Dalrada Technology Group, Inc 10-K for FY2023

Dalrada Technology Group, Inc. (DHTI)

10-K 2023-10-19 For: 2023-06-30

Added on April 06, 2026

About this 10-K

Dalrada Technology Group, Inc filed this 10-K on October 19, 2023, covering the fiscal year ended June 30, 2023 (FY2023).

Headline figures

Fiscal year ended June 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $29.74M; up 54.3% from $19.27M a year earlier
Net loss: $20.29M; compared with a net loss of $14.1M a year earlier
Diluted EPS: -$0.24; compared with -$0.20 a year earlier

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

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

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

PART I

Item 1.	Description of Business	1
Item 1A.	Risk Factors	4
Item 1B.	Unresolved Staff Comments	4
Item 2.	Description of Property	4
Item 3.	Legal Proceedings	5
Item 4.	Mine Safety Disclosures	5

PART II

Item 5.	Market for Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities	6
Item 6.	Selected Financial Data	8
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	8
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	20
Item 8.	Financial Statements and Supplementary Data	21
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	22
Item 9A.	Controls and Procedures	22
Item 9B.	Other Information	22

PART III

Item 10.	Directors, Executive Officers and Corporate Governance	24
Item 11.	Executive Compensation	28
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	31
Item 13.	Certain Relationships, Related Transactions and Director Independence	31
Item 14.	Principal Accountant Fees and Services	33
Item 15.	Exhibits and Financial Statement Schedules	34
	Signatures	35

		Square
		Footage		Lease
Location	Type	(approximate)		Expiration
Escondido, California	Corporate Headquarters		49,530		6/30/2027
San Diego, California	Office		8,228		3/14/2028
Escondido, California	Office		2,992		6/30/2027
Chula Vista, California	Office, Medical Suite		3,200		11/12/2024
San Diego, California	Office, Medical Suite		9,016		8/31/2028
Poway, California	Medical Suite		2,504		7/31/2024
Bengaluru, India	Office		3,300		4/1/2026
Coronado,California	Office, Medical Suite		462		12/31/2024
Florence, Alabama	Pharmacy		1,443		5/31/2024
Livingston, Scotland	Office, Warehouse		4,500		8/27/2025
Escondido, California	Office		167		12/31/2024
Livingston, Scotland	Office, Warehouse		19,000		11/2/2027
San Diego, California	R&D Laboratory Space		1,200		10/31/2023
Bergondo, Spain	Office, Warehourse		9,000		5/31/2028

Period	High		Low
Fiscal 2023
First Quarter ended September 30, 2022	$	0.3700	$	0.0900
Second Quarter ended December 31, 2022	$	0.1700	$	0.0700
Third Quarter ended March 31, 2023	$	0.0200	$	0.0800
Fourth Quarter ended June 30, 2023	$	0.1900	$	0.0600

Fiscal 2022
First Quarter ended September 30, 2021	$	0.3590	$	0.0100
Second Quarter ended December 31, 2021	$	0.9200	$	0.2890
Third Quarter ended March 31, 2022	$	0.9190	$	0.2650
Fourth Quarter ended June 30, 2022	$	0.7200	$	0.0300

	Year Ended June 30, 2023
	Genefic			Dalrada Energy			Dalrada Precision Manufacturing			Dalrada Technologies		Corporate			Consolidated
Revenues	$	15,740,919		$	7,075,414		$	4,873,225		$	2,049,411	$	–		$	29,738,969
Income (Loss) from Operations		(5,783,441	)		(1,065,221	)		(2,461,219	)		10,634		(11,660,710	)		(20,959,957	)

	Year Ended June 30, 2022
	Genefic		Dalrada Energy		Dalrada Precision Manufacturing			Dalrada Technologies		Corporate			Consolidated
Revenues	$	13,617,639	$	1,261,774	$	2,123,437		$	2,239,763	$	25,000		$	19,267,613
Income (Loss) from Operations		2,225,304		967,639		(2,834,342	)		30,177		(10,824,022	)		(10,435,244	)

	·	Employee compensation and benefits decreased by $604,188, or 11.8% from the prior year and is primarily a result of the Company allocating resources from the Corporate segment to each specific segment; shared resources across the four other business segments were included in the Corporate segment in the prior year. Additionally, the Corporate segment began making cost cuts through employee compensation during Q4 2023.

