What changed in this filing

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Item 9A. Controls and Procedures

2024-07-15 compared with 2023-06-23 · 1365 added, 1652 removed, 877 unchanged (77% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

We have established

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

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

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

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

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

O’Leary, evaluated the effectiveness of our

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

Based on his evaluation,

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

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

In light of the material

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

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

These additional procedures have allowed us to conclude

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

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

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

We have established disclosure controls and procedures

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

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

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

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

regarding required disclosure.

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

Rule 13a-15(e) of the Exchange Act, as of December 31, 2023.

Based on his evaluation, Mr.

O’Leary concluded that, due to a material

weakness in our internal control over financial reporting as described below, our disclosure controls and procedures were not effective

as of December 31, 2023.

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

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

These additional procedures have allowed us to

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

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

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

Internal Control Over Financial Reporting

Our management is responsible for establishing and

maintaining adequate internal controls over financial reporting for the Company.

Due to limited resources, management conducted an evaluation

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

Organizations of the Treadway Commission (“ COSO ”).

The results of this evaluation determined that our internal control

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

A material weakness in internal control

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

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

or detected on a timely basis.

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

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

of our financial reporting.

Our management is responsible for establishing

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

Due to limited resources, management conducted an

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

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

The results of this evaluation determined that our

internal control over financial reporting was ineffective as of December 31, 2023, due to material weaknesses.

A material weakness in

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

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

not be prevented or detected on a timely basis.

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

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

for oversight of our financial reporting.

Management’s assessment identified the following

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

We will continue to follow the standards for the Public

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

We will continue to follow the standards for the

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

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

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Changes in Internal Controls

There were no changes in our internal control over

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

There were no changes in our internal control

over financial reporting that occurred during the quarter ended December 31, 2023 that have materially affected, or are reasonably likely

to materially affect, our internal control over financial reporting.

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OTHER INFORMATION

During the quarter ended December 31, 2023, no

director or officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as each term is

defined in Item 408(a) of Regulation S-K.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable to the Company.

Not applicable to the

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Executive Officers and Directors

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

officer and director of the Company:

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

executive officer and director of the Company:

Director's Name

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Director and Chief Commercial Officer of Optilan

Chief Executive Officer of Optilan

O’Leary, Chairman, CEO, President,

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Anthony Brown, Director .

served as a Director of DarkPulse since April 2019.

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

scattering-based distributed fiber optic sensing.

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

of DarkPulse.

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

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

has served as a Director of DarkPulse since April 2019.

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

Brillouin scattering-based distributed fiber optic sensing.

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

subsidiary of DarkPulse.

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

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

From 2001 to 2012, Dr.

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

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

numerous patents in the field of fiber optic sensing.

Brown’s tenure at UNB, he

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

From 2012 to 2015, Dr.

Brown served as an Adjunct Professor at UNB.

From 2013 through

the present, Dr.

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

Brown served as an Adjunct

Professor at UNB.

From 2013 through the present, Dr.

Brown has served

as a consultant for DarkPulse.

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

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

fiber optic sensing.

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

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

through the present, Dr.

Brown has served as a consultant for DarkPulse.

Brown received a Bachelor of Science degree in Physics from

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

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

of Brillouin scattering-based distributed fiber optic sensing.

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

of any other public companies.

Craig Atkin, Director .

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He is also the Chief Commercial Officer of Optilan.

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

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

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

Atkin has also

worked in conventional, renewable and offshore wind environments.

He is experienced working and leading international teams and large

scale projects.

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

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

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

director of any other public companies.

Jason Keith, CEO, Optilan .

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

He oversees all commercial, procurement and tendering activities across the

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

and legislation.

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

requirements.

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

international contracting companies across the globe.

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

Throughout his professional tenure, Mr.

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

last 15 years spent in Senior Executive Leadership roles.

He has extensive skills in commercial and contract management;

this has encompassed

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

Keith holds a Masters in Oil & Gas

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

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

Atkin has an engineering background

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

years’ experience across energy, security, communications and technology sectors in both operational and leadership roles.

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

Atkin has also worked in conventional,

renewable and offshore wind environments.

He is experienced working and leading international teams and large scale projects.

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

Atkin was appointed as a Director

due to his experience with Optilan.

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

Jason Keith, Former CEO, Optilan –

On July 4, 2023, Optilan (UK) received an official letter that all employees’ contracts were terminated as of June 28, 2023.

that time Mr.

Keith’s tenure as CEO of Optilan expired.

Legal Proceedings

During the past ten years there have been no events

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

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

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

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

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

Besides the disclosure below, during the past

ten years there have been no events under any bankruptcy act, no criminal proceedings and no judgments, injunctions, orders or decrees

material to the evaluation of the ability and integrity of any of our directors or executive officers, and none of these persons has been

involved in any judicial or administrative proceedings resulting from involvement in mail or wire fraud or fraud in connection with any

business entity, any judicial or administrative proceedings based on violations of federal or state securities, commodities, banking or

insurance laws or regulations, or any disciplinary sanctions or orders imposed by a stock, commodities or derivatives exchange or other

self-regulatory organization.

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 Official Receiver’s Office (“OR”) to

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

At the same time the court appointed the OR to

take the appointment as liquidator of Optilan (UK) Limited.

The OR has taken control of Optilan (UK) Limited’s assets.

ORs Office has initiated contact with Optilan but we still wait to receive details of the individual who will be taking the role of OR.

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 was scheduled

for July 18, 2023.

On July 18, 2023, the interview was held between

the Official Receiver’s Office (“ OR ”) and the CEO at time of dissolution.

The OR office requested a list of assets,

bank account information and amounts along with any contracts held by Optilan (UK) Limited to begin the liquidation process.

On August 9, 2023, Evelyn Partners was appointed Joint Liquidator.

There are no new claims against Optilan UK Ltd

as of April 16, 2024 and Evelyn partners continue to liquidate the company’s assets.

We are an unsecured creditor of Optilan (UK) Limited

and are 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.

We have approximately $19.4 million intercompany payables due from Optilan (UK), which will increase our liabilities for any obligations

We expect the remaining assets held by Optilan (UK) Limited to be fully impaired and reported as Loss on Deconsolidation during

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

We are still evaluating the full effects of the winding-up

order for liquidation and the material adverse effects it will have on our continued operations and ability to meet future obligations.

Family Relationships

There are no family relationships between any of our

directors and executive officers.

There are no family relationships between any

of our directors and executive officers.

Audit Committee

We currently do not have a functioning Audit

We currently do not have a functioning Audit Committee.

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

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

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

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

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

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

Section 16(a) of the Exchange Act requires the

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

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

Directors, executive officers, and greater than

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Code of Ethics

We have not adopted a formal, written code of ethics

due to a small number of members of management.

We have not adopted a formal, written code of

ethics due to a small number of members of management.

We plan to adopt a Code of Ethics during the fiscal year ending December 31, 2024.

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Name and Principal Position

All Other Compensation

Dennis O’Leary

$ 165,000 (1)

Chairman/CEO and Director

CEO, Optilan (2)

On June 24, 2022, Mr.

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

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

In April 2022, Mr.

Bayliss was removed as CEO and Mr.

Keith was appointed as CEO in May 2022.

O’Leary Employment

On June 22, 2022, our Board

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

our Chief Executive Officer.

All of this amount was accrued and unpaid.

O’Leary Employment Agreement

On June 22, 2022, our Board of Directors, with

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

O’Leary, our Chief Executive

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

The agreement may

be terminated upon the death or disability of Mr.

The agreement may be terminated upon

the death or disability of Mr.

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

Pursuant to the

agreement, Mr.

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

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

Also, pursuant

to the agreement, Mr.

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

Pursuant to the agreement, Mr.

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

Any accrued and unpaid base salary

may also be converted subject to mutual agreement of the Company and Mr.

Also, pursuant to the agreement, Mr.

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

Summary Compensation for Directors

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Anthony Brown, Director

Craig Atkin, Director

Carl Eckel, Director

All of this amount was accrued and unpaid.

Equity Awards

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

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

shares of stock greater than 5% of the 8,152,368,952 (8,152,280,717 common plus 88,235 preferred) shares as of April 16, 2024.

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

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There were no stock

options outstanding as of June 22, 2023.

options outstanding as of April 16, 2024.

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

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

Name and Position

Preferred Stock

4 unchanged sentences

Anthony Brown, Director

Atkin, Director

Craig Atkin, Director

Bill Bayliss, CEO, Optilan

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*Less than 1%

Each share of Series D Preferred Stock is convertible,

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

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

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

or otherwise has or shares:

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

Under Rule 13d-3 of the Exchange Act, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares:

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

and (ii) investment

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

Certain shares may be deemed to be beneficially owned

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

In addition, shares

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

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

In computing the percentage ownership of any person,

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

by reason of these acquisition rights.

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

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

actually outstanding on the date of this prospectus.

and (ii) investment power, which includes the power to dispose or direct the disposition of shares.

Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares).

In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided.

In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the number of shares beneficially owned by such person (and only such person) by reason of these acquisition rights.

As a result, the percentage of outstanding shares of any person as shown in the above table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding on the date of this report.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

For transactions with our

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

For transactions with

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

Executive Compensation.

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of “independent directors.”

We currently have not established any committees of

the Board of Directors.

We currently have not established any committees

of the Board of Directors.

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

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PRINCIPAL ACCOUNTANT FEES AND SERVICES

Consists of fees billed for professional

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

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

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

Consists of fees billed for

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

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

and Mazars USA LLP (“ Mazars ”) , our previous independent registered public

accounting firms, and Fruci & Associates II, PLLC (“ Fruci ”) , our current

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

The following is a summary of the fees incurred by

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

The following is a summary of the fees incurred

by the Company to Urish, Mazars, and Fruci for professional services rendered for the years ended December 31, 2023 and 2022, respectively.

Audit-Related Fees

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Services of Independent Auditors

The Board of Directors may pre-approve all audit and

non-audit services provided by the independent auditors.

The Board of Directors may pre-approve all audit

and non-audit services provided by the independent auditors.

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

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

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

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

The Board of Directors pre-approved 100% of the

Company’s 2023 and 2022 audit fees, audit-related fees and all other fees.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following exhibits are included as part of this

The following exhibits are included as part of

this Form 10-K:

Exhibit Description

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

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

Restated Certificate of Incorporation of Klever Marketing, Inc.

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

Convertible Promissory Note dated July 14, 2018

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

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

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

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

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

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

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

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

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

dated September 2, 2020

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

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

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

Securities Purchase Agreement by and between DarkPulse, Inc.

and GS Capital Partners, LLC dated January 10, 2019

Form of Securities Purchase Agreement between DarkPulse, Inc.

and Crown Bridge Partners, LLC dated February 5, 2019

Securities Purchase Agreement with Geneva Roth Remark Holdings, Inc.

dated September 2, 2020

Consulting Agreement effective December 23, 2020 with Faisal Farooqui

Assignment Agreement with the University of New Brunswick, Canada

Convertible Debenture (Secured) Issued April 24, 2017

Amendment No.

01 to Convertible Debenture (Secured) Term Debenture dated January 17, 2024 with the University of New Brunswick, Canada

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

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

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

dated May 10, 2021

Consulting Agreement with Dr.

Joseph Catalino Jr.

dated May 17, 2021

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

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

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

Teaming Agreement with Crae-Con Construction Inc.

dated June 22, 2021

Teaming Agreement with SurSafe LLC dated June 24, 2021

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

Consulting Agreement dated effective July 22, 2021 with Rick Gibson

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

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

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

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

Subscription Agreement August 9, 2021 with Optilan HoldCo 3 Limited

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

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

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

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

Amendment No.

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

Amendment No.

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

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

dated effective August 31, 2021

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

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

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

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

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

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

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

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

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

Amendment No.

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

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

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

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

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

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

Joint Venture Agreement dated September 9, 2022

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

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

Sale Agreement dated December 1, 2023

Equity Financing Agreement dated April 28, 2023 with GHS Investments, LLC

Amended Equity Financing Agreement dated June 13, 2023 with GHS Investments, LLC

Second Amended Equity Financing Agreement dated July 10, 2023 with GHS Investments, LLC

Amendment No.

1 to Second Amended Equity Financing Agreement dated January 30, 2024 with GHS Investments, LLC

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

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List of Subsidiaries

Certification of Chief Executive Officer and Chief Financial Officer

Certification of Chief Executive Officer and Principal Financial Officer

Consent of Boladale Lawal & Co., independent registered public accounting firm

Consent of Mazars USA LLP, independent registered public accounting firm

Consent of Attorney

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

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

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

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

6 unchanged sentences

Indicates management contract or compensatory plan or arrangement.

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

S-K Item 601.

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

FORM 10-K SUMMARY

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

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

thereunto duly authorized.

Pursuant to the requirements of section 13 or

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

undersigned, thereunto duly authorized.

DARKPULSE, INC.

June 23, 2023

July 15, 2024

/s/ Dennis M.

2 unchanged sentences

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

indicated on this 22nd day of June, 2023.

indicated on this 15th day of July 2024.

/s/ Dennis M.

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

June 23, 2023

July 15, 2024

Anthony Brown

June 23, 2023

July 15, 2024

Anthony Brown

/s/ Craig Atkin

June 23, 2023

July 15, 2024

DARKPULSE, INC.

2 unchanged sentences

and for the Years Ended December 31, 2023 and

Report of Independent Registered Public Accounting Firm (Boladale Lawal &

Co., Lagos, Nigeria, PCAOB ID 6993 ) 2023

Report of Independent Registered Public Accounting Firm

( Mazars USA LLP, Fort Washington, PA., PCAOB ID 339 ) 2022

Report of Independent Registered Public Accounting Firm (Urish

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

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Stockholders’ (Deficit) Equity

Consolidated Statements of Cash Flows

Notes to the Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of DarkPulse,

Opinion on the Consolidated Financial Statements

Audited Consolidated Balance Sheets

Audited Consolidated Statements of Operations

Audited Consolidated Statements of Comprehensive Loss

Audited Consolidated Statements of Stockholders’ Deficit

Audited Consolidated Statements of Cash Flows

Notes to the Audited Consolidated Financial Statement

Report of Independent Registered Public

Accounting Firm

The Board of Directors and Stockholders of

DARKPULSE, INC.

Opinion on the Financial Statements

We have audited the accompanying consolidated

balance sheet of DarkPulse, Inc.

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

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

referred to as the “financial statements”).

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

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

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

Substantial Doubt about the Company’s

Ability to Continue as a Going Concern

The accompanying financial statements have been

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

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

incurred significant operating losses and negative cash flows.

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

at December 31, 2022.

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

to execute its plans and continue operations.

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

a going concern.

