| SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The consolidated financial statements and accompanying
notes are prepared in accordance with generally accepted accounting principles of the United States of America (“U.S. GAAP”)
and the rules and regulations of the U.S Securities and Exchange Commission for Interim Financial Information. The condensed consolidated
financial statements of the Company include the Company and its wholly owned subsidiaries. All intercompany transactions and balances
have been eliminated. All adjustments (consisting of normal recurring items) necessary to present fairly the Company’s financial
position as of June 30, 2024, and the results of operations for three and six months and cash flows for the six months ended June 30,
2024 and 2023 have been included. The Company evaluates its relationships with other
entities to identify whether they are variable interest entities (“VIE”) as defined by Financial Accounting Standards Board
(“FASB”) Accounting Standards Codification (“ASC”) Topic 810, Consolidation Unaudited Interim Financial Information The accompanying unaudited condensed consolidated
balance sheet as of June 30, 2024, the unaudited condensed consolidated statements of operations for the three and six months ended June
30, 2024 and 2023 and of cash flows for the six months ended June 20, 2024 and 2023 have been prepared by the Company, pursuant to the
rules and regulations of the SEC for the interim financial statements. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to rules and regulations. However, the
Company believes that the disclosures are adequate to make the information presented not misleading. The unaudited interim consolidated
financial statements have been prepared on a basis consistent with the audited consolidated financial statements and in the opinion of
management, reflect all adjustments, consisting of only normal recurring adjustments, necessary for the fair presentation of the consolidated
results for the interim periods presented and of the consolidated financial condition as of the date of the interim consolidated balance
sheet. The results of operations are not necessarily indicative of the results expected for the year ending December 31, 2024. The accompanying unaudited interim condensed consolidated
financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto
for the year ended December 31, 2023 included in the Company’s Annual Form 10-K filed with SEC on July 15, 2024. Use of Estimates The preparation of the Company’s financial
statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting period. Significant estimates and assumptions reflected in these financial statements include,
but are not limited to, assumptions used to calculate derivative liabilities, revenue recognition and impairment of long-lived assets.
The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes
to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates when there are changes in circumstances,
facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those
estimates. Cash The Company considers all highly liquid investments
with a maturity of three months or less when acquired to be cash equivalents. The Company places its cash with high credit quality financial
institutions. The Company’s account at this institution is insured by the Federal Deposit Insurance Corporation (“FDIC”)
up to $250,000. To reduce its risk associated with the failure of such a financial institution, the Company evaluates at least annually
the rating of the financial institution in which it holds deposits. 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 the project. Billings for such retention
balances at each balance sheet date are finalized and collected after project completion. Generally, unbilled amounts will be billed and
collected within one year. The Company determined that there are no material amounts due past one year and no material amounts billed
but not expected to be collected within one year. Also, the Company adopted ASU 2016-13 in January 2023 and the adoption did not have
a material impact on the Company’s condensed consolidated financial statements and related disclosures for the year ended June 3,
2024. Each month, the Company reviews its receivables
on a customer-by-customer basis and evaluates whether an allowance for doubtful accounts is necessary based on any known or perceived
collection issues. Any balances that are eventually deemed uncollectible are written off against the allowance after all means of collection
have been exhausted and the potential for recovery is considered remote. As of both June 30, 2024 and December 31, 2023, the Company determined
that the allowance for doubtful accounts was $ 0 0 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 June 30, 2024 and December 31, 2023,
retainage receivable was $ 0 Foreign Currency Translation The Company’s reporting currency is U.S.
