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Item 1. Financial Statements

2023-07-18 compared with 2022-11-04 · 968 added, 843 removed, 229 unchanged (89% of the section changed)

Financial Statements

DARKPULSE, INC.

Consolidated Balance Sheets

September 30,

CONDENSED CONSOLIDATED BALANCE SHEETS

CURRENT ASSETS:

Cash and cash equivalents

Accounts receivable, net

Unbilled revenue

Other current assets

Contract assets

Due from related party

Prepaid expenses and other current assets

TOTAL CURRENT ASSETS

2 unchanged sentences

Operating lease right-of-use assets

Intangible assets

Notes receivable, related party

Investment in related party

Joint venture

Intangible assets, net

Other assets, net

TOTAL NON-CURRENT ASSETS

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:

Accounts payable and accrued liabilities

Accounts payable and accrued expenses

Contract liabilities

Loss provision for contracts in progress

Convertible notes, net

Notes payable

Customer deposits

Notes payable, current

Derivative liability

Contract liabilities

Loan payable, current

Loan payable, related party

Secured debenture, current

Operating lease liabilities - current

4 unchanged sentences

Operating lease liabilities - non-current

Other liabilities – non-current

TOTAL NON-CURRENT LIABILITIES

1 unchanged sentence

Commitments and contingencies

STOCKHOLDERS’ EQUITY:

Preferred stock - Series A (par value $ 0.01 ;

100 shares authorized;

100 and 0 issued and outstanding at September 30, 2022 and December 31, 2021, respectively)

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

100,000 shares authorized;

88,235 issued and outstanding at September 30, 2022 and December 31, 2021, respectively)

Common stock (par value $ 0.0001 ), 20,000,000,000 shares authorized, 6,145,852,186 and 5,197,821,885 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

Treasury stock, 100,000 shares at September 30, 2022 and December 31, 2021

Paid-in capital in excess of par value

Non-controlling interest in variable interest entity and subsidiary

Accumulated other comprehensive income

STOCKHOLDERS' DEFICIT:

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

100 shares designated, 100 shares issued and outstanding at both March 31, 2023 and December 31, 2022

Convertible preferred stock - Series D, par value $ 0.01 , 100,000 shares designated, 88,235 shares issued and outstanding as of both March 31, 2023 and December 31, 2022

Common stock, par value $ 0.0001 , 20,000,000,000 shares authorized, 7,256,166,860 and 6,427,495,360 shares issued as of March 31, 2023 and December 31, 2022, respectively, 7,256,066,860 and 6,427,395,360 shares outstanding as of March 31, 2023 and December 31, 2022, respectively

Treasury stock at cost, 100,000 shares at March 31, 2023 and December 31, 2022

Additional paid-in capital

Non-controlling interests

Accumulated other comprehensive loss

( 1,600,247 )

Accumulated deficit

( 1,137,902 )

Accumulated deficit

( 60,574,902 )

TOTAL STOCKHOLDERS’ EQUITY

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

See accompanying notes to consolidated financial

DARKPULSE, INC.

Consolidated Statements of Operations

For the Three Months

For the Nine Months

Ended September 30,

COST OF GOODS SOLD

( 46,555,334 )

TOTAL STOCKHOLDERS’ DEFICIT

( 11,512,901 )

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT

See the accompanying

notes to the unaudited condensed consolidated financial statements

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

COST OF REVENUES

GROSS PROFIT (LOSS)

OPERATING EXPENSES:

1 unchanged sentence

Salaries, wages and payroll taxes

Bad debt expense

Professional fees

Depreciation and amortization

Debt transaction expenses

Impairment expense

Gain on forgiveness of payables

TOTAL OPERATING EXPENSES

NET OPERATING LOSS

( 9,702,253 )

( 2,485,484 )

OPERATING LOSS

( 14,606,074 )

1 unchanged sentence

OTHER INCOME (EXPENSE):

Interest income (expense)

Gain on the forgiveness of debt

Restructuring costs

Interest expense

Loss on equity investment

Change in fair market of derivative liabilities

Gain/(Loss) on convertible notes

Foreign currency exchange rate variance

TOTAL INCOME (EXPENSE)

( 8,805,668 )

( 1,686,829 )

( 18,375,506 )

( 1,924,311 )

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

Net loss attributable to Company stockholders

$ ( 8,898,239 )

$ ( 1,702,667 )

$ ( 18,119,671 )

$ ( 1,940,149 )

LOSS PER SHARE:

WEIGHTED AVERAGE SHARES OUTSTANDING:

5,840,449,453

4,835,935,495

5,539,124,247

4,679,197,410

5,840,449,453

4,835,935,495

TOTAL OTHER (EXPENSE) INCOME

( 14,799,264 )

( 5,384,270 )

See accompanying notes to consolidated financial

DARKPULSE, INC.

Consolidated Statements of Operations

For the Three Months

For the Nine Months

Ended September 30,

Net loss attributable to non-controlling interests

Net loss attributable to DarkPulse, Inc.

$ ( 14,019,568 )

$ ( 5,270,589 )

Net loss per share - basic and diluted

Weighted average common shares outstanding - basic and diluted

6,958,719,650

5,290,107,585

OTHER COMPREHENSIVE GAIN (LOSS)

Unrealized Gain (Loss) on Foreign Exchange

See the accompanying

notes to the unaudited condensed consolidated financial statements

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE

Three Months Ended

$ ( 14,799,264 )

$ ( 5,384,270 )

OTHER COMPREHENSIVE LOSS

Foreign currency translation

COMPREHENSIVE LOSS

1 unchanged sentence

$ ( 5,603,839 )

$ ( 21,289,108 )

$ ( 1,931,835 )

See accompanying notes to consolidated financial

DARKPULSE, INC.

