheet at September 30, 2021:

Schedule of fair value of assets and liabilities

in acquisition

Accounts receivable

Property & equipment

Total purchase consideration

This purchase price allocation is preliminary

and is pending the finalization of the third-party valuation analysis and working capital, as the Company has not yet completed the detailed

valuation analyses as of the filing date of this Form 10-Q.

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

the potential conversion of the Company's convertible debt.

Recently Issued Accounting Pronouncements

In October 2016, the FASB issued ASU 2016-16,

“ Income Taxes (Topic 740):

Intra-Entity Transfers of Assets Other than Inventory ”, which eliminates the exception that

prohibits the recognition of current and deferred income tax effects for intra-entity transfers of assets other than inventory until the

asset has been sold to an outside party.

The updated guidance is effective for annual periods beginning after December 15, 2019, including

interim periods within those fiscal years.

Early adoption of the update is permitted.

The adoption of ASU 2016-16 did not have a material

impact on the consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04 Intangibles-Goodwill

and Other (“ASC 350”):

Simplifying the Accounting for Goodwill Impairment (“ASU 2017-04”).

ASU 2017-04 simplifies

the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test.

In computing the implied fair value of

goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and

liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value

of assets acquired and liabilities assumed in a business combination.

Instead, under ASU 2017-04, an entity should perform its annual

or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount.

An entity should recognize

an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value;

however, the loss recognized

should not exceed the total amount of goodwill allocated to that reporting unit.

Additionally, an entity should consider income tax effects

from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable.

ASU 2017-04 is effective for annual or any interim goodwill impairment tests for fiscal years beginning after December 15, 2019.

of ASU 2017-04 did not have a material impact on the consolidated financial statements.

In July 2021, the FASB issued ASU No.

Lessors—Certain Leases with Variable Lease Payments (Topic 842), Which requires a lessor to classify a lease with variable

lease payments that do not depend on an index or rate (hereafter referred to as “variable payments”) as an operating lease

on the commencement date of the lease if specified criteria are met.

ASU 2021-05 is effective for the fiscal year beginning after December

15, 2022, including interim periods within that fiscal year.

The Company expects that there would be no material impact on the Company’s

condensed consolidated financial statements upon the adoption of this ASU.

In November 2021, the FASB issued ASU No.

Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , issued

by the Financial Accounting Standards Board.

This ASU requires entities to recognize and measure contract assets and contract liabilities

acquired in a business combination in accordance with ASU 2014-09, Revenue from Contracts with Customers (Topic 606).

The update will

generally result in the recognition of contract assets and contract liabilities at amounts consistent with those recorded by the acquiree

immediately before the acquisition date rather than at fair value.

The Company expects that there would be no material impact on the Company’s

condensed consolidated financial statements upon the adoption of this ASU.

Although there are several other new accounting

pronouncements issued or proposed by the FASB, which the Company has adopted or will adopt, as applicable, the Company does not believe

any of these accounting pronouncements has had or will have a material impact on its financial position or results of operations.

NOTE 2 – REVENUE

following table is a summary of the Company’s timing of revenue recognition for the three and nine months ended September 30, 2021

The following table is a summary of the Company’s

timing of revenue recognition for the three months ended March 31, 2022 and 2021:

Schedule of timing of revenue recognition

Three Months Ended

Nine Months Ended

September 30,

Timing of revenue recognition:

4 unchanged sentences

geographic destination to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

Revenue by source consisted of the following

for the three and nine months ended September 30, 2021 and 2020:

Revenue by source consisted of the following for

the three months ended March 31, 2022 and 2021:

Schedule of revenue by source consisted

Three Months Ended

Nine Months Ended

September 30,

Revenue by products and services:

1 unchanged sentence

Revenue by geographic destination consisted of

the following for the for the three and nine months ended September 30, 2021 and 2020:

the following for the three months ended March 31, 2022 and 2021:

Schedule of revenue by geographic destination

Three Months Ended

Nine Months Ended

September 30,

Revenue by geography:

7 unchanged sentences

of cash payments received (or unconditional rights to receive cash) in advance of fulfilling performance obligations.

As of September

As of March 31,

2022, the Company did not have a contract assets balance.