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 are 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. *Optilian has been deconsolidated, and as a result, no translation
rates were applied for the six-months ending June 30, 2024. The relevant translation rates are as follows:
for the six months ended June, 2024 closing rate at 1.3740 Long-Lived Assets and Goodwill The Company accounts for long-lived assets in
accordance with the provisions of ASC 360-10-35, Property, Plant and Equipment, Impairment or Disposal of Long-lived Assets. Indefinite-lived intangible assets established
in connection with business combinations consist of the tradename. The impairment test for identifiable indefinite-lived intangible assets
consists of a comparison of the estimated fair value of the intangible asset with its carrying value. If the carrying value exceeds its
fair value, an impairment loss is recognized in an amount equal to that excess. The Company accounts for goodwill and intangible
assets in accordance with ASC 350, Intangibles – Goodwill and Other As a result of the Optilan Liquidation as described
in Note 1, management determined that certain events and circumstances occurred that indicated that the carrying amount of the Company’s
reporting unit may not be recoverable. 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 $ 2,037,670 $ 356,260 1,681,410 0 Property and Equipment Property and equipment are carried at historical
cost less accumulated depreciation. Depreciation is based on the estimated service lives of the depreciable assets and is calculated using
the straight-line method. Expenditures that increase the value or productive capacity of assets are capitalized. Fully depreciated assets
are retained in the property and equipment, and accumulated depreciation accounts until they are removed from service. When property and
equipment are retired, sold or otherwise disposed of, the asset’s carrying amount and related accumulated depreciation are removed
from the accounts and any gain or loss is included in operations. Repairs and maintenance are expensed as incurred. The estimated useful lives of property and equipment are generally as follows:
Schedule of estimated useful lives of property and equipment
Years
Office furniture and fixtures 4
Plant and equipment 4-8
Leasehold Improvements 10
Motor vehicles 3 Revenue Recognition The Company’s revenues are generated primarily
from the sale of our services, which consist primarily of advanced technology solutions for integrated communications and security systems,
as well as habitat management. The Company’s sales of products are primarily generated from our TJM subsidiaries. Sales of products
and services are separate from one another. At contract inception, we assess the goods and services promised in the contract with customers
and identify a performance obligation for each. To determine the performance obligation, we consider all products and services promised
in the contract regardless of whether they are explicitly stated or implied by customary business practices. The timing of satisfaction
of the performance obligation is not subject to significant judgment. We measure revenue as the amount of consideration expected to be
received in exchange for transferring goods and services. We recognize service revenues as the performance obligations are met, which
is generally as milestones are satisfied over time. We generally recognize product revenues at the time of shipment, provided that all
other revenue recognition criteria have been met. The Company recognizes revenue when its customer
obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for
those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606,
we perform the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract;
(iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize
revenue when (or as) we satisfy a performance obligation. The five-step model is applied to contracts when it is probable that we will
collect the consideration we are entitled to in exchange for the goods or services transferred to the customer. At contract inception,
once the contract is determined to be within the scope of ASC 606, we assess the goods or services promised within each contract and determine
those that are performance obligations and assess whether each promised good or service is distinct. We then recognize revenue in the
amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is
satisfied. The Company considers each individual sale of
service contract to be its own performance obligation. Services in the contract are highly interdependent and interrelated, and the successful
completion of each milestone is necessary for the overall success of the contract. Therefore, each milestone is not separately identifiable
from other promises in the contract, and not distinct and ultimately not individual performance obligations. The Company records revenue over time using the
input measure as it is the most faithful depiction of an entity’s performance because it directly measures the value of the goods
and services transferred to the customer. The Company utilizes the Right to Invoice for these contracts, as the pricing structure is based
on various milestones that are specified in the contract. These milestones include Construction Phase Plan, Start of the construction
phase, installation phase, site surveys, fiber splicing, recoveries, and closeouts. There are specified payments associated with these
milestones in the contract, and the value allocated is commensurate with work done. In the event that there are advances such as upfront
retainers and not based on the value, those are recorded as contract liabilities. In accordance with ASU No. 2016-12, Revenue
from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedient Liquidation of Optilan (UK) Limited 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 that time DarkPulse,
Inc no longer had any involvement in the operations of Optilan (UK) Ltd. Cost of Revenues Cost of revenues consists primarily of materials
and overhead costs incurred internally and amounts incurred to contract manufacturers to produce our products, airtime and other implementation
costs incurred to install our products and train customer personnel, and customer service and third-party original equipment manufacturer
costs to provide continuing support to our customers. Cost of revenues also includes direct labor attributable to revenue service arrangements. Concentration of Credit Risk 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. Leases The Company accounts for its leases under ASC
842, Leases In calculating the right of use asset and lease
liability, the Company has elected to combine lease and non-lease components. The Company excludes short-term leases having initial terms
of 12 months or less from the new guidance as an accounting policy election, and recognizes rent expense on a straight-line basis over
the lease term. Derivative Financial Instruments The Company evaluates the embedded conversion
feature within its convertible debt instruments under ASC 815-15 and ASC 815-40 to determine if the conversion feature meets the definition
of a liability and, if so, whether to bifurcate the conversion feature and account for it as a separate derivative liability. For derivative
financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is
then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative
financial instruments, the Company uses a lattice model, in accordance with ASC 815-15 , Derivative and Hedging, Fair Value of Financial Instruments The Company measures its financial assets and
liabilities in accordance with the requirements of FASB ASC 820, Fair Value Measurements and Disclosures. Level 1 – Quoted prices are available in
active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset
or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of
financial instruments such as exchange-traded derivatives, marketable securities and listed equities. Level 2 – Pricing inputs are other than
quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date and includes
those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard
models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current
market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these
assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported
by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded
derivatives such as commodity swaps, interest rate swaps, options and collars. Level 3 – Pricing inputs include significant
inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that
result in management’s best estimate of fair value. The Company’s derivative liability is a Level 3 liability measured
at fair value on a recurring basis. See Note 11. Equity Investments The Company uses the equity method to account
for investments in which it has the ability to exercise significant influence over the investee’s operating and financial policies,
or in which its holds a partnership or limited liability company interest in an entity with specific ownership accounts, unless it has
virtually no influence over the investee’s operating and financial policies. The Company follows the guidance in ASC 323-10-30-2,
Joint Ventures, which prescribes the use of the equity method for investments in joint ventures where the Company has significant influence.
