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Item 9A. Controls and Procedures

2023-06-23 compared with 2022-04-15 · 2052 added, 1679 removed, 477 unchanged (89% of the section changed)

AND PROCEDURES

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We have established disclosure controls and procedures

that are designed to ensure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act

of 1934, as amended (the “ Exchange Act ”), is recorded, processed, summarized and reported within the time periods

specified in the rules and forms of the SEC and, as such, is accumulated and communicated to our Chief Executive Officer and Chief Financial

Officer, Dennis O’Leary, who serves as our principal executive officer and principal financial officer, as appropriate to allow

timely decisions regarding required disclosure.

O’Leary, evaluated the effectiveness of our disclosure controls and procedures,

as defined in Rule 13a-15(e) of the Exchange Act, as of December 31, 2021.

Based on his evaluation, Mr.

O’Leary concluded that,

due to a material weakness in our internal control over financial reporting as described below, our disclosure controls and procedures

were not effective as of December 31, 2021.

In light of the material weakness in internal control over financial reporting, we completed

substantive procedures, including validating the completeness and accuracy of the underlying data used for accounting prior to filing

this Form 10-K.

These additional procedures have allowed us to

conclude that, notwithstanding the material weakness in our internal control over financial reporting, the consolidated financial statements

included in this Form 10-K fairly present, in all material respects, our financial position, results of operations and cash flows for

the periods presented in conformity with accounting principles generally accepted in the United States of America.

We have established

disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports filed or submitted

under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), is recorded, processed, summarized and

reported within the time periods specified in the rules and forms of the SEC and, as such, is accumulated and communicated to our Chief

Executive Officer and Chief Financial Officer, Dennis O’Leary, who serves as our principal executive officer and principal financial

officer, as appropriate to allow timely decisions regarding required disclosure.

O’Leary, evaluated the effectiveness of our

disclosure controls and procedures, as defined in Rule 13a-15(e) of the Exchange Act, as of December 31, 2022.

Based on his evaluation,

O’Leary concluded that, due to material weaknesses in our internal control over financial

reporting as described below, our disclosure controls and procedures were not effective as of December 31, 2022.

In light of the material

weakness in internal control over financial reporting, we completed substantive procedures, including validating the completeness and

accuracy of the underlying data used for accounting prior to filing this Form 10-K.

These additional procedures have allowed us to conclude

that, notwithstanding the material weakness in our internal control over financial reporting, the consolidated financial statements included

in this Form 10-K fairly present, in all material respects, our financial position, results of operations and cash flows for the periods

presented in conformity with accounting principles generally accepted in the United States of America.

Internal Control Over Financial Reporting

Our management is responsible for establishing

and maintaining adequate internal controls over financial reporting for the Company.

Due to limited resources, management conducted an

evaluation of internal controls based on criteria established in 2013 Internal Control - Integrated Framework issued by the Committee

of Sponsoring Organizations of the Treadway Commission (“ COSO ”).

The results of this evaluation determined that our

internal control over financial reporting was ineffective as of December 31, 2021, due to material weaknesses.

A material weakness in

internal control over financial reporting is defined as a deficiency, or a combination of deficiencies, in internal control over financial

reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will

not be prevented or detected on a timely basis.

A significant deficiency is a deficiency, or a combination of deficiencies, in internal

control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible

for oversight of our financial reporting.

Management’s assessment identified the

following material weaknesses in internal control over financial reporting:

Our management is responsible for establishing and

maintaining adequate internal controls over financial reporting for the Company.

Due to limited resources, management conducted an evaluation

of internal controls based on criteria established in 2013 Internal Control - Integrated Framework issued by the Committee of Sponsoring

Organizations of the Treadway Commission (“ COSO ”).

The results of this evaluation determined that our internal control

over financial reporting was ineffective as of December 31, 2022, due to material weaknesses.

A material weakness in internal control

over financial reporting is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such

that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented

or detected on a timely basis.

A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over

financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight

of our financial reporting.

Management’s assessment identified the following

material weaknesses in internal control over financial reporting:

The small size of our company limits our ability to achieve the desired level of separation of duties to achieve effective internal controls over financial reporting.

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financial reporting was not effective based on the criteria in Internal Control - Integrated Framework issued by the COSO.

We will continue to follow the standards for the

Public Company Accounting Oversight Board (United States) for internal control over financial reporting to include procedures that:

Pertain to the maintenance of records in reasonable detail

accurately that fairly reflect the transactions and dispositions of our assets;

Provide reasonable assurance that transactions are recorded as necessary

to permit preparation of the financial statements in accordance with generally accepted accounting principles, and that receipts

and expenditures are being made only in accordance with authorizations of management and the Board of Directors;

Provide reasonable assurance regarding prevention or timely detection

of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

Despite the material weaknesses in financial

reporting noted above, we believe that our financial statements included in this report fairly present our financial position, results

of operations and cash flows as of and for the years presented in all material respects.

We will continue to follow the standards for the Public

Company Accounting Oversight Board (United States) for internal control over financial reporting to include procedures that:

Pertain to the maintenance of records in reasonable detail accurately that fairly reflect the transactions and dispositions of our assets;

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the Board of Directors;

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

Despite the material weaknesses in financial reporting

noted above, we believe that our financial statements included in this report fairly present our financial position, results of operations

and cash flows as of and for the years presented in all material respects.

Changes in Internal Controls

There were no changes in our internal control

over financial reporting that occurred during the fiscal quarter covered by this report that have materially affected, or are reasonably

likely to materially affect, our internal control over financial reporting.

There were no changes in our internal control over

financial reporting that occurred during the fiscal quarter covered by this report that have materially affected, or are reasonably likely

to materially affect, our internal control over financial reporting.

We have taken limited steps to meet our Sarbanes-Oxley

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accepted accounting principles (GAAP) and therefore fairly represent the results and condition of the Company.

We are not materially

compliant with the Section 404 requirements due to economic constraints.

We are not materially compliant

with the Section 404 requirements due to economic constraints.

OTHER INFORMATION

EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable to the Company.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Executive Officers and Directors

The following table sets forth the name, age, and position of each

executive officer and director of the Company:

The following table sets forth the name, age, and position of each executive

officer and director of the Company:

Director's Name

Dennis O’Leary

Chairman of the Board, Chief Executive Officer, President, Chief Financial Officer, Secretary &

Chairman of the Board, Chief Executive Officer, President, Chief Financial Officer, Secretary & Treasurer

Anthony Brown

Director and Chief Commercial Officer of Optilan

Chief Executive Officer of Optilan

O’Leary, Chairman, CEO, President,

O’Leary was appointed as the Company’s Chief Executive Officer, President, Chief Financial Officer and Chairman

O’Leary was appointed as the DarkPulse’s Chief Executive Officer, President, Chief Financial Officer and Chairman

of the Board in April 2018.

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Power and Light Corp (Philippines), a firm with expertise in utility scale power generation and solar energy.

co-founded DarkPulse Technologies Inc., a wholly-owned subsidiary of the Company, which is developing specialized devices that monitor

activities along national borders and provide structural health and safety monitoring of oil and gas pipelines.

He holds extensive start-up

experience including multiple exit strategies.

O’Leary is an Ambassador for the Province of New Brunswick, Canada, and a Research

Member of the NATO Science and Technology Organization.

He served as a member of the Board at Arizona State University’s School

of Engineering, Global Resolve as Chair of the Impact Committee.

His previous employment includes the NYPD where he worked as a member

of the Manhattan North Tactical Narcotics Team, which prosecuted establishments involved in the illegal distribution of narcotics.

was a member of a joint taskforce working with the DEA and USINS in the execution of warrants related to narcotics trafficking.

at the NYPD, he was assigned to the Department of Justice as a member of the FBI’s investigative team with internal designation

He is a licensed private pilot with turbine experience.

O’Leary was appointed as a Director due to his extensive experience

in the industries in which we operate.

O’Leary is not, and has not been during the past five years, the director of any other

public companies.

co-founded DarkPulse Technologies Inc., a wholly-owned subsidiary of DarkPulse, which is developing specialized devices that monitor activities

along national borders and provide structural health and safety monitoring of oil and gas pipelines.

He holds extensive start-up experience

including multiple exit strategies.

O’Leary is an Ambassador for the Province of New Brunswick, Canada, and a Research Member

of the NATO Science and Technology Organization.

He served as a member of the Board at Arizona State University’s School of Engineering,

Global Resolve as Chair of the Impact Committee.

His previous employment includes the NYPD where he worked as a member of the Manhattan

North Tactical Narcotics Team, which prosecuted establishments involved in the illegal distribution of narcotics.

He was a member of a

joint taskforce working with the DEA and USINS in the execution of warrants related to narcotics trafficking.

While at the NYPD, he was

assigned to the Department of Justice as a member of the FBI’s investigative team with internal designation C14.

He is a licensed

private pilot with turbine experience.

O’Leary was appointed as a Director due to his extensive experience in the industries

in which DarkPulse operates.

O’Leary is not, and has not been during the past five years, the director of any other public companies.

Anthony Brown, Director .

has served as a Director of the Company since April 2019.

He is a physicist and scientist with extensive experience in the development

of Brillouin scattering-based distributed fiber optic sensing.

Brown co-founded DarkPulse Technologies, Inc., a wholly-owned

subsidiary of the Company.

Brown has more than 25 years of research and lecturing experience gained at the University of New Brunswick

(“ UNB ”), focusing primarily on the development of Brillouin scattering-based distributed fiber optic sensor technology.

served as a Director of DarkPulse since April 2019.

He is a physicist and scientist with extensive experience in the development of Brillouin

scattering-based distributed fiber optic sensing.

Brown co-founded DarkPulse Technologies, Inc., a wholly-owned subsidiary

of DarkPulse.

Brown has more than 25 years of research and lecturing experience gained at the University of New Brunswick (“ UNB ”),

focusing primarily on the development of Brillouin scattering-based distributed fiber optic sensor technology.

From 2001 to 2012, Dr.

Brown served as an assistant professor and research associate at UNB.

Brown’s tenure at UNB, he

was instrumental in developing numerous patents in the field of fiber optic sensing.

Brown’s tenure at UNB, he was instrumental in developing

numerous patents in the field of fiber optic sensing.

From 2012 to 2015, Dr.

Brown served as an Adjunct

Professor at UNB.

From 2013 through the present, Dr.

Brown served as an Adjunct Professor at UNB.

From 2013 through

the present, Dr.

Brown has served as a data scientist for Xplornet Communications, Inc.

through the present, Dr.

Brown has served as a consultant for the Company.

Brown received a Bachelor of Science degree in Physics

from UNB in 1995, and a PhD in Physics from UNB in 2001.

Brown was appointed as a Director due to his extensive experience in the

development of Brillouin scattering-based distributed fiber optic sensing.

Brown is not, and has not been during the past five years,

the director of any other public companies.

Carl Eckel, Director .

Eckel has served

as a Director of the Company since April 2019.

military veteran with over 35 years of defense communications system development

and support experience.

Eckel’s career began in the field of telecommunications operations and continued to evolve with the

rapid advancements in telecommunications technologies.

While serving in the United States Air Force from 1977 to 1985, Mr.

Eckel was responsible

for managing leased communications accounting, planning, user requirement changes, and system upgrades and replacements for critical Air

Force Satellite Control Network (“ AFSCN ”) Programs at Onizuka AFS, until his honorable discharge in 1985.

civilian, from 1985 to 1992, Mr.

Eckel served as a Database Systems Administrator and Site Integrator for Ford Aerospace / Loral where

he was responsible for into customer communications requirements analysis and development of training for operations and maintenance of

the classified and unclassified systems supporting all Space Shuttle and satellite activities.

In 1993 recognizing the government’s

need for quality affordable training for operations and maintenance of complex software and hardware communications systems, Mr.

started a successful training development and delivery business that provided training to Washington D.C.

area clients such as the Pentagon

7th CG, the White House Communications Agency.

and PACAF based in Hawaii.

Eckel worked for Allied Signal/Honeywell in 1995-96 as a

Group Field Engineer maintaining critical Control Center and Remote Tracking Communications Equipment around the world, and then rejoining

communications systems support with Lockheed from 1997 to 1998.

From 1999 to 2000, Mr.

Eckel resumed support on the government side of

the AFSCN serving initially in Network Security and Systems Integration.

From 2000 to 2001, Mr.

Eckel served as a Deputy Maintenance Manager

for ITT where he was responsible for maintenance of AFSCN mission control communications systems.

From 2001 to 2013, Mr.

as a Site Manager, Program Manager, and Program Director for IITC / Nortel / PEC / Avaya Government Solutions where he held a team leadership

role transitioning back into program management.

With this transition Mr.

Eckel was a part of establishing and delivering contract performance

that netted 99-100% contract satisfaction award fees.

Eckel advanced to program director level managing contract team activities,

including subcontractors, at multiple locations supporting programs for the Air Force, Army, and NOAA/NWS.

In early 2014, Mr.

Eckel transitioned

into the Oil and Gas Industry as a safety professional in support of pipeline integrity work, station work, and mainline projects for

clients including Enbridge, Hess, Tesoro, MarkWest, TransCanada, Kinder Morgan, and Shell.

From 2014 through the present, Mr.

served as a Safety Manager for Minnesota Limited, LLC where he is responsible for safety compliance, including field safety inspections,

incident and accident investigation, and reporting.

Eckel received a diploma in Communications Systems from the USAF Technical School

in Shepherd AFB, TX.

Eckel holds numerous certifications, including OSHA 500 – Authorized OSHA 10 and 30 hour trainer, OSHA

510 HAZWOPER, CPR/AED/First aid, DOT – CSA & HAZMAT Driver Training.

Eckel was appointed as a Director due to his extensive

management experience within the government and the private sectors in such areas and industries where our technology systems may be advantageously

Eckel is not, and has not been during the past five years, the director of any other public companies.

Bill Bayliss, CEO, Optilan .

has served as the CEO of Optilan since February 2020.

Bayliss has been actively involved in leadership positions in both the public

and private industrial/energy sector;

including living and working in North America, Middle East and Norway.

Bayliss started his career

in support to the power generation and petrochemical businesses in a wide range of roles including project management, sales and commercial.

He entered the oil and gas business with Brown and Root (B&R) in both London and Aberdeen.

He subsequently moved to Norway with Kvaerner

Engineering and returned back to UK with Kellogg B&R (KBR) fulfilling various roles including Senior Manager for the Hibernia Development

in Canada, Business Manager for the Conoco Southern North Sea operations, maintenance and major project work before being promoted to

KBR Global Operations and Maintenance Director.

Bayliss moved to Petrofac to set up an engineering, procurement, construction

and commissioning support business that grew significantly from an initial seed corn start up investment, and within his role as Vice

President, developed the business into five divisional areas with an annual turnover of circa $300 million and a support staff of 1,800.

In 2009, he moved to Dubai as Chief Operating Officer of Topaz Engineering and was accountable for four business units with a circa $300

million turnover and over 4000 personnel.

Bayliss joined Viking Seatech in September 2011 as Group CEO to take the business through

financial and organizational restructuring and professionalization.

Bayliss led the sale of this HSBC private equity backed debt leveraged

business which was sold in August 2013 for £150million to USA trade buyer Actuant.

At the end of 2014 Mr.

Bayliss moved to work

as an independent consultant helping a number of Private Equity houses including Bluewater Energy and Energy Ventures in their due diligence

activities for the acquisition of various targets covering are Operational, Commercial (including financial elements), HSEQ, the supply

chain, organizational structures and general management support.

In mid-2016 Bill joined ICR.

As Group CEO, he developed and executed

a comprehensive strategy with the “end in mind” that delivered valuable change not only in terms of EBITDA but attractiveness

in terms of exit multiples with the addition of new organic product lines and geographies.

At its peak under Bills guidance the business

nearly doubled in size.

During late 2019, Mr.

Bayliss decided to pursue other activities and was appointed as the CEO of Optilan.

Bayliss has a Master of Science Degree in Engineering and Risk Management.

From 2018 through the present, Dr.

Brown has served

as a consultant for DarkPulse.

Brown received a Bachelor of Science degree in Physics from UNB in 1995, and a PhD in Physics from

Brown was appointed as a Director due to his extensive experience in the development of Brillouin scattering-based distributed

fiber optic sensing.

Brown is not, and has not been during the past five years, the director of any other public companies.

Craig Atkin, Director .

Atkin has served

as a Director of DarkPulse since June 2023.

He is also the Chief Commercial Officer of Optilan.

engineering background with a first class honours degree in Electrical/Electronic Engineering and a Master’s Degree in Project Management.

With over 20 years’ experience across energy, security, communications and technology sectors in both operational and leadership

His previous role was the management of two power stations within the UK for a multinational energy company.

Atkin has also

worked in conventional, renewable and offshore wind environments.

He is experienced working and leading international teams and large

scale projects.

Atkin is commercially-experienced across contract setup and negotiation, M&A and operational works.

Atkin was appointed as a Director due to his experience with Optilan.

Atkin is not, and has not been during the past five years, the

director of any other public companies.

Jason Keith, CEO, Optilan .

Keith has served as the CEO of Optilan since July 2022.

He oversees all commercial, procurement and tendering activities across the

Optilan Group and is responsible for the delivery, development and maintenance of these services in compliance with Group policies, procedures

and legislation.

This is whilst simultaneously ensuring the safe, efficient and economic execution in support of Optilan’s operational

requirements.

Keith has 28 years’ experience predominantly within the energy industry, working for major multi-national and

international contracting companies across the globe.

This includes his previous position at Wood plc, as well as Petrofac, Subsea 7 and

Throughout his professional tenure, Mr.

Keith has held several commercial positions at both project and corporate levels, with the

last 15 years spent in Senior Executive Leadership roles.

He has extensive skills in commercial and contract management;

this has encompassed

valuable multi-cultural experiences, having lived, worked and managed teams across the globe.

Keith holds a Masters in Oil & Gas

Law (LLM) and a Postgraduate in Management, both of which he graduated with distinction from the Robert Gordon University in the United

He also holds a Diploma in Finance and a master’s certificate in Lean Six Sigma (Black Belt) attained through the Villanova

Legal Proceedings

During the past ten years there have been no

events under any bankruptcy act, no criminal proceedings and no judgments, injunctions, orders or decrees material to the evaluation

of the ability and integrity of any of our directors or executive officers, and none of these persons has been involved in any judicial

or administrative proceedings resulting from involvement in mail or wire fraud or fraud in connection with any business entity, any judicial

or administrative proceedings based on violations of federal or state securities, commodities, banking or insurance laws or regulations,

or any disciplinary sanctions or orders imposed by a stock, commodities or derivatives exchange or other self-regulatory organization.

During the past ten years there have been no events

under any bankruptcy act, no criminal proceedings and no judgments, injunctions, orders or decrees material to the evaluation of the ability

and integrity of any of our directors or executive officers, and none of these persons has been involved in any judicial or administrative

proceedings resulting from involvement in mail or wire fraud or fraud in connection with any business entity, any judicial or administrative

proceedings based on violations of federal or state securities, commodities, banking or insurance laws or regulations, or any disciplinary

sanctions or orders imposed by a stock, commodities or derivatives exchange or other self-regulatory organization.

Family Relationships

There are no family relationships between any

of our directors and executive officers.

Audit Committee

As of December 31, 2021, we did not have a functioning

There are no family relationships between any of our

directors and executive officers.

Audit Committee

We currently do not have a functioning Audit

Our management is currently reviewing our SEC filings and relying on outside experts to assist with this process.

Compliance with Section 16(a) of the Securities Exchange Act

Section 16(a) of the Exchange Act requires the

Company’s directors, executive officers, and persons who own more than 10% of a registered class of the Company’s equity

securities, to file with the Commission reports regarding initial ownership and changes in ownership.

Directors, executive officers,

and greater than 10% stockholders are required by the Commission to furnish the Company with copies of all Section 16(a) forms they file.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Exchange Act requires the Company’s

directors, executive officers, and persons who own more than 10% of a registered class of the Company’s equity securities, to file

with the Commission reports regarding initial ownership and changes in ownership.

Directors, executive officers, and greater than 10%

stockholders are required by the Commission to furnish the Company with copies of all Section 16(a) forms they file.

We are not aware of any common stock transactions

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Code of Ethics

We have not adopted a formal, written code of

ethics due to a small number of members of management,.

We have not adopted a formal, written code of ethics

due to a small number of members of management.

We plan to adopt a Code of Ethics during the fiscal year ending December 31, 2023.

EXECUTIVE COMPENSATION

Summary Compensation for Named Executive Officers

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Name and Principal Position

Year Ended Dec 31,

All Other Compensation

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Chairman/CEO and Director

CEO, Optilan (2)

On June 24, 2022, Mr.

O’Leary was awarded 100 shares of Series A Preferred Stock.

Since the shares have no voluntary conversion feature, they are deemed to have no monetary value.

In April 2022, Mr.

Bayliss was removed as CEO and Mr.

Keith was appointed as CEO in May 2022.

O’Leary Employment

On June 22, 2022, our Board

of Directors, with Dennis O’Leary abstaining, approved the Employment Agreement dated effective April 1, 2022 with Mr.

our Chief Executive Officer.

The term of the agreement is three years from the April 1, 2022, subject to termination.