Consolidated Statement of Stockholders' Equity

For the Three Months Ended September 30, 2022

Preferred Stock, Series A

Preferred Stock, Series D

Balance, December 31, 2021

5,197,821,885

Common stock issued for cash

Foreign currency adjustment

Balance, March 31, 2022

5,397,942,946

Common stock issued for cash

Common stock issued for TerraData acquisition

Stock based compensation

Foreign currency adjustment

Balance, June 30, 2022

5,594,156,736

Common stock issued for cash

Foreign currency adjustment

Balance, September 30, 2022

6,145,852,186

Controlling Interest in

Accumulated Other Comprehensive

Total Stockholders’

Balance, December 31, 2021

$ ( 284,463 )

$ ( 11,276,490 )

Common stock issued for cash

Foreign currency adjustment

( 5,384,270 )

Balance, March 31, 2022

$ ( 504,032 )

See the accompanying

notes to the unaudited condensed consolidated financial statements

CONDSENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS'

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND

Preferred stock

Balance at December 31, 2021

5,197,821,885

Conversion of convertible notes

Common stock issued for cash

Common stock issued for TerraData acquisition

Stock based compensation

Foreign currency adjustment

( 4,185,572 )

Balance, June 30, 2022

Balance at March 31, 2022 (unaudited)

5,397,942,951

Balance at December 31, 2022

6,427,395,360

Common stock issued for cash

Common stock issued for cash, net of fees

Issuance of common stock for legal settlement

Foreign currency adjustment

( 1,956,159 )

( 8,805,668 )

Balance, September 30, 2022

Balance at March 31, 2023 (unaudited)

7,256,066,860

Treasury stock

Additional paid-in

Accumulated other com-

stockholders’

Balance at December 31, 2021

$ ( 284,463 )

DARKPULSE, INC.

Consolidated Statement of Stockholders' Equity

For the Three Months Ended September 30, 2022 and 2021

Capital in Excess of Par

Balance, December 31, 2020

$ ( 11,276,490 )

Conversion of convertible notes

Common stock issued for cash

Foreign currency adjustment

Balance, March 31, 2021

( 5,384,270 )

Conversion of convertible notes

Stock based loan acquisition cost

Foreign currency adjustment

Balance, June 30, 2021

( 5,384,270 )

Conversion of convertible notes

Issuance of common stock for public offering

Issuance of common stock for Wildlife Specialist acquisition

Issuance of common stock for Remote Intelligence acquisition

Share-based compensation

Distributions

Foreign currency adjustment - NCI

Foreign currency adjustment

Balance, September 30, 2021

Balance at March 31, 2022 (unaudited)

$ ( 504,032 )

Non-Controlling Interest in

Accumulated Other Comprehensive

Total Stockholders’

Distributions

Balance, December 31, 2020

$ ( 16,660,760 )

Balance at December 31, 2022

$ ( 1,137,902 )

Conversion of convertible notes

Foreign currency adjustment

Balance, March 31, 2021

$ ( 46,555,334 )

$ ( 328,994 )

Conversion of convertible notes

Stock based loan acquisition cost

Common stock issued for cash, net of fees

Issuance of common stock for legal settlement

Foreign currency adjustment

Balance, June 30, 2021

( 14,019,568 )

( 14,799,264 )

Conversion of convertible notes

Issuance of common stock for public offering

Issuance of common stock for Wildlife Specialist acquisition

Issuance of common stock for Remote Intelligence acquisition

Share-based compensation

Distributions

Foreign currency adjustment - NCI

Foreign currency adjustment

Balance at March 31, 2023 (unaudited)

$ ( 1,600,247 )

$ ( 60,574,902 )

Balance, September 30, 2021

$ ( 11,512,901 )

See accompanying notes to consolidated financial

DARKPULSE, INC.

Consolidated Statements of Cash Flows

For the Nine Months Ended

September 30,

See the accompanying

notes to the unaudited condensed consolidated financial statements

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Cash flows from operating activities:

1 unchanged sentence

$ ( 5,384,270 )

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

Amortization of loan acquisition costs

Stock based loan acquisition costs

Gain on the extinguishment of debt

Restructuring costs

Loss on equity investment

Issuance of common stock for legal settlement

Impairment of goodwill and intangible assets

Bad debt expense

Operating lease expense

Amortization of debt discount

Gain on forgiveness of payables

Derivative liability

1 unchanged sentence

Accounts receivable

Unbilled revenue

Contract liability

( 2,523,210 )

Other current assets

Customer deposits

Contract assets

Prepaid expenses and other assets

Accounts payable and accrued expenses

( 2,949,406 )

( 4,362,016 )

Operating lease liabilities

Other current liabilities

Net cash used by operating activities

Contract liabilities

Loss provision for contracts in progress

Operating lease liabilities, net

Other liabilities

Net cash used in operating activities

( 2,323,783 )

2 unchanged sentences

Purchases of property and equipment

Business acquisitions, net of cash received

Investment in patents

Net cash used by investing activities

Investment in joint venture

Issuance of note receivable, related party

Advances to related party

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from sale of common stock from offering

Proceeds from convertible notes payable

Payments on convertible notes

Proceeds from notes payable

Proceeds from sale of common stock, net of fees

Net repayments of loan payable

Net cash provided by financing activities

NET INCREASE (DECREASE) IN CASH

Effect of exchange rate on cash

Net change in cash

( 1,079,500 )

CASH, beginning of period

CASH, end of period

Non-cash finance and investing activities for the nine months ended September 30:

Stock issued for acquisition of TerraData

Stock issued for convertible notes payable and accrued interest

Issuance of common stock for Wildlife Specialists

Issuance of common stock for Remote Intelligence

Effect of exchange rate on cash

Cash at beginning of period

Cash at end of period

Supplemental disclosure of cash flow information:

Cash paid during the nine months ended September 30:

See accompanying notes to consolidated financial

DARKPULSE, INC.

