Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 19, 2018 | |
Due from related party, payable in common stock | ||
Entity Registrant Name | DarkPulse, Inc. | |
Entity Central Index Key | 866,439 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 89,680,567 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,018 | |
Entity Small Business | true | |
Former name | Klever Marketing Inc | |
Entity Emerging Growth | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
CURRENT ASSETS | ||
Cash | $ 159,288 | $ 8,025 |
Cash held by offiecer of variable interest entity | 0 | 10,650 |
Prepaid expenses | 746 | 0 |
Total current assets | 160,034 | 18,675 |
Other Assets, net | 409,487 | 7,275 |
Patents, net | 536,036 | 537,960 |
Total assets | 1,105,557 | 563,910 |
CURRENT LIABILITIES | ||
Accounts payable | 65,154 | 10,000 |
Convertible Notes, net of discount $704,838 and $0 respectively | 124,862 | 0 |
Derivative liability | 910,244 | 0 |
Accrued expenses | 82,904 | 33,594 |
Contract liability, related party | 42,000 | 0 |
Payroll Liabilities | 89,230 | 0 |
Due to related party | 44,096 | 0 |
Due to UNB | 0 | 33,385 |
Total current liabilities | 1,358,489 | 76,979 |
Secured Debenture | 1,163,655 | 1,193,015 |
Total liabilities | 2,522,144 | 1,269,994 |
Commitments and Contingencies | ||
STOCKHOLDERS' DEFICIT | ||
Common Stock, Par Value $0.01, 250,000,000 shares authorized 89,680,567 and 100 shares issued and outstanding respectively | 896,806 | 0 |
Treasury stock, 100,000 shares | (1,000) | 0 |
Convertible Preferred Stock, Series D, par value $0.01, 100,000 shares authorized, 88,235 and 0 shares issued and outstanding respectively | 883 | 0 |
Paid in capital in excess of par value | 859,481 | 0 |
Non-controlling interest in a variable interest entity and subsidiary | (12,439) | 25,808 |
Accumulated other comprehensive income | 328,268 | 298,909 |
Accumulated deficit | (3,488,586) | (1,030,800) |
TOTAL STOCKHOLDERS' DEFICIT | (1,416,587) | (706,084) |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 1,105,557 | $ 563,910 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Convertible Notes, discount | $ 704,838 | $ 0 |
Convertible preferred stock - par value | $ 0.01 | $ 0.01 |
Convertible preferred stock - shares authorized | 2,000,000 | 2,000,000 |
Convertible preferred stock - shares issued | 88,235 | 0 |
Convertible preferred stock - shares outstanding | 88,235 | 0 |
Common stock par value (in Dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 89,680,567 | 100 |
Common stock, shares outstanding | 89,680,567 | 100 |
Treasury stock shares | 100,000 | 100,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Statement [Abstract] | ||||
Revenues | $ 0 | $ 0 | $ 0 | $ 0 |
OPERATING EXPENSES | ||||
General and administrative expenses | 281,996 | 12 | 1,909,547 | 12 |
Research and development | 0 | 0 | 0 | 33,385 |
Depreciation | 0 | 0 | 1,806 | 0 |
Amortization of patents | 18,216 | 12,757 | 43,730 | 38,271 |
Total operating expenses | 300,212 | 12,769 | 1,955,083 | 71,668 |
OPERATING LOSS | (300,212) | (12,769) | (1,955,083) | (71,668) |
OTHER INCOME (EXPENSE) | ||||
Interest expense | (139,961) | (12,235) | (164,990) | (19,734) |
Loss on convertible notes | (916,977) | 0 | (916,977) | 0 |
Gain on change in fair market values of derivative liabilities | 689,949 | 0 | 689,949 | 0 |
Loss on merger | (110,685) | 0 | (110,685) | 0 |
TOTAL OTHER EXPENSES | (477,674) | (12,235) | (502,703) | (19,734) |
NET LOSS | (777,886) | (25,004) | (2,457,786) | (91,402) |
Net Loss attributable to noncontrolling interests in variable interest entity and subsidiary | 100 | 0 | 11,172 | 0 |
Net loss attributable to Company stockholders | $ (777,786) | $ (25,004) | $ (2,446,614) | $ (91,402) |
LOSS PER SHARE: Basic and Diluted | $ 0 | $ (250) | $ (0.03) | $ (914) |
WEIGHTED AVERAGE SHARES OUTSTANDING: Basic and Diluted | 89,680,567 | 100 | 76,127,111 | 100 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Statement [Abstract] | ||||
NET LOSS | $ (777,786) | $ (25,004) | $ (2,446,614) | $ (91,402) |
OTHER COMPREHENSIVE GAIN (LOSS) | ||||
Unrealized Gain (Loss) on Foreign Exchange | (20,638) | (47,672) | 29,359 | (41,958) |
COMPREHENSIVE LOSS | $ (798,424) | $ (72,676) | $ (2,417,255) | $ (133,360) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (2,457,786) | $ (91,402) |
Adjustments to reconcile net loss to net cash used by operating activities: | ||
Debt discount | 205,406 | 0 |
Stock based compensation | 1,602,570 | 0 |
Amortization of debt discount | 115,678 | 0 |
Depreciation and amortization | 45,536 | 38,271 |
Changes in operating assets and liabilities: | ||
Increase in accounts payable | 54,153 | 0 |
Increase in contract liability | 42,000 | 0 |
Increase in payroll liabilities | 89,230 | 0 |
Increase in accrued liabilities | 49,310 | 19,734 |
Increase in prepaid expenses | 9,904 | 0 |
Due to UNB | 0 | 33,385 |
Net cash used in operating activities | (243,999) | (12) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Non-controlling interest | (38,247) | 0 |
Investment in patents | (141,223) | 0 |
Net cash used in investing activities | (179,470) | 0 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from convertible notes payable | 572,072 | 0 |
Payments on convertible notes | (8,050) | 0 |
Proceeds from related party payable | 44,096 | 40 |
Cash payments on note payable | (33,386) | 0 |
Additional paid in capital | 0 | 30 |
Net cash provided by financing activities | 574,732 | 70 |
Net Cash Increase (Decrease) | 151,263 | 58 |
Cash, Beginning of period | 8,025 | 0 |
Cash, End of period | 159,288 | 58 |
Supplementary Cash Flow Information: | ||
Interest paid in cash | 0 | 0 |
Taxes paid in cash | $ 0 | $ 0 |
1. BASIS OF FINANCIAL STATEMENT
1. BASIS OF FINANCIAL STATEMENT PRESENTATION | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF FINANCIAL STATEMENT PRESENTATION | NOTE 1 – BASIS OF FINANCIAL STATEMENT PRESENTATION DarkPulse, Inc. ("DPI" or "Company") is a technology-security company incorporated in 1989 as Klever Marketing, Inc ("Klever"). Its principal subsidiary, DarkPulse Technologies Inc. ("DPTI"), originally started as a technology spinout from the University of New Brunswick, Fredericton, Canada. DPI is comprised of two security platforms: Fiber and Ultra-High Sensitivity Sensors ("UHSS"). On April 27, 2018, Klever entered into an Agreement and Plan of Merger (the “Merger Agreement” or the “Merger”) involving Klever as the surviving parent corporation and acquiring a privately held New Brunswick corporation known as DarkPulse Technologies Inc. as its wholly owned subsidiary. On July 18, 2018, the parties closed the Merger Agreement, as amended on July 7, 2018, and the name of the Company was subsequently changed to DarkPulse, Inc. With the change of control of the Company, the Merger is being be accounted for as a recapitalization in a manner similar to a reverse acquisition. On July 20, 2018, the Company filed a Certificate of Amendment to its Certificate of Incorporation with the State of Delaware, changing the name of the Company to DarkPulse, Inc. The Company filed a corporate action notification with the Financial Industry Regulatory Authority (FINRA), and the Company's ticker symbol with the over-the-counter markets has been was changed to DPLS. The Company’s security and monitoring systems will initially be delivered in applications for border security, pipelines, the oil and gas industry and mine safety. Current uses of fiber optic distributed sensor technology have been limited to quasi-static, long-term structural health monitoring due to the time required to obtain the data and its poor precision. DarkPulse patented sensor technologies enable the monitoring of highly dynamic environments due to its more than 200 times greater resolution and eight times greater accuracy. In December 2010 DPTI entered into an Assignment Agreement with the University of New Brunswick, Canada (“the University”), wherein the University sold, transferred, and assigned certain patents (the "patents") to DPTI in exchange for the issuance of a Debenture to the University in the amount of C$1,500,000 (Canadian dollars). In April 2017 DPTI entered into an Intellectual Property agreement with the University in exchange for the issuance of a replacement Debenture to the University in the amount of US$1,491,923 (C$1,500,000 Canadian dollars). The patents and the Debenture were initially recorded in the Company’s accounts at $1,491,923, based upon the exchange rate between the US dollar and the Canadian dollar on December 16, 2010, the date of the original Debenture. In addition to repayment of principal and interest, the Debenture requires DPTI to pay the University a two percent royalty on sales of any and all products or services which incorporate the patents for a period of five years commencing April 24, 2018, as well as to reimburse the University for its patent related costs. On September 5, 2017, DarkPulse Technology Holdings Inc. (“Holdings”), a subsidiary of the Company, entered into a Strategic Alliance Agreement with Bravatek Solutions Inc., (“Bravatek”) a Colorado corporation, for the purpose of promoting the Company’s products, and pursuant to which the Company will cross-promote Bravatek’s products and services, and Bravatek will be paid sales commissions for clients introduced to the Company by Bravatek. The Chief Executive Officer of Bravatek is also the Co-Chief Executive Officer of the Company, and therefore Bravatek is a related party to the Company. On February 8, 2018 the Company formed DarkPulse BVTK, LLC, a Virginia Limited Liability Company (“DPBVTK”), The Company, through DPTI, has a 60% equity interest in the entity, and Bravatek has a 40% interest. The purpose of this joint venture is to develop, market, and sell products and services based on the Company's patented BOTDA dark-pulse technology ("Licensed Technology"). Both the CEO of the Company and the CEO of Bravatek manage the day to day operations of the joint venture. DPBVTK is considered a variable interest entity, of which Bravatek is considered the primary beneficiary. The Company's interest in DPBVTK is accounted for using the equity method of accounting. The Company has granted DPBVTK a revocable royalty-free non-exclusive license to use the Licensed Technology in the North America, Asia, and European government, military and critical infrastructure/key resources market segments. The initial cash contribution to DPBVTK from Bravatek was $10,000, and the initial cash contribution to DPBVTK from the Company was $100. As of September 30, 2018, Bravatek has contributed cash totaling $87,000 to DPBVTK. On April 27, 2018, DPTI issued 782 shares of common stock to five individuals and two entities, and reserved approximately 118 shares of common stock for an employee stock compensation plan. The 782 shares have been independently valued at $1,602,570. At the closing of the Merger described above, the 782 common shares of DPTI were exchanged for 78,231 shares of the Company's Series D preferred stock. On May 10, 2018, Holdings and DPBVTK executed a six month option agreement and paid the fee of $5,000 to the Battelle Memorial Institute ("Battelle"), pursuant to which the Company acquired an option