4 unchanged sentences

Additions through advance billings to or payments from vendors

Additions through business acquisition

Revenue recognized from current period advance billings to or payments from vendors

Revenue recognized from amounts acquired through business acquisition

Balance at September 30, 2021

( 1,856,961 )

Balance at March 31, 2022

NOTE 3 – ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following

as of September 30, 2021 and December 31, 2020:

as of March 31, 2022 and December 31, 2021:

Schedule of accounts receivable

September 30,

Accounts receivable

2 unchanged sentences

NOTE 4 – INVENTORY

Inventory consisted of the following as of September

Inventory consisted of the following as of March

31, 2022 and December 31, 2021:

Schedule of inventory

September 30,

Raw materials

5 unchanged sentences

Property and equipment consisted of the following

as of September 30, 2021 and December 31, 2020:

Schedule of property, plant and

September 30,

as of March 31, 2022 and December 31, 2021:

Schedule of property, plant and equipment

Property and equipment

3 unchanged sentences

Accounts payable and accrued expenses consisted

of the following as of September 30, 2021 and December 31, 2020:

of the following as of March 31, 2022 and December 31, 2021:

Schedule of accounts payable and accrued liabilities

September 30,

Accounts payable

3 unchanged sentences

We adopted ASC 842 “Leases” using

the modified retrospective approach, electing the practical expedient that allows us not to restate our comparative periods prior to

the adoption of the standard on January 1, 2019.

As such, the disclosures required under ASC 842 are not presented for periods before

the date of adoption.

the modified retrospective approach, electing the practical expedient that allows us not to restate our comparative periods prior to the

adoption of the standard on January 1, 2019.

As such, the disclosures required under ASC 842 are not presented for periods before the

date of adoption.

The following was included in our balance sheet

as of September 30, 2021:

as of March 31, 2022:

Schedule of operating leases

5 unchanged sentences

The weighted average remaining lease term and

weighted average discount rate at September 30, 2021 were as follows:

Schedule of weighted average remaining lease term and

weighted average discount rate

weighted average discount rate at March 31, 2022 were as follows:

Schedule of weighted average remaining lease term and weighted average discount rate

Weighted average remaining lease term (years)

September 30,

Operating leases

2 unchanged sentences

Operating Leases

On January 12, 2021, the Company’s new

acquired subsidiary entered into an operating lease agreement to rent office space in Mumbai, India.

This three-year agreement commenced

January 12, 2021 with an annual rent of approximately $ 50,000 .

On May 27, 2021, the Company’s new acquired

subsidiary entered into an operating lease agreement to rent office space in Mumbai, United Kingdom.

This ten-year agreement commenced

May 27, 2021 with an annual rent of approximately $ 85,000 with the first six months rent free.

On March 9, 2022, the Company entered into an

operating lease agreement to rent office space in Houston, Texas.

This ten-year agreement commenced March 9.

2022 with an annual rent

of approximately $ 81,000 with the first twelve months rent free.

The following table reconciles future minimum

operating lease payments to the discounted lease liability as of September 30, 2021:

Schedule of future minimum

operating lease payments

operating lease payments to the discounted lease liability as of March 31, 2022:

Schedule of future minimum operating lease payments

2026 and later

5 unchanged sentences

NOTE 8 – GOODWILL AND OTHER INTANGIBLE

following table sets forth the changes in the carrying amount of goodwill for the nine months ended September 30, 2021:

The following table sets forth the changes in

the carrying amount of goodwill for the three months ended March 31, 2022:

Schedule of changes in carrying amount of goodwill

Balance at December 31, 2021

2021 Acquisitions

Balance at September 30, 2021

Exchange rate variation

Balance at March 31, 2022

Intangible Assets - Intrusion Detection Intellectual

1 unchanged sentence

on disclosure to protect its intellectual property rights.

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

As of March 31, 2022, the Company held three U.S.

and foreign patents on its

8 unchanged sentences

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.

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 September 30, 2021 and 2020, the Company amortized $12,757 and $12,757, respectively.

Future amortization of intangible assets

is as follows:

Schedule of future amortization of intangible

ended March 31, 2022 and 2021, the Company amortized $ 12,757 and $ 12,757 , respectively.

Future amortization of intangible assets is as

Schedule of future amortization of intangible assets

NOTE 9 – DEBT AGREEMENTS

18 unchanged sentences

the Canadian Dollar and the U.S.

Dollar on September 30, 2021, the quarterly principal repayment amounts will be US$49,750.

