What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-11-19 compared with 2024-08-19 · 153 added, 154 removed, 419 unchanged (42% of the section changed)

131 unchanged sentences

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.

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

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

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

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

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

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

(5) clarify that a completed

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

before the date of initial application, and (6) clarify that an entity that retrospectively applies the guidance in Topic 606 to each

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

The amendments of this

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

There was no impact

as a result of adopting this ASU on the financial statements and related disclosures.

Based on the terms and conditions of the product

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

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

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

to each deliverable based on its relative fair value;

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

over the term of the customer contract.

Derivative Financial Instruments

28 unchanged sentences

successful completion of our BOTDA system.

Headquartered in Houston, Texas, DarkPulse is a globally-based

technology company with presence through its subsidiaries in the, United States and Canada.

In addition to the Company’s BOTDA systems,

through a series of strategic acquisitions the Company offers the manufacture, sale, installation, and monitoring of laser sensing systems,

oil and gas pipeline leak detection, physical security services, telecommunications and satellite communications services, artificial

intelligence-based camera systems, railway monitoring services, drone and rover systems, and Big Data as a Service (“ BDaaS ”).

Headquartered in Houston, Texas, DarkPulse is

a globally-based technology company with presence through its subsidiaries in the, United States and Canada.

In addition to the Company’s

BOTDA systems, through a series of strategic acquisitions the Company offers the manufacture, sale, installation, and monitoring of laser

sensing systems, oil and gas pipeline leak detection, physical security services, telecommunications and satellite communications services,

artificial intelligence-based camera systems, railway monitoring services, drone and rover systems, and Big Data as a Service (“ BDaaS ”).

The Company is focused on expanding services through acquisitions and partnerships to address global infrastructure and critical environmental

24 unchanged sentences

pipeline integrity systems, renewables and security;

Remote Intelligence, Limited Liability Company, a company headquartered in Pennsylvania

who provides unmanned aerial drone and unmanned ground crawler (UGC) services to a variety of clients from industrial mapping and ecosystem

services, to search and rescue, to pipeline security;

Optilan India, PVT located in Kilpauk, Chennai India and Optilan Communication &

Security Systems, Ltd located in Ankara, Turkey provide project engineering & design, system provisioning and contract bid services

globally and throughout Europe;

Remote Intelligence, Limited Liability Company, a company headquartered in Pennsylvania who provides

unmanned aerial drone and unmanned ground crawler (UGC) services to a variety of clients from industrial mapping and ecosystem services,

to search and rescue, to pipeline security;

Wildlife Specialists, Limited Liability Company, a company headquartered in Pennsylvania

4 unchanged sentences

DarkPulse Electronics Manufacturing Inc., a company headquartered in Arizona who is a U.S.

manufacturer of advanced

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

Change in Ownership in Previously Consolidated Subsidiary

Results in Deconsolidation in the Current Period

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

Change in Ownership in Previously Consolidated Subsidiary Results

in Deconsolidation in the Current Period

On June 28, 2023, the county court at Portsmouth,

50 unchanged sentences

of the winding-up order for liquidation.

Six-Months Ended June 30, 2024 Accounting Ana ly sis

Nine-Months Ended September 30, 2024 Accounting Ana ly sis

The Company performed an analysis of the trade

12 unchanged sentences

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 June 30, 2024.

As a result of the impairment, the Company had a carrying value of $0 pertaining to goodwill and intangible assets as of September 30,

Optilan (UK) Limited became subject to the control

14 unchanged sentences

related to that foreign entity.

Upon the liquidation, on June 28, 2023, the Company derecognized Optilan

UK’s assets and liabilities and recorded a loss on consolidation of $1,624,795, which was recognized in other income (expenses)

in the consolidated statements of operations.

Included in the loss on consolidation of $1,642,795 are the gains

on intercompany receivables and payables and currency translation adjustment $12,721,532 and $1,545,008 respectively, offset by the

net loss on impairment of investments of $12,623.

In addition, the allowance of $2,422,457 was recorded against receivables

that have been deemed uncollectible.

Upon the liquidation, on June 28, 2023, the Company

derecognized Optilan UK’s assets and liabilities and recorded a loss on consolidation of $1,624,795, which was recognized in other

income (expenses) in the consolidated statements of operations.