Equity method investments are recorded at cost and are adjusted to recognize (1) the Company’s share, based on percentage ownership
or other contractual basis, of the investee’s net income or loss after the date of investment, (2) amortization of the recorded
investment that exceeds the Company’s share of the book value of the investee’s net assets, (3) additional contributions made
and dividends received, and (4) impairments resulting from other-than- temporary declines in fair value. Gain (loss) on equity investment
includes realized gains or losses upon the sale of the investment and are included as other income (expense) in the consolidated statements
of operations and comprehensive (loss). Per ASC 323-10-30-2, Joint Ventures are accounted
for using the equity method, in which the Company initially records its investment at cost, including transaction costs. Under the equity
method, an investment in common stock and in-substance common stock is presented on the balance sheet of an investor as a single amount.
However, any difference between the cost of the investment and the underlying equity in net assets of an investee — commonly referred
to as a basis difference — should be accounted for as if the investee were a consolidated subsidiary. Income Taxes The Company accounts for income taxes pursuant
to the provision of ASC 740-10, (“ASC 740-10”) which requires, among other things, an asset and liability approach to calculating
deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected
future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation
allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred
asset will not be realized. The Company follows the provision of ASC 740-10
related to Accounting for Uncertain Income Tax Positions. When tax returns are filed, there may be uncertainty about the merits of positions
taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of
a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes
it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes,
if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more likely than not
recognition threshold are measured at the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement
with the applicable taxing authority. The portion of the benefit associated with tax positions taken that exceed the amount measured as
described above should be reflected as a liability for uncertain tax benefits in the accompanying balance sheet along with any associated
interest and penalties that would be payable to the taxing authorities upon examination. The Company believes its tax positions are all
more likely than not to be upheld upon examination. As such, the Company has not recorded a liability for uncertain tax benefits. The Company has adopted ASC 740-10-25, Definition
of Settlement The Company's U.S. subsidiaries were incorporated in 2017, and tax
returns have not yet been filed. The Company does not anticipate a tax liability for the years 2022 and 2021, however may be subject to
certain penalties. The Company has filed tax returns in Canada for the year ended December 31, 2018, and they are still subject to audit. Non-controlling Interests Non-controlling interests are classified as a
separate component of equity in the Company's consolidated balance sheets and statements of changes in stockholders’ equity. Net
income (loss) and comprehensive income (loss) attributable to non-controlling interests are reflected separately from consolidated net
income (loss) and comprehensive income (loss) in the consolidated statements of comprehensive income (loss) and statements of changes
in stockholders’ equity. Any change in ownership of a subsidiary while the controlling financial interest is retained is accounted
for as an equity transaction between the controlling and non-controlling interests. In addition, when a subsidiary is deconsolidated,
any retained non-controlling equity investment in the former subsidiary will be initially measured at fair value and the difference between
the carrying value and fair value of the retained interest will be recorded as a gain or loss. The Company has non-controlling interests
via its subsidiaries TerraData, Remote Intelligence and Wildlife Specialists. During the six months ended June 30, 2024 and 2023, the Company recorded
a loss of $ 9,453 810,693 Comprehensive Loss Comprehensive loss includes net loss well as other
changes in stockholders’ equity that result from transactions and economic events other than those with stockholders. During the
six months ended June 30, 2024 there was no comprehensive loss for foreign currency translation and 2023 Company’s only element
of other comprehensive loss was foreign currency translation. Stock-based Compensation Stock-based compensation is accounted for based
on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the consolidated financial statements of
the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director
is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of
the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. Pursuant to ASC Topic 718, for share-based payments
to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized
over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain.
The Company initially records compensation expense based on the fair value of the award at the reporting date. Further, ASC Topic 718,
provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification
accounting in Topic 718, such as the repricing of share options, which would revalue those options and the accounting for the cancellation
of an equity award whether a replacement award or other valuable consideration is issued in conjunction with the cancellation. If not,
the cancellation is viewed as a replacement and not a modification, with a repurchase price of $ 0 . Loss Per Common Share The Company accounts for earnings per share pursuant
to ASC 260, Earnings per Share
Schedule of anti dilutive securities
June 30, 2024 December 31, 2023
Convertible notes 147,874,598 65,827,695
Series D preferred stock 176,470 176,470
148,051,068 66,004,165 Recent 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 In August 2020, the FASB issued ASU 2020-06, which
simplifies the guidance on the issuer’s accounting for convertible debt instruments by removing the separation models for convertible
debt with a cash conversion feature and convertible instruments with a beneficial conversion feature. As a result, entities will not separately
present in equity an embedded conversion feature in such debt and will account for a convertible debt instrument wholly as debt, unless
certain other conditions are met. The elimination of these models will reduce reported interest expense and increase reported net income
for entities that have issued a convertible instrument that is within the scope of ASU 2020-06. ASU 2020-06 is applicable for fiscal years
beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. The Company
adopted ASU 2020-06 on January 1, 2022 and the adoption of this ASU did not have a material impact on the Company’s consolidated
financial statements and related disclosures. 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). 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. |