Notes to the Consolidated Financial Statements

Cash paid for income taxes

Cash paid for interest

See the accompanying

notes to the unaudited condensed consolidated financial statements

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES

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;

Remote 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 a U.S.

manufacturer and tester of advanced

electronics, cables and sub-assemblies specializing in advanced package and complex CCA and hardware.

Liquidation/winding

up of Optilan (UK) Limited

On May 3, 2023, Eversheds Sutherland (International)

LLP, a creditor of Optilan (UK) Limited, filed a petition to wind up (“Winding up Petition”) Optilan (UK) Limited, a wholly

owned subsidiary of the Company’s Subsidiary, Optilan HoldCo 3 Limited, and the matter was due to be heard in the Portsmouth Combined

Court Centre on June 28, 2023.

On June 28, 2023, the High Court of Justice in

the United Kingdom issued a winding-up order for the liquidation and winding up of the affairs of Optilan (UK) Limited (“Optilan

Liquidation”).

In conjunction with the order, the court appointed the Offical Receiver’s Office (“OR”) to take

the appointment as liquidator of Optilan (UK) Limited and take control of Optilan (UK) Limited’s assets.

On July 3, 2023, Optilan (UK) Limited received

a letter from The Insolvency Service, an executive agency sponsored by the Department for Business and Trade located in the U.K.

to the letter of The Insolvency Services, the Company was required to provide information relating to Optilan (UK) Limited to the Official

Receiver’s Office (a government body of Plymouth, the United Kingdom) and attend an interview with staff of the Official Receiver’s

Office to review the prospect of recovering the assets of Optilan (UK) Limited for the benefit of creditors.

The interview is scheduled

for July 18, 2023.

No order confirming a plan of reorganization,

arrangement or liquidation has been entered as of this filing.

The Company is an Unsecured creditor of Optilan (UK) Limited and is at

risk of losing any repayment of obligations due from Optilan (UK) Limited because there are several intercompany relationships between

the Company and Optilan (UK) Limited, the financial impact of any future claims and liabilities may not be known for several months.

Company has approximately $19.4 million intercompany payables due from Optilan (UK), which will increase the Company liabilities for any

obligations not repaid.

The Company expects the remaining assets held by Optilan (UK) Limited to be fully impaired and reported as discontinued

operations during the second quarter of 2023 as a result of the winding-up order for liquidation.

At the time of this filing the Company

is still evaluating the full effects of the winding-up order for liquidation and the material adverse effects it will have on the Company’s

continued operations and ability to meet future obligations.

The Company evaluated the events and circumstances

of Optilan (UK) Limited liquidation and determined that conditions existed as of March 31, 2023, to indicate that the carrying value of

the Company’s goodwill and intangible assets may not be recoverable.

Refer to Notes 2 and 7 for further detail on the impairment

The Company expects the remaining assets held by Optilan (UK) Limited to be fully impaired during the second or third quarter

of 2023 as a result of the winding-up order for liquidation.

Lasty, the Company performed an analysis of the

trade receivables related to Optilan (UK) Limited and determined that an additional $ 2,364,977 may not be collectible pursuant to the

Optilan Liquidation.

As of March 31, 2023, the Company recorded a bad debt provision for this amount.

Optilan (UK) Limited has the following assets as of

March 31, 2023, including in the accompanying unaudited condensed consolidated balance sheet are as follows:

condensed consolidated information for Optilan UK

Accounts receivable, net

Contract assets

Property and equipment, net

Operating lease right-of-use assets

NOTE 2 – SIGNIFICANT ACCOUNTING

Basis of Presentation and

Principles of Consolidation

The consolidated

financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles of the United States

of America (“U.S.

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

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

intercompany transactions and balances have been eliminated.

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

fairly the Company’s financial position as of March 31, 2023, and the results of operations for three months and cash flows for

the three months ended March 31, 2023 and 2022 have been included.

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.

Unaudited Interim Financial Information

The accompanying unaudited condensed consolidated

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

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

United States for complete financial statements.

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

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

The consolidated financial

statements as of December 31, 2021 have been audited by an independent registered public accounting firm.

The accounting policies and

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

statements of the Company for the year ended December 31, 2021, which are contained in Form 10-K as filed with the Securities and Exchange

Commission on April 15, 2022.

The consolidated balance sheet as of December 31, 2021 was derived from those financial statements.

Basis of Presentation and Principles of

Consolidation

The consolidated financial statements and accompanying

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

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

The condensed consolidated

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

All intercompany transactions and balances

have been eliminated.

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

position as of September 30, 2022, and the results of operations for three and nine months and cash flows for the nine months ended September

30, 2022 have been included.

The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative

of the results to be expected for the full year.

Description of Business

DarkPulse, Inc.

(“DPI” or “Company”)

is a technology 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 infrastructure monitoring systems have been installed into the Honcut Bridge in Marysville, California

creating the first intelligent bridge.

Additional applications of this technology will include border security, pipelines, the oil and

gas industry, aviation & aerospace 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

The Company’s operating units 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;

Remote Intelligence, Limited Liability

Company, 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, Limited Liability

Company, 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

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.

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

Reclassifications

Certain amounts in the Company’s prior period consolidated financial

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

These reclassifications have not changed the results

of operations of prior periods.

Going Concern Uncertainty

As shown in the accompanying financial statements,

during the nine months ended September 30, 2022, the Company reported a net loss of $ 18,375,506 .

As of September 30, 2022, the Company’s

current liabilities exceeded its current assets by $ 6,314,789 .

As of September 30, 2022, the Company had $ 5,967,984 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 generate 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.

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

Company be unable to continue as a going concern.

Management is actively pursuing additional sources of financing sufficient to generate

enough cash flow to fund its operations through calendar year 2022.