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

The financial statements do not include

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

balance sheets of Darkpulse, Inc (the ‘Company’) as of December 31, 2023, and the related consolidated statements of operations

and comprehensive loss, changes in stockholders’ equity/ (deficit) and cash flows for the year ended December 31, 2023, and the

related notes (collectively referred to as the “financial statements”).

In our opinion, the consolidated financial statements

present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2023, and the results

of its operations and its cash flows for the year ended December 31, 2023, in conformity with accounting principles generally accepted

in the United States of America.

Going Concern

The accompanying consolidated financial statements

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

As discussed in Note 3, the Company suffered an accumulated

deficit of $(67,376,221), net loss of $(21,273,043) and a negative working capital of $(18,126,281).

The Company is dependent on obtaining

additional working capital funding from the sale of equity and/or debt securities to execute its plans and continue operations.

conditions raise substantial doubt about the Company’s ability to continue as a going concern.

These financial statements do not

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

Basis for Opinion

6 unchanged sentences

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

We conducted our audit in accordance with the

We conducted our audits in accordance with the

standards of the PCAOB.

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

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

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

1 unchanged sentence

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

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

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

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

1 unchanged sentence

Accordingly, we express no such opinion.

Our audit included performing procedures to assess

Our audits included performing procedures to assess

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

1 unchanged sentence

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

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

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

the overall presentation of the financial statements.

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

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from

Critical audit matters are matters arising from

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

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

complex judgments.

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

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

or on the accounts or disclosures to which it relates.

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,

subjective, or complex judgments.

Communication of critical audit matters does not alter in any way our opinion on the financial statements

taken as a whole and we are not, by communicating the critical audit matters, providing separate opinions on the critical audit matter

or on the accounts or disclosures to which they relate.

Revenue Recognition:

As discussed in Note 2 to the financial statements,

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

and security systems.

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

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

To determine the performance obligation,

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

Revenue is recognized over time using the input measure as it

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

The primary procedures we performed to address

this critical audit matter included:

· We reviewed the underlying agreements and contracts

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

· We recalculated the mathematical accuracy of

· We tested the contract costs to ensure they are

being properly recorded.

· We assessed the adequacy of any loss provisions

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

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

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

Impairment Analysis

As discussed in Note 8 to the financial statements,

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

As disclosed by management, the determination

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

rates and discount rates.

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

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

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

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

of goodwill allocated to the reporting unit.

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

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

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

from the use and eventual disposal of the asset.

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

intangible asset exceeds its fair value.

As a result of the annual impairment assessment,

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

The principal considerations for our determination

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

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

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

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

In addition, the audit effort involved the use of professionals

with specialized skill and knowledge.

Addressing the matter involved performing procedures

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

These procedures

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

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

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

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

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

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

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

in other areas of the audit.

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

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

The primary procedures we performed to address

this critical audit matter included:

· We evaluated and recomputed the methodology used

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

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

· With the assistance of our valuation specialists,

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

as applicable.;

· We assessed the appropriate interpretation and

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

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

Measurements and Disclosures;

· We evaluated the reasonableness of the Company’s

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

as well as tested the mathematical accuracy of the calculations;

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

financial statements related to the impairment.

/s/ Mazars USA LLP

We have served

as the Company’s auditor since 2023.

Fort Washington, PA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and Board of Directors

The Company recognizes

revenue upon transfer of control of promised services to customers in an amount that reflects the consideration the Company expects to

receive in exchange for those services.

Significant judgment

is exercised by the Company in determining revenue recognition for customer agreements, and include the pattern of delivery (i.e., timing

of when revenue is recognized) for each distinct performance obligation.

The related audit effort

in evaluating management’s judgments in determining revenue recognition for customer agreements up to the date of liquidation required

a high degree of auditor judgment

The procedures performed to address the matter included.

· We gained an understanding of internal controls

related to revenue recognition.

· We evaluated management’s significant accounting

policies for reasonableness

· We Obtained and reviewed revenue contract agreements

for each sample selected

· We check the reasonableness of the terms in the

customer agreement and evaluated the appropriateness of management’s application of their accounting policies, along with their

use of estimates, in the determination of revenue recognition conclusions.

· We tested the mathematical accuracy of management’s

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

Going Concern Uncertainty – See

also Going Concern Uncertainty explanatory paragraph above:

As described in Note

3 to the consolidated financial statements, the Company has significant operating losses and a working capital deficiency.

the company lost majority of its revenue as a result of the discontinuation of the subsidiary (Optilan UK).

The ability of the Company

to continue as a going concern is dependent on obtaining additional working capital funding from the sale of equity and/or debt securities

to execute its plans and continue operations.

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

a going concern.

The procedures performed to address the matter included.

· We inquired of executive officers, and key members

of management, of the Company regarding factors that would have an impact on the Company’s ability to continue as a going concern,

· We evaluated management’s plan for addressing

the adverse effects of the conditions identified, including assessing the reasonableness of forecasted information and underlying assumptions

by comparing to actual results of prior periods and actual results achieved to date, and utilizing our knowledge of the entity, its business

and management in considering liquidity needs and the Company’s ability to generate sufficient cash flow,

· We assessed the possibility of raising additional

debt or credit,

· We evaluated the completeness and accuracy of

disclosures in the consolidated financial statements.

During the year 2023, the company recognised an

impairment loss of $6,948,349 on the balance of Goodwill and other intangible assets recognized on acquisition of Optilan the UK subsidiary

Management determined that certain events and circumstances occurred that resulted into the liquidation of the subsidiary company

(Optilan Uk) as a result, the carrying amount of the Company’s reporting is not recoverable and full impairment was recognised.

Also, during the year, company recognized bad

debt expenses of $5,248,218 as a result of impairment on trade and other receivables from which a material amount of $2,422,457 is the

effect of doubt on the recoverability of the account receivables from Optilan (UK) customers due to the liquidation.

We considered the computation of the impairment

charged on Goodwill and other intangible assets and bad debt written off on account receivables as a critical audit matter because it

required an estimation and significant judgement by management.

The procedures performed to address the matter included.

· We reviewed the company impairment assessment memo

· We reviewed the primary events and circumstances that resulted into the liquidation

of the subsidiary.

· We circularized the independent legal advisor and other related parties

· We inquired from the management about the possibility of contingent liabilities

on the disputed contract.

· We reviewed the bad debt schedule and board approval on bad debt written

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

statements related to the impairment.

BOLADALE LAWAL & CO.

(Chartered Accountants)

(PCAOB ID 6993)

Lagos, Nigeria

We have served as the Company’s auditor

July 15, 2024

REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

of DarkPulse, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance

sheet of DarkPulse, Inc.

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

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

(collectively referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly,

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

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

Substantial Doubt about the Company’s Ability

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

The accompanying consolidated financial statements

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

As discussed in Note 3 to the consolidated financial statements,

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

These conditions raise

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

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

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

Opinion on the Consolidated

Financial Statements

We have audited the accompanying

consolidated balance sheet of DarkPulse, Inc.

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

of operations, comprehensive loss, stockholders’ (deficit) equity, and cash flows for the year ended December 31, 2022, and the

related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly,

in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash

flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Substantial Doubt

about the Company’s Ability to Continue as a Going Concern

The accompanying financial

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

As discussed in Note 3 to the financial statements,

the Company has incurred significant operating losses and negative cash flows.

The Company also has an accumulated deficit of approximately

$46.6 million at December 31, 2022.

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

debt securities to execute its plans and continue operations.

These conditions raise substantial doubt about the Company’s ability

to continue as a going concern.

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

The financial statements

do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility

of the Company’s management.

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

based on our audits.

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

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

federal securities laws and the applicable

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

We conducted our audit in accordance with the standards

of the PCAOB.

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

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

The Company is not required to have, nor were we

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

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

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

internal control over financial reporting.

These financial statements

are the responsibility of the Company’s management.

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

statements based on our audit.

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

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

federal securities laws

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

We conducted our audit

in accordance with the standards of the PCAOB.

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

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

The Company is not required to

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

As part of our audit, we are required

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

of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess

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

Our audit included performing

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

that respond to those risks.

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

consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by

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

We believe that our audit provides

a reasonable basis for our opinion.

financial statements.

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

as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for

Critical Audit Matters

The critical audit matters communicated below are

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

to the audit committee and that:

(1) relate) to accounts or disclosures that are material to the consolidated financial statements and

(2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter

in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit

matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Accounting for Embedded Derivative Liabilities

Related to Convertible Debentures

As described in Note 6 to the financial statements,

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

The Company determined that variable conversion features

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

These variable conversion features

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

The Company determined

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

The value of the embedded derivative liabilities

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

We identified the accounting considerations and related

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

Our audit procedures related to the Company’s

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

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

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

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

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

Auditing these elements is especially challenging

and requires auditor judgement due to the nature and extent of audit effort required to address these matters, including the extent of

specialized skill or knowledge needed.

Going Concern Uncertainty – See also Going

Concern Uncertainty explanatory paragraph above

As described further in Note 3 to the consolidated

financial statements, the Company has suffered recurring losses from operations and does not have an established source of revenues sufficient

to cover its operating costs.

The ability of the Company to continue as a going concern is dependent on executing its business plan and

ultimately to attain profitable operations.

Accordingly, the Company has determined that these factors raise substantial doubt as to the

Company’s ability to continue as a going concern for a period of one year from the issuance of these financial statements.

intends to continue to fund its business by way of public or private offerings of the Company’s stock or through loans from private

investors, in order satisfy the Company’s obligations as they come due for at least one year from the financial statement issuance

However, the Company has not concluded that these plans alleviate the substantial doubt related to its ability to continue as a

going concern.

We determined the Company’s ability to continue

as a going concern is a critical audit matter due to the estimation and uncertainty regarding the Company’s available capital and

the risk of bias in management’s judgments and assumptions in their determination.

Our audit procedures related to the Company’s

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

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

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

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

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

The critical audit matters communicated below

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

the audit committee and that:

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

subjective, or complex judgments.

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

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

matters or on the accounts or disclosures to which it relates.

Revenue Recognition

The Company recognizes revenue upon transfer of control

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

Significant judgment is exercised by the Company in

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

for each distinct performance obligation.

The related audit effort in evaluating management’s

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

Our principal audit procedures related to the Company’s

revenue recognition for customer agreements included the following:

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

We evaluated management’s significant accounting policies for reasonableness.

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

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

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

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

Business Combinations – Valuation of Intangible

As described in note 4 of the Consolidated Financial

Statements, the Company completed the acquisitions of 100% of Optilan Guernsey Limited and Optilan Holdco 2 Limited (Optilan) and TJM

Electronics West for $694,527 and $450,000, respectively and 60% of Wildlife Specialists LLC, Remote Intelligence, LLC and TerraData Unmanned,

PLLC for $1,478,000 and $1,478,000, and $600,000 respectively (collectively referred to as the “Acquisitions”) and accounted

for as business combinations.

The acquired intangible assets included Optilan Holdco 3, Limited tradename for valued at $4,033,638.

Company recorded the acquired intangible assets at fair value on the date of acquisition considering a discounted cash flow methodology.

The methods used to estimate the fair value of acquired intangible assets involve assumptions.

The assumptions applied by management in

estimating the fair value of acquired intangible assets included income projections and discount rates.

The principal considerations for our determination

that performing procedures relating to the valuation of intangible assets in the Acquisitions is a critical audit matter are (1) there

was a degree in significant auditor judgement and subjectivity in applying procedures to the fair value of the intangible assets acquired

due to the judgment by management when developing estimates and (2) audit effort was required relating to the estimates, projections,

discount rates, and weighted average cost of capital utilized by the Company.

In addition, the audit effort involved the use of professionals

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

Our principal audit procedures to evaluate the valuation

of intangible assets included the following:

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

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

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

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

/s/ Urish Popeck & Co., LLC

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

Pittsburgh, PA

April 15, 2022

As discussed in Note

2 to the financial statements, the Company recognizes revenue from the sale of services, which consist primarily of advanced technology

solutions for integrated communications and security systems.

At contract inception, the Company assesses the goods and services promised

in the contract with customers and identifies a performance obligation for each, in accordance with ASC 606, Revenue from Contracts with

To determine the performance obligation, the Company considers all products and services promised in the contract.

is recognized over time using the input measure as it most accurately represents the value of goods and services transferred to the customer.

The primary procedures

we performed to address this critical audit matter included:

We reviewed the underlying agreements and contracts and assessed the terms to determine if the performance obligation was met and for the correct amount.

We recalculated the mathematical accuracy of the revenue.

We tested the contract costs to ensure they are being properly recorded.

We assessed the adequacy of any loss provisions by reviewing the Company’s estimated costs to complete contracts and to ensure it is sufficient.

We recalculated the margins on contracts to ensure they are consistent over the entire term of the contract and its related performance obligation.

Impairment Analysis

As discussed in Note

8 to the financial statements, management performed their annual impairment analysis during the year ended December 31, 2022.

by management, the determination of fair value using the income approach requires the use of significant estimates and assumptions, including

forecasted revenue growth rates and discount rates.

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

of revenue multiples, as applicable, based on operating data from guideline publicly traded companies.

If the fair value of the reporting

unit is less than its carrying value, a non-cash impairment charge is recorded in an amount equal to that difference with the loss not

to exceed the total amount of goodwill allocated to the reporting unit.

Additionally, intangible assets subject to amortization were also

reviewed for impairment.

An impairment on the intangible assets shall be recognized only if the carrying amount is not recoverable and

exceeds its fair value.

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

expected to result from the use and eventual disposal of the asset.

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

amount of an intangible asset exceeds its fair value.

As a result of the annual

impairment assessment, the Company concluded that there was impairment to the intangible assets and goodwill in the aggregate of approximately

$12.2 million.

The principal considerations

for our determination that performing procedures relating to the impairment analyses is a critical audit matter are the significant

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

judgment, subjectivity and effort in performing procedures and evaluating audit evidence related to management's significant assumptions

related to forecasted revenue growth rates, discount rates, and revenue multiples, as applicable.

In addition, the audit effort involved

the use of professionals with specialized skill and knowledge.

Addressing the matter

involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial

These procedures included, among others (1) testing management’s process for developing the fair value estimates of

the reporting units, (2) evaluating the allocation of assets and liabilities to the reporting units, (3) evaluating the appropriateness

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

approaches, and (5) evaluating the significant assumptions used by management related to forecasted revenue growth rates, discount rates,

and revenue multiples, as applicable.

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

whether the assumptions used by management were reasonable considering (1) the current and past performance of the reporting unit, (2)

the actions necessary to achieve future forecasts, (3) the consistency with external market data, and (4) whether these assumptions were

consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist

in the evaluation of the income approach and the discount rates, as well as the selection and calculation of revenue multiples, as applicable.