to negotiate a license conveying the following rights: (1) an exclusive royalty bearing license to make, have made, use and sell Battelle Licensed Products in Chemical Warfare Agent detection, and (2) a non-exclusive royalty bearing license to make, have made, use and sell Battelle Licensed Products in explosive detection and illicit drug detection. The Licensed Products utilize new ultra high sensitivity sensors ("UHSS") for detecting drugs, explosives, and chemical warfare agents. Battelle operates the Pacific Northwest National Laboratory (PNNL) under contract from the US Department of Energy (DOE). The portfolio of patents covered by the agreement provide the Company with the opportunity to improve trace detection needed by governments and private sector organizations throughout the world. The option term may be extended by mutual agreement of Battelle and Holdings. On May 11, 2018, Holdings and DPBVTK entered into an Assignment Agreement whereby Holdings assigned to DPBVTK the exclusive rights obtained under its option agreement with Battelle for DPBVTK to solicit research and development contracts with the United States government and its agencies for future inventions and products developed based upon the exclusive rights. The $5,000 option fee is being treated as an investment in DPBVTK, included in other assets on the accompanying condensed consolidated balance sheet, and the Company's portion of losses of the joint venture will be applied against this investment. The Company’s activities are subject to significant risks and uncertainties, including failing to secure additional funding needed to finalize development of the Company’s technology and to commercialize its product in a profitable manner. The accompanying unaudited, condensed financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) have been condensed or omitted in accordance with such rules and regulations. The information furnished in the interim condensed financial statements includes normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements. Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim condensed financial statements be read in conjunction with the Company's audited financial statements and notes thereto included in its December 31, 2017 financial statements reported on Form 8-K. Operating results for the three months and nine months ended September 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. |
2. SIGNIFICANT ACCOUNTING POLIC
2. SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES The Company’s significant accounting policies are described in the notes to the Company’s audited financial statements included in its December 31, 2017 financial statements on Form 8-K. Going Concern Uncertainty As shown in the accompanying financial statements, during the 9 months ended September 30, 2018, the Company did not generate any revenues and reported a net loss of $844,045. As of September 30, 2018, the Company’s current liabilities exceeded its current assets by $1,198,454. As of September 30, 2018, the Company had $159,288 of cash. The Company will require additional funding during the next six months to finance the growth of its 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 and expansion of its operations. The accompanying financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. Management is actively pursuing additional sources of financing sufficient to generate enough cash flow to fund its operations. However, management cannot make any assurances that such financing will be secured. Basis of Presentation 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”). Principles of Consolidation The Company has equity interests in the following entities, whose operations are consolidated into these financial statements: DarkPulse Technologies Inc., a New Brunswick, Canada corporation, a wholly owned subsidiary, incorporated December 16, 2010. DPTI owns 100% of DarkPulse Technology Holdings Inc, a New York corporation, incorporated July 6, 2017. DPTI indirectly owns 37.572% of DarkPulse Technologies International Inc, (“DPTINY”) a New York corporation, incorporated on September 7, 2017. On or about September 18, 2017 DPTI entered into a shareholder agreement with 3 investors, whereby DPTI would own 50.2% of DPTINY and the investors would own 49.8%. On or about October 3, 2017, another investor entered into an agreement with DPTINY to fund it $37,500 for a 0.5% equity interest in DPTINY. On December 26. 2017 the DPTI CEO incorporated another corporation named DarkPulse Technologies International Inc, ("DPTIDel") in Delaware. On or about April 16, 2018 seven investors and DPTI entered into a new agreement whereby it was agreed that the investors would own 62.428% of DPTIDel, and the September 18, 2017 agreement with respect to DPTINY was considered null and void. Accordingly, the funding of $37,500 to DPTINY in October 2017 has been converted to an equity interest in DPTIDel as of April 2018. As of April 16, 2018, DPTI owns approximately 37.572% of the shares of common stock of DPTIDel and 100% of the issued shares of Series A Preferred Stock of DPTIDel, pursuant to which the Company controls both DPTIDel and DPTINY. The Company does not own any interest in DarkPulse East LLC, (“DPE”) an entity organized on December 8, 2017, in Russia, by two of the shareholders of DPTIDel, to act as a sales organization to promote the Company's products within Russia. Each of the two shareholders own 50% interest in DPE. During November and December 2017 DPTINY funded DarkPulse East LLC a total of $20,650 to establish and launch the Company's business in Russia. The Company is considered to be the primary beneficiary of DPE based on implicit obligations to fund it, and accordingly, the operations of DPE are consolidated into these financial statements. As of September 30, 2018, assets of the DPE were $0, and the liabilities to third parties were $0. The Company is not liable for obligations of DPE, and creditors of DPE do not have recourse to the general credit of the Company. On February 8, 2018, DPTI formed DarkPulse BVTK, LLC, a Virginia Limited Liability Company, The Company has a 60% equity interest in the entity, and Bravatek Solutions, Inc ("Bravatek") has a 40% interest. The purpose of this joint venture is to develop, market, and sell products and services based on the Company's patented BOTDA dark-pulse technology. Both the CEO of the Company and the CEO of Bravatek manage the day to day operations of the joint venture. The operations of DPBVTK are not consolidated into these financial statements. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Such estimates and assumptions impact both assets and liabilities, including but not limited to: the valuation of intangible assets, estimates of tax assets, and the probability and potential magnitude of contingent liabilities. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term. Accordingly, actual results could differ significantly from estimates. Cash and Cash Equivalents Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less. The Company had no cash equivalents. Risks related to cash The Company maintains cash in bank and deposit accounts, which at times may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents. Intangible Assets The Company reviews intangibles held and used for possible impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In evaluating the fair value and future benefits of its intangible assets, management performs an analysis of the anticipated undiscounted future net cash flow of the individual assets over the remaining amortization period. The Company recognizes an impairment loss if the carrying value of the asset exceeds the expected future cash flows. Intangible Assets - Intrusion Detection Intellectual Property The Company relies on patent laws and restrictions on disclosure to protect its intellectual property rights. As of September 30, 2018, the Company held 3 U.S. and foreign patents on its intrusion detection technology, which expire in calendar years 2025 through 2034 (depending on the payment of maintenance fees). The DPTI issued patents cover a System and Method for Brillouin Analysis, a System and Method for Resolution Enhancement of a Distributed Sensor, and a Flexible Fiber Optic Deformation System Sensor and Method. Maintenance of intellectual property rights and the protection thereof is important to our business. 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. During the nine months ended September 30, 2018, the Company had patent amortization costs totaling $38,271 on the DPTI technology and $5,459 on its software patents. For the nine months ended September 30, 2017, the Company had patent amortization costs on its intrusion detection technology totaling $38,271. During the three months ended September 30, 2018, the Company had patent amortization costs totaling $38,271 on the DPTI technology and $5,459 on its software patents. For the three months ended September 30, 2017, the Company had patent amortization costs on its intrusion detection technology totaling $12,757 and $0 on its software patents. 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 September 30, 2018 and December 31, 2017: September 30, 2018 December 31, 2017 Historical cost $ 895,155 $ 895,155 Accumulated amortization (395,466 ) (357,195 ) Carrying Value $ 499,689 $ 537,960 Future expected amortization of intangible assets is as follows: Year Ending September 30, 2018 $ 12,757 2019 51,028 2020 51,028 2021 51,028 2022 51,028 Thereafter 282,820 $ 499,689 Intangible Assets - Capitalized software, trademarks, and other patents Capitalized software development costs, and other patents and trademarks, were acquired in the reverse merger with Klever and are stated at cost, net of prior impairment charges. September 30, December 31, Capitalized software development costs $ 262,243 $ 262,243 Patents and trademarks 168,564 168,564 Accumulated amortization of patents and trademarks (131,667 ) (114,097 ) $ 299,140 $ 316,710 The Company capitalizes software development costs incurred from the time technological feasibility has been obtained until the product is generally released to customers. Amortization of capitalized software development costs begins when the products are available to customers and is computed using the straight-line method over the remaining estimated economic life of the product. The Company achieved technological feasibility with regard to its mobile phone technology during the fourth quarter of 2010. No software development costs were incurred and capitalized during the nine months ended September 30, 2018 and 2017, and no amortization expense for software development costs was recorded for the three and nine months ended September 30, 2018 and 2017. The costs of patents and trademarks related to the Company's software are amortized on a straight-line basis over 5 years from the date the patent or trademark is issued. Amortization expense for patents and trademarks related to the Company's software was $5,459 and $8,429 for the three months ended September 30, 2018 and 2017, respectively, and $17,570 and $24,471 for the nine months ended September 30, 2018 and 