However, management cannot make any assurances that such financing

will be secured.

Use of Estimates

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.

balance sheet as of March 31, 2023, the unaudited condensed consolidated statements of operations for the three and three months ended

March 31, 2023 and 2022 and of cash flows for the three months ended March 31, 2023 and 2022 have been prepared by the Company, pursuant

to the rules and regulations of the SEC for the interim financial statements.

Certain information and footnote disclosures normally included

in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to rules and regulations.

Company believes that the disclosures are adequate to make the information presented not misleading.

The unaudited interim consolidated

financial statements have been prepared on a basis consistent with the audited consolidated financial statements and in the opinion of

management, reflect all adjustments, consisting of only normal recurring adjustments, necessary for the fair presentation of the consolidated

results for the interim periods presented and of the consolidated financial condition as of the date of the interim consolidated balance

The results of operations are not necessarily indicative of the results expected for the year ending December 31, 2023.

The accompanying unaudited interim condensed consolidated

financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto

for the year ended December 31, 2022 included in the Company’s Annual Form 10-K filed with SEC on June 23, 2023.

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

Company considers all highly liquid investments with a maturity of three months or less when acquired to be cash equivalents.

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

As of March 31, 2023, there was $ 64,065

of cash held at the U.S.

entities in excess of federally insured limits.

Accounts Receivable

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 the project.

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

Generally, 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 both March 31, 2023 and

December 31, 2022, the Company determined that the allowance for doubtful accounts was $ 5,685,960 and $ 3,320,983 , 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 March 31, 2023 and December 31, 2022, retainage receivable was $ 1,256,364 and $ 824,777 , respectively.

Foreign Currency Translation

The Company’s reporting currency is US Dollars.

The Company’s reporting currency is U.S.

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 are 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.

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.

The relevant translation rates are as follows:

for the periods ended September 30, 2022 closing rate at 1.113030 USD:GBP, average rate at 1.259161 USD:GBP and for the year ended December

31, 2021 closing rate at 1.353583 USD:

GBP, average rate at 1.375671 USD:GBP.

for the three months

ended March 31, 2023 closing rate at 1.23682 S$:GBP, average rate at 1.2033 US$:GBP, and closing rate at 1.3751 US$:CAD.

The relevant translation rates are as follows:

for the periods ended September 30, 2022 closing rate at 1.3751 CAD:USD, average rate at 1.3213 CAD:USD and for the year ended December

31, 2021 closing rate at 1.2794 CAD:USD, average rate at 1.2534 CAD:USD.

for the three months

ended March 31, 2022 closing rate at 1.31524 S$:GBP, average rate at 1.342089 US$:GBP, and closing rate at 1.2484 US$:CAD.

Long-Lived Assets and Goodwill

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

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

indicate that the carrying value may not be recoverable.

Factors the Company considers to be important

which could trigger an impairment review include the following:

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

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

Significant negative industry or economic trends.

When the Company determines that the carrying

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

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

The Company measures

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

the risk inherent in the current business model.

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

exists and in projecting cash flows.

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.

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.

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.

This guidance simplifies the accounting for goodwill impairment by removing

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

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.

As a result of the Optilan Liquidation as

described in Note 1, management determined that certain events and circumstances occurred that indicated that the carrying amount of

the Company’s reporting unit may not be recoverable as of March 31, 2023.

The qualitative assessment was primarily due to the customer contracts

held by Optilan (UK) Limited at March 31, 2023 and the associated revenue projections by the UK subsidiary that is subject to the potential

As such, the Company compared the fair value of the reporting unit to the carrying amounts and recorded an impairment loss

of $ 6,809,166 pertaining to impairment and goodwill in the consolidated statements of operations.

The Company recorded impairment of the

indefinite-lived intangible asset of $ 356,260 , and impairment of goodwill of $ 6,452,906 .

The Company has one reporting unit which was

evaluated in the impairment test noted above.

As a result of the impairment, the Company had a carrying value of $ 0 pertaining to goodwill

and intangible assets as of March 31, 2023.

Property and Equipment

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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.

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.

The Company recognizes revenue when its customer

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

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

(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.

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.

Contract liabilities is shown separately in the

unaudited consolidated balance sheets as current liabilities.

At September 30, 2022 and December 31, 2021, we had contract liabilities

of $ 4,050,438 and $ 3,216,562 , 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.

The Company 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 obligations.

The Company 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.

Cost of Revenues

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

The Company has no significant concentrations

of credit risk.

Related Parties

The Company accounts for related party transactions

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

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

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

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

the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence

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

its own separate interests.

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

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

more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.

Effective January 1, 2019, the Company accounts

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

For operating leases, interest on the lease liability and the amortization of the right of use asset result in straight-line rent

expense over the lease term.

For finance leases, interest on the lease liability and the amortization of the right of use asset results

in front-loaded expense over the lease term.

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 both March 31, 2023 and December 31, 2022,

one customer accounted for 38 % of gross accounts receivable.

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 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 rent expense over the lease

For finance leases, interest on the lease liability and the amortization of the right of use asset results in front-loaded expense

over the lease term.

Variable lease expenses are recorded when incurred.

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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.

Restructuring Costs

The Company accounts for settlement of employment

contracts and one-time salary expenses, such as severance, as restructuring costs when incurred due to specific restructuring event.

For the quarter ended September 30, 2022, the Company recognized $ 501,431 related to the settlement of employment contracts and severance

due to employment changes in our subsidiary, Optilan.

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 carrying amounts of the Company's financial

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

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

at arm’s length.

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 measures its financial assets and

liabilities in accordance with the requirements of FASB ASC 820, Fair Value Measurements and Disclosures.

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.

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’s derivative liability is a

Level 3 liability measured at fair value on a recurring basis.

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’ equity.

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.