The agreement may

be terminated upon the death or disability of Mr.

O’Leary or for “Cause,” as defined in the agreement.

Pursuant to the

agreement, Mr.

O’Leary is entitled to an annual salary of $300,000, which may accrue and be paid once we have available funds.

accrued and unpaid base salary may also be converted subject to mutual agreement of the Company and Mr.

Also, pursuant

to the agreement, Mr.

O’Leary was issued 100 shares of Series A Super Voting Preferred Stock.

Summary Compensation for Directors

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Name and Principal Position

Year Ended Dec 31,

Anthony Brown, Director

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equity awards.

OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Principal Shareholders

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directors, named executive officers, and executive officers and each person owning of record or was known by the Company to own beneficially

shares of stock greater than 5% of the 5,379,559,651 (5,379,471,416 common plus 88,235 preferred) shares as of April 11, 2022.

table includes preferred stock that is convertible into common stock and information as to the ownership of the Company's Stock by each

of its directors, named executive officers, and executive officers and by the directors and executive officers as a group.

no stock options outstanding as of April 11, 2022.

Except as otherwise indicated, all shares are owned directly, and the persons

named in the table have sole voting and investment power with respect to shares shown as beneficially owned by them.

The address for each

of our directors, named executive officers, and executive officers is 1345 Avenue of the Americas, 2 nd Floor, New York, NY

Name and Position

Stock Owned (1)

shares of stock greater than 5% of the 7,312,175,610 (7,312,087,375 common plus 88,235 preferred) shares as of June 22, 2023.

includes preferred stock that is convertible into common stock and information as to the ownership of the Company's Stock by each of its

directors, named executive officers, and executive officers and by the directors and executive officers as a group.

There were no stock

options outstanding as of June 22, 2023.

Except as otherwise indicated, all shares are owned directly, and the persons named in the table

have sole voting and investment power with respect to shares shown as beneficially owned by them.

The address for each of our directors,

named executive officers, and executive officers is 815 Walker Street, Suite 1155, Houston, Texas 77002.

Preferred Stock

Amount and Nature of

Ownership (2)

Percentage of Beneficial Ownership

Percentage of

Dennis O’Leary, CEO and Director

Anthony Brown, Director

Carl Eckel, Director

Atkin, Director

Bill Bayliss, CEO, Optilan

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*Less than 1%

Each share of Series D Preferred Stock is convertible, at the option of the holder, into two shares of our Common

Under Rule 13d-3 of the Exchange Act, a beneficial owner of a security

includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has

Each share of Series D Preferred Stock is convertible,

at the option of the holder, into two shares of our Common Stock.

Under Rule 13d-3 of the Exchange Act, a beneficial

owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship,

or otherwise has or shares:

(i) voting power, which includes the power to vote, or to direct the voting of shares;

and (ii) investment power, which

includes the power to dispose or direct the disposition of shares.

Certain shares may be deemed to be beneficially owned by more

than one person (if, for example, persons share the power to vote or the power to dispose of the shares).

In addition, shares are

deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option)

within 60 days of the date as of which the information is provided.

In computing the percentage ownership of any person, the amount

of shares outstanding is deemed to include the number of shares beneficially owned by such person (and only such person) by reason

of these acquisition rights.

As a result, the percentage of outstanding shares of any person as shown in the above table does not

necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually

outstanding on the date of this prospectus.

CERTAIN RELATIONSHIPS

AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

and (ii) investment

power, which includes the power to dispose or direct the disposition of shares.

Certain shares may be deemed to be beneficially owned

by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares).

In addition, shares

are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of

an option) within 60 days of the date as of which the information is provided.

In computing the percentage ownership of any person,

the amount of shares outstanding is deemed to include the number of shares beneficially owned by such person (and only such person)

by reason of these acquisition rights.

As a result, the percentage of outstanding shares of any person as shown in the above table

does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock

actually outstanding on the date of this prospectus.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

For transactions with our

executive officers, please see the disclosure under “ Item 11.

Executive Compensation.

Director Independence

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of “independent directors.”

We currently have not established any committees

of the Board of Directors.

We currently have not established any committees of

the Board of Directors.

Our Board of Directors may designate from among its members an executive committee and one or more other committees

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We do not have a nominating committee or a nominating committee charter.

Further, we do not have a policy with regard

to the consideration of any director candidates recommended by security holders.

To date, other than as described above, no security

holders have made any such recommendations.

The entire Board of Directors performs all functions that would otherwise be performed by

Further, we do not have a policy with regard to

the consideration of any director candidates recommended by security holders.

To date, other than as described above, no security holders

have made any such recommendations.

The entire Board of Directors performs all functions that would otherwise be performed by committees.

Given the present size of our board it is not practical for us to have committees.

If we are able to grow our business and

increase our operations, we intend to expand the size of our board and allocate responsibilities accordingly.

ACCOUNTANT FEES AND SERVICES

Consists of fees billed for

professional services rendered for the audits of our financial statements, reviews of our interim financial statements included in quarterly

reports, services performed in connection with filings with the SEC, and related other services that were provided by Boyle CPA (“ Boyle ”),

If we are able to grow our business and increase our

operations, we intend to expand the size of our board and allocate responsibilities accordingly.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

Consists of fees billed for professional

services rendered for the audits of our financial statements, reviews of our interim financial statements included in quarterly reports,

services performed in connection with filings with the SEC, and related other services that were provided by Boyle CPA (“ Boyle ”),

our previous independent registered public accounting firm, and Urish Popeck & Co., LLC (“ Urish ”), our current

independent registered public accounting firm, in connection with statutory and regulatory filings or engagements.

The following is a summary of the fees incurred

by the Company to Boyle and Urish for professional services rendered for the years ended December 31, 2021 and 2020, respectively.

The following is a summary of the fees incurred by

the Company to Boyle and Urish for professional services rendered for the years ended December 31, 2022 and 2021, respectively.

Audit-Related Fees

Consists of fees billed for

professional services for tax compliance, tax advice and tax planning.

These services include assistance regarding federal, state and

local tax compliance and consultation in connection with various transactions.

There were no tax fees incurred by the Company for the

years ended December 31, 2021 and 2020.

Consists of fees billed for professional

services for tax compliance, tax advice and tax planning.

These services include assistance regarding federal, state and local tax compliance

and consultation in connection with various transactions.

There were no tax fees incurred by the Company for the years ended December

31, 2022 and 2021.

Board of Directors Pre-Approval of Audit and Permissible Non-Audit

Services of Independent Auditors

The Board of Directors may pre-approve all audit

and non-audit services provided by the independent auditors.

The Board of Directors may pre-approve all audit and

non-audit services provided by the independent auditors.

These services may include audit services, audit-related services, tax services

6 unchanged sentences

The Board of Directors may also pre-approve particular services on a case-by-case basis.

The Board of Directors pre-approved 100% of the

Company’s 2021 and 2020 audit fees, audit-related fees and all other fees.

AND FINANCIAL STATEMENT SCHEDULES

The following exhibits are included as part of

this Form 10-K:

The Board of Directors pre-approved 100% of the Company’s

2022 and 2021 audit fees, audit-related fees and all other fees.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following exhibits are included as part of this

Exhibit Description

of Agreement and Plan of Merger by and between Klever Marketing, Inc., DarkPulse Technologies Inc.

and DPTH Acquisition Corporation

dated April 27, 2018

of Amendment No.

Form of Agreement and Plan of Merger by and between Klever Marketing, Inc., DarkPulse Technologies Inc.

and DPTH Acquisition Corporation dated April 27, 2018

Form of Amendment No.

1 to Agreement and Plan of Merger by and between Klever Marketing, Inc., DarkPulse Technologies Inc.

and DPTH Acquisition

Corporation dated June 29, 2018

of Amendment No.

and DPTH Acquisition Corporation dated June 29, 2018

Form of Amendment No.

2 to Agreement and Plan of Merger by and between Klever Marketing, Inc., DarkPulse Technologies Inc.

and DPTH Acquisition

Corporation dated August 17, 2018, effective as of July 18, 2018

Certificate of Incorporation of Klever Marketing, Inc.

and DPTH Acquisition Corporation dated August 17, 2018, effective as of July 18, 2018

Business Combination Agreement, by, between, and among DarkPulse, Inc., Global System Dynamics, Inc., and Zilla Acquisition Corp.

Restated Certificate of Incorporation of Klever Marketing, Inc.

a Delaware corporation

of Amendment to Certificate of Incorporation

of Designation of Series D Preferred Stock

of Amendment to Certificate of Incorporation filed February 5, 2019

of Amendment to Certificate of Incorporation filed February 20, 2020

of Amendment for Series D Preferred Stock filed December 23, 2021

Promissory Note dated July 14, 2018

Promissory Note dated July 17, 2018, effective July 18, 2018

Promissory Note dated July 24, 2018, and effective July 27, 2018

Promissory Note dated August 20, 2018, effective August 24, 2018

Promissory Note issued to EMA dated September 25, 2018, effective September 28, 2018

Promissory Note issued to Auctus dated September 25, 2018, effective September 27, 2018

Promissory Note issued to FirstFire dated September 24, 2018, and effective October 9, 2018

Certificate of Amendment to Certificate of Incorporation

Certificate of Amendment to Certificate of Incorporation filed February 5, 2019

Certificate of Amendment to Certificate of Incorporation filed February 20, 2020

Amended Bylaws

Certificate of Designation for Series A Preferred Stock dated June 22, 2022

Certificate of Amendment for Series A Preferred Stock filed December 2, 2022

Certificate of Correction for Certificate of Amendment For Series A Preferred Stock filed December 8, 2022

Certificate of Designation of Series D Preferred Stock

Certificate of Amendment for Series D Preferred Stock filed December 23, 2021

Certificate of Amendment for Series D Preferred Stock filed December 2, 2022

Convertible Promissory Note dated July 14, 2018

Convertible Promissory Note dated July 17, 2018, effective July 18, 2018

Convertible Promissory Note dated July 24, 2018, and effective July 27, 2018

Convertible Promissory Note dated August 20, 2018, effective August 24, 2018

Convertible Promissory Note issued to EMA dated September 25, 2018, effective September 28, 2018

Convertible Promissory Note issued to Auctus dated September 25, 2018, effective September 27, 2018

Convertible Promissory Note issued to FirstFire dated September 24, 2018, and effective October 9, 2018

8% Convertible Redeemable Note issued to GS Capital Partners, LLC dated January 10, 2019

of Convertible Promissory Note issued to Crown Bridge Partners, LLC dated February 5, 2019

Promissory Note issued to Geneva Roth Remark Holdings, Inc.

Form of Convertible Promissory Note issued to Crown Bridge Partners, LLC dated February 5, 2019

Convertible Promissory Note issued to Geneva Roth Remark Holdings, Inc.

dated September 2, 2020

Promissory Note Issued as of April 26, 2021 to FIRSTFIRE GLOBAL OPPORTUNITIES FUND, LLC

Convertible Promissory Note Issued as of April 26, 2021 to FIRSTFIRE GLOBAL OPPORTUNITIES FUND, LLC

6% Redeemable Note dated July 14, 2021 issued to GS Capital Partners, LLC in the principal amount of $2,000,000

Purchase Agreement dated July 14, 2021 with GS Capital Partners, LLC

Purchase Agreement by and between DarkPulse, Inc.

Securities Purchase Agreement dated July 14, 2021 with GS Capital Partners, LLC

Securities Purchase Agreement by and between DarkPulse, Inc.

and GS Capital Partners, LLC dated January 10, 2019

of Securities Purchase Agreement between DarkPulse, Inc.

Form of Securities Purchase Agreement between DarkPulse, Inc.

and Crown Bridge Partners, LLC dated February 5, 2019

Purchase Agreement with Geneva Roth Remark Holdings, Inc.

Securities Purchase Agreement with Geneva Roth Remark Holdings, Inc.

dated September 2, 2020

Agreement effective December 23, 2020 with Faisal Farooqui

Agreement with the University of New Brunswick, Canada

Debenture (Secured) Issued April 24, 2017

Fee Agreement dated January 8, 2021 with J.H.

Consulting Agreement effective December 23, 2020 with Faisal Farooqui

Assignment Agreement with the University of New Brunswick, Canada

Convertible Debenture (Secured) Issued April 24, 2017

Finder’s Fee Agreement dated January 8, 2021 with J.H.

Darbie & Co., Inc.

Purchase Agreement dated as of April 26, 2021 with FIRSTFIRE GLOBAL OPPORTUNITIES FUND, LLC

Rights Agreement dated April 26, 2021 to FIRSTFIRE GLOBAL OPPORTUNITIES FUND, LLC

of Terms with Remote Intelligence LLC and Unleash Live, Inc.

Securities Purchase Agreement dated as of April 26, 2021 with FIRSTFIRE GLOBAL OPPORTUNITIES FUND, LLC

Registration Rights Agreement dated April 26, 2021 to FIRSTFIRE GLOBAL OPPORTUNITIES FUND, LLC

Heads of Terms with Remote Intelligence LLC and Unleash Live, Inc.

dated May 10, 2021

Agreement with Dr.

Consulting Agreement with Dr.

Joseph Catalino Jr.

dated May 17, 2021

and Mutual Release Agreement with Auctus Fund, LLC dated June 3, 2021

of Intent with Remote Intelligence, Limited Liability Company dated June 8, 2021

of Intent with Wildlife Specialists, LLC dated June 8, 2021

Agreement with Crae-Con Construction Inc.

Settlement and Mutual Release Agreement with Auctus Fund, LLC dated June 3, 2021

Letter of Intent with Remote Intelligence, Limited Liability Company dated June 8, 2021

Letter of Intent with Wildlife Specialists, LLC dated June 8, 2021

Teaming Agreement with Crae-Con Construction Inc.

dated June 22, 2021

Agreement with SurSafe LLC dated June 24, 2021

of Intent with TerraData Unmanned, PLLC dated June 25, 2021

Agreement dated effective July 22, 2021 with Rick Gibson

Agreement and Terms and Conditions dated August 3, 2021 with Energy & Industrial Advisory Partners, LLC

of Intent dated June 8, 2021 with Remote Intelligence, Limited Liability Company

of Intent dated June 8, 2021 with Wildlife Specialists, LLC

Purchase Agreement dated August 9, 2021with Optilan Guernsey Limited and Optilan Holdco 2 Limited

Agreement August 9, 2021 with Optilan HoldCo 3 Limited

of Intent dated effective August 18, 2021 with TJM Electronics West, Inc.

Interest Purchase Agreement dated August 30, 2021 with Remote Intelligence, Limited Liability Company

Interest Purchase Agreement dated August 30, 2021 with Wildlife Specialists, LLC

of Intent dated June 25, 2021 with TerraData Unmanned, PLLC

Teaming Agreement with SurSafe LLC dated June 24, 2021

Letter of Intent with TerraData Unmanned, PLLC dated June 25, 2021

Consulting Agreement dated effective July 22, 2021 with Rick Gibson

Engagement Agreement and Terms and Conditions dated August 3, 2021 with Energy & Industrial Advisory Partners, LLC

Letter of Intent dated June 8, 2021 with Remote Intelligence, Limited Liability Company

Letter of Intent dated June 8, 2021 with Wildlife Specialists, LLC

Share Purchase Agreement dated August 9, 2021 with Optilan Guernsey Limited and Optilan Holdco 2 Limited

Subscription Agreement August 9, 2021 with Optilan HoldCo 3 Limited

Letter of Intent dated effective August 18, 2021 with TJM Electronics West, Inc.

Membership Interest Purchase Agreement dated August 30, 2021 with Remote Intelligence, Limited Liability Company

Membership Purchase Agreement dated August 24, 2022 with Remote Intelligence, Limited Liability Company

Membership Interest Purchase Agreement dated August 30, 2021 with Wildlife Specialists, LLC

Membership Purchase Agreement dated August 24, 2022 with Wildlife Specialists, LLC

Letter of Intent dated June 25, 2021 with TerraData Unmanned, PLLC

Amendment No.

1 to Letter of Intent with TerraData Unmanned, PLLC dated effective August 24, 2021

Amendment No.

2 to Letter of Intent with TerraData Unmanned, PLLC dated effective September 3, 2021

to Letter of Intent with TJM Electronics West, Inc.

Amendment to Letter of Intent with TJM Electronics West, Inc.

dated effective August 31, 2021

Purchase Agreement dated September 8, 2021 with TJM Electronics West, Inc.

Agreement dated September 21, 2021 with the Arizona Board of Regents

Purchase Agreement with TerraData Unmanned, PLLC dated effective October 1, 2021

Agreement with CADG Engineering Pte Ltd dated effective October 5, 2021

Financing Agreement with GHS Investments LLC dated November 9, 2021

Rights Agreement with GHS Investments LLC dated November 9, 2021

Stock Purchase Agreement dated September 8, 2021 with TJM Electronics West, Inc.

Research Agreement dated September 21, 2021 with the Arizona Board of Regents

Membership Purchase Agreement with TerraData Unmanned, PLLC dated effective October 1, 2021

Teaming Agreement with CADG Engineering Pte Ltd dated effective October 5, 2021

Equity Financing Agreement with GHS Investments LLC dated November 9, 2021

Registration Rights Agreement with GHS Investments LLC dated November 9, 2021

Investor Relations Agreement dated December 15, 2021 with RedChip Companies, Inc.

from Boyle CPA Dated January 28, 2022 Regarding Change in Certifying Accountant

of Subsidiaries

of Boyle CPA, independent registered public accounting firm

Rule 13a-14(a) Certification by Principal Executive Officer and Principal Financial and Accounting

Section 1350 Certification of Principal Executive Officer and Principal Financial and Accounting

Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded

within the Inline XBRL document)

Equity Financing Agreement with GHS Investments LLC dated May 27, 2022

Registration Rights Agreement with GHS Investments LLC dated May 27, 2022

Amendment No.

1 to the Equity Financing Agreement with GHS Investments LLC dated June 1, 2022

Distributorship Agreement dated effective June 13, 2022 with Multi Net Egypt for Trading

Employment Agreement dated effective April 1, 2022 with Dennis O’Leary

Joint Cooperation Contract dated July 5, 2022 with Salman International Company

Exclusive Commercial Agency Agreement dated July 27, 2022 with Gulf Automation Services & Oilfield Supplies Company [Gasos] LLC

Consulting Agreement dated June 1, 2022 with Dr Ehab M.

Joint Venture Agreement dated September 9, 2022

Purchase Agreement dated October 12, 2022 with Gladstone Sponsor, LLC and Gladstone Acquisition Corp.

Assignment, Assumption, Release and Waiver of the Letter Agreement dated October 12, 2022 with Gladstone Sponsor, LLC and Gladstone Acquisition Corp.

Joinder to the Registration Rights Agreement dated October 12, 2022 with Gladstone Acquisition Corp .

Letter from Boyle CPA Dated January 28, 2022 Regarding Change in Certifying Accountant

Letter from Urish Popeck & Co., LLC Dated January 4, 2023 Regarding Change in Certifying Accountant

List of Subsidiaries

Certification of Chief Executive Officer and Chief Financial Officer

Certification of Chief Executive Officer and Principal Financial Officer

Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

Inline XBRL Taxonomy Extension Schema Document

Inline XBRL Taxonomy Extension Calculation Linkbase Document

Inline XBRL Taxonomy Extension Definition Linkbase Document

Inline XBRL Taxonomy Extension Label Linkbase Document

1 unchanged sentence

Cover Page Interactive Data File (formatted in Inline XBRL, and included in exhibit 101).

* Indicates management contract or compensatory plan or arrangement.

# Certain of the exhibits and schedules to this exhibit have been omitted in accordance with Regulation

S-K Item 601.

The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request.

FORM 10-K SUMMARY

Pursuant to the requirements of section 13 or

15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the

undersigned, thereunto duly authorized.

Pursuant to the requirements of section 13 or 15(d)

of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned,

thereunto duly authorized.

DARKPULSE, INC.

April 15, 2022

June 23, 2023

/s/ Dennis M.

Chairman, Chief Executive Officer and President, and Chief Financial Officer (Principal Executive

Officer, Principal Financial and Accounting Officer)

Chairman, Chief Executive Officer and President, and Chief Financial Officer (Principal Executive Officer, Principal Financial and Accounting Officer)

Pursuant to the requirements of the Securities

Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Registrant and in the capacities

indicated on this 15th day of April 2022.

indicated on this 22nd day of June, 2023.

/s/ Dennis M.

Chairman, Chief Executive Officer, President, Chief Financial Officer, Principal Executive Officer,

Principal Financial Officer, and Principal Accounting Officer

April 15, 2022

Chairman, Chief Executive Officer, President, Chief Financial Officer, Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer

June 23, 2023

Anthony Brown

April 15, 2022

June 23, 2023

Anthony Brown

/s/ Carl Eckel

April 15, 2022

/s/ Craig Atkin

June 23, 2023

DARKPULSE, INC.

2 unchanged sentences

and for the Years Ended December 31, 2022 and 2021

Report of Independent Registered Public Accounting Firm (2021 PCAOB ID 1013 ) (2020 PCAOB

Report of Independent Registered Public Accounting Firm

(Mazars USA LLP, Fort Washington, PA., (PCAOB ID 339 )

Report of Independent Registered Public Accounting Firm (Urish

Popeck & Co., LLC, PCAOB ID 1013) 2021

Consolidated Balance Sheets

1 unchanged sentence

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Stockholders’ Deficit

Consolidated Statements of Stockholders’ (Deficit) Equity

Consolidated Statements of Cash Flows

Notes to the Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

Notes to the Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of DarkPulse,

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated

balance sheet of DarkPulse, Inc.