Included in the loss on consolidation of $1,642,795

are the gains on intercompany receivables and payables and currency translation adjustment $12,721,532 and $1,545,008 respectively, offset

by the net loss on impairment of investments of $12,623.

In addition, the allowance of $2,422,457 was recorded

against receivables that have been deemed uncollectible.

On May 27, 2022, we entered an Equity Financing

14 unchanged sentences

Agreement with an investor for the purchase of 11,441,647 shares of Common Stock in exchange for $100,000.

On April 28, 2023 we entered an Equity Financing

Agreement, which was superseded by the Amended Equity Financing Agreement dated June 13, 2023, which was then superseded by the Second

Amended Equity Financing Agreement dated July 10, 2023, as amended (the “ EFA ”), and Registration Rights Agreement (the

“ Registration Rights Agreement ”) with GHS, pursuant to which GHS agreed to purchase up to $30,000,000 in shares of

our Common Stock, from time to time over the course of 24 months after effectiveness of a registration statement on Form S-1 of the underlying

shares of Common Stock.

April 28, 2023 we entered an Equity Financing Agreement, which was superseded by the Amended Equity Financing Agreement dated June 13,

2023, which was then superseded by the Second Amended Equity Financing Agreement dated July 10, 2023, which was then superseded by the

Thrid Amended Equity Financing Agreement dated August 14, 2024 as amended (the “ EFA ”), and Registration Rights Agreement

(the “ Registration Rights Agreement ”) with GHS, pursuant to which GHS agreed to purchase up to $30,000,000 in shares

of our Common Stock, from time to time over the course of 12 months after effectiveness of a registration statement on Form S-1 of the

underlying shares of Common Stock.

The Registration Rights Agreement provides that

7 unchanged sentences

Effective Price

Prior to the sales being made, GHS agreed to purchase

the shares without an effective registration statement in place, and, as such, the shares were restricted.

Below is a table of all puts made by the Company under the EFA during

Number of Common

Shares Issued

Total Proceeds, Net of

Effective Price

to the sales being made, GHS agreed to purchase the shares without an effective registration statement in place, and, as such, the shares

were restricted.

Going Concern Uncertainty

As shown in the accompanying financial

statements, we generated net losses of $2,953,106 and $18,917,363 for the six-months ended June 30, 2024 and 2023, respectively, and

net cash used in operating activities of $423,243 and $2,483,389, respectively.

As of June 30, 2024, the Company’s current

liabilities exceeded its current assets by $19,044,331 and has an accumulated deficit of $70,319,873.

As of June 30, 2024, the

Company had $953 of cash.

Lastly, the Optilan Liquidation no longer raises serious concerns about the viability of the Optilan (UK)

Limited entities.

Optilan (UK) Limited and its subsidiaries have been deconsolidated and are no longer under the control of

DarkPulse, Inc.

As shown in the accompanying financial statements,

we generated net losses of $3,540,148 and $ 19,915,940 for the nine-months ended September 30, 2024 and 2023, respectively, and net cash

used in operating activities of $29,782 $4,066,096, respectively.

As of September 30, 2024, the Company’s current liabilities

exceeded its current assets by $20,535,287 and has an accumulated deficit of $70,910,772 .

As of September 30, 2024, the Company had $165,186

Lastly, the Optilan Liquidation no longer raises serious concerns about the viability of the Optilan (UK) Limited entities.

(UK) Limited and its subsidiaries have been deconsolidated and are no longer under the control of DarkPulse, Inc.

We will require additional funding to finance

27 unchanged sentences

cross-selling existing customer with products from other subsidiaries;

· provide a wide array of diverse services, including enhanced or additional services that may become available

in the future due to, among other things, advances in technology or improvements in our infrastructure;

provide a wide array of diverse services, including enhanced or additional services that may become available in the future due to, among other things, advances in technology or improvements in our infrastructure;

pursue acquisitions of additional assets, in each case if available at attractive prices;

4 unchanged sentences

that will be recognized during future reporting periods.

For the three-months ended June 30, 2024, total

revenues were $14,318 compared to $412,769 for the three-months ended June 30, 2023, a decrease of $398,451.

The decrease was primarily

due to no revenues achieved by Wildlife, Optilan and TJM Electronics West, Inc given capital and resources restraints.

For the six-months ended June 30, 2024, total

revenues were $25,168 compared to $1,950,602 for the six-months ended June 30, 2023, a decrease of $1,925,434.

