10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

☐  TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT

For the transition period from _________ to _________

Commission File Number: 000-12641

DALRADA FINANCIAL CORPORATION

(Name of Small Business Issuer in its charter)

Wyoming	38-3713274
(state or other jurisdiction of incorporation or organization)	(I.R.S. Employer ID. No.)

600 La Terraza Blvd., Escondido, California 92025

(Address of principal executive offices)

858-283-1253

Issuer’s telephone number

Securities registered pursuant to Section 12(g) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.005 par value per share	DFCO	None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒   No ☐  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) Yes ☐    No ☒

As of May 10, 2022, the registrant’s outstanding stock consisted of 70,588,684 common shares.

DALRADA FINANCIAL CORPORATION.

Table of Contents

PART I – FINANCIAL INFORMATION	3
Item 1. Financial Statements (unaudited)	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3. Quantitative and Qualitative Disclosures About Market Risk	34
Item 4. Controls and Procedures	34
PART II – OTHER INFORMATION	36
Item 1. Legal Proceedings	36
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Securities	36
Item 3. Defaults Upon Senior Securities	36
Item 4. Mine Safety Disclosures	36
Item 5. Other Information	36
Item 6. Exhibits	36
SIGNATURES	37

2

PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements

DALRADA FINANCIAL CORPORATION

Condensed Consolidated Balance Sheets

(unaudited) 

	March 31,			June 30,
	2022			2021
Assets
Current assets:
Cash and cash equivalents	$	547,284		$	110,285
Accounts receivable, net		7,425,154			265,812
Accounts receivable, net - related parties		298,714			69,952
Other receivables		171,260			67,328
Inventories		1,156,681			842,108
Prepaid expenses and other current assets		161,634			285,026
Total current assets		9,760,727			1,640,511
Long-term receivables		–			–
Property and equipment, net		939,042			489,902
Goodwill		795,016			736,456
Intangible assets, net		817,231			664,494
Right of use asset, net		678,827			532,327
Right of use asset, net - related party		521,611			639,415
Total assets	$	13,512,454		$	4,703,105
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable	$	1,033,402		$	910,339
Accrued liabilities		1,513,571			641,380
Accrued payroll taxes, penalties and interest		2,025,582			1,953,024
Accounts payable and accrued liabilities – related parties		1,240,385			414,237
Deferred revenue		661,074			219,999
Notes payable, current portion		394,100			415,817
Notes payable – related parties		4,804,622			10,508,955
Convertible note payable - related party		–			1,875,000
Convertible notes payable, net of debt discount		1,536,637			–
Right of use liability		200,328			76,570
Right of use liability - related party		163,920			159,790
Total current liabilities		13,573,621			17,175,111
Notes payable – related parties		10,019,440			–
Right of use liability		478,499			455,757
Right of use liability - related party		357,690			479,625
Total liabilities		24,429,250			18,110,493
Commitments and contingencies (Note 13)		–			–
Stockholders' deficit:
Series G preferred stock, $0.01 par value, 100,000 shares authorized, 10,002 and 0 shares issued and outstanding as of March 31, 2022 and June 30, 2021, respectively		100			–
Series F preferred stock, $0.01 par value, 5,000 and 5,000 shares authorized issued and outstanding as of March 31, 2022 and June 30, 2021, respectively		50			50
Common stock, $0.005 par value, 1,000,000,000 shares authorized, 70,588,684 and 68,464,742 shares issued and outstanding at March 31, 2022 and June 30, 2021, respectively		352,915			369,194
Common stock to be issued		343,900			601,825
Additional paid-in capital		103,504,188			92,965,821
Noncontrolling interests		1,227,504			(38,391	)
Accumulated deficit		(116,412,419	)		(107,338,174	)
Accumulated other comprehensive income (loss)		66,966			32,287
Total stockholders' deficit		(10,916,796	)		(13,407,388	)
Total liabilities and stockholders' deficit	$	13,512,454		$	4,703,105

(The accompanying notes are an integral part of these condensed consolidated financial statements) 

3

DALRADA FINANCIAL CORPORATION

Condensed Consolidated Statements of Operations

(unaudited)

	Three Months Ended March 31,						Nine Months Ended March 31,
	2022			2021			2022			2021
Revenues	$	5,572,826		$	1,303,022		$	15,530,319		$	2,962,784
Revenues - related party		19,324			285,307			111,448			440,455
Total revenues		5,592,150			1,588,329			15,641,767			3,403,239
Cost of revenue		1,773,630			854,791			5,034,308			1,547,052
Gross profit		3,818,520			733,538			10,607,459			1,856,187
Operating expenses:
Selling, general and administrative (includes stock-based compensation of $362,532 and $0 for three months and $2,145,626 and $730,000 for nine months ended March 31, 2022 and 2021, respectively)		6,458,163			2,917,707			16,000,902			5,644,157
Research and development		–			125,752			1,596			404,253
Total operating expenses		6,458,163			3,043,459			16,002,498			6,048,410
Income (loss) from operations		(2,639,643	)		(2,309,921	)		(5,395,039	)		(4,192,223	)
Other income (expense):
Interest expense		(338,677	)		(184,370	)		(597,551	)		(468,181	)
Interest income		4,232			2,991			5,280			3,893
Other income		(3,974	)		458			9,270			37,256
Change in fair value of derivative liability		–			–			–			–
Gain (loss) on foreign exchange		(15,018	)		21,393			(59,351	)		15,945
Total other income (expenses)		(353,437	)		(159,528	)		(642,352	)		(411,087	)
Net loss before taxes		(2,993,080	)		(2,469,449	)		(6,037,391	)		(4,603,310	)
Income taxes		–			–			–			–
Net loss		(2,993,080	)		(2,469,449	)		(6,037,391	)		(4,603,310	)
Net income (loss) attributable to noncontrolling interests		430,147			(4,724	)		3,036,854			(24,328	)
Net loss attributable to Dalrada Financial Corporation stockholders	$	(3,423,227	)	$	(2,464,725	)	$	(9,074,245	)	$	(4,578,982	)
Foreign currency translation		(4,990	)		(15,634	)		34,679			8,625
Comprehensive loss	$	(2,998,070	)	$	(2,485,083	)	$	(6,002,712	)	$	(4,594,685	)
Net loss per common share to Dalrada stockholders - basic	$	(0.05	)	$	(0.04	)	$	(0.12	)	$	(0.07	)
Net loss per common share to Dalrada stockholders - diluted	$	(0.05	)	$	(0.04	)	$	(0.12	)	$	(0.07	)
Weighted average common shares outstanding - basic		70,235,384			70,278,075			72,718,261			69,060,362
Weighted average common shares outstanding - diluted		70,235,384			70,278,075			72,718,261			69,060,362

(The accompanying notes are an integral part of these condensed consolidated financial statements)

4

DALRADA FINANCIAL CORPORATION

Condensed Consolidated Statements of Stockholders’ Deficit

(unaudited)

Preferred Stock

Common

Series G

Series F

Common Stock

Stock

Shares

Amount

Shares

Amount

Shares

Amount

to be Issued

Balance at June 30, 2020

5,000

$

50

5,000

$

50

68,464,742

342,324

–

Net loss

–

–

–

–

–

–

–

Foreign currency translation

–

–

–

–

–

–

–

Balance at September 30, 2020

5,000

50

5,000

50

68,464,742

342,324

$

–

Net loss

–

–

–

–

–

–

–

Foreign currency translation

–

–

–

–

–

–

–

Balance at December 31, 2020

5,000

50

5,000

50

68,464,742

342,324

–

Common stock issued to board members

–

–

–

–

4,500,000

22,500

–

Common stock issued pursuant to business combinations

–

–

–

–

300,000

1,500

687,800

Net loss

–

–

–

–

–

–

–

Foreign currency translation

–

–

–

–

–

–

–

Balance at March 31, 2021

5,000

$

50

5,000

$

50

73,264,742

$

366,324

$

687,800

Balance at June 30, 2021

–

$

–

5,000

$

50

73,838,662

$

369,194

$

601,825

Conversion of related party notes into preferred stock

–

–

–

–

–

–

–

Common stock issued pursuant to acquisitions

–

–

–

–

212,500

1,063

(85,975

)

Joint ventures

–

–

–

–

–

–

58,560

Reversal of shares previously issued to directors

–

–

–

–

(329,478

)

(1,647

)

–

Stock-based compensation

–

–

–

–

2,000,000

10,000

–

Net income (loss)

–

–

–

–

–

–

–

Foreign currency translation

–

–

–

–

–

–

–

Balance at September 30, 2021

–

–

5,000

50

75,721,684

378,610

574,410

Issuance of preferred stock

10,002

100

–

–

–

–

–

Common stock issued pursuant to acquisitions

–

–

–

–

212,500

1,063

(85,975

)

Joint ventures

–

–

–

–

250,000

1,250

(58,560

)

Reversal of shares previously issued to directors

–

–

–

–

(6,500,000

)

(32,500

)

–

Stock-based compensation

–

–

–

–

500,000

2,500

–

Net income (loss)

–

–

–

–

–

–

–

Foreign currency translation

–

–

–

–

–

–

–

Balance at December 31, 2021

10,002

100

5,000

50

70,184,184

350,922

429,875

Common stock issued pursuant to acquisitions

–

–

–

–

212,500

1,063

(85,975

)

Common stock and warrants issued in connection with convertible note

–

–

–

–

192,000

930

–

Joint ventures

–

–

–

–

–

–

–

Stock-based compensation

–

–

–

–

–

–

–

Net income (loss)

–

–

–

–

–

–

–

Foreign currency translation

–

–

–

–

–

–

–

Balance at March 31, 2022

10,002

$

100

5,000

$

50

70,588,684

$

352,915

$

343,900

5

													Accumulated
	Preferred			Additional									Other			Total
	Stock			Paid-in			Noncontrolling			Accumulated			Comprehensive			Stockholders'
	to be Issued			Capital			Interests			Deficit			Income (Loss)			Deficit
Balance at June 30, 2020	$	–		$	91,904,874		$	51,821		$	(107,429,607	)	$	(7,897	)	$	(15,138,435	)
Net loss		–			–			5,015			(914,356	)		–			(909,341	)
Foreign currency translation		–			–			–			–			14,209			14,209
Balance at September 30, 2020		–			91,904,874			56,836			(108,343,963	)		6,312			(16,033,567	)
Net loss		–			–			(24,619	)		(1,799,901	)		–			(1,824,520	)
Foreign currency translation		–			–			–			–			10,050			10,050
Balance at December 31, 2020		–			91,904,874			32,217			(110,143,864	)		16,362			(17,848,037	)
Common stock issued to board members		–			707,500			–			–			–			730,000
Common stock issued pursuant to business combinations		–			104,700			–			–			–			794,000
Net loss		–			–			(4,724	)		(2,464,725	)		–			(2,469,449	)
Foreign currency translation		–			–			–			–			(15,634	)		(15,634	)
Balance at March 31, 2021	$	–		$	92,717,074		$	27,493		$	(112,608,589	)	$	728		$	(18,809,120	)
Balance at June 30, 2021	$	–		$	92,965,821		$	(38,391	)	$	(107,338,174	)	$	32,287		$	(13,407,388	)
Conversion of related party notes into preferred stock		6,532,206			–			–			–			–			6,532,206
Common stock issued pursuant to acquisitions		–			84,913			–			–			–			–
Joint ventures		–			–			111,185			–			–			169,745
Reversal of shares previously issued to directors		–			(13,179	)		–			–			–			(14,826	)
Stock-based compensation		–			667,507			–			–			–			677,507
Net income (loss)		–			–			1,289,169			(2,265,842	)		–			(976,673	)
Foreign currency translation		–			–			–			–			39,344			39,344
Balance at September 30, 2021		6,532,206			93,705,062			1,361,963			(109,604,016	)		71,631			(6,980,085	)
Issuance of preferred stock		(6,532,206	)		6,532,106			–			–			–			–
Common stock issued pursuant to acquisitions		–			84,913			–			–			–			–
Joint ventures		–			57,310			(1,874,244	)		–			–			(1,874,244	)
Reversal of shares previously issued to directors		–			32,500			–			–			–			–
Stock-based compensation		–			1,103,087			–			–			–			1,105,587
Net income (loss)		–			–			1,317,537			(3,385,175	)		–			(2,067,638	)
Foreign currency translation		–			–			–			–			325			325
Balance at December 31, 2021		–			101,514,978			805,257			(112,989,192	)		71,956			(9,816,053	)
Common stock issued pursuant to acquisitions		–			84,913			–			–			–			–
Common stock issued in connection with convertible note		–			1,541,765			–			–			–			1,542,695
Joint ventures		–			–			(7,900	)		–			–			(7,900	)
Stock-based compensation		–			362,532			–			–			–			362,532
Net income (loss)		–			–			430,147			(3,423,227	)		–			(2,993,080	)
Foreign currency translation		–			–			–			–			(4,990	)		(4,990	)
Balance at March 31, 2022	$	–		$	103,504,188		$	1,227,504		$	(116,412,419	)	$	66,966		$	(10,916,796	)

(The accompanying notes are an integral part of these condensed consolidated financial statements)

6

DALRADA FINANCIAL CORPORATION

Condensed Consolidated Statements of Cash Flows

(unaudited)

	Nine Months Ended March 31,
	2022			2021
Cash flows from operating activities:
Net loss	$	(6,037,391	)	$	(4,603,310	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		156,897			37,318
Stock compensation		2,145,626			730,000
Amortization of debt discount		146,475			–
Changes in operating assets and liabilities:
Accounts receivable		(7,388,104	)		(925,095	)
Other receivables		(103,932	)		48,191
Inventories		(314,573	)		58,666
Prepaid expenses and other current assets		123,392			(109,268	)
Accounts payable		123,063			47,350
Accounts payable and accrued liabilities - related parties		1,967,786			675,016
Accrued liabilities		1,100,808			130,027
Accrued payroll taxes, penalties and interest		72,558			364,718
Deferred revenue		441,075			(156,291	)
Net cash used in operating activities		(7,566,320	)		(3,702,678	)
Cash flows from investing activities:
Net cash acquired pursuant to business combination		–			70,131
Purchase of property and equipment		(441,521	)		(139,081	)
Purchase of intangibles		(206,068	)		–
Net cash used in investing activities		(647,589	)		(68,950	)
Cash flows from financing activities:
Proceeds from related party notes payable		7,602,059			4,002,594
Net proceeds (repayments) from notes payable		(21,717	)		(49,544	)
Proceeds from convertible note payable		2,932,857			–
Distributions to noncontrolling interest		(1,882,144	)		–
Repurchase of common shares from subsidiary		(14,826	)		–
Net cash provided by financing activities		8,616,229			3,953,050
Net change in cash and cash equivalents		402,320			181,422
Effect of exchange rate changes on cash		34,679			8,625
Cash and cash equivalents at beginning of period		110,285			75,165
Cash and cash equivalents at end of period	$	547,284		$	265,212
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	–		$	–
Cash paid for interest	$	–		$	–
Supplemental disclosure of non-cash investing and financing activities:
Conversion of related party notes and interest into preferred stock	$	6,532,206		$	–
Contribution of property and equipment into joint venture	$	111,185		$	–
Issuance of shares to joint venture partner	$	58,560		$	–
Conversion of accounts payable related parties to notes payable related parties	$	181,744		$	–
Common stock and warrants issued in connection with convertible note	$	1,542,695		$	–
Common stock issued pursuant to business combination	$	–		$	794,000
Fair value of assets acquired and liabilities assumed in acquisition	$	–		$	492,689
Conversion of accounts payable related parties to related parties convertible notes	$	–		$	781,580
Outstanding balance of note payable issued for due to seller payment	$	–		$	98,000

(The accompanying notes are an integral part of these condensed consolidated financial statements)

7

DALRADA FINANCIAL CORPORATION

Notes to the Condensed Consolidated Financial Statements

(unaudited)

1. Organization and Nature of Operations

Dalrada Financial Corporation, (“Dalrada”), a Wyoming Corporation, and its wholly owned subsidiaries (collectively, the “Company”, “we”, “us” or “our”) is a global solutions provider of clean energy, healthcare, technology, and precision engineering solutions. The company has locations in Malaysia, India, UK, and the USA.

Our operating subsidiaries are Dalrada Precision, Dalrada Health Products, Dalrada Technologies, and Dalrada Energy Services. The subsidiaries are positioned to service the clean energy, healthcare, and technology industries. We market numerous products and services which continuously build upon our core by bringing innovation to a complex new world. During calendar year 2021, the Company expanded its healthcare segment into education, health wellness and rejuvenation as well as COVID-19 testing. As consumers, businesses, and governments seek alternative solutions, Dalrada’s subsidiaries respond with affordable, accessible, and impactful innovations.

The subsidiaries of Dalrada Precision Corp. include: Likido Limited (“Likido”) and Ignite I.T. Corp. (“Ignite”). The subsidiaries of Dalrada Health Products include: Empower Genomics Corp. (“Empower”); Solas Corp. (“Solas”); Pacific Stem Cells, LLC (“PSC”); Pala Diagnostics, LLC (“Pala”); Shark Innovative Technologies Corp. (“Shark”) and International Health Group (“IHG”). The subsidiaries of Dalrada Technologies includes: Prakat Solutions Private Limited and Prakat Solutions (together “Prakat”). Dalrada Energy Services, Inc. (“DES”) is a stand-alone subsidiary.

The COVID-19 pandemic continues to evolve, and the extent to which COVID-19 may impact the Company’s business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the pandemic, the emergence and impact of variants, vaccinations, travel restrictions and social distancing in the United States and other countries, business closures or business disruptions, and the effectiveness of actions taken in the United States and other countries to contain and treat the disease. While the Company experienced increased revenue levels in 2022 related to its COVID-19 testing business, these results are not expected to be indicative of future results.

The Company's principal executive offices are located at 600 La Terraza Blvd., Escondido, California 92025. For more information about the Company’s products visit www.dalrada.com

Going Concern

These condensed consolidated financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As of March 31, 2022, the Company has an accumulated deficit of $116,412,419. The Company closed a convertible debenture funding on February 4, 2022 for a total principal amount of $3,000,000. The continuation of the Company as a going concern is dependent upon the continued financial support from related parties, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing and generating profitable operations from the Company’s future operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These condensed consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

8

2. Summary of Significant Accounting Policies

(a) Basis of Presentation

These consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars. The Company’s fiscal year end is June 30.

We have prepared the accompanying condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These condensed consolidated financial statements are unaudited and, in our opinion, include all adjustments, consisting of normal recurring adjustments and accruals necessary for a fair presentation of our balance sheets, operating results, and cash flows for the periods presented. Operating results for the periods presented are not necessarily indicative of the results that may be expected for fiscal year 2022. Certain information and footnote disclosures normally included in condensed consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been omitted in accordance with the rules and regulations of the SEC. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and accompanying notes.

(b) Principles of Consolidation

These condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries: Dalrada Precision, a company incorporated in the State of California, since June 25, 2018 (date of incorporation), Dalrada Health, a company incorporated in the State of California, since October 2, 2018 (date of incorporation), Dalrada Energy Services, a company incorporated in the State of Wyoming, since March 17, 2022 (date of incorporation), as well as its subsidiaries (Likido, Prakat, Shark, IHG, PSC, Ignite, Empower, Solas) since their respective acquisition dates and Controlling Interest in Pala (see Note 3) . All inter-company transactions and balances have been eliminated on consolidation.

The condensed consolidated financial statements include the accounts of all entities controlled by the Company through its direct or indirect ownership of a majority voting interest. Additionally, the condensed consolidated financial statements include the accounts of variable interest entities (“VIEs”) in which the Company has a variable interest and for which the Company is the “primary beneficiary” as it has both: (1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (2) the obligation to absorb losses of the VIE that potentially could be significant to the VIE or the right to receive benefits from the VIE that potentially could be significant to the VIE. All significant intercompany accounts and transactions are eliminated in consolidation.

Income attributable to the minority interest in the Company's majority owned and controlled consolidated subsidiaries is recorded as net income attributable to noncontrolling interests in the consolidated statements of operations and the noncontrolling interest is reflected as a separate component of consolidated stockholders' equity in the consolidated balance sheet.

(c) Use of Estimates

The preparation of these condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the valuation of inventory, valuation of accrued payroll tax liabilities, valuation of acquired assets and liabilities, variables used in the computation of share-based compensation, and deferred income tax asset valuation allowances.

9

The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

(d) Cash and Cash Equivalents

The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.

(e) Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company generally maintains balances in various operating accounts at financial institutions that management believes to be of high credit quality, in amounts that may exceed federally insured limits. The Company has not experienced any losses related to its cash and cash equivalents and does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

During the nine months ended March 31, 2022, healthcare insurers and government payers accounted for over 74% of total revenues. During the nine months ended March 31, 2022, healthcare insurers and government payers amounted to total revenue of $10,340,464. The accounts receivable related to both healthcare insurers and government payers is $4,766,023 as of March 31, 2022.

(f) Fair Value Measurements

Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1 - applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2 - applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3 - applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company’s financial instruments consist principally of cash, accounts receivable, accounts payable and accrued liabilities, notes payable, and amounts due to related parties. Pursuant to ASC 820, the fair value of cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

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(g) Convertible Instruments

The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC Topic 815, Derivatives and Hedging Activities (“ASC 815”).

Applicable U.S. GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments according to certain criteria. The criteria includes circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

The Company accounts for convertible instruments (when the Company has determined that the embedded conversion options should not be bifurcated from their host instruments) as follows. The Company records, when necessary, deemed dividends for the intrinsic value of conversion options embedded in shares based upon the differences between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the shares. 

(h) Accounts Receivable

Accounts receivable are derived from products and services delivered to customers and are stated at their net realizable value. Each month, the Company reviews its receivables on a customer-by-customer basis and evaluates whether an allowance for doubtful accounts is necessary based on any known or perceived collection issues. Any balances that are eventually deemed uncollectible are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. As of March 31, 2022 and June 30, 2021, the Company recorded a bad debt allowance of $925,619 and $37,465, respectively.