(the “Company”) as of December 31, 2022, and the related consolidated statements of operations,

comprehensive loss, stockholders’ (deficit) equity, and cash flows for the year ended December 31, 2022, and the related notes (collectively

referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects,

the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year then

ended, in conformity with accounting principles generally accepted in the United States of America.

Substantial Doubt about the Company’s

Ability to Continue as a Going Concern

The accompanying financial statements have been

prepared assuming that the Company will continue as a going concern.

As discussed in Note 3 to the financial statements, the Company has

incurred significant operating losses and negative cash flows.

The Company also has an accumulated deficit of approximately $46.6 million

at December 31, 2022.

The Company is dependent on obtaining additional working capital funding from the sale of equity and/or debt securities

to execute its plans and continue operations.

These conditions raise substantial doubt about the Company’s ability to continue as

a going concern.

Management’s plans regarding those matters are also described in Note 3.

The financial statements do not include

any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility

of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)

and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable

rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged

to perform, an audit of its internal control over financial reporting.

As part of our audit, we are required to obtain an understanding

of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s

internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess

the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond

to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from

the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved challenging, subjective, or

complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken

as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters

or on the accounts or disclosures to which it relates.

Revenue Recognition

As discussed in Note 2 to the financial statements,

the Company recognizes revenue from the sale of services, which consist primarily of advanced technology solutions for integrated communications

and security systems.

At contract inception, the Company assesses the goods and services promised in the contract with customers and identifies

a performance obligation for each, in accordance with ASC 606, Revenue from Contracts with Customers.

To determine the performance obligation,

the Company considers all products and services promised in the contract.

Revenue is recognized over time using the input measure as it

most accurately represents the value of goods and services transferred to the customer.

The primary procedures we performed to address

this critical audit matter included:

· We reviewed the underlying agreements and contracts

and assessed the terms to determine if the performance obligation was met and for the correct amount.

· We recalculated the mathematical accuracy of

· We tested the contract costs to ensure they are

being properly recorded.

· We assessed the adequacy of any loss provisions

by reviewing the Company’s estimated costs to complete contracts and to ensure it is sufficient.

· We recalculated the margins on contracts to ensure they are consistent

over the entire term of the contract and its related performance obligation.

Impairment Analysis

As discussed in Note 8 to the financial statements,

management performed their annual impairment analysis during the year ended December 31, 2022.

As disclosed by management, the determination

of fair value using the income approach requires the use of significant estimates and assumptions, including forecasted revenue growth

rates and discount rates.

The determination of fair value using the market multiples approach requires the use of revenue multiples, as

applicable, based on operating data from guideline publicly traded companies.

If the fair value of the reporting unit is less than its

carrying value, a non-cash impairment charge is recorded in an amount equal to that difference with the loss not to exceed the total amount

of goodwill allocated to the reporting unit.

Additionally, intangible assets subject to amortization were also reviewed for impairment.

An impairment on the intangible assets shall be recognized only if the carrying amount is not recoverable and exceeds its fair value.

The carrying amount of an intangible asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result

from the use and eventual disposal of the asset.

An impairment loss shall be measured as the amount by which the carrying amount of an

intangible asset exceeds its fair value.

As a result of the annual impairment assessment,

the Company concluded that there was impairment to the intangible assets and goodwill in the aggregate of approximately $12.2 million.

The principal considerations for our determination

that performing procedures relating to the impairment analyses is a critical audit matter are the significant judgment by management

when developing the fair value measurements of the reporting unit, which in turn led to a high degree of auditor judgment, subjectivity

and effort in performing procedures and evaluating audit evidence related to management's significant assumptions related to forecasted

revenue growth rates, discount rates, and revenue multiples, as applicable.

In addition, the audit effort involved the use of professionals

with specialized skill and knowledge.

Addressing the matter involved performing procedures

and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures

included, among others (1) testing management’s process for developing the fair value estimates of the reporting units, (2) evaluating

the allocation of assets and liabilities to the reporting units, (3) evaluating the appropriateness of the income and market approaches,

(4) testing the completeness and accuracy of the underlying data used in the income and market multiple approaches, and (5) evaluating

the significant assumptions used by management related to forecasted revenue growth rates, discount rates, and revenue multiples, as applicable.

Evaluating management’s assumptions related to forecasted revenue growth rates involved evaluating whether the assumptions used

by management were reasonable considering (1) the current and past performance of the reporting unit, (2) the actions necessary to achieve

future forecasts, (3) the consistency with external market data, and (4) whether these assumptions were consistent with evidence obtained

in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the income approach

and the discount rates, as well as the selection and calculation of revenue multiples, as applicable.

The primary procedures we performed to address

this critical audit matter included:

· We evaluated and recomputed the methodology used

in connection with the Company’s impairment analysis, including review of the appropriate accounting literature, valuation model,

significant assumptions used, and the completeness and accuracy of the underlying data used;

· With the assistance of our valuation specialists,

we assessed the significant assumptions used by management relating to forecasted revenue growth rates, discount rates, and revenue multiples

as applicable.;

· We assessed the appropriate interpretation and

application used by management of the FASB’s Accounting Standards Codification for the impairment analysis including topics ASC

350 - Intangibles – Goodwill and Other , ASC 360 - Property, Plant, and Equipment , and ASC 820 – Fair Value

Measurements and Disclosures;

· We evaluated the reasonableness of the Company’s

projections of future cash flows by comparing the assumptions used in the projections to actual results and other information deemed necessary

as well as tested the mathematical accuracy of the calculations;

· We evaluated the adequacy of the Company’s disclosures in the

financial statements related to the impairment.

/s/ Mazars USA LLP

We have served

as the Company’s auditor since 2023.

Fort Washington, PA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and Board of Directors

Of DarkPulse, Inc.

the Financial Statements

We have audited

the accompanying consolidated balance sheet of DarkPulse, Inc.

and its subsidiaries (the “Company”) as of December 31, 2021,

the related consolidated statements of operations, comprehensive loss, stockholders’ deficit, and cash flows for the year ended

December 31, 2021, and the related notes (collectively referred to as the consolidated financial statements).

In our opinion, the consolidated

financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021, and the results

of its operations and its cash flows for the year ended December 31, 2021 , in conformity with accounting principles generally accepted

in the United States of America.

Substantial Doubt about the

Company’s Ability to Continue as a Going Concern – See also Critical Audit Matters Section Below

The accompanying consolidated

financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 3 to the consolidated

financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency at December 31, 2021.

These conditions raise substantial doubt about its ability to continue as a going concern.

Management’s plans in regard to these

matters are also described in Note 3.

The consolidated financial statements do not include any adjustments that might result from the

outcome of this uncertainty.

These consolidated

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s

consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight

Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance

with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether

the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to

have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required

to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness

of the Company’s internal control over financial reporting.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance

sheet of DarkPulse, Inc.

and its subsidiaries (the “Company”) as of December 31, 2021, the related consolidated statements

of operations, comprehensive loss, stockholders’ deficit, and cash flows for the year ended December 31, 2021, and the related notes

(collectively referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly,

in all material respects, the financial position of the Company at December 31, 2021, and the results of its operations and its cash flows

for the year ended December 31, 2021 , in conformity with accounting principles generally accepted in the United States of America.

Substantial Doubt about the Company’s Ability

to Continue as a Going Concern – See also Critical Audit Matters Section Below

The accompanying consolidated financial statements

have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 3 to the consolidated financial statements,

the Company has suffered recurring losses from operations and has a net capital deficiency at December 31, 2021.

These conditions raise

substantial doubt about its ability to continue as a going concern.

Management’s plans in regard to these matters are also described

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility

of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements

based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)

and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable

rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards

of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated

financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we

engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding

of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s

internal control over financial reporting.

Accordingly, we express no such opinion.

6 unchanged sentences

management, as well as evaluating the overall presentation of the consolidated financial statements.

that our audit provides a reasonable basis for our opinion.

We believe that our audit provides

a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below

are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated

The critical audit matters communicated below are

matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated

to the audit committee and that:

8 unchanged sentences

the Company had convertible debentures that required accounting considerations and significant estimates.

The Company determined that variable conversion

features issued in connection with certain convertible debentures required derivative liability classification.

These variable conversion

features were initially measured at fair value and subsequently have been remeasured to fair value at each reporting period.

determined the fair value of the embedded derivatives using the Black-Scholes-Merton option pricing model.

The value of the embedded derivative

liabilities related to the convertible debentures was $533,753 at December 31, 2021.

We identified the accounting considerations and

related valuations, including the related fair value determinations of the embedded derivative liabilities of such as a critical audit

The Company determined that variable conversion features

issued in connection with certain convertible debentures required derivative liability classification.

These variable conversion features

were initially measured at fair value and subsequently have been remeasured to fair value at each reporting period.

The Company determined

the fair value of the embedded derivatives using the Black-Scholes-Merton option pricing model.

The value of the embedded derivative liabilities

related to the convertible debentures was $533,753 at December 31, 2021.

We identified the accounting considerations and related

valuations, including the related fair value determinations of the embedded derivative liabilities of such as a critical audit matter.

Our audit procedures related to the Company’s

accounting considerations and significant estimate included the following, among others:

· We reviewed the accounting considerations made

by the Company in determining the nature of the various features;

· We evaluated of the potential derivatives and

potential bifurcation in the instruments;

· We evaluated the determination of the fair value

of the various debt and equity instruments and the conversion features that include valuation models and assumptions utilized by management

against current accounting guidance.

· We tested the mathematical accuracy of management’s

calculations related to the estimate.

We reviewed the accounting considerations made by the Company in determining the nature of the various features;

We evaluated of the potential derivatives and potential bifurcation in the instruments;

We evaluated the determination of the fair value of the various debt and equity instruments and the conversion features that include valuation models and assumptions utilized by management against current accounting guidance.

We tested the mathematical accuracy of management’s calculations related to the estimate.

Auditing these elements is especially challenging

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specialized skill or knowledge needed.

Going Concern Uncertainty – See also

Going Concern Uncertainty explanatory paragraph above

Going Concern Uncertainty – See also Going

Concern Uncertainty explanatory paragraph above

As described further in Note 3 to the consolidated

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assertion on its ability to continue as a going concern included the following, among others:

· We performed testing procedures such as analytical procedures

to identify conditions and events that indicate that there could be substantial doubt about the Company’s ability to continue

as a going concern for a reasonable period of time.

· We reviewed and evaluated management's plans

for dealing with adverse effects of these conditions and events.

· We inquired of Company management and reviewed

company records to assess whether there are additional factors that contribute to the uncertainties disclosed.

· We assessed whether the Company’s determination

that there is substantial doubt about its ability to continue as a going concern was adequately disclosed.

We performed testing procedures such as analytical procedures to identify conditions and events that indicate that there could be substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time.

We reviewed and evaluated management's plans for dealing with adverse effects of these conditions and events.

We inquired of Company management and reviewed company records to assess whether there are additional factors that contribute to the uncertainties disclosed.

We assessed whether the Company’s determination that there is substantial doubt about its ability to continue as a going concern was adequately disclosed.

Revenue Recognition

The Company recognizes revenue upon transfer of

control of promised services to customers in an amount that reflects the consideration the Company expects to receive in exchange for

those services.

Significant judgment is exercised by the Company

in determining revenue recognition for customer agreements, and include the pattern of delivery (i.e., timing of when revenue is recognized)

The Company recognizes revenue upon transfer of control

of promised services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those services.

Significant judgment is exercised by the Company in

determining revenue recognition for customer agreements, and include the pattern of delivery (i.e., timing of when revenue is recognized)

for each distinct performance obligation.

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judgments in determining revenue recognition for customer agreements required a high degree of auditor judgment.

Our principal audit procedures related to the

Company’s revenue recognition for customer agreements included the following:

· We gained an understanding of internal controls

related to revenue recognition.

· We evaluated management’s significant accounting

policies for reasonableness.

· We selected a sample of revenues recognized and

performed the following procedures:

o Obtained and read contract source documents for each selection and other documents that were part of the

agreement, if applicable.

o Assessed the terms in the customer agreement and evaluated the appropriateness of management’s application

of their accounting policies, along with their use of estimates, in the determination of revenue recognition conclusions.

o We tested the mathematical accuracy of management’s calculations

of revenue and the associated timing of revenue recognized in the financial statements.

Business Combinations – Valuation

of Intangible Assets

Our principal audit procedures related to the Company’s

revenue recognition for customer agreements included the following:

We gained an understanding of internal controls related to revenue recognition.

We evaluated management’s significant accounting policies for reasonableness.

We selected a sample of revenues recognized and performed the following procedures:

Obtained and read contract source documents for each selection and other documents that were part of the agreement, if applicable.

Assessed the terms in the customer agreement and evaluated the appropriateness of management’s application of their accounting policies, along with their use of estimates, in the determination of revenue recognition conclusions.

We tested the mathematical accuracy of management’s calculations of revenue and the associated timing of revenue recognized in the financial statements.

Business Combinations – Valuation of Intangible

As described in note 4 of the Consolidated Financial

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with specialized skill and knowledge to assist in performing these procedures and evaluating the conclusions.

Our principal audit procedures to evaluate the

valuation of intangible assets included the following:

· We read the purchase agreements used in the underlying

acquisitions and utilized by the Company to allocate the purchase price.

· We obtained the valuation reports prepared by

management’s third-party expert.

· Utilized professionals with specialized skill

and knowledge to evaluate the reasonableness of the methodology, assumptions, including the discount rate and weighted average cost of

capital, as compared to their experience and publically available market data.

· Considered the reasonableness of the overall

allocation of the total purchase price.

Our principal audit procedures to evaluate the valuation

of intangible assets included the following:

We read the purchase agreements used in the underlying acquisitions and utilized by the Company to allocate the purchase price.

We obtained the valuation reports prepared by management’s third-party expert.

Utilized professionals with specialized skill and knowledge to evaluate the reasonableness of the methodology, assumptions, including the discount rate and weighted average cost of capital, as compared to their experience and publicly available market data.

Considered the reasonableness of the overall allocation of the total purchase price.

/s/ Urish Popeck & Co., LLC

We have served as the Company's auditor since 2021.

April 15, 2022

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

To the Shareholders and Board of Directors of

DarkPulse, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated

balance sheets of DarkPulse, Inc.

(the “Company”) as of December 31, 2020, the related consolidated statements of operations,

stockholders’ deficit, and cash flows for the year then ended, and the related notes (collectively referred to as the “financial

statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company

as of December 31, 2020, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles

generally accepted in the United States of America.

Substantial Doubt About the

Company’s Ability to Continue as a Going Concern

in Note 3 to the consolidated financial statements, the Company’s net losses, lack of revenues, and working capital deficiency raise

substantial doubt about its ability to continue as a going concern for one year from the issuance of these financial statements.

plans are also described in Note 3.

The financial statements do not include adjustments that might result from the outcome of this uncertainty.

Basis of Opinion

These financial statements are the responsibility

of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)

and are required to be independent with respect to the Company in accordance with U.S.

federal securities laws and the applicable rules

and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with standards

of the Public Company Accounting Oversight Board (United States).

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to fraud or error.

is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit

we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion

on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess

the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond

to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ Boyle CPA, LLC

We have served as the Company’s auditor from 2019 through 2022

Pittsburgh, PA

April 15, 2022

DARKPULSE, INC.

Consolidated Balance Sheets

Consolidated Balance

CURRENT ASSETS:

Accounts receivable, net

Unbilled revenue

Other current assets

Contract assets

Due from related party

Prepaid expenses and other current assets

TOTAL CURRENT ASSETS

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Operating lease right-of-use assets

Intangible assets

Notes receivable, related party

Investment in related party (see Note 17)

Joint venture

Intangible assets, net

Other assets, net

TOTAL NON-CURRENT ASSETS

LIABILITIES AND STOCKHOLDERS' DEFICIT

LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY

CURRENT LIABILITIES:

Accounts payable and accrued liabilities

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

Notes payable

Customer deposits

Derivative liability

Accounts payable and accrued expenses

Contract liabilities

Loss provision for contracts in progress

Convertible notes, net

Notes payable, current

Derivative liability

Loan payable, current

Loan payable, related party

Secured debenture, current

Operating lease liabilities - current

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Commitments and contingencies

STOCKHOLDERS’ DEFICIT:

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

STOCKHOLDERS’ (DEFICIT) EQUITY:

Series A Super Voting preferred stock, par value $ 0.01 ;

shares designated, 100

shares issued and outstanding at December 31, 2022 and 2021, respectively

Convertible preferred stock - Series D, par value $ 0.01 ,

shares designated, 88,235

shares issued and outstanding as of both December 31, 2022 and 2021

Common stock, par value $ 0.0001 , 20,000,000,000

shares authorized, 6,427,495,360

88,235 issued and outstanding at December 31, 2021 and, 2020, respectively)

Common stock (par value $ 0.0001 ), 20,000,000,000 shares authorized,

5,197,821,885 and 4,088,762,151 shares issued and outstanding at December 31, 2021 and, 2020, respectively

Treasury stock, 100,000 shares at December 31, 2021 and 2020

Paid-in capital in excess of par value

Non-controlling interest in variable interest entity and subsidiary

Accumulated other comprehensive income

Accumulated deficit

and 5,197,921,885

shares issued as of December 31, 2022 and 2021, respectively, 6,427,395,360 and 5,197,821,885 shares outstanding as of December 31,

2022 and 2021, respectively

Treasury stock at cost, 100,000

shares at December 31, 2022 and 2021

Additional paid-in capital

Non-controlling interests

Accumulated other comprehensive loss

( 1,137,902 )

Accumulated deficit

( 46,555,334 )

TOTAL STOCKHOLDERS’ DEFICIT

( 11,276,490 )

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT

See accompanying notes to consolidated financial

TOTAL STOCKHOLDERS’ (DEFICIT) EQUITY

TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY

See accompanying notes to consolidated financial statements.

DARKPULSE, INC.

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of Operations

For the Year Ended

COST OF GOODS SOLD

OPERATING EXPENSES:

COST OF REVENUES

GROSS PROFIT (LOSS)

( 5,443,274 )

OPERATING (INCOME) EXPENSES:

Selling, general and administrative

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Depreciation and amortization

Impairment expense

Gain on forgiveness of payables

Debt transaction expenses

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( 35,063,956 )

( 8,848,020 )

OTHER INCOME (EXPENSE):

Interest expense

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

Gain (Loss) on convertible notes

Gain on forgiveness of debt

Change in fair market of derivative liabilities

Gain on forgiveness of liabilities

Loss on equity investment

Loss on convertible notes

Foreign currency exchange rate variance

TOTAL OTHER INCOME (EXPENSE)

TOTAL OTHER (EXPENSE) INCOME

$ ( 35,517,505 )

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

and subsidiary

Net loss attributable to Company stockholders

$ ( 4,826,320 )

Net loss attributable to noncontrolling interests

Net loss attributable to Darkpulse, Inc.

$ ( 35,278,844 )

LOSS PER SHARE

Basic and Diluted

WEIGHTED AVERAGE SHARES OUTSTANDING:

Basic and Diluted

$ ( 4,692,618 )

Net loss per share - basic and diluted

Weighted average common shares outstanding - basic and diluted

5,713,495,965

See accompanying notes to consolidated financial

4,775,929,690

accompanying notes to consolidated financial statements.

DARKPULSE, INC.

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of Comprehensive Loss

For the Year Ended

$ ( 35,517,505 )

$ ( 4,826,320 )

OTHER COMPREHENSIVE LOSS

Unrecognized Gain (Loss) on Foreign Exchange

OTHER COMPREHENSIVE (LOSS) INCOME

Foreign currency translation

COMPREHENSIVE LOSS

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$ ( 4,799,781 )

See accompanying notes to consolidated financial

accompanying notes to consolidated financial statements.

DARKPULSE, INC.

Consolidated Statement

of Stockholders' Deficit

For the Years Ended December 31, 2021 and 2020

of Stockholders’ (Deficit) Equity

Preferred stock

Controlling Interest in

Accumulated Other Comprehensive

Accumulated other

Total stockholders’

Balance, December 31, 2019

1,392,042,112

Treasury stock

comprehensive

B alance, December 31, 2020

4,088,762,151

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Conversion of convertible notes

2,696,720,039

Common stock issued for cash

Common stock issued for acquisitions

Stock based compensation

Foreign currency adjustment

( 4,826,320 )

Change to Par Value

( 4,826,320 )

Closing of DarkPulse East LLC

Foreign currency adjustment

Balance, December 31, 2021

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( 11,276,490 )

$ ( 3,932,205 )

Conversion of convertible notes

Common stock issued for cash

Common stock issued for acquisitions

Stock based compensation

1,259,746,466

Common shares returned and cancelled

( 33,898,377 )

Issuance of common stock to settle accounts payable

Issuance of preferred shares

Foreign currency adjustment

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$ ( 46,555,334 )

See accompanying notes to consolidated financial

$ ( 328,994 )

See accompanying

notes to consolidated financial statements.