During the three months ended March 31, 2023 and

2022, the Company recorded a loss of $ 779,696 and $ 113,681 , respectively, attributable to non-controlling interests.

Comprehensive Loss

Comprehensive loss includes net loss well as other

changes in stockholders’ equity that result from transactions and economic events other than those with stockholders.

three months ended March 31, 2023 and 2022, the Company’s only element of other comprehensive loss was foreign currency translation.

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.

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

For the nine months ended September 30, 2022,

there were no stock options outstanding.

For the nine months ended September 30, 2022, common stock equivalents related to convertible

preferred stock and convertible debt have not been included in the calculation of diluted loss per common share because they are anti-dilutive.

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

There are 28,316,441 common shares reserved for the

potential conversion of the Company's convertible debt.

Recently Issued Accounting Pronouncements

The Company has reviewed the accounting pronouncements

issued during the nine months ended September 30, 2022 and concluded they were either not applicable or not expected to have a material

impact on the Company’s condensed consolidated financial statements.

NOTE 2 – REVENUE

The following table is a summary of the Company’s

timing of revenue recognition for the three and nine months ended September 30, 2022 and 2021:

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

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

Potentially dilutive items outstanding as of

March 31, 2023 and 2022 are as follows:

Schedule of antidilutive shares

Convertible notes

Series D preferred stock

Recent Accounting Pronouncements

In April 2019, the FASB issued ASU 2019-04, Codification

Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging , and Topic 825, Financial

Instruments, which amends and clarifies several provisions of Topic 326.

In May 2019, the FASB issued ASU 2019-05, Financial Instruments-Credit

Losses (Topic 326):

Targeted Transition Relief , which amends Topic 326 to allow the fair value option to be elected for certain financial

instruments upon adoption.

ASU 2019-10 extended the effective date of ASU 2016-13 until December 15, 2022.

The Company adopted this new

guidance, including the subsequent updates to Topic 326, on January 1, 2023 and the adoption did not have a material impact on the Company’s

condensed consolidated financial statements and related disclosures.

On January 1, 2023, the Company adopted ASU 2016-13,

Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments (ASC 326).

standard replaced the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss

(“CECL”) methodology.

CECL requires an estimate of credit losses for the remaining estimated life of the financial asset using

historical experience, current conditions, and reasonable and supportable forecasts and generally applies to financial assets measured

at amortized cost, including loan receivables and held-to-maturity debt securities, and some off-balance sheet credit exposures such as

unfunded commitments to extend credit.

Financial assets measured at amortized cost will be presented at the net amount expected to be

collected by using an allowance for credit losses.

The Company adopted this new guidance on January 1, 2023 and the adoption did not have

a material impact on the Company’s condensed consolidated financial statements and related disclosures.

Management does not believe that any other recently

issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements.

As new accounting

pronouncements are issued, the Company will adopt those that are applicable.

3 – LIQUIDITY AND GOING CONCERN

generated net losses of $ 14,799,264

and $ 5,384,270

during the three months ended March 31, 2023 and 2022, respectively, and net cash

used in operating activities of $ 2,323,783

and $ 6,288,501 ,

respectively.

As of March 31, 2023, the Company’s current liabilities exceeded its current assets by $ 15,955,423

and has an accumulated deficit of $ 60,574,902 .

As of March 31, 2023, the Company had $ 545,970 of

Lastly, the Optilan Liquidation raises

serious concerns about the viability of the Optilan (UK) Limited entity and related operations of the Optilan subsidiaries.

will require additional funding during the next twelve months to finance the growth of its current operations and achieve its strategic

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.

The 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.

The following

table is a summary of the Company’s timing of revenue recognition for the three months ended March 31, 2023 and 2022:

Schedule of timing of revenue recognition

Three Months Ended

Nine Months Ended

September 30,

Timing of revenue recognition:

Services and products transferred at a point in time

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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 three and nine months ended September 30, 2022 and 2021:

Schedule of revenue by source consisted

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.

by source consisted of the following for the three months ended March 31, 2023 and 2022:

Schedule of revenue by source

Three Months Ended

Nine Months Ended

September 30,

Revenue by products and services:

Total revenue

Revenue by geographic destination consisted of

the following for the three and nine months ended September 30, 2022 and 2021:

by geographic destination consisted of the following for the three months ended March 31, 2023 and 2022:

Schedule of revenue by geographic destination

Three Months Ended

Nine Months Ended

September 30,

Revenue by geography:

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 September

30, 2022, 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

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.

Performance Obligations

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”)

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.

The 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.

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

Contract assets consist of the following:

Schedule of excess of billings

Costs and estimated earnings in excess of billings on uncompleted contracts

Contract liabilities consist of the following:

Billings in excess of costs and estimated earnings on uncompleted contracts

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

3 unchanged sentences

( 1,318,567 )

Balance at September 30, 2022

Balance at March 31, 2023

Variable Consideration

Transaction 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

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 5 – ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following

as of September 30, 2022 and December 31, 2021:

receivable consisted of the following as of March 31, 2023 and December 31, 2022:

Schedule of accounts receivable

September 30,

Accounts receivable

Allowance for doubtful accounts

Total accounts receivable

NOTE 4 – INVENTORY

Inventory consisted of the following as of September

30, 2022 and December 31, 2021:

Schedule of inventory

September 30,

Raw materials

Work in progress

Finished goods

Total inventory

Total inventory, net

( 5,685,960 )

( 3,320,983 )

Accounts receivable, net

The Company performed an analysis of the trade

receivables related to Optilan (UK) Limited and determined that an additional $2,364,977 may not be collectible pursuant to the Optilan

As of March 31, 2023, the Company recorded a bad debt provision for this amount.