2017, respectively. Intangible assets are tested for impairment on an annual basis or when the facts and circumstances suggest that the carrying amount of the assets may not be recovered. Foreign Currency Exchange Rate Policy The company translates monetary assets and liabilities (any item paid for or settled in foreign currency) into the United States Dollar at exchange rates prevailing on the balance sheet date. Non-monetary assets and liabilities are translated at the historical rate in effect when the transaction occurred. Revenues and expenses are translated at the spot rate on the date the transaction occurred. Exchange gains and losses from the translation of monetary items are included in unrealized gain/loss on Foreign Exchange as Other Comprehensive Loss. The following table discloses the dates and exchange rates used for converting Canadian Dollar amounts to U.S. Dollar amounts disclosed in the balance sheet and the statement of operations. Date Canadian $ exchange rate U.S. $ 12/31/2015 $1.00 0.722156 $0.722156 12/31/2016 $1.00 0.743859 $0.743859 4/24/2017 $1.00 0.740050 $0.740050 6/30/2017 $1.00 0.770294 $0.770294 9/30/2017 $1.00 0.802075 $0.802075 12/31/2017 $1.00 0.795343 $0.795343 3/31/2018 $1.00 0.775419 $0.775419 5/23/18 $1.00 0.760996 $0.760996 6/30/18 $1.00 0.760996 $0.760996 9/30/18 $1.00 0.775151 $0.775151 Income Taxes The Company accounts for income taxes in accordance with ASC 740, Accounting for Income Taxes, as clarified by ASC 740-10, Accounting for Uncertainty in Income Taxes. Under this method, deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the provisions of enacted tax laws. Deferred income tax provisions and benefits are based on changes to the assets or liabilities from year to year. In providing for deferred taxes, the Company considers tax regulations of the jurisdictions in which the Company operates, estimates of future taxable income, and available tax planning strategies. If tax regulations, operating results or the ability to implement tax-planning strategies vary, adjustments to the carrying value of deferred tax assets and liabilities may be required. Valuation allowances are recorded related to deferred tax assets based on the "more likely than not" criteria of ASC 740. ASC 740-10 requires that the Company recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the "more-likely-than-not" threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. 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 year 2018. The Company has filed tax returns in Canada for the years ending December 31, 2016, 2015, 2014, and 2013, and they are still subject to audit. Fair Value of Financial Instruments The carrying amounts of the Company's financial assets and liabilities, such as cash, prepaid expenses, and accruals approximate their fair values because of the short maturity of these instruments. The Company believes the carrying value of its secured debenture payable approximates fair value because the terms were negotiated at arms length. Recent Accounting Pronouncements There were no new accounting pronouncements issued or proposed by the Financial Accounting Standards Board during the nine months ended September 30, 2018, and through the date of filing of this report that the Company believes has had or will have a material impact on its financial position or results of operations, including the recognition of revenue, cash flow, the merger that was consummated on July 18, 2018. The Company has no lease obligations. Income (Loss) Per Common Share Basic net income (loss) per share of common stock is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share of common stock is computed by dividing net income (loss) by the sum of the weighted average number of common shares outstanding and the dilutive potential common share equivalents outstanding. Potential dilutive common share equivalents consist of shares issuable upon exercise of outstanding convertible preferred stock and stock options. For the three months and nine months ended September 30, 2017, there were no stock options nor convertible preferred stock outstanding. For the three months and nine months ended September 30, 2018, common stock equivalents related to convertible preferred stock and convertible debt have not been included in the calculation of diluted loss per common share because they are anti-dilutive. Therefore, basic loss per common share is the same as diluted loss per common share. There are 127,324,092 common shares reserved for the potential conversion of the Company's convertible debt. |
3. DEBENTURE
3. DEBENTURE | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
DEBENTURE | NOTE 3 - DEBENTURE DPTI 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 C$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 Canadian $42,000 (US$33,385) due on April 24, 2018 for reimbursement to the University of its research and development costs, and this has been paid. Interest-only maintenance payments are due annually starting after April 24, 2018. Payment of the principal begins on the earlier of (a) three years following two consecutive quarters of positive earnings before interest, taxes, depreciation and amortization, (b) six years from April 24, 2017, or (c) in the event DPTI fails to raise defined capital amounts or secure defined contract amounts by April 24 in the years 2018, 2019, and 2020. The Company has raised funds in excess of the amount required by April 24, 2018. The principal repayment amounts will be due 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 September 30, 2018, the quarterly principal repayment amounts will be US$48,447. The Debenture is secured by the Patents assigned by the University to DPTI by an Assignment Agreement on December 16, 2010. DPTI has pledged the Patents, and granted a lien on them pursuant to an Escrow Agreement dated April 24, 2017, between DPTI and the University. The Debenture was initially recorded at the $1,491,923 equivalent US Dollar amount of Canadian $1,500,000 as of December 16, 2010, the date of the original Debenture. The liability is being adjusted quarterly based on the current exchange value of the Canadian dollar to the US dollar at the end of each quarter. The adjustment is recorded as unrealized gain or loss in the change of the value of the two currencies during the quarter. The amounts recorded as an unrealized gain (loss) for the nine months ended September 30, 2018, and September 30, 2017, were $29,359 and ($41,958) respectively. These amounts are included in Accumulated Other Comprehensive Loss in the Equity section of the consolidated balance sheet, and as Unrealized Loss on Foreign Exchange on the consolidated statement of comprehensive loss. The Debenture also includes a provision requiring DPTI to pay the University a two percent (2%) royalty on sales of any and all products or services which incorporate the Patents for a period of five (5) years from April 24, 2018. For the nine months ended September 30, 2018, and 2017, the Company recorded interest expense of $166,990 and $19,734, respectively. For the three months ended September 30, 2018, and 2017 the Company recorded interest expense of $139,961 and $12,235, respectively. As of September 30, 2018 the debenture liability totaled $1,163,655, all of which was long term. Future minimum required payments over the next 5 years and thereafter are as follows: Period ending September 30, 2019 $ 0 2020 0 2021 0 2022 0 2023 and after $ 1,163,655 Total $ 1,163,655 |
4. STOCKHOLDERS' DEFICIT
4. STOCKHOLDERS' DEFICIT | 9 Months Ended |
Sep. 30, 2018 | |
STOCKHOLDERS' DEFICIT | |
STOCKHOLDERS' DEFICIT | NOTE 4 - STOCKHOLDERS' DEFICIT Common stock On April 27, 2018 DPTI issued approximately 782 pre-reverse merger shares of common stock to five individuals and two entities, and reserved approximately 118 pre-reverse merger shares of common stock for an employee stock compensation plan. The 782 pre-reverse merger shares have been independently valued at $1,602,570. The total outstanding 882 common shares of DPTI were exchanged for 88.235 shares of the Company's Series D Preferred stock on July 18, 2018, as per the Merger described above. Each preferred share is currently convertible into approximately 5,760 shares of common stock. As of September 30, 2018, there were 89,680,567 shares of common stock and 88,235 shares of preferred stock issued and outstanding. |
5. REVERSE ACQUISITION
5. REVERSE ACQUISITION | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
REVERSE ACQUISITION | NOTE 5 – REVERSE ACQUISITION Effective April 27, 2018, the Company, formerly known as Klever Marketing, Inc. ("Klever"), entered into a Merger Agreement with DarkPulse Technologies Inc., pursuant to which the DarkPulse Technologies Inc. shareholders agreed to contribute 100% of the outstanding securities of DarkPulse Technologies Inc. in exchange for an aggregate of 88,235 shares of our Series D Preferred Stock. Following the closing, DarkPulse Technologies Inc. became a wholly owned subsidiary and the DarkPulse Technologies Inc. shareholders became DarkPulse, Inc. stockholders and control the Company through the ownership of the outstanding preferred stock. The transaction was accounted for as a reverse acquisition using the acquisition method of accounting in accordance with FASB ASC Topic 805. DarkPulse Technologies Inc. is the acquirer solely for financial accounting purposes. The following table summarizes the purchase accounting for the fair value of the assets acquired and liabilities assumed at the date of the reverse acquisition. Capitalized software $ 262,243 Patents and trademarks, net 42,356 Total assets acquired 304,599 Total liabilities assumed, due to former management 150,000 Total assets less liabilities assumed 154,599 Net assets attributed to non-controlling interests (Klever shareholders) 23,190 Net assets acquired 131,409 Consideration (1) 131,409 (1) The fair value of the consideration effectively transferred, $131,409, was measured based on the net asset value of the Klever Marketing, Inc. assets immediately before the transaction. The merger agreement was modified on June 29, 2018. The Company secured financing for the closing of the Merger, and it closed on July 18, 2018. On July 20, 2018, Klever's name was changed to DarkPulse Inc., ("DPI") and on September 4, 2018, DarkPulse. Inc.'s stock symbol was changed to DPLS. On August 17, 2018, the Merger Agreement was amended effective July 18, 2018, to effect the merger by share exchange instead of by subsidiary merger. On July 18, 2018, the 882 outstanding common shares of DarkPulse Technologies Inc. were exchanged for 88,235 shares of Klever Marketing Inc. Series D Preferred Stock. The Company is now a wholly owned subsidiary of DPI, a publicly traded company incorporated in Delaware. Terms of the Merger Agreement were that all outstanding liabilities of Klever would be settled in full prior to the merger, with the single exception for two year notes to be issued to the prior management of Klever in the total amount of $150,000 at zero percent interest. Additionally, all outstanding shares of preferred stock would be retired and cancelled, and in May of 2018 approximately 28,358,000 shares of common stock would be