The primary procedures

we performed to address this critical audit matter included:

We evaluated and recomputed the methodology used in connection with the Company’s impairment analysis, including review of the appropriate accounting literature, valuation model, significant assumptions used, and the completeness and accuracy of the underlying data used;

With the assistance of our valuation specialists, we assessed the significant assumptions used by management relating to forecasted revenue growth rates, discount rates, and revenue multiples as applicable.;

We assessed the appropriate interpretation and application used by management of the FASB’s Accounting Standards Codification for the impairment analysis including topics ASC 350 - Intangibles – Goodwill and Other , ASC 360 - Property, Plant, and Equipment , and ASC 820 – Fair Value Measurements and Disclosures;

We evaluated the reasonableness of the Company’s projections of future cash flows by comparing the assumptions used in the projections to actual results and other information deemed necessary as well as tested the mathematical accuracy of the calculations;

We evaluated the adequacy of the Company’s disclosures in the financial statements related to the impairment.

/s/ Mazars USA LLP

served as the Company’s auditor since 2023.

Fort Washington, PA

DARKPULSE, INC.

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CURRENT ASSETS:

Cash and cash equivalents

Accounts receivable, net

Contract assets

Due from related party

Prepaid expenses and other current assets

Contract assets

TOTAL CURRENT ASSETS

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Notes receivable, related party

Investment in related party (see Note 17)

Investment in related party

Joint venture

Intangible assets, net

Other assets, net

Intangible assets, net

TOTAL NON-CURRENT ASSETS

LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:

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Operating lease liabilities - non-current

Other liabilities - non-current

TOTAL NON-CURRENT LIABILITIES

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Commitments and contingencies

STOCKHOLDERS’ (DEFICIT) EQUITY:

STOCKHOLDERS' DEFICIT:

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

100 shares designated, 100

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

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

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

shares authorized, 6,427,495,360

and 5,197,921,885

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

2022 and 2021, respectively

Treasury stock at cost, 100,000

shares at December 31, 2022 and 2021

shares issued and outstanding as of both December 31, 2023 and December 31, 2022

Common stock, par value $ 0.0001 , 20,000,000,000 shares authorized, 8,100,117,720 and 6,427,395,360 shares issued as of December 31, 2023 and December 31, 2022, respectively,

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

Additional paid-in capital

Common Stock to be issued

Non-controlling interests

Accumulated other comprehensive loss

Accumulated other comprehensive income (loss)

( 1,253,356 )

( 1,137,902 )

Accumulated deficit

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( 46,555,334 )

TOTAL STOCKHOLDERS’ (DEFICIT) EQUITY

TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY

See accompanying notes to consolidated financial statements.

TOTAL STOCKHOLDERS' DEFICIT

( 16,675,319 )

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

See notes to consolidated financial statements.

DARKPULSE, INC.

Consolidated Statements

of Operations

Consolidated Statement of Operations

COST OF REVENUES

1 unchanged sentence

( 5,443,274 )

OPERATING (INCOME) EXPENSES:

OPERATING EXPENSES:

Selling, general and administrative

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Depreciation and amortization

Bad debt expense

Impairment expense

Gain on forgiveness of payables

Debt transaction expenses

TOTAL OPERATING EXPENSES

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Interest expense

Loss on deconsolidation

( 1,642,146 )

Change in fair market of derivative liabilities

Gain on forgiveness of liabilities

Loss on equity investment

Loss on convertible notes

Gain on the forgiveness of debt

Foreign currency exchange rate variance

TOTAL OTHER (EXPENSE) INCOME

TOTAL OTHER INCOME (EXPENSE)

( 21,723,043 )

( 35,517,505 )

Net loss attributable to noncontrolling interests

Net loss attributable to non-controlling interests

Net loss attributable to Darkpulse, Inc.

5 unchanged sentences

5,713,495,965

accompanying notes to consolidated financial statements.

See notes to consolidated financial statements.

DARKPULSE, INC.

3 unchanged sentences

$ ( 35,517,505 )

OTHER COMPREHENSIVE (LOSS) INCOME

OTHER COMPREHENSIVE INCOME (LOSS)

Foreign currency translation

2 unchanged sentences

$ ( 36,370,944 )

accompanying notes to consolidated financial statements.

See notes to consolidated financial statements.

DARKPULSE, INC.

Consolidated Statement

of Stockholders’ (Deficit) Equity

Preferred stock

Statement of Stockholders’ Deficit

For the Years Ended

December 31, 2023 and 2022

Accumulated other

Total stockholders’

Treasury stock

comprehensive

B alance, December 31, 2020

at December 31, 2021

5,197,821,885

1 unchanged sentence

$ ( 11,276,490 )

Conversion of convertible notes

Common stock issued for cash

Common stock issued for acquisitions

Stock based compensation

Foreign currency adjustment

Conversion of convertible

Issuance of preferred

Common stock issued

1,259,746,466

Common shares returned

and cancelled

( 33,898,377 )

Balance, December 31, 2021

Common stock issue

for TerraData acquisition

Foreign currency

( 35,278,844 )

( 35,517,505 )

Common stock issued for cash

Balance at December

6,427,395,360

Common shares returned and cancelled

( 1,137,902 )

Issuance of common stock to settle accounts payable

Issuance of preferred shares

Foreign currency adjustment

( 46,555,334 )

Common stock issued

for cash, net of fees

1,375,722,360

Balance, December 31, 2022

Issuance of common

stock for legal settlement

Common Stock to

Foreign currency

( 20,820,887 )

( 21,723,043 )

Balance at December

8,100,117,720

$ ( 1,253,356 )

See accompanying

notes to consolidated financial statements.

$ ( 67,376,221 )

$ ( 16,675,319 )

See notes to consolidated financial statements.

DARKPULSE, INC.

Consolidated Statements

Consolidated Statement

of Cash Flows

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Gain on forgiveness of payables and liabilities

Gain on forgiveness of liabilities

( 3,488,860 )

Change in fair market of derivative liabilities

1 unchanged sentence

Loss on equity investment

Loan acquisition costs

Stock based compensation

Amortization of debt discount

Issuance of common stock for legal settlement

Bad debt expense

Loss on deconsolidation

Operating lease expense

Gain on forgiveness of debt

( 1,484,799 )

Changes in operating assets and liabilities:

Accounts receivable

( 1,762,213 )

Contract assets

Prepaid expenses and other assets

Accounts payable and accrued expenses

( 2,041,131 )

Contract liabilities

( 2,348,773 )

( 1,288,315 )

Loss provision for contracts in progress

Accounts payable and accrued expenses

( 2,609,891 )

Operating lease liabilities, net

Other liabilities

( 2,463,942 )

Other current liabilities

Other liabilities

( 1,556,932 )

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Advances to related party

Business acquisitions, net of cash received

Capitalized patents

Net cash used in investing activities

( 5,045,405 )

( 1,689,153 )

Cash flows from financing activities:

Proceeds from sale of common stock, net of fees

Proceeds from convertible debentures

Repayments of convertible debentures

Proceeds from notes payable

Proceeds from convertible notes

Net repayments of loan payable

Net cash provided by financing activities

Net change in cash and cash equivalents

Net change in cash

( 2,236,303 )

( 2,618,146 )

Effect of exchange rate on cash

2 unchanged sentences

Supplemental disclosure of cash flow information:

Cash paid for income taxes

Cash paid for interest

Cash paid for income taxes

Non-cash financing and investing activities:

Issuance of common stock per TerraData Acquisition

Issuance of common stock for convertible notes payable and interest

Issuance of common stock for Wildlife Specialists and Remote Intelligence

Non-controlling interest for Wildlife Specialists and Remote Intelligence

accompanying notes to consolidated financial statements.

Stock issued for acquisition of TerraData

See notes to consolidated financial statements.

DARKPULSE, INC.

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Financial Statements

For the Years ended December

31, 2022 and 2021

NOTE 1 – BASIS

OF FINANCIAL STATEMENT PRESENTATION

For the Years ended

December 31, 2023 and 2022

1 – BASIS OF FINANCIAL STATEMENT PRESENTATION

and Description of Business

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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.

technology have been limited to quasi-static, long-term structural health monitoring due to the time required to obtain the data and its

poor precision.

The Company’s patented BOTDA dark-pulse sensor technology allows for the monitoring of highly dynamic environments

due to its greater resolution and accuracy.

The Company’s

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

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

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

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

Wildlife Specialists,

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

and monitoring services;

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

unmanned ground crawlers to meet the needs of its customers;

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

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

NOTE 2 – SIGNIFICANT

ACCOUNTING POLICIES

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

Company’s subsidiaries consist of DarkPulse UK, Ltd which concentrates on the sale and engineering of distributed fiber

optic sensors;

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

ceased its business operations;

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 DarkPulse Manufacturing formerly 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 Official Receiver’s Office (“OR”) to take

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

At the same time the court appointed the OR to

take the appointment as liquidator of Optilan (UK) Limited.

The OR has taken control of Optilan (UK) Limited’s assets.

ORs Office has initiated contact with Optilan but we still wait to receive details of the individual who will be taking the role of OR.

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 occurred July

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.

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

liabilities for any obligations not repaid.

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

On August 9, 2023, Evelyn Partners

was appointed Joint Liquidator.

2 – SIGNIFICANT ACCOUNTING POLICIES

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

of Presentation and Principles of Consolidation

The Company’s

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

The Company’s consolidated

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

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

intercompany balances and transactions have been eliminated in consolidation.

All material intercompany

balances and transactions have been eliminated in consolidation.

Our consolidated

1 unchanged sentence

and its subsidiaries:

DarkPulse Technologies

Technologies Inc.

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

DPTI owns 100%

100% of DarkPulse Technology Holdings Inc., a New York corporation, incorporated July 6, 2017.

4 unchanged sentences

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

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

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

30, 2021, the Company closed two separate Membership Interest Purchase Agreements with Remote Intelligence, Limited Liability Company,

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

(“ WS ”) pursuant to which the Company agreed to pay to the majority shareholder of each of RI and WS an aggregate of

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

in exchange for 60 %

ownership of each of RI and WS.

In 2023, Optilan was deemed insolvent

by the entered liquidation.

August 30, 2021, the Company closed two separate Membership Interest Purchase Agreements with Remote Intelligence, Limited Liability

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

liability company (“ WS ”) pursuant to which the Company agreed to pay to the majority shareholder of each of RI

and WS an aggregate of 15,000,000

shares of the Company’s Common Stock and $ 1,000,000 in exchange for 60 % ownership of each of RI and WS.

8, 2021, the Company entered into and closed the Stock Purchase Agreement with TJM Electronics West, Inc., an Arizona corporation (“ TJM ”),

2 unchanged sentences

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

Company agreed to purchase 60 %

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

Company agreed to purchase 60 % of the equity interests in TerraData in exchange for 3,725,386

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

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.

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.

determination is made that the Company is the primary beneficiary, then that entity is consolidated.

Use of Estimates

The preparation of the Company’s financial

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Actual results could differ from those

Reclassifications

Certain amounts in the Company’s prior

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

reclassifications are primarily due to contract related assets and liabilities.

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

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

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

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

There were no changes

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

financing activities.

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

5 unchanged sentences

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

As of December 31, 2022,

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

Accounts Receivable

Accounts receivable

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

Most billings are determined

based on contractual terms.

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

including retainage, as current assets.

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

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

Contract assets include amounts billed to customers under retention

provisions in construction contracts.

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

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

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.

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

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.

Also, the Company adopted ASU 2016-13

in January 2023 and the adoption did not have a material impact on the Company’s consolidated financial statements and

related disclosures for the year ended December 31, 2023.

Each month, the Company reviews its

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

or perceived collection issues.

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

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

As of December 31, 2022 and 2021, the

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

Accounts receivable

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

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

As of December 31, 2022 and 2021, retainage

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

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

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

As of December 31, 2023 and 2022,

the Company determined that the allowance for doubtful accounts was $ 0

and $ 3,320,983 ,

respectively.

The allowance pertaining to Optilan UK was derecognized upon the Optilan Liquidation.

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

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

As of December 31, 2023 and 2022,

retainage receivable was $ 0 and $ 824,777 , respectively.

The retainage pertaining to Optilan UK was derecognized upon the Optilan

Currency Translation

The Company’s reporting currency is US Dollars.

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

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

The accounts of one of the

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

The Company’s

reporting currency is US Dollars.

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

British Pound (“GBP”) as the functional currency, as well as the Turkish lira, Emiraes Dirham, Azerbajani Manat and Indian

The accounts of one of the Company’s subsidiaries is maintained using the appropriate local currency, Canadian Dollar (“CAD”)

as the functional currency.

All assets and liabilities are translated into U.S.

Dollars at balance sheet date, shareholders' equity is translated at historical

rates and revenue and expense accounts are translated at the average exchange rate for the year or the reporting period.

The translation

adjustments are reported as a separate component of stockholders’ equity, captioned as accumulated other comprehensive (loss) gain.

Transaction gains and losses arising from exchange rate fluctuations on transactions denominated in a currency other than the functional

currency are included in the statements of operations as foreign currency exchange variance.

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

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

comprehensive (loss) gain.

Transaction gains and losses arising from exchange rate fluctuations on transactions denominated in a currency

other than the functional currency are included in the statements of operations as foreign currency exchange variance.

relevant translation rates are as follows:

4 unchanged sentences

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

GBP, average rate at 1.375671 US$:GBP

and for the Optilan acquisition closing rate at 1.38138

GBP, average rate at 1.23710

US$:GBP and for the Optilan acquisition closing rate at 1.375103 US$:

Long-Lived Assets and Goodwill

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

of Long-lived Assets.

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

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

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

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

circumstances indicate that the carrying amount may not be recoverable.

Recoverability of assets to be held and used is measured by

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

If the carrying

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

of the asset exceeds the fair value of the asset.

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

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

Refer to Notes 4 and 8.

In determining

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

orderly transaction between market participants at the measurement date.

This includes reviewing market comparables such as revenue multipliers

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

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

The Company calculated the carrying

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

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

Refer to Note 7.

During the year ended December 31, 2023, as a

result of 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.

The qualitative assessment was primarily due to

the customer contracts held by Optilan (UK) Limited and the associated revenue projections by the UK subsidiary that is subject to the

potential winding up.

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

loss of $ 6,948,349

pertaining to impairment and goodwill and intangible assets in the consolidated statements of operations.

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 December 31, 2023.

and Equipment

equipment are carried at historical cost less accumulated depreciation.

Depreciation is based on the estimated service lives of the depreciable

assets and is calculated using the straight-line method.

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

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

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

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

Repairs and maintenance are expensed as incurred.

and equipment are carried at historical cost less accumulated depreciation.

Depreciation is based on the estimated service lives of the

depreciable assets and is calculated using the straight-line method.

Expenditures that increase the value or productive capacity of assets

are capitalized.

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

are removed from service.

When property and equipment are retired, sold or otherwise disposed of, the asset’s carrying amount and

related accumulated depreciation are removed from the accounts and any gain or loss is included in operations.