Pala and Empower have a standardized approach to estimate the amount of consideration that we expect to be entitled to for its COVID-19 testing revenue, including the impact of contractual allowances (including payer denials), and patient price concessions. As a result of Pala and Empower’s limited transaction history, collection and payer reimbursement is based on industry standards and third-party experts. Adjustments to our estimated contractual allowances and implicit patient price concessions are recorded in the current period as changes in estimates. Although we have limited track record, further adjustments to the allowances, based on actual receipts, may be recorded upon settlement.

In March 2022, the U.S. Health Resources and Services Administration (“HRSA”) informed providers that, after March 22, 2022, it would stop accepting claims for testing and treatment for uninsured individuals under the HRSA COVID-19 Uninsured Program and that claims submitted prior to that date would be subject to eligibility and availability of funds. For the three months ended March 31, 2022, revenue for testing of uninsured individuals under the HRSA COVID-19 Uninsured Program represented approximately 46% of our COVID-19 testing net revenue. As of March 31, 2022, approximately 25% of our net accounts receivable was associated with claims for reimbursement for COVID-19 testing of uninsured individuals. As a result of HRSA ceasing the COVID-19 Uninsured Program, the Company reduced its Accounts Receivable by $614,322 for the three months ended March 31, 2022 and $1,500,799 for the nine months ended March 31, 2022. Although we believe that our estimates for contractual allowances and patient price concessions are appropriate, actual results could differ from those estimates.

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(i) Inventory

Inventory is recorded at the lower of cost or net realizable value on a first-in first-out basis. As of March 31, 2022 and June 30, 2021, inventory is comprised of raw materials purchased from suppliers, work-in-progress, and finished goods produced or purchased for resale. The Company establishes inventory reserves for estimated obsolete or unsaleable inventory equal to the difference between the cost of inventory and the estimated net realizable value based upon assumptions about future market conditions.

(j) Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization expense is recognized using the straight-line method over the estimated useful life of each asset, as follows: 

	Estimated Useful Life
Computer and office equipment	3 - 5 years
Machinery and equipment	5 years
Leasehold improvements	Shorter of lease term or useful life

Estimated useful lives are periodically assessed to determine if changes are appropriate. Maintenance and repairs are charged to expense as incurred. When assets are retired or otherwise disposed of, the cost of these assets and related accumulated depreciation or amortization are eliminated from the balance sheet and any resulting gains or losses are included in the statement of operations loss in the period of disposal.

(k) Business Combinations and Acquisitions

The Company accounts for acquisitions in which it obtains control of one or more businesses as a business combination. The purchase price of the acquired businesses is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the purchase price over those fair values is recognized as goodwill. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments, in the period in which they are determined, to the assets acquired and liabilities assumed with the corresponding offset to goodwill. If the assets acquired are not a business, the Company accounts for the transaction or other event as an asset acquisition. Under both methods, the Company recognizes the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired entity. In addition, for transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase.

(l) Impairment of Long-Lived Assets

The Company reviews its long-lived assets (property and equipment) for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. If the sum of the expected cash flows, undiscounted, is less than the carrying amount of the asset, an impairment loss is recognized as the amount by which the carrying amount of the asset exceeds its fair value.

Goodwill is tested annually at June 30 for impairment and upon the occurrence of certain events or substantive changes in circumstances.

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The annual goodwill impairment test allows for the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. An entity may choose to perform the qualitative assessment on none, some or all of its reporting units or an entity may bypass the qualitative assessment for any reporting unit and proceed directly to step one of the quantitative impairment test. If it is determined, on the basis of qualitative factors, that the fair value of a reporting unit is, more likely than not, less than its carrying value, the quantitative impairment test is required. The quantitative impairment test calculates any goodwill impairment as the difference between the carrying amount of a reporting unit and its fair value, but not to exceed the carrying amount of goodwill. As of March 31, 2022 and June 30, 2021, there were no significant qualitative factors that indicated goodwill was impaired.

(m) Revenue Recognition

The Company adopted ASU 2014-09, Revenue from Contracts with Customers, and its related amendments (collectively known as “ASC 606”), effective January 1, 2019 using the modified retrospective transition approach applied to all contracts. Therefore, the reported results for the quarter ended March 31, 2022 reflect the application of ASC 606. Management determined that there were no retroactive adjustments necessary to revenue recognition upon the adoption of the ASU 2014-09. The Company determines revenue recognition through the following steps:

· Identification of a contract with a customer;

· Identification of the performance obligations in the contract;

· Determination of the transaction price;

· Allocation of the transaction price to the performance obligations in the contract; and

· Recognition of revenue when or as the performance obligations are satisfied.

Revenue is recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. As a practical expedient, the Company does not adjust the transaction price for the effects of a significant financing component if, at contract inception, the period between customer payment and the transfer of goods or services is expected to be one year or less.

The Company’s revenue is derived from the sales of its products, which represents net sales recorded in the Company’s condensed consolidated statements of operations. Product sales are recognized when performance obligations under the terms of the contract with the customer are satisfied. Typically, this would occur upon transfer of control, including passage of title to the customer and transfer of risk of loss related to those goods. The Company measures revenue as the amount of consideration to which it expects to be entitled in exchange for transferring goods (transaction price). The Company records reductions to revenue for estimated customer returns, allowances, markdowns and discounts. The Company bases its estimates on historical rates of customer returns and allowances as well as the specific identification of outstanding returns, markdowns and allowances that have not yet been received by the Company. The actual amount of customer returns and allowances is inherently uncertain and may differ from the Company’s estimates. If the Company determines that actual or expected returns or allowances are significantly higher or lower than the reserves it established, it would record a reduction or increase, as appropriate, to net sales in the period in which it makes such a determination. Reserves for returns, and markdowns are included within accrued expenses and other liabilities. Allowance and discounts are recorded in accounts receivable, net and the value of inventory associated with reserves for sales returns are included within prepaid expenses and other current assets on the condensed consolidated balance sheets.

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The Company estimates warranty claims reserves based on historical results and research and determined that a warranty reserve was not necessary as of March 31, 2022.

Net revenues from COVID-19 testing accounted for over 74% of the Company’s total net revenues for the nine months ended March 31, 2022 and primarily comprised of a high volume of relatively low-dollar transactions. Pala, which provides clinical testing services and other services, satisfies its performance obligations and recognizes revenues primarily upon completion of the testing process (when results are reported) or when services have been rendered. Pala does not invoice the patients themselves for testing but relies on healthcare insurers and government payers for reimbursement for COVID-19 testing. Pala has a standardized approach to estimate the amount of consideration that we expect to be entitled to, including the impact of contractual allowances (including payer denials), and patient price concessions. As a result of Pala’s limited transaction history, collection and payer reimbursement is based on industry standards and third-party experts. Adjustments to our estimated contractual allowances and implicit patient price concessions are recorded in the current period as changes in estimates. Although we have limited track record, further adjustments to the allowances, based on actual receipts, may be recorded upon settlement.

The DES transaction price for its contracts reflects our estimates and are based on historical, current and forecasted information to determine the expected amount to which we will be entitled in exchange for transferring the promised goods or services to the customer. The realization of variable consideration occurs within a short period of time from product delivery; therefore, the time value of money effect is not significant. We primarily provide standard warranty programs for products in our commercial businesses for periods that typically range from one to two years. These assurance-type programs typically cannot be purchased separately and do not meet the criteria to be considered a performance obligation. Our cost estimation process is based on the professional knowledge and experience of engineers and program managers along with finance professionals

The Company also earns service revenue from its other subsidiaries, including information technology and consulting services via Prakat, educational programs and courses via IHG, and management services for Solas. For Prakat and Solas, revenues are recognized when performance obligations have been satisfied and the services are complete. This is generally at a point of time upon written completion and client acceptance of the project, which represents transfer of control to the customer. For IHG, revenues are recognized over the course of a semester while services are performed.

Disaggregation of Revenue

The following table presents the Company's revenue disaggregated by revenue source: 

	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
Product sales - third parties	$	1,627,647	$	1,150,289	$	1,788,938	$	1,715,478
Product sales - related party		19,324		23,429		49,208		81,077
Service revenue - third parties		3,945,179		152,733		13,741,381		1,247,306
Service revenue - related party		–		261,878		62,240		359,378
Total revenue	$	5,592,150	$	1,588,329	$	15,641,767	$	3,403,239

Contract Balances

The following table provides information about receivables and liabilities from contracts with customers:  

	March 31,		June 30,
	2022		2021
Accounts receivable, net	$	7,425,154	$	265,812
Accounts receivable, net - related parties		298,714		69,952
Deferred revenue		661,074		219,999

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The Company invoices customers based upon contractual billing schedules, and accounts receivable are recorded when the right to consideration becomes unconditional. Contract liabilities represent a set-up fee prepayment received from a customer in advance of performance obligations met.

(n) Cost of Revenue

Cost of revenue consists primarily of inventory sold for product sales and direct labor for information technology and consulting services. The following table is a breakdown of cost of revenue:   

	Three Months Ended  March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
Product sales	$	796,148	$	401,790	$	1,386,244	$	798,934
Service revenue		977,482		453,001		3,648,064		748,118
Total cost of revenue	$	1,773,630	$	854,791	$	5,034,308	$	1,547,052

(o) Advertising

Advertising costs are expensed as incurred. During the nine months ended March 31, 2022 and 2021, advertising expenses were approximately $366,551 and $15,000, respectively.

(p) Stock-based Compensation

The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued. During the nine months ended March 31, 2022 and 2021, stock-based compensation expense was $2,145,626 and $730,000, respectively.

(q) Foreign Currency Translation

The functional currency of the Company is the United States dollar. The functional currency of the Likido subsidiary is the British pound. The functional currency of Prakat is the Indian rupee. The financial statements of the Company’s subsidiaries were translated to United States dollars in accordance with ASC 830, Foreign Currency Translation Matters, using period-end rates of exchange for assets and liabilities, and average rates of exchange for the year for revenues and expenses. Gains and losses arising on foreign currency denominated transactions are included in condensed consolidated statements of operations.

(r) Comprehensive Loss

ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the condensed consolidated financial statements. During the nine months ended March 31, 2022, the Company’s only component of comprehensive income was foreign currency translation adjustments.

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(s) Non-controlling Interests

Non-controlling interests are classified as a separate component of equity in the Company's consolidated balance sheets and statements of changes in stockholders’ equity. Net loss attributable to non-controlling interests are reflected separately from consolidated net loss in the consolidated statements of comprehensive loss and statements of changes in stockholders’ equity. Any change in ownership of a subsidiary while the controlling financial interest is retained is accounted for as an equity transaction between the controlling and non-controlling interests. In addition, when a subsidiary is deconsolidated, any retained non-controlling equity investment in the former subsidiary will be initially measured at fair value and the difference between the carrying value and fair value of the retained interest will be recorded as a gain or loss.

As of March 31, 2022, non-controlling interests pertained to the Company’s Prakat and Pala subsidiaries.

(t) Basic and Diluted Net Loss per Share

The Company computes net income (loss) per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the periods using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the periods is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants.

The weighted average number of common stock equivalents related to convertible notes payable of 3,278,330 and 58,042,294 shares, and cashless warrants of 15,786,829 and 0, was not included in diluted loss per share, because the effects are antidilutive, for the three and nine months ended March 31, 2022 and 2021, respectively.

There were no adjustments to the numerator during the three and nine months ended March 31, 2022 and 2021.

(u) Income Taxes

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, Accounting for Income Taxes. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

(v) Recent Accounting Pronouncements

In August 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-06, which simplifies the guidance on the issuer’s accounting for convertible debt instruments by removing the separation models for convertible debt with a cash conversion feature and convertible instruments with a beneficial conversion feature. As a result, entities will not separately present in equity an embedded conversion feature in such debt and will account for a convertible debt instrument wholly as debt, unless certain other conditions are met. The elimination of these models will reduce reported interest expense and increase reported net income for entities that have issued a convertible instrument that is within the scope of ASU 2020-06. ASU 2020-06 is applicable for fiscal years beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. The Company has elected to early adopt this ASU and the adoption of this ASU did not have a material impact on the Company’s consolidated financial statements and related disclosures.

3. Investment in Pala Diagnostics

In August 2021, Dalrada, through its subsidiary Dalrada Health, entered into a joint venture (“JV”) with Vivera Pharmaceuticals, Inc (“Vivera”) for a 51% ownership and controlling interest. The JV, Pala Diagnostics, LLC (“Pala”) is a CLIA-certified diagnostics lab focused on SARS-CoV-2 testing for now with additional testing capabilities to be introduced. The JV has been treated as a business combination.

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We determined that Pala is a Variable Interest Entity (VIE), We believe that the Company has the power to direct the activities that most significantly impact the economic performance of Pala, and accordingly, Dalrada is considered the primary beneficiary of the VIE. The Company has consolidated the activities of the VIE.

Pursuant to the partnership agreement, Dalrada had an equity commitment of $500,000 for operating capital of which it achieved during the period ended December 31, 2021. In the nine months ended March 31, 2022, Vivera contributed property and equipment at a fair value of $111,185. This amount was recorded to non-controlling interest equity balance in the consolidated balance sheets.

In November 2021, Pala Diagnostics signed a Factoring Agreement for up to $1,000,000 with a related party which bears an annualized interest rate of 24%. As of March 31, 2022, the outstanding principal and interest of $210,435 and $14,943, respectively, was paid in full.

Pursuant to the JV agreement, Dalrada issued 250,000 shares of common stock to Vivera in October 2021. The fair value of $58,560 was recorded to goodwill as of March 31, 2022.

As of the quarter ended March 31, 2022, Vivera’s unauthorized distribution balance totaled $1,882,144. The Company initiated an action seeking judicial relief on December 7, 2021 due to the Vivera’s actions resulting in the unapproved distribution Pala. The judicial matters are presently being consolidated in Orange County, California. The pending litigation with Vivera has had a material impact on the operations of the joint venture including a significant loss of its customer base.

4. Selected Balance Sheet Elements

Inventories

Inventories consisted of the following as of March 31, 2022 and June 30, 2021: 

	March 31,		June 30,
	2022		2021
Raw materials	$	347,971	$	172,227
Finished goods		808,710		669,881
	$	1,156,681	$	842,108

Property and Equipment, Net

Property and equipment, net consisted of the following as of March 31, 2022 and June 30, 2021: 

	March 31,			June 30,
	2022			2021
Machinery and equipment	$	582,959		$	223,141
Leasehold improvements		301,941			323,669
Computer and office equipment		394,089			186,549
		1,278,989			733,359
Less: Accumulated depreciation		(339,947	)		(243,457	)
	$	939,042		$	489,902

Depreciation and amortization expense of $103,566 and $37,318 for the nine months ended March 31, 2022 and 2021, respectively, were included in selling, general and administrative expenses in the statements of operations.

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Intangible Assets, Net

Intangible assets, net consisted of the following as of March 31, 2022 and June 30, 2021: 

	March 31, 2022
	Gross		Accumulated		Carrying
	Amount		Amortization		Value
Amortized:
Curriculum development	$	693,385	$	80,895	$	612,490
Licenses		195,000		–		195,000
Software		9,741		–		9,741
	$	898,126	$	80,895	$	817,231

	June 30, 2021
	Gross		Accumulated		Carrying
	Amount		Amortization		Value
Amortized:
Curriculum development	$	693,385	$	28,891	$	664,494
Licenses		–		–		–
	$	693,385	$	28,891	$	664,494

Amortization expense of $155,570 and $0 for the nine months ended March 31, 2022, and 2021, respectively, were included in selling, general and administrative expenses in the statements of operations.

5. Accrued Payroll Taxes

As of March 31, 2021, and June 30, 2021, the Company had $2,025,582 and $1,953,024, respectively, of accrued payroll taxes, penalties and interest relating to calendar years 2004 - 2007. The total balance for accrued payroll taxes has accumulated on a quarterly basis beginning on their respective quarterly filing dates. Accrued interest is compounded daily at an estimated effective interest rate of 7.33%. The quarterly sub-totals that make up the $2,025,582 balance have a calculated expiration date of 10 years according to the Internal Revenue Service statute of limitations. As the tax periods surpass their estimated expiration date, the Company removes the liability from the condensed consolidated balance sheets, and an equivalent amount is recognized as “Gain on expiration of accrued payroll taxes” within other income on the condensed consolidated statements of operations. For the three months ended March 31, 2022, and 2021, the Company recognized $23,030 and $127,235, respectively, of penalties and interest within interest expense on the condensed consolidated statements of operations. The amount owing may be subject to additional late filing fees and penalties that are not quantifiable as of the date of these condensed consolidated financial statements. In addition, the Company periodically reviews the historical filings in determining if the statute has been paused or extended by the Internal Revenue Service.

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6.  Debt

Notes Payable - Related Parties

The following is a summary of notes payable – related parties on March 31, 2022 and June 30, 2021:

	March 31, 2022
	Outstanding		Accrued
	Principal		Interest
Related entity 1	$	6,300,775	$	72,852
Related entity 2		7,079,166		54,849
Related entity 3		379,525		8,226
Related entity 4		850,102		117,620
Related entity 5		181,744		1,363
Related entity 6		32,750		246
	$	14,824,062	$	255,156

	June 30, 2021
	Outstanding		Accrued
	Principal		Interest
Related entity 1	$	2,978,066	$	29,875
Related entity 2		357,025		5,532
Related entity 3		3,087,689		47,728
Related entity 4		3,668,938		93,150
Related entity 5		417,237		5,862
	$	10,508,955	$	182,147

In September 2021, the Company converted $4,428,589 in principal and $102,054 in accrued interest into 6,937 shares of Series G convertible preferred stock. As of March 31, 2022, the remaining outstanding amounts of the related party notes payable were extended through September 30, 2026.

Notes in the amount of $15,841,268 are unsecured and bear interest at 3% per annum. Each entity has significant influence or common ownership with the Company’s Chief Executive Officer.

As of March 31, 2022, and June 30, 2021, total accrued interest for Notes Payable-Related Parties was $255,156 and $182,147, respectively. The Company recorded interest expense from Notes Payable-Related Party for the nine months ended March 31, 2022, and 2021 of $173,007 and $95,998, respectively.

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Convertible Notes

On February 4, 2022, the Company” entered into a securities purchase agreement (“SPA”) with YA II PN, Ltd. (the “Buyer”) for issuance and sale of convertible debentures (the “Debentures”) in the aggregate principal amount of $3,000,000, including net proceeds received of $2,880,000 from February to March 2022.

The Debentures have a fixed conversion price of $0.9151 per share (the “Fixed Conversion Price”). The principal and interest, which will accrue at a rate of 5% per annum, payable under the Debentures will mature 15 months from the issuance date (the “Maturity Date”), unless earlier converted or redeemed by the Company. At any time before the Maturity Date, the Buyer may convert the Debentures into the Company’s common stock at the Fixed Conversion Price. Beginning on May 1, 2022, and continuing on the first day of each calendar month thereafter through February 1, 2023, the Principal amount plus a 20% redemption premium and plus accrued and unpaid interest will be subject to monthly redemption (“Monthly Redemption”). Under Monthly Redemption, the Company shall redeem an applicable redemption amount in accordance with the redemption schedule provided in the Debenture, which is subject to pro rata adjustment to reflect the conversion or redemption otherwise effected pursuant to the Debenture contemporaneous with or prior to the scheduled redemption date, in cash, in common stock through the Buyer’s conversion of the Debenture (at any time after the applicable redemption date), or a combination of both at the Company’s option. With respect to each Monthly Redemption all or partially in common stock, the conversion price shall be the lower of (1) the Fixed Conversion Price, or (2) 100% of the lowest daily VWAP during the ten consecutive trading days immediately preceding the date of conversion (the “Variable Conversion Price”). The conversion price shall be adjusted from time to time pursuant to the other terms and conditions of the Debenture. At no point will the conversion price be less than $0.01.

The Company, in its sole discretion, may redeem in cash amounts owed under the Debentures prior to the Maturity Date by providing the Buyer with advance written notice at least 10 trading days prior to such redemption, provided that the Shares are trading below the Fixed Conversion Price at the time of the redemption notice. The Company shall pay a redemption premium equal to 20% (the “Redemption Premium”) of the principal amount being redeemed.

In connection with the Debenture, the Company issued to the Buyer warrants equal to 30% coverage exercisable at a strike price equal to the Fixed Conversion Price determined at the date of the initial closing, or a total of 983,499 warrants to purchase common stock. The Warrants shall be exercisable for four years and shall be exercised on a cash basis provided the Company is not in default and the shares underlying the Warrant are subject to an effective registration statement at the time of the Investor’s exercise. There is a cashless provision.

The Company analyzed the conversion feature of the warrants and determined they did not need to be bifurcated under ASC 815. Based on adoption of ASU-2020-06, the debt will be accounted for as traditional convertible debt with no portion of the proceeds attributed to the conversion feature. The warrants issued with the debt will be accounted for as a debt discount and will be amortized as interest expense over the life of the note. The warrants were valued using the Monte Carlo model and the Company recognized $1,427,495 as a debt discount.

In connection with the Debenture, the Company incurred $120,000 in issuance costs. Furthermore, the Company issued 192,000 shares of common stock to the Buyer and broker at a fair value of $115,200.

During the nine months ended March 31, 2022, the Company amortized $146,475 of debt discount. Interest expense was $18,356, all of which was accrued and unpaid as of March 31, 2022. The company also recorded accretion on the Redemption Premium of $52,857, which is included in interest expense.

The net balance of the convertible note, after unamortized debt discount of $1,516,220, was $1,483,780 as of March 31, 2022.

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7.  Convertible Note Payable – Related Parties

On June 30, 2019, the Company issued a convertible note for $1,875,000 to the Chief Executive Officer of the Company for compensation. Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and was due 360 days from the date of issuance. On June 30, 2019, the Company issued note agreement which included a conversion feature of the outstanding balance at $0.034 per share. As the conversion price was equal to the fair value of the common shares on the date of the agreement, there was no beneficial conversion feature. As of June 30, 2021, the principal balance was $1,875,000 and the accrued interest was $112,500.

In September 2021, the Company converted, along with the related party notes above, principal of $1,875,000 and accrued $126,563 in interest into 3,065 shares of Series G convertible preferred stock.

8. Related Party Transactions

There are various related party transactions which are reflected as either accounts payable and accrued liabilities – related parties or notes payable – related parties in the consolidated Balance Sheets.

