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 December 31, 2021

☐  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 February 11, 2022, the registrant’s outstanding stock consisted of 70,184,184 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	24
Item 3. Quantitative and Qualitative Disclosures About Market Risk	29
Item 4. Controls and Procedures	29
PART II – OTHER INFORMATION	31
Item 1. Legal Proceedings	31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Securities	31
Item 3. Defaults Upon Senior Securities	31
Item 4. Mine Safety Disclosures	31
Item 5. Other Information	31
Item 6. Exhibits	31
SIGNATURES	32

2

PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements

DALRADA FINANCIAL CORPORATION

Condensed Consolidated Balance Sheets

(unaudited)

	December 31,			June 30,
	2021			2021
Assets
Current assets:
Cash and cash equivalents	$	180,756		$	110,285
Accounts receivable, net		6,045,187			265,812
Accounts receivable, net - related parties		119,480			69,952
Other receivables		141,653			67,328
Inventories		1,377,495			842,108
Prepaid expenses and other current assets		254,774			285,026
Total current assets		8,119,345			1,640,511
Property and equipment, net		775,261			489,902
Goodwill		795,016			736,456
Intangible assets, net		734,565			664,494
Right of use asset, net		455,559			532,327
Right of use asset, net - related party		560,118			639,415
Total assets	$	11,439,864		$	4,703,105
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable	$	1,295,533		$	910,339
Accrued liabilities		1,341,723			641,380
Accrued payroll taxes, penalties and interest		2,002,552			1,953,024
Accounts payable and accrued liabilities – related parties		599,212			414,237
Deferred revenue		657,159			219,999
Notes payable, current portion		402,894			415,817
Notes payable – related parties		4,060,321			10,508,955
Convertible notes payable – related party		–			1,875,000
Right of use liability		166,886			76,570
Right of use liability - related party		161,080			159,790
Total current liabilities		10,687,360			17,175,111
Notes payable – related parties		9,880,849			–
Right of use liability		288,672			455,757
Right of use liability - related party		399,038			479,625
Total liabilities		21,255,919			18,110,493
Commitments and contingencies (Note 12)		–			–
Stockholders' deficit:
Series G preferred stock, $0.01 par value, 100,000 shares authorized, 10,002 and 0 shares issued and outstanding as of December 31, 2021 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 December 31, 2021 and June 30, 2021, respectively		50			50
Common stock, $0.005 par value, 1,000,000,000 shares authorized, 70,184,184 and 68,464,742 shares issued and outstanding at December 31, 2021 and June 30, 2021, respectively		350,922			369,194
Common stock to be issued		429,875			601,825
Additional paid-in capital		101,514,977			92,965,821
Accumulated deficit		(112,989,191	)		(107,338,174	)
Accumulated other comprehensive income (loss)		71,956			32,287
Total stockholders’ deficit – Dalrada Financial Corporation		(10,621,311	)		(13,368,997	)
Noncontrolling interests		805,256			(38,391	)
Total stockholders’ deficit including noncontrolling interests		(9,816,055	)		(13,407,388	)
Total liabilities and stockholders' deficit	$	11,439,864		$	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						Six Months Ended
	December 31,						December 31,
	2021			2020			2021			2020
Revenues	$	5,370,449		$	366,402		$	9,957,493		$	1,059,762
Revenues - related party		76,815			89,115			92,124			155,148
Total revenues		5,447,264			455,517			10,049,617			1,214,910
Cost of revenue		2,056,343			458,833			3,260,678			692,261
Gross profit		3,390,921			(3,316	)		6,788,939			522,649
Operating expenses:
Selling, general and administrative (includes stock-based compensation of $1,105,587 and $0 for three months and $1,783,094 and $0 for six months ended 2021 and 2020, respectively)		5,234,462			1,418,909			9,542,739			2,726,450
Research and development		–			255,679			1,596			278,501
Total operating expenses		5,234,462			1,674,588			9,544,335			3,004,951
Loss from operations		(1,843,541	)		(1,677,904	)		(2,755,396	)		(2,482,302	)
Other income (expense):
Interest expense		(135,070	)		(154,751	)		(258,874	)		(283,811	)
Interest income		521			377			1,048			902
Other income		(1,464	)		624			13,244			36,798
Gain (loss) on foreign exchange		(88,084	)		7,134			(44,333	)		(5,448	)
Total other income (expenses)		(224,097	)		(146,616	)		(288,915	)		(251,559	)
Net loss before taxes		(2,067,638	)		(1,824,520	)		(3,044,311	)		(2,733,861	)
Income taxes		–			–			–			–
Net loss		(2,067,638	)		(1,824,520	)		(3,044,311	)		(2,733,861	)
Net income (loss) attributable to noncontrolling interests		1,317,537			(24,619	)		2,606,707			(19,604	)
Net loss attributable to Dalrada Financial Corporation stockholders	$	(3,385,175	)	$	(1,799,901	)	$	(5,651,018	)	$	(2,714,257	)
Foreign currency translation		325			10,050			39,669			24,259
Comprehensive loss	$	(2,067,313	)	$	(1,814,470	)	$	(3,004,642	)	$	(2,709,602	)
Net loss per common share to Dalrada stockholders – basic	$	(0.05	)	$	(0.03	)	$	(0.08	)	$	(0.04	)
Net loss per common share to Dalrada stockholders – diluted	$	(0.05	)	$	(0.03	)	$	(0.08	)	$	(0.04	)
Weighted average common shares outstanding – basic		73,903,689			68,464,742			73,939,348			68,464,742
Weighted average common shares outstanding – diluted		73,903,689			68,464,742			73,939,348			68,464,742

(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

Series G

Series F

Common Stock

Common 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

$

–

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 venture

–

–

–

–

–

–

58,560

Repurchase of common shares from subsidiary

(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 venture

–

–

–

–

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

(continued)

	Preferred Stock to be Issued			Additional Paid-in Capital			Noncontrolling Interests			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Stockholders' 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	)		–			(2,909,341	)
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	)
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 venture		–			–			111,185			–			–			169,745
Repurchase of common shares from subsidiary		–			(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		$	(6,980,086	)
Issuance of preferred stock		(6,532,206	)		6,532,106			–			–			–			–
Common stock issued pursuant to acquisitions		–			84,913			–			–			–			–
Joint venture		–			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	$	–		$	101,514,977		$	805,256		$	(112,989,191	)	$	71,956		$	(9,816,055	)

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

5

DALRADA FINANCIAL CORPORATION

Condensed Consolidated Statements of Cash Flows

(unaudited)

	Six Months Ended
	December 31,
	2021			2020
Cash flows from operating activities:
Net loss	$	(3,044,311	)	$	(2,733,861	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		94,253			30,718
Stock compensation		1,783,094			–
Changes in operating assets and liabilities:
Accounts receivable		(5,828,903	)		55,801
Other receivables		(74,325	)		19,173
Inventories		(535,387	)		21,573
Prepaid expenses and other current assets		30,252			(36,081	)
Accounts payable		384,424			(95,774	)
Accounts payable and accrued liabilities - related parties		1,046,334			339,385
Accrued liabilities		928,960			171,853
Accrued payroll taxes, penalties and interest		49,528			237,008
Deferred revenue		437,160			(50,171	)
Net cash used in operating activities		(4,728,921	)		(2,040,375	)
Cash flows from investing activities:
Purchase of property and equipment		(232,988	)		(102,523	)
Purchase of intangibles		(104,740	)		–
Net cash used in investing activities		(337,728	)		(102,523	)
Cash flows from financing activities:
Proceeds from related party notes payable		6,999,445			2,232,848
Net proceeds (repayments) from notes payable		(12,923	)		–
Distributions to noncontrolling interest		(1,874,245	)		–
Repurchase of common shares from subsidiary		(14,826	)		–
Net cash provided by financing activities		5,097,451			2,232,848
Net change in cash and cash equivalents		30,802			89,950
Effect of exchange rate changes on cash		39,669			21,545
Cash and cash equivalents at beginning of period		110,285			75,165
Cash and cash equivalents at end of period	$	180,756		$	186,660
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 pay able-related parties to note payable-related parties	$	181,744		$	–

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

6

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, and Dalrada Technologies. 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 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 2021 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 December 31, 2021, the Company has an accumulated deficit of $112,989,191. The Company closed a convertible debenture funding on February 4, 2022 for a total principal amount of $3,000,000 (see Note 14. Subsequent Events for additional information). 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.

7

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.

Revision of Prior Period Financial Statements

In the Company’s quarterly report for the six months ended December 31, 2020, the Company included $600,000 in revenues and $165,000 cost of goods sold pertaining to its Dalrada Precision entity. In the fourth quarter of the year ended June 30, 2021, the Company reversed the revenue and related accounts receivable as well as the cost of goods sold and related inventory. The adjustment was a result in the change of relationship with its third-party manufacturer as a resale partner exclusively to that of a third-party manufacturer and requested the title of inventory to be returned and adjusted the revenue accordingly. We have modified the previously reported amounts included in the statements of operations, cash flows and accompanying footnotes for the three and six months ended December 31, 2020 to reflect the above adjustment.

(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), as well as its subsidiaries (Likido, Prakat, Shark, IHG, Pacific Stem, Ignite, Empower, Solas) since their respective acquisition dates (see Note 3) and Controlling Interest in Pala (see Note 4) . All inter-company transactions and balances have been eliminated on consolidation.