Repairs and maintenance

are expensed as incurred.

The estimated

useful lives of property and equipment are generally as follows:

Schedule of estimated useful lives

Schedule of estimated

Office furniture and fixtures

50 unchanged sentences

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

In the event that there

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

In accordance

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

Narrow-Scope Improvements and Practical Expedient ,

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

(2) permit an entity to exclude

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

(3) specify that the measurement

date for noncash consideration is contract inception;

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

effect of all modifications that occur before the beginning of the earliest period presented when identifying the satisfied and unsatisfied

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

(5) clarify that a completed contract for purposes of transition is a contract for which all (or substantially all) of the

revenue was recognized under legacy GAAP before the date of initial application, and (6) clarify that an entity that retrospectively applies

the guidance in Topic 606 to each prior reporting period is not required to disclose the effect of the accounting change for the period

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

fiscal years.

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

Based on the terms

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

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

When a transaction involves more than one product

or service, revenue is allocated to each deliverable based on its relative fair value;

otherwise, revenue is recognized as products are

delivered or as services are provided over the term of the customer contract.

Cost of revenues

consists primarily of materials and overhead costs incurred internally and amounts incurred to contract manufacturers to produce

In the event that

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

In accordance with ASU No.

2016-12, Revenue

from Contracts with Customers (Topic 606):

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

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

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

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

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

contract inception;

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

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

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

(5) clarify that

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

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

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

The amendments

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

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

Based on the terms and conditions of

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

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

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

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

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

are provided over the term of the customer contract.

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

Financial instruments that potentially subject the

Company to concentrations of credit risk consist principally of cash and cash equivalents.

The Company has not experienced any losses

related to its cash and does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial

banking relationships.

As of December 31, 2022, one customer accounted

for 38 % of gross accounts receivable.

Cost of revenues also includes direct

labor attributable to revenue service arrangements.

Concentration of

instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents.

The Company has not experienced any losses related to its cash and does not believe that it is subject to unusual credit risk beyond

the normal credit risk associated with commercial banking relationships.

As of December 31, 2022, one customer accounted for

38 % of gross accounts receivable.

As of December 31, 2023,

one customer accounted for 39 % of gross accounts receivable.

accounts for its leases under ASC 842, Leases .

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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.

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

conversion feature meets the definition of a liability and, if so, whether to bifurcate the conversion feature and account for it as

a separate derivative liability.

For derivative financial instruments that are accounted for as liabilities, the derivative instrument

is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the

statements of operations.

For stock-based derivative financial instruments, the Company uses a lattice model, in accordance with ASC

815-15 , Derivative and Hedging, to value the derivative instruments at inception and on subsequent valuation dates.

The classification

of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end

of each reporting period.

Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether

net-cash settlement of the derivative instrument could be required within 12 months after the balance sheet date.

of Financial Instruments

Company measures its financial assets and liabilities in accordance with the requirements of FASB ASC 820, Fair Value Measurements

and Disclosures.

As defined in FASB ASC 820, the fair value is the price that would be received to sell an asset or paid to transfer

a liability in an orderly transaction between market participants at the measurement date (exit price).

The Company utilized the market

data of similar entities in its industry or assumptions that market participants would use in pricing the asset or liability, including

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

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.

Value of Financial Instruments

The Company measures its financial

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

defined in FASB ASC 820, the fair value is the price that would be received to sell an asset or paid to transfer a liability in an

orderly transaction between market participants at the measurement date (exit price).

The Company utilized the market data of

similar entities in its industry or assumptions that market participants would use in pricing the asset or liability, including

assumptions about risk and the risks inherent in the inputs to the valuation technique.

These inputs can be readily observable, market

corroborated, or generally unobservable.

The Company classifies fair value balances based on the observability of those inputs.

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:

These inputs can be readily observable,

market corroborated, or generally unobservable.

The Company classifies fair value balances based on the observability of those

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:

– 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

Active markets are

those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing

Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.

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– 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.

These inputs may be used

with internally developed methodologies that result in management’s best estimate of fair value.

The Company’s

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

Equity Investments

The Company uses

the equity method to account for investments in which it has the ability to exercise significant influence over the investee’s

uses the equity method to account for investments in which it has the ability to exercise significant influence over the investee’s

operating and financial policies, or in which its holds a partnership or limited liability company interest in an entity with specific

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in the consolidated statements of operations and comprehensive (loss).

ASC 323-10-30-2, Joint Ventures are accounted for using the equity method, in which the Company initially records its investment at cost,

323-10-30-2, Joint Ventures are accounted for using the equity method, in which the Company initially records its investment at cost,

including transaction costs.

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Tax positions taken are not offset or aggregated with other positions.

positions that meet the more likely than not recognition threshold are measured at the largest amount of tax benefit that is more than

50 percent likely of being realized upon settlement with the applicable taxing authority.

The portion of the benefit associated with tax

positions taken that exceed the amount measured as described above should be reflected as a liability for uncertain tax benefits in the

accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination.

Tax positions

that meet the more likely than not recognition threshold are measured at the largest amount of tax benefit that is more than 50 percent

likely of being realized upon settlement with the applicable taxing authority.

The portion of the benefit associated with tax positions

taken that exceed the amount measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying

balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination.

believes its tax positions are all more likely than not to be upheld upon examination.

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for uncertain tax benefits.

has adopted ASC 740-10-25, Definition of Settlement which provides guidance on how an entity should determine whether a tax position

is effectively settled for the purpose of recognizing previously unrecognized tax benefits and provides that a tax position can be effectively

settled upon the completion and examination by a taxing authority without being legally extinguished.

The Company has adopted ASC 740-10-25, Definition

of Settlement which provides guidance on how an entity should determine whether a tax position is effectively settled for

the purpose of recognizing previously unrecognized tax benefits and provides that a tax position can be effectively settled upon the

completion and examination by a taxing authority without being legally extinguished.

For tax positions considered effectively

settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than not to

be sustained based solely on the basis of its technical merits and the statute of limitations remains open.

The federal and

state income tax returns of the Company are subject to examination by the IRS and state taxing authorities, generally for three years

settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than not

to be sustained based solely on the basis of its technical merits and the statute of limitations remains open.

The federal and state

income tax returns of the Company are subject to examination by the IRS and state taxing authorities, generally for three years

after they are filed.

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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’

Non-controlling

interests are classified as a separate component of equity in the Company's consolidated balance sheets and statements of changes in stockholders’

Net income (loss) and comprehensive income (loss) attributable to non-controlling interests are reflected separately from consolidated

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respectively, attributable to non-controlling interests.

Comprehensive

Comprehensive Loss

includes net loss well as other changes in stockholders’ equity that result from transactions and economic events other than those

with stockholders.

During the years ended December 31, 2022 and 2021, the Company’s only element of other comprehensive loss was

foreign currency translation.

Comprehensive

loss includes net loss well as other changes in stockholders’ equity that result from transactions and economic events other than

those with stockholders.

During the years ended December 31, 2023 and 2022, the Company’s only element of other comprehensive loss

was foreign currency translation.

compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the

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fair value of the award.

ASC Topic 718, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement

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.

If not, the cancellation is viewed as a replacement and not a modification, with a repurchase price

accounts for earnings per share pursuant to ASC 260, Earnings per Share , which requires disclosure on the financial statements

of "basic" and "diluted" earnings (loss) per share.

Basic earnings (loss) per share are computed by dividing net income

(loss) by the weighted average number of common shares outstanding for the year.

Diluted earnings (loss) per share is computed by dividing

net income (loss) by the weighted average number of common shares outstanding plus common stock equivalents (if dilutive) related to stock

options and warrants for each year.

Until the measurement date is reached, the total amount of

compensation expense remains uncertain.

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

reporting date.

Further, ASC Topic 718, provides guidance about which changes to the terms or conditions of a share-based payment award

require an entity to apply modification accounting in Topic 718, such as the repricing of share options, which would revalue those options

and the accounting for the cancellation of an equity award whether a replacement award or other valuable consideration is issued in conjunction

with the cancellation.

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

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

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

Potentially dilutive

items outstanding as of December 31, 2022 and 2021 are as follows:

Schedule of antidilutive shares

Potentially dilutive items outstanding as of

December 31, 2023 and 2022 are as follows:

Schedule of anti dilutive shares

Convertible notes

1,589,257,888

Series D preferred stock

1,589,257,888

Issued Accounting Pronouncements

In November 2021,

the FASB issued ASU No.

2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from

Contracts with Customers , issued by the Financial Accounting Standards Board.

This ASU requires entities to recognize and measure

contract assets and contract liabilities acquired in a business combination in accordance with ASU 2014-09, Revenue from Contracts with

Customers (Topic 606).

The update will generally result in the recognition of contract assets and contract liabilities at amounts consistent

with those recorded by the acquiree immediately before the acquisition date rather than at fair value.

The Company expects that there

would be no material impact on the Company’s condensed consolidated financial statements upon the adoption of this ASU.

Recently Issued Accounting Pronouncements

In November 2021, the FASB issued ASU No.

2021-08, Business

Combinations (Topic 805):

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

Accounting Standards Board.

This ASU requires entities to recognize and measure contract assets and contract liabilities acquired in a

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

The update will generally result

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

the acquisition date rather than at fair value.

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

consolidated financial statements upon the adoption of this ASU.

In August 2020, the FASB issued ASU 2020-06, which

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financial statements and related disclosures.

there are several other new accounting pronouncements issued or proposed by the FASB, which the Company has adopted or will adopt, as

applicable, the Company does not believe any of these accounting pronouncements has had or will have a material impact on its financial

position or results of operations.

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).

This standard

replaced the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”)

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

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

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

Company generated net losses of $ 35,517,505

and $ 4,826,320

during the years ended December 31, 2022 and 2021, respectively,

and net cash used in operating activities of $ 21,738,542

Company generated net losses of $ 21,723,043 and

during the years ended December 31, 2023 and 2022, respectively, and net cash used in operating activities of $ 5,653,214

and $ 21,738,542 ,

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As of December 31, 2023, the Company had $ 11,912 of

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

its strategic objectives.

These factors, as well as the uncertain conditions that the Company faces relative to capital raising

activities, create substantial doubt as to the Company’s ability to continue as a going concern.

The Company is seeking to

raise additional capital principally through private placement offerings and is targeting strategic partners in an effort to

finalize the development of its products and begin generating revenues.

The ability of the Company to continue as a going concern is

dependent upon the success of future capital offerings or alternative financing arrangements or expansion of its operations.

accompanying consolidated financial statements do not include any adjustments that might be necessary should the Company be unable

to continue as a going concern.

Management is actively pursuing additional sources of financing sufficient to generate enough cash

flow to fund its operations for twelve months from the issuance date of these consolidated financial statements.

However, management

cannot make any assurances that such financing will be secured.

NOTE 4 – BUSINESS

Holdco 3 Limited

9, 2021, the Company entered into a Share Purchase Agreement with Optilan Guernsey Limited and Optilan Holdco 2 Limited (the “Sellers”),

pursuant to which the Company purchased from the Sellers all of the issued and outstanding equity interests of Optilan HoldCo 3 Limited,

a private company incorporated in England and Wales (“Optilan”) for £1.00.

In connection with the acquisition,

the Company acquired $ 14,828,459

in assets and assumed liabilities totaling $ 25,179,320 .

As shown below, this purchase price consideration is nominal and it was considered $0 for accounting

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

has accounted for the purchase using the acquisition method of accounting for business combinations under ASC 805.

Accordingly, the purchase

price has been allocated to the underlying assets and liabilities in proportion to their respective fair values.

The excess of the consideration

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

The following table summarizes the acquired

assets and assumed liabilities for the fair value of the assets and liabilities recognized at the date of acquisition:

Schedule of fair value of assets and liabilities in acquisition

(Amounts in US$’s)

Amounts Recognized as of Acquisition Date

Measurement Period Adjustments

Accounts receivable

Property & equipment

Right-of-use assets

Unbilled revenue

Intangible assets:

Accounts payable

Contract deposits

Contract liabilities, current

Lease liabilities, current

Other current liabilities

Lease liabilities, noncurrent

Total purchase consideration

Specialists, LLC and Remote Intelligence, LLC

On August 30, 2021, the Company closed two

separate Membership Interest Purchase Agreements (the “ MPAs ”) with Remote Intelligence, Limited Liability

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

liability company (“ WS ”) pursuant to which the Company agreed to pay to the majority shareholder of each of RI

and WS an aggregate of 15,000,000

shares of the Company’s common stock (at the fair value of $0.07 per share), $500,000 to be paid on the closing date, and an

additional $500,000 to be paid 12 weeks from closing date in exchange for 60 %

ownership of each of RI and WS.

RI and WS are now subsidiaries of the Company.

has accounted for the purchase using the acquisition method of accounting for business combinations under ASC 805.

Accordingly, the purchase

price has been allocated to the underlying assets and liabilities in proportion to their respective fair values.

The excess of the consideration

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

The following table summarizes the acquired

assets and assumed liabilities for the fair value of the assets and liabilities recognized at the date of acquisition:

Schedule of Condensed Consolidated Balance Sheet

Consideration

Purchase price

The allocation

of the total purchase price to the tangible and intangible assets acquired and liabilities assumed by DarkPulse based on the estimated

fair values as of August 29, 2021 was as follows:

Schedule of fair value of assets and liabilities in acquisition

(Amounts in US$’s)

Amounts Recognized as of Acquisition Date

Measurement Period Adjustments

Accounts receivable

Other current assets

Property & equipment

Assumed liabilities

Non-controlling interest

Total Consideration for 60% of equity interests

TJM Electronics

September 8, 2021, the Company entered into and closed the Stock Purchase Agreement with TJM Electronics West, Inc., an Arizona corporation

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

exchange for $ 450,000 .

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

has accounted for the purchase using the acquisition method of accounting for business combinations under ASC 805.

Accordingly, the purchase

price has been allocated to the underlying assets and liabilities in proportion to their respective fair values.

The excess of the consideration

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

The following table summarizes the acquired

assets and assumed liabilities for the fair value of the assets and liabilities recognized at the date of acquisition:

Schedule of fair value of assets and liabilities in acquisition

Accounts receivable

Property & equipment

Total Consideration

Unmanned, PLLC

October 1, 2021 the Company entered into and closed the Membership Purchase Agreement (the “ TerraData MPA ”) with

TerraData Unmanned, PLLC, a Florida limited liability company (“ TerraData ”), and Justin Dee, the sole shareholder

of TerraData, pursuant to which the Company agreed to purchase 60 %

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

shares of the Company’s Common Stock (at the fair value of $0.05 per share) $ 400,000 ,

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

TerraData is now a subsidiary of the

The shares were issued to Justin Dee during 2022.

has accounted for the purchase using the acquisition method of accounting for business combinations under ASC 805.