	·	Legal and professional fees decreased by $838,306, or 45.3% from the prior year. The reduction was primarily a result of $230,400 associated with convertible debts issued in the prior year. During the current year, the company began cutting costs in professional fees and incurred less legal fees.

	·	Sales and marketing costs decreased by $213,098, or 74.2% from the prior year due to reduced costs associated with third party investor relations, paid media, and content creation expenses. The Company’s internal marketing generates most of the sales and marketing services which is included in the employee compensation and benefits expenses.

	·	Other general and administrative costs for general corporate expenses, including information technology, rent, travel, and insurance increased by $977,394, or 121.6% from the prior year and is a result increases in travel expenses, rent expense, computer software expenses, and management fees.

	·	Employee compensation and benefits increased by $1,646,077, or 220.1% from the prior year and a result of growth of the health-related business of the Genefic segment and the Company allocating resources from the Corporate segment to each specific segment; shared resources across the four other business segments were included in the Corporate segment in the prior year.

	·	Legal and Professional Fees increased by $1,101,256, or 81.1% from the prior year and primarily a result of the lawsuit with Vivera Pharmaceuticals.

	·	Sales and marketing costs decreased by $185,003, or 79.8% from the prior year due to reduced costs associated with third party advertising, paid media, and content creation expenses. The Company’s internal marketing generates most of the sales and marketing services which is included in the Corporate segment employee compensation and benefits expenses.

	·	Other general and administrative costs increased by $2,543,073, or 70.8% from the prior year and is a result of expansion of the diagnostic and pharmacy subsidiaries where certain business opportunities included large overhead expenses.

	·	Employee compensation and benefits increased to $484,719 as the energy segment continued to grow during the year. The employee resources were focused on the development of the current projects and building a future pipeline. Additionally, Company allocated resources from the Corporate segment to each specific segment. The Dalrada Energy Services segment did not have employee compensation and benefits expense during the prior year.

	·	Legal and Professional Fees increased by $452,869, or 377.3% from the prior year and is a result of the growth of the energy segment throughout the year. Professional fees included services for management fees and other services specific to the energy industry.

	·	Sales and marketing costs increased to $12,599. The Company’s internal marketing generates most of the sales and marketing services which is included in the Corporate segment employee compensation and benefits expenses. The Dalrada Energy Services segment did not have sales and marketing costs during the prior year.

	·	Other general and administrative costs increased to $897,738 from the prior year and is a result of management fees, travel and other general overhead costs associated with Dalrada Energy Services’ energy upgrade business and Bothof Brothers Contracting.

	Year Ended
	June 30,
	2023			2022
Net cash used in operating activities	$	(4,612,798	)	$	(10,349,808	)
Net cash used in investing activities		(1,063,427	)		(574,040	)
Net cash provided by financing activities		5,717,144			11,668,585
Net change in cash during the period, before effects of foreign currency	$	40,919		$	744,737

	·	General. The Company discloses all material related party transactions, including the nature of the relationship, the nature of the transactions, the dollar amounts of the transactions, the amounts due to or from related parties.
	·	Receivables. The Company separately discloses any receivables from officers, employees, or affiliated entities.

Report of Independent Registered Public Accounting Firm	F-1
Consolidated Balance Sheets	F-5
Consolidated Statements of Operations and Comprehensive Loss	F-6
Consolidated Statements of Stockholders’ Equity (Deficit)	F-7
Consolidated Statements of Cash Flows	F-9
Notes to the Consolidated Financial Statements	F-10



	Additional					Accumulated Other			Dalrada Financial Corp's						Total
	Paid-in		Accumulated			Comprehensive			Stockholders'			Noncontrolling			Stockholders'
	Capital		Deficit			Income (Loss)			Deficit			Interests			Deficit

Balance at June 30, 2021	$	92,965,821	$	(107,338,174	)	$	32,287		$	(13,368,997	)	$	(38,391	)	$	(13,407,388	)
Conversion of related party notes into preferred stock		–		–			–			–			–			–
Issuance of preferred stock		6,532,106		–			–			6,532,106			–			6,532,106
Common stock issued pursuant to acquisitions		793,651		–			–			1,093,003			–			1,093,003
Joint ventures		57,310		–			–			58,560			(2,009,123	)		(1,950,563	)
Reversal of shares previously issued to directors		19,321		–			–			(14,826	)		–			(14,826	)
Common stock and warrants issued in connection with convertible note		1,541,765		–			–			1,542,695			–			1,542,695
Common stock issued pursuant to conversion of note		131,788		–			–			133,664			–			133,664
Stock-based compensation		2,585,270		–			–			2,772,770			–			2,772,770
Net income (loss)		–		(14,098,316	)		–			(14,098,316	)		2,526,533			(11,571,783	)
Foreign currency translation		–		–			(82,960	)		(82,960	)		–			(82,960	)
Balance at June 30, 2022	$	104,627,032	$	(121,436,490	)	$	(50,673	)	$	(15,432,201	)	$	479,019		$	(14,953,182	)