8

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 six months ended December 31, 2021, healthcare insurers and government payers accounted for over 75% of total revenues. During the six months ended December 31, 2021, healthcare insurers and government payers amounted to total revenue of $5,329,571 and $2,818,206, respectively. The accounts receivable related to both healthcare insurers and government payers is $5,338,135 as of December 31, 2021.

9

(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) 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 December 31, 2021 and June 30, 2021, the Company had an allowance of doubtful accounts of $48,135 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.

(h) Inventory

Inventory is recorded at the lower of cost or net realizable value on a first-in first-out basis. As of December 31, 2021 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.

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(i) 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.

(j) 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.

(k) 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 December 31, 2021 and June 30, 2021, there were no significant qualitative factors that indicated goodwill was impaired.

(l) 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 year ended June 30, 2020 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:

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· 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 December 31, 2021.

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 stem cell therapy procedures from Pacific Stems. For Prakat and Pacific Stems, 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.

Net revenues from Pala accounted for over 75% of the Company’s total net revenues for the three and six months ended December 31, 2021 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.

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Disaggregation of Revenue

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

	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2021		2020		2021		2020
Product sales - third parties	$	301,693	$	123,090	$	343,643	$	496,873
Product sales - related party		14,575		39,115		29,884		57,648
Service revenue - third parties		5,062,756		243,312		9,613,850		562,889
Service revenue - related party		62,240		50,000		62,240		97,500
Total revenue	$	5,447,264	$	455,517	$	10,049,617	$	1,214,910

Contract Balances

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

	December 31,		June 30,
	2021		2021
Accounts receivable, net	$	6,045,187	$	265,812
Accounts receivable, net - related parties		119,480		69,952
Deferred revenue		657,159		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.

(m) 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				Six Months Ended
	December 31,				December 31,
	2021		2020		2021		2020
Product sales	$	526,063	$	315,763	$	590,096	$	397,143
Service revenue		1,530,280		143,070		2,670,582		295,118
Total cost of revenue	$	2,056,343	$	458,833	$	3,260,678	$	692,261

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(n) Advertising

Advertising costs are expensed as incurred. During the six months ended December 31, 2021 and 2020, advertising expenses were approximately $228,000 and $15,000, respectively.

(o) 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 six months ended December 31, 2021 and 2020, stock-based compensation expense was $1,783,094 and $0, respectively.

(p) 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.

(q) 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 six months ended December 31, 2021, the Company’s only component of comprehensive income was foreign currency translation adjustments.

(r)  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 December 31, 2021, non-controlling interests pertained to the Company’s Prakat and Pala subsidiaries.

(s) 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.

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The weighted average number of common stock equivalents related to convertible notes payable of 0 and 57,628,876 shares, stock options of 1,000,000 and 0, and cashless warrants of 8,775,000 and 0, was not included in diluted loss per share, because the effects are antidilutive, for the three and six months ended December 31, 2021 and 2020, respectively.

There were no adjustments to the numerator during the three and six months ended December 31, 2021 and 2020.

(t) 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.

(u) Recent Accounting Pronouncements   The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

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 six months ended December 31, 2021, 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% and is included in the Notes Payable – Related Parties. As of December 31, 2021, the outstanding principal and interest was $210,435 and $7,334, respectively.

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 December 31, 2021.

During the quarter ended December 31, 2021, Vivera withdrew unauthorized distributions totaling $1,874,245. The unauthorized distributions are currently being disputed through pending litigation. 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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4. Selected Balance Sheet Elements

Inventories

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

	December 31,		June 30,
	2021		2021
Raw materials	$	423,130	$	172,227
Finished goods		954,365		669,881
	$	1,377,495	$	842,108

Property and Equipment, Net

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

	December 31,			June 30,
	2021			2021
Machinery and equipment	$	515,404		$	223,141
Leasehold improvements		333,285			323,669
Computer and office equipment		226,250			186,549
		1,074,939			733,359
Less: Accumulated depreciation		(299,678	)		(243,457	)
	$	775,261		$	489,902

Depreciation and amortization expense of $58,814 and $30,718 for the six months ended December 31, 2021 and 2020, 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 December 31, 2021 and June 30, 2021: 

	December 31, 2021
	Gross		Accumulated		Carrying
	Amount		Amortization		Value
Amortized:
Curriculum development	$	693,385	$	63,560	$	629,825
Licenses		95,000		–		95,000
Software		9,740		–		9,740
	$	798,125	$	63,560	$	734,565

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	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 $35,439 and $0 for the six months ended December 31, 2021 and 2020, respectively, were included in selling, general and administrative expenses in the statements of operations.

5. Accrued Payroll Taxes

As of December 31, 2021, and June 30, 2021, the Company had $2,002,552 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 $2,002,552 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 six months ended December 31, 2021 and 2020, the Company recognized $190,466 and $127,235, respectively, of penalties and interest within interest expense on the condensed consolidated statements of operations. For the six months ended December 31, 2021 and 2020, the Company recognized $0 and $0, respectively, within “Gain on expiration of accrued payroll taxes” as a result of quarterly tax liabilities that expired during the fiscal periods 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.

6.  Notes Payable

Notes Payable - Related Parties

The following is a summary of notes payable – related parties at December 31, 2021 and June 30, 2021: 

	December 31, 2021
	Outstanding		Accrued
	Principal		Interest
Related entity 1	$	6,147,021	$	72,852
Related entity 2		6,549,422		54,849
Related entity 3		379,525		8,226
Related entity 4		650,708		117,620
Related entity 5		181,744		1,363
Related entity 6		32,750		246
	$	13,941,170	$	255,156

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	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 December 31, 2021, the remaining outstanding amounts of the related party notes payable were extended through September 30, 2026.

Notes in the amount of $10,115,962 are unsecured and bear interest at 3% per annum. Notes in the amount of $3,542,130 do not have a stated interest rate and are included in current liabilities. $210,435 of notes payable is secured by accounts receivable (see Note 3. Investment in Pala Diagnostics for additional information). Each entity has significant influence or common ownership with the Company’s Chief Executive Officer.

As of December 31, 2021 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 six months ended December 30, 2021 and 2020 of $173,007 and $95,998, respectively.

7.  Convertible Note Payable – Related Parties

As of 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

The Company’s operations are funded by related parties either through cash advances payment of the Company’s expenditures, including payroll, on the Company’s behalf. These amounts are reflected as either accounts payable and accrued liabilities – related parties or notes payable – related parties in the consolidated Balance Sheets.

As of December 31, 2021 and June 30, 2021, the Company owed $599,212 and $414,237, respectively to all related parties 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 December 31, 2021 and June 30, 2021, the amount above includes $0 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 six months ended December 31, 2021 and 2020 were $27,000 and $27,000, respectively. As of December 30, 2021, the Company owed $10,508,955 in the form of promissory notes and $515,233 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.

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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 six 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 Company’s to related parties with common ownership:  

	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2021		2020		2021		2020
Dalrada Health	$	14,575	$	39,115	$	29,884	$	57,648
Solas		56,240		–		56,240		–
Prakat		6,000		50,000		6,000		97,500
	$	76,815	$	89,115	$	92,124	$	155,148

See Notes 3, 6, 7, 8, 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 a majority 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.

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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.

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 six-month period ended December 31, 2021.

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.

During the six months ended December 31, 2021 and 2020, stock-based compensation expense was $1,783,094 and $0, 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 six months ended December 31, 2021 and 2020 is as follows:  

	Three Months Ended December 31, 2021
	Engineering		Health		Information Technology		Education			Corporate			Inter-Segment Eliminations			Consolidated
Revenues	$	1,447,780	$	4,197,213	$	1,149,993	$	178,073		$	69,270		$	(1,595,065	)	$	5,447,264
Income (loss) from Operations		45,530		2,083,838		162,693		(82,807	)		(3,007,287	)		(1,045,508	)		(1,843,541	)
Net income (loss)	$	32,255	$	2,071,590	$	161,934	$	(82,807	)	$	(3,103,594	)	$	(1,147,016	)	$	(2,067,638	)

	Six Months Ended December 31, 2021
	Engineering			Health		Information Technology		Education			Corporate			Inter-Segment Eliminations			Consolidated
Revenues	$	1,463,197		$	8,039,452	$	1,854,537	$	457,551		$	138,540		$	(1,903,660	)	$	10,049,617
Income (loss) from Operations		(87,270	)		4,367,553		21,860		(125,587	)		(5,405,048	)		(1,526,904	)		(2,755,396	)
Net income (loss)	$	(113,857	)	$	4,343,049	$	19,621	$	(125,587	)	$	(5,595,514	)	$	(1,572,022	)	$	(3,044,311	)

	Three Months Ended December 31, 2020
	Engineering			Health			Information Technology			Corporate			Inter-Segment Eliminations			Consolidated
Revenues	$	273,052		$	115,864		$	433,857		$	–		$	(367,256	)	$	455,517
Loss from operations		(425,758	)		(199,053	)		(93,649	)		(973,919	)		14,475			(1,677,904	)
Net loss	$	(400,793	)	$	(199,053	)	$	(97,081	)	$	(833,776	)	$	(293,817	)	$	(1,824,520	)

	Six Months Ended December 31, 2020
	Engineering			Health			Information Technology			Corporate			Inter-Segment Eliminations			Consolidated
Revenues	$	860,460		$	188,314		$	909,665		$	–		$	(743,529	)	$	1,214,910
Loss from operations		(179,182	)		(320,139	)		(14,425	)		(1,814,527	)		(154,029	)		(2,482,302	)
Net loss	$	(185,462	)	$	(320,139	)	$	(14,175	)	$	(1,561,789	)	$	(652,296	)	$	(2,733,861	)

Geographic Information

The following table presents revenue by country:

	Six Months Ended
	December 31,
	2021		2020
United States	$	8,808,629	$	326,776
Europe		150,970		259,828
India		1,090,018		628,306
	$	10,049,617	$	1,214,910

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The following table presents inventories by country:  

	December 31,		June 30,
	2021		2021
United States	$	766,231	$	335,036
Europe		611,264		507,072
	$	1,377,495	$	842,108

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

	December 31,		June 30,
	2021		2021
United States	$	264,890	$	221,308
Europe		497,050		256,888
India		13,321		11,706
	$	775,261	$	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 of 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 of 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.