As of March 31, 2022, and June 30, 2021, the Company owed $599,212 and $414,237, respectively to a related party for reimbursement of various operating expenses, accrued salaries, management fees, etc. which has been recorded in accounts payable and accrued liabilities – related parties. See below for some specific disclosures related to these amounts.

As of March 31, 2022, and June 30, 2021, the amount above includes $67,500 and $7,650 of management fees, which consists of accounting and administrative services from a related party company controlled by the Chief Executive Officer of the Company. The current management fee agreement calls for monthly payments of $7,500. The agreement is ongoing until terminated by either party. Total expenses incurred related to management fees during the nine months ended March 31, 2022, and 2021 were $67,500 and $27,000, respectively. As of March 31, 2022, the Company owed $15,218,162 in the form of promissory notes and $1,240,385 included within accounts payable and accrued liabilities – related parties.

In September 2021, the Company converted related party notes and convertible notes of principal totaling $6,303,589 and accrued interest of $228,617 into an aggregate of 10,002 shares of Series G preferred stock.

On July 1, 2019, the Company formalized an employment agreement with its Chief Executive Officer, which entitles him to compensation of three hundred and ninety-three thousand dollars ($393,000) per year. Annual increases will be up to 10% based performance criteria to be determined at a later date. He will be issued common stock of the Company sufficient to provide a 10% ownership position post reverse split which shares be maintained for a period of two years. In addition to all other benefits and compensation, he shall be eligible for a quarterly bonus of $47,000 based on if the Company achieves a net profit for that quarter. In the three months ended December 31, 2021, the Chief Executive Officer converted $131,000 of accrued salary into a promissory note.

In October 2021, the Company cancelled 6,500,000 shares of common stock that had been previously issued to directors (see Note 11. Stock-Based Compensation for additional information).

21

The following is a summary of revenues recorded by the Companies to related parties with common ownership: 

	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2022		2021		2022		2021
Dalrada Health	$	19,324	$	23,429	$	49,208	$	81,077
Solas		–		–		56,240		–
Prakat		–		126,748		6,000		224,248
Pacific Stem		–		135,130		–		135,130
	$	19,324	$	285,307	$	111,448	$	440,455

See Notes 6, 7, 9, 10, and 11 for additional related party transactions.

9. Preferred Stock

The Company has 100,000 shares authorized of Series Preferred Stock, par value, $0.01, of which 5,000 shares of Series F Preferred Stock (at a fair value of $170) were issued to the CEO in December 2019 and 10,002 shares of Series G Preferred Stock were issued pursuant to the conversion of $6,532,206 in outstanding related party notes and accrued interest into preferred shares.

Each share of Series F Super Preferred Stock entitles the holder to the greater of (i) one hundred thousand votes for each share of Series F Super Preferred Stock, or (ii) the number of votes equal to the number of all outstanding shares of Common Stock, plus one additional vote such that the holders of Series F Super Preferred Stock shall always constitute most of the voting rights of the Corporation. In any vote or action of the holders of the Series F Super Preferred Stock voting together as a separate class required by law, each share of issued and outstanding Series F Super Preferred Stock shall entitle the holder thereof to one vote per share. The holders of Series F Super Preferred Stock shall vote together with the shares of Common Stock as one class.

Each share of Series G Convertible Preferred share converts into 2,177 shares of common stock (equivalent to converting the related equity dollars into common shares at $0.30 per share).  Series G Convertible Preferred shares do not have voting rights.

10. Stockholders’ Equity

Common Stock

In August and December 2021, the Company issued 87,500 and 87,500 shares, respectively, of common stock related to the acquisition of Pacific Stem.

In September 2021, the Company repurchased 329,478 shares of common stock from a Company employee for a total fair value of $14,827.

In September 2021, the Company issued 2,000,000 shares of common stock to board members for a total fair value of $560,000.

In October and December 2021, the Company issued 125,000 and 125,000 shares, respectively, of common stock related to the acquisition of IHG.

On October 28, 2021, 250,000 shares were issued to Vivera pursuant to the Pala agreement (see Note 3. Investment in Pala Diagnostics for additional information).

In December 2021, the Company issued 500,000 shares of common stock pursuant to a consulting agreement for a total fair value of $380,000.

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In March 2022, the Company issued 125,000 shares of common stock related to the acquisition of IHG.

In March 2022, the Company issued 87,500 shares of common stock related to the acquisition of PSC.

In March 2022, the Company issued 192,000 shares of common stock pursuant to a consulting agreement for a total fair value of $107,880.

11. Stock-Based Compensation

On May 10, 2021, the Company granted 1,000,000 options to purchase common stock to its Chief Financial Officer with an exercise price of $0.47 per share. The options expire in ten years after issuance. The fair value of the options granted was $0.43 per share, or $430,027 which was calculated using the Black-Scholes model.

On November 10, 2021, the Company cancelled 6,500,000 shares issued to the Board of Directors and issued 6,500,000 cashless warrants. 4,500,000 cashless warrants were to vest immediately, and 2,000,000 cashless warrants were to vest over a 12-month period. All cashless warrants carry a $0.45 exercise price and a ten-year term. The Company recorded stock-based compensation related to the 6,500,000 shares in prior periods; therefore, no stock-based compensation related to the warrants was recorded in the three-month period ended March 31, 2022.

On November 30, 2021, the Company issued 2,275,000 cashless warrants to employees and consultants for services performed. 825,000 cashless warrants vested immediately and 1,450,000 cashless warrants vests over a 36-month period. The cashless warrants include an exercise price of $0.45 per share. The cashless warrants expire in ten years after issuance. The fair value of the cashless warrants granted was $0.73 per share, or $1,651,093 which was calculated using the Black-Scholes model.

In December 2021, the Company issued 500,000 shares of common stock pursuant to a consulting agreement for healthcare management services at $0.76 per share. The Company recorded stock-based compensation related to the 500,000 shares in the amount of $377,500.

On February 16, 2022, the Company issued 2,250,000 cashless warrants to new members of the Board of Directors. The cashless warrants vest over a 12-month period and hold an exercise price of $0.45 per share. The cashless warrants expire in ten years after issuance. The fair value of the cashless warrants granted was $0.59 per share, or $1,338,644 which was calculated using the Black-Scholes model.

During the nine months ended March 31, 2022, and 2021, stock-based compensation expense was $2,145,626 and $730,000, respectively.

12. Segment Reporting

Upon the Company’s acquisitions in the year ended June 30, 2020, and 2021, the Company manages its business and makes its decisions based on segments. The Company classifies its operations into 5 segments: Engineering, Health, Information Technology, Education, and Corporate. The Company evaluates the performance of its segments primarily based on revenues, operating income (loss) and net income (loss). Also included below is a breakout by segment for Inventory, PPE, Goodwill, and Total Assets.

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Segment information for the three and nine months ended March 31, 2022, and 2021 is as follows: 

	Three Months Ended March 31, 2022
	Engineering		Health			Information Technology		Education			Corporate			Inter-Segment Eliminations			Consolidated
Revenues	$	1,415,480	$	2,948,850		$	1,952,352	$	177,135		$	1,060		$	(902,727	)	$	5,592,150
Income (Loss) from Operations		196,961		(439,834	)		548,618		(91,157	)		(2,820,721	)		(33,510	)	$	(2,639,643	)
Net income (loss)	$	194,950	$	(448,706	)	$	548,961	$	(91,157	)	$	(2,996,568	)	$	(200,561	)	$	(2,993,580	)

	Nine Months Ended March 31, 2022
	Engineering		Health		Information Technology		Education			Corporate			Inter-Segment Eliminations			Consolidated
Revenues	$	2,878,677	$	10,988,302	$	3,806,889	$	634,686		$	139,600		$	(2,806,387	)	$	15,641,767
Income (Loss) from Operations		109,691		3,927,719		570,478		(216,744	)		(8,225,769	)		(1,560,414	)		(5,395,039	)
Net income (loss)	$	81,092	$	3,894,343	$	568,582	$	(216,744	)	$	(8,592,081	)	$	(1,772,583	)	$	(6,037,391	)

	Three Months Ended March 31, 2021
	Engineering			Health			Information Technology			Education			Corporate			Inter-Segment Eliminations			Consolidated
Revenues	$	316,848		$	689,024		$	536,918		$	202,394		$	–		$	(156,854	)	$	1,588,329
Loss from operations		(193,260	)		(193,236	)		(39,466	)		(42,862	)		(2,077,807	)		236,711			(2,309,921	)
Net loss	$	(184,913	)	$	(178,033	)	$	(39,467	)	$	(42,862	)	$	(1,914,921	)	$	(109,253	)	$	(2,469,449	)

	Nine Months Ended March 31, 2021
	Engineering		Health			Information Technology			Education			Corporate			Inter-Segment Eliminations			Consolidated
Revenues	$	1,777,309	$	877,338		$	1,446,583		$	202,394		$	–		$	(900,384	)	$	3,403,239
Loss from operations		227,557		(513,375	)		(53,892	)		(42,862	)		(3,892,334	)		82,682			(4,192,223	)
Net loss	$	229,626	$	(498,172	)	$	(53,643	)	$	(42,862	)	$	(3,476,710	)	$	(761,549	)	$	(4,603,310	)

Geographic Information

The following table presents revenue by country: 

	Nine Months Ended
	March 31,
	2022		2021
United States	$	13,602,738	$	1,916,506
Europe		150,189		507,661
India		1,888,840		979,072
	$	15,641,767	$	3,403,239

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The following table presents inventories by country: 

	March 31,		June 30,
	2022		2021
United States	$	311,697	$	335,036
Europe		844,984		507,072
	$	1,156,681	$	842,108

The following table presents property and equipment, net, by country: 

	March 31,		June 30,
	2022		2021
United States	$	710,120	$	221,308
Europe		215,601		256,888
India		13,321		11,706
	$	939,042	$	489,902

13. Commitments and Contingencies

Lease Commitments

The Company determines if an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys to the Company the right to control the use of an explicitly or implicitly identified fixed asset for a period of time in exchange for consideration. Control of an underlying asset is conveyed to the Company if the Company obtains the rights to direct the use of and to obtain substantially all the economic benefits from using the underlying asset. The Company has lease agreements which include lease and non-lease components, which the Company has elected to account for as a single lease component for all classes of underlying assets. Lease expense for variable lease components is recognized when the obligation is probable.

Operating lease right of use (“ROU”) assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Operating lease payments are recognized as lease expense on a straight-line basis over the lease term. The Company primarily leases buildings (real estate) which are classified as operating leases. ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. As an implicit interest rate is not readily determinable in the Company's leases, the incremental borrowing rate is used based on the information available at commencement date in determining the present value of lease payments.

The lease term for all the Company's leases includes the non-cancellable period of the lease plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor. Options for lease renewals have been excluded from the lease term (and lease liability) for the majority of the Company's leases as the reasonably certain threshold is not met.

Lease payments included in the measurement of the lease liability are comprised of fixed payments, variable payments that depend on index or rate, and amounts probable to be payable under the exercise of the Company option to purchase the underlying asset if reasonably certain.

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Variable lease payments not dependent on a rate or index associated with the Company's leases are recognized when the event, activity, or circumstance in the lease agreement on which those payments are assessed as probable. Variable lease payments are presented as operating expenses in the Company's income statement in the same line item as expense arising from fixed lease payments. As of and during the three months ended March 31, 2022, management determined that there were no variable lease costs.

Right of Use Asset

In May 2020, the Company entered into a 5 five-year lease agreement to lease a commercial building in Escondido, California. The building is owned by a related party. The Company recognized a right of use asset and liability of $822,389 and used an effective borrowing rate of 3.0% within the calculation. Imputed interest is $53,399. The lease agreements mature in April 2025. Total amounts expensed under the lease during the three and nine months ended March 31, 2022, were $100,053 and $300,159, respectively, for which is included accounts payable and accrued liabilities – related parties.

In May 2020, the Company entered into 3 three-year lease agreement to lease a warehouse in Brownsville, Texas. The Company recognized a right of use asset and liability of $177,124 and used an effective borrowing rate of 3.0% within the calculation. Imputed interest is $8,399. The lease agreements mature in April 2025.

The Company’s Prakat subsidiary entered into a lease agreement to lease office space through September 2026. The Company recognized a right of use asset and liability of $140,874 and used an effective borrowing rate of 9.2% within the calculation.

In August 2020, the Company’s Likido subsidiary entered in a new operating agreement for warehouse space. The lease matured in July 2021.

In June 2017, the Company’s IHG subsidiary entered a lease for 3 separate office suites in San Diego, California. The lease expired in January 2022.

In May 2021, the Company’s PSC subsidiary entered into a 3 year and 6-month lease agreement to lease a medical office space in Poway, California. The Company recognized a right of use asset and liability of $277,856 and used an effective borrowing rate of 3.0% within the calculation.

In January 2022, the Company’s IHG subsidiary entered into a 5 year and 5-month lease agreement to lease a medical office space in Chula Vista, California. The Company recognized a right of use asset and liability of $287,345 and used an effective borrowing rate of 3.0% within the calculation.

14. Subsequent Events

On April 6, 2022, the Company, through Dalrada Precision Corp., acquired Silicon Services Consortium (Europe) Ltd. for a total purchase price of £2,000,000, or approximately $2,700,000. The acquisition was complete as a 100% stock transaction.

On April 8, 2022, the Company, through Solas Corp., entered into an Asset Purchase Agreement with Rakhesh Guttikonda Medical Inc. to purchase the assets of its Remedi Med Spa’s for a total of $61,118. The purchase price will be paid monthly installments of $5,000.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis in conjunction with our financial statements, including the notes thereto, included in this Report. Some of the information contained in this Report may contain forward-looking statements within the meaning of Section 27A of the Securities Exchange Act of 1933, as amended (the “Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This information may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance, or achievements to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by the use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that the projections included in these forward-looking statements will come to pass. Our actual results could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. We undertake no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

Our net loss and limited working capital raise substantial doubt about our ability to continue as a going concern. We incurred a net loss of $2,993,080 during the nine months ended March 31, 2022. We will be required to raise substantial capital to fund our capital expenditures, working capital, and other cash requirements. We will continue to rely on related parties and seek other financing to complete our business plans. The successful outcome of future financing activities cannot be determined at this time and there are no assurances that, if achieved, we will have sufficient funds to execute our intended business plan or generate positive operational results.

In addition to our current deficit, we may incur additional losses during the foreseeable future, until we are able to successfully execute our business plan. There is no assurance that we will be able to obtain additional financing through private placements and/or public offerings necessary to support our working capital requirements. To the extent that funds generated from any private placements and/or public offerings are insufficient, we will have to raise additional working capital through other sources, such as bank loans and/or financings. No assurance can be given that additional financing will be available, or if available, will be on acceptable terms.

We are incurring increased costs as a result of being a publicly traded company. As a public company, we incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act of 2002, as well as new rules subsequently implemented by the Securities and Exchange Commission, have required changes in corporate governance practices of public companies. These new rules and regulations have increased our legal and financial compliance costs and have made some activities more time-consuming and costly. For example, as a result of becoming a public company, we have created additional board committees and have adopted policies regarding internal controls and disclosure controls and procedures. In addition, we have incurred additional costs associated with our public company reporting requirements. As a result of the new rules, it may become more difficult for us to attract and retain qualified persons to serve on our Board of Directors or as executive officers. We cannot predict or estimate the amount of additional costs we may incur as a result of being a public company or the timing of such costs.

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RESULTS OF OPERATIONS

Three Months Ended March 31, 2022 and 2021

The following table sets forth the results of our operations for the three months ended March 31, 2022 and 2021:

	Three Months Ended
	March 31,
	2022			2021
Revenues	$	5,592,150		$	1,588,329
Cost of revenues		1,773,630			854,791
Gross profit		3,818,520			733,538
Operating expenses		6,458,163			3,043,459
Income (loss) from operations		(2,639,643	)		(2,309,921	)
Other income (expenses)		(353,437	)		(159,528	)
Net loss	$	(2,993,080	)	$	(2,469,449	)

Revenues and Cost of Revenues

During the three months ended March 31, 2022, the Company recorded revenues of $5,592,150 as attributable to each entity below:

	Three Months Ended
	March 31,
	2022			2021
Pala Diagnostics	$	2,461,900		$	–
Prakat		798,822			350,766
Empower		945,079			–
IHG		177,135			202,394
Health		373,200			263,806
Likido		150,189			247,834
Precision		1,087,213			662,078
Other / Intercompany Eliminations		(401,388	)		(138,549	)
	$	5,592,150		$	1,588,329

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Revenues

Revenues for the three months ended March 31, 2022, was $5,592,150 compared with revenue of $1,588,239 during the three months ended March 31, 2021, an increase of $4,003,821, or 252%. The increase in revenues was primarily attributable the Company’s COVID-19 testing segment, the sale of 6 Likido units. It was determined, in accordance with ASC 606, that multiple deliverables are included within the executed customer contracts, and the Revenue related to obligations already performed will be recognized in future periods upon completion of the second deliverable obligations.

Costs and Expenses

Cost of Revenues. Cost of Revenues for the three months ended March 31, 2022 was $1,773,630 compared to cost of revenues of $854,791 during the three months ended March 31, 2021, an increase of $918,839, or 107%. The increase in Cost of Revenues was primarily a result of the COVID-19 testing segment and the sale of 6 Likido units.

Operating Expenses. Operating expenses for the three months ended March 31, 2022 was $6,458,163 compared to operating expenses of $3,043,459 during the three months ended March 31, 2021, an increase of $3,414,704, or 112%. The increase in operating expenses was a result of corporate expansion, stock-based compensation and growth of the COVID-19 testing segment. During the nine months ended March 31, 2022, the Company recorded stock compensation expense of $1,105,587 to consultants, employees, executives and the Board of Directors.

Other Income (Expense)

Other income (expense) consists of penalties and interest within interest expense on the consolidated statements of operations.

Net Income (Loss)

Net loss for the three months ended March 31, 2022 was $2,993,080 compared to net loss of $2,469,449 for the three months ended March 31, 2021.

RESULTS OF OPERATIONS

Nine Months Ended March 31, 2022 and 2021

The following table sets forth the results of our operations for the nine months ended March 31, 2022 and 2021:

	Nine Months Ended
	March 31,
	2022			2021
Revenues	$	15,641,767		$	3,403,239
Cost of revenues		5,034,308			1,547,052
Gross profit		10,607,459			1,856,187
Operating expenses		16,002,499			6,048,410
Income (loss) from operations		(5,395,040	)		(4,192,223	)
Other income (expenses)		(642,352	)		(411,087	)
Net loss	$	(6,037,391	)	$	(4,603,310	)

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Revenues and Cost of Revenues

During the nine months ended March 31, 2022, the Company recorded revenues of $15,641,767 as attributable to each entity below:

	Nine Months Ended
	March 31,
	2022			2021
Pala Diagnostics	$	10,340,464		$	–
Prakat		1,888,840			979,072
Empower		1,239,552			–
IHG		634,686			202,394
Health		465,278			452,120
Likido		150,189			507,661
Precision		1,193,419			744,763
Other / Intercompany Eliminations		(270,661	)		517,230
	$	15,941,767		$	3,403,239

Revenues

Revenues for the nine months ended March 31, 2022, was $15,641,767 compared with revenue of $3,403,239 during the nine months ended March 31, 2021, an increase of $12,238,528 or 360%. The increase in revenues was primarily attributable the Company’s COVID-19 testing segment which includes Pala and Empower. The Company also increased revenue through its technology segment, supported by Prakat, as well as growth of IHG’s educational platform. It was determined, in accordance with ASC 606, that multiple deliverables are included within the executed customer contracts, and the Revenue related to obligations already performed will be recognized in future periods upon completion of the second deliverable obligations.

Costs and Expenses

Cost of Revenues. Cost of Revenues for the nine months ended March 31, 2022, was $5,034,308 compared to cost of revenues of $1,547,052 during the nine months ended March 31, 2021, an increase of $3,487,256, or 225%. The increase in Cost of Revenues was primarily a result of the COVID-19 testing segment.

Operating Expenses. Operating expenses for the nine months ended March 31, 2022, was $16,002,498 compared to operating expenses of $6,048,410 during the nine months ended March 31, 2021, an increase of $9,954,088, or 165%. The increase in operating expenses was a result of corporate expansion, stock-based compensation, and growth of the COVID-19 testing segment. During the nine months ended March 31, 2022, the Company recorded stock compensation expense of $2,145,626 to employees, executives and the Board of Directors.

Other Income (Expense)

Other income (expense) consists of penalties and interest within interest expense on the consolidated statements of operations.

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Net Income (Loss)

Net loss for the nine months ended March 31, 2022, was $6,037,391 compared to net loss of $4,603,310 for the nine months ended March 31, 2021.

Liquidity and Capital Resources 

As of March 31, 2022, the Company had an accumulated deficit of $116,412,419. The Company continues to incur significant losses and raises substantial doubt regarding the Company’s ability to continue as a going concern. Cash presently on hand is immaterial. We anticipate needing additional liquidity during the next twelve months to fund operations, expand our subsidiaries, expand the growth of the COVID-19 testing segment, continue the commercialization of our Likido heating & cooling units and growing the Dalrada Energy Services subsidiary. Management is planning to support operations by raising capital, and by accelerating sales & marketing efforts of high-margin heating & cooling units, precision parts, our Glanhealth products, Dalrada Energy Services and COVID-19 testing. The continuation of the Company as a going concern is dependent upon the continued financial support from its management, its ability to obtain the necessary debt or equity financing and generate profitable operations from the Company’s planned future operations. We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund planned acquisitions and activities and there are no plans to induce conversion of existing debt. There are no assurances that our plans will be successful. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Our audit firm included an explanatory paragraph in their report regarding substantial doubt about our Company’s ability to continue as a going concern.

The Company is managing and anticipating two significant opportunities, possibly resulting in upside to revenues and shareholder value. Dalrada Precision has been providing Managed Services to support International Transactions and has completed 350 of these contracts. The newly established Dalrada Energy Services has developed a business model to recognize total contractual values similar to a sales-type lease and has completed five of these contracts with mid-sized and large facilities/buildings. These two opportunities may result in an influx of commissionable revenue and profit during the remainder of this fiscal year. 