Common stock issued for conversion of convertibles notes, accrued interest and premium		1,392,615		–			–			1,447,488			–			1,447,488
Common stock issued pursuant to acquisitions		998,225		–			–			314,475			–			314,475
Common stock issued pursuant to consultant agreement		174,000		–			–			184,000			–			184,000
Conversion of related party notes into preferred stock		33,859,043		–			–			33,859,544			–			33,859,544
Warrants issued pursuant to acquisitions		5,751		–			–			5,751			–			5,751
Stock-based compensation		4,195,156		–			–			4,022,656			–			4,022,656
Net income (loss)		–		(20,292,519	)		–			(20,292,519	)		(335,202	)		(20,627,721	)
Foreign currency translation		–		–			(175	)		(175	)		–			(175	)
Balance at June 30, 2023	$	145,251,822	$	(141,729,009	)	$	(50,848	)	$	4,109,019		$	143,817		$	4,252,836

Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	139,941	$	77,766
Cash paid for interest	$	9,048	$	–

Supplemental disclosure of non-cash investing and financing activities:
Conversion of related party notes and interest into preferred stock	$	33,859,544	$	6,532,206
Contribution of property and equipment into joint venture	$	–	$	111,185
Issuance of shares to joint venture partner	$	–	$	58,560
Conversion of accounts payable-related parties to note payable-related parties	$	8,676,605	$	181,744
Common stock and warrants issued in connection with convertible note	$	–	$	1,542,695
Common stock issued pursuant to conversion of note, accrued interest and premium	$	–	$	133,664
Common stock issued pursuant to business combination	$	314,475	$	1,093,003
Fair value of assets acquired and liabilities assumed in acquisition	$	–	$	468,232
Conversion of convertible note payable, accrued interest and premium into common stock	$	1,447,488	$	–
Increase in right-of-use asset and liability	$	2,227,830	$	–

Schedule of fair value of assets and liabilities
	Fair Value Measurements as of June 30, 2023 Using:
	Level 1		Level 2		Level 3		Total
Liabilities:
Contingent consideration		–		–	$	4,285,389	$	4,285,389
	$	–	$	–	$	4,285,389	$	4,285,389

Schedule of changes in contingent consideration liability
	Contingent
	Consideration
	Liability
Balance as of June 30, 2022	$	4,870,800
Change in fair value		(585,411	)
Balance as of June 30, 2023	$	4,285,389

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
	Year Ended
	June 30,
	2023		2022
Product sales - third parties	$	7,324,522	$	2,280,403
Product sales - related party		77,308		75,324
Service revenue - third parties		20,131,701		15,584,154
Service revenue - related party		2,205,438		1,327,732
Total revenue	$	29,738,969	$	19,267,613

Schedule of receivables and contract liabilities
	Year Ended
	June 30,
	2023		2022
Accounts receivable, net	$	4,453,104	$	6,406,555
Accounts receivable, net - related parties		752,348		41,603
Long-term receivables		41,722		42,395
Long-term receivables - related parties		1,173,893		1,209,103
Deferred revenue		1,337,259		720,923

Schedule of cost of revenue
	Year Ended
	June 30,
	2023		2022
Product sales	$	5,546,015	$	2,547,392
Service revenue		15,133,035		6,213,874
Total cost of revenue	$	20,679,050	$	8,761,266

Schedule of anti-dilutive shares
	2023		2022
Convertible notes payable		–		2,999,148
Common stock warrants		45,451,134		12,025,000
Weighted average exercise price	$	0.33	$	0.45
Proceeds	$	15,150,695	$	5,411,250
Average stock price for FY	$	0.13	$	0.50
Shares purchased		116,543,810		10,822,500