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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 September 3, 2021, 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 six months ended December 31, 2021 were $99,020 and $198,040, 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 into a lease for 3 separate office suites in San Diego, California. The lease expires in January 2022.

In May 2021, the Company’s PSC subsidiary entered into a three 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.

14. Subsequent Events

On February 4, 2022, the Company entered into a securities purchase agreement with YA II PN, Ltd. for issuance and sale of convertible debentures (the “Debentures”) in the aggregate principal amount of $3,000,000, with the purchase price equal to 96% of the principal amount. The Debentures have a fixed conversion price of $0.9151 per share. 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. Beginning on May 1, 2022, the Principal amount plus a 20% redemption premium and plus accrued and unpaid interest will be subject to monthly redemption Debentures included warrant coverage of 983,499 warrants at an exercise price of $0.9151 and expire on February 4, 2026. The warrant’s conversion price on the convertible note and exercise price on warrants have anti-dilution provisions. Third party fees associated with the Debentures includes $230,400 in cash and restricted shares equal to 192,000. The company has received net proceeds of $1,920,000 on February 7, 2022. Management has reviewed all subsequent events through February 14, 2022.

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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 $2,968,298 during the six months ended December 31, 2021. We will be required to raise substantial capital to fund our capital expenditures, working capital, and other cash requirements since our current cash assets are exhausted and we have generated no revenues to date to sustain our operations. We will continue to rely on related parties to fund our operations, which may dilute existing share value. We will need to 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 expect to incur additional losses during the foreseeable future. Until we are able to successfully execute our business plan. Consequently, we will require substantial additional capital to continue our development and marketing activities. 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. In addition, these new rules and regulations have made it more difficult and more expensive for us to obtain director and officer liability insurance, which we currently cannot afford to do. 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.

RESULTS OF OPERATIONS

Three Months Ended December 31, 2021 and 2020

The following table sets forth the results of our operations for the three months ended December 31, 2021 and 2020:

	Three Months Ended
	December 31,
	2021			2020
Revenues	$	5,447,264		$	455,517
Cost of revenues		2,056,343			458,833
Gross profit		3,390,921			(3,316	)
Operating expenses		5,234,462			1,674,588
Loss from operations		(1,843,541	)		(1,677,904	)
Other income (expenses)		(224,097	)		(146,616	)
Net loss	$	(2,067,638	)	$	(1,824,520	)

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Revenues and Cost of Revenues

During the three months ended December 31, 2021, the Company recorded revenues of $5,447,264 as attributable to each entity below:

	Three Months Ended
	December 31,
	2021		2020
Pala Diagnostics	$	4,091,325	$	–
Prakat		635,426		261,229
IHG		178,073		–
Health		38,142		115,864
Likido		139,163		17,828
Precision		102,595		28,513
Other		262,540		32,083
	$	5,447,264	$	455,517

Revenues

Revenues for the three months ended December 31, 2021 was $5,447,264 compared with revenue of $455,517 during the three months ended December 31, 2020, an increase of $4,991,747, or 1,096%. 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.

Costs and Expenses

Cost of Revenues. Cost of Revenues for the three months ended December 31, 2021 was $2,056,343 compared to cost of revenues of $458,833 during the three months ended December 31, 2020, an increase of $1,597,510, or 348%. The increase in Cost of Revenues was primarily a result of the COVID-19 testing segment.

Operating Expenses. Operating expenses for the three months ended December 31, 2021 was $5,234,462 compared to operating expenses of $1,674,588 during the three months ended December 31, 2020, an increase of $3,559,874, or 213%. The increase in operating expenses was a result of corporate expansion, stock-based compensation and growth of the COVID-19 testing segment. Most of fiscal 2020’s operating expenses were spent on development of the Company’s proposed business operations. During the three months ended December 31, 2021, 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 December 31, 2021 was $2,067,638 compared to net loss of $1,824,520 for the three months ended December 31, 2020.

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RESULTS OF OPERATIONS

Six Months Ended December 31, 2021 and 2020

The following table sets forth the results of our operations for the six months ended December 31, 2021 and 2020:

	Six Months Ended
	December 31,
	2021			2020
Revenues	$	10,049,617		$	1,214,910
Cost of revenues		3,260,678			692,261
Gross profit		6,788,939			522,649
Operating expenses		9,544,335			3,004,951
Loss from operations		(2,755,396	)		(2,482,302	)
Other income (expenses)		(288,915	)		(251,559	)
Net loss	$	(3,044,311	)	$	(2,733,861	)

Revenues and Cost of Revenues

During the six months ended December 31, 2021, the Company recorded revenues of $10,049,617 as attributable to each entity below:

	Six Months Ended
	December 31,
	2021		2020
Pala Diagnostics	$	7,878,564	$	–
Prakat		1,090,018		628,306
IHG		457,551		–
Health		92,078		188,314
Likido		150,970		259,828
Precision		106,205		82,685
Other		274,230		55,777
	$	10,049,617	$	1,214,910

Revenues

Revenues for the six months ended December 31, 2021 was $10,049,617 compared with revenue of $1,214,910 during the six months ended December 31, 2020, an increase of $8,834,707, or 727%. 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.

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Costs and Expenses

Cost of Revenues. Cost of Revenues for the six months ended December 31, 2021 was $3,260,678 compared to cost of revenues of $692,261 during the six months ended December 31, 2020, an increase of $2,568,417, or 85%. The increase in Cost of Revenues was primarily a result of the COVID-19 testing segment.

Operating Expenses. Operating expenses for the six months ended December 31, 2021 was $9,544,335 compared to operating expenses of $3,004,951 during the six months ended December 31, 2020, an increase of 6,539,384, or 218%. The increase in operating expenses was a result of corporate expansion, stock-based compensation, and growth of the COVID-19 testing segment. Most of fiscal 2020’s operating expenses were spent on development of the Company’s proposed business operations. During the six months ended December 31, 2021, the Company recorded stock compensation expense of $1,783,094 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.

Net Income (Loss)

Net loss for the six months ended December 31, 2021 was $3,044,311 compared to net loss of $2,733,861 for the six months ended December 31, 2020.

Liquidity and Capital Resources 

As of December 31, 2021, the Company had an accumulated deficit of $112,989,191. 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 and continue the commercialization of our Likido heating & cooling units. 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 and COVID-19 testing through Pala Diagnostics. 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.

Working Capital

As of December 31, 2021, the Company had current assets of $8,119,345 and current liabilities of $10,687,360 compared with current assets of $1,640,511 and current liabilities of $17,175,111 at 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.

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Cash Flows

	Six Months Ended
	December 31,
	2021			2020
Net cash used in operating activities	$	(4,728,921	)	$	(2,040,375	)
Net cash used in investing activities		(337,728	)		(102,523	)
Net cash provided by financing activities		5,097,451			2,232,848
Net change in cash during the period, before effects of foreign currency	$	30,802		$	89,950

Cash flow from Operating Activities

During the six months ended December 31, 2021, the Company used $4,728,922 of cash for operating activities compared to $2,040,375 used during the three months ended December 31, 2020. 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 six months ended December 31, 2021, the Company used $337,728 of cash for investing activities compared to $102,523 used during the three months ended December 31, 2020. 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 six months ended December 31, 2021, the Company received $5,097,451 in cash from financing activities compared to $2,332,848 during the six months ended December 3, 2020. The Company received proceeds of $6,999,445 from the issuance of related party notes payable compared to $2,232,848 received during the six months ended December 31, 2020. The Company also repaid $12,923 on the notes payable and repurchased $14,826 of common shares during the six months ended December 31, 2021. During the six months ended December 31, 2021, Vivera withdrew an unauthorized distribution totaling $1,874,245 in 2021.

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.

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.

28

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 February 14, 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.

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 six months ended December 31, 2021.

29

(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.

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.