Working Capital

As of March 31, 2022, the Company had current assets of $9,760,727 and current liabilities of $13,573,621 compared with current assets of $1,640,511 and current liabilities of $17,175,111 on June 30, 2021. The increase in the working capital was primarily a result of Pala Diagnostics commercial insurance and government billing for COVID-19 testing services.

Cash Flows

	Nine Months Ended March 31,
	2022			2021
Net cash used in operating activities	$	(7,566,320	)	$	(3,702,678	)
Net cash used in investing activities		(647,589	)		(68,950	)
Net cash provided by financing activities		8,616,229			3,953,050
Net change in cash during the period, before effects of foreign currency	$	402,320		$	181,422

31

Cash flow from Operating Activities

During the nine months ended March 31, 2022, the Company used $7,566,320 of cash for operating activities compared to $3,702,678 used during the nine months ended March 31, 2021. The increase in the use of cash for operating activities was primarily due to the net loss due to a decrease in the changes in operating assets and liabilities.

Cash flow from Investing Activities

During the nine months ended March 31, 2022, the Company used $647,589 of cash for investing activities compared to $68,950 used during the nine months ended March 31, 2021. The increase in the use of cash for investing activities was primarily due to the purchase of equipment used in the COVID-19 testing operations.

Cash flow from Financing Activities

During the nine months ended March 31, 2022, the Company received $8,616,229 in cash from financing activities compared to $3,953,050 during the nine months ended March 31, 2021. The Company received proceeds of $7,602,059 from the issuance of related party notes payable compared to $4,002,594 received during the nine months ended March 31, 2021. The Company also repaid $21,717 on the notes payable and repurchased $14,826 of common shares during the nine months ended March 31, 2022. During the nine months ended March 31, 2022, Vivera withdrew an unauthorized distribution totaling $1,882,144.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Impact of COVID - 19

As a novel strain of coronavirus (COVID-19) continues to impact the economy of the United States and other countries around the world, we are committed to being a part of the coordinated public and private sector response to this unprecedented challenge. We have made substantial investments to expand and maintain the amount of COVID-19 testing available. We have been effectively managing challenges in the global supply chain; and, at this point, we have sufficient supplies to conduct our business.

Due to the COVID-19 pandemic, we have experienced significant volatility and periods of significant demand for COVID-19 testing services, with demand generally fluctuating in line with changes in the prevalence of the virus and related variants. Additionally, compared to historical levels, our revenue per requisition has been positively impacted by COVID-19 molecular testing.

In March 2022, the U.S. Health Resources and Services Administration ("HRSA") informed providers that, after March 22, 2022, it would stop accepting claims for testing and treatment for uninsured individuals under the HRSA COVID-19 Uninsured Program and that claims submitted prior to that date would be subject to eligibility and availability of funds. For the three months ended March 31, 2022, revenue for testing of uninsured individuals under the HRSA COVID-19 Uninsured Program represented approximately 46% of our COVID-19 testing net revenue. As of March 31, 2022, 25% of our net accounts receivable was associated with claims for reimbursement for COVID-19 testing of uninsured individuals. Although we believe that our estimates for contractual allowances and patient price concessions are appropriate, actual results could differ from those estimates.

32

Critical Accounting Policies

Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in note (1) of the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes for the reporting period. Significant areas requiring the use of management estimates relate to the valuation of its mineral leases and claims and our ability to obtain final government permission to complete the project.

Stock-Based Compensation

The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.

Subsequent Events

Management has evaluated all other subsequent events through May 23, 2022, the date the financial statements were available to be issued. Based on this evaluation, no additional material events were identified which require adjustment or disclosure in these financial statements.

Recently Issued Accounting Pronouncements

We have reviewed all the recently issued, but not yet effective, accounting pronouncements and we do not believe any of these pronouncements will have a material impact on the Company.

Contractual Obligations

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

33

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not applicable to smaller reporting companies.

Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures. Our Chief Executive Officer and Principal Financial Officer, after evaluating the effectiveness of our "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q (the "Evaluation Date"), concluded that as of the Evaluation Date, our disclosure controls and procedures were not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms. The control weaknesses mentioned below were first identified during the nine months ended March 31, 2022.

(b) Changes in internal control over financial reporting. There were no changes in our internal control over financial reporting during our most recent fiscal quarter that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Internal Controls

Disclosure controls and procedures, no matter how well designed and implemented, can provide only reasonable assurance of achieving an entity's disclosure objectives. The likelihood of achieving such objectives is affected by limitations inherent in disclosure controls and procedures. These include the fact that human judgment in decision-making can be faulty and that breakdowns in internal control can occur because of human failures such as simple errors or mistakes or intentional circumvention of the established process.

Management's Report on Internal Control over Financial Reporting 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Securities Exchange Act of 1934 Rule 13a-15(f). Our management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission ("2013 COSO Framework").

A material weakness is a deficiency or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Our management concluded we have a material weakness due to the following:

Accounting and Financial Reporting Policies and Procedures

The Company does not currently have a comprehensive and formalized accounting and financial reporting policies and procedures manual, nor do they have sufficient informal practices in place to efficiently and effectively complete a majority of the aspects of financial reporting, including performing reconciliations and preparing adequate and complete schedules. Management Plans to establish comprehensive financial reporting policies which include performing reconciliations and preparing adequate and complete schedules during fiscal year 2022.

34

Tracking of Contracts and Agreements

The Company should keep a master file in a centralized location of all executed contracts and agreements that the Company has entered into. In addition, the Company should document any significant transaction in an agreement. Centralizing master documents and putting them with a responsible party that is authorized to see all master documents should increase management’s ability to quickly track down important documents in the course of business and during financial reporting periods. Management plans to keep a master file in a centralized location of all executed contracts and agreements that the Company has entered into beginning fiscal year 2021.

Evidence and Retention of Financial Data Review

The Company should document and retain all management reviews related to financial data. This includes reviews of reconciliations, accounts receivable, accounts payable, financial reports, budgets, etc. Management review procedures related to financial data should also be included in the accounting policies and procedures manual. Management plans to retain reviews of reconciliations, accounts receivable, accounts payable, financial reports, budgets, etc. during fiscal year 2022.

35

PART II – OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS

None.

ITEM 2.      UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS SECURITIES

None.

ITEM 3.      DEFAULTS UPON SENIOR SECURITIES 

None noted.

ITEM 4.     MINE SAFETY DISCLOSURES

Not applicable to our Company.

ITEM 5.     OTHER INFORMATION

None noted.

ITEM 6.      EXHIBITS

Exhibit Number	Exhibit Description
31.1	Certification of the Chief Executive Officer Pursuant to Rule 13a-14 or 15d-14 of the Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of the Chief Financial Officer Pursuant to Rule 13a-14 or 15d-14 of the Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*	Inline XBRL Instance Document
101.SCH*	Inline XBRL Schema Document
101.CAL*	Inline XBRL Calculation Linkbase Document
101.DEF*	Inline XBRL Definition Linkbase Document
101.LAB*	Inline XBRL Label Linkbase Document
101.PRE*	Inline XBRL Presentation Linkbase Document
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

36

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

	Dalrada Financial Corporation
	By: /s/ Brian Bonar
Date:   May 23, 2022	Brian Bonar
	Chief Executive Officer

Pursuant to the requirements of the Exchange Act this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Brian Bonar	Chief Executive Officer	May 23, 2022
Brian Bonar	and Director

37

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO

18 USC, ss 1350, AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES OXLEY ACT OF 2002

I, Brian Bonar, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Dalrada Financial Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedure to be designed under our supervision, to ensure that material information relating to the registrant, including its condensed consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based upon such evaluation; and
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 23, 2022

/s/ Brian Bonar

Brian Bonar
President, Chief Executive Officer, and Director
(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO

18 USC, ss 1350, AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES OXLEY ACT OF 2002

I, Kyle McCollum, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Dalrada Financial Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedure to be designed under our supervision, to ensure that material information relating to the registrant, including its condensed consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based upon such evaluation; and
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 23, 2022

/s/ Kyle McCollum

Kyle McCollum
Chief Financial Officer, and Director
(Principal Financial Officer
and Principal Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Brian Bonar, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)     the Quarterly Report on Form 10-Q of Dalrada Financial Corporation for the period ended March 31, 2022 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)     the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Dalrada Financial Corporation

Dated:  May 23, 2022
	/s/ Brian Bonar
	Brian Bonar
	President, Chief Executive Officer, and Director
	(Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Kyle McCollum, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)     the Quarterly Report on Form 10-Q of Dalrada Financial Corporation for the period ended March 31, 2022 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)     the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Dalrada Financial Corporation

Dated:  May 23, 2022
	/s/ Kyle McCollum
	Kyle McCollum
	Chief Financial Officer, and Director
	(Principal Financial Officer and Principal Accounting Officer)

XML

Cover - shares	9 Months Ended
	Mar. 31, 2022	May 10, 2022
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Mar. 31, 2022
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2022
Current Fiscal Year End Date	--06-30
Entity File Number	000-12641
Entity Registrant Name	DALRADA FINANCIAL CORPORATION
Entity Central Index Key	0000725394
Entity Tax Identification Number	38-3713274
Entity Incorporation, State or Country Code	WY
Entity Address, Address Line One	600 La Terraza Blvd.
Entity Address, City or Town	Escondido
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92025
City Area Code	858
Local Phone Number	283-1253
Title of 12(b) Security	Common Stock, $0.005 par value per share
Trading Symbol	DFCO
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		70,588,684

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Mar. 31, 2022	Jun. 30, 2021
Current assets:
Cash and cash equivalents	$ 547,284	$ 110,285
Accounts receivable, net	7,425,154	265,812
Accounts receivable, net - related parties	298,714	69,952
Other receivables	171,260	67,328
Inventories	1,156,681	842,108
Prepaid expenses and other current assets	161,634	285,026
Total current assets	9,760,727	1,640,511
Long-term receivables	0	0
Property and equipment, net	939,042	489,902
Goodwill	795,016	736,456
Intangible assets, net	817,231	664,494
Right of use asset, net	678,827	532,327
Right of use asset, net - related party	521,611	639,415
Total assets	13,512,454	4,703,105
Current liabilities:
Accounts payable	1,033,402	910,339
Accrued liabilities	1,513,571	641,380
Accrued payroll taxes, penalties and interest	2,025,582	1,953,024
Accounts payable and accrued liabilities – related parties	1,240,385	414,237
Deferred revenue	661,074	219,999
Notes payable, current portion	394,100	415,817
Notes payable – related parties	4,804,622	10,508,955
Convertible note payable - related party	0	1,875,000
Convertible notes payable, net of debt discount	1,536,637	0
Right of use liability	200,328	76,570
Right of use liability - related party	163,920	159,790
Total current liabilities	13,573,621	17,175,111
Notes payable – related parties	10,019,440	0
Right of use liability	478,499	455,757
Right of use liability - related party	357,690	479,625
Total liabilities	24,429,250	18,110,493
Commitments and contingencies (Note 13)
Stockholders' deficit:
Common stock, $0.005 par value, 1,000,000,000 shares authorized, 70,588,684 and 68,464,742 shares issued and outstanding at March 31, 2022 and June 30, 2021, respectively	352,915	369,194
Common stock to be issued	343,900	601,825
Additional paid-in capital	103,504,188	92,965,821
Noncontrolling interests	1,227,504	(38,391)
Accumulated deficit	(116,412,419)	(107,338,174)
Accumulated other comprehensive income (loss)	66,966	32,287
Total stockholders' deficit	(10,916,796)	(13,407,388)
Total liabilities and stockholders' deficit	13,512,454	4,703,105
Series G Preferred Stock [Member]
Stockholders' deficit:
Preferred Stock, Value, Issued	100	0
Series F Preferred Stock [Member]
Stockholders' deficit:
Preferred Stock, Value, Issued	$ 50	$ 50

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Mar. 31, 2022	Jun. 30, 2021
Common stock, par value	$ 0.005	$ 0.005
Common stock, shares authorized	1,000,000,000	1,000,000,000
Common stock, shares issued	70,588,684	68,464,742
Common stock, shares outstanding	70,588,684	68,464,742
Series G Preferred Stock [Member]
Preferred Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Preferred Stock, Shares Authorized	100,000	100,000
Preferred Stock, Shares Issued	10,002	0
Preferred Stock, Shares Outstanding	10,002	0
Series F Preferred Stock [Member]
Preferred Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Preferred Stock, Shares Authorized	5,000	5,000
Preferred Stock, Shares Issued	5,000	5,000
Preferred Stock, Shares Outstanding	5,000	5,000

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021
Income Statement [Abstract]
Revenues	$ 5,572,826	$ 1,303,022	$ 15,530,319	$ 2,962,784
Revenues - related party	19,324	285,307	111,448	440,455
Total revenues	5,592,150	1,588,329	15,641,767	3,403,239
Cost of revenue	1,773,630	854,791	5,034,308	1,547,052
Gross profit	3,818,520	733,538	10,607,459	1,856,187
Operating expenses:
Selling, general and administrative (includes stock-based compensation of $362,532 and $0 for three months and $2,145,626 and $730,000 for nine months ended March 31, 2022 and 2021, respectively)	6,458,163	2,917,707	16,000,902	5,644,157
Research and development	0	125,752	1,596	404,253
Total operating expenses	6,458,163	3,043,459	16,002,498	6,048,410
Income (loss) from operations	(2,639,643)	(2,309,921)	(5,395,039)	(4,192,223)
Other income (expense):
Interest expense	(338,677)	(184,370)	(597,551)	(468,181)
Interest income	4,232	2,991	5,280	3,893
Other income	(3,974)	458	9,270	37,256
Change in fair value of derivative liability	0	0	0	0
Gain (loss) on foreign exchange	(15,018)	21,393	(59,351)	15,945
Total other income (expenses)	(353,437)	(159,528)	(642,352)	(411,087)
Net loss before taxes	(2,993,080)	(2,469,449)	(6,037,391)	(4,603,310)
Income taxes	0	0	0	0
Net loss	(2,993,080)	(2,469,449)	(6,037,391)	(4,603,310)
Net income (loss) attributable to noncontrolling interests	430,147	(4,724)	3,036,854	(24,328)
Net loss attributable to Dalrada Financial Corporation stockholders	(3,423,227)	(2,464,725)	(9,074,245)	(4,578,982)
Foreign currency translation	(4,990)	(15,634)	34,679	8,625
Comprehensive loss	$ (2,998,070)	$ (2,485,083)	$ (6,002,712)	$ (4,594,685)
Net loss per common share to Dalrada stockholders - basic	$ (0.05)	$ (0.04)	$ (0.12)	$ (0.07)
Net loss per common share to Dalrada stockholders - diluted	$ (0.05)	$ (0.04)	$ (0.12)	$ (0.07)
Weighted average common shares outstanding - basic	70,235,384	70,278,075	72,718,261	69,060,362
Weighted average common shares outstanding - diluted	70,235,384	70,278,075	72,718,261	69,060,362

XML

Condensed Consolidated Statements of Operations (Unaudited) (Parenthetical) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021
Income Statement [Abstract]
Stock-based compensation	$ 362,532	$ 0	$ 2,145,626	$ 730,000

XML

Condensed Consolidated Statements of Stockholders' Deficit (Unaudited) - USD ($)	Preferred Stock Series G [Member]	Preferred Stock Series F [Member]	Common Stock [Member]	Commonstockbeissued [Member]	Preferred Stocktobe Issued [Member]	Additional Paid-in Capital [Member]	Noncontrolling Interest [Member]	Retained Earnings [Member]	Comprehensive Income [Member]	Total
Beginning balance, value at Jun. 30, 2020	$ 50	$ 50	$ 342,324			$ 91,904,874	$ 51,821	$ (107,429,607)	$ (7,897)	$ (15,138,435)
Beginning balance, shares at Jun. 30, 2020	5,000	5,000	68,464,742
Net income (loss)							5,015	(914,356)		(909,341)
Foreign currency translation									14,209	14,209
Ending balance, value at Sep. 30, 2020	$ 50	$ 50	$ 342,324			91,904,874	56,836	(108,343,963)	6,312	(16,033,567)
Ending balance, shares at Sep. 30, 2020	5,000	5,000	68,464,742
Net income (loss)							(24,619)	(1,799,901)		(1,824,520)
Foreign currency translation									10,050	10,050
Ending balance, value at Dec. 31, 2020	$ 50	$ 50	$ 342,324			91,904,874	32,217	(110,143,864)	16,362	(17,848,037)
Ending balance, shares at Dec. 31, 2020	5,000	5,000	68,464,742
Net income (loss)							(4,724)	(2,464,725)		(2,469,449)
Foreign currency translation									(15,634)	(15,634)
Common stock issued to board members			$ 22,500			707,500				730,000
Common stock issued to board members, shares			4,500,000
Common stock issued pursuant to business combinations			$ 1,500	687,800		104,700				794,000
Common stock issued pursuant to business combinations, shares			300,000
Ending balance, value at Mar. 31, 2021	$ 50	$ 50	$ 366,324	687,800		92,717,074	27,493	(112,608,589)	728	(18,809,120)
Ending balance, shares at Mar. 31, 2021	5,000	5,000	73,264,742
Beginning balance, value at Jun. 30, 2021		$ 50	$ 369,194	601,825		92,965,821	(38,391)	(107,338,174)	32,287	(13,407,388)
Beginning balance, shares at Jun. 30, 2021		5,000	73,838,662
Net income (loss)							1,289,169	(2,265,842)		(976,673)
Foreign currency translation									39,344	39,344
Conversion of related party notes into preferred stock					6,532,206					6,532,206
Common stock issued pursuant to acquisitions			$ 1,063	(85,975)		84,913
Common stock issued pursuant to acquisitions, shares			212,500
Joint ventures				58,560			111,185			169,745
Reversal of shares previously issued to directors			$ (1,647)			(13,179)				(14,826)
Reversal of shares previously issued to directors, shares			(329,478)
Stock-based compensation			$ 10,000			667,507				677,507
Stock-based compensation, shares			2,000,000
Ending balance, value at Sep. 30, 2021		$ 50	$ 378,610	574,410	6,532,206	93,705,062	1,361,963	(109,604,016)	71,631	(6,980,085)
Ending balance, shares at Sep. 30, 2021		5,000	75,721,684
Beginning balance, value at Jun. 30, 2021		$ 50	$ 369,194	601,825		92,965,821	(38,391)	(107,338,174)	32,287	(13,407,388)
Beginning balance, shares at Jun. 30, 2021		5,000	73,838,662
Ending balance, value at Mar. 31, 2022	$ 100	$ 50	$ 352,915	343,900		103,504,188	1,227,504	(116,412,419)	66,966	(10,916,796)
Ending balance, shares at Mar. 31, 2022	10,002	5,000	70,588,684
Beginning balance, value at Sep. 30, 2021		$ 50	$ 378,610	574,410	6,532,206	93,705,062	1,361,963	(109,604,016)	71,631	(6,980,085)
Beginning balance, shares at Sep. 30, 2021		5,000	75,721,684
Net income (loss)							1,317,537	(3,385,175)		(2,067,638)
Foreign currency translation									325	325
Common stock issued pursuant to acquisitions			$ 1,063	(85,975)		84,913
Common stock issued pursuant to acquisitions, shares			212,500
Joint ventures			$ 1,250	(58,560)		57,310	(1,874,244)			(1,874,244)
Joint venture, shares			250,000
Reversal of shares previously issued to directors			$ (32,500)			32,500
Reversal of shares previously issued to directors, shares			(6,500,000)
Stock-based compensation			$ 2,500			1,103,087				1,105,587
Stock-based compensation, shares			500,000
Issuance of preferred stock	$ 100				(6,532,206)	6,532,106
Issuance of preferred stock, shares	10,002
Ending balance, value at Dec. 31, 2021	$ 100	$ 50	$ 350,922	429,875		101,514,978	805,257	(112,989,192)	71,956	(9,816,053)
Ending balance, shares at Dec. 31, 2021	10,002	5,000	70,184,184
Net income (loss)							430,147	(3,423,227)		(2,993,080)
Foreign currency translation									(4,990)	(4,990)
Common stock issued pursuant to acquisitions			$ 1,063	(85,975)		84,913
Common stock issued pursuant to acquisitions, shares			212,500
Joint ventures							(7,900)			(7,900)
Stock-based compensation						362,532				362,532
Common stock issued in connection with convertible note			$ 930			1,541,765				1,542,695
Common stock issued in connection with convertible note, shares			192,000
Ending balance, value at Mar. 31, 2022	$ 100	$ 50	$ 352,915	$ 343,900		$ 103,504,188	$ 1,227,504	$ (116,412,419)	$ 66,966	$ (10,916,796)
Ending balance, shares at Mar. 31, 2022	10,002	5,000	70,588,684

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Cash flows from operating activities:
Net loss	$ (6,037,391)	$ (4,603,310)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	156,897	37,318
Stock compensation	2,145,626	730,000
Amortization of debt discount	146,475	0
Changes in operating assets and liabilities:
Accounts receivable	(7,388,104)	(925,095)
Other receivables	(103,932)	48,191
Inventories	(314,573)	58,666
Prepaid expenses and other current assets	123,392	(109,268)
Accounts payable	123,063	47,350
Accounts payable and accrued liabilities - related parties	1,967,786	675,016
Accrued liabilities	1,100,808	130,027
Accrued payroll taxes, penalties and interest	72,558	364,718
Deferred revenue	441,075	(156,291)
Net cash used in operating activities	(7,566,320)	(3,702,678)
Cash flows from investing activities:
Net cash acquired pursuant to business combination	0	70,131
Purchase of property and equipment	(441,521)	(139,081)
Purchase of intangibles	(206,068)	0
Net cash used in investing activities	(647,589)	(68,950)
Cash flows from financing activities:
Proceeds from related party notes payable	7,602,059	4,002,594
Net proceeds (repayments) from notes payable	(21,717)	(49,544)
Proceeds from convertible note payable	2,932,857	0
Distributions to noncontrolling interest	(1,882,144)	0
Repurchase of common shares from subsidiary	(14,826)	0
Net cash provided by financing activities	8,616,229	3,953,050
Net change in cash and cash equivalents	402,320	181,422
Effect of exchange rate changes on cash	34,679	8,625
Cash and cash equivalents at beginning of period	110,285	75,165
Cash and cash equivalents at end of period	547,284	265,212
Supplemental disclosure of cash flow information:
Cash paid for income taxes	0	0
Cash paid for interest	0	0
Supplemental disclosure of non-cash investing and financing activities:
Conversion of related party notes and interest into preferred stock	6,532,206	0
Contribution of property and equipment into joint venture	111,185	0
Issuance of shares to joint venture partner	58,560	0
Conversion of accounts payable related parties to notes payable related parties	181,744	0
Common stock and warrants issued in connection with convertible note	1,542,695	0
Common stock issued pursuant to business combination	0	794,000
Fair value of assets acquired and liabilities assumed in acquisition	0	492,689
Conversion of accounts payable related parties to related parties convertible notes	0	781,580
Outstanding balance of note payable issued for due to seller payment	$ 0	$ 98,000

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Organization and Nature of Operations

9 Months Ended

Mar. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Nature of Operations

1. Organization and Nature of Operations

Dalrada Financial Corporation, (“Dalrada”), a Wyoming Corporation, and its wholly owned subsidiaries (collectively, the “Company”, “we”, “us” or “our”) is a global solutions provider of clean energy, healthcare, technology, and precision engineering solutions. The company has locations in Malaysia, India, UK, and the USA.

