DPLS

New in FY2025

• This summary should be read in conjunction with the “ Risk Factors ” section and should not be relied upon as an exhaustive summary of the material risks facing the Company. · If we default on the Secured Debenture, the secured holder could take possession of our assets, including our patents and other intellectual property. · Our stockholders have limited voting power compared to the holder of our Series A Preferred Stock. · We have a limited operating history in an evolving and highly volatile industry, which makes it difficult to evaluate future prospects and may increase the risk that we will not be successful. · We face intense and increasing competition and, if we do not compete effectively, our competitive positioning and our operating results will be harmed. · Our operating results may fluctuate due to market forces out of our control that impact demand for our products and services. · Cyberattacks and security breaches of our systems, or those impacting customers or third parties, could adversely impact our brand and reputation and our business, operating results and financial condition. · Any significant disruption in our technology could adversely impact our brand and reputation and our business, operating results, and financial condition. · There is no assurance that we will achieve profitability or that our revenue and business models will be successful. · We will require additional capital to support business growth, and this capital might not be available or may require stockholder approval to obtain. · You may experience dilution of your ownership interests because of the future issuance of additional shares of our common or preferred stock or other securities that are convertible into or exercisable for our common or preferred stock. · The future development and growth of our technology and product offerings are subject to a variety of factors that are difficult to predict and evaluate and may be in the hands of third parties to a substantial extent.
• On June 28, 2023, the High Court of Justice in the United Kingdom issued a winding-up order for the liquidation of Optilan (UK) Limited.
• Evelyn Partners LLP continues to liquidate the company's assets as of the date of this filing.
• The Company is an unsecured creditor of Optilan (UK) Limited with approximately $19.4 million in intercompany payables due from Optilan (UK), which have been fully impaired.
• There are no new claims against Optilan (UK) Limited as of the date hereof.
• However, the liquidation is ongoing and the financial impact of any future claims or recoveries remains uncertain.
• In the event we are unable to recover any portion of the obligations owed by Optilan (UK) Limited, or additional claims or liabilities arise in connection with the liquidation, our financial condition could be materially adversely affected.
• We believe that material weaknesses exist in our internal control over financial reporting as of December 31, 2025, including those related to (i) our internal audit functions and (ii) a lack of segregation of duties within accounting functions.
• On August 14, 2024, we entered into the EFA with GHS, as amended, 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 30 months (the “ Contract Period ”) after effectiveness of a registration statement on Form S-1 of the underlying shares of Common Stock.
• From August 2021 until April 13, 2026, GHS has purchased and sold 57,441,968 and 57,441,968 shares of our Common Stock, respectively.
• Our independent registered public accounting firm reports (from two separate independent registered public accounting firms) on our audited financial statements for the years ended December 31, 2025 and 2024, each indicate that there are a number of factors that raise substantial risks about our ability to continue as a going concern.
• We may be unable to submit a Purchase Order to our contract manufacturer on the anticipated timeline, which could materially delay the commercialization of our patented BOTDA technology.
• We currently expect to submit a Purchase Order to Sanmina Corp, our contract manufacturer, during Q2 2026 for the full manufacturing of our patented BOTDA sensor system hardware.
• However, this expectation is subject to significant uncertainty, including the availability of sufficient working capital, the completion of final engineering specifications, and other operational and market conditions.
• We previously anticipated submitting this Purchase Order in an earlier period, and the timeline has been extended.
• There can be no assurance that we will submit the Purchase Order on the anticipated timeline, or at all.
• A further delay or failure to submit the Purchase Order would materially delay our ability to manufacture and sell our patented BOTDA technology, which would have a material adverse effect on our business, financial condition, and results of operations.
• We may be affected by fluctuations in currency exchange rates .
• We are potentially exposed to adverse as well as beneficial movements in currency exchange rates.
• Factors that may cause fluctuations in our quarterly operating results include, but are not limited to, the following: · a change in the volume of our customers use of our products and services and generally; · planned and unplanned increases in marketing, sales and other operating expenses that we may incur to grow and expand our customer base and operations, and to remain competitive; · the success, or lack of success, in new marketing approaches we have recently undertaken or plan to undertake, which have not been previously or fully tested; · the continued market acceptance of our products and services in a highly competitive environment; · system disruptions, outages and other performance problems or interruptions on our products and technology, or breaches of data or system security, including ransomware or other major cyber-attacks, which, if extended or severe, may harm our credibility and reputation in the market; · our failure to provide adequate customer service; · our ability to successfully, and in a timely manner, continue development, improvement and feature-enhancement of our products and services, including our intellectual property, data analytics, proprietary technology and customer support functions; · the timing and success of new product and service introductions, and new product and service features or enhancements, by us and our subsidiaries, or our competitors, or other changes in the competitive landscape of the markets in which we operate; · the success of our expansion into new markets, products and services, or ones in which we are in the early stages; · changes in the adoption and use of our technologies and the public perception of them; · changes in the legislative or regulatory environment, scope or focus of regulatory investigations and inquiries, or interpretations of regulatory requirements, or outright prohibition of certain activities; · disputes with our customers, adverse litigation and regulatory judgments, enforcement actions, settlements or other related costs and the reputational impact and public perception of such occurrences, including in emerging industries, or emerging components of industries; · the timing and amount of non-cash expenses, such as stock-based compensation and asset impairment; · changes in accounting standards, policies, guidance, interpretations or principles; and · general economic conditions in either domestic or international markets, including the impact of pandemics.
• The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including the following: · Geo-political events, such as the crisis in Ukraine, government responses to such events and the related impact on the economy both nationally and internationally; · Changes in our industry; · Competitive pricing pressures; · Our ability to obtain working capital financing; · Additions or departures of key personnel; · Sales of our common stock; · Our ability to execute our business plan; · Operating results that fall below expectations; · Loss of any strategic relationship; · Regulatory developments; and · Economic and other external factors.
• July 24, 2024, we and GS Capital Partners, LLC entered into a Settlement Agreement pursuant to which the Company entered into a confession of judgment in favor of GS Capital in the amount of $2,673,423 which has been reduced to $1,950,123 (the “ Balance ”).
• After approval of the court on August 19, 2024, the Company will issue to GS Capital free-trading and unrestricted shares of Common Stock pursuant to drawdown requests in the amounts determined by GS Capital, subject to a 4.99% beneficial ownership limitation.
• Based on the estimated VWAP of our Common Stock on April 10, 2026, we would have to issue approximately 196,982,121 shares of Common Stock to satisfy our obligations.