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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)

31

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:   February 14, 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	February 14, 2022
Brian Bonar	and Director

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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, 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: February 14, 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: February 14, 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 December 31, 2021 (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:  February 14, 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 December 31, 2021 (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:  February 14, 2022
	/s/ Kyle McCollum
	Kyle McCollum
	Chief Financial Officer, and Director
	(Principal Financial Officer and Principal Accounting Officer)

XML

Cover - shares	6 Months Ended
	Dec. 31, 2021	Feb. 11, 2022
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Dec. 31, 2021
Document Fiscal Period Focus	Q2
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
Trading Symbol	DFCO
Title of 12(g) Security	Common Stock, $0.005 par value per share
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		70,184,184

XML

Condensed Consolidated Balance Sheets (unaudited) - USD ($)	Dec. 31, 2021	Jun. 30, 2021
Current assets:
Cash and cash equivalents	$ 180,756	$ 110,285
Accounts receivable, net	6,045,187	265,812
Accounts receivable, net - related parties	119,480	69,952
Other receivables	141,653	67,328
Inventories	1,377,495	842,108
Prepaid expenses and other current assets	254,774	285,026
Total current assets	8,119,345	1,640,511
Property and equipment, net	775,261	489,902
Goodwill	795,016	736,456
Intangible assets, net	734,565	664,494
Right of use asset, net	455,559	532,327
Right of use asset, net - related party	560,118	639,415
Total assets	11,439,864	4,703,105
Current liabilities:
Accounts payable	1,295,533	910,339
Accrued liabilities	1,341,723	641,380
Accrued payroll taxes, penalties and interest	2,002,552	1,953,024
Accounts payable and accrued liabilities – related parties	599,212	414,237
Deferred revenue	657,159	219,999
Notes payable, current portion	402,894	415,817
Notes payable – related parties	4,060,321	10,508,955
Convertible notes payable – related party		1,875,000
Right of use liability	166,886	76,570
Right of use liability - related party	161,080	159,790
Total current liabilities	10,687,360	17,175,111
Notes payable – related parties	9,880,849	0
Right of use liability	288,672	455,757
Right of use liability - related party	399,038	479,625
Total liabilities	21,255,919	18,110,493
Commitments and contingencies (Note 12)
Stockholders' deficit:
Common stock, $0.005 par value, 1,000,000,000 shares authorized, 70,184,184 and 68,464,742 shares issued and outstanding at December 31, 2021 and June 30, 2021, respectively	350,922	369,194
Common stock to be issued	429,875	601,825
Additional paid-in capital	101,514,977	92,965,821
Accumulated deficit	(112,989,191)	(107,338,174)
Accumulated other comprehensive income (loss)	71,956	32,287
Total stockholders’ deficit – Dalrada Financial Corporation	(10,621,311)	(13,368,997)
Noncontrolling interests	805,256	(38,391)
Total stockholders’ deficit including noncontrolling interests	(9,816,055)	(13,407,388)
Total liabilities and stockholders' deficit	11,439,864	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	Dec. 31, 2021	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	70,184,184	68,464,742
Common stock, shares outstanding	70,184,184	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		6 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
Total revenues	$ 5,447,264	$ 455,517	$ 10,049,617	$ 1,214,910
Cost of revenue	2,056,343	458,833	3,260,678	692,261
Gross profit	3,390,921	(3,316)	6,788,939	522,649
Operating expenses:
Selling, general and administrative (includes stock-based compensation of $1,105,587 and $0 for three months and $1,783,094 and $0 for six months ended 2021 and 2020, respectively)	5,234,462	1,418,909	9,542,739	2,726,450
Research and development		255,679	1,596	278,501
Total operating expenses	5,234,462	1,674,588	9,544,335	3,004,951
Loss from operations	(1,843,541)	(1,677,904)	(2,755,396)	(2,482,302)
Other income (expense):
Interest expense	(135,070)	(154,751)	(258,874)	(283,811)
Interest income	521	377	1,048	902
Other income	(1,464)	624	13,244	36,798
Gain (loss) on foreign exchange	(88,084)	7,134	(44,333)	(5,448)
Total other income (expenses)	(224,097)	(146,616)	(288,915)	(251,559)
Net loss before taxes	(2,067,638)	(1,824,520)	(3,044,311)	(2,733,861)
Income taxes
Net loss	(2,067,638)	(1,824,520)	(3,044,311)	(2,733,861)
Net income (loss) attributable to noncontrolling interests	1,317,537	(24,619)	2,606,707	(19,604)
Net loss attributable to Dalrada Financial Corporation stockholders	(3,385,175)	(1,799,901)	(5,651,018)	(2,714,257)
Foreign currency translation	325	10,050	39,669	24,259
Comprehensive loss	$ (2,067,313)	$ (1,814,470)	$ (3,004,642)	$ (2,709,602)
Net loss per common share to Dalrada stockholders – basic	$ (0.05)	$ (0.03)	$ (0.08)	$ (0.04)
Net loss per common share to Dalrada stockholders – diluted	$ (0.05)	$ (0.03)	$ (0.08)	$ (0.04)
Weighted average common shares outstanding – basic	73,903,689	68,464,742	73,939,348	68,464,742
Weighted average common shares outstanding – diluted	73,903,689	68,464,742	73,939,348	68,464,742
Revenues [Member]
Total revenues	$ 5,370,449	$ 366,402	$ 9,957,493	$ 1,059,762
Revenues Related Party [Member]
Total revenues	$ 76,815	$ 89,115	$ 92,124	$ 155,148

XML

Condensed Consolidated Statements of Operations (unaudited) (Parenthetical) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
Income Statement [Abstract]
Stock-based compensation	$ 1,105,587	$ 0	$ 1,783,094	$ 0

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)		(2,909,341)
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
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)										(2,733,861)
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
Beginning balance, value at Sep. 30, 2020	$ 50	$ 50	$ 342,324			91,904,874	56,836	(108,343,963)	6,312	(16,033,567)
Beginning 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
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	(6,980,086)
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
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 venture				58,560			111,185			169,745
Repurchase of common shares from subsidiary			$ (1,647)			(13,179)				(14,826)
Repurchase of common shares from subsidiary ,shares			(329,478)
Stock-based compensation			$ 10,000			667,507				677,507
Stock-based compensation, shares			2,000,000
Net income (loss)							1,289,169	(2,265,842)		(976,673)
Foreign currency translation									39,344	39,344
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	(6,980,086)
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
Net income (loss)										(3,044,311)
Ending balance, value at Dec. 31, 2021	$ 100	$ 50	$ 350,922	429,875		101,514,977	805,256	(112,989,191)	71,956	(9,816,055)
Ending balance, shares at Dec. 31, 2021	10,002	5,000	70,184,184
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	(6,980,086)
Beginning balance, shares at Sep. 30, 2021		5,000	75,721,684
Issuance of preferred stock	$ 100				(6,532,206)	6,532,106
Issuance of preferred stock, shares	10,002
Common stock issued pursuant to acquisitions			$ 1,063	(85,975)		84,913
Common stock issued pursuant to acquisitions, shares			212,500
Joint venture			$ 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
Net income (loss)							1,317,537	(3,385,175)		(2,067,638)
Foreign currency translation									325	325
Ending balance, value at Dec. 31, 2021	$ 100	$ 50	$ 350,922	$ 429,875		$ 101,514,977	$ 805,256	$ (112,989,191)	$ 71,956	$ (9,816,055)
Ending balance, shares at Dec. 31, 2021	10,002	5,000	70,184,184

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Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($)	6 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Cash flows from operating activities:
Net loss	$ (3,044,311)	$ (2,733,861)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	94,253	30,718
Stock compensation	1,783,094	0
Changes in operating assets and liabilities:
Accounts receivable	(5,828,903)	55,801
Other receivables	(74,325)	19,173
Inventories	(535,387)	21,573
Prepaid expenses and other current assets	30,252	(36,081)
Accounts payable	384,424	(95,774)
Accounts payable and accrued liabilities - related parties	1,046,334	339,385
Accrued liabilities	928,960	171,853
Accrued payroll taxes, penalties and interest	49,528	237,008
Deferred revenue	437,160	(50,171)
Net cash used in operating activities	(4,728,921)	(2,040,375)
Cash flows from investing activities:
Purchase of property and equipment	(232,988)	(102,523)
Purchase of intangibles	(104,740)
Net cash used in investing activities	(337,728)	(102,523)
Cash flows from financing activities:
Proceeds from related party notes payable	6,999,445	2,232,848
Net proceeds (repayments) from notes payable	(12,923)	0
Distributions to noncontrolling interest	(1,874,245)	0
Repurchase of common shares from subsidiary	(14,826)	0
Net cash provided by financing activities	5,097,451	2,232,848
Net change in cash and cash equivalents	30,802	89,950
Effect of exchange rate changes on cash	39,669	21,545
Cash and cash equivalents at beginning of period	110,285	75,165
Cash and cash equivalents at end of period	180,756	186,660
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 pay able-related parties to note payable-related parties	$ 181,744	$ 0

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Organization and Nature of Operations

6 Months Ended

Dec. 31, 2021

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, and Dalrada Technologies. 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 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 2021 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 December 31, 2021, the Company has an accumulated deficit of $112,989,191. The Company closed a convertible debenture funding on February 4, 2022 for a total principal amount of $3,000,000 (see Note 14. Subsequent Events for additional information). 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

6 Months Ended

Dec. 31, 2021

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.

Revision of Prior Period Financial Statements

In the Company’s quarterly report for the six months ended December 31, 2020, the Company included $600,000 in revenues and $165,000 cost of goods sold pertaining to its Dalrada Precision entity. In the fourth quarter of the year ended June 30, 2021, the Company reversed the revenue and related accounts receivable as well as the cost of goods sold and related inventory. The adjustment was a result in the change of relationship with its third-party manufacturer as a resale partner exclusively to that of a third-party manufacturer and requested the title of inventory to be returned and adjusted the revenue accordingly. We have modified the previously reported amounts included in the statements of operations, cash flows and accompanying footnotes for the three and six months ended December 31, 2020 to reflect the above adjustment.