Our operating subsidiaries are Dalrada Precision, Dalrada Health Products, Dalrada Technologies, and Dalrada Energy Services. The subsidiaries are positioned to service the clean energy, healthcare, and technology industries. We market numerous products and services which continuously build upon our core by bringing innovation to a complex new world. During calendar year 2021, the Company expanded its healthcare segment into education, health wellness and rejuvenation as well as COVID-19 testing. As consumers, businesses, and governments seek alternative solutions, Dalrada’s subsidiaries respond with affordable, accessible, and impactful innovations.

The subsidiaries of Dalrada Precision Corp. include: Likido Limited (“Likido”) and Ignite I.T. Corp. (“Ignite”). The subsidiaries of Dalrada Health Products include: Empower Genomics Corp. (“Empower”); Solas Corp. (“Solas”); Pacific Stem Cells, LLC (“PSC”); Pala Diagnostics, LLC (“Pala”); Shark Innovative Technologies Corp. (“Shark”) and International Health Group (“IHG”). The subsidiaries of Dalrada Technologies includes: Prakat Solutions Private Limited and Prakat Solutions (together “Prakat”). Dalrada Energy Services, Inc. (“DES”) is a stand-alone subsidiary.

The COVID-19 pandemic continues to evolve, and the extent to which COVID-19 may impact the Company’s business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the pandemic, the emergence and impact of variants, vaccinations, travel restrictions and social distancing in the United States and other countries, business closures or business disruptions, and the effectiveness of actions taken in the United States and other countries to contain and treat the disease. While the Company experienced increased revenue levels in 2022 related to its COVID-19 testing business, these results are not expected to be indicative of future results.

The Company's principal executive offices are located at 600 La Terraza Blvd., Escondido, California 92025. For more information about the Company’s products visit www.dalrada.com

Going Concern

These condensed consolidated financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As of March 31, 2022, the Company has an accumulated deficit of $116,412,419. The Company closed a convertible debenture funding on February 4, 2022 for a total principal amount of $3,000,000. The continuation of the Company as a going concern is dependent upon the continued financial support from related parties, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing and generating profitable operations from the Company’s future operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These condensed consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

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Summary of Significant Accounting Policies

9 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

(a) Basis of Presentation

These consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars. The Company’s fiscal year end is June 30.

We have prepared the accompanying condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These condensed consolidated financial statements are unaudited and, in our opinion, include all adjustments, consisting of normal recurring adjustments and accruals necessary for a fair presentation of our balance sheets, operating results, and cash flows for the periods presented. Operating results for the periods presented are not necessarily indicative of the results that may be expected for fiscal year 2022. Certain information and footnote disclosures normally included in condensed consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been omitted in accordance with the rules and regulations of the SEC. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and accompanying notes.

(b) Principles of Consolidation

These condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries: Dalrada Precision, a company incorporated in the State of California, since June 25, 2018 (date of incorporation), Dalrada Health, a company incorporated in the State of California, since October 2, 2018 (date of incorporation), Dalrada Energy Services, a company incorporated in the State of Wyoming, since March 17, 2022 (date of incorporation), as well as its subsidiaries (Likido, Prakat, Shark, IHG, PSC, Ignite, Empower, Solas) since their respective acquisition dates and Controlling Interest in Pala (see Note 3) . All inter-company transactions and balances have been eliminated on consolidation.

The condensed consolidated financial statements include the accounts of all entities controlled by the Company through its direct or indirect ownership of a majority voting interest. Additionally, the condensed consolidated financial statements include the accounts of variable interest entities (“VIEs”) in which the Company has a variable interest and for which the Company is the “primary beneficiary” as it has both: (1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (2) the obligation to absorb losses of the VIE that potentially could be significant to the VIE or the right to receive benefits from the VIE that potentially could be significant to the VIE. All significant intercompany accounts and transactions are eliminated in consolidation.

Income attributable to the minority interest in the Company's majority owned and controlled consolidated subsidiaries is recorded as net income attributable to noncontrolling interests in the consolidated statements of operations and the noncontrolling interest is reflected as a separate component of consolidated stockholders' equity in the consolidated balance sheet.

(c) Use of Estimates

The preparation of these condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the valuation of inventory, valuation of accrued payroll tax liabilities, valuation of acquired assets and liabilities, variables used in the computation of share-based compensation, and deferred income tax asset valuation allowances.

The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

(d) Cash and Cash Equivalents

The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.

(e) Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company generally maintains balances in various operating accounts at financial institutions that management believes to be of high credit quality, in amounts that may exceed federally insured limits. The Company has not experienced any losses related to its cash and cash equivalents and does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

During the nine months ended March 31, 2022, healthcare insurers and government payers accounted for over 74% of total revenues. During the nine months ended March 31, 2022, healthcare insurers and government payers amounted to total revenue of $10,340,464. The accounts receivable related to both healthcare insurers and government payers is $4,766,023 as of March 31, 2022.

(f) Fair Value Measurements

Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1 - applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2 - applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3 - applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company’s financial instruments consist principally of cash, accounts receivable, accounts payable and accrued liabilities, notes payable, and amounts due to related parties. Pursuant to ASC 820, the fair value of cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

(g) Convertible Instruments

The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC Topic 815, Derivatives and Hedging Activities (“ASC 815”).

Applicable U.S. GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments according to certain criteria. The criteria includes circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

The Company accounts for convertible instruments (when the Company has determined that the embedded conversion options should not be bifurcated from their host instruments) as follows. The Company records, when necessary, deemed dividends for the intrinsic value of conversion options embedded in shares based upon the differences between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the shares. 

(h) Accounts Receivable

Accounts receivable are derived from products and services delivered to customers and are stated at their net realizable value. Each month, the Company reviews its receivables on a customer-by-customer basis and evaluates whether an allowance for doubtful accounts is necessary based on any known or perceived collection issues. Any balances that are eventually deemed uncollectible are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. As of March 31, 2022 and June 30, 2021, the Company recorded a bad debt allowance of $925,619 and $37,465, respectively.

Pala and Empower have a standardized approach to estimate the amount of consideration that we expect to be entitled to for its COVID-19 testing revenue, including the impact of contractual allowances (including payer denials), and patient price concessions. As a result of Pala and Empower’s limited transaction history, collection and payer reimbursement is based on industry standards and third-party experts. Adjustments to our estimated contractual allowances and implicit patient price concessions are recorded in the current period as changes in estimates. Although we have limited track record, further adjustments to the allowances, based on actual receipts, may be recorded upon settlement.

In March 2022, the U.S. Health Resources and Services Administration (“HRSA”) informed providers that, after March 22, 2022, it would stop accepting claims for testing and treatment for uninsured individuals under the HRSA COVID-19 Uninsured Program and that claims submitted prior to that date would be subject to eligibility and availability of funds. For the three months ended March 31, 2022, revenue for testing of uninsured individuals under the HRSA COVID-19 Uninsured Program represented approximately 46% of our COVID-19 testing net revenue. As of March 31, 2022, approximately 25% of our net accounts receivable was associated with claims for reimbursement for COVID-19 testing of uninsured individuals. As a result of HRSA ceasing the COVID-19 Uninsured Program, the Company reduced its Accounts Receivable by $614,322 for the three months ended March 31, 2022 and $1,500,799 for the nine months ended March 31, 2022. Although we believe that our estimates for contractual allowances and patient price concessions are appropriate, actual results could differ from those estimates.

(i) Inventory

Inventory is recorded at the lower of cost or net realizable value on a first-in first-out basis. As of March 31, 2022 and June 30, 2021, inventory is comprised of raw materials purchased from suppliers, work-in-progress, and finished goods produced or purchased for resale. The Company establishes inventory reserves for estimated obsolete or unsaleable inventory equal to the difference between the cost of inventory and the estimated net realizable value based upon assumptions about future market conditions.

(j) Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization expense is recognized using the straight-line method over the estimated useful life of each asset, as follows: 

	Estimated Useful Life
Computer and office equipment	3 - 5 years
Machinery and equipment	5 years
Leasehold improvements	Shorter of lease term or useful life

Estimated useful lives are periodically assessed to determine if changes are appropriate. Maintenance and repairs are charged to expense as incurred. When assets are retired or otherwise disposed of, the cost of these assets and related accumulated depreciation or amortization are eliminated from the balance sheet and any resulting gains or losses are included in the statement of operations loss in the period of disposal.

(k) Business Combinations and Acquisitions

The Company accounts for acquisitions in which it obtains control of one or more businesses as a business combination. The purchase price of the acquired businesses is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the purchase price over those fair values is recognized as goodwill. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments, in the period in which they are determined, to the assets acquired and liabilities assumed with the corresponding offset to goodwill. If the assets acquired are not a business, the Company accounts for the transaction or other event as an asset acquisition. Under both methods, the Company recognizes the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired entity. In addition, for transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase.

(l) Impairment of Long-Lived Assets

The Company reviews its long-lived assets (property and equipment) for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. If the sum of the expected cash flows, undiscounted, is less than the carrying amount of the asset, an impairment loss is recognized as the amount by which the carrying amount of the asset exceeds its fair value.

Goodwill is tested annually at June 30 for impairment and upon the occurrence of certain events or substantive changes in circumstances.

The annual goodwill impairment test allows for the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. An entity may choose to perform the qualitative assessment on none, some or all of its reporting units or an entity may bypass the qualitative assessment for any reporting unit and proceed directly to step one of the quantitative impairment test. If it is determined, on the basis of qualitative factors, that the fair value of a reporting unit is, more likely than not, less than its carrying value, the quantitative impairment test is required. The quantitative impairment test calculates any goodwill impairment as the difference between the carrying amount of a reporting unit and its fair value, but not to exceed the carrying amount of goodwill. As of March 31, 2022 and June 30, 2021, there were no significant qualitative factors that indicated goodwill was impaired.

(m) Revenue Recognition

The Company adopted ASU 2014-09, Revenue from Contracts with Customers, and its related amendments (collectively known as “ASC 606”), effective January 1, 2019 using the modified retrospective transition approach applied to all contracts. Therefore, the reported results for the quarter ended March 31, 2022 reflect the application of ASC 606. Management determined that there were no retroactive adjustments necessary to revenue recognition upon the adoption of the ASU 2014-09. The Company determines revenue recognition through the following steps:

· Identification of a contract with a customer;

· Identification of the performance obligations in the contract;

· Determination of the transaction price;

· Allocation of the transaction price to the performance obligations in the contract; and

· Recognition of revenue when or as the performance obligations are satisfied.

Revenue is recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. As a practical expedient, the Company does not adjust the transaction price for the effects of a significant financing component if, at contract inception, the period between customer payment and the transfer of goods or services is expected to be one year or less.

The Company’s revenue is derived from the sales of its products, which represents net sales recorded in the Company’s condensed consolidated statements of operations. Product sales are recognized when performance obligations under the terms of the contract with the customer are satisfied. Typically, this would occur upon transfer of control, including passage of title to the customer and transfer of risk of loss related to those goods. The Company measures revenue as the amount of consideration to which it expects to be entitled in exchange for transferring goods (transaction price). The Company records reductions to revenue for estimated customer returns, allowances, markdowns and discounts. The Company bases its estimates on historical rates of customer returns and allowances as well as the specific identification of outstanding returns, markdowns and allowances that have not yet been received by the Company. The actual amount of customer returns and allowances is inherently uncertain and may differ from the Company’s estimates. If the Company determines that actual or expected returns or allowances are significantly higher or lower than the reserves it established, it would record a reduction or increase, as appropriate, to net sales in the period in which it makes such a determination. Reserves for returns, and markdowns are included within accrued expenses and other liabilities. Allowance and discounts are recorded in accounts receivable, net and the value of inventory associated with reserves for sales returns are included within prepaid expenses and other current assets on the condensed consolidated balance sheets.

The Company estimates warranty claims reserves based on historical results and research and determined that a warranty reserve was not necessary as of March 31, 2022.

Net revenues from COVID-19 testing accounted for over 74% of the Company’s total net revenues for the nine months ended March 31, 2022 and primarily comprised of a high volume of relatively low-dollar transactions. Pala, which provides clinical testing services and other services, satisfies its performance obligations and recognizes revenues primarily upon completion of the testing process (when results are reported) or when services have been rendered. Pala does not invoice the patients themselves for testing but relies on healthcare insurers and government payers for reimbursement for COVID-19 testing. Pala has a standardized approach to estimate the amount of consideration that we expect to be entitled to, including the impact of contractual allowances (including payer denials), and patient price concessions. As a result of Pala’s limited transaction history, collection and payer reimbursement is based on industry standards and third-party experts. Adjustments to our estimated contractual allowances and implicit patient price concessions are recorded in the current period as changes in estimates. Although we have limited track record, further adjustments to the allowances, based on actual receipts, may be recorded upon settlement.

The DES transaction price for its contracts reflects our estimates and are based on historical, current and forecasted information to determine the expected amount to which we will be entitled in exchange for transferring the promised goods or services to the customer. The realization of variable consideration occurs within a short period of time from product delivery; therefore, the time value of money effect is not significant. We primarily provide standard warranty programs for products in our commercial businesses for periods that typically range from one to two years. These assurance-type programs typically cannot be purchased separately and do not meet the criteria to be considered a performance obligation. Our cost estimation process is based on the professional knowledge and experience of engineers and program managers along with finance professionals

The Company also earns service revenue from its other subsidiaries, including information technology and consulting services via Prakat, educational programs and courses via IHG, and management services for Solas. For Prakat and Solas, revenues are recognized when performance obligations have been satisfied and the services are complete. This is generally at a point of time upon written completion and client acceptance of the project, which represents transfer of control to the customer. For IHG, revenues are recognized over the course of a semester while services are performed.

Disaggregation of Revenue

The following table presents the Company's revenue disaggregated by revenue source: 

	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
Product sales - third parties	$	1,627,647	$	1,150,289	$	1,788,938	$	1,715,478
Product sales - related party		19,324		23,429		49,208		81,077
Service revenue - third parties		3,945,179		152,733		13,741,381		1,247,306
Service revenue - related party		–		261,878		62,240		359,378
Total revenue	$	5,592,150	$	1,588,329	$	15,641,767	$	3,403,239

Contract Balances

The following table provides information about receivables and liabilities from contracts with customers:  

	March 31,		June 30,
	2022		2021
Accounts receivable, net	$	7,425,154	$	265,812
Accounts receivable, net - related parties		298,714		69,952
Deferred revenue		661,074		219,999

The Company invoices customers based upon contractual billing schedules, and accounts receivable are recorded when the right to consideration becomes unconditional. Contract liabilities represent a set-up fee prepayment received from a customer in advance of performance obligations met.

(n) Cost of Revenue

Cost of revenue consists primarily of inventory sold for product sales and direct labor for information technology and consulting services. The following table is a breakdown of cost of revenue:   

	Three Months Ended  March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
Product sales	$	796,148	$	401,790	$	1,386,244	$	798,934
Service revenue		977,482		453,001		3,648,064		748,118
Total cost of revenue	$	1,773,630	$	854,791	$	5,034,308	$	1,547,052

(o) Advertising

Advertising costs are expensed as incurred. During the nine months ended March 31, 2022 and 2021, advertising expenses were approximately $366,551 and $15,000, respectively.

(p) Stock-based Compensation

The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued. During the nine months ended March 31, 2022 and 2021, stock-based compensation expense was $2,145,626 and $730,000, respectively.

(q) Foreign Currency Translation

The functional currency of the Company is the United States dollar. The functional currency of the Likido subsidiary is the British pound. The functional currency of Prakat is the Indian rupee. The financial statements of the Company’s subsidiaries were translated to United States dollars in accordance with ASC 830, Foreign Currency Translation Matters, using period-end rates of exchange for assets and liabilities, and average rates of exchange for the year for revenues and expenses. Gains and losses arising on foreign currency denominated transactions are included in condensed consolidated statements of operations.

(r) Comprehensive Loss

ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the condensed consolidated financial statements. During the nine months ended March 31, 2022, the Company’s only component of comprehensive income was foreign currency translation adjustments.

(s) Non-controlling Interests

Non-controlling interests are classified as a separate component of equity in the Company's consolidated balance sheets and statements of changes in stockholders’ equity. Net loss attributable to non-controlling interests are reflected separately from consolidated net loss in the consolidated statements of comprehensive loss and statements of changes in stockholders’ equity. Any change in ownership of a subsidiary while the controlling financial interest is retained is accounted for as an equity transaction between the controlling and non-controlling interests. In addition, when a subsidiary is deconsolidated, any retained non-controlling equity investment in the former subsidiary will be initially measured at fair value and the difference between the carrying value and fair value of the retained interest will be recorded as a gain or loss.

As of March 31, 2022, non-controlling interests pertained to the Company’s Prakat and Pala subsidiaries.

(t) Basic and Diluted Net Loss per Share

The Company computes net income (loss) per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the periods using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the periods is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants.

The weighted average number of common stock equivalents related to convertible notes payable of 3,278,330 and 58,042,294 shares, and cashless warrants of 15,786,829 and 0, was not included in diluted loss per share, because the effects are antidilutive, for the three and nine months ended March 31, 2022 and 2021, respectively.

There were no adjustments to the numerator during the three and nine months ended March 31, 2022 and 2021.

(u) Income Taxes

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, Accounting for Income Taxes. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

(v) Recent Accounting Pronouncements

In August 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-06, which simplifies the guidance on the issuer’s accounting for convertible debt instruments by removing the separation models for convertible debt with a cash conversion feature and convertible instruments with a beneficial conversion feature. As a result, entities will not separately present in equity an embedded conversion feature in such debt and will account for a convertible debt instrument wholly as debt, unless certain other conditions are met. The elimination of these models will reduce reported interest expense and increase reported net income for entities that have issued a convertible instrument that is within the scope of ASU 2020-06. ASU 2020-06 is applicable for fiscal years beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. The Company has elected to early adopt this ASU and the adoption of this ASU did not have a material impact on the Company’s consolidated financial statements and related disclosures.

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Investment in Pala Diagnostics

9 Months Ended

Mar. 31, 2022

Investment In Pala Diagnostics

Investment in Pala Diagnostics

3. Investment in Pala Diagnostics

In August 2021, Dalrada, through its subsidiary Dalrada Health, entered into a joint venture (“JV”) with Vivera Pharmaceuticals, Inc (“Vivera”) for a 51% ownership and controlling interest. The JV, Pala Diagnostics, LLC (“Pala”) is a CLIA-certified diagnostics lab focused on SARS-CoV-2 testing for now with additional testing capabilities to be introduced. The JV has been treated as a business combination.

We determined that Pala is a Variable Interest Entity (VIE), We believe that the Company has the power to direct the activities that most significantly impact the economic performance of Pala, and accordingly, Dalrada is considered the primary beneficiary of the VIE. The Company has consolidated the activities of the VIE.

Pursuant to the partnership agreement, Dalrada had an equity commitment of $500,000 for operating capital of which it achieved during the period ended December 31, 2021. In the nine months ended March 31, 2022, Vivera contributed property and equipment at a fair value of $111,185. This amount was recorded to non-controlling interest equity balance in the consolidated balance sheets.

In November 2021, Pala Diagnostics signed a Factoring Agreement for up to $1,000,000 with a related party which bears an annualized interest rate of 24%. As of March 31, 2022, the outstanding principal and interest of $210,435 and $14,943, respectively, was paid in full.

Pursuant to the JV agreement, Dalrada issued 250,000 shares of common stock to Vivera in October 2021. The fair value of $58,560 was recorded to goodwill as of March 31, 2022.

As of the quarter ended March 31, 2022, Vivera’s unauthorized distribution balance totaled $1,882,144. The Company initiated an action seeking judicial relief on December 7, 2021 due to the Vivera’s actions resulting in the unapproved distribution Pala. The judicial matters are presently being consolidated in Orange County, California. The pending litigation with Vivera has had a material impact on the operations of the joint venture including a significant loss of its customer base.

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Selected Balance Sheet Elements

9 Months Ended

Mar. 31, 2022

Selected Balance Sheet Elements

Selected Balance Sheet Elements

4. Selected Balance Sheet Elements

Inventories

Inventories consisted of the following as of March 31, 2022 and June 30, 2021: 

	March 31,		June 30,
	2022		2021
Raw materials	$	347,971	$	172,227
Finished goods		808,710		669,881
	$	1,156,681	$	842,108

Property and Equipment, Net

Property and equipment, net consisted of the following as of March 31, 2022 and June 30, 2021: 

	March 31,			June 30,
	2022			2021
Machinery and equipment	$	582,959		$	223,141
Leasehold improvements		301,941			323,669
Computer and office equipment		394,089			186,549
		1,278,989			733,359
Less: Accumulated depreciation		(339,947	)		(243,457	)
	$	939,042		$	489,902

Depreciation and amortization expense of $103,566 and $37,318 for the nine months ended March 31, 2022 and 2021, respectively, were included in selling, general and administrative expenses in the statements of operations.