Dollar on March 31, 2022, the quarterly principal repayment amounts will be US$49,750.

The Debenture

9 unchanged sentences

The amounts recorded as an

unrealized loss for the three months ended September 30, 2021 and 2020, were $ 16,155 and $ 39,047 respectively.

unrealized loss for the three months ended March 31, 2022 and 2021, were $ 29,297 and $ 17,909 respectively.

These amounts are included

1 unchanged sentence

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

For the three months ended September 30, 2021,

and 2020, the Company recorded interest expense of $ 13,168 and $ 12,255 , respectively.

As of September 30, 2021 the debenture liability

totaled $ 1,184,516 , all of which was long term.

The Debenture also includes a provision requiring DPTI to pay the University a 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 March 31, 2022, and

2021, the Company recorded interest expense of $ 12,617 and $ 13,283 , respectively.

As of March 31, 2022 the debenture liability totaled

$ 1,201,661 , all of which was long term.

Future minimum required payments over the

1 unchanged sentence

Schedule of future minimum debt payments

Period ending September 30,

Period ending March 31,

2027 and after

5 unchanged sentences

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, 2021.

Management determined the expected volatility of 359.78%,

a risk-free rate of interest of 0.09%,

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.

issue of the debt security as of March 31, 2022.

Management determined the expected volatility of 172.27%, a risk-free rate of interest

of 1.63%, and contractual lives of the debt varying from six months to two years.

The table below details the Company's four 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 debt

1 unchanged sentence

$ ( 125,107 )

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 will be 18%.

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.

As of September 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 September 30,

2021 and 2020 respectively, there was derivative liability of $ 893,381 and $ 1,232,344 related to convertible debt securities.

As of March 31, 2022 and December 31, 2021 respectively,

there was $ 378,263 and $ 931,158 of convertible debt outstanding, net of debt discount of $ 0 , and $ 35,525 .

As of March 31, 2022 and December

31, 2021 respectively, there was derivative liability of $ 533,753 and $ 1,220,880 related to convertible debt securities.

NOTE 10 - STOCKHOLDERS' DEFICIT

As of September

31, 2022, there were 5,397,942,946 shares of common stock and 88,235 shares of preferred

3 unchanged sentences

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 September 30, 2021, and December 31, 2020, there were 88,235 total preferred shares issued and outstanding for all classes.

During the three months ended September 30, 2021,

As of March 31, 2022, and December 31, 2021, there were 88,235 total preferred shares issued and outstanding for all classes.

During the three months ended March 31, 2022,

the Company issued no shares of preferred stock .

1 unchanged sentence

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

As of September 30, 2021 and

December 31, 2020, there were 4,922,968,442 and 4,088,762,156 common shares issued and outstanding.

During the three months ended September 30, 2021,

As of March 31, 2022 and December

31, 2021, there were 5,397,942,946 and 5,197,821,885 common shares issued and outstanding.

During the three months ended March 31, 2022,

the Company issued the following shares of common stock :

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 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 January 12, 2022, the Company issued 23,372,430

shares of common stock for $ 1,150,000 .

On January 21, 2022, the Company issued 33,454,988

shares of common stock for $ 1,150,000 .

On February 7, 2022, the Company issued 16,040,411

shares of common stock for $ 500,000 .

On March 3, 2022, the Company issued 16,579,569

shares of common stock for $ 500,000 .

On March 7, 2022, the Company issued 75,798,921

shares of common stock for $ 2,500,000 .

On March 14, 2022, the Company issued 5,617,347

shares of common stock for $ 400,000 .

On March 23, 2022, the Company issued 29,257,395

shares of common stock for $ 1,500,000 .

Stock Options

During the three months ended September 30, 2021,

the Company did not issue any stock options and had no stock options outstanding at September 30, 2021.

During the three months ended March 31, 2022,

the Company did not issue any stock options and had no stock options outstanding at March 31, 2022.

Public Offerings

On August 19, 2021, we entered into the Purchase

Agreement with GHS, for the offering of up to $ 45,000,000 worth of Common Stock.

Pursuant to the Purchase Agreement, on August 19, 2021,

we and GHS agreed that we would issue and sell to GHS, and GHS would purchase from the Company, 31,799,260 shares of Common Stock for

total proceeds to the Company, net of discounts, of $ 3,300,000 , at an effective price of $ 0.1038 per share (the “ First Closing ”).