(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), as well as its subsidiaries (Likido, Prakat, Shark, IHG, Pacific Stem, Ignite, Empower, Solas) since their respective acquisition dates (see Note 3) and Controlling Interest in Pala (see Note 4) . 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 six months ended December 31, 2021, healthcare insurers and government payers accounted for over 75% of total revenues. During the six months ended December 31, 2021, healthcare insurers and government payers amounted to total revenue of $5,329,571 and $2,818,206, respectively. The accounts receivable related to both healthcare insurers and government payers is $5,338,135 as of December 31, 2021.

(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) 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 December 31, 2021 and June 30, 2021, the Company had an allowance of doubtful accounts of $48,135 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.

(h) Inventory

Inventory is recorded at the lower of cost or net realizable value on a first-in first-out basis. As of December 31, 2021 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.

(i) 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.

(j) 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.

(k) 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 December 31, 2021 and June 30, 2021, there were no significant qualitative factors that indicated goodwill was impaired.

(l) 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 year ended June 30, 2020 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 December 31, 2021.

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 stem cell therapy procedures from Pacific Stems. For Prakat and Pacific Stems, 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.

Net revenues from Pala accounted for over 75% of the Company’s total net revenues for the three and six months ended December 31, 2021 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.

Disaggregation of Revenue

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

	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2021		2020		2021		2020
Product sales - third parties	$	301,693	$	123,090	$	343,643	$	496,873
Product sales - related party		14,575		39,115		29,884		57,648
Service revenue - third parties		5,062,756		243,312		9,613,850		562,889
Service revenue - related party		62,240		50,000		62,240		97,500
Total revenue	$	5,447,264	$	455,517	$	10,049,617	$	1,214,910

Contract Balances

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

	December 31,		June 30,
	2021		2021
Accounts receivable, net	$	6,045,187	$	265,812
Accounts receivable, net - related parties		119,480		69,952
Deferred revenue		657,159		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.

(m) 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				Six Months Ended
	December 31,				December 31,
	2021		2020		2021		2020
Product sales	$	526,063	$	315,763	$	590,096	$	397,143
Service revenue		1,530,280		143,070		2,670,582		295,118
Total cost of revenue	$	2,056,343	$	458,833	$	3,260,678	$	692,261

(n) Advertising

Advertising costs are expensed as incurred. During the six months ended December 31, 2021 and 2020, advertising expenses were approximately $228,000 and $15,000, respectively.

(o) 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 six months ended December 31, 2021 and 2020, stock-based compensation expense was $1,783,094 and $0, respectively.

(p) 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.

(q) 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 six months ended December 31, 2021, the Company’s only component of comprehensive income was foreign currency translation adjustments.

(r)  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 December 31, 2021, non-controlling interests pertained to the Company’s Prakat and Pala subsidiaries.

(s) 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 0 and 57,628,876 shares, stock options of 1,000,000 and 0, and cashless warrants of 8,775,000 and 0, was not included in diluted loss per share, because the effects are antidilutive, for the three and six months ended December 31, 2021 and 2020, respectively.

There were no adjustments to the numerator during the three and six months ended December 31, 2021 and 2020.

(t) 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.

(u) Recent Accounting Pronouncements   The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

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Investment in Pala Diagnostics

6 Months Ended

Dec. 31, 2021

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 six months ended December 31, 2021, 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% and is included in the Notes Payable – Related Parties. As of December 31, 2021, the outstanding principal and interest was $210,435 and $7,334, respectively.

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 December 31, 2021.

During the quarter ended December 31, 2021, Vivera withdrew unauthorized distributions totaling $1,874,245. The unauthorized distributions are currently being disputed through pending litigation. 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

6 Months Ended

Dec. 31, 2021

Selected Balance Sheet Elements

Selected Balance Sheet Elements

4. Selected Balance Sheet Elements

Inventories

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

	December 31,		June 30,
	2021		2021
Raw materials	$	423,130	$	172,227
Finished goods		954,365		669,881
	$	1,377,495	$	842,108

Property and Equipment, Net

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

	December 31,			June 30,
	2021			2021
Machinery and equipment	$	515,404		$	223,141
Leasehold improvements		333,285			323,669
Computer and office equipment		226,250			186,549
		1,074,939			733,359
Less: Accumulated depreciation		(299,678	)		(243,457	)
	$	775,261		$	489,902

Depreciation and amortization expense of $58,814 and $30,718 for the six months ended December 31, 2021 and 2020, 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 December 31, 2021 and June 30, 2021: 

	December 31, 2021
	Gross		Accumulated		Carrying
	Amount		Amortization		Value
Amortized:
Curriculum development	$	693,385	$	63,560	$	629,825
Licenses		95,000		–		95,000
Software		9,740		–		9,740
	$	798,125	$	63,560	$	734,565

	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 $35,439 and $0 for the six months ended December 31, 2021 and 2020, respectively, were included in selling, general and administrative expenses in the statements of operations.

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Accrued Payroll Taxes

6 Months Ended

Dec. 31, 2021

Payables and Accruals [Abstract]

Accrued Payroll Taxes

5. Accrued Payroll Taxes

As of December 31, 2021, and June 30, 2021, the Company had $2,002,552 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 $2,002,552 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 six months ended December 31, 2021 and 2020, the Company recognized $190,466 and $127,235, respectively, of penalties and interest within interest expense on the condensed consolidated statements of operations. For the six months ended December 31, 2021 and 2020, the Company recognized $0 and $0, respectively, within “Gain on expiration of accrued payroll taxes” as a result of quarterly tax liabilities that expired during the fiscal periods 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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Notes Payable

6 Months Ended

Dec. 31, 2021

Debt Disclosure [Abstract]

Notes Payable

6.  Notes Payable

Notes Payable - Related Parties

The following is a summary of notes payable – related parties at December 31, 2021 and June 30, 2021: 

	December 31, 2021
	Outstanding		Accrued
	Principal		Interest
Related entity 1	$	6,147,021	$	72,852
Related entity 2		6,549,422		54,849
Related entity 3		379,525		8,226
Related entity 4		650,708		117,620
Related entity 5		181,744		1,363
Related entity 6		32,750		246
	$	13,941,170	$	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 December 31, 2021, the remaining outstanding amounts of the related party notes payable were extended through September 30, 2026.

Notes in the amount of $10,115,962 are unsecured and bear interest at 3% per annum. Notes in the amount of $3,542,130 do not have a stated interest rate and are included in current liabilities. $210,435 of notes payable is secured by accounts receivable (see Note 3. Investment in Pala Diagnostics for additional information). Each entity has significant influence or common ownership with the Company’s Chief Executive Officer.

As of December 31, 2021 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 six months ended December 30, 2021 and 2020 of $173,007 and $95,998, respectively.

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Convertible Note Payable – Related Parties

6 Months Ended

Dec. 31, 2021

Debt Disclosure [Abstract]

Convertible Note Payable – Related Parties

7.  Convertible Note Payable – Related Parties

As of 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

6 Months Ended

Dec. 31, 2021

Related Party Transactions [Abstract]

Related Party Transactions

8. Related Party Transactions

The Company’s operations are funded by related parties either through cash advances payment of the Company’s expenditures, including payroll, on the Company’s behalf. These amounts are reflected as either accounts payable and accrued liabilities – related parties or notes payable – related parties in the consolidated Balance Sheets.

As of December 31, 2021 and June 30, 2021, the Company owed $599,212 and $414,237, respectively to all related parties 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 December 31, 2021 and June 30, 2021, the amount above includes $0 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 six months ended December 31, 2021 and 2020 were $27,000 and $27,000, respectively. As of December 30, 2021, the Company owed $10,508,955 in the form of promissory notes and $515,233 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 six 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 Company’s to related parties with common ownership:  

	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2021		2020		2021		2020
Dalrada Health	$	14,575	$	39,115	$	29,884	$	57,648
Solas		56,240		–		56,240		–
Prakat		6,000		50,000		6,000		97,500
	$	76,815	$	89,115	$	92,124	$	155,148

See Notes 3, 6, 7, 8, 9, 10, and 11 for additional related party transactions.

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Preferred Stock

6 Months Ended

Dec. 31, 2021

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 a majority 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

6 Months Ended

Dec. 31, 2021

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.

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Stock-Based Compensation

6 Months Ended

Dec. 31, 2021

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 six-month period ended December 31, 2021.

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.

During the six months ended December 31, 2021 and 2020, stock-based compensation expense was $1,783,094 and $0, respectively.