DARKPULSE, INC.

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of Cash Flows

the Year Ended

Cash flows from operating activities:

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$ ( 4,826,320 )

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

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

Depreciation and amortization

Gain on forgiveness of payables and liabilities

Gain on forgiveness of liabilities

( 3,488,860 )

Change in fair market of derivative liabilities

Impairment of goodwill and intangible assets

Loss on equity investment

Loan acquisition costs

Stock based compensation

Gain on reduction of loan default penalty

Gain on extinguishment of debt

( 3,488,860 )

Operating lease expense

( 1,346,808 )

Amortization of debt discount

Derivative liability

Changes in operating assets and liabilities:

Accounts receivable

Unbilled revenue

Contract liability

Customer deposits

Contract assets

Prepaid expenses and other assets

Accounts payable and accrued expenses

( 2,041,131 )

Operating lease liabilities

Other current liabilities

Contract liabilities

( 2,609,891 )

Net cash used by operating activities

( 1,288,315 )

Loss provision for contracts in progress

Operating lease liabilities, net

Other liabilities

( 1,556,932 )

( 1,125,843 )

Net cash used in operating activities

( 21,738,542 )

( 11,363,470 )

Cash flows from investing activities:

Purchases of property and equipment

( 2,074,627 )

Investment in related party

( 1,500,000 )

Investment in joint venture

Issuance of note receivable, related party

( 1,049,248 )

Advances to related party

Business acquisitions, net of cash received

Capitalized patents

Net cash used by investing activities

Net cash used in investing activities

( 5,045,405 )

( 1,689,153 )

Cash flows from financing activities:

Proceeds from sale of common stock

Proceeds from sale of common stock, net of fees

Proceeds from convertible debentures

Repayments of convertible debentures

Proceeds from related party notes payable

Proceeds from notes payable

Net Repayments of loan payable

Net cash provided by financing activities

NET INCREASE (DECREASE) IN CASH

Net change in cash and cash equivalents

( 2,618,146 )

Effect of exchange rate on cash

CASH, beginning of year

CASH, end of year

Cash at beginning of year

Cash at end of year

Supplemental disclosure of cash flow information:

Cash paid during the year ended December 31:

Non-cash finance and investing activities during the year ended December 31:

Cash paid for income taxes

Cash paid for interest

Non-cash financing and investing activities:

Issuance of common stock per TerraData Acquisition

Issuance of common stock for convertible notes payable and interest

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Non-controlling interest for Wildlife Specialists and Remote Intelligence

See accompanying notes to consolidated financial

accompanying notes to consolidated financial statements.

DARKPULSE, INC.

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Financial Statements

For the Years ended December 31, 2021 and 2020

NOTE 1 – BASIS OF FINANCIAL STATEMENT

Organization and Description of Business

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

and Plan of Merger (the “Merger Agreement” or the “Merger”) involving Klever as the surviving parent corporation

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

as its wholly owned subsidiary.

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

DarkPulse, Inc.

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

to a reverse acquisition.

On July 20, 2018, the Company filed a Certificate

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

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

was changed to DPLS.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies

consistently applied in the preparation of the accompanying financial statements are as follows:

Basis of Presentation and Principles of

Consolidation

The Company’s consolidated financial statements

are prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”).

The consolidated

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

All material intercompany balances and transactions

have been eliminated in consolidation.

Our consolidated financial statements as of December

31, 2021 and 2020 include the accounts of DarkPulse Inc.

For the Years ended December

31, 2022 and 2021

NOTE 1 – BASIS

OF FINANCIAL STATEMENT PRESENTATION

and 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.

The Company’s

subsidiaries consist of Optilan HoldCo 3 Limited, a company headquartered in Coventry, United Kingdom (“Optilan”) whose

focus is in telecommunications, energy, rail, critical network infrastructure, pipeline integrity systems, renewables and security;

Intelligence, LLC, a company headquartered in Pennsylvania who provides unmanned aerial drone and unmanned ground crawler (UGC) services

to a variety of clients from industrial mapping and ecosystem services, to search and rescue, to pipeline security;

Wildlife Specialists,

LLC, a company headquartered in Pennsylvania who provides clients with comprehensive wildlife and environmental assessment, planning,

and monitoring services;

TerraData Unmanned, PLLC, a company headquartered in Florida who custom manufactures NDAA compliant drones and

unmanned ground crawlers to meet the needs of its customers;

and TJM Electronics West, Inc., a company headquartered in Arizona who is

manufacturer and tester of advanced electronics, cables and sub-assemblies specializing in advanced package and complex CCA and

NOTE 2 – SIGNIFICANT

ACCOUNTING POLICIES

the significant accounting policies consistently applied in the preparation of the accompanying financial statements are as follows:

of Presentation and Principles of Consolidation

The Company’s

consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“US

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

intercompany balances and transactions have been eliminated in consolidation.

Our consolidated

financial statements as of December 31, 2022 and 2021 include the accounts of DarkPulse Inc.

and its subsidiaries:

DarkPulse Technologies Inc.

a New Brunswick, Canada corporation, a wholly owned subsidiary, incorporated December 16, 2010.

DPTI owns 100% of DarkPulse Technology Holdings

Inc., a New York corporation, incorporated July 6, 2017.

DPTI indirectly owns 37.572% of DarkPulse Technologies

International Inc., ("DPTINY") a New York corporation, incorporated on September 7, 2017.

On or about September 18, 2017, DPTI

entered into a shareholder agreement with three investors, whereby DPTI would own 50.2% of DPTINY and the investors would own 49.8%.

On or about October 3, 2017, another investor entered into an agreement with DPTINY to fund it $37,500 for a 0.5% equity interest in

On December 26, 2017, DPTI’s CEO incorporated another corporation named DarkPulse Technologies International Inc., ("DPTIDel")

in the State of Delaware.

On or about April 16, 2018, seven investors and DPTI entered into a new agreement whereby it was agreed that

the investors would own 62.428% of DPTIDel, and the September 18, 2017 agreement with respect to DPTINY was considered null and void.

Accordingly, the funding of $37,500 to DPTINY in October 2017 has been converted to an equity interest in DPTIDel as of April 2018.

of April 16, 2018, DPTI owns approximately 37.572% of the shares of common stock of DPTIDel and 100% of the issued shares of Series A

Preferred Stock of DPTIDel, pursuant to which the Company controls both DPTIDel and DPTINY.

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

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

On August 30, 2021, the Company closed two

separate Membership Interest Purchase Agreements 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 the Company agreed to pay to the majority shareholder of each of RI and WS an aggregate

of 15,000,000

DarkPulse Technologies

(“DPTI”), a New Brunswick, Canada corporation, a wholly owned subsidiary, incorporated December 16, 2010.

DPTI owns 100%

of DarkPulse Technology Holdings Inc., a New York corporation, incorporated July 6, 2017.

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.

In connection with the acquisition,

the Company acquired $ 14,828,459 in assets and assumed liabilities totaling $ 25,179,320 .

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

Refer to Note 4 for the assets acquired and liabilities assumed of Optilan.

30, 2021, the Company closed two separate Membership Interest Purchase Agreements 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 the Company agreed to pay to the majority shareholder of each of RI and WS an aggregate of

shares of the Company’s Common Stock and $ 1,000,000

1 unchanged sentence

ownership of each of RI and WS.

On September 8, 2021, the Company entered into

and closed the Stock Purchase Agreement 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 .

Effective October 1, 2021 the Company entered

into and closed the Membership Purchase Agreement with TerraData Unmanned, PLLC, a Florida limited liability company (“ TerraData ”),

and Justin Dee, the sole shareholder of TerraData, pursuant to which the Company agreed to purchase 60 %

8, 2021, the Company entered into and closed the Stock Purchase Agreement 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 .

October 1, 2021 the Company entered into and closed the Membership Purchase Agreement with TerraData Unmanned, PLLC, a Florida

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

Company agreed to purchase 60 %

of the equity interests in TerraData in exchange for 3,725,386

shares of the Company’s Common Stock and $ 400,000 .

Use of Estimates

In preparing the consolidated financial statements,

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

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

Actual results may differ significantly from

those estimates.

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

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

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

The Company evaluates its relationships with other

entities to identify whether they are variable interest entities (“VIE”) as defined by Financial Accounting Standards Board

(“FASB”) Accounting Standards Codification (“ASC”) Topic 810, Consolidation (“ASC 810”), and

to assess whether it is the primary beneficiary of such entities.

If the determination is made that the Company is the primary beneficiary,

then that entity is consolidated.

The preparation of the Company’s financial

statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and

liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of

revenues and expenses during the reporting period.

Significant estimates and assumptions reflected in these financial statements include,

but are not limited to, assumptions used to calculate derivative liabilities, revenue recognition and impairment of long-lived assets.

The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes

to be reasonable under the circumstances.

On an ongoing basis, management evaluates its estimates when there are changes in circumstances,

facts and experience.

Changes in estimates are recorded in the period in which they become known.

Actual results could differ from those

Reclassifications

Certain amounts in the Company’s prior

year consolidated financial statements have been reclassified to conform to their current year presentation.

reclassifications are primarily due to contract related assets and liabilities.

In addition, certain other assets of $560,760 were

reclassified from current to long-term and certain liabilities of $185,247 were reclassified from long-term to current.

result of these reclassifications, our working capital deficit increased by $746,006 as compared to amounts previously

There were no changes to previously reported total assets, total liabilities, or equity.

There were no changes

to previously reported operating or net loss and no changes to previously reported cash flows from operating, investing, or

financing activities.

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 a financial institution,

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

As of December 31, 2022,

there was $ 640,614 of cash held at the US entities in excess of federally insured limits.

Accounts Receivable

Accounts receivable

and contract assets include amounts billed to customers under the terms and provisions of the contracts.

Most billings are determined

based on contractual terms.

As is common practice in the industry, the Company classifies all accounts receivable and contract assets,

including retainage, as current assets.

The contracting cycle for certain long-term contracts may extend beyond one year, and accordingly,

collection of retainage on those contracts may extend beyond one year.

Contract assets include amounts billed to customers under retention

provisions in construction contracts.

Such provisions are standard in the Company’s industry and usually allow for a portion of

progress billings on the contract price, typically 5-10%, to be withheld by the customer until after the Company has completed work on

Billings for such retention balances at each balance sheet date are finalized and collected after project completion.

unbilled amounts will be billed and collected within one year.

The Company determined that there are no material amounts due past one

year and no material amounts billed but not expected to be collected within one year.

Each month, the Company reviews

its receivables on a customer-by-customer basis and evaluates whether an allowance for doubtful accounts is necessary based on any known

or perceived collection issues.

Any balances that are eventually deemed uncollectible are written off against the allowance after all

means of collection have been exhausted and the potential for recovery is considered remote.

As of December 31, 2022 and 2021, the

Company determined that the allowance for doubtful accounts was $ 3,320,983 and $ 3,365,293 , respectively.

Accounts receivable

includes retainage amounts for the portion of the contract price earned by us for work performed but held for payment by the customer

as a form of security until we reach certain construction milestones or complete the project.

As of December 31, 2022 and 2021, retainage

receivable was $824,777 and $497,773, respectively.

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.

as the functional currency, as well as the Turkish lira, Emiraes Dirham, Azerbajani Manat and Indian Rupee.

The accounts of one of the

Company’s subsidiaries is maintained using the appropriate local currency, Canadian Dollar (“CAD”) as the functional

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

for the year ended December 31, 2021 closing rate at 1.353583

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 as foreign currency exchange variance.

relevant translation rates are as follows:

for the year ended December 31, 2022 a closing rate at 1.20582

GBP, average rate at 1.23710

US$:GBP and for the Optilan acquisition closing rate at 1.38138 US$:

The relevant translation rates are as follows:

for the year ended December 31, 2021 closing rate at 1.2794 US$:

CAD, average rate at 1.2534 US$:CAD and for the year ended December

31, 2020 closing rate at 1.2754 US$:

CAD, average rate at 1.3388 US$:CAD.

US$:GBP, and closing rate of 1.375103

relevant translation rates are as follows:

for the year ended December 31, 2021 a closing rate at 1.353583 US$:

GBP, average rate at 1.375671 US$:GBP

and for the Optilan acquisition closing rate at 1.38138

Long-Lived Assets and Goodwill

The Company accounts for long-lived assets in

accordance with the provisions of ASC 360-10-35, Property, Plant and Equipment, Impairment or Disposal of Long-lived Assets.

This accounting

standard requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying

amount may not be recoverable.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an

asset to future undiscounted net cash flows expected to be generated by the asset.

If the carrying amount of an asset exceeds its estimated

future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value

of the asset.

The Company accounts for goodwill and intangible

assets in accordance with ASC 350, Intangibles – Goodwill and Other.

Goodwill represents the excess of the purchase price of an

entity over the estimated fair value of the assets acquired and liabilities assumed.

ASC 350 requires that goodwill and other intangibles

with indefinite lives be tested for impairment annually or on an interim basis if events or circumstances indicate that the fair value

of an asset has decreased below its carrying value.

During the fourth quarter of 2020, the Company adopted ASU No.

2017-04, Intangibles

– Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment.

accounts for long-lived assets in accordance with the provisions of ASC 360-10-35, Property, Plant and Equipment, Impairment or Disposal

of Long-lived Assets.

This accounting standard requires that long-lived assets be reviewed for impairment whenever events or changes

in circumstances indicate that the carrying amount may not be recoverable.

Recoverability of assets to be held and used is measured by

a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset.

If the carrying

amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount

of the asset exceeds the fair value of the asset.

Indefinite-lived

intangible assets established in connection with business combinations consist of the tradename.

The impairment test for identifiable

indefinite-lived intangible assets consists of a comparison of the estimated fair value of the intangible asset with its carrying value.

If the carrying value exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.

accounts for goodwill and intangible assets in accordance with ASC 350, Intangibles – Goodwill and Other .

Goodwill represents

the excess of the purchase price of an entity over the estimated fair value of the assets acquired and liabilities assumed.

ASC 350 requires

that goodwill and other intangibles with indefinite lives be tested for impairment annually or on an interim basis if events or circumstances

indicate that the fair value of an asset has decreased below its carrying value.

This guidance simplifies the accounting for goodwill

impairment by removing Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation.

Goodwill impairment

will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of

The adoption of this standard had no material impact on the Consolidated Financial Statements.

During fiscal 2021 and 2020,

the Company recorded no impairments.

Intangible Assets - Intrusion Detection Intellectual

The Company relies on patent laws and restrictions

on disclosure to protect its intellectual property rights.

As of December 31, 2021, the Company held three U.S.

and foreign patents on

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

The DPTI issued patents cover a System and Method

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

System Sensor and Method.

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

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

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

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

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

Further, the Company may be

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

in substantial costs and diversion of management's attention.

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

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

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

For the year ended December 31, 2021, the Company

had patent amortization costs on its intrusion detection technology totaling $ 51,028 .

Patents costs are being amortized over the remaining

life of each patent, which is from 7 to 16 years.

The DPTI issued patents cover a System and Method

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

System Sensor and Method.

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

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

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

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

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

Further, the Company may be

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

in substantial costs and diversion of management's attention.

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

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

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

The following is a summary

of activity related to the DPTI patents for the year ended December 31, 2021:

Intangible Assets

Balance at January 1, 2021

Balance at December 31, 2021

The following is a summary of the DPTI patents

as of December 31, 2021:

Historical cost

Accumulated amortization

Carrying Value

Future expected amortization of intangible

assets is as follows:

Future expected amortization of intangible assets

Year Ending December 31,

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.

The quantitative

impairment test calculates any goodwill impairment as the difference between the carrying amount of a reporting unit and its fair value,

but not to exceed the carrying amount of goodwill.

It is our practice, at a minimum, to perform a qualitative or quantitative goodwill

impairment test in the fourth quarter every year.

The Company has one reporting unit it evaluates during its impairment test.

During the year ended December 31, 2022, management

determined that certain events and circumstances occurred that indicated that the carrying amount of the Company’s reporting unit

may not be recoverable.

The qualitative assessment was primarily due to underperformance of the Company’s subsidiaries as compared

to the Company’s initial projections at the time of each respective acquisition.

Specifically, in 2022 the Company determined that

certain revenue targets would not be achieved and anticipated costs to complete projects were higher than forecasted.

As such, the Company

compared the fair value of the reporting unit to the carrying amounts and recorded an impairment loss of $12,222,598 pertaining to impairment

and goodwill in the consolidated statements of operations.

The Company recorded impairment of the indefinite-lived intangible asset of

$2,703,456, and impairment of goodwill of $9,519,143.

The Company has one reporting unit which was evaluated in the impairment test noted

Refer to Notes 4 and 8.

In determining

the fair value of the reporting unit, management estimated the price that would be received to sell the reporting unit as a whole in an

orderly transaction between market participants at the measurement date.

This includes reviewing market comparables such as revenue multipliers

and assigning certain assets and liabilities to the reporting units, such as the respective working capital deficits of each entity and

debt obligations that would need to be assumed by a market participant buyer in an orderly transaction.

The Company calculated the carrying

amounts of the reporting unit by utilizing the entities’ assets and liabilities at December 31, 2022, including the carrying value

of the identifiable intangible assets and goodwill assigned to the respective reporting unit.

and Equipment

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.

Fully depreciated assets are retained in the property and equipment, and accumulated depreciation accounts until they are removed from

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:

The estimated

useful lives of property and equipment are generally as follows:

Schedule of estimated useful lives

3 unchanged sentences

Motor vehicles

Revenue Recognition

The Company’s revenues are generated primarily

from the sale of our products, which consist primarily of advanced technology solutions for integrated communications and security systems.

At contract inception, we assess the goods and services promised in the contract with customers and identify a performance obligation

To determine the performance obligation, we consider all products and services promised in the contract regardless of whether

they are explicitly stated or implied by customary business practices.

The timing of satisfaction of the performance obligation is not

subject to significant judgment.

We measure revenue as the amount of consideration expected to be received in exchange for transferring

goods and services.

We generally recognize product revenues at the time of shipment, provided that all other revenue recognition criteria

have been met.

The Company recognizes revenue when its customer

obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for

those goods or services.

To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606,

we perform the following five steps:

The Company’s

revenues are generated primarily from the sale of our services, which consist primarily of advanced technology solutions for integrated

communications and security systems, as well as habitat management.

The Company’s sales of products are primarily generated from

our TJM subsidiaries.

Sales of products and services are separate from one another.

At contract inception, we assess the goods and services

promised in the contract with customers and identify a performance obligation for each.

To determine the performance obligation, we consider

all products and services promised in the contract regardless of whether they are explicitly stated or implied by customary business practices.

The timing of satisfaction of the performance obligation is not subject to significant judgment.

We measure revenue as the amount of consideration

expected to be received in exchange for transferring goods and services.

We recognize service revenues as the performance obligations

are met, which is generally as milestones are satisfied over time.

We generally recognize product revenues at the time of shipment, provided

that all other revenue recognition criteria have been met.

recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which

we expect to receive in exchange for those goods or services.

To determine revenue recognition for arrangements that the Company determines

are within the scope of ASC 606, we perform the following five steps:

(i) identify the contract(s) with a customer;

(ii) identify the performance obligations in the contract;

(ii) identify the

performance obligations in the contract;

(iii) determine the transaction price;

(iv) allocate the transaction price to the performance obligations in the contract;

and (v) recognize

revenue when (or as) we satisfy a performance obligation.

The five-step model is applied to contracts when it is probable that we will

collect the consideration we are entitled to in exchange for the goods or services transferred to the customer.

At contract inception,

once the contract is determined to be within the scope of ASC 606, we assess the goods or services promised within each contract and

determine those that are performance obligations and assess whether each promised good or service is distinct.

We then recognize revenue

in the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation

is satisfied.

In accordance with ASU No.

2016-12, Revenue

from Contracts with Customers (Topic 606):

Narrow-Scope Improvements and Practical Expedient , which is to (1) clarify the objective

of the collectability criterion for applying paragraph 606-10-25-7;

(2) permit an entity to exclude amounts collected from customers

for all sales (and other similar) taxes from the transaction price;

(3) specify that the measurement date for noncash consideration is

contract inception;

(4) provide a practical expedient that permits an entity to reflect the aggregate effect of all modifications that

occur before the beginning of the earliest period presented when identifying the satisfied and unsatisfied performance obligations, determining

the transaction price, and allocating the transaction price to the satisfied and unsatisfied performance obligations;

(5) clarify that

a completed contract for purposes of transition is a contract for which all (or substantially all) of the revenue was recognized under

legacy GAAP before the date of initial application, and (6) clarify that an entity that retrospectively applies the guidance in Topic

606 to each prior reporting period is not required to disclose the effect of the accounting change for the period of adoption.

The amendments

of this ASU are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years.

no impact as a result of adopting this ASU on the financial statements and related disclosures.

Based on the terms and conditions of

the product arrangements, the Company believes that its products and services can be accounted for separately as its products and services

have value to the Company’s customers on a stand-alone basis.

When a transaction involves more than one product or service, revenue

is allocated to each deliverable based on its relative fair value;

otherwise, revenue is recognized as products are delivered or as services

are provided over the term of the customer contract.