NOTE 6 – PROPERTY AND EQUIPMENT

Property and equipment consisted of the following

as of September 30, 2022 and December 31, 2021:

and equipment consisted of the following as of March 31, 2023 and December 31, 2022 :

Schedule of property, plant and equipment

September 30,

Property and equipment

Leasehold improvements

Property and equipment at cost

Less - accumulated depreciation

NOTE 6 – ACCOUNTS PAYABLE AND ACCRUED

Accounts payable and accrued expenses consisted

of the following as of September 30, 2022 and December 31, 2021:

Schedule of accounts payable and accrued liabilities

September 30,

( 2,180,847 )

( 2,055,484 )

Property and equipment, net

7 – GOODWILL AND OTHER INTANGIBLE ASSETS

following is a summary of activity of goodwill for the three months ended March 31, 2023:

Schedule of changes in carrying amount of goodwill

Balances at December 31, 2022

Impairment of goodwill pertaining to Optilan

( 6,452,906 )

Foreign exchange translation

Balances at March 31, 2023

Intangible Assets,

On January 1, 2023, the

Company revised the estimated useful life of the trade name intangible asset from 25 years to 10 years.

Amortization expense for the three

months ended March 31, 2023 and 2022 was $ 33,255 and $ 0 , respectively.

During the three months ended March 31, 2023, the Company recorded impairment of the trade name of $ 356,260 .

At March 31, 2023 and December 31, 2022,

the carrying value of the intangible assets was $ 0 and $ 390,330 , respectively.

Patents - Intrusion

Detection Intellectual Property

following is a summary of the DPTI patents:

Schedule of patents

accumulated amortization

the three months ended March 31, 2023 and 2022, the Company amortized $ 12,757 and $ 12,757 ,

respectively.

8 – 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 three months ended March 31, 2023,

the Company contributed $ 98,125 to the joint venture and recorded a loss on the equity investment of $ 65,056 .

9 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and

accrued expenses consisted of the following as of March 31, 2023 and December 31, 2022:

Schedule of accounts payable and accrued expenses

Accounts payable

1 unchanged sentence

Total accounts payable and accrued expenses

NOTE 7 – LEASES

We adopted ASC 842 “Leases” using

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

adoption of the standard on January 1, 2019.

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

date of adoption.

The following was included in our balance sheet

as of September 30, 2022:

March 31, 2023 and December 31, 2022, there was $ 378,263 of convertible debt outstanding

and a derivative liability of $ 306,467 .

31, 2023, all outstanding convertible debt is default.

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 purchase price of the GS Note is $1,980,000.

The GS Note matures on July

14, 2022 upon which time all accrued and unpaid interest will be due and payable.

Interest accrues on the GS Note at

per annum until the GS Note becomes due and payable.

The GS Note is subject to various “Events of Default,” which are

disclosed in the GS Note.

Upon the occurrence of an “Event of Default,” the interest rate on the GS Note will be 18%.

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

shareholders and the Company used a portion of the proceeds of the GS Note to retire convertible debt.

31, 2023 and December 31, 2022, $ 2,000,000

remains outstanding.

As of March 31, 2023, 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 March 31, 2023 and December 31, 2022:

Schedule of loans payable

RI - line of credit

RI - Short-term loans

WS - line of credit

WS- Short-term loans

Loan payable, current

RI - SBA EIDL

RI - long-term loans

WS - SBA EIDL

WS - long-term loans

Loan payable, non-current

11 – SECURED DEBENTURE

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 Company has raised funds in excess of the amount required for 2020, 2019 and 2018.

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 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 U.S.

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 U.S.

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 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 three

months ended March 31, 2023, and 2022, the Company recorded interest expense of $ 28,275

and $ 12,617 ,

respectively.

As of March 31, 2023 and December 31, 2022, the debenture

liability totaled $ 1,109,250 and $ 1,090,827 , respectively .

The following was included

in our balance sheet as of March 31, 2023 and December 31, 2022:

Schedule of operating leases

Operating leases

September 30,

ROU operating lease assets

2 unchanged sentences

Total operating lease liabilities

The weighted average remaining lease term and

weighted average discount rate at September 30, 2022 were as follows:

The weighted average

remaining lease term and weighted average discount rate at March 31, 2023 and December 31, 2022 were as follows:

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

Weighted average remaining lease term (years)

September 30,

Operating leases

Weighted average remaining lease term (years)

Weighted average discount rate

Operating Leases

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 .

2021, the Company’s newly acquired subsidiary entered into an operating lease agreement to rent office space in Warwick, United

This ten-year agreement commenced May 27, 2021 with an annual rent of approximately $ 85,000 with the first six months rent

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

3 unchanged sentences

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

The following table reconciles future minimum

operating lease payments to the discounted lease liability as of September 30, 2022:

Schedule of future minimum operating lease payments

2026 and later

Total lease payments

Less imputed interest

Total lease obligations

Less current obligations

( 1,779,238 )

Long-term lease obligations

NOTE 8 – GOODWILL AND OTHER INTANGIBLE

The following table sets forth the changes in

the carrying amount of goodwill for the nine months ended September 30, 2022:

Schedule of changes in carrying amount of goodwill

Balance at December 31, 2021

Exchange rate variation

( 1,802,491 )

Balance at September 30, 2022

Intangible Assets - Intrusion Detection Intellectual

The Company relies on patent laws and restrictions

on disclosure to protect its intellectual property rights.

As of September 30, 2022, 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 nine months ended September 30, 2022 and

2021, the Company amortized $ 38,271 and $ 38,271 , respectively.

Future amortization of intangible assets is as follows:

Schedule of future amortization of intangible assets

NOTE 9 – DEBT AGREEMENTS

Secured Debenture

DPTI issued a convertible Debenture to the University

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

date of the Debenture.

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

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

The Debenture had an initial required payment

of 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 by April 24, 2018.