Gone since FY2024

• This summary should be read in conjunction with the “ Risk Factors ” section and should not be relied upon as an exhaustive summary of the material risks facing the Company. · If we default on the Secured Debenture, the secured holder could take possession of our assets, including our patents and other intellectual property. · Several of the convertible notes issued by us are in litigation with uncertain outcomes. · Our stockholders have limited voting power compared to the holder of our Series A Preferred Stock. · We have a limited operating history in an evolving and highly volatile industry, which makes it difficult to evaluate future prospects and may increase the risk that we will not be successful. · We face intense and increasing competition and, if we do not compete effectively, our competitive positioning and our operating results will be harmed. · Our operating results may fluctuate due to market forces out of our control that impact demand for our products and services. · Cyberattacks and security breaches of our systems, or those impacting customers or third parties, could adversely impact our brand and reputation and our business, operating results and financial condition. · Any significant disruption in our technology could adversely impact our brand and reputation and our business, operating results, and financial condition. · Certain large customers provide a significant share of our revenue and the termination of such agreements or reduction in business with such customers could harm our business.
• If we were to lose or were unable to renew these and other client contracts at favorable terms, our results of operations and financial condition may be adversely affected. · There is no assurance that we will achieve profitability or that our revenue and business models will be successful. · We will require additional capital to support business growth, and this capital might not be available or may require stockholder approval to obtain. · You may experience dilution of your ownership interests because of the future issuance of additional shares of our common or preferred stock or other securities that are convertible into or exercisable for our common or preferred stock. · The future development and growth of our technology and product offerings are subject to a variety of factors that are difficult to predict and evaluate and may be in the hands of third parties to a substantial extent.
• 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.
• To date the 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.
• Pursuant 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 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 as of the date hereof against Optilan (UK) Limited and Evelyn Partners continues 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 not repaid.
• 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.
• In the event we lose the repayment obligations of Optilan (UK) Limited, our financial condition could be materially adversely affected.
• Due to the failure of GSD to consummate a business combination with DarkPulse by February 9, 2024, GSD will be forced to liquidate, which may make the shares of GSD owned by DarkPulse worthless and DarkPulse may be unable to recoup any expenses spent on acquiring securities of GSD and loans to GSD.
• 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 the issued and outstanding shares of Class B Common Stock of GSD, all legal rights the Company had under the BCA have been terminated.
• GSD had until February 9, 2024 to consummate a business combination.
• Due the fact that GSD did not consummate a business combination by February 9, 2024, there will be a mandatory liquidation and subsequent dissolution.
• On or about April 17,2024 GSD has redeemed the remaining public shares and has been liquidated and dissolved.
• The Company may be subject to claims of creditors based on the type and nature of claims stemming from this transaction, however any such prospective claims at this point in time are speculative at best.
• GSD is a blank check company with limited resources.
• Since there are limits on use of the Trust Funds for GSD’s working capital in connection with a business combination, GSD must rely on DarkPulse, its Sponsor, management or outside sources to pay for the various expenses associated with completing a business combination.
• For this purpose, DarkPulse has advanced to GSD non-interest-bearing working capital loans.
• As of January 23, 2024, GSD had issued to DarkPulse non-interest bearing non-convertible promissory notes for working capital loans in the principal amount of $679,582.
• In addition, on October 12, 2022, DarkPulse paid Gladstone Sponsor, LLC (GSD’s original sponsor) $1,500,000 for 2,623,120 shares of Class B Common and 4,298,496 Private Placement Warrants issued by GSD to Gladstone Sponsor, LLC in order to become GSD’s Sponsor.
• DarkPulse has also expended an additional estimated $1,142,241 to third-party service providers in connection with the attempted business combination with GSD.
• Together, DarkPulse expended an estimated aggregate of $3,321,823 in connection with the attempted business combination with GSD.
• All funds loaned to GSD by DarkPulse can only be repaid only from funds held outside of GSD’s Trust Account and GSD does not have material funds held outside of its Trust Account.
• Due to the fact that GSD failed to complete a business combination by February 9, 2024, it will now be forced to liquidate.
• DarkPulse, as the Sponsor of GSD and owner of an aggregate of 2,623,120 shares of Class B Common Stock and 4,298,496 GSD Private Placement Warrants, each of which is exercisable to purchase one share of Class A Common Stock of GSD, will not be able to participate in the liquidation as a holder of Class B Common Stock of GSD due to DarkPulse having agreed to waive its rights to any liquidation distributions, which means the shares of Class B Common Stock of GSD owned by DarkPulse are worthless.
• As a result of GSD’s liquidation, DarkPulse’s investment in GSD will be worthless and DarkPulse will be unable to recoup its expenses.
• Escalating global tensions, including the conflict between Russia and Ukraine, could negatively impact us.
• The ongoing conflict between Russia and Ukraine could led to disruption, instability and volatility in global markets and industries that could negatively impact our operations.

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