Contract liabilities is shown separately in the

unaudited consolidated balance sheets as current liabilities.

At December 31, 2021 and December 31, 2020, we had contract liabilities

of $ 3,216,562 and $ 0 , respectively.

Cost of Product Sales and Services

Cost of sales consists primarily of materials,

airtime and overhead costs incurred internally and amounts incurred to contract manufacturers to produce our products, airtime and other

implementation costs incurred to install our products and train customer personnel, and customer service and third-party original equipment

manufacturer costs to provide continuing support to our customers.

There are certain costs which are deferred and recorded as prepaids,

until such revenue is recognized.

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

Concentration of Credit Risk

The Company has no significant concentrations

(iv) allocate the transaction price to the performance

obligations in the contract;

and (v) recognize revenue when (or as) we satisfy a performance obligation.

The five-step model is applied

to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services transferred

to the customer.

At contract inception, once the contract is determined to be within the scope of ASC 606, we assess the goods or services

promised within each contract and determine those that are performance obligations and assess whether each promised good or service is

We then recognize revenue in the amount of the transaction price that is allocated to the respective performance obligation

when (or as) the performance obligation is satisfied.

considers each individual sale of service contract to be its own performance obligation.

Services in the contract are highly interdependent

and interrelated, and the successful completion of each milestone is necessary for the overall success of the contract.

Therefore, each

milestone is not separately identifiable from other promises in the contract, and not distinct and ultimately not individual performance

records revenue over time using the input measure as it is the most faithful depiction of an entity’s performance because it directly

measures the value of the goods and services transferred to the customer.

The Company utilizes the Right to Invoice for these contracts,

as the pricing structure is based on various milestones that are specified in the contract.

These milestones include Construction Phase

Plan, Start of the construction phase, installation phase, site surveys, fiber splicing, recoveries, and closeouts.

There are specified

payments associated with these milestones in the contract, and the value allocated is commensurate with work done.

In the event that there

are advances such as upfront retainers and not based on the value, those are recorded as contract liabilities.

In accordance

2016-12, Revenue from Contracts with Customers (Topic 606):

Narrow-Scope Improvements and Practical Expedient ,

which is to (1) clarify the objective of the collectability criterion for applying paragraph 606-10-25-7;

(2) permit an entity to exclude

amounts collected from customers for all sales (and other similar) taxes from the transaction price;

(3) specify that the measurement

date for noncash consideration is contract inception;

(4) provide a practical expedient that permits an entity to reflect the aggregate

effect of all modifications that occur before the beginning of the earliest period presented when identifying the satisfied and unsatisfied

performance obligations, determining the transaction price, and allocating the transaction price to the satisfied and unsatisfied performance

(5) clarify that a completed contract for purposes of transition is a contract for which all (or substantially all) of the

revenue was recognized under legacy GAAP before the date of initial application, and (6) clarify that an entity that retrospectively applies

the guidance in Topic 606 to each prior reporting period is not required to disclose the effect of the accounting change for the period

The amendments of this ASU are effective for fiscal years beginning after December 15, 2017, and interim periods within those

fiscal years.

There was no impact as a result of adopting this ASU on the financial statements and related disclosures.

Based on the terms

and conditions of the product arrangements, the Company believes that its products and services can be accounted for separately as its

products and services have value to the Company’s customers on a stand-alone basis.

When a transaction involves more than one product

or service, revenue is allocated to each deliverable based on its relative fair value;

otherwise, revenue is recognized as products are

delivered or as services are provided over the term of the customer contract.

Cost of revenues

consists primarily of materials and overhead costs incurred internally and amounts incurred to contract manufacturers to produce

our products, airtime and other implementation costs incurred to install our products and train customer personnel, and customer service

and third-party original equipment manufacturer costs to provide continuing support to our customers.

Cost of revenues also includes

direct labor attributable to revenue service arrangements.

Concentration

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

for its leases under ASC 842, Leases .

Under this guidance, arrangements meeting the definition of a lease are classified as operating

or financing leases, and are recorded on the consolidated balance sheet as both a right of use asset and lease liability, calculated

by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing

Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the

Financial instruments that potentially subject the

Company to concentrations of credit risk consist principally of cash and cash equivalents.

The Company has not experienced any losses

related to its cash and does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial

banking relationships.

As of December 31, 2022, one customer accounted

for 38 % of gross accounts receivable.

accounts for its leases under ASC 842, Leases .

Under this guidance, arrangements meeting the definition of a lease are classified

as operating or financing leases, and are recorded on the consolidated balance sheet as both a right of use asset and lease liability,

calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental

borrowing rate.

Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized

over the lease term.

For operating leases, interest on the lease liability and the amortization of the right of use asset result in straight-line

3 unchanged sentences

Variable lease expenses are recorded when incurred.

In calculating the right of use asset and lease

liability, the Company has elected to combine lease and non-lease components.

The Company excludes short-term leases having initial terms

of 12 months or less from the new guidance as an accounting policy election, and recognizes rent expense on a straight-line basis over

the lease term.

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

The Company measures

its financial assets and liabilities in accordance with the requirements of FASB ASC 820, “Fair Value Measurements and Disclosures”.

As defined in FASB ASC 820, the fair value is the price that would be received to sell an asset or paid to transfer a liability in an

orderly transaction between market participants at the measurement date (exit price).

The Company utilized the market data of similar

entities in its industry or assumptions that market participants would use in pricing the asset or liability, including assumptions about

risk and the risks inherent in the inputs to the valuation technique.

These inputs can be readily observable, market corroborated, or

generally unobservable.

In calculating

the right of use asset and lease liability, the Company has elected to combine lease and non-lease components.

The Company excludes short-term

leases having initial terms of 12 months or less from the new guidance as an accounting policy election, and recognizes rent expense on

a straight-line basis over the lease term.

Financial Instruments

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.

of Financial Instruments

Company measures its financial assets and liabilities in accordance with the requirements of FASB ASC 820, Fair Value Measurements

and Disclosures.

As defined in FASB ASC 820, the fair value is the price that would be received to sell an asset or paid to transfer

a liability in an orderly transaction between market participants at the measurement date (exit price).

The Company utilized the market

data of similar entities in its industry or assumptions that market participants would use in pricing the asset or liability, including

assumptions about risk and the risks inherent in the inputs to the valuation technique.

These inputs can be readily observable, market

corroborated, or generally unobservable.

The Company classifies fair value balances based on the observability of those inputs.

FASB ASC 820 established

a fair value hierarchy that prioritizes the inputs used to measure fair value.

The hierarchy gives the highest priority to unadjusted

quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs

(level 3 measurement) as follows:

Level 1 – Quoted prices are available in

active markets for identical assets or liabilities as of the reporting date.

Active markets are those in which transactions for the asset

or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 1 primarily consists

of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.

Level 2 – Pricing inputs are other than

quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date and includes

those financial instruments that are valued using models or other valuation methodologies.

These models are primarily industry-standard

models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current

market and contractual prices for the underlying instruments, as well as other relevant economic measures.

Substantially all of these

assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are

supported by observable levels at which transactions are executed in the marketplace.

Instruments in this category generally include

non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars.

Level 3 – Pricing inputs include significant

inputs that are generally less observable from objective sources.

These inputs may be used with internally developed methodologies that

result in management’s best estimate of fair value.

The Company accounts for income taxes pursuant

to the provision of ASC 740-10, “Accounting for Income Taxes” (“ASC 740-10”) which requires, among other things,

an asset and liability approach to calculating deferred income taxes.

The asset and liability approach requires the recognition of deferred

tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax

bases of assets and liabilities.

A valuation allowance is provided to offset any net deferred tax assets for which management believes

it is more likely than not that the net deferred asset will not be realized.

The Company follows the provision of ASC 740-10

related to Accounting for Uncertain Income Tax Positions.

When tax returns are filed, there may be uncertainty about the merits of positions

taken or the amount of the position that would be ultimately sustained.

In accordance with the guidance of ASC 740-10, the benefit of

a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes

it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes,

820 established a fair value hierarchy that prioritizes the inputs used to measure fair value.

The hierarchy gives the highest priority

to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable

inputs (level 3 measurement) as follows:

Quoted prices are available in active markets for identical assets or liabilities as of the reporting date.

Active markets are those

in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing

Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.

Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable

as of the reported date and includes those financial instruments that are valued using models or other valuation methodologies.

models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time

value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic

Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be

derived from observable data or are supported by observable levels at which transactions are executed in the marketplace.

in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars.

Pricing inputs include significant inputs that are generally less observable from objective sources.

These inputs may be used with internally

developed methodologies that result in management’s best estimate of fair value.

The Company’s

derivative liability is a Level 3 liability measured at fair value on a recurring basis.

Equity Investments

The Company uses

the equity method to account for investments in which it has the ability to exercise significant influence over the investee’s

operating and financial policies, or in which its holds a partnership or limited liability company interest in an entity with specific

ownership accounts, unless it has virtually no influence over the investee’s operating and financial policies.

The Company follows

the guidance in ASC 323-10-30-2, Joint Ventures, which prescribes the use of the equity method for investments in joint ventures where

the Company has significant influence.

Equity method investments are recorded at cost and are adjusted to recognize (1) the Company’s

share, based on percentage ownership or other contractual basis, of the investee’s net income or loss after the date of investment,

(2) amortization of the recorded investment that exceeds the Company’s share of the book value of the investee’s net assets,

(3) additional contributions made and dividends received, and (4) impairments resulting from other-than-temporary declines in fair value.

Gain (loss) on equity investment includes realized gains or losses upon the sale of the investment and are included as other income (expense)

in the consolidated statements of operations and comprehensive (loss).

ASC 323-10-30-2, Joint Ventures are accounted for using the equity method, in which the Company initially records its investment at cost,

including transaction costs.

Under the equity method, an investment in common stock and in-substance common stock is presented on the

balance sheet of an investor as a single amount.

However, any difference between the cost of the investment and the underlying equity

in net assets of an investee — commonly referred to as a basis difference — should be accounted for as if the investee were

a consolidated subsidiary.

accounts for income taxes pursuant to the provision of ASC 740-10, (“ASC 740-10”) which requires, among other things, an asset

and liability approach to calculating deferred income taxes.

The asset and liability approach requires the recognition of deferred tax

assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases

of assets and liabilities.

A valuation allowance is provided to offset any net deferred tax assets for which management believes it is

more likely than not that the net deferred asset will not be realized.

follows the provision of ASC 740-10 related to Accounting for Uncertain Income Tax Positions.

When tax returns are filed, there may be

uncertainty about the merits of positions taken or the amount of the position that would be ultimately sustained.

In accordance with the

guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all

available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the

resolution of appeals or litigation processes, if any.

Tax positions taken are not offset or aggregated with other positions.

Tax positions that meet the more likely than

not recognition threshold are measured at the largest amount of tax benefit that is more than 50 percent likely of being realized upon

settlement with the applicable taxing authority.

The portion of the benefit associated with tax positions taken that exceed the amount

measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying balance sheet along with

any associated interest and penalties that would be payable to the taxing authorities upon examination.

The Company believes its tax positions are all

more likely than not to be upheld upon examination.

As such, the Company has not recorded a liability for uncertain tax benefits.

The Company has adopted ASC 740-10-25, “Definition

of Settlement”, which provides guidance on how an entity should determine whether a tax position is effectively settled for the

purpose of recognizing previously unrecognized tax benefits and provides that a tax position can be effectively settled upon the completion

and examination by a taxing authority without being legally extinguished.

For tax positions considered effectively settled, an entity

would recognize the full amount of tax benefit, even if the tax position is not considered more likely than not to be sustained based

solely on the basis of its technical merits and the statute of limitations remains open.

The federal and state income tax

returns of the Company are subject to examination by the IRS and state taxing authorities, generally for three years after they are filed.

The Company's U.S.

subsidiaries were incorporated

in 2017, and tax returns have not yet been filed.

The Company does not anticipate a tax liability for the years 2021 and 2020.

has filed tax returns in Canada for the year ended December 31, 2018, and they are still subject to audit.

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

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.

positions that meet the more likely than not recognition threshold are measured at the largest amount of tax benefit that is more than

50 percent likely of being realized upon settlement with the applicable taxing authority.

The portion of the benefit associated with tax

positions taken that exceed the amount measured as described above should be reflected as a liability for uncertain tax benefits in the

accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination.

believes its tax positions are all more likely than not to be upheld upon examination.

As such, the Company has not recorded a liability

for uncertain tax benefits.

has adopted ASC 740-10-25, Definition of Settlement which provides guidance on how an entity should determine whether a tax position

is effectively settled for the purpose of recognizing previously unrecognized tax benefits and provides that a tax position can be effectively

settled upon the completion and examination by a taxing authority without being legally extinguished.

For tax positions considered effectively

settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than not to

be sustained based solely on the basis of its technical merits and the statute of limitations remains open.

The federal and

state income tax returns of the Company are subject to examination by the IRS and state taxing authorities, generally for three years

after they are filed.

The Company's

subsidiaries were incorporated in 2017, and tax returns have not yet been filed.

The Company does not anticipate a tax liability

for the years 2022 and 2021, however may be subject to certain penalties.

The Company has filed tax returns in Canada for the year ended

December 31, 2018, and they are still subject to audit.

Non-controlling Interests

Non-controlling interests

are classified as a separate component of equity in the Company's consolidated balance sheets and statements of changes in stockholders’

Net income (loss) and comprehensive income (loss) attributable to non-controlling interests are reflected separately from consolidated

net income (loss) and comprehensive income (loss) in the consolidated statements of comprehensive income (loss) and statements of changes

in stockholders’ equity.

Any change in ownership of a subsidiary while the controlling financial interest is retained is accounted

for as an equity transaction between the controlling and non-controlling interests.

In addition, when a subsidiary is deconsolidated,

any retained non-controlling equity investment in the former subsidiary will be initially measured at fair value and the difference between

the carrying value and fair value of the retained interest will be recorded as a gain or loss.

The Company has non-controlling interests

via its subsidiaries TerraData, Remote Intelligence and Wildlife Specialists.

the years ended December 31, 2022 and 2021, the Company recorded a loss of $ 238,661

and $ 133,702 ,

respectively, attributable to non-controlling interests.

Comprehensive

Comprehensive loss

includes net loss well as other changes in stockholders’ equity that result from transactions and economic events other than those

with stockholders.

During the years ended December 31, 2022 and 2021, the Company’s only element of other comprehensive loss was

foreign currency translation.

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.

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.

If not, the cancellation is viewed as a replacement and not a modification, with a repurchase price

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.

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

Potentially dilutive

items outstanding as of December 31, 2022 and 2021 are as follows:

Schedule of antidilutive shares

Convertible preferred stock

Stock Options

Stock Warrants

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.

The adoption 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.

Convertible notes

1,589,257,888

Series D preferred stock

1,589,257,888

Issued Accounting Pronouncements

In November 2021,

the FASB issued ASU No.

2021-08, 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 3 – GOING CONCERN

As shown in the accompanying financial statements,

the Company generated net losses of $ 4,826,320 and $ 275,842 during the years ended December 31, 2021 and 2020, respectively.

As of December 31, 2021, the Company’s

current liabilities exceeded its current assets by $ 10,120,885 .

As of December 31, 2021, the Company had $ 3,658,846 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.

NOTE 4 – 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

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.

In August 2020, the FASB issued ASU 2020-06, which

simplifies the guidance on the issuer’s accounting for convertible debt instruments by removing the separation models for convertible

debt with a cash conversion feature and convertible instruments with a beneficial conversion feature.

As a result, entities will not separately

present in equity an embedded conversion feature in such debt and will account for a convertible debt instrument wholly as debt, unless

certain other conditions are met.

The elimination of these models will reduce reported interest expense and increase reported net income

for entities that have issued a convertible instrument that is within the scope of ASU 2020-06.

ASU 2020-06 is applicable for fiscal years

beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020.

adopted ASU 2020-06 on January 1, 2022 and the adoption of this ASU did not have a material impact on the Company’s consolidated

financial statements and related disclosures.

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.

3 – LIQUIDITY AND GOING CONCERN

Company generated net losses of $ 35,517,505

and $ 4,826,320

during the years ended December 31, 2022 and 2021, respectively,

and net cash used in operating activities of $ 21,738,542

and $ 11,363,470 ,

respectively.

As of December 31, 2022, the Company’s current liabilities exceeded its current assets by $ 11,562,784

and an accumulated deficit of $ 46,555,334 .

As of December 31, 2022, the Company had $ 2,060,332 of

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.

The ability 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.

accompanying consolidated 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 for twelve months from the issuance date of these consolidated financial statements.

However, management

cannot make any assurances that such financing will be secured.

NOTE 4 – BUSINESS

Holdco 3 Limited

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.

In connection with the acquisition,

the Company acquired $ 14,828,459

in assets and assumed liabilities totaling $ 25,179,320 .

As shown below, this purchase price consideration is nominal and it was considered $0 for accounting

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 for the fair value of the assets and liabilities recognized in the Condensed Consolidated Balance Sheet at December 31, 2021:

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 for the fair value of the assets and liabilities recognized at the date of acquisition:

Schedule of fair value of assets and liabilities in acquisition

14 unchanged sentences

Total purchase consideration

Wildlife Specialists, LLC and Remote Intelligence,

On August 30, 2021, the Company 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 the Company agreed to pay to the majority shareholder of each of RI and WS an aggregate of 15,000,000

shares of the Company’s 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 %

Specialists, LLC and Remote Intelligence, LLC

On August 30, 2021, the Company 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 the Company agreed to pay to the majority shareholder of each of RI

and WS an aggregate of 15,000,000

shares of the Company’s common stock (at the fair value of $0.07 per share), $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 for the fair value of the assets and liabilities recognized in the Condensed Consolidated Balance Sheet at December 31, 2021:

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 for the fair value of the assets and liabilities recognized at the date of acquisition:

Schedule of Condensed Consolidated Balance Sheet

WILDLIFE SPECIALISTS

Consideration

Purchase price

The allocation of the total purchase price to

the tangible and intangible assets acquired and liabilities assumed by DarkPulse based on the estimated fair values as of August 29,

2021 was as follows:

The allocation

of the total purchase price to the tangible and intangible assets acquired and liabilities assumed by DarkPulse based on the estimated

fair values as of August 29, 2021 was as follows:

Schedule of fair value of assets and liabilities in acquisition

WILDLIFE SPECIALISTS

(Amounts in US$’s)

Recognized as

of Acquisition

Amounts Recognized as of Acquisition Date

Measurement Period Adjustments

Accounts receivable

4 unchanged sentences

Total Consideration for 60% of equity interests

Schedule of Condensed Consolidated Balance Sheet

REMOTE INTELLIGENCE

Consideration

Purchase price

The allocation of the total purchase price to

the tangible and intangible assets acquired and liabilities assumed by the Company based on the estimated fair values as of August 29,

2021 was as follows:

Schedule of fair value of assets and liabilities in acquisition

REMOTE INTELLIGENCE

(Amounts in US$’s)

Accounts receivable

Property & equipment

Assumed liabilities

Non-controlling interest

Total Consideration for 60% of equity interests

TJM Electronics West, Inc.

On September 8,

2021, the Company entered into and closed the Stock Purchase Agreement 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 .

TJM Electronics

September 8, 2021, the Company entered into and closed the Stock Purchase Agreement 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 .

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 for the fair value of the assets and liabilities recognized in the Condensed Consolidated Balance Sheet at December 31, 2021:

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 for the fair value of the assets and liabilities recognized at the date of acquisition:

Schedule of fair value of assets and liabilities in acquisition

2 unchanged sentences

Total Consideration

TerraData Unmanned, PLLC.

Effective October 1, 2021 the Company 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 the Company

agreed to purchase 60 %

Unmanned, PLLC

October 1, 2021 the Company 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 the Company agreed to purchase 60 %

of the equity interests in TerraData in exchange for 3,725,386

shares of the Company’s Common Stock and $ 400,000 ,

shares of the Company’s Common Stock (at the fair value of $0.05 per share) $ 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.

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 for the fair value of the assets and liabilities recognized in the Condensed Consolidated Balance Sheet at December 31, 2021:

TerraData is now a subsidiary of the

The shares were issued to Justin Dee during 2022.

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 for the fair value of the assets and liabilities recognized at the date of acquisition:

Schedule of Condensed Consolidated Balance Sheet

1 unchanged sentence

Purchase price

The allocation of the total purchase price to

the tangible and intangible assets acquired and liabilities assumed by the Company based on the estimated fair values as of October 1,

2021 was as follows:

The allocation

of the total purchase price to the tangible and intangible assets acquired and liabilities assumed by the Company based on the fair values

as of October 1, 2021 was as follows:

Schedule of fair value of assets and liabilities in acquisition

3 unchanged sentences

Total Consideration for 60% of equity interests

Unaudited Supplemental Pro Forma Data

Unaudited pro forma results of operations for

the nine months ended December 31, 2021 and 2020 as though the Company acquired Optilan, Wildlife Specialists, Remote Intelligence, TJM

Electronic West and TerraData Unmanned (the “Acquired Companies”) on the first day of each fiscal year are set forth below.

results of operations

Year Ended December 31,

Supplemental Pro Forma Data

Unaudited pro

forma results of operations for the year ended December 31, 2021 as though the Company acquired Optilan, Wildlife Specialists, Remote

Intelligence, TJM Electronic West and TerraData Unmanned (the “Acquired Companies”) on the first day of each fiscal year

are set forth below.