The decrease was primarily

due to no revenues from Optilan as a result of the de-consolidation and TJM Electronics West, Inc given capital and resources restraints.

of Revenues and Gross Margin

For the three-months ended June 30, 2024, cost

of revenues was $671 compared to $1,184,848 for the three-months ended June 30, 2023, a decrease of $1,184,177.

For the three-months ended September 30, 2024,

total revenues were $30,671 compared to $80,071 for the three-months ended September 30, 2023, a decrease of $ 51,400.

The decrease was

primarily due to no revenues achieved by Wildlife, Optilan and TJM Electronics West, Inc given capital and resources restraints.

For the nine-months ended September 30, 2024,

total revenues were $ 55,839 compared to $2,032,6763 for the nine-months ended September 30, 2023, a decrease of $1,976,834.

was primarily due to no revenues from Optilan as a result of the de-consolidation and TJM Electronics West, Inc given capital and resources

Cost of Revenues and Gross Margin

For the three-months ended September 30, 2024,

cost of revenues was $ 0 compared to $3,005 for the three-months ended September 30, 2023, a decrease of $ 3,005.

The decrease was mainly

attributable to lower cost of revenues from Optilan and TJM Electronics West, Inc.

For the six-months ended June 30, 2024, cost of

revenues was $870 compared to $2,411,640 for the six-months ended June 30, 2023, a decrease of $2,411,640.

The decrease was mainly attributable

to lower cost of revenues from Optilan and TJM Electronics West, Inc.

For the nine-months ended September 30, 2024,

cost of revenues was $870 compared to $2,414,645 for the nine-months ended September 30, 2023, a decrease of $2,413,775 .

was mainly attributable to lower cost of revenues from TJM Electronics West, Inc and Optilan deconsolidation.

Gross (loss) profit for the three-months ended

June 30, 2024 was $13,647 with a gross (loss) profit of 95% compared to ($772,079) for the three- months ended June 30, 2023 with a (187%)

gross margin.

Gross (loss) profit for the six-months ended June

30, 2024 was $24,298 with a gross (loss) profit of 97% compared to ($461,038) for the six- months ended June 30, 2023 with a (24%) gross

September 30, 2024 was $30,671 with a gross (loss) profit of 100% compared to 79,066 for the three- months ended September 30, 2023 with

a 96% gross margin.

Gross (loss) profit for the nine-months ended

September 30, 2024 was $54,969 with a gross (loss) profit of 98% compared to ($381,972) for the nine- months ended September 30, 2023

with a (19%) gross margin.

Operating Expenses

Selling, general and administrative expenses for

three-months ended June 30, 2024 decreased by $329,222 to $170,315 from $499,537 for the three-months ended June 30, 2023.

primarily consisted of decrease in advertising costs, insurance and information technology expenses.

three-months ended September 30, 2024 decreased by $256,294 to $146,575 from $402,869 for the three-months ended September 30, 2023.

decrease primarily consisted of decrease in consultant costs, legal insurance and information technology expenses.

Selling, general and administrative expenses for

six-months ended June 30, 2024 decreased by $1,185,944 to $327,426 from $1,513,370 for the six-months ended June 30, 2023.

primarily consisted of decrease in advertising costs, insurance and information technology expenses.

nine-months ended September 30, 2024 decreased by $ 1,326,365 to $474,001 from $1,800,266 for the nine-months ended September 30, 2023.

The decrease primarily consisted of decrease in consultant costs, legal, insurance and information technology expenses.

Salaries, wages and payroll taxes for three-months

ended June 30, 2024 decreased to $185,000 from $578,900 for the three-months ended June 30, 2023.

The decrease primarily consisted of

reduced headcount at each subsidiary.

ended September 30, 2024 decreased to $185,000 from $253,622 for the three-months ended September 30, 2023.

The decrease primarily consisted

of reduced headcount at each subsidiary.

Furthermore, the Company reduced accrued payroll which it was determined was no longer payable.

Salaries, wages and payroll taxes for six-months

ended June 30, 2024 decreased to $396,877 from $2.126,108 for the six-months ended June 30, 2023.

The decrease primarily consisted of

reduced headcount at each subsidiary.

Salaries, wages and payroll taxes for nine-months

ended September 30, 2024 decreased to $581,877 from $2,379,730 for the nine-months ended September 30, 2023.