We received approximately $ 2,790,000 in net proceeds from the First Closing after deducting the fees and other estimated offering expenses

payable by us.

We used the net proceeds from the First Closing for working capital and for general corporate purposes.

The shares were

issued to GHS in a registered direct offering, pursuant to a prospectus supplement to our currently effective registration statement on

Form S-3 (File No.

333-257826), which was initially filed with the SEC on July 12, 2021, and was declared effective on August 18, 2021.

On September 30, 2021, the Company paid a $ 275,000 placement fee to J.H.

Darbie & Co, $ 125,000 cash and $ 150,000 with 1,073,730 shares

of common stock.

Pursuant to the Purchase Agreement, on August

31, 2021, we and GHS agreed that the Company would issue and sell to GHS, and GHS would purchase from us, 27,297,995

shares of Common Stock for total proceeds to us, net of discounts, of $ 3,300,000 ,

at an effective price of $ 0.120888 per share (the “ Second Closing ”).

We received approximately $ 2,885,000 in net

proceeds from the Second 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 purposes.

The shares were issued to GHS in a registered direct

offering, pursuant to a prospectus supplement to our currently effective registration statement on Form S-3 (File No.

333-257826), which

was initially filed with the SEC on July 12, 2021, and was declared effective on August 18, 2021.

On September 30, 2021, the Company

paid a $ 262,000 placement fee to J.H.

Darbie & CO, $ 112,000 cash and $ 150,000 with 1,185,771 shares of common stock.

Pursuant to the Purchase Agreement, on September

22, 2021, we and GHS agreed that we would issue and sell to GHS, and GHS would purchase from us, 25,630,272

shares of Common Stock for total proceeds to us, net of discounts, of $ 2,000,000 , at an effective price of $ $ 0.085836 per share

(the “ Third Closing ”).

We received approximately $ 1,915,000 in net proceeds from the Third Closing after deducting

the fees and other estimated offering expenses payable by us.

We used the net proceeds from the Third Closing for working capital and

for general corporate purposes.

The shares were issued to GHS in a registered direct offering, pursuant to a prospectus supplement to

our currently effective registration statement on Form S-3 (File No.

333-257826), which was initially filed with the SEC on July 12,

2021, and was declared effective on August 18, 2021.

On September 30, 2021, the Company paid a $ 185,000 placement fee to J.H.

& CO, $ 85,000 cash and $ 100,000 with 934,580 shares of common stock.

On November 9, 2021,

we entered an Equity Financing Agreement (the “ Equity Financing Agreement ”) and Registration Rights Agreement (the

“ GHS Registration Rights 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 course of 24 months (the “ Contract Period ”) after effectiveness of

a registration statement on Form S-1 (the “ Registration Statement ”) of the underlying shares of Common Stock.

The GHS Registration

Rights Agreement provides that we shall (i) use our best efforts to file with the SEC a Registration Statement within 45 days of the date

of the GHS Registration Rights Agreement;

and (ii) have the Registration Statement declared effective by the SEC within 30 days after

the date the GHS Registration Statement is filed with the SEC, but in no event more than 90 days after the GHS Registration Statement

Pursuant to the Equity Financing Agreement, on

January 12, 2022, we and GHS agreed that the Company would issue and sell to GHS, and GHS would purchase from us, 23,372,430 shares of

Common Stock for total proceeds to us, net of discounts, of $ 1,150,000 , at an effective price of $0.054124 per share (the “ Second

EFA Closing ”).

We received approximately $ 1,033,975 in net proceeds from the Second EFA Closing after deducting the fees and

other estimated offering expenses payable by us.

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

corporate purposes.

Pursuant to the Equity Financing Agreement, on

January 21, 2022, we and GHS agreed that the Company would issue and sell to GHS, and GHS would purchase from us, 33,454,988 shares of

Common Stock for total proceeds to us, net of discounts, of $ 1,150,000 , at an effective price of $0.037812 per share (the “ Third

EFA Closing ”).

We received approximately $ 1,033,975 in net proceeds from the Third EFA Closing after deducting the fees and

other estimated offering expenses payable by us.

We used the net proceeds from the Third EFA Closing for working capital and for general

corporate purposes.