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Segment Reporting

6 Months Ended

Dec. 31, 2021

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 six months ended December 31, 2021 and 2020 is as follows:  

	Three Months Ended December 31, 2021
	Engineering		Health		Information Technology		Education			Corporate			Inter-Segment Eliminations			Consolidated
Revenues	$	1,447,780	$	4,197,213	$	1,149,993	$	178,073		$	69,270		$	(1,595,065	)	$	5,447,264
Income (loss) from Operations		45,530		2,083,838		162,693		(82,807	)		(3,007,287	)		(1,045,508	)		(1,843,541	)
Net income (loss)	$	32,255	$	2,071,590	$	161,934	$	(82,807	)	$	(3,103,594	)	$	(1,147,016	)	$	(2,067,638	)

	Six Months Ended December 31, 2021
	Engineering			Health		Information Technology		Education			Corporate			Inter-Segment Eliminations			Consolidated
Revenues	$	1,463,197		$	8,039,452	$	1,854,537	$	457,551		$	138,540		$	(1,903,660	)	$	10,049,617
Income (loss) from Operations		(87,270	)		4,367,553		21,860		(125,587	)		(5,405,048	)		(1,526,904	)		(2,755,396	)
Net income (loss)	$	(113,857	)	$	4,343,049	$	19,621	$	(125,587	)	$	(5,595,514	)	$	(1,572,022	)	$	(3,044,311	)

	Three Months Ended December 31, 2020
	Engineering			Health			Information Technology			Corporate			Inter-Segment Eliminations			Consolidated
Revenues	$	273,052		$	115,864		$	433,857		$	–		$	(367,256	)	$	455,517
Loss from operations		(425,758	)		(199,053	)		(93,649	)		(973,919	)		14,475			(1,677,904	)
Net loss	$	(400,793	)	$	(199,053	)	$	(97,081	)	$	(833,776	)	$	(293,817	)	$	(1,824,520	)

	Six Months Ended December 31, 2020
	Engineering			Health			Information Technology			Corporate			Inter-Segment Eliminations			Consolidated
Revenues	$	860,460		$	188,314		$	909,665		$	–		$	(743,529	)	$	1,214,910
Loss from operations		(179,182	)		(320,139	)		(14,425	)		(1,814,527	)		(154,029	)		(2,482,302	)
Net loss	$	(185,462	)	$	(320,139	)	$	(14,175	)	$	(1,561,789	)	$	(652,296	)	$	(2,733,861	)

Geographic Information

The following table presents revenue by country:

	Six Months Ended
	December 31,
	2021		2020
United States	$	8,808,629	$	326,776
Europe		150,970		259,828
India		1,090,018		628,306
	$	10,049,617	$	1,214,910

The following table presents inventories by country:  

	December 31,		June 30,
	2021		2021
United States	$	766,231	$	335,036
Europe		611,264		507,072
	$	1,377,495	$	842,108

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

	December 31,		June 30,
	2021		2021
United States	$	264,890	$	221,308
Europe		497,050		256,888
India		13,321		11,706
	$	775,261	$	489,902

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Commitments and Contingencies

6 Months Ended

Dec. 31, 2021

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 of 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 of 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 September 3, 2021, 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 six months ended December 31, 2021 were $99,020 and $198,040, 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 into a lease for 3 separate office suites in San Diego, California. The lease expires in January 2022.

In May 2021, the Company’s PSC subsidiary entered into a three 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.

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Subsequent Events

6 Months Ended

Dec. 31, 2021

Subsequent Events [Abstract]

Subsequent Events

14. Subsequent Events

On February 4, 2022, the Company entered into a securities purchase agreement with YA II PN, Ltd. for issuance and sale of convertible debentures (the “Debentures”) in the aggregate principal amount of $3,000,000, with the purchase price equal to 96% of the principal amount. The Debentures have a fixed conversion price of $0.9151 per share. 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. Beginning on May 1, 2022, the Principal amount plus a 20% redemption premium and plus accrued and unpaid interest will be subject to monthly redemption Debentures included warrant coverage of 983,499 warrants at an exercise price of $0.9151 and expire on February 4, 2026. The warrant’s conversion price on the convertible note and exercise price on warrants have anti-dilution provisions. Third party fees associated with the Debentures includes $230,400 in cash and restricted shares equal to 192,000. The company has received net proceeds of $1,920,000 on February 7, 2022. Management has reviewed all subsequent events through February 14, 2022.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Dec. 31, 2021

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.

Revision of Prior Period Financial Statements

In the Company’s quarterly report for the six months ended December 31, 2020, the Company included $600,000 in revenues and $165,000 cost of goods sold pertaining to its Dalrada Precision entity. In the fourth quarter of the year ended June 30, 2021, the Company reversed the revenue and related accounts receivable as well as the cost of goods sold and related inventory. The adjustment was a result in the change of relationship with its third-party manufacturer as a resale partner exclusively to that of a third-party manufacturer and requested the title of inventory to be returned and adjusted the revenue accordingly. We have modified the previously reported amounts included in the statements of operations, cash flows and accompanying footnotes for the three and six months ended December 31, 2020 to reflect the above adjustment.

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), as well as its subsidiaries (Likido, Prakat, Shark, IHG, Pacific Stem, Ignite, Empower, Solas) since their respective acquisition dates (see Note 3) and Controlling Interest in Pala (see Note 4) . 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 six months ended December 31, 2021, healthcare insurers and government payers accounted for over 75% of total revenues. During the six months ended December 31, 2021, healthcare insurers and government payers amounted to total revenue of $5,329,571 and $2,818,206, respectively. The accounts receivable related to both healthcare insurers and government payers is $5,338,135 as of December 31, 2021.

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.

Accounts Receivable

(g) 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 December 31, 2021 and June 30, 2021, the Company had an allowance of doubtful accounts of $48,135 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.

Inventory

(h) Inventory

Inventory is recorded at the lower of cost or net realizable value on a first-in first-out basis. As of December 31, 2021 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

(i) 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

(j) 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

(k) 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 December 31, 2021 and June 30, 2021, there were no significant qualitative factors that indicated goodwill was impaired.

Revenue Recognition

(l) 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 year ended June 30, 2020 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 December 31, 2021.

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 stem cell therapy procedures from Pacific Stems. For Prakat and Pacific Stems, 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.

Net revenues from Pala accounted for over 75% of the Company’s total net revenues for the three and six months ended December 31, 2021 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.

Disaggregation of Revenue

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

	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2021		2020		2021		2020
Product sales - third parties	$	301,693	$	123,090	$	343,643	$	496,873
Product sales - related party		14,575		39,115		29,884		57,648
Service revenue - third parties		5,062,756		243,312		9,613,850		562,889
Service revenue - related party		62,240		50,000		62,240		97,500
Total revenue	$	5,447,264	$	455,517	$	10,049,617	$	1,214,910

Contract Balances

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

	December 31,		June 30,
	2021		2021
Accounts receivable, net	$	6,045,187	$	265,812
Accounts receivable, net - related parties		119,480		69,952
Deferred revenue		657,159		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

(m) 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				Six Months Ended
	December 31,				December 31,
	2021		2020		2021		2020
Product sales	$	526,063	$	315,763	$	590,096	$	397,143
Service revenue		1,530,280		143,070		2,670,582		295,118
Total cost of revenue	$	2,056,343	$	458,833	$	3,260,678	$	692,261

Advertising

(n) Advertising

Advertising costs are expensed as incurred. During the six months ended December 31, 2021 and 2020, advertising expenses were approximately $228,000 and $15,000, respectively.

Stock-based Compensation

(o) 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 six months ended December 31, 2021 and 2020, stock-based compensation expense was $1,783,094 and $0, respectively.

Foreign Currency Translation

(p) 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

(q) 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 six months ended December 31, 2021, the Company’s only component of comprehensive income was foreign currency translation adjustments.

Non-controlling Interests

(r)  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 December 31, 2021, non-controlling interests pertained to the Company’s Prakat and Pala subsidiaries.

Basic and Diluted Net Loss per Share

(s) 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 0 and 57,628,876 shares, stock options of 1,000,000 and 0, and cashless warrants of 8,775,000 and 0, was not included in diluted loss per share, because the effects are antidilutive, for the three and six months ended December 31, 2021 and 2020, respectively.

There were no adjustments to the numerator during the three and six months ended December 31, 2021 and 2020.

Income Taxes

(t) 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

(u) Recent Accounting Pronouncements   The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Dec. 31, 2021

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				Six Months Ended
	December 31,				December 31,
	2021		2020		2021		2020
Product sales - third parties	$	301,693	$	123,090	$	343,643	$	496,873
Product sales - related party		14,575		39,115		29,884		57,648
Service revenue - third parties		5,062,756		243,312		9,613,850		562,889
Service revenue - related party		62,240		50,000		62,240		97,500
Total revenue	$	5,447,264	$	455,517	$	10,049,617	$	1,214,910

Schedule of receivables and contract liabilities

	December 31,		June 30,
	2021		2021
Accounts receivable, net	$	6,045,187	$	265,812
Accounts receivable, net - related parties		119,480		69,952
Deferred revenue		657,159		219,999

Schedule of cost of revenue

	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2021		2020		2021		2020
Product sales	$	526,063	$	315,763	$	590,096	$	397,143
Service revenue		1,530,280		143,070		2,670,582		295,118
Total cost of revenue	$	2,056,343	$	458,833	$	3,260,678	$	692,261

XML

Selected Balance Sheet Elements (Tables)

6 Months Ended

Dec. 31, 2021

Selected Balance Sheet Elements

Schedule of inventory

	December 31,		June 30,
	2021		2021
Raw materials	$	423,130	$	172,227
Finished goods		954,365		669,881
	$	1,377,495	$	842,108

Schedule of property and equipment

	December 31,			June 30,
	2021			2021
Machinery and equipment	$	515,404		$	223,141
Leasehold improvements		333,285			323,669
Computer and office equipment		226,250			186,549
		1,074,939			733,359
Less: Accumulated depreciation		(299,678	)		(243,457	)
	$	775,261		$	489,902

Schedule of Intangible assets, net

	December 31, 2021
	Gross		Accumulated		Carrying
	Amount		Amortization		Value
Amortized:
Curriculum development	$	693,385	$	63,560	$	629,825
Licenses		95,000		–		95,000
Software		9,740		–		9,740
	$	798,125	$	63,560	$	734,565

	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

XML

Notes Payable (Tables)

6 Months Ended

Dec. 31, 2021

Debt Disclosure [Abstract]