Accordingly, the purchase

price has been allocated to the underlying assets and liabilities in proportion to their respective fair values.

The excess of the consideration

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

The following table summarizes the acquired

assets and assumed liabilities for the fair value of the assets and liabilities recognized at the date of acquisition:

Schedule of Condensed Consolidated Balance Sheet

Consideration

Purchase price

The allocation

of the total purchase price to the tangible and intangible assets acquired and liabilities assumed by the Company based on the fair values

as of October 1, 2021 was as follows:

Schedule of fair value of assets and liabilities in acquisition

(Amounts in US$'s)

Assumed liabilities

Non-controlling interest

Total Consideration for 60% of equity interests

Supplemental Pro Forma Data

Unaudited pro

forma results of operations for the year ended December 31, 2021 as though the Company acquired Optilan, Wildlife Specialists, Remote

Intelligence, TJM Electronic West and TerraData Unmanned (the “Acquired Companies”) on the first day of each fiscal year

are set forth below.

Proforma results of operations

Pro forma revenues

Pro forma operating income

Pro forma net income

Pro forma net income attributable to DarkPulse

Pro forma net income per share

Weighted average common shares outstanding

4,790,929,690

NOTE 5 – REVENUE

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 years ended December 31, 2023 and 2022:

Schedule of timing of revenue recognition

Schedule of timing of revenue

Services and products transferred at a point in time

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flows are affected by economic factors.

Revenue by source

consisted of the following for the years ended December 31, 2022 and 2021:

Schedule of revenue by source consisted

by source consisted of the following for the years ended December 31, 2023 and 2022:

Schedule of revenue

Total revenue

geographic destination consisted of the following for the for the years ended December 31, 2022 and 2021:

by geographic destination consisted of the following for the for the years ended December 31, 2023 and 2022:

Schedule of revenue by geographic destination

Years Ended December 31,

North America

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Total revenue

Contract revenue

is recognized over time using the cost-to-cost measure of progress for fixed price contracts.

The cost-to-cost measure of progress best

depicts the continuous transfer of control of goods or services to the customer.

The contractual terms provide that the customer compensates

the Company for services rendered.

Contract costs

include all direct materials, labor and subcontracted costs, as well as indirect costs related to contract performance, such as indirect

labor, supplies, tools, repairs and the costs of capital equipment.

The cost estimation and review process for recognizing revenue over

time under the cost-to- cost method is based on the professional knowledge and experience of the Company’s project managers, engineers

and financial professionals.

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.

A performance

obligation is a contractual promise to transfer a distinct good or service to the customer and is the unit of account under Accounting

Standards Codification (“ASC”) Topic 606.

The transaction price of a contract is allocated to distinct performance obligations

and recognized as revenue when or as the performance obligations are satisfied.

The Company’s contracts often require significant

integrated services and, even when delivering multiple distinct services, are generally accounted for as a single performance obligation.

Contract amendments and change orders are generally not distinct from the existing contract due to the significant integrated service

provided in the context of the contract and are accounted for as a modification of the existing contract and performance obligation.

majority of the Company’s performance obligations are completed within one year.

When more than

one contract is entered into with a customer on or close to the same date, the Company evaluates whether those contracts should be combined

and accounted for as a single contract as well as whether those contracts should be accounted for as more than one performance obligation.

This evaluation requires significant judgment and is based on the facts and circumstances of the various contracts, which could change

the amount of revenue and profit recognition in a given period depending upon the outcome of the evaluation.

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.

As of December 31, 2022, the Company had backlog

3 unchanged sentences

Contract Assets and Liabilities

The Company bill its customers based

on contractual terms, including, milestone billings based on the completion of certain phases of the work.

Sometimes, billing occurs after

revenue recognition, resulting in unbilled revenue, which is accounted for as a contract asset.

Sometimes the Company receives advances

payments from our customers before revenue is recognized, resulting in deferred revenue, which is accounted for as a contract liability.

Contract assets in the consolidated

balance sheets represents costs and estimated earnings in excess of billings, which arise when revenue has been recorded but the amount

has not been billed.

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

Schedule of contract assets and liabilities

Costs and estimated earnings in excess of billings on uncompleted contracts

Total contract assets

Contract liabilities consist of

the following:

Contract liabilities consist of the following:

Billings in excess of costs and estimated earnings on uncompleted contracts

Total contract liabilities

The following

table is a summary of the Company’s activity of contract liabilities related to contracts with customers.

Schedule of contract liabilities related to contracts with customers

Contract assets and liabilities on December 31, 2023 are $ 0

upon the deconsolidation related to the Optilan liquidation.

The following table is a summary of the Company’s

activity of contract liabilities related to contracts with customers.

Rollforward of contract liabilities

Balance at December 31, 2021

Additions through advance billings to or payments from vendors

Additions through business acquisition

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

( 7,514,687 )

Balance at December 31, 2022

Additions through advance billings to or payments from vendors

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

Deconsolidation

( 2,215,212 )

1 unchanged sentence

Variable Consideration

pricing for the Company’s contracts may include variable consideration, such as unapproved change orders, claims, incentives and

liquidated damages.

Management estimates variable consideration for a performance obligation utilizing estimation methods that best predict

the amount of consideration to which the Company will be entitled.

Variable consideration is included in the estimated transaction price

to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated

with the variable consideration is resolved.

Management’s estimates of variable consideration and determination of whether to include

estimated amounts in transaction price are based on past practices with the customer, specific discussions, correspondence or preliminary

negotiations with the customer, legal evaluations and all other relevant information that is reasonably available.

The effect of a change

in variable consideration on the transaction price of a performance obligation is typically recognized as an adjustment to revenue on

a cumulative catch-up basis.

To the extent unapproved change orders, claims and liquidated damages reflected in transaction price are

not resolved in the Company’s favor, or to the extent incentives reflected in transaction price are not earned, there could be reductions

in, or reversals of, previously recognized revenue.

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:

Schedule of accounts receivable

receivable consisted of the following:

Schedule of accounts

Accounts receivable

1 unchanged sentence

( 3,320,983 )

( 3,365,293 )

Accounts receivable, net

6 – PROPERTY AND EQUIPMENT, NET

equipment, net consisted of the following:

Schedule of property, plant and equipment

and equipment, net consisted of the following:

Schedule of property

and equipment, net

Property and equipment

4 unchanged sentences

Property and equipment, net

expense was $ 1,331,972 and $ 78,465 for the years ended December 31, 2022 and 2021, respectively.

expenses was $ 508,935 and $ 1,331,972 for the years ended December 31, 2023 and 2022, respectively.

7 - GOODWILL AND INTANGIBLE ASSETS

3 unchanged sentences

Balances at December 31, 2021

Business combinations

Foreign exchange translation

Balances at December 31, 2021

Impairment (see Note 2)

( 9,519,143 )

2 unchanged sentences

Balances at December 31, 2022

connection with the Optilan acquisition, the Company recognized an intangible asset, a trade name, of $ 4,033,638 .

The trade name has a useful life of 25

the Company’s impairment analysis at December 31, 2022 (see Note 2), the Company recorded impairment of the trade name of $ 2,703,456 .

following is a summary of intangible assets, net:

Schedule of intangible assets

Impairment of goodwill

( 6,948,349 )

Foreign currency translation

Balances at December 31, 2023

Intangible Assets, Net

In connection with the Optilan acquisition, the

Company recognized an intangible asset, a trade name, of $4,033,638.

The trade name has a useful life of 25 years.

During the Company’s impairment analysis

at December 31, 2022 (see Note 2), the Company recorded impairment of the trade name of $2,703,456.

The following is a summary of intangible assets,

Summary of intangible assets

Trade name per business combination

( 3,059,716 )

( 2,703,456 )

accumulated amortization

1 unchanged sentence

Intangible assets, net

Amortization expense was $ 161,346 and $ 0 for the

years ended December 31, 2022 and 2021, respectively.

Future amortization

expense as of December 31, 2022 is as follows:

of future amortization expense Optilian acquisition

Years Ended December 31,

Total future amortization expense

Amortization expense was $ 34,070 and

$ 161,346 for the years ended December 31, 2023 and 2022, respectively.

- Intrusion Detection Intellectual Property

4 unchanged sentences

on the payment of maintenance fees).

The DPTI issued

patents cover a System and Method for Brillouin Analysis, a System and Method for Resolution Enhancement of a Distributed Sensor, and

a Flexible Fiber Optic Deformation System Sensor and Method.

Maintenance of intellectual property rights and the protection thereof is

important to our business.

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

may challenge any issued patents.

Other parties may independently develop similar or competing technology or design around any patents

that may be issued to the Company.

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

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

Further, the Company may be required to enforce its intellectual property or other proprietary rights through litigation, which, regardless

of success, could result in substantial costs and diversion of management's attention.

Additionally, there may be existing patents of

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

pending that the Company's products might infringe upon, since these applications are often not publicly available until a patent is issued

or published.

For the years

ended December 31, 2022 and 2021, the Company had patent amortization costs on its intrusion detection technology totaling $ 75,087 and

$ 51,028 , respectively.

issued patents cover a System and Method for Brillouin Analysis, a System and Method for Resolution Enhancement of a Distributed Sensor,

and a Flexible Fiber Optic Deformation System Sensor and Method.

Maintenance of intellectual property rights and the protection thereof

is important to our business.

Any patents that may be issued may not sufficiently protect the Company's intellectual property and third

parties may challenge any issued patents.

Other parties may independently develop similar or competing technology or design around any

patents that may be issued to the Company.

The Company cannot be certain that the steps it has taken will prevent the misappropriation

of its intellectual property, particularly in foreign countries where the laws may not protect proprietary rights as fully as in the United

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.

years ended December 31, 2023 and 2022, the Company had patent amortization costs on its intrusion detection technology totaling $ 14,212

and $ 75,087 , respectively.

Patents costs are being amortized over the remaining life of each patent, which is from 7 to 16 years.

The following

is a summary of the DPTI patents as of December 31, 2022 and 2021:

issued patents cover a System and Method for Brillouin Analysis, a System and Method for Resolution Enhancement of a Distributed Sensor,

and a Flexible Fiber Optic Deformation System Sensor and Method.

Maintenance of intellectual property rights and the protection thereof

is important to our business.

Any patents that may be issued may not sufficiently protect the Company's intellectual property and third

parties may challenge any issued patents.

Other parties may independently develop similar or competing technology or design around any

patents that may be issued to the Company.

The Company cannot be certain that the steps it has taken will prevent the misappropriation

of its intellectual property, particularly in foreign countries where the laws may not protect proprietary rights as fully as in the United

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.

following is a summary of the DPTI patents as of December 31, 2023 and 2022:

Schedule of patents

1 unchanged sentence

expected amortization of patents is as follows:

Schedule of future amortization of intangible

Schedule of future amortization of intangible assets

As of December 31,

1 unchanged sentence

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.

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.

1 unchanged sentence

under ASC 323-10-30-2.

During the year ended December 31, 2022, the Company

contributed $ 103,505 to the joint venture and recorded a loss on the equity investment of $ 51,753 .

During the year ended

December 31, 2023, the Company contributed $ 113,124 to the joint venture and recorded a loss on the equity investment of $ 159,849 .

the year ended December 31, 2022, the Company contributed $ 103,505 to the joint venture and recorded a loss on the equity investment

of $ 51,753 .

9 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable

and accrued expenses consists of the following:

Schedule of accounts payable and accrued expenses

payable and accrued expenses consists of the following as of December 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 11 – DEBT

Company uses the Black-Scholes Model to calculate the derivative value of its convertible debt.

uses the Black-Scholes Model to calculate the derivative value of its convertible debt.

The valuation result generated by this

4 unchanged sentences

the expected volatility of 106.90%, a risk-free rate of interest of 5.48%, and contractual lives of the debt of three months.

management determined the expected volatility between 475.55-624.25%, a risk-free rate of interest between 0.10-0.13%, and contractual

lives of the debt varying from zero months to eight months.

Management made the determination to use an expected life rather than contractual

life for the calculations for the matured debt as of December 31, 2022 and 2021.

The table below details the Company's outstanding convertible

notes and related derivative liability:

Schedule of convertible debt

Derivative Liability

the years ended December 31, 2022 and 2021, change in fair value of the derivative liability was $ 227,286

and $ 687,124 ,

respectively.

The following is a summary of the change in derivative liability:

Change in derivative liabilities

management determined the expected volatility of 140.30%, a risk-free rate of interest of 4.73%, and contractual lives of the debt of

three months.

Management made the determination to use an expected life rather than contractual life for the calculations for the matured

debt as of December 31, 2023 and 2022.

August 7, 2023, the Company entered into a convertible note for a principal of $ 57,750 .

The note bears interest at a rate of 10 %

per annum and matures after one year.

Following 180 days from the note, the noteholder may convert at a discount of 39 %.

The Company has reserved a sufficient number of shares of common stock for issuance upon full conversion of the note in accordance

with the terms.

September 29, 2023, the Company entered into a convertible note for a principal of $ 57,750 , which was funded on October 4, 2023.

bears interest at a rate of 10 % per annum and matures after one year.

Following 180 days from the note, the noteholder may convert at

a discount of 39 %.

The Company has reserved a sufficient number of shares of common stock for issuance upon full conversion of the note

in accordance with the terms (see Note 15).

December 4, 2023, the Company entered into a convertible note for a principal of $ 51,150 , which was funded on December 7, 2023.

bears interest at a rate of 10 % per annum and matures after one year.

Following 180 days from the note, the noteholder may convert at

a discount of 39 %.

The Company has reserved a sufficient number of shares of common stock for issuance upon full conversion of the note

in accordance with the terms.

of December 31, 2023 and, 2022, there was $ 166,650 and

convertible debt principal outstanding.

During the year ended December 31, 2023 and 2022, $ 12,025

of the debt discount was amortized.

The summary of convertible notes

Schedule of convertible notes

Principal Outstanding

unamortized debt discount

Convertible notes, net

The table below details the Company's

outstanding convertible notes and related derivative liability:

Outstanding convertible notes and derivative liability

Derivative Liability

1800 Diagonal Lending

During the years ended December 31,

2023 and 2022, change in fair value of the derivative liability was $167,582 and $227,286, respectively.

The following is a summary of

the derivative liability:

Schedule of derivative liability

Balances at December 31, 2021

1 unchanged sentence

Balances at December 31, 2022

Loss on issuance of debt

Issuance of convertible note - 1800 Diagonal Lending

Change in fair value

EMA settlement

Balances at December 31, 2023

26, 2021, the Company entered a Securities Purchase Agreement and Registration Rights with FIRSTFIRE GLOBAL OPPORTUNITIES FUND, LLC,

a Delaware limited liability company (the “ FirstFire ”), pursuant to which the Company issued to FirstFire a

Convertible Promissory Note in the principal amount of $ 825,000

(the “ FirstFire Note ”).