issued to the former management, who were also the shareholders of the preferred shares to be cancelled. At the closing of the merger, the Klever common stockholders owned approximately 15% of the ownership of the merged entity, and the DarkPulse Technologies Inc. shareholders owned approximately 85% of the entity. The intellectual property assets of Klever remained in the merged entity. Cash assets in the Klever bank account were used to settle the prior outstanding liabilities, and were not for the benefit of the newly merged entity. The tables below represent the pro forma financial statements for the year ended December 31, 2017, and the three and nine months ending September 30, 2018, assuming the reverse acquisition had occurred on January 1, 2017, pursuant to ASC Subtopic 805-10-50. The historical financial information has been derived from the financial statements of DarkPulse Technologies Inc., as filed on November 19, 2018, in the Company’s Form 8K-A and the audited financial statements of Klever. The financial information has been adjusted to give pro forma effect to events that are directly attributable to the reverse merger, are factually supportable and, in the case of the pro forma statements of operations, have a recurring impact. The pro forma adjustments are based upon available information and assumptions that the Company believes are reasonable. This pro forma information does not purport to represent what the actual results of our operations would have been had the reverse acquisition occurred on January 1, 2017. Pro Forma Consolidated Balance Sheet as of December 31, 2017 DarkPulse Technologies Inc. Klever Marketing, Inc. Adjustments Consolidated ASSETS Current assets: Cash and cash equivalents $ 18,675 $ 2,498 $ (2,498 ) $ 18,675 Total current assets 18,675 2,498 (2,498 ) 18,675 Other assets: 7,275 – – 7,275 Patents, net 537,960 316,710 – 854,670 Goodwill – – 17,020,000 17,020,000 Total other assets 545,235 316,710 17,020,000 17,881,945 Total assets $ 563,910 $ 319,208 $ 17,017,502 $ 17,900,620 LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable and accrued liabilities $ 43,594 $ 710,997 $ (710,997 ) $ 43,594 Short term debt 33,385 33.385 Preferred stock dividends – 2,546 (2,546 ) – Related party payable – 38,000 (38,000 ) – Total current liabilities 76,979 751,543 (713,543 ) 114,979 Long term liabilities 1,193,015 150,000 1,343,015 Total liabilities 1,269,994 751,543 (601,543 ) 1,419,994 Stockholders’ deficit: Preferred stock – 5,094 (5,094 ) – Common stock – 613,226 283,580 896,806 Additional paid in capital – 18,389,162 16,869,116 35,258,278 Non-controlling interest in Variable Interest Entity and subsidiary 25,808 – – 25,808 Treasury stock – (1,000 ) – (1,000 ) Accumulated other comprehensive income 298,908 – – 298,908 Accumulated deficit (1,030,800 ) (19,438,817 ) 433,443 (20,036,174 ) Total stockholders’ deficit (706,084 ) (432,335 ) 17,619,045 16,480.626 Total liabilities and stockholders’ deficit $ 563,910 $ 319,208 $ 17,017,502 $ 17,900,620 Pro Forma Consolidated Income Statement for the year ended December 31, 2017 DarkPulse Technologies Inc. Klever Marketing Inc. Adjustments Consolidated Revenues $ – $ – $ – $ – Operating expenses General and administrative 12,296 169,447 – 181,743 Research and development 33,385 895 – 34,280 Amortization/Impairment expense 51,028 290,260 – 341,288 Marketing 11,299 – – 11,299 Total operating expenses 108,008 460,602 – 568,610 Loss from operations (108,008 ) (460,602 ) – (568,610 ) Other income (expense) Interest and other income – 625 – 625 Interest expense (32,295 ) – – (32,295 ) Interest expense - related parties – (1,938 ) – (1,938 ) Gain on settlement of debt – 237,928 – 237,928 Total other income (expense) (32,295 ) 236,615 – 204,320 Loss before income taxes (140,303 ) (223,987 ) – (364,290 ) Income tax benefit (provision) – 38,728 24,259 62,987 Net loss attributable to non-controlling interests in variable interest entity and subsidiary 12,439 – – 12,439 Net loss attributable to Company shareholders $ (127,864 ) $ (185,259 ) $ 24,259 $ (288,864 ) Proforma Consolidated Income Statement for the three and nine months ended September 30, 2018 For the three months ended September 30, 2018 DarkPulse Klever Technologies, Inc. Marketing Inc. Adjustments Consolidated Revenues $ – $ – $ – $ – Operating expenses General and administrative 281,996 48,242 – 330,238 Research and development – 228 – 228 Amortization/Impairment expense 18,216 – – 18,216 Marketing – – – – Total operating expenses 300,212 48,470 – 348,682 Loss from operations (300,212 ) (48,470 ) – (348,682 ) Other income (expense) Interest and other income – – – Interest expense (139,961 ) (1,069 ) – (141,030 ) Loss on convertible notes (916,977 ) – – (916,977 ) Gain on change in fair market values of derivative securities 689,949 – – 689,949 Loss on merger (110,685 ) – – (110,685 ) Total other income (expense) (477,674 ) (1,069 ) – (478,743 ) Loss before income taxes (777,886 ) (49,539 ) – (827,425 ) – Income tax benefit (provision) – – – Net loss attributable to non-controlling interests in variable interest entity and subsidiary 100 – – 100 Net loss attributable to Company shareholders $ (777,786 ) $ (49,539 ) $ – $ (827,325 ) For the nine months ended September 30, 2018 DarkPulse Klever Technologies, Inc. Marketing Inc. Adjustments Consolidated Revenues $ – $ – $ – $ – Operating expenses General and administrative 306,978 48,242 – 355,220 Research and development – 228 – 228 Amortization/Impairment expense 43,730 – – 43,730 Depreciation 1,806 – – Total operating expenses 352,514 48,470 – 400,984 Loss from operations (352,514 ) (48,470 ) – (400,984 ) Other income (expense) Interest and other income – – Interest expense (164,990 ) (1,069 ) – (166,059 ) Loss on convertible notes (916,977 ) – – (916,977 ) Gain on change in fair market values of derivative securities 689,949 – – 689,949 Loss on merger (110,685 ) – – Total other income (expense) (502,703 ) (1,069 ) – (503,772 ) Loss before income taxes (855,217 ) (49,539 ) – (904,756 ) Income tax benefit (provision) – – – – Net loss attributable to non-controlling interests in variable interest entity and subsidiary 11,172 – – 11,172 Net loss attributable to Company shareholders $ (844,045 ) $ (49,539 ) $ – $ (893,584 ) |
6. COMMITMENTS & CONTINGENCIES
6. COMMITMENTS & CONTINGENCIES | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS & CONTINGENCIES | NOTE 6 - COMMITMENTS & CONTINGENCIES Potential Royalty Payments The Company, in consideration of the terms of the debenture to the University of New Brunswick, shall pay to the University a two percent royalty on sales of any and all products or services which incorporate the Company's patents for a period of five years from April 24, 2018. Potential Commission Payments The Company, in consideration of the Strategic Alliance Agreement with Bravatek, for the purpose of promoting the Company’s products, will pay Bravatek sales commissions for clients introduced to the Company by Bravatek. Legal Matters The Company is not a party to any significant pending legal proceedings, and no other such proceedings are known to be contemplated. No director, officer or affiliate of the Company, and no owner of record or beneficial owner of more than 5.0% of the securities of the Company, or any associate of any such director, officer or security holder is a party adverse to the Company or has a material interest adverse to the Company in reference to pending litigation. |
7. RELATED PARTY TRANSACTIONS
7. RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 7 – RELATED PARTY TRANSACTIONS The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions. Pursuant to Section 850-10-20 the related parties include a) affiliates of the Company; b) Entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825-10-15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate 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. 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 period; and d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement. During the 9 months ended September 30, 2018, two of the officers and directors of the Company advanced personal funds in the amount of $10,689 for Company expenses, and $10,689 was repaid to them prior to September 30, 2018. The Co-CEO of the Company is also the CEO of Bravatek, and in May 2018 the Company received $42,000 for an order from DPBVTK, a joint venture partner related party for a demonstration unit, to be used in their marketing efforts to generate sales of our intrusion detection product. The order has been recorded as a prepaid sale and is a current liability as of September 30, 2018. |
8. CONVERTIBLE DEBT SECURITIES
8. CONVERTIBLE DEBT SECURITIES | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE DEBT SECURITIES | NOTE 8 – CONVERTIBLE DEBT SECURITIES The Company uses the Black-Scholes Model to calculate the derivative value of its convertible debt. The valuation result generated by this pricing model is necessarily driven by the value of the underlying common stock incorporated into the model. The values of the common stock used were based on the price at the date of issue of the debt security and September 30, 2018. Management determined the expected volatility at 259%, a risk free rate of interest of 2.48%, and contractual lives of the debt varying from six months to two years. The table below details the Company's nine outstanding convertible notes, with totals for the face amount, amortization of discount, initial loss, change in the fair market value, and the derivative liability. Face Amortization Initial Q3 change Derivative Balance Amount of Discount Loss in FMV 9/30/2018 $ 189,750 $ 38,990 $ 423,572 $ (376,313 ) $ 237,009 201,000 37,447 406,460 (357,702 ) 249,758 97,000 21,614 41,635 (48,396 ) 90,239 100,000 2,198 27,073 (17,410 ) 109,663 100,000 1,916 35,471 (27,004 ) 108,467 29,250 2,726 (2,470 ) (3,302 ) 23,478 49,726 4,694 (3,609 ) (5,957 ) 40,160 41,774 3,943 (3,032 ) (4,940 ) 33,802 29,250 2,150 (8,123 ) (3,459 ) 17,668 Subtotal 820,516 115,678 916,977 689,949 910,244 Transaction expense – – – 51,250 – $ 820,516 $ 115,678 $ 916,977 $ 741,199 $ 910,244 On July 17, 2018, The Company entered into a securities purchase agreement with Carebourn Capital L.P., (“Carebourn”) issuing to Carebourn a convertible promissory note in the aggregate principal amount of $189,750 with a $24,750 original issue discount and $15,000 in transactional expenses due to Carebourn. The note bears interest at 12% per annum and may be converted into common shares of DPI's common stock at a conversion price equal to 60% of the average of the three lowest trading prices of the DPI's common stock during the 20 prior trading days. On July 27, 2018, The Company entered into a securities purchase agreement with Carebourn, issuing to Carebourn a convertible promissory note in the aggregate principal amount of $276,000 with a $36,000 original issue discount and $15,000 in transactional expenses due to Carebourn. The note bears interest at 12% per annum and may be converted into common shares of the Company's common stock at a conversion price equal to 60% of the average of the three lowest trading prices of the Company's