Proforma results of operations

Pro forma revenues

Pro forma operating income (loss)

$ ( 16,627,266 )

Pro forma net income (loss)

$ ( 11,308,866 )

Pro forma net income (loss) attributable to DarkPulse

Pro forma operating income

Pro forma net income

Pro forma net income attributable to DarkPulse

Pro forma net income per share

Weighted average common shares outstanding

4,790,929,690

NOTE 5 – REVENUE

The following table is a summary of the Company’s

timing of revenue recognition for the years ended December 31, 2021 and 2020:

The following

table is a summary of the Company’s timing of revenue recognition for the years ended December 31, 2022 and 2021:

Schedule of timing of revenue recognition

Timing of revenue recognition:

Services and products transferred at a point in time

1 unchanged sentence

Total revenue

The Company disaggregates revenue by source and

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 years ended December 31, 2021 and 2020:

disaggregates revenue by source and 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 years ended December 31, 2022 and 2021:

Schedule of revenue by source consisted

Revenue by products and services:

Total revenue

Revenue by geographic destination consisted of

the following for the for the years ended December 31, 2021 and 2020:

geographic destination consisted of the following for the for the years ended December 31, 2022 and 2021:

Schedule of revenue by geographic destination

Revenue by geography:

Years Ended December 31,

North America

International

United Kingdom

Rest of world

Total revenue

Contract Balances

The Company records contract assets when it has

a right to consideration and records accounts receivable when it has an unconditional right to consideration.

Contract liabilities consist

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

As of December

31, 2021, the Company did not have a contract assets balance.

The following table is a summary of the Company’s

opening and closing balances of contract liabilities related to contracts with customers.

Contract revenue

is recognized over time using the cost-to-cost measure of progress for fixed price contracts.

The cost-to-cost measure of progress best

depicts the continuous transfer of control of goods or services to the customer.

The contractual terms provide that the customer compensates

the Company for services rendered.

Contract costs

include all direct materials, labor and subcontracted costs, as well as indirect costs related to contract performance, such as indirect

labor, supplies, tools, repairs and the costs of capital equipment.

The cost estimation and review process for recognizing revenue over

time under the cost-to- cost method is based on the professional knowledge and experience of the Company’s project managers, engineers

and financial professionals.

Management reviews estimates of total contract transaction price and total project costs on an ongoing basis.

Changes in job performance, job conditions and management’s assessment of expected variable consideration are factors that influence

estimates of the total contract transaction price, total costs to complete those contracts and profit recognition.

Changes in these factors

could result in revisions to revenue and costs of revenue in the period in which the revisions are determined on a prospective basis,

which could materially affect the Company’s consolidated results of operations for that period.

Provisions for losses on uncompleted

contracts are recorded in the period in which such losses are determined.

A performance

obligation is a contractual promise to transfer a distinct good or service to the customer and is the unit of account under Accounting

Standards Codification (“ASC”) Topic 606.

The transaction price of a contract is allocated to distinct performance obligations

and recognized as revenue when or as the performance obligations are satisfied.

The Company’s contracts often require significant

integrated services and, even when delivering multiple distinct services, are generally accounted for as a single performance obligation.

Contract amendments and change orders are generally not distinct from the existing contract due to the significant integrated service

provided in the context of the contract and are accounted for as a modification of the existing contract and performance obligation.

majority of the Company’s performance obligations are completed within one year.

When more than

one contract is entered into with a customer on or close to the same date, the Company evaluates whether those contracts should be combined

and accounted for as a single contract as well as whether those contracts should be accounted for as more than one performance obligation.

This evaluation requires significant judgment and is based on the facts and circumstances of the various contracts, which could change

the amount of revenue and profit recognition in a given period depending upon the outcome of the evaluation.

As of December 31, 2022, the Company had backlog

of approximately $ 7,079,000 .

During the year ended December 31, 2022, there was approximately $ 4,200,000 in revenue recognized pertaining

to backlog as of December 31, 2021.

Contract Assets and Liabilities

The Company bill its customers based

on contractual terms, including, milestone billings based on the completion of certain phases of the work.

Sometimes, billing occurs after

revenue recognition, resulting in unbilled revenue, which is accounted for as a contract asset.

Sometimes the Company receives advances

payments from our customers before revenue is recognized, resulting in deferred revenue, which is accounted for as a contract liability.

Contract assets in the consolidated

balance sheets represents costs and estimated earnings in excess of billings, which arise when revenue has been recorded but the amount

has not been billed.

Contract assets consist of the following :

Schedule of excess of billings

Costs and estimated earnings in excess of billings on uncompleted contracts

Total contract assets

Contract liabilities consist of

the following:

Billings in excess of costs and estimated earnings on uncompleted contracts

Total contract liabilities

The following

table is a summary of the Company’s activity of contract liabilities related to contracts with customers.

Schedule of contract liabilities related to contracts with customers

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

Revenue recognized from amounts acquired through business acquisition

Balance at December 31, 2021

NOTE 6 – CONVERTIBLE DEBT SECURITIES

The Company uses the Black-Scholes Model to calculate

the derivative value of its convertible debt.

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

of the underlying common stock incorporated into the model.

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

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

Management determined the expected volatility between 475.55-624.25%, a risk free

rate of interest between 0.10-0.13%, and contractual lives of the debt varying from zero months to eight months.

Management made the

determination to use an expected life rather than contractual life for the calculations for the matured debt as of December 31, 2021.

The expected life is equal to the contractual life extended by one year which vary from two to seven months.

The table below details

the Company's outstanding convertible notes, with totals for the face amount, amortization of discount, initial loss, change in the fair

market value, and the derivative liability.

Additions through advance billings to or payments from vendors

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

( 7,514,687 )

Balance at December 31, 2022

Variable Consideration

pricing for the Company’s contracts may include variable consideration, such as unapproved change orders, claims, incentives and

liquidated damages.

Management estimates variable consideration for a performance obligation utilizing estimation methods that best predict

the amount of consideration to which the Company will be entitled.

Variable consideration is included in the estimated transaction price

to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated

with the variable consideration is resolved.

Management’s estimates of variable consideration and determination of whether to include

estimated amounts in transaction price are based on past practices with the customer, specific discussions, correspondence or preliminary

negotiations with the customer, legal evaluations and all other relevant information that is reasonably available.

The effect of a change

in variable consideration on the transaction price of a performance obligation is typically recognized as an adjustment to revenue on

a cumulative catch-up basis.

To the extent unapproved change orders, claims and liquidated damages reflected in transaction price are

not resolved in the Company’s favor, or to the extent incentives reflected in transaction price are not earned, there could be reductions

in, or reversals of, previously recognized revenue.

NOTE 6 – ACCOUNTS RECEIVABLE

Accounts receivable

consisted of the following:

Schedule of accounts receivable

Accounts receivable

Allowance for doubtful accounts

( 3,320,983 )

( 3,365,293 )

Accounts receivable, net

PROPERTY AND EQUIPMENT, NET

equipment, net consisted of the following:

Schedule of property, plant and equipment

Property and equipment

Leasehold improvements

Property and equipment at cost

Less - accumulated depreciation

( 2,055,484 )

Property and equipment, net

expense was $ 1,331,972 and $ 78,465 for the years ended December 31, 2022 and 2021, respectively.

8 - GOODWILL AND INTANGIBLE ASSETS

The following

is a summary of activity of goodwill for the years ended December 31, 2022 and 2021:

Schedule of changes in carrying amount of goodwill

Balances at December 31, 2020

Business combinations

Foreign exchange translation

Balances at December 31, 2021

Impairment (see Note 2)

( 9,519,143 )

Foreign exchange translation

( 1,107,205 )

Balances at December 31, 2022

connection with the Optilan acquisition, the Company recognized an intangible asset, a trade name, of $ 4,033,638 .

The trade name has a useful life of 25

the Company’s impairment analysis at December 31, 2022 (see Note 2), the Company recorded impairment of the trade name of $ 2,703,456 .

following is a summary of intangible assets, net:

Schedule of intangible assets

Trade name per business combination

( 2,703,456 )

accumulated amortization

Foreign exchange translation

Intangible assets, net

Amortization expense was $ 161,346 and $ 0 for the

years ended December 31, 2022 and 2021, respectively.

Future amortization

expense as of December 31, 2022 is as follows:

of future amortization expense Optilian acquisition

Years Ended December 31,

Total future amortization expense

- Intrusion Detection Intellectual Property

relies on patent laws and restrictions on disclosure to protect its intellectual property rights.

As of December 31, 2022 and 2021, the

Company held three U.S.

and foreign patents on its intrusion detection technology, which expire in calendar years 2025 through 2034 (depending

on the payment of maintenance fees).

The DPTI issued

patents cover a System and Method for Brillouin Analysis, a System and Method for Resolution Enhancement of a Distributed Sensor, and

a Flexible Fiber Optic Deformation System Sensor and Method.

Maintenance of intellectual property rights and the protection thereof is

important to our business.

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

may challenge any issued patents.

Other parties may independently develop similar or competing technology or design around any patents

that may be issued to the Company.

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

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

Further, the Company may be required to enforce its intellectual property or other proprietary rights through litigation, which, regardless

of success, could result in substantial costs and diversion of management's attention.

Additionally, there may be existing patents of

which the Company is unaware that could be pertinent to its business, and it is not possible to know whether there are patent applications

pending that the Company's products might infringe upon, since these applications are often not publicly available until a patent is issued

or published.

For the years

ended December 31, 2022 and 2021, the Company had patent amortization costs on its intrusion detection technology totaling $ 75,087 and

$ 51,028 , respectively.

Patents costs are being amortized over the remaining life of each patent, which is from 7 to 16 years .

The following

is a summary of the DPTI patents as of December 31, 2022 and 2021:

Schedule of patents

accumulated amortization

expected amortization of patents is as follows:

Schedule of future amortization of intangible

As of December 31,

Total patents

– JOINT VENTURE

On September 9, 2022, the Company entered into a Joint

Venture Agreement with Neural Signals Inc, (“NSI”), for the purpose of developing, marketing and selling products and services

based on the patents issued to NSI.

The parties established the Joint Venture, Neural Logistics Inc., under a separate entity to

conduct business.

The Company has 50 % ownership in NSI.

The Company determined that the investment was accounted for as an equity investment

under ASC 323-10-30-2.

During the year ended December 31, 2022, the Company

contributed $ 103,505 to the joint venture and recorded a loss on the equity investment of $ 51,753 .

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable

and accrued expenses consists of the following:

Schedule of accounts payable and accrued expenses

Accounts payable

Accrued liabilities

Total accounts payable and accrued expenses

NOTE 11 – DEBT

Company uses the Black-Scholes Model to calculate the derivative value of its convertible debt.

The valuation result generated by this

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

The values of the common

stock used were based on the price at the date of issue of the debt security as of December 31, 2022 and 2021.

In 2022, management determined

the expected volatility of 140.30%, a risk-free rate of interest of 4.73%, and contractual lives of the debt of three months.

management determined the expected volatility between 475.55-624.25%, a risk-free rate of interest between 0.10-0.13%, and contractual

lives of the debt varying from zero months to eight months.

Management made the determination to use an expected life rather than contractual

life for the calculations for the matured debt as of December 31, 2022 and 2021.

The table below details the Company's outstanding convertible

notes and related derivative liability:

Schedule of convertible debt

Transaction expense

On October 7, 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

On April 16, 2021, Geneva converted $ 47,850 of principal and $2,153 into 8,065,040 shares of common stock.

On January 4, 2021, the Company entered into

a securities purchase agreement with 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 July 12, 2021, Geneva converted $ 42,350 of principal and $1,540 into 1,784,146 shares of common stock.

On February 3, 2021, the Company entered into

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

with a $ 15,700

original issue discount and $ 3,500

in transactional expenses due to Geneva and its counsel.

The note bears interest at 4.5 %

per annum and may be converted into common shares of the Company's common stock at a conversion price equal to 81% of the lowest two

trading prices of the Company's common stock during the 10 prior trading days.

The Company received $ 75,000

On July 14, 2021, the Company repaid $ 94,200 of principal.

On February 18, 2021, the Company entered

into a securities purchase agreement with Geneva issuing to Geneva a convertible promissory note in the aggregate principal amount

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 two

trading prices of the Company's common stock during the 10 prior trading days.

The Company received $ 60,000

On July 14, 2021, the Company repaid $ 76,200 of principal.

On April 5, 2021, the Company entered into a

securities purchase agreement with Geneva issuing to Geneva a convertible promissory note in the aggregate principal amount of

with a $ 10,700

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 two

trading prices of the Company's common stock during the 10 prior trading days.

The Company received $ 50,000

On July 14, 2021, the Company repaid $64,200 of principal.

On April 26, 2021, the Company entered a

Securities Purchase Agreement and Registration Rights with FIRSTFIRE GLOBAL OPPORTUNITIES FUND, LLC, a Delaware limited liability

company (the “ FirstFire ”), pursuant to which the Company issued to FirstFire a Convertible Promissory Note in the

principal amount of $ 825,000 (the

“ FirstFire Note ”).

Derivative Liability

the years ended December 31, 2022 and 2021, change in fair value of the derivative liability was $ 227,286

and $ 687,124 ,

respectively.

The following is a summary of the change in derivative liability:

Change in derivative liabilities

Derivative Liability

Balances at December 31, 2020

Change in fair value

Balances at December 31, 2021

Change in fair value

Balances at December 31, 2022

26, 2021, the Company entered a Securities Purchase Agreement and Registration Rights with FIRSTFIRE GLOBAL OPPORTUNITIES FUND, LLC,

a Delaware limited liability company (the “ FirstFire ”), pursuant to which the Company issued to FirstFire a

Convertible Promissory Note in the principal amount of $ 825,000

(the “ FirstFire Note ”).

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

1 unchanged sentence

26, 2022 upon which time all accrued and unpaid interest will be due and payable.

Interest accrues on the FirstFire Note at 10 %

Interest accrues on the FirstFire Note

per annum guaranteed until the FirstFire Note becomes due and payable, whether at maturity or upon acceleration or by prepayment or

The FirstFire Note is convertible at any time after 180 days from issuance, upon the election of the FirstFire, into

shares of the Company’s Common Stock at $ 0.015 per

shares of the Company’s Common Stock at $ 0.015

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

occurrence of an “Event of Default,” the conversion price would become $ 0.005 .

On November 17, 2021, FirstFire converted $825,000 of principal and $61,875 of interest into 177,375,000 shares

of common stock.

On December 31, 2021, the Company commenced an

action against FirstFire Global Opportunities Fund, LLC, and Eli Fireman (“Fireman”) in the United States District Court for

the Southern District of New York.

The complaint alleges that FirstFire is an unregistered dealer acting in violation of Section 15(a)

of the Securities Exchange Act of 1934 (the “Act”), and that the Company is entitled to rescissionary relief from certain

convertible promissory notes and securities purchase agreements entered into by the Company and FirstFire pursuant to Section 29(b) of

The complaint also asserts claims against Fireman for control person liability under Section 20(a) of the Act, unjust enrichment

of FirstFire, and constructive trust against FirstFire.

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

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

On June 3, 2021, the Company entered into a

Settlement and Mutual Release Agreement with Auctus Fund, LLC.

Pursuant to the Agreement, the Auctus agreed to convert the

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

“ Auctus Note”) into 12,500,000 shares of the Company’s Common stock (the “ Auctus

Shares ”) as consideration for full and complete satisfaction of and settlement of the Auctus Note, which also terminates

all obligations owing under both the Auctus Note and the corresponding Securities Purchase Agreement dated September 25, 2018

between the Company and Auctus.

Auctus also agreed to limit the resales of the Auctus Shares in the public market to no more than 2,500,000 shares

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

On July 14, 2021, the Company entered a

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

to the Lender a 6% Redeemable Note in the principal amount of $ 2,000,000 (the

“ GS Note ”).

the occurrence of an “Event of Default,” the conversion price would become $ 0.005 .

On November 17, 2021, FirstFire converted $825,000 of principal and $61,875 of interest into 177,375,000 shares of common

31, 2021, the Company commenced an action against FirstFire Global Opportunities Fund, LLC, and Eli Fireman (“Fireman”) in

the United States District Court for the Southern District of New York.

The complaint alleges that FirstFire is an unregistered dealer

acting in violation of Section 15(a) of the Securities Exchange Act of 1934 (the “Act”), and that the Company is entitled

to rescissionary relief from certain convertible promissory notes and securities purchase agreements entered into by the Company and FirstFire

pursuant to Section 29(b) of the Act.

The complaint also asserts claims against Fireman for control person liability under Section 20(a)

of the Act, unjust enrichment of FirstFire, and constructive trust against FirstFire.

2021, the Company entered into a Stipulation of Settlement with four note holders pursuant to which the Company agreed to pay $ 173,000

to the note holders.

2021, the Company entered into a Settlement and Mutual Release Agreement with Auctus Fund, LLC.

Pursuant to the Agreement, the Auctus

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

(the “ Auctus Note ”) into 12,500,000 shares of the Company’s

Common stock (the “ Auctus Shares ”) as consideration for full and complete satisfaction of and settlement of the Auctus

Note, which also terminates all obligations owing under both the Auctus Note and the corresponding Securities Purchase Agreement dated

September 25, 2018 between the Company and Auctus.

Auctus also agreed to limit the resales of the Auctus Shares in the public market

to no more than 2,500,000 shares per calendar week until all of the Auctus Shares have been sold.

December 31, 2022 and 2021 respectively, there was $ 378,263

of convertible debt outstanding.

As of December 31, 2022 and 2021 respectively, there was derivative

liability of $ 306,467 and

$ 533,753 related

to convertible debt securities.

As of December

31, 2022, all outstanding convertible debt is default.

14, 2021, the Company entered a Securities Purchase Agreement (the “ GS SPA ”) with GS Capital Partners, LLC

pursuant to which the Company issued to the Lender a 6% Redeemable Note in the principal amount of $ 2,000,000

(the “ GS Note ”).

The purchase price of the GS Note is $ 1,980,000 .

1 unchanged sentence

14, 2022 upon which time all accrued and unpaid interest will be due and payable.

Interest accrues on the GS Note at 6 %

Interest accrues on the GS Note

per annum until the GS Note becomes due and payable.

4 unchanged sentences

shareholders and the Company used a portion of the proceeds of the GS Note to retire convertible debt.

As of December 31, 2021,

$2,000,000 remains outstanding.

As of December 31, 2022 and

respectively, there was $ 378,263

and $ 931,158 of convertible

debt outstanding, net of debt discount of $ 0 ,

and $ 35,525 .

As of December 31, 2021 and 2020 respectively, there was derivative liability of $ 533,753

and $ 1,220,880 related to

convertible debt securities.

NOTE 7 - DEBENTURE

DPTI issued a convertible Debenture to the University

(see Note 1) in exchange for the Patents assigned to the Company, in the amount of Canadian $1,500,000, or US $1,491,923 on December

16, 2010, the date of the Debenture.

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

as the original Debenture.

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

The Debenture had an initial

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

costs, and this has been paid.

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

Payment of the principal

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

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

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

The Company has raised funds in excess of the amount required for 2020,

2021, $2,000,000 remains outstanding.

As of December 31, 2022, the

GS note is in default.

The Company’s

RI and WS subsidiaries have various loans including Small Business Association (“SBA”) Economic Injury Disaster Loan (“EIDL’)

loans, lines of credit and other advances.

The loans bear interest with varying rates up to 9.25% per annum.

The following is a summary

of the loans payable at December 31, 2022 and 2021:

Schedule of loans payable

RI - line of credit

RI - Short-term loans

WS - line of credit

WS - Short-term loans

Loans payable, current

RI - SBA EIDL

RI - long-term loans

WS - SBA EIDL

WS - long-term loans

Loans payable, non-current

The CARES Act

extended COVID relief funding for qualified small businesses under the EIDL assistance program.

In 2020, RI and WS were approved by the

SBA and received proceeds of $103,100 and $26,700, respectively.

The EIDL loans mature in thirty years from the effective date of the

loan and has a fixed interest rate of 3.75% per annum .

In August 2020,

WS entered into a line of credit for $100,000, which was amended and extended to a principal amount of $200,000 in 2021.

The loan is due

on demand and bears interest at the prime rate index and 1.00% As of December 31, 2022 and 2021, the outstanding balance was $200,000

and $175,331, respectively.

In March 2019,

RI entered into a line of credit for $45,000, which was amended and extended to a principal amount of $100,000 in 2021.

The loan is due

on demand and bears interest at the prime rate index and 1.00% As of December 31, 2022 and 2021, the outstanding balance was $99,971 and

$83,030, respectively.

minimum required payments over the next 5 years and thereafter are as follows:

Future minimum required

Years Ended December 31,

Total future minimum payments

NOTE 12 – SECURED

issued a convertible Debenture to the University (see Note 1) in exchange for the Patents assigned to the Company, in the amount of

Canadian $1,500,000, or US $1,491,923 on December 16, 2010, the date of the Debenture.