The purchase price of the FirstFire Note is $ 750,000 .

The FirstFire Note matures on January

26, 2022 upon which time all accrued and unpaid interest will be due and payable.

Interest accrues on the FirstFire Note

per annum guaranteed until the FirstFire Note becomes due and payable, whether at maturity or upon acceleration or by prepayment or

The FirstFire Note is convertible at any time after 180 days from issuance, upon the election of the FirstFire, into

shares of the Company’s Common Stock at $ 0.015

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

the occurrence of an “Event of Default,” the conversion price would become $ 0.005 .

On November 17, 2021, FirstFire converted $825,000 of principal and $61,875 of interest into 177,375,000 shares of common

31, 2021, the Company commenced an action against FirstFire Global Opportunities Fund, LLC, and Eli Fireman (“Fireman”) in

the United States District Court for the Southern District of New York.

The complaint alleges that FirstFire is an unregistered dealer

acting in violation of Section 15(a) of the Securities Exchange Act of 1934 (the “Act”), and that the Company is entitled

to rescissionary relief from certain convertible promissory notes and securities purchase agreements entered into by the Company and FirstFire

pursuant to Section 29(b) of the Act.

The complaint also asserts claims against Fireman for control person liability under Section 20(a)

of the Act, unjust enrichment of FirstFire, and constructive trust against FirstFire.

2021, the Company entered into a Stipulation of Settlement with four note holders pursuant to which the Company agreed to pay $ 173,000

to the note holders.

2021, the Company entered into a Settlement and Mutual Release Agreement with Auctus Fund, LLC.

Pursuant to the Agreement, the Auctus

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

(the “ Auctus Note ”) into 12,500,000 shares of the Company’s

Common stock (the “ Auctus Shares ”) as consideration for full and complete satisfaction of and settlement of the Auctus

Note, which also terminates all obligations owing under both the Auctus Note and the corresponding Securities Purchase Agreement dated

September 25, 2018 between the Company and Auctus.

Auctus also agreed to limit the resales of the Auctus Shares in the public market

to no more than 2,500,000 shares per calendar week until all of the Auctus Shares have been sold.

December 31, 2022 and 2021 respectively, there was $ 378,263

of convertible debt outstanding.

As of December 31, 2022 and 2021 respectively, there was derivative

liability of $ 306,467 and

$ 533,753 related

to convertible debt securities.

As of December

31, 2022, all outstanding convertible debt is default.

14, 2021, the Company entered a Securities Purchase Agreement (the “ GS SPA ”) with GS Capital Partners, LLC

pursuant to which the Company issued to the Lender a 6% Redeemable Note in the principal amount of $ 2,000,000

(the “ GS Note ”).

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

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.

As of December 31, 2022 and

2021, $2,000,000 remains outstanding.

As of December 31, 2022, the

GS note is in default.

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 6 % 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.

As of December 31, 2023 and 2022, $ 1,923,868 and $ 2,000,000 remains outstanding.

As of December 31, 2023, the GS Note is in default.

The Company’s

15 unchanged sentences

Loans payable, non-current

The CARES Act

extended COVID relief funding for qualified small businesses under the EIDL assistance program.

In 2020, RI and WS were approved by the

SBA and received proceeds of $103,100 and $26,700, respectively.

The EIDL loans mature in thirty years from the effective date of the

loan and has a fixed interest rate of 3.75% per annum .

In August 2020,

WS entered into a line of credit for $100,000, which was amended and extended to a principal amount of $200,000 in 2021.

The loan is due

on demand and bears interest at the prime rate index and 1.00% As of December 31, 2022 and 2021, the outstanding balance was $200,000

and $175,331, respectively.

In March 2019,

RI entered into a line of credit for $45,000, which was amended and extended to a principal amount of $100,000 in 2021.

The loan is due

on demand and bears interest at the prime rate index and 1.00% As of December 31, 2022 and 2021, the outstanding balance was $99,971 and

$83,030, respectively.

minimum required payments over the next 5 years and thereafter are as follows:

Future minimum required

Years Ended December 31,

Total future minimum payments

NOTE 12 – SECURED

issued a convertible Debenture to the University (see Note 1) in exchange for the Patents assigned to the Company, in the amount of

Canadian $1,500,000, or US $1,491,923 on December 16, 2010, the date of the Debenture.

On April 24, 2017 DPTI issued a replacement

secured term Debenture in the same CAD 1,500,000 amount as the original Debenture.

The interest rate is the Bank of Canada Prime

overnight rate plus 1% per annum.

The Debenture had an initial required payment of CAD 42,000 (US$33,385) due on April 24, 2018 for

reimbursement to the University of its research and development costs, and this has been paid.

Interest-only maintenance payments

are due annually starting after April 24, 2018.

Payment of the principal begins on the earlier of (a) three years following two

consecutive quarters of positive earnings before interest, taxes, depreciation and amortization, (b) six years from April 24, 2017,

or (c) in the event DPTI fails to raise defined capital amounts or secure defined contract amounts by April 24 in the years 2018,

2019, and 2020.

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

in 2023, The principal repayment amounts will be due quarterly over a six year period in the

amount of Canadian Dollars 62,500.

Based on the exchange rate between the Canadian Dollar and the U.S.

Dollar on December 31, 2018,

the quarterly principal repayment amounts will be US$48,447.

The Debenture is secured by the Patents assigned by the University to

DPTI by an Assignment Agreement on December 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.

11 – SECURED DEBENTURE

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

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.

Beginning in 2023, The principal repayment amounts

will be due quarterly over a six year period in the amount of Canadian Dollars 62,500.

Based on the exchange rate between the Canadian

Dollar and the U.S.

Dollar on December 31, 2018, the quarterly principal repayment amounts will be US$48,447.

The Debenture is secured

by the Patents assigned by the University to DPTI by an Assignment Agreement on December 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

6 unchanged sentences

To date, no royalties have been paid.

For the years ended December

31, 2022 and 2021, the Company recorded interest expense of $ 36,307

and $ 52,538 ,

respectively.

As of December

31, 2022, the outstanding balance of the debenture liability totaled $ 1,090,827 .

minimum required payments over the next 5 years and thereafter are as follows:

Future minimum required payments

For the years ended December 31, 2023 and 2022, the Company recorded

interest expense of $ 66,813 and $ 36,307 , respectively.

of December 31, 2023, and December 31, 2022, the outstanding balance of the debenture liability

totaled $ 1,099,250 and $ 1,090,827 , respectively.

minimum required payments over the next five years and thereafter are as follows:

Schedule of future

minimum required payments

Period ending December 31,

8 unchanged sentences

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

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

Schedule of weighted

average remaining lease term and weighted average discount rate

Operating leases

1 unchanged sentence

Weighted average discount rate

On January 12,

12, 2021, the Company’s newly acquired subsidiary entered into an operating lease agreement to rent office space in Mumbai, India.

three-year agreement commenced January 12, 2021 with an annual rent of approximately $ 50,000 .

On May 27, 2021,

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

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

On August 31,

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.

4 unchanged sentences

months rent free.

On March 9, 2022, the Company entered into an operating

lease agreement to rent office space in Houston, Texas.

On March 9, 2022, the Company entered into an

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

This ten-year agreement commenced March 9.

2022 with an annual rent of approximately

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

2022 with an annual rent

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

On June 28, 2023, the Company recognized a gain

on deconsolidation of $1,642,146 related to Optilan (UK) and its subsidiaries leases.

The following

1 unchanged sentence

Schedule of future minimum operating lease payments

Years Ended December 31,

2027 and later

5 unchanged sentences

13 – STOCKHOLDERS’ EQUITY (DEFICIT)

accordance with the Company’s bylaws, the Company has authorized a total of 2,000,000

shares of preferred stock, par value $ 0.01

per share, for all classes.

As of December 31, 2022 and 2021 respectively, there were 88,335

total preferred shares issued and outstanding for all classes.

23, 2021, pursuant to the approval of the Board of Directors and a majority vote of the holders of Series D Preferred Stock, the Company

amended the Certificate of Designation for the Series D Preferred Stock so that each share of Series D Stock is convertible, at the sole

and exclusive election of the holder, into two shares of Common Stock of the Company.

On June 22, 2022, the Board of Directors of the

Company approved the filing of an amendment to the Company’s Certificate of Incorporation (the “Certificate of

Incorporation”), in the form of a Certificate of Designation that authorized for issuance of up to 100 shares of a new series

of Preferred Stock, par value $ 0.01

per share, of the Company designated “Series A Super Voting Preferred Stock” and established the rights, preferences and

limitations thereof.

The Board authorized the Series A Preferred Stock pursuant to the authority given to the Board under the

Certificate of Incorporation, which authorizes the issuance of up to 2,000,000

shares of Preferred Stock, par value $ 0.01

per share, and authorizes the Board, by resolution, to establish any or all of the unissued shares of Preferred Stock, not then

allocated to any series into one or more series and to fix and determine the designation of each such shares, the number of shares

which shall constitute such series and certain preferences, limitations and relative rights of the shares of each series so

The holders of the Series A Preferred Stock shall

be entitled to vote, on a pro-rata basis, on all matters subject to a vote or written consent of the holders of the Company’s Common

Stock, and on all such matters, the shares of Series A Preferred Stock shall be entitled to that number of votes equal to the number

of votes that all issued and outstanding shares of Common Stock and all other securities of the Company are entitled to, as of any such

date of determination, on a fully diluted basis, plus one million (1,000,000) votes, it being the intention that the holders of

the Series A Preferred Stock shall have effective voting control of the Company, on a fully diluted basis.

Unless approved by a majority vote of the holders

of Common Stock, the Series A Super Voting Preferred Stock will terminate five years after the issuance date, which is June 24, 2027.

During the year

ended December 31, 2022, the Company issued 100 shares of Series A preferred stock to the Chief Executive Officer for no consideration

pursuant to above.

Pursuant to this, the CEO has the right to a majority of the voting power

of the Company.

In accordance

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

for all classes.

As of December 31, 2023 and 2022 respectively, there were 88,335 and 88,335 total preferred shares issued and outstanding

for all classes.

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

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

As of December 31, 2023 and

2022, there were 8,100,117,720 and 6,427,395,360 common shares issued, respectively.

As of December 31, 2023 and 2022, there were 8,100,117,720

and 5,197,921,885

common shares issued, respectively.

As of December 31, 2022 and 2021, there were 6,427,395,360 and 5,197,821,885

common shares outstanding, respectively.

2021 Transactions

On January 14, 2021, the Company issued an

aggregate of 100,000,000

shares of common stock upon the conversion of convertible debt, as issued on September 24, 2018, in the amount of $ 28,000 .

On January 25, 2021, the Company issued an

aggregate of 150,000,000

shares of common stock upon the conversion of convertible debt, as issued on September 24, 2018, in the amount of $ 42,000 .

On February 1, 2021, the Company issued an

aggregate of 30,999,995

shares of common stock upon the conversion of convertible debt, as issued on February 12, 2019, in the amount of $ 8,116 .

On February 11, 2021, the Company issued an

aggregate of 100,000,000

shares of common stock upon the conversion of convertible debt, as issued on September 24, 2018, in the amount of $ 56,000 .

On February 18, 2021, the Company issued an

aggregate of 220,000,000

shares of common stock upon the conversion of convertible debt, as issued on September 24, 2018, in the amount of $ 75,436

for principal and $ 39,638

for interest.

On April 15, 2021, the Company issued an

aggregate of 8,065,040

shares of common stock upon the conversion of convertible debt, as issued on October 7, 2020, in the amount of $ 47,850

and interest of $ 2,153 .25.

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

shares of common stock as compensation for loan acquisition costs associated with the note issued on the same date for the amount of

On June 4, 2021, the Company issued an aggregate

of 12,500,000

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

and interest of $ 260 .61.

12, 2021, the Company issued an aggregate of 1,784,146

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

14, 2021, the Company issued an aggregate of 45,037,115

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

interest of $ 26,246 .

19, 2021, the Company issued an aggregate of 2,898,382

shares of common stock upon the conversion of convertible debt, as issued on October 7, 2020, in the amount of $ 10,497 and

interest of $ 6,748 .

25, 2021, the Company issued 31,799,260

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

31, 2021, the Company issued 27,297,995

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

September 22, 2021, the Company issued 25,630,272

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

September 30, 2021, the Company issued 15,000,000

shares of common stock pursuant to two separate Membership Interest Purchase Agreements with Remote Intelligence, and Wildlife

Specialists, LLC.

September 30, 2021, the Company issued 3,194,081

shares of common stock as compensation valued at $ 250,000

for loan acquisition costs associated with proceeds raised.

1, 2021, the Company issued 37,187,289

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

15, 2021, the Company issued 14,282,304

shares of common stock for $ 1,055,000 .

22, 2021, the Company issued 1,596,594

shares of common stock as compensation valued at $ 250,000

for loan acquisition costs associated with proceeds raised.

25, 2021, the Company issued 634,778

shares of common stock as compensation valued at $ 250,000 for

loan acquisition costs associated with proceeds raised.

November 17, 2021, the Company issued an aggregate of 177,375,000

shares of common stock upon the conversion of convertible debt, as issued on April 30, 2021, in the amount of $ 825,000

and interest of $ 61,875 .

December 21, 2021, the Company issued an aggregate of 43,777,478

shares of common stock for $ 2,538,327 .

2022 Transactions

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 efforts

to file with the SEC a Registration Statement within 45 days of the date of the GHS Registration Rights Agreement;

and (ii) have the Registration

Statement declared effective by the SEC within 30 days after the date the GHS Registration Statement is filed with the SEC, but in no

event more than 90 days after the GHS Registration Statement is filed.

Below is a table of all puts made by the Company

under the Equity Financing Agreement and EDFA during 2022:

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.

The RRA provides that we shall (i) use our best

efforts to file with the SEC a Registration Statement within 45 days of the date of the GHS Registration Rights Agreement;

and (ii) have

the Registration Statement declared effective by the SEC within 30 days after the date the GHS Registration Statement is filed with the

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

On April 28, 2023 the

Company entered into an Equity Financing Agreement with GHS, to which GHS agreed to Purchase $30,000,000 in shares of our Common Stock

over the course of 12 months at 92% of the current market price.

On June 13, 2023 the

Company entered into an Amendment to the 2023 Equity Financing Agreement with GHS, to which GHS agreed to Purchase $30,000,000 in shares

of our Common Stock over the course of 12 months at 92% of the current market price.

On July 10,2023 the Company

entered into a Second Amendment to the 2023 Equity Financing Agreement with GHS, to which GHS agreed to purchase up to $30,000,000 in

shares of our Common Stock over the course of 12 months at 92% of the current market price.

On September 5, 2023,

we entered into a Stock Purchase Agreement with an investor for the purchase of 100,000,000 shares of Common Stock for a total consideration

The RRA provides that

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

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.