common stock during the 20 prior trading days. As of the date the consolidated financial statements were available for issuance, DPI received $150,000 net cash, and $75,000 is due to be received. On August 20, 2018, the Company entered into a securities purchase agreement with More Capital LLC, ("More") issuing to More a convertible promissory note in the aggregate principal amount of $152,000 with a $20,000 original issue discount and $7,000 in transactional expenses due to More. The note bears interest at 12% per annum and may be converted into common shares of the Company's common stock at a conversion price equal to 60% of the average of the three lowest trading prices of the Company's common stock during the 20 prior trading days. As of the date the consolidated financial statements were available for issuance, DPI received $70,000 net cash, and $55,000 is due to be received. On September 24, 2018, the Company entered into a securities purchase agreement with Auctus Fund, LLC, (“Auctus”) issuing to Auctus a convertible promissory note in the aggregate principal amount of $100,000 with $10,250 in transactional expenses due to Auctus and its counsel. The note bears interest at 8% per annum and may be converted into common shares of the Company's common stock at a conversion price equal to 70% of the lowest trading price of the Company's common stock during the 20 prior trading days. The Company received $89,750 net cash on September 27, 2018. On September 25, 2018, the Company entered into a securities purchase agreement with EMA Financial, LLC, (“EMA”) issuing to EMA a convertible promissory note in the aggregate principal amount of $100,000 with a 6% original issue discount and $4,000 in transactional expenses due to EMA. The note bears interest at 8% per annum and may be converted into common shares of the Company's common stock at a conversion price equal to the lower of current market price, $0.25, or 70% of the lowest trading price of the Company's common stock during the 20 prior trading days. The Company received $90,000 net cash on September 28, 2018. As of September 30, 2018 and 2017 respectively, there was $124,862 and $0 of convertible debt outstanding, net of debt discount of $912,382, and $0, As of September 30, 2018 and 2017 respectively, there was derivative liability of $910,244 and $0 related to convertible debt securities. |
9. PREFERRED STOCK
9. PREFERRED STOCK | 9 Months Ended |
Sep. 30, 2018 | |
Stockholders' Equity Note [Abstract] | |
PREFERRED STOCK | NOTE 9 – PREFERRED STOCK 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 September 30, 2018 and December 31, 2017 respectively, there were 88,235 and 0 total preferred shares issued and outstanding for all classes. On July 12, 2018, the Company filed a Certificate of Designation with the State of Delaware amending the designation of its previously designated “Class D Voting Preferred Stock,” designating 100,000 shares of the Company’s preferred stock as “Series D Preferred Stock.” Each share of Series D Preferred Stock entitles the holder to 6,000 votes on all matters submitted to a vote of the Company’s stockholders and is convertible at the election of the holder into a number of shares of common stock equal to the number of outstanding shares of common stock of the Company multiplied by 5 ⅔, divided by the number of outstanding shares of Series D Preferred Stock. All of these shares are owned by the Company's management, with control ownership held by the Company's CEO. |
10. COMMON STOCK
10. COMMON STOCK | 9 Months Ended |
Sep. 30, 2018 | |
STOCKHOLDERS' DEFICIT | |
COMMON STOCK | NOTE 10 – COMMON STOCK In accordance with the Company’s bylaws, the Company has authorized a total of 250,000,000 shares of common stock, par value $0.01 per share. As of September 30, 2018 and December 31, 2017 respectively, there were 89,680,567 and 61,322,567 common shares issued and outstanding. During the nine months ended September 30, 2018, the Company issued 28,358,000 shares of common stock as settlement of deferred compensation and notes payable to former officers and directors of the Company in the total amount of $558,745.74, and in recognition of the upcoming cancellation of the PSF, Inc. preferred shares. |
11. STOCK OPTIONS
11. STOCK OPTIONS | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK OPTIONS | NOTE 11 – STOCK OPTIONS The Company’s shareholders approved, by a majority vote, the adoption of the 1998 Stock Incentive Plan (the “Plan”). As amended on August 11, 2003, the Plan reserves 20,000,000 shares of common stock for issuance upon the exercise of options which may be granted from time-to-time to officers, directors, certain employees and consultants of the Company or its subsidiaries by the Board of Directors. The Plan permits the award of both qualified and non-qualified incentive stock options. During the nine months ended September 30, 2018, the Company did not issue any stock options and had no stock options outstanding at September 30, 2018. |
12. SUBSEQUENT EVENTS
12. SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 12 – SUBSEQUENT EVENTS The Company evaluated events occurring after the date of the accompanying unaudited condensed consolidated balance sheets through the date the financial statements were issued and has identified the following subsequent events that it believes require disclosure: On September 24, 2018, the Company entered into a securities purchase agreement with FirstFire Global Opportunities Fund LLC, (“FirstFire”) issuing to FirstFire a convertible promissory note in the aggregate principal amount of $247,500, with a $22,500 original issue discount and $5,000 in transactional expenses due to FirstFire's counsel. The note bears interest at 8% per annum and may be converted into common shares of the Company's common stock at a conversion price equal to the lower of $0.25, or 70% of the lowest trading price of the Company's common stock during the 20 prior trading days. The Company received $220,000 net cash on October 9, 2018. |
2. SIGNIFICANT ACCOUNTING POL_2
2. SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Going Concern Uncertainty | Going Concern Uncertainty As shown in the accompanying financial statements, during the 9 months ended September 30, 2018, the Company did not generate any revenues and reported a net loss of $844,045. As of September 30, 2018, the Company’s current liabilities exceeded its current assets by $1,198,454. As of September 30, 2018, the Company had $159,288 of cash. The Company will require additional funding during the next six months to finance the growth of its 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 and expansion of its operations. The accompanying financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. Management is actively pursuing additional sources of financing sufficient to generate enough cash flow to fund its operations. However, management cannot make any assurances that such financing will be secured. |
Basis of Presentation | Basis of Presentation 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"). |
Principles of Consolidation | Principles of Consolidation The Company has equity interests in the following entities, whose operations are consolidated into these financial statements: DarkPulse Technologies Inc., a New Brunswick, Canada corporation, a wholly owned subsidiary, incorporated December 16, 2010. DPTI owns 100% of DarkPulse Technology Holdings Inc, a New York corporation, incorporated July 6, 2017. DPTI indirectly owns 37.572% of DarkPulse Technologies International Inc, (“DPTINY”) a New York corporation, incorporated on September 7, 2017. On or about September 18, 2017 DPTI entered into a shareholder agreement with 3 investors, whereby DPTI would own 50.2% of DPTINY and the investors would own 49.8%. On or about October 3, 2017, another investor entered into an agreement with DPTINY to fund it $37,500 for a 0.5% equity interest in DPTINY. On December 26. 2017 the DPTI CEO incorporated another corporation named DarkPulse Technologies International Inc, ("DPTIDel") in Delaware. On or about April 16, 2018 seven investors and DPTI entered into a new agreement whereby it was agreed that the investors would own 62.428% of DPTIDel, and the September 18, 2017 agreement with respect to DPTINY was considered null and void. Accordingly, the funding of $37,500 to DPTINY in October 2017 has been converted to an equity interest in DPTIDel as of April 2018. As of April 16, 2018, DPTI owns approximately 37.572% of the shares of common stock of DPTIDel and 100% of the issued shares of Series A Preferred Stock of DPTIDel, pursuant to which the Company controls both DPTIDel and DPTINY. The Company does not own any interest in DarkPulse East LLC, (“DPE”) an entity organized on December 8, 2017, in Russia, by two of the shareholders of DPTIDel, to act as a sales organization to promote the Company's products within Russia. Each of the two shareholders own 50% interest in DPE. During November and December 2017 DPTINY funded DarkPulse East LLC a total of $20,650 to establish and launch the Company's business in Russia. The Company is considered to be the primary beneficiary of DPE based on implicit obligations to fund it, and accordingly, the operations of DPE are consolidated into these financial statements. As of September 30, 2018, assets of the DPE were $0, and the liabilities to third parties were $0. The Company is not liable for obligations of DPE, and creditors of DPE do not have recourse to the general credit of the Company. On February 8, 2018, DPTI formed DarkPulse BVTK, LLC, a Virginia Limited Liability Company, The Company has a 60% equity interest in the entity, and Bravatek Solutions, Inc ("Bravatek") has a 40% interest. The purpose of this joint venture is to develop, market, and sell products and services based on the Company's patented BOTDA dark-pulse technology. Both the CEO of the Company and the CEO of Bravatek manage the day to day operations of the joint venture. The operations of DPBVTK are not consolidated into these financial statements. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Such estimates and assumptions impact both assets and liabilities, including but not limited to: the valuation of intangible assets, estimates of tax assets, and the probability and potential magnitude of contingent liabilities. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term. Accordingly, actual results could differ significantly from estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less. The Company had no cash equivalents. |
Risks related to cash | Risks related to cash The Company maintains cash in bank and deposit accounts, which at times may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents. |
Intangible Assets | Intangible Assets The Company reviews intangibles held and used for possible impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In evaluating the fair value and future benefits of its intangible assets, management performs an analysis of the anticipated undiscounted future net cash flow of the individual assets over the remaining amortization period. The Company recognizes an impairment loss if the carrying value of the asset exceeds the expected future cash flows. |