Intangible Assets, Net

Intangible assets, net consisted of the following as of March 31, 2022 and June 30, 2021: 

	March 31, 2022
	Gross		Accumulated		Carrying
	Amount		Amortization		Value
Amortized:
Curriculum development	$	693,385	$	80,895	$	612,490
Licenses		195,000		–		195,000
Software		9,741		–		9,741
	$	898,126	$	80,895	$	817,231

	June 30, 2021
	Gross		Accumulated		Carrying
	Amount		Amortization		Value
Amortized:
Curriculum development	$	693,385	$	28,891	$	664,494
Licenses		–		–		–
	$	693,385	$	28,891	$	664,494

Amortization expense of $155,570 and $0 for the nine months ended March 31, 2022, and 2021, respectively, were included in selling, general and administrative expenses in the statements of operations.

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Accrued Payroll Taxes

9 Months Ended

Mar. 31, 2022

Payables and Accruals [Abstract]

Accrued Payroll Taxes

5. Accrued Payroll Taxes

As of March 31, 2021, and June 30, 2021, the Company had $2,025,582 and $1,953,024, respectively, of accrued payroll taxes, penalties and interest relating to calendar years 2004 - 2007. The total balance for accrued payroll taxes has accumulated on a quarterly basis beginning on their respective quarterly filing dates. Accrued interest is compounded daily at an estimated effective interest rate of 7.33%. The quarterly sub-totals that make up the $2,025,582 balance have a calculated expiration date of 10 years according to the Internal Revenue Service statute of limitations. As the tax periods surpass their estimated expiration date, the Company removes the liability from the condensed consolidated balance sheets, and an equivalent amount is recognized as “Gain on expiration of accrued payroll taxes” within other income on the condensed consolidated statements of operations. For the three months ended March 31, 2022, and 2021, the Company recognized $23,030 and $127,235, respectively, of penalties and interest within interest expense on the condensed consolidated statements of operations. The amount owing may be subject to additional late filing fees and penalties that are not quantifiable as of the date of these condensed consolidated financial statements. In addition, the Company periodically reviews the historical filings in determining if the statute has been paused or extended by the Internal Revenue Service.

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Debt

9 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

Debt

6.  Debt

Notes Payable - Related Parties

The following is a summary of notes payable – related parties on March 31, 2022 and June 30, 2021:

	March 31, 2022
	Outstanding		Accrued
	Principal		Interest
Related entity 1	$	6,300,775	$	72,852
Related entity 2		7,079,166		54,849
Related entity 3		379,525		8,226
Related entity 4		850,102		117,620
Related entity 5		181,744		1,363
Related entity 6		32,750		246
	$	14,824,062	$	255,156

	June 30, 2021
	Outstanding		Accrued
	Principal		Interest
Related entity 1	$	2,978,066	$	29,875
Related entity 2		357,025		5,532
Related entity 3		3,087,689		47,728
Related entity 4		3,668,938		93,150
Related entity 5		417,237		5,862
	$	10,508,955	$	182,147

In September 2021, the Company converted $4,428,589 in principal and $102,054 in accrued interest into 6,937 shares of Series G convertible preferred stock. As of March 31, 2022, the remaining outstanding amounts of the related party notes payable were extended through September 30, 2026.

Notes in the amount of $15,841,268 are unsecured and bear interest at 3% per annum. Each entity has significant influence or common ownership with the Company’s Chief Executive Officer.

As of March 31, 2022, and June 30, 2021, total accrued interest for Notes Payable-Related Parties was $255,156 and $182,147, respectively. The Company recorded interest expense from Notes Payable-Related Party for the nine months ended March 31, 2022, and 2021 of $173,007 and $95,998, respectively.

Convertible Notes

On February 4, 2022, the Company” entered into a securities purchase agreement (“SPA”) with YA II PN, Ltd. (the “Buyer”) for issuance and sale of convertible debentures (the “Debentures”) in the aggregate principal amount of $3,000,000, including net proceeds received of $2,880,000 from February to March 2022.

The Debentures have a fixed conversion price of $0.9151 per share (the “Fixed Conversion Price”). The principal and interest, which will accrue at a rate of 5% per annum, payable under the Debentures will mature 15 months from the issuance date (the “Maturity Date”), unless earlier converted or redeemed by the Company. At any time before the Maturity Date, the Buyer may convert the Debentures into the Company’s common stock at the Fixed Conversion Price. Beginning on May 1, 2022, and continuing on the first day of each calendar month thereafter through February 1, 2023, the Principal amount plus a 20% redemption premium and plus accrued and unpaid interest will be subject to monthly redemption (“Monthly Redemption”). Under Monthly Redemption, the Company shall redeem an applicable redemption amount in accordance with the redemption schedule provided in the Debenture, which is subject to pro rata adjustment to reflect the conversion or redemption otherwise effected pursuant to the Debenture contemporaneous with or prior to the scheduled redemption date, in cash, in common stock through the Buyer’s conversion of the Debenture (at any time after the applicable redemption date), or a combination of both at the Company’s option. With respect to each Monthly Redemption all or partially in common stock, the conversion price shall be the lower of (1) the Fixed Conversion Price, or (2) 100% of the lowest daily VWAP during the ten consecutive trading days immediately preceding the date of conversion (the “Variable Conversion Price”). The conversion price shall be adjusted from time to time pursuant to the other terms and conditions of the Debenture. At no point will the conversion price be less than $0.01.

The Company, in its sole discretion, may redeem in cash amounts owed under the Debentures prior to the Maturity Date by providing the Buyer with advance written notice at least 10 trading days prior to such redemption, provided that the Shares are trading below the Fixed Conversion Price at the time of the redemption notice. The Company shall pay a redemption premium equal to 20% (the “Redemption Premium”) of the principal amount being redeemed.

In connection with the Debenture, the Company issued to the Buyer warrants equal to 30% coverage exercisable at a strike price equal to the Fixed Conversion Price determined at the date of the initial closing, or a total of 983,499 warrants to purchase common stock. The Warrants shall be exercisable for four years and shall be exercised on a cash basis provided the Company is not in default and the shares underlying the Warrant are subject to an effective registration statement at the time of the Investor’s exercise. There is a cashless provision.

The Company analyzed the conversion feature of the warrants and determined they did not need to be bifurcated under ASC 815. Based on adoption of ASU-2020-06, the debt will be accounted for as traditional convertible debt with no portion of the proceeds attributed to the conversion feature. The warrants issued with the debt will be accounted for as a debt discount and will be amortized as interest expense over the life of the note. The warrants were valued using the Monte Carlo model and the Company recognized $1,427,495 as a debt discount.

In connection with the Debenture, the Company incurred $120,000 in issuance costs. Furthermore, the Company issued 192,000 shares of common stock to the Buyer and broker at a fair value of $115,200.

During the nine months ended March 31, 2022, the Company amortized $146,475 of debt discount. Interest expense was $18,356, all of which was accrued and unpaid as of March 31, 2022. The company also recorded accretion on the Redemption Premium of $52,857, which is included in interest expense.

The net balance of the convertible note, after unamortized debt discount of $1,516,220, was $1,483,780 as of March 31, 2022.

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Convertible Note Payable – Related Parties

9 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

Convertible Note Payable – Related Parties

7.  Convertible Note Payable – Related Parties

On June 30, 2019, the Company issued a convertible note for $1,875,000 to the Chief Executive Officer of the Company for compensation. Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and was due 360 days from the date of issuance. On June 30, 2019, the Company issued note agreement which included a conversion feature of the outstanding balance at $0.034 per share. As the conversion price was equal to the fair value of the common shares on the date of the agreement, there was no beneficial conversion feature. As of June 30, 2021, the principal balance was $1,875,000 and the accrued interest was $112,500.

In September 2021, the Company converted, along with the related party notes above, principal of $1,875,000 and accrued $126,563 in interest into 3,065 shares of Series G convertible preferred stock.

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Related Party Transactions

9 Months Ended

Mar. 31, 2022

Related Party Transactions [Abstract]

Related Party Transactions

8. Related Party Transactions

There are various related party transactions which are reflected as either accounts payable and accrued liabilities – related parties or notes payable – related parties in the consolidated Balance Sheets.

As of March 31, 2022, and June 30, 2021, the Company owed $599,212 and $414,237, respectively to a related party for reimbursement of various operating expenses, accrued salaries, management fees, etc. which has been recorded in accounts payable and accrued liabilities – related parties. See below for some specific disclosures related to these amounts.

As of March 31, 2022, and June 30, 2021, the amount above includes $67,500 and $7,650 of management fees, which consists of accounting and administrative services from a related party company controlled by the Chief Executive Officer of the Company. The current management fee agreement calls for monthly payments of $7,500. The agreement is ongoing until terminated by either party. Total expenses incurred related to management fees during the nine months ended March 31, 2022, and 2021 were $67,500 and $27,000, respectively. As of March 31, 2022, the Company owed $15,218,162 in the form of promissory notes and $1,240,385 included within accounts payable and accrued liabilities – related parties.

In September 2021, the Company converted related party notes and convertible notes of principal totaling $6,303,589 and accrued interest of $228,617 into an aggregate of 10,002 shares of Series G preferred stock.

On July 1, 2019, the Company formalized an employment agreement with its Chief Executive Officer, which entitles him to compensation of three hundred and ninety-three thousand dollars ($393,000) per year. Annual increases will be up to 10% based performance criteria to be determined at a later date. He will be issued common stock of the Company sufficient to provide a 10% ownership position post reverse split which shares be maintained for a period of two years. In addition to all other benefits and compensation, he shall be eligible for a quarterly bonus of $47,000 based on if the Company achieves a net profit for that quarter. In the three months ended December 31, 2021, the Chief Executive Officer converted $131,000 of accrued salary into a promissory note.

In October 2021, the Company cancelled 6,500,000 shares of common stock that had been previously issued to directors (see Note 11. Stock-Based Compensation for additional information).

The following is a summary of revenues recorded by the Companies to related parties with common ownership: 

	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2022		2021		2022		2021
Dalrada Health	$	19,324	$	23,429	$	49,208	$	81,077
Solas		–		–		56,240		–
Prakat		–		126,748		6,000		224,248
Pacific Stem		–		135,130		–		135,130
	$	19,324	$	285,307	$	111,448	$	440,455

See Notes 6, 7, 9, 10, and 11 for additional related party transactions.

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Preferred Stock

9 Months Ended

Mar. 31, 2022

Equity [Abstract]

Preferred Stock

9. Preferred Stock

The Company has 100,000 shares authorized of Series Preferred Stock, par value, $0.01, of which 5,000 shares of Series F Preferred Stock (at a fair value of $170) were issued to the CEO in December 2019 and 10,002 shares of Series G Preferred Stock were issued pursuant to the conversion of $6,532,206 in outstanding related party notes and accrued interest into preferred shares.

Each share of Series F Super Preferred Stock entitles the holder to the greater of (i) one hundred thousand votes for each share of Series F Super Preferred Stock, or (ii) the number of votes equal to the number of all outstanding shares of Common Stock, plus one additional vote such that the holders of Series F Super Preferred Stock shall always constitute most of the voting rights of the Corporation. In any vote or action of the holders of the Series F Super Preferred Stock voting together as a separate class required by law, each share of issued and outstanding Series F Super Preferred Stock shall entitle the holder thereof to one vote per share. The holders of Series F Super Preferred Stock shall vote together with the shares of Common Stock as one class.

Each share of Series G Convertible Preferred share converts into 2,177 shares of common stock (equivalent to converting the related equity dollars into common shares at $0.30 per share).  Series G Convertible Preferred shares do not have voting rights.

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Stockholders’ Equity

9 Months Ended

Mar. 31, 2022

Equity [Abstract]

Stockholders’ Equity

10. Stockholders’ Equity

Common Stock

In August and December 2021, the Company issued 87,500 and 87,500 shares, respectively, of common stock related to the acquisition of Pacific Stem.

In September 2021, the Company repurchased 329,478 shares of common stock from a Company employee for a total fair value of $14,827.

In September 2021, the Company issued 2,000,000 shares of common stock to board members for a total fair value of $560,000.

In October and December 2021, the Company issued 125,000 and 125,000 shares, respectively, of common stock related to the acquisition of IHG.

On October 28, 2021, 250,000 shares were issued to Vivera pursuant to the Pala agreement (see Note 3. Investment in Pala Diagnostics for additional information).

In December 2021, the Company issued 500,000 shares of common stock pursuant to a consulting agreement for a total fair value of $380,000.

In March 2022, the Company issued 125,000 shares of common stock related to the acquisition of IHG.

In March 2022, the Company issued 87,500 shares of common stock related to the acquisition of PSC.

In March 2022, the Company issued 192,000 shares of common stock pursuant to a consulting agreement for a total fair value of $107,880.

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Stock-Based Compensation

9 Months Ended

Mar. 31, 2022

Equity [Abstract]

Stock-Based Compensation

11. Stock-Based Compensation

On May 10, 2021, the Company granted 1,000,000 options to purchase common stock to its Chief Financial Officer with an exercise price of $0.47 per share. The options expire in ten years after issuance. The fair value of the options granted was $0.43 per share, or $430,027 which was calculated using the Black-Scholes model.

On November 10, 2021, the Company cancelled 6,500,000 shares issued to the Board of Directors and issued 6,500,000 cashless warrants. 4,500,000 cashless warrants were to vest immediately, and 2,000,000 cashless warrants were to vest over a 12-month period. All cashless warrants carry a $0.45 exercise price and a ten-year term. The Company recorded stock-based compensation related to the 6,500,000 shares in prior periods; therefore, no stock-based compensation related to the warrants was recorded in the three-month period ended March 31, 2022.

On November 30, 2021, the Company issued 2,275,000 cashless warrants to employees and consultants for services performed. 825,000 cashless warrants vested immediately and 1,450,000 cashless warrants vests over a 36-month period. The cashless warrants include an exercise price of $0.45 per share. The cashless warrants expire in ten years after issuance. The fair value of the cashless warrants granted was $0.73 per share, or $1,651,093 which was calculated using the Black-Scholes model.

In December 2021, the Company issued 500,000 shares of common stock pursuant to a consulting agreement for healthcare management services at $0.76 per share. The Company recorded stock-based compensation related to the 500,000 shares in the amount of $377,500.

On February 16, 2022, the Company issued 2,250,000 cashless warrants to new members of the Board of Directors. The cashless warrants vest over a 12-month period and hold an exercise price of $0.45 per share. The cashless warrants expire in ten years after issuance. The fair value of the cashless warrants granted was $0.59 per share, or $1,338,644 which was calculated using the Black-Scholes model.

During the nine months ended March 31, 2022, and 2021, stock-based compensation expense was $2,145,626 and $730,000, respectively.

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Segment Reporting

9 Months Ended

Mar. 31, 2022

Segment Reporting [Abstract]

Segment Reporting

12. Segment Reporting

Upon the Company’s acquisitions in the year ended June 30, 2020, and 2021, the Company manages its business and makes its decisions based on segments. The Company classifies its operations into 5 segments: Engineering, Health, Information Technology, Education, and Corporate. The Company evaluates the performance of its segments primarily based on revenues, operating income (loss) and net income (loss). Also included below is a breakout by segment for Inventory, PPE, Goodwill, and Total Assets.

Segment information for the three and nine months ended March 31, 2022, and 2021 is as follows: 

	Three Months Ended March 31, 2022
	Engineering		Health			Information Technology		Education			Corporate			Inter-Segment Eliminations			Consolidated
Revenues	$	1,415,480	$	2,948,850		$	1,952,352	$	177,135		$	1,060		$	(902,727	)	$	5,592,150
Income (Loss) from Operations		196,961		(439,834	)		548,618		(91,157	)		(2,820,721	)		(33,510	)	$	(2,639,643	)
Net income (loss)	$	194,950	$	(448,706	)	$	548,961	$	(91,157	)	$	(2,996,568	)	$	(200,561	)	$	(2,993,580	)

	Nine Months Ended March 31, 2022
	Engineering		Health		Information Technology		Education			Corporate			Inter-Segment Eliminations			Consolidated
Revenues	$	2,878,677	$	10,988,302	$	3,806,889	$	634,686		$	139,600		$	(2,806,387	)	$	15,641,767
Income (Loss) from Operations		109,691		3,927,719		570,478		(216,744	)		(8,225,769	)		(1,560,414	)		(5,395,039	)
Net income (loss)	$	81,092	$	3,894,343	$	568,582	$	(216,744	)	$	(8,592,081	)	$	(1,772,583	)	$	(6,037,391	)

	Three Months Ended March 31, 2021
	Engineering			Health			Information Technology			Education			Corporate			Inter-Segment Eliminations			Consolidated
Revenues	$	316,848		$	689,024		$	536,918		$	202,394		$	–		$	(156,854	)	$	1,588,329
Loss from operations		(193,260	)		(193,236	)		(39,466	)		(42,862	)		(2,077,807	)		236,711			(2,309,921	)
Net loss	$	(184,913	)	$	(178,033	)	$	(39,467	)	$	(42,862	)	$	(1,914,921	)	$	(109,253	)	$	(2,469,449	)

	Nine Months Ended March 31, 2021
	Engineering		Health			Information Technology			Education			Corporate			Inter-Segment Eliminations			Consolidated
Revenues	$	1,777,309	$	877,338		$	1,446,583		$	202,394		$	–		$	(900,384	)	$	3,403,239
Loss from operations		227,557		(513,375	)		(53,892	)		(42,862	)		(3,892,334	)		82,682			(4,192,223	)
Net loss	$	229,626	$	(498,172	)	$	(53,643	)	$	(42,862	)	$	(3,476,710	)	$	(761,549	)	$	(4,603,310	)

Geographic Information

The following table presents revenue by country: 

	Nine Months Ended
	March 31,
	2022		2021
United States	$	13,602,738	$	1,916,506
Europe		150,189		507,661
India		1,888,840		979,072
	$	15,641,767	$	3,403,239

The following table presents inventories by country: 

	March 31,		June 30,
	2022		2021
United States	$	311,697	$	335,036
Europe		844,984		507,072
	$	1,156,681	$	842,108

The following table presents property and equipment, net, by country: 

	March 31,		June 30,
	2022		2021
United States	$	710,120	$	221,308
Europe		215,601		256,888
India		13,321		11,706
	$	939,042	$	489,902

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Commitments and Contingencies

9 Months Ended

Mar. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

13. Commitments and Contingencies

Lease Commitments

The Company determines if an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys to the Company the right to control the use of an explicitly or implicitly identified fixed asset for a period of time in exchange for consideration. Control of an underlying asset is conveyed to the Company if the Company obtains the rights to direct the use of and to obtain substantially all the economic benefits from using the underlying asset. The Company has lease agreements which include lease and non-lease components, which the Company has elected to account for as a single lease component for all classes of underlying assets. Lease expense for variable lease components is recognized when the obligation is probable.

Operating lease right of use (“ROU”) assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Operating lease payments are recognized as lease expense on a straight-line basis over the lease term. The Company primarily leases buildings (real estate) which are classified as operating leases. ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. As an implicit interest rate is not readily determinable in the Company's leases, the incremental borrowing rate is used based on the information available at commencement date in determining the present value of lease payments.

The lease term for all the Company's leases includes the non-cancellable period of the lease plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor. Options for lease renewals have been excluded from the lease term (and lease liability) for the majority of the Company's leases as the reasonably certain threshold is not met.

Lease payments included in the measurement of the lease liability are comprised of fixed payments, variable payments that depend on index or rate, and amounts probable to be payable under the exercise of the Company option to purchase the underlying asset if reasonably certain.

Variable lease payments not dependent on a rate or index associated with the Company's leases are recognized when the event, activity, or circumstance in the lease agreement on which those payments are assessed as probable. Variable lease payments are presented as operating expenses in the Company's income statement in the same line item as expense arising from fixed lease payments. As of and during the three months ended March 31, 2022, management determined that there were no variable lease costs.

Right of Use Asset

In May 2020, the Company entered into a 5 five-year lease agreement to lease a commercial building in Escondido, California. The building is owned by a related party. The Company recognized a right of use asset and liability of $822,389 and used an effective borrowing rate of 3.0% within the calculation. Imputed interest is $53,399. The lease agreements mature in April 2025. Total amounts expensed under the lease during the three and nine months ended March 31, 2022, were $100,053 and $300,159, respectively, for which is included accounts payable and accrued liabilities – related parties.

In May 2020, the Company entered into 3 three-year lease agreement to lease a warehouse in Brownsville, Texas. The Company recognized a right of use asset and liability of $177,124 and used an effective borrowing rate of 3.0% within the calculation. Imputed interest is $8,399. The lease agreements mature in April 2025.

The Company’s Prakat subsidiary entered into a lease agreement to lease office space through September 2026. The Company recognized a right of use asset and liability of $140,874 and used an effective borrowing rate of 9.2% within the calculation.

In August 2020, the Company’s Likido subsidiary entered in a new operating agreement for warehouse space. The lease matured in July 2021.

In June 2017, the Company’s IHG subsidiary entered a lease for 3 separate office suites in San Diego, California. The lease expired in January 2022.

In May 2021, the Company’s PSC subsidiary entered into a 3 year and 6-month lease agreement to lease a medical office space in Poway, California. The Company recognized a right of use asset and liability of $277,856 and used an effective borrowing rate of 3.0% within the calculation.

In January 2022, the Company’s IHG subsidiary entered into a 5 year and 5-month lease agreement to lease a medical office space in Chula Vista, California. The Company recognized a right of use asset and liability of $287,345 and used an effective borrowing rate of 3.0% within the calculation.

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Subsequent Events

9 Months Ended

Mar. 31, 2022

Subsequent Events [Abstract]

Subsequent Events

14. Subsequent Events

On April 6, 2022, the Company, through Dalrada Precision Corp., acquired Silicon Services Consortium (Europe) Ltd. for a total purchase price of £2,000,000, or approximately $2,700,000. The acquisition was complete as a 100% stock transaction.

On April 8, 2022, the Company, through Solas Corp., entered into an Asset Purchase Agreement with Rakhesh Guttikonda Medical Inc. to purchase the assets of its Remedi Med Spa’s for a total of $61,118. The purchase price will be paid monthly installments of $5,000.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

Basis of Presentation

(a) Basis of Presentation

These consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars. The Company’s fiscal year end is June 30.