The below table of puts from 1/12/2023 through

4/11/2023 were made by the Company under the 2022 EFA during 2023.

The put from 4/28/2023 was made under the EFA dated 4/28/2023.

puts from 6/26/2023 and 7/3/2023 were made by the Company under the Amended EFA dated June 13, 2023.

The 7/10/2023 put was made by the

Company under the Second Amended EFA dated July 10, 2023.

Schedule of equity financing agreement

Number of Shares Sold

Number of Common Shares Issued

Total Proceeds, Net of Discounts

1 unchanged sentence

1,375,722,360

2022, the Company issued 3,725,386

shares of common stock pursuant to a settlement of $ 200,000

in accounts payable.

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

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

The shares were cancelled by the Company.

December 31, 2022 and 2021, the Company had 13,602,044,965 and 1,589,257,888 ,

respectively, in common shares reserved for issuance.

In January 2023, the Company entered into a settlement

of a dispute between certain stockholders in which the Company decided, during the period ended June 30, 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 for the year ended December

As part of this transaction $280,536 of accrued liabilities have been reversed.

As of December

31, 2023 and 2022, the Company had no outstanding stock options.

NOTE 15 – INCOME

14 – INCOME TAXES

and foreign components of loss before (benefit) provision for income taxes were as follows:

Schedule of income components

Schedule of provision for income taxes

$ ( 11,676,768 )

1 unchanged sentence

( 7,133,368 )

( 22,376,486 )

Total income (loss) before income taxes

2 unchanged sentences

The provision

for income taxes for the years ended December 31, 2022 and 2021 differs from the amount which would be expected as a result

of applying the statutory tax rates to the losses before income taxes due primarily to the valuation allowance to fully reserve net deferred

for income taxes for the years ended December 31, 2023 and 2022 differs from the amount which would be expected as a result of applying

the statutory tax rates to the losses before income taxes due primarily to the valuation allowance to fully reserve net deferred tax assets.

The following

table summarizes the significant differences between statutory rates for the years ended December 31, 2023 and 2022:

Statutory tax rate

Schedule of statutory rate

Statutory tax rate:

3 unchanged sentences

Change in valuation allowance:

The Company’s deferred tax

assets and liabilities as of December 31, 2022 and 2021 are as follows:

Deferred Tax assets and liabilities

The Company’s deferred

tax assets and liabilities as of December 31, 2023 and 2022 are as follows:

Schedule of deferred

tax assets and liabilities

Deferred Tax (Liabilities):

6 unchanged sentences

( 9,244,530 )

( 9,357,049 )

Deferred tax assets (liabilities)

Company has approximately $ 20,718,222 of

federal and state net operating loss carryforwards as of December 31, 2022.

Of the $20.7 million of NOL’s, $4.8 million will

begin to expire in 2023 while $15.9 will not expire but will be limited to 80% utilization.

The company also has net operating

losses in the UK of $5,045,611

which will not expire and $636,852

has approximately $ 26,485,942

of federal and state net operating loss carryforwards as of December 31, 2023.

Of the $26.4 million of NOL's, $ 4.8

million will begin to expire in 2023 while $ 15.9 million will not expire but will be limited to 80% utilization.

company also has net operating losses in the UK of $ 22,085,338

and $ 636,852

of net operating loss carryforwards in Canada which will begin to expire in 2038.

Company records a tax valuation allowance when it is more likely than not that it will not be able to recover the value of its

deferred tax assets.

For the years ended December 31, 2022 and 2021, the Company calculated its estimated annualized effective tax

respectively, for both the United States, Canada and the UK.

The Company had no

income tax expense on its losses for the years ended December 31, 2022 and 2021, respectively.

The change in valuation allowance

for the years ended December 31, 2022 and 2021 is an increase of $ 6,991,478 and $ 1,013,674 , respectively.

records a tax valuation allowance when it is more likely than not that it will not be able to recover the value of its deferred tax assets.

For the years ended December 31, 2023 and 2022, the Company calculated its estimated annualized effective tax rate at 0 % and 0 %, respectively,

for both the United States, Canada and the UK.

The Company had no income tax expense on its losses for the years ended December 31, 2023

and 2022, respectively.

recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely

8 unchanged sentences

As of December 31, 2023 and 2022, the Company had no uncertain tax positions.

Company does not anticipate any significant changes to the total amounts of unrecognized tax benefits in the next twelve months.

Company files income tax returns in New Brunswick, Canada, and the U.S.

does not anticipate any significant changes to the total amounts of unrecognized tax benefits in the next twelve months.

The Company files

income tax returns in New Brunswick, Canada, and the U.S.

federal, New York, and Delaware and the UK jurisdictions.

Tax years 2012 to current remain open to examination by Canadian authorities;

the tax year 2020

remains open to examination by U.S.

NOTE 16 – COMMITMENTS

AND CONTINGENCIES

Tax years 2012 to

current remain open to examination by Canadian authorities;

the tax year 2020 remains open to examination by U.S.

15 – COMMITMENTS AND CONTINGENCIES

Royalty Payments

1 unchanged sentence

sales of any and all products or services, which incorporate the Company's patents for a period of five years from April 24, 2018.

As of December 31, 2022, the

Company’s Optilan subsidiary had five bonded contracts for a total guaranteed value of approximately $984,000.

Legal Matters

DarkPulse, Inc.

Twitter, Inc.

As disclosed in greater detail in the Company’s

Form 10-Q, filed October 24, 2022, the Company is actively investigating potential claims against the @MIKEWOOD and @BullMeechum3 Twitter

There are no material updates to this matter.

Carebourn Capital, L.P.

DarkPulse, Inc.

As disclosed in greater detail in the Company’s

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.

On or about January 29, 2021, Carebourn Capital,

(“ Carebourn ”) commenced an action against the Company in Minnesota State Court.

Carebourn alleged that the Company

was in breach of certain securities purchase agreements and convertible promissory notes sold to Carebourn on or about July 17, 2018

and July 24, 2018.

On or about August 31, 2021, the Company answered

Carebourn’s complaint and interposed affirmative defenses, including that Carebourn was an unregistered “dealer,” as

such term is defined in the Securities Exchange Act of 1934 (“ Exchange Act ”) and, therefore, all contracts between

the parties arising from or related to the securities purchase agreements and convertible promissory notes sold to Carebourn on or about

July 17, 2018 and July 24, 2018 were void pursuant to the Exchange Act.

The Company also asserted counterclaims against Carebourn under

the Minnesota Securities Act.

On or about April 21, 2023, the State Court ruled

in the Company’s favor on its motion for partial summary judgment on its Exchange Act defense, holding that (i) Carebourn

is a “dealer” under the Exchange Act in violation of the mandatory registration requirement imposed thereby, and (ii) all

contracts between the parties are void.

On or about November 17, 2023, the State Court ruled in the Company’s

favor on its motion for summary judgment on its Minnesota Securities Act counterclaims against Carebourn and awarded damages for Carebourn’s

violation of Minn.

§ 80A.76(d) in the amount of $124,012.91, attorney’s fees in the amount of $239,923.33 and costs

in the amount of $23,757.24 (or a total award in the amount of $387,693.48).

On or about March 23, 2024, Carebourn appealed

the final judgment entered by the State Court against Carebourn and in favor of the Company.

On or about March 25, 2024, the Minnesota Appellate

Court entered an Order, noting that Minn.

104.01 provides that appeals must be taken within 60 days of the date of the

final judgment and, therefore, it appears that Carebourn failed to timely take its appeal.

The Appellate Court requested the parties

submit informal briefing in response to two questions:

(a) Did the time to appeal the December 27, 2024 amended judgment expire

on February 26, 2024;

and (b) If the answer to (a) is yes, must this appeal be dismissed as untimely.

On or about April 4, 2024,

DarkPulse filed its informal briefing in response with the Appellate Court.

The Company is currently awaiting a decision from the Appellate

date hereof, Carebourn has refused to voluntarily satisfy the final judgment.

Accordingly, the Company intends to exercise

all legal rights and remedies available to it to collect the amounts awarded.

DarkPulse intends to continue to exercise all

legal rights and remedies available to it to collect the amounts awarded should Carebourn fail to voluntarily pay the same.

More Capital, LLC v.

DarkPulse, Inc.

As disclosed in greater detail in the Company’s

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 and Minnesota Uniform Securities Act.

On or about June 29, 2021, More Capital, LLC

(“ More ”) commenced an action against the Company in Minnesota State Court.

More alleged that the Company was in breach

of a certain securities purchase agreement and convertible promissory note sold to More on or about August 20, 2018.

On or about September 3, 2021, the Company answered

More’s complaint and interposed affirmative defenses, including that More was an unregistered “dealer,” as such term

is defined in the Exchange Act and, therefore, all contracts between the parties arising from or related to the securities purchase agreement

and convertible promissory note sold to More on or about August 20, 2018 were void pursuant to the Exchange Act.

The Company also asserted

counterclaims against More under the Minnesota Securities Act.

On or about December 11, 2023, the Minnesota State

Court ruled in the Company’s favor on its motion for summary judgment on its (a) Exchange Act defense, holding that (1) More

is a “dealer” under the Exchange Act in violation of the mandatory registration requirement imposed thereby, and (ii) all

contracts between the parties are void, and (b) Minnesota Securities Act counterclaims against More and awarded damages for More’s

violation of Minn.

§ 80A.76(d) in the amount of $300,809.39, attorney’s fees in the amount of $110,029.00 and costs

in the amount of $210.25 (or a total award in the amount of $412,048.64).

On or about March 23, 2024, More appealed the

final judgment entered by the State Court against More and in favor of the Company.

On or about March 25, 2024, the Minnesota Appellate

Court entered an Order, noting that Minn.

104.01 provides that appeals must be taken within 60 days of the date of the

final judgment and, therefore, it appears that More failed to timely take its appeal.

The Appellate Court requested the parties submit

informal briefing in response to two questions:

(a) Did the time to appeal the December 27, 2024 amended judgment expire on February

and (b) If the answer to (a) is yes, must this appeal be dismissed as untimely.

On or about April 4, 2024, DarkPulse filed

its informal briefing in response with the Appellate Court.

The Company is currently awaiting a decision from the Appellate Court.

As of April 1, 2024, the final judgment had not

yet been satisfied by More, nor had a judgment been entered that stayed enforcement of that judgment.

Accordingly, the Company took actions

to enforce and collect the judgment including, inter alia , serving garnishment summons on More’s banks.

As of the date hereof, More has refused to voluntarily

satisfy the final judgement.

Accordingly, the Company intends to exercise all legal rights and remedies available to it to collect the

amounts awarded.

Carebourn Capital et al v.

1 unchanged sentence

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.

DarkPulse, Inc.

As disclosed in greater detail in the Company’s

Form 10-Q, filed October 24, 2022, on September 10, 2021, Stephen Goodman, Mark Banash, and David Singer (“Former Officers”)

commenced suit against the Company in Arizona Superior Court, Maricopa County.

As of the date hereof, the Company and Former

Officers have entered into a mutual settlement.

Thus, the Former Officers’ lawsuit against the Company has been dismissed with prejudice.

Any expenses or amounts awed have been recorded as of December 31, 2022 and are properly disclosed.

On or about May 20, 2022, Carebourn and More (together

with Carebourn, the “ Noteholders ”) commenced an action against the Company, certain members of the Company’s

executive team and board of directors and Standard Registrar and Transfer Company, Inc., the Company’s transfer agent, in the United

States District Court for the District of Utah.

The Noteholders’ complaint alleged various causes of action arising from certain

securities purchase agreements and convertible promissory notes the Company sold to the Noteholders.

On or about November 23, 2022, the Company and

the members of the Company’s executive team and board of directors named in this action moved to dismiss the Noteholders’

On or about February 21, 2023, the Court granted

the Company’s motion to dismiss in part and stayed the action pending resolution of the motion for summary judgment brought by the

Securities and Exchange Commission against Carebourn in the United States District Court for the District of Minnesota.

On or about November 1, 2023, the Noteholders

moved to dismiss the action.

On or about November 2, 2023, the Company moved

for sanctions against the Noteholders and their counsel of record.

On or about December 4, 2023, the Court entered

an order granting dismissal of the Noteholders’ claims with prejudice.

The Court acknowledged that notwithstanding its dismissal

of the Noteholders’ claims, the Court continues to retain jurisdiction over the Noteholders because of DarkPulse’s pending

motion for sanctions against the Noteholders and their attorneys.

On May 22, 2024, the Court scheduled oral arguments

on the Company’s sanction motion on July 2, 2024.

DarkPulse, Inc.

1 unchanged sentence

Fund, LLC, and Eli Fireman

As disclosed in greater detail in the Company’s

Form 10-Q, filed October 24, 2022, the Company remains in active litigation with FirstFire Global Opportunities Fund, LLC (“FirstFire”),

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

The following discloses

the material updates for this matter.

On January 17, 2023, the Court granted the FirstFire

Parties’ motion to dismiss the Company’s complaint.

Also on January 17, 2023, the Company appealed the trial court’s

decision to the United States Court of Appeals for the Second Circuit.

Briefing is currently taking place on the Company’s appeal.

The Company remains committed to actively litigating

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

DarkPulse, Inc.

EMA Financial, LLC et al

As disclosed in greater detail in the Company’s

Form 10-Q, filed October 24, 2022, the Company remains in active litigation with EMA Financial, LLC (“EMA”), EMA Group, Inc.

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

The following discloses the material updates for this matter.

On March 1, 2023, the Court granted the EMA Parties’

motion to dismiss the Company’s claims asserted under the Securities Exchange Act of 1934, but denied dismissal of the Company’s

claim asserted under the Racketeer Influenced and Corrupt Organizations (RICO) Act.

On or about May 15, 2023, the Company and the

EMA Parties reached an understanding of settlement, which was subsequently memorialized.

The action was subsequently dismissed on or about

June 14, 2023.

DarkPulse, Inc.

Brunson Chandler & Jones,

On July 8, 2022, the Company commenced litigation

against Brunson Chandler & Jones, PLLC (“Brunson Firm”), and Lance B.

Brunson (“Brunson,” and together with

the Brunson Firm, the “Brunson Parties”) through the filing of a complaint in the United States District Court for the District

The Company is alleging that the Brunson Parties have committed professional negligence and breach of contract.

On March 2, 2023, the Brunson Parties filed an

answer, affirmative defenses, and counterclaims to the Company’s complaint, wherein the Brunson Firm alleged claims for (i) breach

of contract against the Company, (ii) breach of contract against the Company’s subsidiary, DarkPulse Technologies, Inc., and (iii)

quantum meruit.

On June 5, 2023, the Company filed its answer

and affirmative defenses to the Brunson Firm’s counterclaims.

The Company remains committed to litigating its claims and affirmative

defenses against the Brunson Parties.