Intangible Assets - Intrusion Detection Intellectual Property | Intangible Assets - Intrusion Detection Intellectual Property The Company relies on patent laws and restrictions on disclosure to protect its intellectual property rights. As of September 30, 2018, the Company held 3 U.S. and foreign patents on its intrusion detection technology, which expire in calendar years 2025 through 2034 (depending on the payment of maintenance fees). The DPTI issued patents cover a System and Method for Brillouin Analysis, a System and Method for Resolution Enhancement of a Distributed Sensor, and a Flexible Fiber Optic Deformation System Sensor and Method. Maintenance of intellectual property rights and the protection thereof is important to our business. 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. During the nine months ended September 30, 2018, the Company had patent amortization costs totaling $38,271 on the DPTI technology and $5,459 on its software patents. For the nine months ended September 30, 2017, the Company had patent amortization costs on its intrusion detection technology totaling $38,271. During the three months ended September 30, 2018, the Company had patent amortization costs totaling $38,271 on the DPTI technology and $5,459 on its software patents. For the three months ended September 30, 2017, the Company had patent amortization costs on its intrusion detection technology totaling $12,757 and $0 on its software patents. 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 September 30, 2018 and December 31, 2017: September 30, 2018 December 31, 2017 Historical cost $ 895,155 $ 895,155 Accumulated amortization (395,466 ) (357,195 ) Carrying Value $ 499,689 $ 537,960 Future expected amortization of intangible assets is as follows: Year Ending September 30, 2018 $ 12,757 2019 51,028 2020 51,028 2021 51,028 2022 51,028 Thereafter 282,820 $ 499,689 |
Intangible Assets - Capitalized software, trademarks, and other patents | Intangible Assets - Capitalized software, trademarks, and other patents Capitalized software development costs, and other patents and trademarks, were acquired in the reverse merger with Klever and are stated at cost, net of prior impairment charges. September 30, December 31, Capitalized software development costs $ 262,243 $ 262,243 Patents and trademarks 168,564 168,564 Accumulated amortization of patents and trademarks (131,667 ) (114,097 ) $ 299,140 $ 316,710 The Company capitalizes software development costs incurred from the time technological feasibility has been obtained until the product is generally released to customers. Amortization of capitalized software development costs begins when the products are available to customers and is computed using the straight-line method over the remaining estimated economic life of the product. The Company achieved technological feasibility with regard to its mobile phone technology during the fourth quarter of 2010. No software development costs were incurred and capitalized during the nine months ended September 30, 2018 and 2017, and no amortization expense for software development costs was recorded for the three and nine months ended September 30, 2018 and 2017. The costs of patents and trademarks related to the Company's software are amortized on a straight-line basis over 5 years from the date the patent or trademark is issued. Amortization expense for patents and trademarks related to the Company's software was $5,459 and $8,429 for the three months ended September 30, 2018 and 2017, respectively, and $17,570 and $24,471 for the nine months ended September 30, 2018 and 2017, respectively. Intangible assets are tested for impairment on an annual basis or when the facts and circumstances suggest that the carrying amount of the assets may not be recovered. |
Foreign Currency Exchange Rate Policy | Foreign Currency Exchange Rate Policy The company translates monetary assets and liabilities (any item paid for or settled in foreign currency) into the United States Dollar at exchange rates prevailing on the balance sheet date. Non-monetary assets and liabilities are translated at the historical rate in effect when the transaction occurred. Revenues and expenses are translated at the spot rate on the date the transaction occurred. Exchange gains and losses from the translation of monetary items are included in unrealized gain/loss on Foreign Exchange as Other Comprehensive Loss. The following table discloses the dates and exchange rates used for converting Canadian Dollar amounts to U.S. Dollar amounts disclosed in the balance sheet and the statement of operations. Date Canadian $ exchange rate U.S. $ 12/31/2015 $1.00 0.722156 $0.722156 12/31/2016 $1.00 0.743859 $0.743859 4/24/2017 $1.00 0.740050 $0.740050 6/30/2017 $1.00 0.770294 $0.770294 9/30/2017 $1.00 0.802075 $0.802075 12/31/2017 $1.00 0.795343 $0.795343 3/31/2018 $1.00 0.775419 $0.775419 5/23/18 $1.00 0.760996 $0.760996 6/30/18 $1.00 0.760996 $0.760996 9/30/18 $1.00 0.775151 $0.775151 |
Income Taxes | Income Taxes The Company accounts for income taxes in accordance with ASC 740, Accounting for Income Taxes, as clarified by ASC 740-10, Accounting for Uncertainty in Income Taxes. Under this method, deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the provisions of enacted tax laws. Deferred income tax provisions and benefits are based on changes to the assets or liabilities from year to year. In providing for deferred taxes, the Company considers tax regulations of the jurisdictions in which the Company operates, estimates of future taxable income, and available tax planning strategies. If tax regulations, operating results or the ability to implement tax-planning strategies vary, adjustments to the carrying value of deferred tax assets and liabilities may be required. Valuation allowances are recorded related to deferred tax assets based on the "more likely than not" criteria of ASC 740. ASC 740-10 requires that the Company recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the "more-likely-than-not" threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. 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 year 2018. The Company has filed tax returns in Canada for the years ending December 31, 2016, 2015, 2014, and 2013, and they are still subject to audit. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of the Company's financial assets and liabilities, such as cash, prepaid expenses, and accruals approximate their fair values because of the short maturity of these instruments. The Company believes the carrying value of its secured debenture payable approximates fair value because the terms were negotiated at arms length. |
Recently Issued Accounting Pronouncements | Recent Accounting Pronouncements There were no new accounting pronouncements issued or proposed by the Financial Accounting Standards Board during the nine months ended September 30, 2018, and through the date of filing of this report that the Company believes has had or will have a material impact on its financial position or results of operations, including the recognition of revenue, cash flow, the merger that was consummated on July 18, 2018. The Company has no lease obligations. |
Income (Loss) Per Common Share | Income (Loss) Per Common Share Basic net income (loss) per share of common stock is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share of common stock is computed by dividing net income (loss) by the sum of the weighted average number of common shares outstanding and the dilutive potential common share equivalents outstanding. Potential dilutive common share equivalents consist of shares issuable upon exercise of outstanding convertible preferred stock and stock options. For the three months and nine months ended September 30, 2017, there were no stock options nor convertible preferred stock outstanding. For the three months and nine months ended September 30, 2018, common stock equivalents related to convertible preferred stock and convertible debt have not been included in the calculation of diluted loss per common share because they are anti-dilutive. Therefore, basic loss per common share is the same as diluted loss per common share. There are 127,324,092 common shares reserved for the potential conversion of the Company's convertible debt. |
2. SIGNIFICANT ACCOUNTING POL_3
2. SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of activity related to patents | September 30, 2018 December 31, 2017 Historical cost $ 895,155 $ 895,155 Accumulated amortization (395,466 ) (357,195 ) Carrying Value $ 499,689 $ 537,960 |
Future expected amortization of intangible assets | Year Ending September 30, 2018 $ 12,757 2019 51,028 2020 51,028 2021 51,028 2022 51,028 Thereafter 282,820 $ 499,689 |
Intangible Assets - Capitalized software, trademarks, and other patents | September 30, 2018 December 31, 2017 Capitalized software development costs $ 262,243 $ 262,243 Patents and trademarks 168,564 168,564 Accumulated amortization of patents and trademarks (131,667 ) (114,097 ) $ 299,140 $ 316,710 |
3. DEBENTURE (Tables)
3. DEBENTURE (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Future minimum required payments | Period ending September 30, 2019 $ 0 2020 0 2021 0 2022 0 2023 and after $ 1,163,655 Total $ 1,163,655 |
5. REVERSE ACQUISITION (Tables)
5. REVERSE ACQUISITION (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Fair value of assets acquired and liabilities assumed | Capitalized software $ 262,243 Patents and trademarks, net 42,356 Total assets acquired 304,599 Total liabilities assumed, due to former management 150,000 Total assets less liabilities assumed 154,599 Net assets attributed to non-controlling interests (Klever shareholders) 23,190 Net assets acquired 131,409 Consideration (1) 131,409 (1) The fair value of the consideration effectively transferred, $131,409, was measured based on the net asset value of the Klever Marketing, Inc. assets immediately before the transaction. |
Pro forma information | DarkPulse Technologies Inc. Klever Marketing, Inc. Adjustments Consolidated ASSETS Current assets: Cash and cash equivalents $ 18,675 $ 2,498 $ (2,498 ) $ 18,675 Total current assets 18,675 2,498 (2,498 ) 18,675 Other assets: 7,275 – – 7,275 Patents, net 537,960 316,710 – 854,670 Goodwill – – 17,020,000 17,020,000 Total other assets 545,235 316,710 17,020,000 17,881,945 Total assets $ 563,910 $ 319,208 $ 17,017,502 $ 17,900,620 LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable and accrued liabilities $ 43,594 $ 710,997 $ (710,997 ) $ 43,594 Short term debt 33,385 33.385 Preferred stock dividends – 2,546 (2,546 ) – Related party payable – 38,000 (38,000 ) – Total current liabilities 76,979 751,543 (713,543 ) 114,979 Long term liabilities 1,193,015 150,000 1,343,015 Total liabilities 1,269,994 751,543 (601,543 ) 1,419,994 Stockholders’ deficit: Preferred stock – 5,094 (5,094 ) – Common stock – 613,226 283,580 896,806 Additional paid in capital – 18,389,162 16,869,116 35,258,278 Non-controlling interest in Variable Interest Entity and subsidiary 25,808 – – 25,808 Treasury stock – (1,000 ) – (1,000 ) Accumulated other comprehensive income 298,908 – – 298,908 Accumulated deficit (1,030,800 ) (19,438,817 ) 433,443 (20,036,174 ) Total stockholders’ deficit (706,084 ) (432,335 ) 17,619,045 16,480.626 Total liabilities and stockholders’ deficit $ 563,910 $ 319,208 $ 17,017,502 $ 17,900,620 DarkPulse Technologies Inc. Klever Marketing Inc Adjustments Consolidated Revenues $ – $ – $ – $ – Operating expenses General and administrative 12,296 169,447 – 181,743 Research and development 33,385 895 – 34,280 Amortization/Impairment expense 51,028 290,260 – 341,288 Marketing 11,299 – – 11,299 Total operating expenses 108,008 460,602 – 568,610 Loss from operations (108,008 ) (460,602 ) – (568,610 ) Other income (expense) Interest and other income – 625 – 625 Interest expense (32,295 ) – – (32,295 ) Interest expense - related parties – (1,938 ) – (1,938 ) Gain on settlement of debt – 237,928 – 237,928 Total other income (expense) (32,295 ) 236,615 – 204,320 Loss before income taxes (140,303 ) (223,987 ) – (364,290 ) Income tax benefit (provision) – 38,728 24,259 62,987 Net loss attributable to non-controlling interests in variable interest entity and subsidiary 12,439 – – 12,439 Net loss attributable to Company shareholders $ (127,864 ) $ (185,259 ) $ 24,259 $ (288,864 ) |