Schedule of purchase price allocation
	Preliminary Purchase Price Allocation
Cash and cash equivalents	$	70,979
Other receivables		27,289
Right of use asset, net		18,618
Property and equipment, net		17,179
Trade name		6,776
Accounts payable		(24,165	)
Accrued liabilities		(18,807	)
Deferred revenue		(60,000	)
Right of use liability		(18,618	)
Notes payable, current portion		(19,251	)
Purchase price consideration	$	–

Schedule of purchase price consideration
Common stock to be issued	$	175,000
Contingent consideration		5,053,000
Total purchase price consideration	$	5,228,000

Schedule of purchase price allocation

	Purchase Price
	Allocation
Cash and cash equivalents	$	301,647
Accounts receivable, net		375,357
Inventories		146,300
Prepaid expenses and other current assets		6,025
Property and equipment, net		28,437
Intangible assets		1,810,580
Goodwill		2,962,938
Accounts payable		(240,056	)
Accrued liabilities		(108,180	)
Deferred revenue		–
Notes payable		(55,048	)
Purchase price consideration	$	5,228,000

Schedule of purchase price consideration
Common stock (and to be issued)	$	918,000
Line of credit		244,395
Bank loan		467,712
Total purchase price consideration	$	1,630,107

Schedule of pro forma information
	Year Ended June 30,
	2023			2022
Revenues	$	33,047,518		$	23,723,570
Net loss attributable to Dalrada	$	(23,202,682	)	$	(14,169,496	)
Net loss per common share - basic	$	(0.28	)	$	(0.20	)

Schedule of Inventories
	June 30,		June 30,
	2023		2022
Raw materials	$	658,175	$	399,706
Work-in-progress		708,007		–
Finished goods		712,510		1,224,915
Inventory, Net	$	2,078,692	$	1,624,621

Schedule of property and equipment, net
	June 30,			June 30,
	2023			2022
Machinery and equipment	$	1,448,556		$	740,147
Leasehold improvements		208,689			314,642
Computer and office equipment		426,162			518,017
Construction in progress		249,613			–
		2,333,020			1,572,806
Less: Accumulated depreciation		(856,938	)		(496,394	)
	$	1,476,082		$	1,076,412

Schedule of goodwill
	Precision			Health			Total
Balance: June 30, 2022	$	3,122,811		$	1,130,613		$	4,253,424
Additions		–			–			–
Adjustments to purchase price allocation		(16,721	)		–			–
Less: loss on impairment		–			(433,556	)		(433,556	)
Balance: June 30, 2023	$	3,106,090		$	697,057		$	3,803,147

Schedule of intangible assets, net
													Developed
													technology,
	Curriculum						Customer						software,
	development			Licenses			relationships			Trademarks			and other			Totals
Balance: June 30, 2022	$	693,385		$	1,064,000		$	1,230,159		$	348,100		$	335,021		$	3,670,665
Additions		–			–			–			186,047			477,458			663,505
Adjustments to purchase price allocation		–			–			14,321			1,400			1,000			16,721
Balance: June 30, 2023		693,385			1,064,000			1,244,480			535,547			813,479			4,350,891

Less: Accumulated amortization
Balance: June 30, 2022		(102,891	)		(4,260	)		(30,754	)		(380	)		(7,492	)		(145,777	)
Additions		(69,339	)		(51,118	)		(123,016	)		(54,215	)		(49,340	)		(347,028	)
Balance: June 30 , 2023		(172,230	)		(55,378	)		(153,770	)		(54,595	)		(56,832	)		(492,805	)

Net book value: June 30, 2023	$	521,155		$	1,008,622		$	1,090,710		$	480,952		$	756,647		$	3,858,086

Schedule of future amortization expense
Year Ending June 30,
2024	$	396,596
2025		361,280
2026		299,265
2027		299,265
2028		299,265
Thereafter		2,202,415
Total	$	3,858,086

Schedule of notes payable, related parties
	June 30, 2023
	Outstanding		Accrued
	Principal		Interest
Related entity 1	$	1,380,672	$	3,038
Related entity 2		126,864		–
Related entity 3		105,000		–
Related entity 4		50,074		–
Related entity 5		–		–
Related entity 6		237,473		11,144
	$	1,900,083	$	14,182

	June 30, 2022
	Outstanding		Accrued
	Principal		Interest
Related entity 1	$	8,261,310	$	120,050
Related entity 2		8,213,976		106,951
Related entity 3		453,052		11,072
Related entity 4		1,512,924		123,996
Related entity 5		366,800		786
	$	18,808,062	$	362,855