On or about December 31, 2021, the Company commenced

an action against FirstFire Global Opportunities Fund, LLC (“ FirstFire ”) and its control person, Eli Fireman (“ Fireman ,”

and together with FirstFire, the “ FirstFire Defendants ”), in the United States District Court for the Southern District

On or about May 5, 2022, the Company amended its

complaint against the FirstFire Defendants.

The amended complaint alleges that the FirstFire Defendants were liable to the Company for

rescission of certain convertible promissory notes and transitions effected thereunder and damages pursuant to the Racketeer Influenced

and Corrupt Organizations Act (“ RICO ”).

On or about January 17, 2023, the Court granted

the FirstFire Defendants’ motion to dismiss the Company’s operative pleading.

Later on the same day, the Company appealed

the Court’s decision to the United States Court of Appeals for the Second Circuit (“ Second Circuit ”).

Oral arguments were held before the Second Circuit

on the Company’s appeal on December 11, 2023.

On March 28, 2024, the Second Circuit issued its

decision and found that the District Court (a) properly found that the Delaware forum-selection clause was enforceable but, thereafter,

(b) improperly made a ruling on the merits of the Company’s claims for relief.

As a result, the Second Circuit affirmed the

District Court’s decision in part, vacated in part and remanded the case back to the District Court for transferring to the United

States District Court for the District of Delaware.

As of the date hereof, this action has not yet

transferred to the Delaware Court.

The Company remains committed to actively litigating its claims for relief under RICO.

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.

On or about September 23, 2022, the Company, Social

Life Network, Inc.

and Redhawk Holdings Corp.

commenced an action against Crown Bridge Partners, LLC (“ Crown Bridge ”)

and its control persons, Soheil Ahdoot and Sepas Ahdoot (collectively, the “ Crown Bridge Defendants ”) in the United

States District Court for the Southern District of New York.

The complaint alleges that the Crown Bridge Defendants are liable to each

of the plaintiffs for damages pursuant to RICO.

On or about September 29, 2023, the Court granted

the Crown Bridge Defendants’ motion to dismiss the plaintiffs’ complaint.

On October 23, 2023, the plaintiffs appealed the

Court’s decision to the Second Circuit.

As of the date hereof, the appeal is fully briefed.

The Company remains committed to actively litigating

its RICO claims against the Crown Bridge Defendants.

Benner et al v.

DarkPulse, Inc.

On March 29, 2023, J.

Merlin Benner, Phillip J.

Benner, Benjamin P.

Benner, Jonas M.

Benner, and Angelica M.

Benner (collectively, the “Benner Parties”) commenced an action

in the United States District Court for the Southern District of Texas against the Company and its Chief Executive Officer, Dennis O’Leary,

individually, alleging (i) the Company is in breach of contracts between the Company and the Benner Parties as it concerns Remote Intelligence,

LLC and Wildlife Specialists, LLC, (ii) violation of Texas Uniform Fraudulent Transfer Act by the Company, and (iii) defamation by Mr.

Pursuant to a stipulation entered into by the

parties to this matter, the Company and Mr.

O’Leary are scheduled to file their answer to the Benner Parties’ complaint on

or before June 30, 2023.

GS Capital Partners, LLC v.

DarkPulse, Inc.

On June 2, 2023, GS Capital Partners, LLC (“GS

Capital”) commenced an action in the Supreme Court for New York County against the Company through the filing of motion for summary

judgment in lieu of a complaint.

The motion claims that the Company is in breach of a convertible promissory note, dated July 14, 2021,

and accompanying securities purchase agreement, dated the same.

The motion claims that GS Capital is entitled

to an award of $2,407,671, plus prejudgment interest and attorney’s fees, costs and disbursements.

The Company is currently looking to retain legal

counsel to represent it in this matter, and intends to vigorously defend itself against GS Capital.

The Company intends to vigorously defendant against

From time to time, we may become involved in

litigation relating to claims arising out of our operations in the normal course of business.

We are not currently involved in any pending

legal proceeding or litigation and, to the best of our knowledge, no governmental authority is contemplating any proceeding to which

we are a party or to which any of our properties is subject, which would reasonably be likely to have a material adverse effect on our

business, financial condition and operating results.

its claims for relief under RICO.

NOTE 16 – RELATED

PARTY TRANSACTIONS

Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure

of related party transactions.

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;

for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value

Option Subsection of Section 825-10-15, to be accounted for by the equity method by the investing entity;

c) trusts for the benefit of

employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management;

d) principal owners of

e) management of the Company;

f) other parties with which the Company may deal if one party controls or can significantly

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

pursuing its own separate interests;

and g) Other parties that can significantly influence the management or operating policies of the

transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to

an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

The financial

statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances,

and other similar items in the ordinary course of business.

However, disclosure of transactions that are eliminated in the preparation

of consolidated or combined financial statements is not required in those statements.

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 statements;

c) the dollar amounts of transactions for each of the periods for which

income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding

and d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the

terms and manner of settlement.

the year ended December 31, 2022, certain executives of the Company received $ 270,000

in Directors fees from Optilan for being members of Optilan’s Board of Directors with an additional $ 90,000

accrued but unpaid.

years ended December 31, 2022 and 2021, the Company’s Chief Executive Officer advanced personal funds in the amount of $ 0

and for Company expenses.

Remote Intelligence and Wildlife Specialists

Loan Payables

RI has a loan payable with the former majority

shareholder, who is a shareholder in the Company after the acquisition of 60% of RI’s membership interests.

The loan is unsecured,

non-interest bearing and due on demand.

As of December 31, 2022 and 2021, the outstanding balance was $ 226,247 and $ 185,247 , respectively.

WS has a loan payable with the former majority

shareholder, who is a shareholder in the Company after the acquisition of 60% of WS’s membership interests.

The loan is unsecured,

non-interest bearing and due on demand.

As of December 31, 2022 and 2021, the outstanding balance was $ 135,500 and $ 0 , respectively.

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 year ended December 31, 2023 and 2022, certain executives of the Company received $ 120,000 and

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

Intelligence and Wildlife Specialists Loan Payables

loan payable with the former majority shareholder, who is a shareholder in the Company after the acquisition of 60% of RI’s membership

The loan is unsecured, non-interest bearing and due on demand.

As of both year ended 2023 and 2022, the outstanding balance

was $ 226,247 .

loan payable with the former majority shareholder, who is a shareholder in the Company after the acquisition of 60% of WS’s membership

The loan is unsecured, non-interest bearing and due on demand.

As of both year ended 2023 and 2022, the outstanding balance

was $ 135,500 .

SPAC Transaction

On October 12,

2022, the Company entered into and closed the Purchase Agreement (the “Agreement”) pursuant to which the Company purchased

2,623,120 shares of Class B Common Stock (the “Class B Common Stock”) and 4,298,496 Private Placement Warrants, each of which

is exercisable to purchase one share of Class A Common Stock (the “Warrants,” together, with the Class B Common Stock, the

"Securities") of Gladstone Acquisition Corp., a Delaware corporation (NASDAQ:

GLEE) (the “SPAC”), from Gladstone Sponsor,

LLC (‘Original Sponsor”) for $ 1,500,000 (the “Purchase Price”).

The SPAC subsequently changed its name to Global

Systems Dynamics, Inc.

addition to the payment of the Purchase Price, the Company also assumed the following obligations:

(i) responsibility for all of

SPAC’s public company reporting obligations, (ii) the right to provide an extension payment and extend the deadline of the

SPAC to complete an initial business combination from 15 months from August 9, 2021 to 18 months for an additional $1,150,000, and

(iii) all other obligations and liabilities of the Original Sponsor related to the SPAC.

The principal balance of this note

shall be payable by GSD on the earlier to occur of:

(i) the date on which GSD consummates its initial business combination (the

“Business Combination”) and (ii) the date that the winding up of GSD is effective.

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,

As of December

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

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.

The principal balance of this note shall be payable by GSD on the earlier to occur of:

on which GSD consummates its initial business combination (the “Business Combination”) and (ii) the date that the winding

up of GSD is effective.

The note does not bear interest.

of December 31, 2022, the outstanding note receivable was $ 1,049,248

and $ 100,752

was classified as other assets on the consolidated balance sheet.

the Agreement, the Company replaced the SPAC’s current directors and officers with directors and officers the Company selected in

its sole discretion.

Following the closing of the Agreement, the SPAC changed its name to Global System Dynamics, Inc.

to the Agreement, the Company also entered into the Assignment, Assumption, Release and Waiver of the Letter Agreement pursuant to which

the Original Sponsor and each of the parties to the Letter Agreement (defined below) agreed that all rights, interests and obligations

of the Original Sponsor under the Letter Agreement (as defined below) were hereby assigned to the Company and that the Original Sponsor

will have no further rights, interests or obligations under the Letter Agreement as of the Closing Date.

14, 2022 the Company, the SPAC, and Zilla Acquisition Corp.

(“Merger Sub”) entered into an Business Combination Agreement

which is referred to as the “Merger Agreement,” pursuant to which they agreed to combine their respective businesses.

to the terms of the Merger Agreement, Zilla Acquisition Corp., a wholly-owned subsidiary of GSD, will merge with and into DarkPulse, which

transaction is referred to as the “Business Combination” or the “Merger” with DarkPulse surviving the Business

Combination as a wholly-owned subsidiary of GSD.

Following the Business Combination, DarkPulse and GSD will operate as a consolidated

company, which is referred to as the Combined Company, under the name “Global System Dynamics, Inc.,” and the combined entity

will trade under the symbol “DARK.”

determined that the SPAC has the subordinated equity to carry out its primary economic activities, and the power to control the activities

that most directly impact the performance of the SPAC is shares by all equity holders as a group.

Furthermore, the SPAC is designed to

benefit the public shareholders over the Class B sponsor shareholder, DarkPulse.

Because the Company is not the primary beneficiary of

the SPAC, consolidation is precluded until the merger is consummated.

As such, the Company’s $1,500,000 investment in GSD was accounted

for as cost at December 31, 2022.

As of December 31, 2022, the Company has $318,025

owed from GSD and included as due from related party on the consolidated balance sheet.

These advances were made to pay for certain expenses

on behalf of the SPAC, as well as $30,000 in accrued management fees.

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

NOTE 18 – SUBSEQUENT

Through June 23, 2023, the Company has issued

587,692,015 shares of common stock for net proceeds of $2,276,080.

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

shares of common stock pursuant to a settlement of a former litigation matter.

7, 2023, March 9, 2023, April 7, 2023 and May 5, 2023, GSD issued a non-convertible promissory note in the aggregate principal amount

of $335,788 ($83,947 per month) to the Company, in connection with the extension of the termination date for the GSD’s initial business

combination from February 9, 2023 to the issuance date of these consolidated financial statements.

the promissory note, the Company has agreed to loan to GSD $251,841 to deposit into GSDs trust account.

The promissory note bears no interest

and is repayable in full upon the earlier of (i) the date on which GSD consummates its Initial Business Combination, and (ii) the date

that the winding up of GSD is effective.

From January 1, 2023 through June 23, 2023, the

Company has provided non-interest-bearing advances to GSD in the principal amount of $769,436.

On May 16, 2023, the Company entered into a 50/50

Partner Agreement with Jupiter Metal Pvt.

(“ Jupiter ,” together, with the Company, the “ Partners ”)

pursuant to which the Company and Jupiter formed a partnership pursuant to the provisions of The Indian Partnership Act 1932 (the “ Act ”).

The name of the partnership is “OM DarkPulse Infratech” (the “ Partnership ”) and its purpose is to jointly

work on infrastructure projects in India.

The Partnership will commence on the effective date and will continue for 12 months, unless

earlier dissolved and terminated pursuant to the Act or any other provisions in the agreement.

The Partnership will also be automatically

extended for additional 12-month terms unless terminated upon written notice by either of the Partners upon 90 days prior written notice

prior to termination of the Partnership pursuant to the terms in the agreement.

No contributions have been made to date.

On 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

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

the outstanding note receivable was $ 0 and $ 1,049,248 , respectively.

On January 24,2024 the SPAC was terminated and the outstanding

note receivable was determined to be uncollectible, therefore, written off as bad debt as of December 31, 2023.

As of December 31, 2023 and 2022, the Company

has $ 0 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 $120,000 in accrued management fees.

The advances are unsecured, non-interest

bearing and due on demand.

On January 24,2024 the SPAC was terminated and the outstanding due from related party was determined to be

uncollectible, therefore, written off as bad debt as of December 31, 2023.

17 – SUBSEQUENT EVENTS

On January 8, 2024 the Company issued 52,162,997

shares to a third party in exchange for cash in accordance with its equity agreement.

On January 23, 2024,

the BCA was terminated by mutual consent of the parties thereto.

Although, as the Sponsor of GSD, the Company still owns all of the issued

and outstanding shares of Class B Common Stock of GSD, all legal rights the Company had under the BCA have been terminated.

On February 12, 2024, February 13, 2024 and February

14, 2024 the Company executed a convertible note from a third party, into 36,363,636, 32,786,885 and 42,117,347 shares respectively,

in accordance with its Securities Purchase Agreement.

On February 28, 2024,

we entered into a Stock Purchase Agreement with an investor for the purchase of 178,571,428 shares of Common Stock for a total consideration

On March 28, 2024 the Company issued 27,777,777

shares to a third party of in accordance with the Securities Purchase Agreement Dated November 30, 2023.

On April 9, 2024 the court dismissed both Carebourn

and Moore’s appeal that concluded the original judgment case in which DarkPulse won its counterclaims.

The Company is now actively

enforcing the judgments.

On May 2, 2024, we entered

into a Stock Purchase Agreement with an investor for the purchase of 104,166,667 shares of Common Stock for a total consideration of

On May 20, 2024 the

company entered into a Stock Purchase Agreements with investors for the purchase of 288,888,889 shares of Common Stock for a total consideration

On May 23, 2024 the

company entered into a Stock Purchase Agreement with an investor for the purchase of 22,222,222 shares of Common Stock for a total consideration

On June 9, 2024 the

company entered into a Stock Purchase Agreement with an investor for the purchase of 48,888,888 shares of Common Stock for a total consideration

On June 18, 2024 the

company entered into a Stock Purchase Agreement with an investor for the purchase of 22,222,222 shares of Common Stock for a total consideration

On July 1, 2024 the company

entered into a Stock Purchase Agreement with an investor for the purchase of 111,111,111 shares of Common Stock for a total consideration

On July 9, 2024 the

company entered into a Stock Purchase Agreement with an investor for the purchase of 111,111,111 shares of Common Stock for a total consideration

On July 12, 2024 the company entered into a Stock Purchase Agreement with an investor for the purchase of 33,333,333 shares of Common

Stock for a total consideration of $15,000.

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

What changed 10-K

Item 9A. Controls and Procedures