8. CONVERTIBLE DEBT SECURITIES
8. CONVERTIBLE DEBT SECURITIES (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of convertible debt | Face Amortization Initial Q3 change Derivative Balance Amount of Discount Loss in FMV 9/30/2018 $ 189,750 $ 38,990 $ 423,572 $ (376,313 ) $ 237,009 201,000 37,447 406,460 (357,702 ) 249,758 97,000 21,614 41,635 (48,396 ) 90,239 100,000 2,198 27,073 (17,410 ) 109,663 100,000 1,916 35,471 (27,004 ) 108,467 29,250 2,726 (2,470 ) (3,302 ) 23,478 49,726 4,694 (3,609 ) (5,957 ) 40,160 41,774 3,943 (3,032 ) (4,940 ) 33,802 29,250 2,150 (8,123 ) (3,459 ) 17,668 Subtotal 820,516 115,678 916,977 689,949 910,244 Transaction expense – – – 51,250 – $ 820,516 $ 115,678 $ 916,977 $ 741,199 $ 910,244 |
2. SIGNIFICANT ACCOUNTING POL_4
2. SIGNIFICANT ACCOUNTING POLICIES (Details - Summary of activity related to patents) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Finite lived assets, net | $ 499,689 | |
Patents [Member] | DPTI technology [Member] | ||
Finite lived assets, cost | 895,155 | $ 895,155 |
Accumulated amortization | (395,466) | (357,195) |
Finite lived assets, net | $ 499,689 | $ 537,960 |
2. SIGNIFICANT ACCOUNTING POL_5
2. SIGNIFICANT ACCOUNTING POLICIES (Details - Future expected amortization of intangible assets) | Sep. 30, 2018USD ($) |
Accounting Policies [Abstract] | |
Amortization year ending 2018 | $ 12,757 |
Amortization year ending 2019 | 51,028 |
Amortization year ending 2020 | 51,028 |
Amortization year ending 2021 | 51,028 |
Amortization year ending 2022 | 51,028 |
Thereafter | 282,820 |
Total | $ 499,689 |
2. SIGNIFICANT ACCOUNTING POL_6
2. SIGNIFICANT ACCOUNTING POLICIES (Details - Capitalized software, trademarks, and other patents) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Capitalized software development costs | $ 262,243 | $ 262,243 |
Patents and trademarks | 499,689 | |
Capitalized software development costs, net | 299,140 | 316,710 |
Patents and Trademarks [Member] | ||
Patents and trademarks | 168,564 | 168,564 |
Accumulated amortization of patents and trademarks | $ (131,667) | $ (114,097) |
2. SIGNIFICANT ACCOUNTING POL_7
2. SIGNIFICANT ACCOUNTING POLICIES (Details - Foreign currency rates) | Jun. 30, 2018 | May 23, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Apr. 24, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Canada, Dollars | |||||||||
Foreign currency exchange rate | .760996 | .760996 | .775419 | .795343 | .802075 | .770294 | .740050 | .743859 | .722156 |
2. SIGNIFICANT ACCOUNTING POL_8
2. SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Net loss | $ (777,786) | $ (25,004) | $ (2,446,614) | $ (91,402) | ||
Working Capital | (1,198,454) | (1,198,454) | ||||
Cash | 159,288 | 58 | 159,288 | 58 | $ 8,025 | $ 0 |
Payments to develop software | $ 0 | |||||
Antidilutive shares | 127,324,092 | |||||
Patents [Member] | Minimum [Member] | ||||||
Amortization period | 7 years | |||||
Patents [Member] | Maximum [Member] | ||||||
Amortization period | 16 years | |||||
Software Development [Member] | ||||||
Payments to develop software | $ 0 | 0 | ||||
Amortization expense | 0 | 0 | 0 | 0 | ||
Patents and Trademarks [Member] | ||||||
Amortization expense | $ 5,459 | $ 8,429 | 17,570 | 24,471 | ||
DPTI technology [Member] | Patents [Member] | ||||||
Amortization expense | 38,271 | $ 38,271 | ||||
DPTI technology [Member] | Software Patents [Member] | ||||||
Amortization expense | 5,459 | |||||
Intrusion Detection Technology [Member] | Patents [Member] | ||||||
Amortization expense | $ 38,271 |
3. DEBENTURE (Details)
3. DEBENTURE (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Debt Disclosure [Abstract] | ||
Period ending 2019 | $ 0 | |
Period ending 2020 | 0 | |
Period ending 2021 | 0 | |
Period ending 2022 | 0 | |
Period ending 2023 and after | 1,163,655 | |
Total | $ 1,163,655 | $ 1,193,015 |
3. DEBENTURE (Details Narrative
3. DEBENTURE (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |||||
Unrealized gain (loss) on debentures | $ 29,359 | $ (41,958) | |||
Interest expense | $ 139,961 | $ 12,235 | 166,990 | $ 19,734 | |
Debenture liability | $ 1,163,655 | $ 1,163,655 | $ 1,193,015 |
4. STOCKHOLDERS' DEFICIT (Detai
4. STOCKHOLDERS' DEFICIT (Details Naratives) - shares | Sep. 30, 2018 | Dec. 31, 2017 |
Common stock, shares issued | 89,680,567 | 100 |
Common stock, shares outstanding | 89,680,567 | 100 |
Convertible preferred stock - shares issued | 88,235 | 0 |
Convertible preferred stock - shares outstanding | 88,235 | 0 |
DPTI Del [Member] | ||
Equity ownership percentage | 37.60% | |
DPTI Del [Member] | DPTI NY [Member] | ||
Equity ownership percentage | 100.00% |
5. REVERSE ACQUISITION (Details
5. REVERSE ACQUISITION (Details - Assets acquired and liabilities assumed) - Merger Agreement [Member] | 4 Months Ended | |
Apr. 27, 2018USD ($) | ||
Capitalized software | $ 262,243 | |
Patents and trademarks, net | 42,356 | |
Total assets acquired | 304,599 | |
Total liabilities assumed | 150,000 | |
Total assets less liabilities assumed | 154,599 | |
Net assets attributed to non-controlling interests (Klever shareholders) | 23,190 | |
Net assets acquired | 131,409 | |
Consideration [1] | $ 131,409 | [1] |
[1] | The fair value of the consideration effectively transferred, $131,409, was measured based on the net asset value of the Klever Marketing, Inc. assets immediately before the transaction. |
5. REVERSE ACQUISITION (Detai_2
5. REVERSE ACQUISITION (Details - Pro Forma Consolidated Balance Sheet ) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
CURRENT ASSETS | ||
Total current assets | $ 160,034 | $ 18,675 |
Total assets | 1,105,557 | 563,910 |
Current liabilities: | ||
Total current liabilities | 1,358,489 | 76,979 |
Total liabilities | 2,522,144 | 1,269,994 |
Stockholders deficit: | ||
Preferred stock | 883 | 0 |
Common stock | 896,806 | 0 |
Non-controlling interest in Variable Interest Entity and subsidiary | (12,439) | 25,808 |
Treasury stock | (1,000) | 0 |
Accumulated other comprehensive income | 328,268 | 298,909 |
Accumulated deficit | (3,488,586) | (1,030,800) |
Total stockholders deficit | (1,416,587) | (706,084) |
Total liabilities and stockholders' equity | $ 1,105,557 | 563,910 |
DarkPulse Technologies [Member] | ||
CURRENT ASSETS | ||
Cash and cash equivalents | 18,675 | |
Total current assets | 18,675 | |
Other assets | 7,275 | |
Patents, net | 537,960 | |
Goodwill | 0 | |
Total other assets | 545,235 | |
Total assets | 563,910 | |
Current liabilities: | ||
Accounts payable and accrued liabilities | 43,594 | |
Short term debt | 33,385 | |
Preferred stock dividends | 0 | |
Related party payable | 0 | |
Total current liabilities | 76,979 | |
Long term liabilities | 1,193,015 | |
Total liabilities | 1,269,994 | |
Stockholders deficit: | ||
Preferred stock | 0 | |
Common stock | 0 | |
Additional paid in capital | 0 | |
Non-controlling interest in Variable Interest Entity and subsidiary | 25,808 | |
Treasury stock | 0 | |
Accumulated other comprehensive income | 298,908 | |
Accumulated deficit | (1,030,800) | |
Total stockholders deficit | (706,084) | |
Total liabilities and stockholders' equity | 563,910 | |
Klever Marketing [Member] | ||
CURRENT ASSETS | ||
Cash and cash equivalents | 2,498 | |
Total current assets | 2,498 | |
Other assets | 0 | |
Patents, net | 316,710 | |
Goodwill | 0 | |
Total other assets | 316,710 | |
Total assets | 319,208 | |
Current liabilities: | ||
Accounts payable and accrued liabilities | 710,997 | |
Preferred stock dividends | 2,546 | |
Related party payable | 38,000 | |
Total current liabilities | 751,543 | |
Long term liabilities | 0 | |
Total liabilities | 751,543 | |
Stockholders deficit: | ||
Preferred stock | 5,094 | |
Common stock | 613,226 | |
Additional paid in capital | 18,389,162 | |
Non-controlling interest in Variable Interest Entity and subsidiary | 0 | |
Treasury stock | (1,000) | |
Accumulated other comprehensive income | 0 | |
Accumulated deficit | (19,438,817) | |
Total stockholders deficit | (432,335) | |
Total liabilities and stockholders' equity | 319,208 | |
Adjustments [Member] | ||
CURRENT ASSETS | ||
Cash and cash equivalents | (2,498) | |
Total current assets | (2,498) | |
Other assets | 0 | |
Patents, net | 0 | |
Goodwill | 17,020,000 | |
Total other assets | 17,020,000 | |
Total assets | 17,017,502 | |
Current liabilities: | ||
Accounts payable and accrued liabilities | (710,997) | |
Preferred stock dividends | (2,546) | |
Related party payable | (38,000) | |
Total current liabilities | (713,543) | |
Long term liabilities | 150,000 | |
Total liabilities | (601,543) | |
Stockholders deficit: | ||
Preferred stock | (5,094) | |
Common stock | 283,580 | |
Additional paid in capital | 16,869,116 | |
Non-controlling interest in Variable Interest Entity and subsidiary | 0 | |
Treasury stock | 0 | |
Accumulated other comprehensive income | 0 | |
Accumulated deficit | 433,443 | |
Total stockholders deficit | 17,619,045 | |
Total liabilities and stockholders' equity | 17,017,502 | |
Consolidated [Member] | ||
CURRENT ASSETS | ||
Cash and cash equivalents | 18,675 | |
Total current assets | 18,675 | |
Other assets | 7,275 | |
Patents, net | 854,670 | |
Goodwill | 17,020,000 | |
Total other assets | 17,881,945 | |
Total assets | 17,900,620 | |
Current liabilities: | ||
Accounts payable and accrued liabilities | 43,594 | |
Short term debt | 33,385 | |
Preferred stock dividends | 0 | |
Related party payable | 0 | |
Total current liabilities | 114,979 | |
Long term liabilities | 1,343,015 | |
Total liabilities | 1,419,994 | |
Stockholders deficit: | ||
Preferred stock | 0 | |
Common stock | 896,806 | |
Additional paid in capital | 35,258,278 | |
Non-controlling interest in Variable Interest Entity and subsidiary | 25,808 | |
Treasury stock | (1,000) | |
Accumulated other comprehensive income | 298,908 | |
Accumulated deficit | (20,036,174) | |
Total stockholders deficit | 1,648,063 | |
Total liabilities and stockholders' equity | $ 17,900,620 |
5. REVERSE ACQUISITION (Detai_3