Pursuant to the Equity Financing Agreement, on

February 7, 2022, we and GHS agreed that the Company would issue and sell to GHS, and GHS would purchase from us, 16,040,411 shares of

Common Stock for total proceeds to us, net of discounts, of $ 500,000 , at an effective price of $0.0342884 per share (the “ Fourth

EFA Closing ”).

We received approximately $ 448,975 in net proceeds from the Fourth EFA Closing after deducting the fees and other

estimated offering expenses payable by us.

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

On February 21, 2022, we sold 75,798,921 shares

of our Common Stock at $0.032982 per share for total consideration of $ 2,500,000 .

On March 3, 2022, we sold 16,579,569 shares of

our Common Stock at $0.0301576 per share for total consideration of $ 500,000 .

On March 14, 2022, we sold 5,617,347 shares of

our Common Stock at $0.071208 per share for total consideration of $ 400,000 .

Pursuant to the Equity Financing Agreement, on

March 23, 2022, we and GHS agreed that the Company would issue and sell to GHS, and GHS would purchase from us, 29,257,395 shares of Common

Stock for total proceeds to us, net of discounts, of $ 1,500,000 , at an effective price of $0.056396 per share (the “ Fifth EFA

We received approximately $ 1,348,975 in net proceeds from the Fifth EFA Closing after deducting the fees and other

estimated offering expenses payable by us.

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

NOTE 11 – RELATED PARTY TRANSACTIONS

29 unchanged sentences

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

During the three months ended September 30, 2021

and 2020, the Company’s Chief Executive Officer advanced personal funds in the amount of $ 0 and $ 10,582 for Company expenses.

of September 30, 2021, the Company’s Chief Executive Officer is owed a total of $ 23,980 for advanced personal funds.

During the three months ended March 31, 2022 and

2021, the Company’s Chief Executive Officer advanced personal funds in the amount of $ 0 and $ 329 for Company expenses.

31, 2022, the Company’s Chief Executive Officer is owed a total of $ 0 for advanced personal funds.

NOTE 12 - COMMITMENTS & CONTINGENCIES

1 unchanged sentence

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.

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

DarkPulse, Inc.

Twitter, Inc.

As disclosed in greater detail in the Company’s

Form 10-K, filed April 15, 2022, the Company’s investigation of the Investor News matter remains ongoing.

Carebourn Capital, L.P.

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

DarkPulse, Inc.

As disclosed in greater detail in the Company’s

Form 10-K, filed April 15, 2022, the Company remains in active litigation with 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 September 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, 2021, 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.

The remainder of this disclosure will address all material updates since the aforementioned Form 10-K.

On April 11, 2022, the Court held a hearing on

Carebourn’s Motion to Compel DarkPulse.

As of the date hereof, no decision has been rendered on Carebourn’s motion.

14, 2022, the Court granted the Company’s Motion to Enforce the Protective Order, and simultaneously denied Carebourn’s request

for reconsideration of Carebourn’s Motion for Dispositive Relief.

On April 27, 2022, the Court awarded the Company $18,858.18 in

attorneys’ fees from Carebourn in connection with the Court’s April 14, 2022 decision on the Company’s Motion to Compel

Carebourn has been ordered to pay the $18,858.18 on or before July 26, 2022.

The Company remains committed to actively litigating

its claims for relief under the Securities Exchange Act of 1934.

More Capital, LLC v.

DarkPulse, Inc.

As disclosed in greater detail in the Company’s

Form 10-K, filed April 15, 2022, the Company remains in active litigation with More Capital, LLC (“ More ”).

The remainder

of this disclosure will address all material updates since the aforementioned Form 10-K.

On April 11, 2014, the Court held a hearing on

the Company’s Motion to Compel More and More’s Motion for Summary Judgment.

As of the date hereof, no decision has been rendered

on either of the aforesaid motions.

The Company remains committed to actively litigating

its claims for relief under the Securities Exchange Act of 1934.

Goodman et al.

DarkPulse, Inc.

As disclosed in greater detail in the Company’s

Form 10-K, filed April 15, 2022, the Company remains in active litigation with Stephen Goodman (“ Goodman ”), Mark Banash

(“ Banash ”), and David Singer (“ Singer ”) (Goodman, Banash, and Singer together, the “ Series

D Plaintiffs ”).

As of April 15, 2022, there has been no material updates to this litigation.

The Company remains committed to actively litigating

its claims and defenses against the Series D Plaintiffs.

DarkPulse, Inc.