On April 24, 2017 DPTI issued a replacement

secured term Debenture in the same CAD 1,500,000 amount as the original Debenture.

The interest rate is the Bank of Canada Prime

overnight rate plus 1% per annum.

The Debenture had an initial required payment of CAD 42,000 (US$33,385) due on April 24, 2018 for

reimbursement to the University of its research and development costs, and this has been paid.

Interest-only maintenance payments

are due annually starting after April 24, 2018.

Payment of the principal begins on the earlier of (a) three years following two

consecutive quarters of positive earnings before interest, taxes, depreciation and amortization, (b) six years from April 24, 2017,

or (c) in the event DPTI fails to raise defined capital amounts or secure defined contract amounts by April 24 in the years 2018,

2019, and 2020.

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

The Company has raised funds in excess of the amount required for 2020, 2019 and 2018.

in 2023, The principal repayment amounts will be due quarterly over a six year period in the

amount of Canadian Dollars 62,500.

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

Dollar on December 31, 2018, the quarterly principal repayment amounts

will be US$48,447.

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

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

and the University.

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

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

The liability is being

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

The adjustment

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

The amounts recorded as an

unrealized gain (loss) for the years ended December 31, 2021 and 2020, were $ 20,941 and $ 20,941 respectively.

These amounts are included

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

on the consolidated statement of comprehensive loss.

The Debenture also includes a provision requiring DPTI to pay the University a 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 years ended December 31, 2021 and 2020, the Company recorded

interest expense of $ 52,538 and $ 52,538 , respectively.

As of December 31, 2021, the debenture liability totaled $ 1,172,364 ,

all of which was long term.

Future minimum required payments over the

next 5 years and thereafter are as follows:

Dollar on December 31, 2018,

the quarterly principal repayment amounts will be US$48,447.

The Debenture is secured by the Patents assigned by the University to

DPTI by an Assignment Agreement on December 16, 2010.

DPTI has pledged the Patents, and granted a lien on them pursuant to an Escrow

Agreement dated April 24, 2017, between DPTI and the University.

The Debenture

was initially recorded at the $1,491,923 equivalent US Dollar amount of Canadian 1,500,000 as of December 16, 2010, the date of the original

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

end of each quarter.

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

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.

To date, no royalties have been paid.

For the years ended December

31, 2022 and 2021, the Company recorded interest expense of $ 36,307

and $ 52,538 ,

respectively.

As of December

31, 2022, the outstanding balance of the debenture liability totaled $ 1,090,827 .

minimum required payments over the next 5 years and thereafter are as follows:

Future minimum required payments

Period ending December 31,

2026 and after

NOTE 8 – LEASES

The Company adopted ASC 842

“Leases” using the modified retrospective approach, electing the practical expedient that allows the Company not to

restate its 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 December 31, 2021 and 2020:

The following

was included in our balance sheet as of December 31, 2022 and 2021:

Schedule of operating leases

4 unchanged sentences

Total operating lease liabilities

The weighted average remaining lease term and

weighted average discount rate at December 31, 2021 were as follows:

average remaining lease term and weighted average discount rate at December 31, 2022 and 2021 were as follows:

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

Weighted average remaining lease term (years)

Operating leases

Weighted average remaining lease term (years)

Weighted average discount rate

Operating leases

Operating Leases

On January 12, 2021, the Company’s newly

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 newly acquired

subsidiary entered into an operating lease agreement to rent office space in Warwick, 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 August 31, 2021, the Company’s newly

acquired subsidiary entered into an operating lease agreement to rent office space in Tempe, Arizona.

This five-year agreement commenced

August 31, 2021 with an annual rent of approximately $ 192,000 .

On October 20, 2021, the Company’s newly

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

This ten-year agreement

commenced October 20, 2021 with an annual rent of approximately $ 200,000 with the first six months rent free.

The following table reconciles future minimum

operating lease payments to the discounted lease liability as of December 31, 2021:

On January 12,

2021, the Company’s newly acquired subsidiary entered into an operating lease agreement to rent office space in Mumbai, India.

three-year agreement commenced January 12, 2021 with an annual rent of approximately $ 50,000 .

On May 27, 2021,

the Company’s newly acquired subsidiary entered into an operating lease agreement to rent office space in Warwick, 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 August 31,

2021, the Company’s newly acquired subsidiary entered into an operating lease agreement to rent office space in Tempe, Arizona.

This five-year agreement commenced August 31, 2021 with an annual rent of approximately $ 192,000 .

October 20, 2021, the Company’s newly acquired subsidiary entered into an operating lease agreement to rent office space in Warwick,

United Kingdom.

This ten-year agreement commenced October 20, 2021 with an annual rent of approximately $ 200,000 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 December 31, 2022:

Schedule of future minimum operating lease payments

5 unchanged sentences

Long-term lease obligations

NOTE 9 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accrued liabilities consist of the following as of December 31:

Schedule of accounts payable and accrued liabilities

Accounts payable

Accrued liabilities

NOTE 10 – INCOME TAXES

The domestic and foreign components of loss before

(benefit) provision for income taxes were as follows:

of income components

STOCKHOLDERS’ EQUITY (DEFICIT)

accordance with the Company’s bylaws, the Company has authorized a total of 2,000,000

shares of preferred stock, par value $ 0.01

per share, for all classes.

As of December 31, 2022 and 2021 respectively, there were 88,335

total preferred shares issued and outstanding for all classes.

23, 2021, pursuant to the approval of the Board of Directors and a majority vote of the holders of Series D Preferred Stock, the Company

amended the Certificate of Designation for the Series D Preferred Stock so that each share of Series D Stock is convertible, at the sole

and exclusive election of the holder, into two shares of Common Stock of the Company.

On June 22, 2022, the Board of Directors of the

Company approved the filing of an amendment to the Company’s Certificate of Incorporation (the “Certificate of

Incorporation”), in the form of a Certificate of Designation that authorized for issuance of up to 100 shares of a new series

of Preferred Stock, par value $ 0.01

per share, of the Company designated “Series A Super Voting Preferred Stock” and established the rights, preferences and

limitations thereof.

The Board authorized the Series A Preferred Stock pursuant to the authority given to the Board under the

Certificate of Incorporation, which authorizes the issuance of up to 2,000,000

shares of Preferred Stock, par value $ 0.01

per share, and authorizes the Board, by resolution, to establish any or all of the unissued shares of Preferred Stock, not then

allocated to any series into one or more series and to fix and determine the designation of each such shares, the number of shares

which shall constitute such series and certain preferences, limitations and relative rights of the shares of each series so

The holders of the Series A Preferred Stock shall

be entitled to vote, on a pro-rata basis, on all matters subject to a vote or written consent of the holders of the Company’s Common

Stock, and on all such matters, the shares of Series A Preferred Stock shall be entitled to that number of votes equal to the number

of votes that all issued and outstanding shares of Common Stock and all other securities of the Company are entitled to, as of any such

date of determination, on a fully diluted basis, plus one million (1,000,000) votes, it being the intention that the holders of

the Series A Preferred Stock shall have effective voting control of the Company, on a fully diluted basis.

Unless approved by a majority vote of the holders

of Common Stock, the Series A Super Voting Preferred Stock will terminate five years after the issuance date, which is June 24, 2027.

During the year

ended December 31, 2022, the Company issued 100 shares of Series A preferred stock to the Chief Executive Officer for no consideration

pursuant to above.

Pursuant to this, the CEO has the right to a majority of the voting power

of the Company.

In accordance with the Company’s bylaws,

the Company has authorized a total of 20,000,000,000

shares of common stock, par value $ 0.0001

As of December 31, 2022 and 2021, there were 6,427,495,360

and 5,197,921,885

common shares issued, respectively.

As of December 31, 2022 and 2021, there were 6,427,395,360 and 5,197,821,885

common shares outstanding, respectively.

2021 Transactions

On January 14, 2021, the Company issued an

aggregate of 100,000,000

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

On January 25, 2021, the Company issued an

aggregate of 150,000,000

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

On February 1, 2021, the Company issued an

aggregate of 30,999,995

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

On February 11, 2021, the Company issued an

aggregate of 100,000,000

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

On February 18, 2021, the Company issued an

aggregate of 220,000,000

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

for principal and $ 39,638

for interest.

On April 15, 2021, the Company issued an

aggregate of 8,065,040

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

and interest of $ 2,153 .25.

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

shares of common stock as compensation for loan acquisition costs associated with the note issued on the same date for the amount of

On June 4, 2021, the Company issued an aggregate

of 12,500,000

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

and interest of $ 260 .61.

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 .

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 .

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 .

25, 2021, the Company issued 31,799,260

shares of common stock for $ 3,000,000 .

31, 2021, the Company issued 27,297,995

shares of common stock for $ 3,000,000 .

September 22, 2021, the Company issued 25,630,272

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

September 30, 2021, the Company issued 15,000,000

shares of common stock pursuant to two separate Membership Interest Purchase Agreements with Remote Intelligence, and Wildlife

Specialists, LLC.

September 30, 2021, the Company issued 3,194,081

shares of common stock as compensation valued at $ 250,000

for loan acquisition costs associated with proceeds raised.

1, 2021, the Company issued 37,187,289

shares of common stock for $ 3,000,000 .

15, 2021, the Company issued 14,282,304

shares of common stock for $ 1,055,000 .

22, 2021, the Company issued 1,596,594

shares of common stock as compensation valued at $ 250,000

for loan acquisition costs associated with proceeds raised.

25, 2021, the Company issued 634,778

shares of common stock as compensation valued at $ 250,000 for

loan acquisition costs associated with proceeds raised.

November 17, 2021, the Company issued an aggregate of 177,375,000

shares of common stock upon the conversion of convertible debt, as issued on April 30, 2021, in the amount of $ 825,000

and interest of $ 61,875 .

December 21, 2021, the Company issued an aggregate of 43,777,478

shares of common stock for $ 2,538,327 .

2022 Transactions

On May 27, 2022 we entered an Equity Financing

Agreement (the “ 2022 EFA ”) and Registration Rights Agreement (the “ RRA ”) with GHS, pursuant to

which GHS agreed to purchase up to $70,000,000 in shares of our Common Stock, from time to time over the course of 24 months after

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

Common Stock.

The RRA 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 is filed.

Below is a table of all puts made by the Company

under the Equity Financing Agreement and EDFA during 2022:

Schedule of equity financing agreement

Number of Shares Sold

Total Proceeds, Net of Discounts

Effective Price per Share

1,259,746,466

2022, the Company issued 3,725,386

shares of common stock pursuant to a settlement of $ 200,000

in accounts payable.

On August 30, 2022, the Company received 33,898,377

shares of common stock for cancellation from a previous note holder.

The shares were cancelled by the Company.

December 31, 2022 and 2021, the Company had 13,602,044,965 and 1,589,257,888 ,

respectively, in common shares reserved for issuance.

As of December

31, 2022 and 2021, the Company had no outstanding stock options.

NOTE 15 – INCOME

and foreign components of loss before (benefit) provision for income taxes were as follows:

Schedule of income components

$ ( 13,141,019 )

$ ( 4,285,237 )

( 22,376,486 )

Total income (loss) before income taxes

$ ( 35,517,505 )

The provision (benefit) for income taxes for

the years ended December 31, 2021 and 2020 differs from the amount which would be expected as a result of applying the statutory tax

rates to the losses before income taxes due primarily to the valuation allowance to fully reserve net deferred tax assets.

The following table summarizes the significant

differences between statutory rates for the years ended December 31, 2021 and 2020:

$ ( 4,826,320 )

The provision

for income taxes for the years ended December 31, 2022 and 2021 differs from the amount which would be expected as a result

of applying the statutory tax rates to the losses before income taxes due primarily to the valuation allowance to fully reserve net deferred

The following

table summarizes the significant differences between statutory rates for the years ended December 31, 2022 and 2021:

Statutory tax rate

1 unchanged sentence

Foreign rate differential

Goodwill impairment

NOLs carryforward adjustment

Change in valuation allowance:

The Company’s deferred tax assets and liabilities as of December

31, 2021 and 2020 are as follows:

The Company’s deferred tax

assets and liabilities as of December 31, 2022 and 2021 are as follows:

Deferred Tax assets and liabilities

4 unchanged sentences

Stock based compensation

Property and equipment

Valuation allowance

( 2,365,571 )

( 1,351,897 )

Deferred tax assets (liabilities)

The Company has approximately $ 7,448,199

of federal and state net operating loss carryforwards as of December 31, 2021, which will not expire but will be limited to 80%

The company also has net operating losses in the United Kingdom of $ 1,414,454

Company has approximately $ 20,718,222 of

federal and state net operating loss carryforwards as of December 31, 2022.

Of the $20.7 million of NOL’s, $4.8 million will

begin to expire in 2023 while $15.9 will not expire but will be limited to 80% utilization.

The company also has net operating

losses in the UK of $5,045,611

which will not expire and $636,852

of net operating loss carryforwards in Canada which will begin to expire in 2038.

The Company records a tax valuation

allowance when it is more likely than not that it will not be able to recover the value of its deferred tax assets.

For the years

ended December 31, 2021 and 2020, the Company calculated its estimated annualized effective tax rate at 0 %

respectively, for both the United States, Canada and the United Kingdom.

Company records a tax valuation allowance when it is more likely than not that it will not be able to recover the value of its

deferred tax assets.

For the years ended December 31, 2022 and 2021, the Company calculated its estimated annualized effective tax

respectively, for both the United States, Canada and the UK.

The Company had no

income tax expense on its losses for the years ended December 31, 2022 and 2021, respectively.

The Company recognizes 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

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% likelihood of being realized upon ultimate settlement with the relevant tax authority.

recognizes interest accrued on uncertain tax positions as well as interest received from favorable tax settlements within interest expense.

The Company recognizes penalties accrued on unrecognized tax benefits within selling, general and administrative expenses.

As of December

31, 2021 and 2020, the Company had no uncertain tax positions.

The Company does not anticipate any

significant changes to the total amounts of unrecognized tax benefits in the next twelve months.

The Company files income tax

returns in New Brunswick, Canada, and the U.S.

federal, New York, and Delaware jurisdictions and the United Kingdom jurisdictions.

Tax years 2011

to current remain open to examination by Canadian authorities;

the tax year 2018 remains open to examination by U.S.

NOTE 11 – PREFERRED STOCK

In accordance with the Company’s bylaws,

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

As of December

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

On December 23, 2021, pursuant to the approval of the Board of Directors

and a majority vote of the holders of Series D Preferred Stock, the Company amended the Certificate of Designation for the Series D Preferred

Stock so that each share of Series D Stock is convertible, at the sole and exclusive election of the holder, into two shares of Common

Stock of the Company.

NOTE 12 – COMMON STOCK

In accordance with the Company’s bylaws,

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

As of December 31, 2021 and

2020, there were 5,197,821,885 and 4,088,762,156 common shares issued and outstanding.

On February 18, 2020, the majority stockholders

holding a majority of the issued and outstanding voting shares of the Company amended the Company’s Certificate of Incorporation

to amend the par value of the Company’s common stock from $0.01 to $0.0001.

On January 14, 2021, the Company issued an aggregate

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

On January 25, 2021, the Company issued an aggregate

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

On February 1, 2021, the Company issued an aggregate

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

On February 11, 2021, the Company issued an aggregate

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

On February 18, 2021, the Company issued an aggregate

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

for principal and $ 39,638 for interest.

On April 15, 2021, the Company issued an aggregate

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

interest of $ 2,153 .25.

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

shares of common stock as compensation for loan acquisition costs associated with the note issued on the same date for the amount of

On June 4, 2021, the Company issued an aggregate

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

and interest of $ 260 .61.

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 August 25, 2021, the Company issued 31,799,260

shares of common stock for $ 3,000,000 .

On August 31, 2021, the Company issued 27,297,995

shares of common stock for $ 3,000,000 .

On September 22, 2021, the Company issued 25,630,272

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

On September 30, 2021, the Company issued 15,000,000

shares of common stock pursuant to two separate Membership Interest Purchase Agreements with Remote Intelligence, and Wildlife Specialists,

On September 30, 2021, the Company issued 3,194,081

shares of common stock as compensation valued at $ 250,000

for loan acquisition costs associated with proceeds raised.

On October 1, 2021, the Company issued 37,187,289

shares of common stock for $ 3,000,000 .

On October 15, 2021, the Company issued 14,282,304

shares of common stock for $ 1,055,000 .

On October 22, 2021, the Company issued 1,596,594

shares of common stock as compensation valued at $ 250,000

for loan acquisition costs associated with proceeds raised.

On October 25, 2021, the Company issued 634,778

shares of common stock as compensation valued at $ 250,000

for loan acquisition costs associated with proceeds raised.

On November 17, 2021, the Company issued an aggregate

of 177,375,000 shares of common stock upon the conversion of convertible debt, as issued on April 30, 2021, in the amount of $ 825,000

and interest of $ 61,875 .

On December 21, 2021, the Company issued an aggregate

of 43,777,478 shares of common stock for $ 2,538,327 .

At December 31, 2021, the Company had 1,589,257,888

in common shares reserved for issuance for convertible debt securities.

NOTE 13 – STOCK OPTIONS

As of December 31, 2021 and 2020, the Company

had no outstanding stock options.

NOTE 14 – COMMITMENTS AND CONTINGENCIES

Potential Royalty Payments

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 change in valuation allowance

for the years ended December 31, 2022 and 2021 is an increase of $ 6,991,478 and $ 1,013,674 , respectively.

recognizes 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% likelihood of being realized upon ultimate settlement with

the relevant tax authority.

The Company recognizes interest accrued on uncertain tax positions as well as interest received from favorable

tax settlements within interest expense.

The Company recognizes penalties accrued on unrecognized tax benefits within selling, general

and administrative expenses.

As of December 31, 2022 and 2021, the Company had no uncertain tax positions.

Company does not anticipate any significant changes to the total amounts of unrecognized tax benefits in the next twelve months.

Company files income tax returns in New Brunswick, Canada, and the U.S.

federal, New York, and Delaware and the UK jurisdictions.

Tax years 2012 to current remain open to examination by Canadian authorities;

the tax year 2020

remains open to examination by U.S.

NOTE 16 – COMMITMENTS

AND CONTINGENCIES

Royalty Payments

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.

As of December 31, 2022, the

Company’s Optilan subsidiary had five bonded contracts for a total guaranteed value of approximately $984,000.

Legal Matters

1 unchanged sentence

Twitter, Inc.

On January 24, 2022, the Company filed a petition

in the Supreme Court of the State of New York County of New York to compel a disclosure from Twitter, Inc.

The petition sought to compel

Twitter, Inc.

to disclose the owner and operator of the “Investor News” Twitter account (@newsfilterio) so the Company could

commence an action for damages arising from false, misleading, and untrue statements made by the Investor News.

On February 23, 2022, the Court ordered Twitter

to release information concerning the owner and operator of the Investor News account to the Company.

Company will continue to pursue and expose the identities of those individuals or groups and shall take any and all legal action to pursue

the violators .

As disclosed in greater detail in the Company’s

Form 10-Q, filed October 24, 2022, the Company is actively investigating potential claims against the @MIKEWOOD and @BullMeechum3 Twitter

There are no material updates to this matter.

Carebourn Capital, L.P.

1 unchanged sentence

As disclosed in greater detail in the Company’s

Form 10-Q, filed November 15, 2021, the Company remains in active litigation with Carebourn Capital, L.P.

(“Carebourn”).

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

On November 1, 2021, the Company filed a motion

to compel Carebourn to produce certain documents and supplement its responses to certain interrogatories.

On September 27, 2021, Carebourn filed a declaratory

judgment and a motion for declaratory judgment, dismissal of the Company’s claims, and summary judgment (“Dispositive Motion”).

On February 15, 2022, the Court rendered its

decision on the aforesaid motions, denying the Dispositive Motion in its entirety and granting in part, and denying in part, the Company’s

motion to compel.

Pursuant to the Court’s ruling in the Company’s favor on its motion to compel, the Court has awarded the

Company attorneys’ costs and fees in connection with the successful portions of its motion to compel.

On January 19, 2022, the Company filed a motion

for enforcement of a protective order.

It is the Company’s position that Carebourn has violated a protective order that was entered

into by the parties and seeks to protect confidential information exchanged during the litigation.

The Court has not yet rendered a decision

on this motion.

On March 24, 2022, Carebourn filed a Motion to

Compel against DarkPulse, alleging that DarkPulse failed to fulfill its discovery obligations by not producing a privilege log.

contends that Carebourn’s motion is meritless and premature.

The Company remains committed to actively litigating

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

Form 10-Q, filed October 24, 2022, the Company remains in active litigation with Carebourn Capital, L.P.

(“Carebourn”) in

Minnesota state court.

The following discloses the material updates for this matter.

On April 21, 2023, the Minnesota state court granted

the Company’s motion for partial summary judgment on its affirmative defenses.

Specifically, the Court found that Carebourn is an

unregistered dealer, acting in violation of Section 15(a) of the Securities Exchange Act of 1934 and, thus, the contracts between the

Company and Carebourn are now void pursuant to Section 29(b) of the Exchange Act.

The Company is actively litigating its counterclaims

asserted under the Minnesota Uniform Securities Act.

More Capital, LLC v.

1 unchanged sentence

As disclosed in greater detail in the Company’s

Form 10-Q, filed November 15, 2021, 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-Q.