5. REVERSE ACQUISITION (Details - Pro Forma Consolidated Income Statement) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Revenues | $ 0 | $ 0 | $ 0 | $ 0 | |
OPERATING EXPENSES | |||||
General and administrative | 281,996 | 12 | 1,909,547 | 12 | |
Research and development | 0 | 0 | 0 | 33,385 | |
Amortization/Impairment expense | 18,216 | 12,757 | 43,730 | 38,271 | |
Depreciation | 0 | 0 | 1,806 | 0 | |
Total operating expenses | 300,212 | 12,769 | 1,955,083 | 71,668 | |
Loss from operations | (300,212) | (12,769) | (1,955,083) | (71,668) | |
Other income (expense) | |||||
Interest expense | (139,961) | (12,235) | (164,990) | (19,734) | |
Loss on convertible notes | 916,977 | 0 | 916,977 | 0 | |
Gain on change in fair market values of derivative liabilities | 689,949 | 0 | 689,949 | 0 | |
Loss on merger | (110,685) | 0 | (110,685) | 0 | |
Total other income (expense) | (477,674) | (12,235) | (502,703) | (19,734) | |
Net Loss attributable to noncontrolling interests in variable interest entity and subsidiary | 100 | 0 | 11,172 | 0 | |
Net loss attributable to Company stockholders | (777,786) | $ (25,004) | (2,446,614) | $ (91,402) | |
DarkPulse Technologies [Member] | |||||
Revenues | 0 | 0 | $ 0 | ||
OPERATING EXPENSES | |||||
General and administrative | 281,996 | 306,978 | 12,296 | ||
Research and development | 0 | 0 | 33,385 | ||
Amortization/Impairment expense | 18,216 | 43,730 | 51,028 | ||
Marketing | 0 | 11,299 | |||
Depreciation | 1,806 | ||||
Total operating expenses | 300,212 | 352,514 | 108,008 | ||
Loss from operations | (300,212) | (352,514) | (108,008) | ||
Other income (expense) | |||||
Interest and other income | 0 | 0 | 0 | ||
Interest expense | (139,961) | (164,990) | (32,295) | ||
Loss on convertible notes | (916,977) | (916,977) | |||
Interest expense - related parties | 0 | ||||
Gain on change in fair market values of derivative liabilities | 689,949 | 689,949 | |||
Loss on merger | (110,685) | (110,685) | |||
Gain on settlement of debt | 0 | ||||
Total other income (expense) | (477,674) | (502,703) | (32,295) | ||
Loss before income taxes | (777,886) | (855,217) | (140,303) | ||
Income tax benefit (provision) | 0 | 0 | 0 | ||
Net Loss attributable to noncontrolling interests in variable interest entity and subsidiary | 100 | 11,172 | 12,439 | ||
Net loss attributable to Company stockholders | (777,786) | (844,045) | (127,864) | ||
Klever Marketing [Member] | |||||
Revenues | 0 | 0 | 0 | ||
OPERATING EXPENSES | |||||
General and administrative | 48,242 | 48,242 | 169,447 | ||
Research and development | 228 | 228 | 895 | ||
Amortization/Impairment expense | 0 | 0 | 290,260 | ||
Marketing | 0 | 0 | |||
Depreciation | 0 | ||||
Total operating expenses | 48,470 | 48,470 | 460,602 | ||
Loss from operations | (48,470) | (48,470) | (460,602) | ||
Other income (expense) | |||||
Interest and other income | 0 | 0 | 625 | ||
Interest expense | (1,069) | (1,069) | 0 | ||
Loss on convertible notes | 0 | 0 | |||
Interest expense - related parties | (1,938) | ||||
Gain on change in fair market values of derivative liabilities | 0 | 0 | |||
Loss on merger | 0 | 0 | |||
Gain on settlement of debt | 237,928 | ||||
Total other income (expense) | (1,069) | (1,069) | 236,615 | ||
Loss before income taxes | (49,539) | (49,539) | (223,987) | ||
Income tax benefit (provision) | 0 | 0 | 38,728 | ||
Net Loss attributable to noncontrolling interests in variable interest entity and subsidiary | 0 | 0 | 0 | ||
Net loss attributable to Company stockholders | (49,539) | (49,539) | (185,259) | ||
Adjustments [Member] | |||||
Revenues | 0 | 0 | 0 | ||
OPERATING EXPENSES | |||||
General and administrative | 0 | 0 | 0 | ||
Research and development | 0 | 0 | 0 | ||
Amortization/Impairment expense | 0 | 0 | 0 | ||
Marketing | 0 | 0 | |||
Depreciation | 0 | ||||
Total operating expenses | 0 | 0 | 0 | ||
Loss from operations | 0 | 0 | 0 | ||
Other income (expense) | |||||
Interest and other income | 0 | 0 | 0 | ||
Interest expense | 0 | 0 | 0 | ||
Loss on convertible notes | 0 | 0 | |||
Interest expense - related parties | 0 | ||||
Gain on change in fair market values of derivative liabilities | 0 | 0 | |||
Loss on merger | 0 | 0 | |||
Gain on settlement of debt | 0 | ||||
Total other income (expense) | 0 | 0 | 0 | ||
Loss before income taxes | 0 | 0 | 0 | ||
Income tax benefit (provision) | 0 | 0 | 24,259 | ||
Net Loss attributable to noncontrolling interests in variable interest entity and subsidiary | 0 | 0 | 0 | ||
Net loss attributable to Company stockholders | 0 | 0 | 24,259 | ||
Consolidated [Member] | |||||
Revenues | 0 | 0 | 0 | ||
OPERATING EXPENSES | |||||
General and administrative | 330,238 | 355,220 | 181,743 | ||
Research and development | 228 | 228 | 34,280 | ||
Amortization/Impairment expense | 18,216 | 43,730 | 341,288 | ||
Marketing | 0 | 11,299 | |||
Depreciation | 1,806 | ||||
Total operating expenses | 348,682 | 400,984 | 568,610 | ||
Loss from operations | (348,682) | (400,984) | (568,610) | ||
Other income (expense) | |||||
Interest and other income | 0 | 0 | 625 | ||
Interest expense | (141,030) | (166,059) | (32,295) | ||
Loss on convertible notes | (916,977) | (916,977) | |||
Interest expense - related parties | (1,938) | ||||
Gain on change in fair market values of derivative liabilities | 689,949 | 689,949 | |||
Loss on merger | (110,685) | (110,685) | |||
Gain on settlement of debt | 237,928 | ||||
Total other income (expense) | (478,743) | (503,772) | 204,320 | ||
Loss before income taxes | (827,425) | (904,756) | (364,290) | ||
Income tax benefit (provision) | 0 | 0 | 62,987 | ||
Net Loss attributable to noncontrolling interests in variable interest entity and subsidiary | 100 | 11,172 | 12,439 | ||
Net loss attributable to Company stockholders | $ (827,325) | $ (893,584) | $ (288,864) |
7. RELATED PARTY TRANSACTIONS (
7. RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Related Party Transactions [Abstract] | ||
Advance from related party | $ 44,096 | $ 40 |
Repayment of advance from related party | $ 10,689 |
8. CONVERTIBLE DEBT SECURITIE_2
8. CONVERTIBLE DEBT SECURITIES (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Amortization of discount | $ 115,678 | $ 0 | ||
Change in Fair Market Value | $ 689,949 | $ 0 | 689,949 | $ 0 |
Convertible Debt 1 [Member] | ||||
Face amount | 189,750 | 189,750 | ||
Amortization of discount | 38,990 | |||
Initial loss | 423,572 | |||
Change in Fair Market Value | (376,313) | |||
Derivative balance | 237,009 | 237,009 | ||
Convertible Debt 2 [Member] | ||||
Face amount | 201,000 | 201,000 | ||
Amortization of discount | 37,447 | |||
Initial loss | 406,460 | |||
Change in Fair Market Value | (357,702) | |||
Derivative balance | 249,758 | 249,758 | ||
Convertible Debt 3 [Member] | ||||
Face amount | 97,000 | 97,000 | ||
Amortization of discount | 21,614 | |||
Initial loss | 41,635 | |||
Change in Fair Market Value | (48,396) | |||
Derivative balance | 90,239 | 90,239 | ||
Convertible Debt 4 [Member] | ||||
Face amount | 100,000 | 100,000 | ||
Amortization of discount | 2,198 | |||
Initial loss | 27,073 | |||
Change in Fair Market Value | (17,410) | |||
Derivative balance | 109,663 | 109,663 | ||
Convertible Debt 5 [Member] | ||||
Face amount | 100,000 | 100,000 | ||
Amortization of discount | 1,916 | |||
Initial loss | 35,471 | |||
Change in Fair Market Value | (27,004) | |||
Derivative balance | 108,467 | 108,467 | ||
Convertible Debt 6 [Member] | ||||
Face amount | 26,250 | 26,250 | ||
Amortization of discount | 2,726 | |||
Initial loss | (2,470) | |||
Change in Fair Market Value | (3,302) | |||
Derivative balance | 23,478 | 23,478 | ||
Convertible Debt 7 [Member] | ||||
Face amount | 49,726 | 49,726 | ||
Amortization of discount | 4,694 | |||
Initial loss | (3,609) | |||
Change in Fair Market Value | (5,957) | |||
Derivative balance | 40,160 | 40,160 | ||
Convertible Debt 8 [Member] | ||||
Face amount | 41,774 | 41,774 | ||
Amortization of discount | 3,943 | |||
Initial loss | (3,032) | |||
Change in Fair Market Value | (4,940) | |||
Derivative balance | 33,802 | 33,802 | ||
Convertible Debt 9 [Member] | ||||
Face amount | 29,250 | 29,250 | ||
Amortization of discount | 2,150 | |||
Initial loss | (8,123) | |||
Change in Fair Market Value | (3,459) | |||
Derivative balance | 17,668 | 17,668 | ||
Derivative Liabilities [Member] | ||||
Face amount | 820,516 | 820,516 | ||
Amortization of discount | 115,678 | |||
Initial loss | 916,977 | |||
Change in Fair Market Value | 689,949 | |||
Transaction expense | 51,250 | |||
Derivative balance | $ 910,244 | $ 910,244 |
8. CONVERTIBLE DEBT SECURITIE_3
8. CONVERTIBLE DEBT SECURITIES (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Proceeds from convertible debt | $ 572,072 | $ 0 |
Carebourn Prom Note 1 [Member] | ||
Debt issuance date | Jul. 17, 2018 | |
Debt stated interest rate | 12.00% | |
Debt face amount | $ 189,750 | |
Original Issue Discount | 24,750 | |
Debt issuance costs | $ 15,000 | |
Carebourn Prom Note 2 [Member] | ||
Debt issuance date | Jul. 27, 2018 | |
Debt stated interest rate | 12.00% | |
Debt face amount | $ 276,000 | |
Original Issue Discount | 36,000 | |
Debt issuance costs | 15,000 | |
Proceeds from convertible debt | $ 150,000 | |
More Capital [Member] | ||
Debt issuance date | Aug. 20, 2018 | |
Debt stated interest rate | 12.00% | |
Debt face amount | $ 152,000 | |
Original Issue Discount | 20,000 | |
Debt issuance costs | 7,000 | |
Proceeds from convertible debt | $ 70,000 | |
Auctus Fund [Member] | ||
Debt issuance date | Sep. 24, 2018 | |
Debt stated interest rate | 8.00% | |
Debt face amount | $ 100,000 | |
Debt issuance costs | 10,250 | |
Proceeds from convertible debt | $ 89,750 | |
EMA Financial [Member] | ||
Debt issuance date | Sep. 25, 2018 | |
Debt face amount | $ 100,000 | |
Debt issuance costs | 4,000 | |
Proceeds from convertible debt | 90,000 | |
Convertible Debt [Member] | ||
Convertible debt outstanding | 124,862 | 0 |
Unamortized debt discount | 912,382 | 0 |
Derivative liability | $ 910,244 | $ 0 |
9. PREFERRED STOCK (Details Nar
9. PREFERRED STOCK (Details Narrative) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
Stockholders' Equity Note [Abstract] | ||
Convertible preferred stock - shares authorized | 2,000,000 | 2,000,000 |
Convertible preferred stock - par value | $ 0.01 | $ 0.01 |
Convertible preferred stock - shares issued | 88,235 | 0 |
Convertible preferred stock - shares outstanding | 88,235 | 0 |
10. COMMON STOCK (Details Narra
10. COMMON STOCK (Details Narrative) - USD ($) | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Common stock par value (in Dollars per share) | $ 0.01 | $ 0.01 | |
Common stock, shares authorized | 250,000,000 | 250,000,000 | |
Common stock, shares issued | 89,680,567 | 100 | |
Common stock, shares outstanding | 89,680,567 | 100 | |
Former Officers and Directors [Member] | |||
Stock issued for compensation, shares | 28,358,000 | ||
Stock issued for compensation, value | $ 558,746 | ||
An Investor [Member] | |||
Stock issued new, shares issued | 1,091,000 | ||
Proceeds from issuance of common stock | $ 40,300 |
11. STOCK OPTIONS (Details Narr
11. STOCK OPTIONS (Details Narrative) | 9 Months Ended |
Sep. 30, 2018shares | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Common stock reserved for issuance | 20,000,000 |
Stock options granted | 0 |