Schedule of notes payable

	December 31, 2021
	Outstanding		Accrued
	Principal		Interest
Related entity 1	$	6,147,021	$	72,852
Related entity 2		6,549,422		54,849
Related entity 3		379,525		8,226
Related entity 4		650,708		117,620
Related entity 5		181,744		1,363
Related entity 6		32,750		246
	$	13,941,170	$	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

XML

Related Party Transactions (Tables)

6 Months Ended

Dec. 31, 2021

Related Party Transactions [Abstract]

Summary of revenues

	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2021		2020		2021		2020
Dalrada Health	$	14,575	$	39,115	$	29,884	$	57,648
Solas		56,240		–		56,240		–
Prakat		6,000		50,000		6,000		97,500
	$	76,815	$	89,115	$	92,124	$	155,148

XML

Segment Reporting (Tables)

6 Months Ended

Dec. 31, 2021

Segment Reporting [Abstract]

Schedule of segment information

	Three Months Ended December 31, 2021
	Engineering		Health		Information Technology		Education			Corporate			Inter-Segment Eliminations			Consolidated
Revenues	$	1,447,780	$	4,197,213	$	1,149,993	$	178,073		$	69,270		$	(1,595,065	)	$	5,447,264
Income (loss) from Operations		45,530		2,083,838		162,693		(82,807	)		(3,007,287	)		(1,045,508	)		(1,843,541	)
Net income (loss)	$	32,255	$	2,071,590	$	161,934	$	(82,807	)	$	(3,103,594	)	$	(1,147,016	)	$	(2,067,638	)

	Six Months Ended December 31, 2021
	Engineering			Health		Information Technology		Education			Corporate			Inter-Segment Eliminations			Consolidated
Revenues	$	1,463,197		$	8,039,452	$	1,854,537	$	457,551		$	138,540		$	(1,903,660	)	$	10,049,617
Income (loss) from Operations		(87,270	)		4,367,553		21,860		(125,587	)		(5,405,048	)		(1,526,904	)		(2,755,396	)
Net income (loss)	$	(113,857	)	$	4,343,049	$	19,621	$	(125,587	)	$	(5,595,514	)	$	(1,572,022	)	$	(3,044,311	)

	Three Months Ended December 31, 2020
	Engineering			Health			Information Technology			Corporate			Inter-Segment Eliminations			Consolidated
Revenues	$	273,052		$	115,864		$	433,857		$	–		$	(367,256	)	$	455,517
Loss from operations		(425,758	)		(199,053	)		(93,649	)		(973,919	)		14,475			(1,677,904	)
Net loss	$	(400,793	)	$	(199,053	)	$	(97,081	)	$	(833,776	)	$	(293,817	)	$	(1,824,520	)

	Six Months Ended December 31, 2020
	Engineering			Health			Information Technology			Corporate			Inter-Segment Eliminations			Consolidated
Revenues	$	860,460		$	188,314		$	909,665		$	–		$	(743,529	)	$	1,214,910
Loss from operations		(179,182	)		(320,139	)		(14,425	)		(1,814,527	)		(154,029	)		(2,482,302	)
Net loss	$	(185,462	)	$	(320,139	)	$	(14,175	)	$	(1,561,789	)	$	(652,296	)	$	(2,733,861	)

Schedule of revenue by country

	Six Months Ended
	December 31,
	2021		2020
United States	$	8,808,629	$	326,776
Europe		150,970		259,828
India		1,090,018		628,306
	$	10,049,617	$	1,214,910

Schedule of inventories by country

	December 31,		June 30,
	2021		2021
United States	$	766,231	$	335,036
Europe		611,264		507,072
	$	1,377,495	$	842,108

Schedule of property and equipment by country

	December 31,		June 30,
	2021		2021
United States	$	264,890	$	221,308
Europe		497,050		256,888
India		13,321		11,706
	$	775,261	$	489,902

XML

Organization and Nature of Operations (Details Narrative) - USD ($)	Feb. 04, 2022	Dec. 31, 2021	Jun. 30, 2021
Subsequent Event [Line Items]
Accumulated deficit		$ 112,989,191	$ 107,338,174
Subsequent Event [Member]
Subsequent Event [Line Items]
Principal amount	$ 3,000,000

XML

Summary of Significant Accounting Policies (Details - Estimated useful life)	6 Months Ended
	Dec. 31, 2021
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		6 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
Product Information [Line Items]
Revenues	$ 5,447,264	$ 455,517	$ 10,049,617	$ 1,214,910
Product Sales Third Parties [Member]
Product Information [Line Items]
Revenues	301,693	123,090	343,643	496,873
Product Sales Related Parties [Member]
Product Information [Line Items]
Revenues	14,575	39,115	29,884	57,648
Service Revenue Third Parties [Member]
Product Information [Line Items]
Revenues	5,062,756	243,312	9,613,850	562,889
Service Revenue Related Party [Member]
Product Information [Line Items]
Revenues	$ 62,240	$ 50,000	$ 62,240	$ 97,500

XML

Summary of Significant Accounting Policies (Details - Receivables and contract liabilities) - USD ($)	Dec. 31, 2021	Jun. 30, 2021
Accounting Policies [Abstract]
Accounts receivable, net	$ 6,045,187	$ 265,812
Accounts receivable, net - related parties	119,480	69,952
Deferred revenue	$ 657,159	$ 219,999

XML

Summary of Significant Accounting Policies (Details - Cost of revenue) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
Product Information [Line Items]
Cost of revenue	$ 2,056,343	$ 458,833	$ 3,260,678	$ 692,261
Product Sales [Member]
Product Information [Line Items]
Cost of revenue	526,063	315,763	590,096	397,143
Service [Member]
Product Information [Line Items]
Cost of revenue	$ 1,530,280	$ 143,070	$ 2,670,582	$ 295,118

XML

Summary of Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020	Jun. 30, 2021
Product Information [Line Items]
Revenues	$ 5,447,264	$ 455,517	$ 10,049,617	$ 1,214,910
Cost of Goods and Services Sold	2,056,343	$ 458,833	3,260,678	692,261
Accounts receivable	6,045,187		6,045,187		$ 265,812
Allowance for doubtful accounts	48,135		48,135		$ 37,465
Advertising expenses			228,000	15,000
Stock-based compensation expenses			$ 1,783,094	$ 0
Convertible Notes Payables [Member]
Product Information [Line Items]
Antidilutive securities excluded from computation of earnings per share, amount			0	57,628,876
Equity Option [Member]
Product Information [Line Items]
Antidilutive securities excluded from computation of earnings per share, amount			1,000,000	0
Warrant [Member]
Product Information [Line Items]
Antidilutive securities excluded from computation of earnings per share, amount			8,775,000	0
Healthcare Insurers [Member]
Product Information [Line Items]
Revenues			$ 5,329,571
Government Payers [Member]
Product Information [Line Items]
Revenues			2,818,206
Healthcare Insurers And Government Payers [Member]
Product Information [Line Items]
Accounts receivable	$ 5,338,135		$ 5,338,135
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Healthcare Insurers And Government Payers [Member]
Product Information [Line Items]
Concentrations of credit risk				75.00%
Dalrada Precision [Member]
Product Information [Line Items]
Revenues				$ 600,000
Cost of Goods and Services Sold				$ 165,000

XML

Investment in Pala Diagnostics (Details Narrative) - USD ($)	1 Months Ended	6 Months Ended
	Aug. 31, 2021	Dec. 31, 2021	Dec. 31, 2020	Nov. 30, 2021
Contribution of property and equipment into joint venture		$ 111,185	$ 0
[custom:UnauthorizedDistributions]		1,874,245
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	$ 7,334
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 ($)	Dec. 31, 2021	Jun. 30, 2021
Selected Balance Sheet Elements
Raw materials	$ 423,130	$ 172,227
Finished goods	954,365	669,881
Inventory, Net	$ 1,377,495	$ 842,108

XML

Selected Balance Sheet Elements (Details - Property and equipment) - USD ($)	Dec. 31, 2021	Jun. 30, 2021
Selected Balance Sheet Elements
Machinery and equipment	$ 515,404	$ 223,141
Leasehold improvements	333,285	323,669
Computer and office equipment	226,250	186,549
Property, Plant and Equipment, Gross	1,074,939	733,359
Less: Accumulated depreciation	(299,678)	(243,457)
Property, Plant and Equipment, Net	$ 775,261	$ 489,902

XML

Selected Balance Sheet Elements (Details - Intangible Assets, Net) - USD ($)	Dec. 31, 2021	Jun. 30, 2021
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	$ 798,125	$ 693,385
Finite-Lived Intangible Assets, Accumulated Amortization	63,560	28,891
Finite-Lived Intangible Assets, Net	734,565	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	63,560	28,891
Finite-Lived Intangible Assets, Net	629,825	664,494
License [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	95,000
Finite-Lived Intangible Assets, Accumulated Amortization
Finite-Lived Intangible Assets, Net	95,000
Software Development [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	9,740
Finite-Lived Intangible Assets, Accumulated Amortization
Finite-Lived Intangible Assets, Net	$ 9,740

XML

Selected Balance Sheet Elements (Details Narrative) - USD ($)	6 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Selected Balance Sheet Elements
Depreciation and amortization expense	$ 58,814	$ 30,718
Amortization expense	$ 35,439	$ 0

XML

Accrued Payroll Taxes (Details Narrative) - USD ($)	6 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Jun. 30, 2021
Payables and Accruals [Abstract]
Revenue service amount	$ 2,002,552		$ 1,953,024
Accrued interest rate	Accrued interest is compounded daily at an estimated effective interest rate of 7.33%
Penalties and interest expense	$ 190,466	$ 127,235
Gain on expiration of accrued tax liability	$ 0	$ 0