The principal

repayment amounts will be due yearly 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 September 30, 2022, the quarterly principal repayment amounts will be US$49,750.

The Debenture

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

DPTI has pledged the Patents,

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

The Debenture was initially recorded at the

$1,491,923 equivalent US Dollar amount of Canadian $1,500,000 as of December 16, 2010, the date of the original Debenture.

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

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

The amounts recorded as an unrealized loss for the three months ended September 30, 2022 and 2021, were $ 74,538

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 24, 2018.

For the nine months ended September 30, 2022,

and 2021, the Company recorded interest expense of $ 36,307 and $ 39,001 , respectively.

As of September 30, 2022 the debenture liability

totaled $ 1,090,827 , all of which was long term.

Future minimum required payments over the next 5 years and thereafter

are as follows:

Schedule of future minimum debt payments

Period ending September 30,

2027 and after

Convertible Debt Securities

The Company uses the Black-Scholes Model to calculate

the derivative value of its convertible debt.

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

of the underlying common stock incorporated into the model.

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

issue of the debt security as of September 30, 2022.

Management determined the expected volatility of 124.08%, a risk-free rate of interest

of 4.05%, and contractual lives of the debt of three months.

The table below details the Company's four outstanding convertible notes,

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

Schedule of debt

Transaction expense

As of September 30, 2022 and December 31, 2021

respectively, there was $ 378,263 and of convertible debt outstanding, net of debt discount of $ 0 .

As of September 30, 2022 and December

31, 2021 respectively, there was a derivative liability of $ 296,308 and $ 533,753 related to convertible debt securities.

NOTE 10 - STOCKHOLDERS' EQUITY

As of September 30, 2022, there were 6,145,852,186

shares of common stock and 88,335 shares of preferred stock issued and outstanding.

Preferred Stock

In accordance with the Company’s Certificate

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

As of September 30, 2022, and December 31, 2021, there were 88,335 and 88,235 , respectively total preferred shares issued and outstanding

for all classes.

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 established.

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 three months ended September 30, 2022,

the Company issued 100 shares of Series A preferred 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 September 30, 2022 and

December 31, 2021, there were 6,145,852,186 and 5,197,821,885 common shares issued and outstanding.

During the three months ended September 30, 2022,

the Company issued the following shares of common stock:

On July 1, 2022, the Company issued 33,525,465

shares of common stock for $ 556,750 .

On July 11, 2022, the Company issued 32,756,532

shares of common stock for $ 556,750 .

On July 20, 2022, the Company issued 29,386,519

shares of common stock for $ 556,750 .

On July 28, 2022, the Company issued 35,884,040

shares of common stock for $ 556,750 .

On August 10, 2022, the Company issued 44,505,857

shares of common stock for $ 680,110 .

On August 18, 2022, the Company issued 54,574,909

shares of common stock for $ 948,863 .

On August 25, 2022, the Company issued 105,255,759

shares of common stock for $ 2,264,961 .

On August 30, 2022, the Company received 33,898,377

shares of common stock for cancellation from a previous note holder.

On September 2, 2022, the Company issued 140,073,757

shares of common stock for $ 3,000,000 .

On September 14, 2022, the Company issued 79,092,686

shares of common stock for $ 1,757,466 .

On September 30, 2022, the Company issued 30,538,303

shares of common stock for $ 500,000 .

Stock Options

During the three months ended September 30, 2022,

the Company did not issue any stock options and had no stock options outstanding at September 30, 2022.

Public Offerings

On November 9, 2021, we entered an Equity Financing

Agreement (the “ Equity Financing Agreement ”) and Registration Rights Agreement (the “ GHS Registration Rights

Agreement ”) with GHS, pursuant to which GHS agreed to purchase up to $ 30,000,000 in shares of our Common Stock, from time to

time over the course of 24 months (the “ Contract Period ”) after effectiveness of a registration statement on Form S-1

(the “ Registration Statement ”) of the underlying shares of Common Stock.

The GHS Registration Rights Agreement provides

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

Rights Agreement;

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

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

Below is a table of all puts made by the Company

under the Equity Financing Agreement during 2022:

Schedule of equity financing

Number of Shares Sold

Total Proceeds, Net of Discounts

Effective Price per Share

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

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

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

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

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

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

On May 27, we entered an Equity Financing Agreement

(the “ 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.

13 - STOCKHOLDERS' EQUITY (DEFICIT)

In accordance

with the Company’s bylaws, the Company has authorized a total of 2,000,000 shares of preferred stock, par value $ 0.01 per

share, for all classes.

As of March 31, 2023 and December 31, 2022, there were 88,335 and 88,235 total preferred shares

issued and outstanding for all classes, respectively.

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

As of March 31, 2023 and December 31, 2022, there were 7,256,166,860 and 6,427,495,360 common shares issued, respectively.

As of March 31, 2023 and December 31, 2022, there were 7,256,066,860 and 6,427,395,360 common shares outstanding, respectively.

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

5 unchanged sentences

under the 2022 EFA during 2023:

Number of Shares Sold

Schedule of equity financing agreement

Number of Common Shares Issued

Total Proceeds, Net of Discounts

Effective Price per Share

$ 0.017386441

$ 0.021518644

$ 0.021417288

$ 0.022220339

NOTE 11 – 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.

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;

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.

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) 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;

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

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

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

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

During the nine months ended September 30, 2022

and 2021, 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

NOTE 12 - COMMITMENTS & 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.

Legal Matters

Issued shares

pursuant to an individual stock purchase agreement with an unrelated investor (not under 2022 EFA)

In January 2023, the Company entered into a settlement

of a dispute between certain stockholders in which the Company decided, during the period ended March 31, 2023, to issue shares to settle

In January 2023, the Company issued 297,000,000

shares of common stock to the individuals.