FirstFire Global Opportunities

Fund, LLC, and Eli Fireman (SDNY)

As disclosed in greater detail in the Company’s

Form 10-K, filed April 15, 2022, the Company remains in active litigation with FirstFire Global Opportunities Fund, LLC (“ FirstFire ”),

and Eli Fireman (“ Fireman ”) (FirstFire and Fireman together, the “ FirstFire Parties ”).

The remainder

of this disclosure will address all material updates since the aforementioned Form 10-K.

On May 5, 2022, the Company filed its amended

complaint (“ FirstFire Amended Complaint ”).

Accordingly, the FirstFire Parties’ answer or motion in response to

the FirstFire Amended Complaint is due on or before May 19, 2022.

FirstFire Global Opportunities Fund, LLC v.

DarkPulse, Inc.

Chancery Court)

As disclosed in greater detail in the Company’s

Form 10-K, filed April 15, 2022, there are no material updates to this litigation and the Company maintains its view that the FirstFire

Delaware Chancery matter is fully disclosed.

Absent any future material developments, no further disclosures will be made about the FirstFire

Delaware Chancery matter.

DarkPulse, Inc.

EMA Financial, LLC et al

As disclosed in greater detail in the Company’s

Form 10-K, filed April 15, 2022, the Company remains in active litigation with EMA Financial, LLC (“ EMA ”), EMA Group,

(“ EMA Group ”), and Felicia Preston (“ Preston ”) (EMA, EMA Group, and Preston together, the “ EMA

The remainder of this disclosure will address all material updates since the aforementioned Form 10-K.

On March 28, 2022, the Company filed its first

amended complaint against the EMA Parties (the “ EMA Amended Complaint ”).

On April 22, 2022, the Company and the EMA

Parties entered into a Stipulation, which the Court so ordered on May 3, 2022, and established the EMA Parties were required to file

and serve their answer and/or pre-motion letter for a motion under Rule 12 to the EMA Amended Complaint on or before June 21, 2022.

The Company remains committed to actively litigating

its claims for relief under the Securities Exchange Act of 1934.

From time to time, we may become involved in litigation

5 unchanged sentences

NOTE 13 – 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:

Effective October 1,

2021, we entered into and closed the Membership Purchase Agreement (the “ TerraData MPA ”) with TerraData Unmanned, PLLC,

a Florida limited liability company (“ TerraData ”), and Justin Dee, the sole shareholder of TerraData, pursuant to which

we agreed to purchase 60% of the equity interests in TerraData in exchange for 3,725,386 shares of our Common Stock and $400,000, subject

to adjustments as defined in the TerraData MPA, to be paid within 12 weeks of closing.

TerraData is now a subsidiary of the Company.

Pursuant to the Purchase Agreement, on October

1, 2021, we and GHS agreed that we would issue and sell to GHS, and GHS would purchase from us, 37,187,289

shares of Common Stock for total proceeds to us, net of discounts, of $3,000,000, at an effective price of $0.08874 per share (the “ Fourth

We received approximately $2,850,000 in net proceeds from the Fourth Closing after deducting the fees and other estimated

offering expenses payable by us.

We used the net proceeds from the Fourth Closing for working capital and for general corporate purposes.

The shares were issued to GHS in a registered direct offering, pursuant to a prospectus supplement to our currently effective registration

statement on Form S-3 (File No.

333-257826), which was initially filed with the SEC on July 12, 2021, and was declared effective on August

to the Purchase Agreement, on October 14, 2021, we and GHS agreed that we would issue and sell to GHS, and GHS would purchase from us,

14,282,304 shares of Common Stock for total proceeds to us, net of discounts, of $1,055,000, at an effective price of $0.08125 per share

(the “ Fifth Closing ”).

We received approximately $1,002,250 in net proceeds from the Fifth Closing after deducting

the fees and other estimated offering expenses payable by us.

We used the net proceeds from the Fifth Closing for working capital and

for general corporate purposes.

The shares were issued to GHS in a registered direct offering, pursuant to a prospectus supplement to

our currently effective registration statement on Form S-3 (File No.

333-257826), which was initially filed with the SEC on July 12,

2021, and was declared effective on August 18, 2021.

On April 8, 2022, the Company issued 23,746,816

shares of common stock for $1,000,000.

On May 3, 2022, the Company issued 29,522,276

shares of common stock for $1,000,000.

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