On October 27, 2021, the Company served its initial

discovery requests, consisting of interrogatories, requests for admission, and requests for production, on More.

On November 24, 2021, More served its responses

to the Company’s initial discovery requests.

After reviewing More’s responses, it is the Company’s position that More’s

responses are false, misleading, untrue, and/or evasive.

On February 28, 2022, the Company filed its motion

to compel More to produce certain documents and supplement or otherwise modify its responses to certain interrogatories and requests

for admission.

DarkPulse’s motion will be heard on April 14, 2022.

On March 9, 2022, More filed a motion for summary

judgment against the Company.

The Company’s opposition is being filed on or before March 23, 2022, and More’s motion will

be heard on April 6, 2022.

Form 10-Q, filed October 24, 2022, the Company remains in active litigation with More Capital, LLC (“More”) in Minnesota state

There are no material updates to this litigation.

The Company remains committed to actively litigating

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

its affirmative defenses and claims for relief under the Securities Exchange Act of 1934 and Minnesota Uniform Securities Act.

Carebourn Capital et al v.

Standard Registrar

and Transfer et al

On May 20, 2022, Carebourn Capital, L.P.

(“Carebourn”)

and More Capital, LLC (“More,” and together with Carebourn, the “Noteholder Plaintiffs”) commenced an action against

(i) Standard Registrar and Transfer Co., Inc.

(“Standard”), (ii) Amy Merrill (“Merrill”) (Standard and Merrill,

together, the “TA Defendants”), (iii) DarkPulse, Inc., (iv) Dennis O’Leary (“O’Leary”), (v) Thomas

Seifert (“Seifert”), (vi) Carl Eckel (“Eckel”), (vii) Anthony Brown (“Brown”), and (viii) Faisal Farooqui

(“Farooqui”) (DarkPulse, O’Leary, Seifert, Eckel, Brown, and Farooqui, collectively, the “DPLS Defendants ”)

in the United States District Court for the District of Utah.

The Noteholder Plaintiffs’ complaint alleges

the DPLS Defendants violated the Racketeer Influenced and Corrupt Organizations (RICO) Act, are liable for attorneys’ fees pursuant

to the Company’s breach of securities contracts between the Company and, separately, Carebourn and More, and engaged in civil conspiracy,

fraudulent concealment, tortious interference with economic relations and conversion against the Noteholder Plaintiffs.

Thereafter, the TA Defendants and DPLS Defendants

separately moved to dismiss the Noteholder Plaintiffs’ complaint.

On February 10, 2023, the Court denied both motions without prejudice

and stayed the action pending the conclusion of enforcement action commenced by the U.S.

Securities and Exchange Commission against Carebourn

and its principal, Chip Rice, in the U.S.

District Court for the District of Minnesota.

The Company contends that the Noteholder Plaintiffs’

lawsuit is duplicative of the first-filed lawsuits commenced by the Noteholder Plaintiffs’ in Minnesota state court.

intends to vigorously defend itself against the Noteholder Plaintiffs’ lawsuit.

Goodman et al.

1 unchanged sentence

As disclosed in greater detail in the Company’s

Form 10-Q, filed November 15, 2021, 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”).

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

On August 20, 2021, the Company and the Series

D Plaintiffs entered into a stipulation, pursuant to which the Company withdrew its motion to dismiss and the Company was provided with

an extended period of time to respond to the complaint.

On September 8, 2021, the Company filed its Answer

and Counterclaims, wherein the Company alleges counterclaims arising from various breaches of fiduciary duties by the Series D Plaintiffs

while they were employed as officers of the Company.

On December 9, 2021, the parties participated

in private mediation.

No understanding of settlement was reached at the conclusion thereof.

The Company remains committed to actively litigating

its claims and defenses against the Series D Plaintiffs.

Form 10-Q, filed October 24, 2022, on September 10, 2021, Stephen Goodman, Mark Banash, and David Singer (“Former Officers”)

commenced suit against the Company in Arizona Superior Court, Maricopa County.

As of the date hereof, the Company and Former

Officers have entered into a mutual settlement.

Thus, the Former Officers’ lawsuit against the Company has been dismissed with prejudice.

Any expenses or amounts awed have been recorded as of December 31, 2022 and are properly disclosed.

DarkPulse, Inc.

FirstFire Global Opportunities

Fund, LLC, and Eli Fireman (SDNY)

On December 31, 2021, the Company commenced an

action against FirstFire Global Opportunities Fund, LLC (“FirstFire”), and Eli Fireman (“Fireman”) (FirstFire

and Fireman together, the “FirstFire Parties”) in the United States District Court for the Southern District of New York.

The complaint alleges that FirstFire is an unregistered dealer acting in violation of Section 15(a) of the Securities Exchange Act of

1934 (the “Act”), and that the Company is entitled to rescissionary relief from certain convertible promissory notes and

securities purchase agreements entered into by the Company and FirstFire pursuant to Section 29(b) of the Act.

The complaint also asserts

claims against Fireman for control person liability under Section 20(a) of the Act, unjust enrichment of FirstFire, and constructive

trust against FirstFire.

On January 14, 2022, the Company moved for entry

of a temporary restraining order and award of a preliminary injunction against FirstFire to enjoin them from selling or attempting to

sell, transfer, or otherwise dispose of the 177,275,000 common shares the Company believed were in FirstFire’s possession pursuant

to a certain note.

On January 14, 2022, the Court denied the Company’s

order to show cause seeking a temporary restraining order.

Following expedited briefing by the parties,

on January 21, 2022, the Court denied the Company’s motion for preliminary injunction.

On March 14, 2022, the FirstFire Parties filed

their letter request for a motion to dismiss the Company’s complaint.

The Company responded to the FirstFire Parties’ letter

on March 17, 2022.

As of the filing date, the Court has not yet issued a decision on the FirstFire Parties letter request to file its

motion to dismiss.

FirstFire Global Opportunities Fund, LLC v.

DarkPulse, Inc.

Chancery Court)

On December 13, 2021, FirstFire Global Opportunities

Fund, LLC (“FirstFire”) commenced an action against the Company in the Court of Chancery of the State of Delaware.

The complaint

seeks declaratory judgment of the issuance of 177,375,000 shares of Company common stock pursuant to a certain convertible promissory

On January 4, 2022, the Company filed a motion

to dismiss FirstFire’s complaint.

On February 11, 2022, the Company filed its opening

memorandum of law in support of its motion to dismiss.

The Company’s memorandum argues that FirstFire the certain convertible promissory

note that the issuance was made under is void ab initio as it violates New York’s criminal usury laws, and that FirstFire improperly

amended the governing law provision of the void convertible note to evade being declared void ab initio and, instead, continue to enforce

the unlawful transaction.

On March 14, 2022, FirstFire filed a notice of

voluntary dismissal of its complaint.

As of December 31, 2021, DarkPulse views the

aforesaid FirstFire Delaware Chancery matter as fully closed.

Fund, LLC, and Eli Fireman

As disclosed in greater detail in the Company’s

Form 10-Q, filed October 24, 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 following discloses

the material updates for this matter.

On January 17, 2023, the Court granted the FirstFire

Parties’ motion to dismiss the Company’s complaint.

Also on January 17, 2023, the Company appealed the trial court’s

decision to the United States Court of Appeals for the Second Circuit.

Briefing is currently taking place on the Company’s appeal.

The Company remains committed to actively litigating

its claims for relief under the Securities Exchange Act of 1934 and Racketeer Influenced and Corrupt Organizations (RICO) Act.

DarkPulse, Inc.

EMA Financial, LLC et al

On January 4, 2022, the Company commenced an

action against EMA Financial, LLC (“EMA”), EMA Group, Inc.

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

(EMA, EMA Group, and Preston together, the “EMA Parties”) in the United States District Court for the Southern District of

The complaint alleges that EMA is an unregistered dealer acting in violation of Section 15(a) of the Securities Exchange Act

of 1934 (the “Act”), and that the Company is entitled to rescissionary relief from certain convertible promissory notes and

securities purchase agreements entered into by the Company and EMA pursuant to Section 29(b) of the Act.

The complaint also asserts claims

against Preston for control person liability under Section 20(a) of the Act, unjust enrichment of EMA, EMA Group, and Preston, and constructive

trust against the EMA Parties.

On March 28, 2022, the Company filed its first

amended complaint against the EMA Parties.

The amended complaint alleges the same causes of action asserted in the initial complaint—(1)

that EMA 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

is entitled to rescissionary relief from certain convertible promissory notes and securities purchase agreements entered into by the

Company and EMA, (2) that Preston is liable pursuant to Section 20(a) of the Act, and (3) unjust enrichment—along with two claims:

that the EMA Parties, first, violated and, second conspired to violate the Racketeer Influenced and Corrupt Organizations (RICO) Act

for engaging in the collection of an unlawful debt.

As disclosed in greater detail in the Company’s

Form 10-Q, filed October 24, 2022, the Company remains in active litigation with EMA Financial, LLC (“EMA”), EMA Group, Inc.

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

The following discloses the material updates for this matter.

On March 1, 2023, the Court granted the EMA Parties’

motion to dismiss the Company’s claims asserted under the Securities Exchange Act of 1934, but denied dismissal of the Company’s

claim asserted under the Racketeer Influenced and Corrupt Organizations (RICO) Act.

On or about May 15, 2023, the Company and the

EMA Parties reached an understanding of settlement, which was subsequently memorialized.

The action was subsequently dismissed on or about

June 14, 2023.

DarkPulse, Inc.

Brunson Chandler & Jones,

On July 8, 2022, the Company commenced litigation

against Brunson Chandler & Jones, PLLC (“Brunson Firm”), and Lance B.

Brunson (“Brunson,” and together with

the Brunson Firm, the “Brunson Parties”) through the filing of a complaint in the United States District Court for the District

The Company is alleging that the Brunson Parties have committed professional negligence and breach of contract.

On March 2, 2023, the Brunson Parties filed an

answer, affirmative defenses, and counterclaims to the Company’s complaint, wherein the Brunson Firm alleged claims for (i) breach

of contract against the Company, (ii) breach of contract against the Company’s subsidiary, DarkPulse Technologies, Inc., and (iii)

quantum meruit.

On June 5, 2023, the Company filed its answer

and affirmative defenses to the Brunson Firm’s counterclaims.

The Company remains committed to litigating its claims and affirmative

defenses against the Brunson Parties.

DarkPulse, Inc., et al v.

Crown Bridge Partners,

On September 23, 2022, the Company commenced an

action along with two other plaintiffs (“Crown Bridge Plaintiffs”) against Crown Bridge Partners, LLC, Soheil Ahdoot, and

Sepas Ahdoot (“Crown Bridge Defendants”) in the United States District Court for the Southern District of New York alleging

violations of the Racketeer Influenced and Corrupt Organizations (RICO) Act.

On January 13, 2023, the Crown Bridge Defendants

filed a motion to dismiss.

As of May 16, 2023, the Crown Bridge Defendants’ motion to dismiss was fully submitted to the court.

As of the date hereof, no decision has been made on the motion.

The Company remains committed to actively litigating

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

its RICO claims against the Crown Bridge Defendants.

Benner et al v.

DarkPulse, Inc.

On March 29, 2023, J.

Merlin Benner, Phillip J.

Benner, Benjamin P.

Benner, Jonas M.

Benner, and Angelica M.

Benner (collectively, the “Benner Parties”) commenced an action

in the United States District Court for the Southern District of Texas against the Company and its Chief Executive Officer, Dennis O’Leary,

individually, alleging (i) the Company is in breach of contracts between the Company and the Benner Parties as it concerns Remote Intelligence,

LLC and Wildlife Specialists, LLC, (ii) violation of Texas Uniform Fraudulent Transfer Act by the Company, and (iii) defamation by Mr.

Pursuant to a stipulation entered into by the

parties to this matter, the Company and Mr.

O’Leary are scheduled to file their answer to the Benner Parties’ complaint on

or before June 30, 2023.

GS Capital Partners, LLC v.

DarkPulse, Inc.

On June 2, 2023, GS Capital Partners, LLC (“GS

Capital”) commenced an action in the Supreme Court for New York County against the Company through the filing of motion for summary

judgment in lieu of a complaint.

The motion claims that the Company is in breach of a convertible promissory note, dated July 14, 2021,

and accompanying securities purchase agreement, dated the same.

The motion claims that GS Capital is entitled

to an award of $2,407,671, plus prejudgment interest and attorney’s fees, costs and disbursements.

The Company is currently looking to retain legal

counsel to represent it in this matter, and intends to vigorously defend itself against GS Capital.

The Company intends to vigorously defendant against

From time to time, we may become involved in

4 unchanged sentences

business, financial condition and operating results.

On March 11, 2020, the World Health Organization

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

President announced a National

Emergency relating to the disease.

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

potential for catastrophic impact.

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

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

These measures,

while intended to protect human life, are expected to have serious adverse impacts on domestic and foreign economies of uncertain severity

and duration.

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

The sweeping nature of the coronavirus pandemic

makes it extremely difficult to predict how the Company’s business and operations will be affected in the longer run, but we expect

that it may materially affect our business, financial condition and results of operations.

The extent to which the coronavirus impacts

our results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may

emerge concerning the severity of the coronavirus and the actions to contain the coronavirus or treat its impact, among others.

the coronavirus outbreak has begun to have indeterminable adverse effects on general commercial activity and the world economy, and our

business and results of operations could be adversely affected to the extent that this coronavirus or any other epidemic harms the global

economy generally and/or the markets in which we operate specifically.

Any of the foregoing factors, or other cascading effects of the

coronavirus pandemic that are not currently foreseeable, could materially increase our costs, negatively impact our revenues and damage

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

The duration of any such impacts

cannot be predicted.

NOTE 15 – RELATED PARTY TRANSACTIONS

The Company follows

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

transactions.

NOTE 17 – RELATED

PARTY TRANSACTIONS

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

of related party transactions.

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

b) Entities for which investments

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

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

c) trusts for the benefit of employees, such as

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

d) principal owners of the Company;

management of the Company;

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

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

its own separate interests;

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

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

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

The financial statements

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

similar items in the ordinary course of business.

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

or combined financial statements is not required in those statements.

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

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

c) trusts for the benefit of

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

d) principal owners of

e) management of the Company;

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

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

pursuing its own separate interests;

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

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

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

The financial

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

and other similar items in the ordinary course of business.

However, disclosure of transactions that are eliminated in the preparation

of consolidated or combined financial statements is not required in those statements.

The disclosures shall include:

a) the nature of the relationship(s)

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

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

of the transactions on the financial statements;

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

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

and d) amounts

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

During the years ended December 31, 2021 and

2020, the Company’s Chief Executive Officer advanced personal funds in the amount of $ 593 and $ 68,254 for Company expenses.

NOTE 16 – SUBSEQUENT EVENTS

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

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

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

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

On April 11, 2022, the Company issued 23,746,816

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

a) the nature of

the relationship(s) involved;

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

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

of the effects of the transactions on the financial statements;

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

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

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

terms and manner of settlement.

the year ended December 31, 2022, certain executives of the Company received $ 270,000

in Directors fees from Optilan for being members of Optilan’s Board of Directors with an additional $ 90,000

accrued but unpaid.

years ended December 31, 2022 and 2021, the Company’s Chief Executive Officer advanced personal funds in the amount of $ 0

and for Company expenses.

Remote Intelligence and Wildlife Specialists

Loan Payables

RI has a loan payable with the former majority

shareholder, who is a shareholder in the Company after the acquisition of 60% of RI’s membership interests.

The loan is unsecured,

non-interest bearing and due on demand.

As of December 31, 2022 and 2021, the outstanding balance was $ 226,247 and $ 185,247 , respectively.

WS has a loan payable with the former majority

shareholder, who is a shareholder in the Company after the acquisition of 60% of WS’s membership interests.

The loan is unsecured,

non-interest bearing and due on demand.

As of December 31, 2022 and 2021, the outstanding balance was $ 135,500 and $ 0 , respectively.

SPAC Transaction

On October 12,

2022, the Company entered into and closed the Purchase Agreement (the “Agreement”) pursuant to which the Company purchased

2,623,120 shares of Class B Common Stock (the “Class B Common Stock”) and 4,298,496 Private Placement Warrants, each of which

is exercisable to purchase one share of Class A Common Stock (the “Warrants,” together, with the Class B Common Stock, the

"Securities") of Gladstone Acquisition Corp., a Delaware corporation (NASDAQ:

GLEE) (the “SPAC”), from Gladstone Sponsor,

LLC (‘Original Sponsor”) for $ 1,500,000 (the “Purchase Price”).

The SPAC subsequently changed its name to Global

Systems Dynamics, Inc.

addition to the payment of the Purchase Price, the Company also assumed the following obligations:

(i) responsibility for all of

SPAC’s public company reporting obligations, (ii) the right to provide an extension payment and extend the deadline of the

SPAC to complete an initial business combination from 15 months from August 9, 2021 to 18 months for an additional $1,150,000, and

(iii) all other obligations and liabilities of the Original Sponsor related to the SPAC.

The principal balance of this note

shall be payable by GSD on the earlier to occur of:

(i) the date on which GSD consummates its initial business combination (the

“Business Combination”) and (ii) the date that the winding up of GSD is effective.

The note does not bear interest.

of December 31, 2022, the outstanding note receivable was $ 1,049,248

and $ 100,752

was classified as other assets on the consolidated balance sheet.

the Agreement, the Company replaced the SPAC’s current directors and officers with directors and officers the Company selected in

its sole discretion.

Following the closing of the Agreement, the SPAC changed its name to Global System Dynamics, Inc.

to the Agreement, the Company also entered into the Assignment, Assumption, Release and Waiver of the Letter Agreement pursuant to which

the Original Sponsor and each of the parties to the Letter Agreement (defined below) agreed that all rights, interests and obligations

of the Original Sponsor under the Letter Agreement (as defined below) were hereby assigned to the Company and that the Original Sponsor

will have no further rights, interests or obligations under the Letter Agreement as of the Closing Date.

14, 2022 the Company, the SPAC, and Zilla Acquisition Corp.

(“Merger Sub”) entered into an Business Combination Agreement

which is referred to as the “Merger Agreement,” pursuant to which they agreed to combine their respective businesses.

to the terms of the Merger Agreement, Zilla Acquisition Corp., a wholly-owned subsidiary of GSD, will merge with and into DarkPulse, which

transaction is referred to as the “Business Combination” or the “Merger” with DarkPulse surviving the Business

Combination as a wholly-owned subsidiary of GSD.

Following the Business Combination, DarkPulse and GSD will operate as a consolidated

company, which is referred to as the Combined Company, under the name “Global System Dynamics, Inc.,” and the combined entity

will trade under the symbol “DARK.”

determined that the SPAC has the subordinated equity to carry out its primary economic activities, and the power to control the activities

that most directly impact the performance of the SPAC is shares by all equity holders as a group.

Furthermore, the SPAC is designed to

benefit the public shareholders over the Class B sponsor shareholder, DarkPulse.

Because the Company is not the primary beneficiary of

the SPAC, consolidation is precluded until the merger is consummated.

As such, the Company’s $1,500,000 investment in GSD was accounted

for as cost at December 31, 2022.

As of December 31, 2022, the Company has $318,025

owed from GSD and included as due from related party on the consolidated balance sheet.

These advances were made to pay for certain expenses

on behalf of the SPAC, as well as $30,000 in accrued management fees.

The advances are unsecured, non-interest bearing and due on demand.

NOTE 18 – SUBSEQUENT

Through June 23, 2023, the Company has issued

587,692,015 shares of common stock for net proceeds of $2,276,080.

In January 2023, the Company issued 297,000,000

shares of common stock pursuant to a settlement of a former litigation matter.

7, 2023, March 9, 2023, April 7, 2023 and May 5, 2023, GSD issued a non-convertible promissory note in the aggregate principal amount

of $335,788 ($83,947 per month) to the Company, in connection with the extension of the termination date for the GSD’s initial business

combination from February 9, 2023 to the issuance date of these consolidated financial statements.

the promissory note, the Company has agreed to loan to GSD $251,841 to deposit into GSDs trust account.

The promissory note bears no interest

and is repayable in full upon the earlier of (i) the date on which GSD consummates its Initial Business Combination, and (ii) the date

that the winding up of GSD is effective.

From January 1, 2023 through June 23, 2023, the

Company has provided non-interest-bearing advances to GSD in the principal amount of $769,436.

On May 16, 2023, the Company entered into a 50/50

Partner Agreement with Jupiter Metal Pvt.

(“ Jupiter ,” together, with the Company, the “ Partners ”)

pursuant to which the Company and Jupiter formed a partnership pursuant to the provisions of The Indian Partnership Act 1932 (the “ Act ”).

The name of the partnership is “OM DarkPulse Infratech” (the “ Partnership ”) and its purpose is to jointly

work on infrastructure projects in India.

The Partnership will commence on the effective date and will continue for 12 months, unless

earlier dissolved and terminated pursuant to the Act or any other provisions in the agreement.

The Partnership will also be automatically

extended for additional 12-month terms unless terminated upon written notice by either of the Partners upon 90 days prior written notice

prior to termination of the Partnership pursuant to the terms in the agreement.

No contributions have been made to date.

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 9A. Controls and Procedures