We have prepared the accompanying condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These condensed consolidated financial statements are unaudited and, in our opinion, include all adjustments, consisting of normal recurring adjustments and accruals necessary for a fair presentation of our balance sheets, operating results, and cash flows for the periods presented. Operating results for the periods presented are not necessarily indicative of the results that may be expected for fiscal year 2022. Certain information and footnote disclosures normally included in condensed consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been omitted in accordance with the rules and regulations of the SEC. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and accompanying notes.

Principles of Consolidation

(b) Principles of Consolidation

These condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries: Dalrada Precision, a company incorporated in the State of California, since June 25, 2018 (date of incorporation), Dalrada Health, a company incorporated in the State of California, since October 2, 2018 (date of incorporation), Dalrada Energy Services, a company incorporated in the State of Wyoming, since March 17, 2022 (date of incorporation), as well as its subsidiaries (Likido, Prakat, Shark, IHG, PSC, Ignite, Empower, Solas) since their respective acquisition dates and Controlling Interest in Pala (see Note 3) . All inter-company transactions and balances have been eliminated on consolidation.

The condensed consolidated financial statements include the accounts of all entities controlled by the Company through its direct or indirect ownership of a majority voting interest. Additionally, the condensed consolidated financial statements include the accounts of variable interest entities (“VIEs”) in which the Company has a variable interest and for which the Company is the “primary beneficiary” as it has both: (1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (2) the obligation to absorb losses of the VIE that potentially could be significant to the VIE or the right to receive benefits from the VIE that potentially could be significant to the VIE. All significant intercompany accounts and transactions are eliminated in consolidation.

Income attributable to the minority interest in the Company's majority owned and controlled consolidated subsidiaries is recorded as net income attributable to noncontrolling interests in the consolidated statements of operations and the noncontrolling interest is reflected as a separate component of consolidated stockholders' equity in the consolidated balance sheet.

Use of Estimates

(c) Use of Estimates

The preparation of these condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the valuation of inventory, valuation of accrued payroll tax liabilities, valuation of acquired assets and liabilities, variables used in the computation of share-based compensation, and deferred income tax asset valuation allowances.

The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Cash and Cash Equivalents

(d) Cash and Cash Equivalents

The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.

Concentrations of Credit Risk

(e) Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company generally maintains balances in various operating accounts at financial institutions that management believes to be of high credit quality, in amounts that may exceed federally insured limits. The Company has not experienced any losses related to its cash and cash equivalents and does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

During the nine months ended March 31, 2022, healthcare insurers and government payers accounted for over 74% of total revenues. During the nine months ended March 31, 2022, healthcare insurers and government payers amounted to total revenue of $10,340,464. The accounts receivable related to both healthcare insurers and government payers is $4,766,023 as of March 31, 2022.

Fair Value Measurements

(f) Fair Value Measurements

Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1 - applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2 - applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3 - applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company’s financial instruments consist principally of cash, accounts receivable, accounts payable and accrued liabilities, notes payable, and amounts due to related parties. Pursuant to ASC 820, the fair value of cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

Convertible Instruments

(g) Convertible Instruments

The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC Topic 815, Derivatives and Hedging Activities (“ASC 815”).

Applicable U.S. GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments according to certain criteria. The criteria includes circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

The Company accounts for convertible instruments (when the Company has determined that the embedded conversion options should not be bifurcated from their host instruments) as follows. The Company records, when necessary, deemed dividends for the intrinsic value of conversion options embedded in shares based upon the differences between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the shares. 

Accounts Receivable

(h) Accounts Receivable

Accounts receivable are derived from products and services delivered to customers and are stated at their net realizable value. Each month, the Company reviews its receivables on a customer-by-customer basis and evaluates whether an allowance for doubtful accounts is necessary based on any known or perceived collection issues. Any balances that are eventually deemed uncollectible are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. As of March 31, 2022 and June 30, 2021, the Company recorded a bad debt allowance of $925,619 and $37,465, respectively.

Pala and Empower have a standardized approach to estimate the amount of consideration that we expect to be entitled to for its COVID-19 testing revenue, including the impact of contractual allowances (including payer denials), and patient price concessions. As a result of Pala and Empower’s limited transaction history, collection and payer reimbursement is based on industry standards and third-party experts. Adjustments to our estimated contractual allowances and implicit patient price concessions are recorded in the current period as changes in estimates. Although we have limited track record, further adjustments to the allowances, based on actual receipts, may be recorded upon settlement.

In March 2022, the U.S. Health Resources and Services Administration (“HRSA”) informed providers that, after March 22, 2022, it would stop accepting claims for testing and treatment for uninsured individuals under the HRSA COVID-19 Uninsured Program and that claims submitted prior to that date would be subject to eligibility and availability of funds. For the three months ended March 31, 2022, revenue for testing of uninsured individuals under the HRSA COVID-19 Uninsured Program represented approximately 46% of our COVID-19 testing net revenue. As of March 31, 2022, approximately 25% of our net accounts receivable was associated with claims for reimbursement for COVID-19 testing of uninsured individuals. As a result of HRSA ceasing the COVID-19 Uninsured Program, the Company reduced its Accounts Receivable by $614,322 for the three months ended March 31, 2022 and $1,500,799 for the nine months ended March 31, 2022. Although we believe that our estimates for contractual allowances and patient price concessions are appropriate, actual results could differ from those estimates.

Inventory

(i) Inventory

Inventory is recorded at the lower of cost or net realizable value on a first-in first-out basis. As of March 31, 2022 and June 30, 2021, inventory is comprised of raw materials purchased from suppliers, work-in-progress, and finished goods produced or purchased for resale. The Company establishes inventory reserves for estimated obsolete or unsaleable inventory equal to the difference between the cost of inventory and the estimated net realizable value based upon assumptions about future market conditions.

Property and Equipment

(j) Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization expense is recognized using the straight-line method over the estimated useful life of each asset, as follows: 

	Estimated Useful Life
Computer and office equipment	3 - 5 years
Machinery and equipment	5 years
Leasehold improvements	Shorter of lease term or useful life

Estimated useful lives are periodically assessed to determine if changes are appropriate. Maintenance and repairs are charged to expense as incurred. When assets are retired or otherwise disposed of, the cost of these assets and related accumulated depreciation or amortization are eliminated from the balance sheet and any resulting gains or losses are included in the statement of operations loss in the period of disposal.

Business Combinations and Acquisitions

(k) Business Combinations and Acquisitions

The Company accounts for acquisitions in which it obtains control of one or more businesses as a business combination. The purchase price of the acquired businesses is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the purchase price over those fair values is recognized as goodwill. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments, in the period in which they are determined, to the assets acquired and liabilities assumed with the corresponding offset to goodwill. If the assets acquired are not a business, the Company accounts for the transaction or other event as an asset acquisition. Under both methods, the Company recognizes the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired entity. In addition, for transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase.

Impairment of Long-Lived Assets

(l) Impairment of Long-Lived Assets

The Company reviews its long-lived assets (property and equipment) for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. If the sum of the expected cash flows, undiscounted, is less than the carrying amount of the asset, an impairment loss is recognized as the amount by which the carrying amount of the asset exceeds its fair value.

Goodwill is tested annually at June 30 for impairment and upon the occurrence of certain events or substantive changes in circumstances.

The annual goodwill impairment test allows for the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. An entity may choose to perform the qualitative assessment on none, some or all of its reporting units or an entity may bypass the qualitative assessment for any reporting unit and proceed directly to step one of the quantitative impairment test. If it is determined, on the basis of qualitative factors, that the fair value of a reporting unit is, more likely than not, less than its carrying value, the quantitative impairment test is required. The quantitative impairment test calculates any goodwill impairment as the difference between the carrying amount of a reporting unit and its fair value, but not to exceed the carrying amount of goodwill. As of March 31, 2022 and June 30, 2021, there were no significant qualitative factors that indicated goodwill was impaired.

Revenue Recognition

(m) Revenue Recognition

The Company adopted ASU 2014-09, Revenue from Contracts with Customers, and its related amendments (collectively known as “ASC 606”), effective January 1, 2019 using the modified retrospective transition approach applied to all contracts. Therefore, the reported results for the quarter ended March 31, 2022 reflect the application of ASC 606. Management determined that there were no retroactive adjustments necessary to revenue recognition upon the adoption of the ASU 2014-09. The Company determines revenue recognition through the following steps:

· Identification of a contract with a customer;

· Identification of the performance obligations in the contract;

· Determination of the transaction price;

· Allocation of the transaction price to the performance obligations in the contract; and

· Recognition of revenue when or as the performance obligations are satisfied.

Revenue is recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. As a practical expedient, the Company does not adjust the transaction price for the effects of a significant financing component if, at contract inception, the period between customer payment and the transfer of goods or services is expected to be one year or less.

The Company’s revenue is derived from the sales of its products, which represents net sales recorded in the Company’s condensed consolidated statements of operations. Product sales are recognized when performance obligations under the terms of the contract with the customer are satisfied. Typically, this would occur upon transfer of control, including passage of title to the customer and transfer of risk of loss related to those goods. The Company measures revenue as the amount of consideration to which it expects to be entitled in exchange for transferring goods (transaction price). The Company records reductions to revenue for estimated customer returns, allowances, markdowns and discounts. The Company bases its estimates on historical rates of customer returns and allowances as well as the specific identification of outstanding returns, markdowns and allowances that have not yet been received by the Company. The actual amount of customer returns and allowances is inherently uncertain and may differ from the Company’s estimates. If the Company determines that actual or expected returns or allowances are significantly higher or lower than the reserves it established, it would record a reduction or increase, as appropriate, to net sales in the period in which it makes such a determination. Reserves for returns, and markdowns are included within accrued expenses and other liabilities. Allowance and discounts are recorded in accounts receivable, net and the value of inventory associated with reserves for sales returns are included within prepaid expenses and other current assets on the condensed consolidated balance sheets.

The Company estimates warranty claims reserves based on historical results and research and determined that a warranty reserve was not necessary as of March 31, 2022.

Net revenues from COVID-19 testing accounted for over 74% of the Company’s total net revenues for the nine months ended March 31, 2022 and primarily comprised of a high volume of relatively low-dollar transactions. Pala, which provides clinical testing services and other services, satisfies its performance obligations and recognizes revenues primarily upon completion of the testing process (when results are reported) or when services have been rendered. Pala does not invoice the patients themselves for testing but relies on healthcare insurers and government payers for reimbursement for COVID-19 testing. Pala has a standardized approach to estimate the amount of consideration that we expect to be entitled to, including the impact of contractual allowances (including payer denials), and patient price concessions. As a result of Pala’s limited transaction history, collection and payer reimbursement is based on industry standards and third-party experts. Adjustments to our estimated contractual allowances and implicit patient price concessions are recorded in the current period as changes in estimates. Although we have limited track record, further adjustments to the allowances, based on actual receipts, may be recorded upon settlement.

The DES transaction price for its contracts reflects our estimates and are based on historical, current and forecasted information to determine the expected amount to which we will be entitled in exchange for transferring the promised goods or services to the customer. The realization of variable consideration occurs within a short period of time from product delivery; therefore, the time value of money effect is not significant. We primarily provide standard warranty programs for products in our commercial businesses for periods that typically range from one to two years. These assurance-type programs typically cannot be purchased separately and do not meet the criteria to be considered a performance obligation. Our cost estimation process is based on the professional knowledge and experience of engineers and program managers along with finance professionals

The Company also earns service revenue from its other subsidiaries, including information technology and consulting services via Prakat, educational programs and courses via IHG, and management services for Solas. For Prakat and Solas, revenues are recognized when performance obligations have been satisfied and the services are complete. This is generally at a point of time upon written completion and client acceptance of the project, which represents transfer of control to the customer. For IHG, revenues are recognized over the course of a semester while services are performed.

Disaggregation of Revenue

The following table presents the Company's revenue disaggregated by revenue source: 

	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
Product sales - third parties	$	1,627,647	$	1,150,289	$	1,788,938	$	1,715,478
Product sales - related party		19,324		23,429		49,208		81,077
Service revenue - third parties		3,945,179		152,733		13,741,381		1,247,306
Service revenue - related party		–		261,878		62,240		359,378
Total revenue	$	5,592,150	$	1,588,329	$	15,641,767	$	3,403,239

Contract Balances

The following table provides information about receivables and liabilities from contracts with customers:  

	March 31,		June 30,
	2022		2021
Accounts receivable, net	$	7,425,154	$	265,812
Accounts receivable, net - related parties		298,714		69,952
Deferred revenue		661,074		219,999

The Company invoices customers based upon contractual billing schedules, and accounts receivable are recorded when the right to consideration becomes unconditional. Contract liabilities represent a set-up fee prepayment received from a customer in advance of performance obligations met.

Cost of Revenue

(n) Cost of Revenue

Cost of revenue consists primarily of inventory sold for product sales and direct labor for information technology and consulting services. The following table is a breakdown of cost of revenue:   

	Three Months Ended  March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
Product sales	$	796,148	$	401,790	$	1,386,244	$	798,934
Service revenue		977,482		453,001		3,648,064		748,118
Total cost of revenue	$	1,773,630	$	854,791	$	5,034,308	$	1,547,052

Advertising

(o) Advertising

Advertising costs are expensed as incurred. During the nine months ended March 31, 2022 and 2021, advertising expenses were approximately $366,551 and $15,000, respectively.

Stock-based Compensation

(p) Stock-based Compensation

The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued. During the nine months ended March 31, 2022 and 2021, stock-based compensation expense was $2,145,626 and $730,000, respectively.

Foreign Currency Translation

(q) Foreign Currency Translation

The functional currency of the Company is the United States dollar. The functional currency of the Likido subsidiary is the British pound. The functional currency of Prakat is the Indian rupee. The financial statements of the Company’s subsidiaries were translated to United States dollars in accordance with ASC 830, Foreign Currency Translation Matters, using period-end rates of exchange for assets and liabilities, and average rates of exchange for the year for revenues and expenses. Gains and losses arising on foreign currency denominated transactions are included in condensed consolidated statements of operations.

Comprehensive Loss

(r) Comprehensive Loss

ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the condensed consolidated financial statements. During the nine months ended March 31, 2022, the Company’s only component of comprehensive income was foreign currency translation adjustments.

Non-controlling Interests

(s) Non-controlling Interests

Non-controlling interests are classified as a separate component of equity in the Company's consolidated balance sheets and statements of changes in stockholders’ equity. Net loss attributable to non-controlling interests are reflected separately from consolidated net loss in the consolidated statements of comprehensive loss and statements of changes in stockholders’ equity. Any change in ownership of a subsidiary while the controlling financial interest is retained is accounted for as an equity transaction between the controlling and non-controlling interests. In addition, when a subsidiary is deconsolidated, any retained non-controlling equity investment in the former subsidiary will be initially measured at fair value and the difference between the carrying value and fair value of the retained interest will be recorded as a gain or loss.

As of March 31, 2022, non-controlling interests pertained to the Company’s Prakat and Pala subsidiaries.

Basic and Diluted Net Loss per Share

(t) Basic and Diluted Net Loss per Share

The Company computes net income (loss) per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the periods using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the periods is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants.

The weighted average number of common stock equivalents related to convertible notes payable of 3,278,330 and 58,042,294 shares, and cashless warrants of 15,786,829 and 0, was not included in diluted loss per share, because the effects are antidilutive, for the three and nine months ended March 31, 2022 and 2021, respectively.

There were no adjustments to the numerator during the three and nine months ended March 31, 2022 and 2021.

Income Taxes

(u) Income Taxes

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, Accounting for Income Taxes. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

Recent Accounting Pronouncements

(v) Recent Accounting Pronouncements

In August 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-06, which simplifies the guidance on the issuer’s accounting for convertible debt instruments by removing the separation models for convertible debt with a cash conversion feature and convertible instruments with a beneficial conversion feature. As a result, entities will not separately present in equity an embedded conversion feature in such debt and will account for a convertible debt instrument wholly as debt, unless certain other conditions are met. The elimination of these models will reduce reported interest expense and increase reported net income for entities that have issued a convertible instrument that is within the scope of ASU 2020-06. ASU 2020-06 is applicable for fiscal years beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. The Company has elected to early adopt this ASU and the adoption of this ASU did not have a material impact on the Company’s consolidated financial statements and related disclosures.

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

Schedule of property and equipment, estimated useful life

	Estimated Useful Life
Computer and office equipment	3 - 5 years
Machinery and equipment	5 years
Leasehold improvements	Shorter of lease term or useful life

Schedule of disaggregated revenue

	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
Product sales - third parties	$	1,627,647	$	1,150,289	$	1,788,938	$	1,715,478
Product sales - related party		19,324		23,429		49,208		81,077
Service revenue - third parties		3,945,179		152,733		13,741,381		1,247,306
Service revenue - related party		–		261,878		62,240		359,378
Total revenue	$	5,592,150	$	1,588,329	$	15,641,767	$	3,403,239

Schedule of receivables and contract liabilities

	March 31,		June 30,
	2022		2021
Accounts receivable, net	$	7,425,154	$	265,812
Accounts receivable, net - related parties		298,714		69,952
Deferred revenue		661,074		219,999

Schedule of cost of revenue

	Three Months Ended  March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
Product sales	$	796,148	$	401,790	$	1,386,244	$	798,934
Service revenue		977,482		453,001		3,648,064		748,118
Total cost of revenue	$	1,773,630	$	854,791	$	5,034,308	$	1,547,052

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Selected Balance Sheet Elements (Tables)

9 Months Ended

Mar. 31, 2022

Selected Balance Sheet Elements

Schedule of inventory

	March 31,		June 30,
	2022		2021
Raw materials	$	347,971	$	172,227
Finished goods		808,710		669,881
	$	1,156,681	$	842,108

Schedule of property and equipment

	March 31,			June 30,
	2022			2021
Machinery and equipment	$	582,959		$	223,141
Leasehold improvements		301,941			323,669
Computer and office equipment		394,089			186,549
		1,278,989			733,359
Less: Accumulated depreciation		(339,947	)		(243,457	)
	$	939,042		$	489,902

Schedule of Intangible assets, net

	March 31, 2022
	Gross		Accumulated		Carrying
	Amount		Amortization		Value
Amortized:
Curriculum development	$	693,385	$	80,895	$	612,490
Licenses		195,000		–		195,000
Software		9,741		–		9,741
	$	898,126	$	80,895	$	817,231

	June 30, 2021
	Gross		Accumulated		Carrying
	Amount		Amortization		Value
Amortized:
Curriculum development	$	693,385	$	28,891	$	664,494
Licenses		–		–		–
	$	693,385	$	28,891	$	664,494

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Debt (Tables)

9 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

Schedule of notes payable, related parties

	March 31, 2022
	Outstanding		Accrued
	Principal		Interest
Related entity 1	$	6,300,775	$	72,852
Related entity 2		7,079,166		54,849
Related entity 3		379,525		8,226
Related entity 4		850,102		117,620
Related entity 5		181,744		1,363
Related entity 6		32,750		246
	$	14,824,062	$	255,156

	June 30, 2021
	Outstanding		Accrued
	Principal		Interest
Related entity 1	$	2,978,066	$	29,875
Related entity 2		357,025		5,532
Related entity 3		3,087,689		47,728
Related entity 4		3,668,938		93,150
Related entity 5		417,237		5,862
	$	10,508,955	$	182,147

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Related Party Transactions (Tables)

9 Months Ended

Mar. 31, 2022

Related Party Transactions [Abstract]

Summary of revenues

	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2022		2021		2022		2021
Dalrada Health	$	19,324	$	23,429	$	49,208	$	81,077
Solas		–		–		56,240		–
Prakat		–		126,748		6,000		224,248
Pacific Stem		–		135,130		–		135,130
	$	19,324	$	285,307	$	111,448	$	440,455

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Segment Reporting (Tables)

9 Months Ended

Mar. 31, 2022

Segment Reporting [Abstract]

Schedule of segment information

	Three Months Ended March 31, 2022
	Engineering		Health			Information Technology		Education			Corporate			Inter-Segment Eliminations			Consolidated
Revenues	$	1,415,480	$	2,948,850		$	1,952,352	$	177,135		$	1,060		$	(902,727	)	$	5,592,150
Income (Loss) from Operations		196,961		(439,834	)		548,618		(91,157	)		(2,820,721	)		(33,510	)	$	(2,639,643	)
Net income (loss)	$	194,950	$	(448,706	)	$	548,961	$	(91,157	)	$	(2,996,568	)	$	(200,561	)	$	(2,993,580	)

	Nine Months Ended March 31, 2022
	Engineering		Health		Information Technology		Education			Corporate			Inter-Segment Eliminations			Consolidated
Revenues	$	2,878,677	$	10,988,302	$	3,806,889	$	634,686		$	139,600		$	(2,806,387	)	$	15,641,767
Income (Loss) from Operations		109,691		3,927,719		570,478		(216,744	)		(8,225,769	)		(1,560,414	)		(5,395,039	)
Net income (loss)	$	81,092	$	3,894,343	$	568,582	$	(216,744	)	$	(8,592,081	)	$	(1,772,583	)	$	(6,037,391	)

	Three Months Ended March 31, 2021
	Engineering			Health			Information Technology			Education			Corporate			Inter-Segment Eliminations			Consolidated
Revenues	$	316,848		$	689,024		$	536,918		$	202,394		$	–		$	(156,854	)	$	1,588,329
Loss from operations		(193,260	)		(193,236	)		(39,466	)		(42,862	)		(2,077,807	)		236,711			(2,309,921	)
Net loss	$	(184,913	)	$	(178,033	)	$	(39,467	)	$	(42,862	)	$	(1,914,921	)	$	(109,253	)	$	(2,469,449	)

	Nine Months Ended March 31, 2021
	Engineering		Health			Information Technology			Education			Corporate			Inter-Segment Eliminations			Consolidated
Revenues	$	1,777,309	$	877,338		$	1,446,583		$	202,394		$	–		$	(900,384	)	$	3,403,239
Loss from operations		227,557		(513,375	)		(53,892	)		(42,862	)		(3,892,334	)		82,682			(4,192,223	)
Net loss	$	229,626	$	(498,172	)	$	(53,643	)	$	(42,862	)	$	(3,476,710	)	$	(761,549	)	$	(4,603,310	)