XML

Notes Payable (Details - Notes payable) - USD ($)	Dec. 31, 2021	Jun. 30, 2021
Debt Instrument [Line Items]
Notes payable	$ 13,941,170	$ 10,508,955
Accrued interest	255,156	182,147
Note Payable Related Entity 1 [Member]
Debt Instrument [Line Items]
Notes payable	6,147,021	2,978,066
Accrued interest	72,852	29,875
Note Payable Related Entity 2 [Member]
Debt Instrument [Line Items]
Notes payable	6,549,422	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	650,708	3,668,938
Accrued interest	117,620	93,150
Note Payable Related Party Entityfive [Member]
Debt Instrument [Line Items]
Notes payable	181,744	417,237
Accrued interest	1,363	$ 5,862
Note Payable Related Party Entity Six [Member]
Debt Instrument [Line Items]
Notes payable	32,750
Accrued interest	$ 246

XML

Notes Payable (Details Narrative) - USD ($)	3 Months Ended	6 Months Ended		9 Months Ended
	Sep. 30, 2021	Dec. 31, 2021	Dec. 31, 2020	Sep. 30, 2021	Jun. 30, 2021
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Line Items]
Debt instrument converted	$ 6,532,206
Interest payable, related parties		$ 255,156			$ 182,147
Notes Payable Related Parties [Member]
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Line Items]
Interest payable, related parties		255,156			$ 182,147
Interest expense, related parties		$ 173,007	$ 95,998
Series G Convertible Preferred Stock [Member]
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Line Items]
Number of shares converted				6,937
Principal [Member]
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Line Items]
Debt instrument converted				$ 4,428,589
Accrued Interest [Member]
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Line Items]
Debt instrument converted				$ 102,054

XML

Convertible Note Payable – Related Parties (Details Narrative) - USD ($)	1 Months Ended	3 Months Ended	6 Months Ended	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2021	Dec. 31, 2021	Sep. 30, 2021	Jun. 30, 2021	Jun. 30, 2019
Defined Benefit Plan Disclosure [Line Items]
Convertible note payable - related party					$ 1,875,000
Debt instrument converted		$ 6,532,206
Accrued interest					$ 112,500
Series G Convertible Preferred Stock [Member]
Defined Benefit Plan Disclosure [Line Items]
Number of shares converted				6,937
Principal [Member]
Defined Benefit Plan Disclosure [Line Items]
Debt instrument converted				$ 4,428,589
Accrued Interest [Member]
Defined Benefit Plan Disclosure [Line Items]
Debt instrument converted				$ 102,054
Chief Executive Officer [Member]
Defined Benefit Plan Disclosure [Line Items]
Convertible note payable - related party						$ 1,875,000
Debt stated interest rate						3.00%
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		$ 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		6 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
Related Party Transaction [Line Items]
Revenues - related party	$ 76,815	$ 89,115	$ 92,124	$ 155,148
Dalrada Health [Member]
Related Party Transaction [Line Items]
Revenues - related party	14,575	39,115	29,884	57,648
Prakat [Member]
Related Party Transaction [Line Items]
Revenues - related party	$ 6,000	$ 50,000	$ 6,000	$ 97,500

XML

Related Party Transactions (Details Narrative) - USD ($)	1 Months Ended			3 Months Ended	6 Months Ended		9 Months Ended
	Oct. 31, 2021	Sep. 30, 2021	Sep. 30, 2021	Sep. 30, 2021	Dec. 31, 2021	Dec. 31, 2020	Sep. 30, 2021	Jun. 30, 2021
Related Party Transaction [Line Items]
Outstanding principal					$ 10,508,955
Accounts payable and accrued liabilities related parties					515,233
Debt instrument converted				$ 6,532,206
Number of shares issued to directors	6,500,000
Principal [Member]
Related Party Transaction [Line Items]
Debt instrument converted							$ 4,428,589
Accrued Interest [Member]
Related Party Transaction [Line Items]
Debt instrument converted							$ 102,054
Chief Executive Officer [Member]
Related Party Transaction [Line Items]
Management fees					27,000	$ 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			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					$ 0			$ 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	6 Months Ended
	Sep. 30, 2021	Dec. 31, 2021
Class of Stock [Line Items]
Debt converted, amount converted	$ 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 converted, amount converted		$ 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		6 Months Ended
	Dec. 31, 2021	Oct. 31, 2021	Aug. 31, 2021	Aug. 31, 2021	Dec. 31, 2021	Sep. 30, 2021	Dec. 31, 2021
Class of Stock [Line Items]
Shares issued to related party, shares	500,000
Shares issued to related party, value	$ 377,500				$ 1,105,587	$ 677,507
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
I H G [Member]
Class of Stock [Line Items]
Shares issued for acquisition, shares	125,000	125,000

XML

Stock-Based Compensation (Details Narrative) - USD ($)			1 Months Ended		3 Months Ended		6 Months Ended
	Nov. 10, 2021	May 10, 2021	Dec. 31, 2021	Nov. 30, 2021	Dec. 31, 2021	Sep. 30, 2021	Dec. 31, 2021	Dec. 31, 2020
Defined Benefit Plan Disclosure [Line Items]
Shares issued to related party, shares			500,000
Shares issued to related party, value			$ 377,500		$ 1,105,587	$ 677,507
Stock based compensation							$ 1,783,094	$ 0
Common Stock [Member]
Defined Benefit Plan Disclosure [Line Items]
Shares issued to related party, shares			500,000
Shares Issued, Price Per Share			$ 0.76		$ 0.76		$ 0.76
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]
Options granted		1,000,000
Exercise price		$ 0.47
Option term		10 years
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				6 Months Ended
	Dec. 31, 2021	Sep. 30, 2021	Dec. 31, 2020	Sep. 30, 2020	Dec. 31, 2021	Dec. 31, 2020
Segment Reporting Information [Line Items]
Revenue	$ 5,447,264		$ 455,517		$ 10,049,617	$ 1,214,910
Loss from operations	(1,843,541)		(1,677,904)		(2,755,396)	(2,482,302)
Net income (loss)	(2,067,638)	$ (976,673)	(1,824,520)	$ (2,909,341)	(3,044,311)	(2,733,861)
Engineering [Member]
Segment Reporting Information [Line Items]
Revenue	1,447,780		273,052		1,463,197	860,460
Loss from operations	45,530		(425,758)		(87,270)	(179,182)
Net income (loss)	32,255		(400,793)		(113,857)	(185,462)
Health [Member]
Segment Reporting Information [Line Items]
Revenue	4,197,213		115,864		8,039,452	188,314
Loss from operations	2,083,838		(199,053)		4,367,553	(320,139)
Net income (loss)	2,071,590		(199,053)		4,343,049	(320,139)
Information Technology [Member]
Segment Reporting Information [Line Items]
Revenue	1,149,993		433,857		1,854,537	909,665
Loss from operations	162,693		(93,649)		21,860	(14,425)
Net income (loss)	161,934		(97,081)		19,621	(14,175)
Education [Member]
Segment Reporting Information [Line Items]
Revenue	178,073				457,551
Loss from operations	(82,807)				(125,587)
Net income (loss)	(82,807)				(125,587)
Corporate Segment [Member]
Segment Reporting Information [Line Items]
Revenue	69,270				138,540
Loss from operations	(3,007,287)		(973,919)		(5,405,048)	(1,814,527)
Net income (loss)	(3,103,594)		(833,776)		(5,595,514)	(1,561,789)
Inter Segment Eliminations [Member]
Segment Reporting Information [Line Items]
Revenue	(1,595,065)		(367,256)		(1,903,660)	(743,529)
Loss from operations	(1,045,508)		14,475		(1,526,904)	(154,029)
Net income (loss)	$ (1,147,016)		$ (293,817)		$ (1,572,022)	$ (652,296)

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Segment Reporting (Details - Revenue by country) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	$ 5,447,264	$ 455,517	$ 10,049,617	$ 1,214,910
UNITED STATES
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue			8,808,629	326,776
Europe [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue			150,970	259,828
INDIA
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue			$ 1,090,018	$ 628,306

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Segment Reporting (Details - Inventories by country) - USD ($)	Dec. 31, 2021	Jun. 30, 2021
Revenues from External Customers and Long-Lived Assets [Line Items]
Inventories	$ 1,377,495	$ 842,108
UNITED STATES
Revenues from External Customers and Long-Lived Assets [Line Items]
Inventories	766,231	335,036
Europe [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Inventories	$ 611,264	$ 507,072

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Segment Reporting (Details - Property and equipment by country)Segment Reporting (Details - Property and equipment by country) - USD ($)	Dec. 31, 2021	Jun. 30, 2021
Revenues from External Customers and Long-Lived Assets [Line Items]
Property and equipment, net	$ 775,261	$ 489,902
UNITED STATES
Revenues from External Customers and Long-Lived Assets [Line Items]
Property and equipment, net	264,890	221,308
Europe [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Property and equipment, net	497,050	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	6 Months Ended
	Dec. 31, 2021	Dec. 31, 2021	Jun. 30, 2021	May 31, 2021	Dec. 31, 2020	May 31, 2020
Operating lease, right of use asset	$ 455,559	$ 455,559	$ 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	$ 99,020	$ 198,040
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				300.00%