The fair value of $ 1,989,900 ,

or $0.0067 per

share, was included in professional fees in the consolidated statements of operations in the three months ended March 31, 2023.

14 - COMMITMENTS & 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.

March 31, 2023 and December 31, 2022, the Company’s Optilan subsidiary had five bonded contracts for a total guaranteed value

of approximately $ 967,000 and $ 984,000 ,

respectively.

DarkPulse, Inc.

1 unchanged sentence

As disclosed in greater detail in the Company’s

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

On October 21, 2022, the Company filed a petition

against Twitter, Inc.

in the Supreme Court of the State of New York County of New York to compel disclosure of the owner(s) and operator(s)

of two certain Twitter accounts:

“Mike Wood” (@MIKEWOOD) and “Bull Meechum” (@BullMeechum3).

The petition seeks

disclosure of the owner(s) and operator(s) of the aforementioned accounts so the Company can commence an action against such individuals

for damages arising from false, misleading, and untrue statements made by the same.

On October 25, 2022, the court signed an order

to show cause directing Twitter to show cause on or before November 4, 2022 as to why an order compelling disclosure of the identities

of the owner(s) / operator(s) of the @MIKEWOOD and @BullMeechum3 Twitter accounts should not be made.

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 August 10, 2022, the Company remains in active litigation with Carebourn Capital, L.P.

(“Carebourn”) in Minnesota

There are no material updates to this litigation.

The Company remains committed to actively litigating

its affirmative defenses and 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 August 10, 2022, the Company remains in active litigation with More Capital, LLC (“More”) in Minnesota State

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 affirmative defenses and 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, on September 10, 2021, Stephen Goodman, Mark Banash, and David Singer (“Former Officers”)

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 is engaged

in settlement negotiations with the Former Officers.

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.

DarkPulse, Inc.

FirstFire Global Opportunities Fund, LLC, and

FirstFire Global Opportunities

Fund, LLC, and Eli Fireman

As disclosed in greater detail in the Company’s

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

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”).

As previously disclosed therein, the FirstFire

Parties’ motion to dismiss the Company’s first amended complaint has been fully submitted to the Court.

On May 26, 2022, the

FirstFire Parties requested oral arguments on their motion to dismiss.

As of the date hereof, oral arguments have not been scheduled and,

further, no decision has been rendered on the FirstFire Parties’ motion to dismiss.

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.

its claims for relief under the Securities Exchange Act of 1934 and Racketeer Influenced and Corrupt Organizations (RICO) Act.

DarkPulse, Inc.

1 unchanged sentence

As disclosed in greater detail in the Company’s

Form 10-Q, filed August 10, 2022, the Company remains in active litigation with EMA Financial, LLC (“EMA”), EMA Group, Inc.

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”).

As of July 22, 2022, the EMA Parties’ motion

to dismiss the Company’s first amended complaint is fully submitted.

As of the date hereof, no decision has been rendered on the

EMA Parties’ motion to dismiss.

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 and Racketeer Influenced and Corrupt Organizations Act.

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.

On June 30, 2023, the Company and Mr.

O'Leary filed their Answer to

the Benner Parties' Complaint.

The Company intends to vigorously defend itself against the Benner Parties’ lawsuit.

GS Capital Partners, LLC v.

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 litigation

4 unchanged sentences

financial condition and operating results.

NOTE 13 – SUBSEQUENT EVENTS

On October 12, 2022 the Company entered into

and closed the Purchase Agreement pursuant to which the Company purchased 2,623,120 shares of 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 of Gladstone Acquisition

Corp., a Delaware corporation (NASDAQ:

GLEE) (the " SPAC "), from Gladstone Sponsor, LLC (" Original

Sponsor ") for $1,500,000 (the “ Purchase Price ”).

In 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.

On October 14, 2022, the Company and GHS agreed

that the Company would issue and sell to GHS, and GHS would purchase from the Company, 30,538,303 shares of Common Stock for total proceeds

to the Company, net of discounts, of $500,000, at an effective price of $0.0140339 per share (the “ Closing ”).

received approximately $463,975 in net proceeds from the Closing after deducting the fees and other estimated offering expenses payable

by the Company.

The Company used the net proceeds from the Closing for working capital and for general corporate purposes.

NOTE 15 – RELATED

PARTY TRANSACTIONS

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;

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

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) 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

c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of

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

and d) amounts due from or to related parties

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

the three months ended March 31, 2023 and 2022, certain executives of the Company received $ 120,000 and $ 0 , respectively,

in Directors fees from Optilan for being members of Optilan’s Board of Directors.

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 both March 31, 2023 and December 31, 2022, the outstanding balance was $ 226,247 .

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 both March 31, 2023 and December 31, 2022, the outstanding balance was $ 135,500 .

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.

31, 2023 and December 31, 2022, the Company’s $ 1,500,000 investment in GSD was accounted for as cost.

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.

February 7, 2023 and March 9, 2023, GSD issued a non-convertible promissory note in the aggregate principal amount of $ 167,894

($83,947 per month) to the Company in connection with the extension of the termination date for the GSD’s initial

business combination.

As of March 31, 2023 and December 31, 2022, the outstanding note receivable was $ 1,217,142

and $ 1,049,248 ,

respectively.

As of March 31, 2023 and December 31, 2022, the

Company has $767,135 and $318,025, respectively, 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.

are unsecured, non-interest bearing and due on demand.

16 – SUBSEQUENT EVENTS

1, 2023 through July 18, 2023, the Company has issued 203,842,371 shares of common stock for net proceeds of $537,849.

1, 2023 through July 18, 2023, GSD issued non-convertible promissory notes aggregating in the 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.

The termination

was extended through August 9, 2023.

to 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.

April 1, 2023 through July 18, 2023, the Company has provided non-interest-bearing advances to GSD aggregating $101,460.

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-Q

Item 1. Financial Statements