Schedule of revenue by country

	Nine Months Ended
	March 31,
	2022		2021
United States	$	13,602,738	$	1,916,506
Europe		150,189		507,661
India		1,888,840		979,072
	$	15,641,767	$	3,403,239

Schedule of inventories by country

	March 31,		June 30,
	2022		2021
United States	$	311,697	$	335,036
Europe		844,984		507,072
	$	1,156,681	$	842,108

Schedule of property and equipment by country

	March 31,		June 30,
	2022		2021
United States	$	710,120	$	221,308
Europe		215,601		256,888
India		13,321		11,706
	$	939,042	$	489,902

XML

Organization and Nature of Operations (Details Narrative) - USD ($)	Mar. 31, 2022	Feb. 04, 2022	Jun. 30, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Accumulated deficit	$ 116,412,419		$ 107,338,174
Principal amount		$ 3,000,000

XML

Summary of Significant Accounting Policies (Details - Estimated useful life)	9 Months Ended
	Mar. 31, 2022
Office Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Estimated Useful Lives	3
Office Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Estimated Useful Lives	5
Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Estimated Useful Lives	5
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Estimated Useful Lives	Shorter of lease term or useful life

XML

Summary of Significant Accounting Policies (Details - Revenue) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021
Product Information [Line Items]
Revenues	$ 5,592,150	$ 1,588,329	$ 15,641,767	$ 3,403,239
Product Sales Third Parties [Member]
Product Information [Line Items]
Revenues	1,627,647	1,150,289	1,788,938	1,715,478
Product Sales Related Parties [Member]
Product Information [Line Items]
Revenues	19,324	23,429	49,208	81,077
Service Revenue Third Parties [Member]
Product Information [Line Items]
Revenues	3,945,179	152,733	13,741,381	1,247,306
Service Revenue Related Party [Member]
Product Information [Line Items]
Revenues	$ 0	$ 261,878	$ 62,240	$ 359,378

XML

Summary of Significant Accounting Policies (Details - Receivables and contract liabilities) - USD ($)	Mar. 31, 2022	Jun. 30, 2021
Accounting Policies [Abstract]
Accounts receivable, net	$ 7,425,154	$ 265,812
Accounts receivable, net - related parties	298,714	69,952
Deferred revenue	$ 661,074	$ 219,999

XML

Summary of Significant Accounting Policies (Details - Cost of revenue) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021
Product Information [Line Items]
Cost of revenue	$ 1,773,630	$ 854,791	$ 5,034,308	$ 1,547,052
Product Sales [Member]
Product Information [Line Items]
Cost of revenue	796,148	401,790	1,386,244	798,934
Service [Member]
Product Information [Line Items]
Cost of revenue	$ 977,482	$ 453,001	$ 3,648,064	$ 748,118

XML

Summary of Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021	Jun. 30, 2021
Product Information [Line Items]
Revenues	$ 5,592,150	$ 1,588,329	$ 15,641,767	$ 3,403,239
Accounts Receivable, after Allowance for Credit Loss	7,425,154		7,425,154		$ 265,812
Allowance for doubtful accounts	925,619		925,619		$ 37,465
Advertising expenses			366,551	15,000
Stock-based compensation expenses			$ 2,145,626	$ 730,000
Convertible Notes Payable [Member]
Product Information [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount			3,278,330	58,042,294
Cashless Warrants [Member]
Product Information [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount			15,786,829	0
Healthcare Insurers [Member]
Product Information [Line Items]
Revenues			$ 10,340,464
Healthcare Insurers And Government Payers [Member]
Product Information [Line Items]
Accounts Receivable, after Allowance for Credit Loss	$ 4,766,023		$ 4,766,023
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Healthcare Insurers And Government Payers [Member]
Product Information [Line Items]
Concentrations of credit risk	46.00%		74.00%
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Healthcare Insurers And Government Payers [Member]
Product Information [Line Items]
Concentrations of credit risk			25.00%

XML

Investment in Pala Diagnostics (Details Narrative) - USD ($)	1 Months Ended	9 Months Ended
	Aug. 31, 2021	Mar. 31, 2022	Mar. 31, 2021	Nov. 30, 2021
Contribution of property and equipment into joint venture		$ 111,185	$ 0
Unauthorized distributions		1,882,144
Dalrada Health [Member]
Ownership interest	51.00%
Dalrada Health [Member] | Partnership Agreement [Member]
Payment to jointventure	$ 500,000
Dalrada Health [Member] | J V Agreement [Member]
Number of shares issued	250,000
Pala Diagnostics [Member]
Principal and interest		$ 210,435	$ 14,943
Pala Diagnostics [Member] | Partnership Agreement [Member]
Related parties				$ 1,000,000
Interest rate				24.00%
Dalrada [Member] | J V Agreement [Member]
Research and development expenses	$ 58,560

XML

Selected Balance Sheet Elements (Details - Inventories) - USD ($)	Mar. 31, 2022	Jun. 30, 2021
Selected Balance Sheet Elements
Raw materials	$ 347,971	$ 172,227
Finished goods	808,710	669,881
Inventory, Net	$ 1,156,681	$ 842,108

XML

Selected Balance Sheet Elements (Details - Property and equipment) - USD ($)	Mar. 31, 2022	Jun. 30, 2021
Selected Balance Sheet Elements
Machinery and equipment	$ 582,959	$ 223,141
Leasehold improvements	301,941	323,669
Computer and office equipment	394,089	186,549
Property, Plant and Equipment, Gross	1,278,989	733,359
Less: Accumulated depreciation	(339,947)	(243,457)
Property, Plant and Equipment, Net	$ 939,042	$ 489,902

XML

Selected Balance Sheet Elements (Details - Intangible Assets, Net) - USD ($)	Mar. 31, 2022	Jun. 30, 2021
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	$ 898,126	$ 693,385
Finite-Lived Intangible Assets, Accumulated Amortization	80,895	28,891
Finite-Lived Intangible Assets, Net	817,231	664,494
Curriculum Development [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	693,385	693,385
Finite-Lived Intangible Assets, Accumulated Amortization	80,895	28,891
Finite-Lived Intangible Assets, Net	612,490	664,494
License [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	195,000	0
Finite-Lived Intangible Assets, Accumulated Amortization	0	0
Finite-Lived Intangible Assets, Net	195,000	$ 0
Software Development [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	9,741
Finite-Lived Intangible Assets, Accumulated Amortization	0
Finite-Lived Intangible Assets, Net	$ 9,741

XML

Selected Balance Sheet Elements (Details Narrative) - USD ($)	9 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Selected Balance Sheet Elements
Depreciation and amortization expense	$ 103,566	$ 37,318
Amortization expense	$ 155,570	$ 0

XML

Accrued Payroll Taxes (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Jun. 30, 2021
Payables and Accruals [Abstract]
Revenue service amount	$ 2,025,582		$ 2,025,582	$ 1,953,024
Accrued interest rate			Accrued interest is compounded daily at an estimated effective interest rate of 7.33%
Penalties and interest expense	$ 23,030	$ 127,235

XML

Debt (Details - Notes payable) - USD ($)	Mar. 31, 2022	Jun. 30, 2021
Debt Instrument [Line Items]
Notes payable	$ 14,824,062	$ 10,508,955
Accrued interest	255,156	182,147
Note Payable Related Entity 1 [Member]
Debt Instrument [Line Items]
Notes payable	6,300,775	2,978,066
Accrued interest	72,852	29,875
Note Payable Related Entity 2 [Member]
Debt Instrument [Line Items]
Notes payable	7,079,166	357,025
Accrued interest	54,849	5,532
Note Payable Related Entity 3 [Member]
Debt Instrument [Line Items]
Notes payable	379,525	3,087,689
Accrued interest	8,226	47,728
Note Payable Related Party Entityfour [Member]
Debt Instrument [Line Items]
Notes payable	850,102	3,668,938
Accrued interest	117,620	93,150
Note Payable Related Entity 5 [Member]
Debt Instrument [Line Items]
Notes payable	181,744	417,237
Accrued interest	1,363	$ 5,862
Note Payable Related Entity 6 [Member]
Debt Instrument [Line Items]
Notes payable	32,750
Accrued interest	$ 246

XML

Debt (Details Narrative) - USD ($)		1 Months Ended	3 Months Ended	9 Months Ended
	Feb. 04, 2022	Sep. 30, 2021	Sep. 30, 2021	Mar. 31, 2022	Mar. 31, 2021	Jun. 30, 2021
Debt Instrument [Line Items]
Debt instrument converted			$ 6,532,206
Interest payable, related parties				$ 255,156		$ 182,147
Proceeds from Convertible Debt				2,932,857	$ 0
Amortization of Debt Discount (Premium)				146,475	0
Securities Purchase Agreement [Member] | YA II PN Debentures [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	5.00%
Interest payable, related parties				18,356
Debt Instrument, Face Amount	$ 3,000,000
Proceeds from Convertible Debt	$ 2,880,000
Debt Instrument, Convertible, Conversion Price	$ 0.9151
[custom:WarrantsIssuedShares-0]	983,499
Debt Instrument, Unamortized Discount	$ 1,427,495			1,516,220
Payments of Debt Issuance Costs	$ 120,000
Stock Issued During Period, Shares, New Issues	192,000
Stock Issued During Period, Value, New Issues	$ 115,200
Amortization of Debt Discount (Premium)				146,475
Convertible Debt				1,483,780
Unsecured Notes Payable [Member]
Debt Instrument [Line Items]
Unsecured Long-Term Debt, Noncurrent				$ 15,841,268
Debt Instrument, Interest Rate, Stated Percentage				3.00%
Notes Payable Related Parties [Member]
Debt Instrument [Line Items]
Interest payable, related parties				$ 255,156		$ 182,147
Interest expense, related parties				$ 173,007	$ 95,998
Series G Preferred Stock [Member]
Debt Instrument [Line Items]
Debt instrument converted		$ 4,428,589
Debt converted, interest converted		$ 102,054
Debt Conversion, Converted Instrument, Shares Issued		6,937

XML

Convertible Note Payable – Related Parties (Details Narrative) - USD ($)	1 Months Ended	3 Months Ended	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2021	Mar. 31, 2022	Jun. 30, 2021	Jun. 30, 2019
Defined Benefit Plan Disclosure [Line Items]
Debt instrument converted		$ 6,532,206
Chief Executive Officer [Member]
Defined Benefit Plan Disclosure [Line Items]
Convertible note payable - related party					$ 1,875,000
Debt stated interest rate					300.00%
Conversion price					$ 0.034
Debt instrument converted			$ 6,532,206
Chief Executive Officer [Member] | Series G Convertible Preferred Stock [Member]
Defined Benefit Plan Disclosure [Line Items]
Number of shares converted	3,065
Chief Executive Officer [Member] | Principal [Member]
Defined Benefit Plan Disclosure [Line Items]
Debt instrument converted				$ 1,875,000
Interest and Dividends Payable				$ 112,500
Debt instrument converted	$ 1,875,000
Chief Executive Officer [Member] | Accrued Interest [Member]
Defined Benefit Plan Disclosure [Line Items]
Debt instrument converted	$ 126,563

XML

Related Party Transactions (Details) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021
Related Party Transaction [Line Items]
Revenues - related party	$ 19,324	$ 285,307	$ 111,448	$ 440,455
Dalrada Health [Member]
Related Party Transaction [Line Items]
Revenues - related party	19,324	23,429	49,208	81,077
Solas [Member]
Related Party Transaction [Line Items]
Revenues - related party	0	0	56,240	0
Prakat [Member]
Related Party Transaction [Line Items]
Revenues - related party	0	126,748	6,000	224,248
Pacific Stem [Member]
Related Party Transaction [Line Items]
Revenues - related party	$ 0	$ 135,130	$ 0	$ 135,130

XML

Related Party Transactions (Details Narrative) - USD ($)	1 Months Ended			3 Months Ended	9 Months Ended
	Oct. 31, 2021	Sep. 30, 2021	Sep. 30, 2021	Sep. 30, 2021	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021	Jun. 30, 2021
Related Party Transaction [Line Items]
Outstanding principal					$ 15,218,162
Accounts payable and accrued liabilities related parties					1,240,385
Debt instrument converted				$ 6,532,206
Number of shares issued to directors	6,500,000
Chief Executive Officer [Member]
Related Party Transaction [Line Items]
Management fees					67,500	$ 27,000
Debt instrument converted					6,532,206
Accrued salary							$ 131,000
Chief Executive Officer [Member] | Principal [Member]
Related Party Transaction [Line Items]
Debt instrument converted		$ 1,875,000
Chief Executive Officer [Member] | Accrued Interest [Member]
Related Party Transaction [Line Items]
Debt instrument converted		$ 126,563
Chief Executive Officer [Member] | Accrued Salary [Member]
Related Party Transaction [Line Items]
Accounts payable and accrued liabilities - related parties					599,212			$ 414,237
Trucept [Member] | Management Fees [Member]
Related Party Transaction [Line Items]
Accounts payable and accrued liabilities - related parties					$ 67,500			$ 7,650
Ralated Party [Member]
Related Party Transaction [Line Items]
Number of shares converted			10,002
Ralated Party [Member] | Principal [Member]
Related Party Transaction [Line Items]
Debt instrument converted			$ 6,303,589
Ralated Party [Member] | Accrued Interest [Member]
Related Party Transaction [Line Items]
Debt instrument converted			$ 228,617

XML

Preferred Stock (Details Narrative) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2021	Mar. 31, 2022
Class of Stock [Line Items]
Debt Conversion, Converted Instrument, Amount	$ 6,532,206
Preferred stock conversion		Each share of Series G Convertible Preferred share converts into 2,177 shares of common stock (equivalent to converting the related equity dollars into common shares at $0.30 per share).
Chief Executive Officer [Member]
Class of Stock [Line Items]
Debt Conversion, Converted Instrument, Amount		$ 6,532,206
Series F Super Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, shares authorized		100,000
Preferred stock, par value		$ 0.01
Preferred stock, shares issued		5,000
Series F Super Preferred Stock [Member] | Chief Executive Officer [Member]
Class of Stock [Line Items]
Debt converted, shares issued		10,002

XML

Stockholders’ Equity (Details Narrative) - USD ($)	1 Months Ended					3 Months Ended			9 Months Ended
	Mar. 31, 2022	Feb. 16, 2022	Oct. 31, 2021	Aug. 31, 2021	Aug. 31, 2021	Mar. 31, 2022	Dec. 31, 2021	Sep. 30, 2021	Mar. 31, 2022
Class of Stock [Line Items]
Shares issued to related party, shares	500,000
Shares issued to related party, value	$ 377,500					$ 362,532	$ 1,105,587	$ 677,507
Common Stock [Member]
Class of Stock [Line Items]
Shares issued to related party, shares	500,000	2,250,000							192,000
Shares issued to related party, value									$ 107,880
Dalrada Health [Member] | Pala Agreement [Member]
Class of Stock [Line Items]
Number of shares issued					250,000
Consultant [Member]
Class of Stock [Line Items]
Shares issued to related party, shares	500,000
Shares issued to related party, value	$ 380,000
Common Stock [Member] | Employee [Member]
Class of Stock [Line Items]
Number shares repurchased									329,478
Number of shares repurchased, value									$ 14,827
Common Stock [Member] | Board Members [Member]
Class of Stock [Line Items]
Number shares repurchased									2,000,000
Number of shares repurchased, value									$ 560,000
Pacific Stem Cells [Member] | Common Stock [Member]
Class of Stock [Line Items]
Shares issued for acquisition, shares	87,500			87,500					87,500
I H G [Member]
Class of Stock [Line Items]
Shares issued for acquisition, shares	125,000		125,000						125,000

XML

Stock-Based Compensation (Details Narrative) - USD ($)			1 Months Ended			3 Months Ended			9 Months Ended
	Nov. 10, 2021	May 10, 2021	Mar. 31, 2022	Feb. 16, 2022	Nov. 30, 2021	Mar. 31, 2022	Dec. 31, 2021	Sep. 30, 2021	Mar. 31, 2022	Mar. 31, 2021
Defined Benefit Plan Disclosure [Line Items]
Fair value of options granted per share				$ 0.59
Fair value of options granted				$ 1,338,644
Exercise price				$ 0.45
Shares issued to related party, shares			500,000
Shares issued to related party, value			$ 377,500			$ 362,532	$ 1,105,587	$ 677,507
Stock based compensation									$ 2,145,626	$ 730,000
Common Stock [Member]
Defined Benefit Plan Disclosure [Line Items]
Shares issued to related party, shares			500,000	2,250,000					192,000
Shares Issued, Price Per Share			$ 0.76			$ 0.76			$ 0.76
Shares issued to related party, value									$ 107,880
Employee [Member]
Defined Benefit Plan Disclosure [Line Items]
Cashless warrants					2,275,000
Cashless warrants vest					825,000
Exercise price					$ 0.45
Board of Directors Chairman [Member]
Defined Benefit Plan Disclosure [Line Items]
Number of shares issued cancelled	6,500,000
Cashless warrants	6,500,000
Cashless warrants vest	4,500,000
Chief Financial Officer [Member]
Defined Benefit Plan Disclosure [Line Items]
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Net of Forfeitures		1,000,000
Share-Based Compensation Arrangements by Share-Based Payment Award, Options, Grants in Period, Weighted Average Exercise Price		$ 0.47
Fair value of options granted per share		$ 0.43
Fair value of options granted		$ 430,027
Employee [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of options granted per share					$ 0.73
Fair value of options granted					$ 1,651,093

XML

Segment Reporting (Details - Segment information) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021
Segment Reporting Information [Line Items]
Revenue	$ 5,592,150	$ 1,588,329	$ 15,641,767	$ 3,403,239
Loss from operations	(2,639,643)	(2,309,921)	(5,395,039)	(4,192,223)
Net income (loss)	(2,993,580)	(2,469,449)	(6,037,391)	(4,603,310)
Engineering [Member]
Segment Reporting Information [Line Items]
Revenue	1,415,480	316,848	2,878,677	1,777,309
Loss from operations	196,961	(193,260)	109,691	227,557
Net income (loss)	194,950	(184,913)	81,092	229,626
Health [Member]
Segment Reporting Information [Line Items]
Revenue	2,948,850	689,024	10,988,302	877,338
Loss from operations	(439,834)	(193,236)	3,927,719	(513,375)
Net income (loss)	(448,706)	(178,033)	3,894,343	(498,172)
Information Technology [Member]
Segment Reporting Information [Line Items]
Revenue	1,952,352	536,918	3,806,889	1,446,583
Loss from operations	548,618	(39,466)	570,478	(53,892)
Net income (loss)	548,961	(39,467)	568,582	(53,643)
Education [Member]
Segment Reporting Information [Line Items]
Revenue	177,135	202,394	634,686	202,394
Loss from operations	(91,157)	(42,862)	(216,744)	(42,862)
Net income (loss)	(91,157)	(42,862)	(216,744)	(42,862)
Corporate Segment [Member]
Segment Reporting Information [Line Items]
Revenue	1,060		139,600
Loss from operations	(2,820,721)	(2,077,807)	(8,225,769)	(3,892,334)
Net income (loss)	(2,996,568)	(1,914,921)	(8,592,081)	(3,476,710)
Inter Segment Eliminations [Member]
Segment Reporting Information [Line Items]
Revenue	(902,727)	(156,854)	(2,806,387)	(900,384)
Loss from operations	(33,510)	236,711	(1,560,414)	82,682
Net income (loss)	$ (200,561)	$ (109,253)	$ (1,772,583)	$ (761,549)

XML

Segment Reporting (Details - Revenue by country) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	$ 5,592,150	$ 1,588,329	$ 15,641,767	$ 3,403,239
UNITED STATES
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue			13,602,738	1,916,506
Europe [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue			150,189	507,661
INDIA
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue			$ 1,888,840	$ 979,072

XML

Segment Reporting (Details - Inventories by country) - USD ($)	Mar. 31, 2022	Jun. 30, 2021
Revenues from External Customers and Long-Lived Assets [Line Items]
Inventories	$ 1,156,681	$ 842,108
UNITED STATES
Revenues from External Customers and Long-Lived Assets [Line Items]
Inventories	311,697	335,036
Europe [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Inventories	$ 844,984	$ 507,072

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Segment Reporting (Details - Property and equipment by country)Segment Reporting (Details - Property and equipment by country) - USD ($)	Mar. 31, 2022	Jun. 30, 2021
Revenues from External Customers and Long-Lived Assets [Line Items]
Property and equipment, net	$ 939,042	$ 489,902
UNITED STATES
Revenues from External Customers and Long-Lived Assets [Line Items]
Property and equipment, net	710,120	221,308
Europe [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Property and equipment, net	215,601	256,888
INDIA
Revenues from External Customers and Long-Lived Assets [Line Items]
Property and equipment, net	$ 13,321	$ 11,706

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Commitments and Contingencies (Details Narrative) - USD ($)	3 Months Ended	9 Months Ended
	Mar. 31, 2022	Mar. 31, 2022	Jan. 31, 2022	Jun. 30, 2021	May 31, 2021	Mar. 31, 2021	May 31, 2020
Operating lease, right of use asset	$ 678,827	$ 678,827		$ 532,327
Escondido, CA [Member]
Operating lease liability							$ 822,389
Operating lease, right of use asset							$ 822,389
Effective borrowing rate							3.00%
Imputed Interest							$ 53,399
Operating Lease, Expense	$ 100,053	$ 300,159
Brownsville, TX [Member]
Operating lease liability							177,124
Operating lease, right of use asset							$ 177,124
Effective borrowing rate							3.00%
Imputed Interest							$ 8,399
Prakat Subsidiary [Member]
Operating lease liability						$ 140,874
Operating lease, right of use asset						$ 140,874
Effective borrowing rate	9.20%	9.20%
Poway, CA [Member]
Operating lease liability					$ 277,856
Operating lease, right of use asset					$ 277,856
Effective borrowing rate					3.00%
Chula Vista C A [Member]
Operating lease liability			$ 287,345
Operating lease, right of use asset			$ 287,345
Effective borrowing rate			3.00%