The decrease primarily consisted

of reduced headcount at each subsidiary.

Furthermore, the Company reduced accrued payroll which it was determined was no longer payable.

Professional fees for the three-months ended June

30, 2024 decreased to $23,260 from $255,690 for the three-months ended June 30, 2023 due to decrease in revenue.

Professional fees for the six-months ended June

30, 2024 decreased to $108,631 from $3,206,388 for the six-months ended June 30, 2023 due to reduced legal and auditor fees.

Professional fees for the three-months ended September

30, 2024 increased to $226,026 from ($40,235) for the three-months ended September 30, 2023 .

Professional fees for the nine-months ended September

30, 2024 decreased to $406,654 from $3,166,153 for the nine-months ended September 30, 2023 due to reduced legal and auditor fees.

Depreciation and amortization for three-months

ended June 30, 2024 decreased to $44,585 from $220,749 for the three-months ended June 30, 2023.

This decrease is primarily due to the

Optilan deconsolidation and sale of some subsidiary property, plant and equipment.

Depreciation and amortization for six-months ended

June 30, 2024 decreased to $63,873 from $451,983 for the six-months ended June 30, 2023.

This decrease is primarily due to the Optilan

deconsolidation and sale of some subsidiary property, plant and equipment.

Bad Debt expense for the three-months ended June

20, 2024 increased $2,337 from $57,480 for the six-months ended June 30, 2023.

Bad Debt expense for the six-months ended June

20, 2024 decreased $2,362,640 from $2,422,457 for the six-months ended June 30, 2023.

ended September 30, 2024 decreased to $31,837 from $44,502 for the three-months ended September 30, 2023.

This decrease is primarily due

to the Optilan deconsolidation and sale of some subsidiary property, plant and equipment.

Depreciation and amortization for nine-months

ended September 30, 2024 decreased to $95,709 from $496,485 for the nine-months ended September 30, 2023.

This decrease is primarily due

to the Optilan deconsolidation and sale of some subsidiary property, plant and equipment.

Bad Debt expense for the three-months ended September

20, 2024 decreased $11,506 from $11,506 for the three-months ended September 30, 2023.

Bad Debt expense for the nine-months ended September

20, 2024 decreased $2,374,146 from $2,433,963 for the nine-months ended September 30, 2023.

This was the result of the Optilan deconsolidation.

During the three-months ended June 30, 2024 and

2023, the Company recorded $0 and $115,971, respectively, in impairment on the Company’s goodwill and intangible assets

During the six-months ended June 30, 2024 and

2023, the Company recorded $0 and $6,925,137, respectively, in impairment on the Company’s goodwill and intangible assets

During the three-months ended September 30, 2024

and 2023, the Company recorded $0 and $115,971, respectively, in impairment on the Company’s goodwill and intangible assets

During the nine-months ended September 30, 2024

and 2023, the Company recorded $0 and $6,925,137, respectively, in impairment on the Company’s goodwill and intangible assets

Other Income (Expense)

For the three-months ended June 30, 2024, we had

other expense of ($1,947,377) compared to other expense of ($1,617,692) during three months ended June 30, 2023.

The increase is due to

an increase in interest expense.

For the six-months ended June 30, 2024, we had

other expense of ($1,948,779) compared to other expense of ($1,810,882) during six months ended June 30, 2023.

The increase is due to

an increase in interest expense.

For the three-months ended September 30, 2024,

we had other expense of 28,280 compared to other expense of ($521,353 ) during three months ended September 30, 2023.

The decrease is

due to FMV of derivatives .

For the nine-months ended September 30, 2024,

we had other expense of ($1,977,059 ) compared to other expense of ($2,332,234 ) during nine months ended September 30, 2023, mainly attributable

the termination of the SPAC.

Net Loss from Continuing Operations

As a result of the above, we reported a net loss

of continuing operations of $2,416,706 and $4,118,097 for the three-months ended June 30, 2024 and 2023, respectively.

of continuing operations of $587,043 and $998,581 for the three-months ended September 30, 2024 and 2023, respectively.

As a result of the above, we reported a net loss

of continuing operations of $2,953,104 and $18,917,361 for the six-months ended June 30, 2024 and 2023, respectively.

of continuing operations of $3,540,148 and $19,915,940 for the nine-months ended September 30, 2024 and 2023, respectively.

