S-1/A: DarkPulse Files Amendment No. 1 to Form S-1/A Registration Statement, Updates Business Information

DarkPulse, Inc. files an amendment to its Form S-1/A registration statement to include additional business information and general updates.

Summary

• DarkPulse, Inc. filed Pre-Effective Amendment No. 1 to its Form S-1/A registration statement.
• The amendment includes additional information about the company's business and provides general updates since the initial filing.
• The prospectus relates to the offer and resale of up to 3,500,000,000 shares of common stock by GHS Investments LLC.
• DarkPulse is a technology company focused on laser sensing systems and related solutions for critical infrastructure.
• The company's activities include manufacturing, sales, installation, and monitoring of its patented BOTDA dark-pulse sensor technology.
• DarkPulse has a global presence through subsidiaries in the United Kingdom, India, Dubai, Abu Dhabi, Turkey, Azerbaijan, United States and Canada.
• Optilan (UK) Limited, a former wholly-owned subsidiary, is in liquidation, potentially impacting DarkPulse's financial condition.
• The company's current operations include DarkPulse, Inc. (Houston, TX), Terradata Unmanned PLLC (Florida), and DarkPulse Manufacturing Inc. (Arizona).
• The engineering group is based in Mumbai, India and operates as Optilan India Pvt Ltd.
• The company has completed development of its Gen. 3 dark-pulse BOTDA system and is pending a Purchase Order issuance to Sanmina Corp for full manufacturing of the system hardware.
• The company has built two units for testing the system in the field.
• A 2% royalty is owed to the University of New Brunswick on sales of the patented technology, but no royalties have been paid yet.
• On July 10, 2023, the company entered into an Equity Financing Agreement with GHS, pursuant to which GHS agreed to purchase up to $30,000,000 in shares of the company's Common Stock, from time to time over the course of 12 months.
• On January 30, 2024, the company and GHS entered into the Amendment No. 1 to the EFA pursuant to which the Contract Period was amended to 24 months.
• The purchase price of the shares of Common Stock contained in a Put shall be 92% of the Market Price with Market Price defined as the lowest VWAP of the Common Stock during the the five consecutive Trading Days preceding the relevant Put Notice Date.
• In addition, the company is required to issue to GHS shares in the amount of 115% of each Put.
• The Market Price as of February 6, 2024 was $0.0011.
• At that price the company would be able to sell shares to GHS under the EFA at the discounted price of $0.001012.
• At that discounted price, 3,500,000,000 shares would only represent $3,080,000, which is below the full amount of the EFA.

Sentiment

Score: 4

Explanation: The document contains both positive and negative aspects. The company has completed development of its Gen. 3 dark-pulse BOTDA system and has a global presence. However, Optilan (UK) Limited is in liquidation, and the company has not yet sold its patented BOTDA dark-pulse sensor system. The company is also offering a large number of shares for resale, which could dilute the value of existing shares.

Positives

• DarkPulse has completed development of its Gen. 3 dark-pulse BOTDA system.
• The company has a global presence through subsidiaries in multiple countries.
• The company has a patented BOTDA dark-pulse sensor technology.
• The company has an Equity Financing Agreement with GHS Investments LLC for up to $30,000,000.

Negatives

• Optilan (UK) Limited is in liquidation, potentially impacting DarkPulse's financial condition.
• The company owes a 2% royalty to the University of New Brunswick on sales of its patented technology.
• The company has not yet sold its patented BOTDA dark-pulse sensor system.
• The purchase price of the shares of Common Stock contained in a Put shall be 92% of the Market Price with Market Price defined as the lowest VWAP of the Common Stock during the the five consecutive Trading Days preceding the relevant Put Notice Date.
• In addition, the company is required to issue to GHS shares in the amount of 115% of each Put.
• The Market Price as of February 6, 2024 was $0.0011.
• At that price the company would be able to sell shares to GHS under the EFA at the discounted price of $0.001012.
• At that discounted price, 3,500,000,000 shares would only represent $3,080,000, which is below the full amount of the EFA.

Risks

• The company's common stock involves a high degree of risk.
• The company's former wholly-owned subsidiary, Optilan (UK) Limited, is in liquidation.
• The company may be adversely affected by natural disasters, pandemics, and other catastrophic events.
• If the company defaults on the Secured Debenture, the secured holder could take possession of the company's assets, including patents and other intellectual property.
• Several of the convertible notes issued by the company are in litigation with uncertain outcomes.
• The company's stockholders have limited voting power compared to the holder of the company's Series A Preferred Stock.
• The company has a limited operating history in an evolving and highly volatile industry.
• The company faces intense and increasing competition.
• The company's operating results may fluctuate due to market forces out of the company's control.
• Cyberattacks and security breaches could adversely impact the company.
• Any significant disruption in the company's technology could adversely impact the company.
• Certain large customers provide a significant share of the company's revenue.
• There is no assurance that the company will achieve profitability or that its revenue and business models will be successful.
• The company will require additional capital to support business growth.
• Stockholders may experience dilution of their ownership interests.
• The future development and growth of the company's technology and product offerings are subject to a variety of factors that are difficult to predict and evaluate.
• The company's intellectual property rights are valuable, and any inability to protect them could adversely impact the company.

Future Outlook

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

Industry Context

The overall optical sensing market is projected to reach USD $3.47 billion by 2023 from USD $1.13 billion in 2016, at a CAGR of 15.47% between 2017 and 2023.

Comparison to Industry Standards

• The company believes that fiber sensing applications which incorporate its BOTDA technology may provide significant competitive advantages over structural health monitoring applications offered by the long-term leaders in the field, such as Schlumberger, Hewlett-Packard, and Yokogawa, which collectively account for a significant portion of industry sales.
• These companies, as well as others, have numerous differences in feature sets and functionality, but all share certain basic attributes: a bright-pulse technology as the core of their systems architecture.
• An architecture designed using bright-pulsing technology has limited sensing capabilities and resolutions of one meter allowing for mostly long-term quasi-static deployments.
• However, the company utilizes its BOTDA technology allowing for multiple applications into those markets unavailable to companies using bright-pulse technology.
• While many of the companies using bright-pulse technology have attempted to incorporate various sensing techniques into a legacy technology, none have been able to offer the order of magnitude resolutions offered by the company's patented dark-pulse based BOTDA technology.

Legal Proceedings

• The company remains in active litigation with Carebourn Capital, L.P. in Minnesota State Court.
• The company remains in active litigation with More Capital, LLC in Minnesota State Court.
• The company remains in active litigation with FirstFire Global Opportunities Fund, LLC and Eli Fireman.
• The company remains in active litigation with Crown Bridge Partners, LLC, Soheil Ahdoot and Sepas Ahdoot.
• The company and its CEO, Dennis OLeary, remain in active litigation with J. Merlin Benner, Phillip J. Benner, Benjamin P. Benner, Jonas M. Benner, and Angelica M. Benner in the United States District Court for the Southern District of Texas.

Stakeholder Impact

• The liquidation of Optilan (UK) Limited could negatively impact the company's financial condition and ability to meet future obligations.
• The offering of a large number of shares for resale could dilute the value of existing shares.

Next Steps

• The company will use the proceeds from the Puts for global expansion and also potential acquisitions deemed beneficial to its operational capabilities.

Key Dates

Keywords

Equity Financing Agreement, Common Stock, Registration Statement, BOTDA technology, DarkPulse, Liquidation, Optilan, Shares, GHS, Sensor