Liquidity and Capital Resources

1 unchanged sentence

development and commercialization of our proprietary fiber optic sensing devices, and for operating expenses.

During the three-months ended June 30, 2024, we

had $222,004 in cash proceeds from our equity financings compared to $537,849 in 2023.

During the six-months ended June 30, 2024, we

had $262,585 in cash proceeds from our equity financings compared to $2,625,650 in 2023.

As of June 30, 2024, we had cash of $953 compared

to $11,912 as of December 31, 2023.

We currently do not have sufficient cash to fund our operations for the next 12 months and we will

require working capital to complete development, testing and marketing of our products and to pay for ongoing operating expenses.

We anticipate

adding consultants for technology development and the corresponding operations of the Company, but this will not occur prior to obtaining

additional capital.

During the three-months ended September 30, 2024,

we had $474,205 in cash proceeds from our equity financings compared to $334,115 in 2023.

During the nine-months ended September 30, 2024,

we had $ 696,205 in cash proceeds from our equity financings compared to $2,859,764 in 2023.

As of September 30, 2024, we had cash of $165,579

compared to $11,912 as of December 31, 2023.

We currently do not have sufficient cash to fund our operations for the next 12 months and

we will require working capital to complete development, testing and marketing of our products and to pay for ongoing operating expenses.

We anticipate adding consultants for technology development and the corresponding operations of the Company, but this will not occur prior

to obtaining additional capital.

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

Currently, loans from banks or other lending

sources for lines of credit or similar short-term borrowings are not available to us.

We have been able to raise working capital to fund

operations through the issuances of convertible notes or obtained through the issuance of our restricted common stock.

As of June 30,

2024, our current liabilities exceeded our current assets by $19,044,331.

Currently, loans from banks

or other lending sources for lines of credit or similar short-term borrowings are not available to us.

We have been able to raise working

capital to fund operations through the issuances of convertible notes or obtained through the issuance of our restricted common stock.

As of September 30, 2024, our current liabilities exceeded our current assets by $20,535,288.

Several of our significant operating subsidiaries

9 unchanged sentences

Cash Flows from Operating Activities

During the six-months ended June 30, 2024, net

cash used in operating activities was $ 313,725 resulting from our net loss of $2,953,104 partially offset by non-cash charges of $1,707,137

During the nine-months ended September 30, 2024,

net cash used in operating activities was $29,782 resulting from our net loss of $3,540,148 partially offset by non-cash charges of $1,748,303

primarily driven by our loss on equity investment resulting from the “SPAC” termination.

3 unchanged sentences

Cash Flows from Investing Activities

During the six-months ended June 30, 2024, we had net cash used in

investing activities of $(59,817).

During the six-months ended June 30, 2023, we

had net cash used in investing activities of $1,154,848, including $419,737 in notes and $519,637 in advances to GSD, as well as our joint

venture investment of $113,124 and purchase of property and equipment of $102,350.

During the nine-months ended September 30, 2024, we had net cash used

in investing activities of $ 120,248 .

During the nine-months ended September 30, 2023,

we had net cash used in investing activities of $1,409,128 , including $563,317 in notes and $630,337 in advances to GSD, as well as our

joint venture investment of $113,124 and purchase of property and equipment of $102,350.

Cash Flows from Financing Activities

During the six-months ended June 30, 2024, net

cash provided by financing activities was $362,582 of which $362,585 was comprised of proceeds from the issuance of common stock.

During the six-months ended June 30, 2023, net

cash provided by financing activities was $2,598,603 which was primarily comprised of proceeds from the sale of common stock of $2,625,650,

less repayments of loans $27,047.

During the nine-months ended September 30, 2024,

net cash provided by financing activities was $1,623,081 of which $1,043,131 was comprised of proceeds from the issuance of common stock.

During the nine-months ended September 30, 2023,

net cash provided by financing activities was $3,090,717 which was comprised of proceeds from convertible notes of $50,000 and the sale

of common stock of $3,067,764 , less repayments of loans $27,047.

Factors That May Affect Future Results

42 unchanged sentences

financial statements and related disclosures.

Quantitative and Qualitative Disclosures About Market

Quantitative and Qualitative Disclosures About Market Risk

As a smaller reporting company, the Company has elected not to provide

1 unchanged sentence

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis