DHTI 10-Q
Dalrada Technology Group, Inc. (DHTI)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
For the transition period from _________ to _________
Commission File Number:
(Name of Small Business Issuer in its charter)
| (state or other jurisdiction of incorporation or organization) | (I.R.S. Employer ID. No.) |
(Address of principal executive offices)
Issuer’s telephone number
Securities registered pursuant to Section 12(b) of the Act: Not applicable
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Securities registered pursuant to Section 12(g)
of the Act:
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.
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).
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 ☐ | |
| Smaller reporting company | ||
| Emerging growth company | ||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Act) Yes ☐ No
As of May 20, 2026, the registrant’s outstanding stock consisted of common shares.
DALRADA TECHNOLOGY GROUP, INC.
Table of Contents
| 2 |
PART I – FINANCIAL INFORMATION
Item 1. Unaudited Interim Condensed Consolidated Financial Statements.
DALRADA TECHNOLOGY GROUP, INC.
Consolidated Balance Sheets (unaudited)
| March 31, | June 30, | |||||||
| 2026 | 2025 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Accounts receivable, net | ||||||||
| Accounts receivable, net - related parties | ||||||||
| Inventories | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Long-term receivables | ||||||||
| Long-term receivables - related parties | ||||||||
| Property and equipment, net | ||||||||
| Goodwill | ||||||||
| Intangible assets, net | ||||||||
| Right-of-use asset, net - Operating | ||||||||
| Right-of-use asset, net - related party - Operating | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued liabilities | ||||||||
| Accounts payable and accrued liabilities – related parties | ||||||||
| Deferred revenue | ||||||||
| Notes payable, current portion | ||||||||
| Lease Liability, current portion - Operating | ||||||||
| Lease Liability, current portion - related - Operating | ||||||||
| Total current liabilities | ||||||||
| Noncurrent payables | ||||||||
| Notes payable, net of current portion | ||||||||
| Notes payable, net of current portion – related parties | ||||||||
| Contingent consideration | ||||||||
| Lease Liability, net of current portion - Operation | ||||||||
| Lease Liability, net of current portion - related party - Operating | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 12) | ||||||||
| Stockholders’ equity (deficit): | ||||||||
| Series I preferred stock, $ par value, shares authorized, and shares issued and outstanding as of March 31, 2026 and June 30, 2025, respectively | ||||||||
| Series H preferred stock, $ par value, shares authorized, issued and outstanding as of March 31, 2026 and June 30, 2025, respectively | ||||||||
| Series G preferred stock, $ par value, shares authorized, shares issued and outstanding as of both March 31, 2026 and June 30, 2025, respectively | ||||||||
| Series F preferred stock, $ par value, shares authorized, issued and outstanding as of both March 31, 2026 and June 30, 2025, respectively | ||||||||
| Common stock, $ par value, shares authorized, and shares issued and outstanding at March 31, 2026 and June 30, 2025, respectively | ||||||||
| Common stock to be issued | ||||||||
| Preferred stock to be issued | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ||||||
| Total Dalrada Technology Group’s stockholders’ equity (deficit) | ( | ) | ( | ) | ||||
| Noncontrolling interests | ||||||||
| Total stockholders’ equity (deficit) | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
(The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements)
| 3 |
DALRADA TECHNOLOGY GROUP, INC.
Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| March 31, | March 31, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Revenues - related party | ||||||||||||||||
| Total revenues | ||||||||||||||||
| Cost of revenues | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest income | ||||||||||||||||
| Other expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gain (loss) on foreign exchange | ( | ) | ||||||||||||||
| Total other expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss before taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for Income Taxes | ||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other comprehensive loss | ||||||||||||||||
| Foreign currency translation | ( | ) | ( | ) | ||||||||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net income (loss) attributable to noncontrolling interests | ( | ) | ( | ) | ( | ) | ||||||||||
| Net loss attributable to Dalrada Technology Group Inc. stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per common share to Dalrada stockholders – basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per common share to Dalrada stockholders – diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average common shares outstanding – basic | ||||||||||||||||
| Weighted average common shares outstanding – diluted | ||||||||||||||||
(The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements)
| 4 |
DALRADA TECHNOLOGY GROUP, INC.
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) (unaudited)
| Preferred Stock | ||||||||||||||||||||||||||||
| Series I | Series H | Series G | Series F | |||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ||||||||||||||||||||||||
| Common stock issued pursuant to acquisitions | – | – | – | – | ||||||||||||||||||||||||
| Conversion of related party notes into preferred stock | – | – | – | – | ||||||||||||||||||||||||
| Warrants issued pursuant to acquisitions | – | – | – | – | ||||||||||||||||||||||||
| Common stock issued pursuant to consulting agreement | – | – | – | – | ||||||||||||||||||||||||
| Stock-based compensation | – | – | – | – | ||||||||||||||||||||||||
| Removal of NCI retained upon closure of Pala | – | – | – | – | ||||||||||||||||||||||||
| Net loss | – | – | – | – | ||||||||||||||||||||||||
| Foreign currency translation | – | – | – | – | ||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | $ | ||||||||||||||||||||||||
| Warrants issued pursuant to acquisitions | – | – | – | – | ||||||||||||||||||||||||
| Common stock issued pursuant to consulting agreement | – | – | – | |||||||||||||||||||||||||
| Stock-based compensation | – | – | – | – | ||||||||||||||||||||||||
| Removal of NCI retained upon closure of Pala | – | – | – | – | ||||||||||||||||||||||||
| Net loss | – | – | – | – | ||||||||||||||||||||||||
| Foreign currency translation | – | – | – | – | ||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | $ | ||||||||||||||||||||||||
| Warrants issued pursuant to acquisitions | – | – | – | – | ||||||||||||||||||||||||
| Common stock issued pursuant to acquisitions | – | – | – | – | ||||||||||||||||||||||||
| Conversion of related party notes into preferred stock | – | – | – | – | ||||||||||||||||||||||||
| Warrants issued pursuant to acquisitions | – | – | – | – | ||||||||||||||||||||||||
| Common stock issued pursuant to consulting agreement | – | – | – | – | ||||||||||||||||||||||||
| Stock-based compensation | – | – | – | – | ||||||||||||||||||||||||
| NCI Adjustment prior quarters | – | – | – | – | ||||||||||||||||||||||||
| Net loss | – | – | – | – | ||||||||||||||||||||||||
| Foreign currency translation | – | – | – | – | ||||||||||||||||||||||||
| Balance at March 31, 2026 | $ | $ | $ | $ | ||||||||||||||||||||||||
| Balance at June 30, 2025 | ||||||||||||||||||||||||||||
| Common stock issued pursuant to acquisitions | – | – | – | – | ||||||||||||||||||||||||
| Conversion of related party notes into preferred stock | – | – | – | |||||||||||||||||||||||||
| Warrants issued pursuant to acquisitions | – | – | – | – | ||||||||||||||||||||||||
| Common stock issued pursuant to consulting agreement | – | – | – | – | ||||||||||||||||||||||||
| Stock-based compensation | – | – | – | – | ||||||||||||||||||||||||
| Removal of NCI retained upon closure of Pala | – | – | – | – | ||||||||||||||||||||||||
| Net loss | – | – | – | – | ||||||||||||||||||||||||
| Foreign currency translation | – | – | – | – | ||||||||||||||||||||||||
| Balance at March 31, 2026 | $ | $ | $ | $ | ||||||||||||||||||||||||
(The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements)
| 5 |
DALRADA TECHNOLOGY GROUP, INC.
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) (unaudited)
(continued)
| Additional | ||||||||||||||||||||
| Common Stock | Common Stock | Preferred Stock | Paid-in | |||||||||||||||||
| Shares | Amount | to be Issued | to be Issued | Capital | ||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ||||||||||||||||
| Common stock issued pursuant to acquisitions | – | |||||||||||||||||||
| Conversion of related party notes into preferred stock | – | |||||||||||||||||||
| Warrants issued pursuant to acquisitions | – | |||||||||||||||||||
| Common stock issued pursuant to consulting agreement | – | |||||||||||||||||||
| Stock-based compensation | – | |||||||||||||||||||
| Removal of NCI retained upon closure of Pala | – | |||||||||||||||||||
| Net loss | – | |||||||||||||||||||
| Foreign currency translation | – | |||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | $ | ||||||||||||||||
| Common stock issued pursuant to acquisitions | – | |||||||||||||||||||
| Warrants issued pursuant to acquisitions | – | |||||||||||||||||||
| Conversion of related party notes into preferred stock | – | ( | ) | |||||||||||||||||
| Common stock issued pursuant to consulting agreement | – | |||||||||||||||||||
| Stock-based compensation | – | |||||||||||||||||||
| Net loss | – | |||||||||||||||||||
| Foreign currency translation | – | |||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | $ | ||||||||||||||||
| Common stock issued pursuant to acquisitions | – | – | – | – | ||||||||||||||||
| Warrants issued pursuant to acquisitions | – | |||||||||||||||||||
| Common stock issued pursuant to consulting agreement | – | |||||||||||||||||||
| Stock-based compensation | – | |||||||||||||||||||
| NCI Adjustment prior quarters | – | |||||||||||||||||||
| Net loss | – | |||||||||||||||||||
| Foreign currency translation | – | |||||||||||||||||||
| Balance at March 31, 2026 | $ | $ | $ | $ | ||||||||||||||||
| Balance at June 30, 2025 | ||||||||||||||||||||
| Common stock issued pursuant to acquisitions | – | |||||||||||||||||||
| Conversion of related party notes into preferred stock | – | ( | ) | |||||||||||||||||
| Warrants issued pursuant to acquisitions | – | |||||||||||||||||||
| Common stock issued pursuant to consulting agreement | – | |||||||||||||||||||
| Stock-based compensation | – | |||||||||||||||||||
| Removal of NCI retained upon closure of Pala | – | |||||||||||||||||||
| Net loss | – | |||||||||||||||||||
| Foreign currency translation | – | |||||||||||||||||||
| Balance at March 31, 2026 | $ | $ | $ | $ | ||||||||||||||||
(The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements)
| 6 |
DALRADA TECHNOLOGY GROUP, INC.
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) (unaudited)
(continued)
| Total | ||||||||||||||||||||
Accumulated Other | Dalrada Financial Corp's | Total | ||||||||||||||||||
| Accumulated | Comprehensive | Stockholders' | Noncontrolling | Stockholders' | ||||||||||||||||
| Deficit | Income (Loss) | Deficit | Interests | Equity (Deficit) | ||||||||||||||||
| Balance at June 30, 2025 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Common stock issued pursuant to acquisitions | ||||||||||||||||||||
| Conversion of related party notes into preferred stock | ||||||||||||||||||||
| Warrants issued pursuant to acquisitions | ||||||||||||||||||||
| Common stock issued pursuant to consulting agreement | ||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||
| Removal of NCI retained upon closure of Pala | ||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Foreign currency translation | ||||||||||||||||||||
| Balance at September 30, 2025 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||
| Common stock issued pursuant to acquisitions | ||||||||||||||||||||
| Conversion of related party notes into preferred stock | ||||||||||||||||||||
| Warrants issued pursuant to acquisitions | ||||||||||||||||||||
| Common stock issued pursuant to consulting agreement | ||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Foreign currency translation | ||||||||||||||||||||
| Balance at December 31, 2025 | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||
| Common stock issued pursuant to acquisitions | ||||||||||||||||||||
| Warrants issued pursuant to acquisitions | ||||||||||||||||||||
| Common stock issued pursuant to consulting agreement | ||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||
| NCI Adjustment prior quarters | ( | ) | ( | ) | ||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Foreign currency translation | ||||||||||||||||||||
| Balance at March 31, 2026 | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||
| Balance at June 30, 2025 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Common stock issued pursuant to acquisitions | ||||||||||||||||||||
| Conversion of related party notes into preferred stock | ||||||||||||||||||||
| Warrants issued pursuant to acquisitions | ||||||||||||||||||||
| Common stock issued pursuant to consulting agreement | ||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||
| Removal of NCI retained upon closure of Pala | ||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Foreign currency translation | ||||||||||||||||||||
| Balance at March 31, 2026 | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||
(The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements)
| 7 |
DALRADA TECHNOLOGY GROUP, INC.
Condensed Consolidated Statements of Cash Flows (unaudited)
| Nine Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Stock compensation | ||||||||
| Changes in operating assets and liabilities, net of amounts acquired or assumed in connection with acquisition: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Other receivables | ||||||||
| Inventories | ( | ) | ( | ) | ||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Noncurrent receivables | ( | ) | ||||||
| Accounts payable and accrued liabilities - related parties | ||||||||
| Accounts payable and accrued liabilities | ( | ) | ||||||
| Decrease in Right of Use Asset/Liability | ||||||||
| Contingent consideration | ||||||||
| Deferred revenue | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | ( | ) | ||||||
| Purchase of intangibles | ( | ) | ||||||
| Acquisition of business, net of cash | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Net proceeds (repayments) from related party notes payable | ||||||||
| Repayments of notes payable | ||||||||
| Net proceeds (repayments) from notes payable | ||||||||
| Additional Paid in Capital | ||||||||
| Stock issued | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Net change in cash and cash equivalents | ( | ) | ( | ) | ||||
| Effect of exchange rate changes on cash | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| 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 | $ | $ | ||||||
| Preferred stock issued pursuant to business combination | $ | $ | ||||||
| Warrants issued pursuant to acquisitions | $ | $ | ||||||
| (Decrease) Increase in right-of-use asset and liability | $ | ( | ) | $ | ( | ) | ||
(The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements)
| 8 |
DALRADA TECHNOLOGY GROUP, INC.
Notes to the Condensed Consolidated Financial Statements (unaudited)
| 1. | Organization and Nature of Operations |
Unless otherwise stated or the context requires otherwise, references herein to the “Company,” “Dalrada,” “we,” “us,” and “our” mean Dalrada Technology Group, Inc. and its direct and indirect subsidiaries, and controlled and managed entities.
Dalrada has five primary business divisions: Genefic, Dalrada Climate Technology, Dalrada Precision Manufacturing, Dalrada Technologies and Dalrada Corporate. Within each of these divisions, the Company seeks to drive innovation while creating solutions that are sustainable, accessible, and affordable. Dalrada’s global solutions directly address climate change, gaps in the health care industry, and technology needs that facilitate a new era of human behavior and interaction and ensure a bright future for the world around us.
Genefic
Genefic delivers advanced health care solutions with dedicated products, services, and systems. From virus and disease screening capabilities to pharmaceutical goods and holistic wellness clinics, When the world needs advanced health care, Genefic delivers with ingenuity, accessibility, and affordability. This specialized division is committed to developing key health products, lifesaving medications and building comprehensive systems to increase capability, striving to keep people healthy with the goals of improving their quality of life and increasing their longevity on a global level.
Genefic Specialty Pharmacy (“Genefic Pharmacy”)- Genefic Pharmacy (formerly Genefic Specialty Pharmacy Rx Solutions) is an Alabama-based pharmacy with more than 30 years of experience in the retail medical and pharmaceutical industries. Genefic Pharmacy specializes in providing expert care and managing disease states through comprehensive prescription management, education, nursing, and total health solutions. Genefic Pharmacy maintains pharmacy licenses in all 50 States as well as Washington D.C.
Genefic Infusion Rx- Genefic Infusion Rx is a Louisiana-based infusion pharmacy which handles all aspects of fluid and medication infusion, via intravenous or subcutaneous application. Genefic Infusion Rx serves as an essential with healthcare systems, enhancing the infusion process through efficient authorization and prescription management. Its compounding facility is led by one of only eight pharmacists in Louisiana with a sterile compounding board certification, ensuring top-tier precision and quality in medication preparation.
Boost Diagnostics- Boost Diagnostics (formerly Empower Genomics and Genefic Diagnostics) is Dalrada’s wholly owned diagnostic laboratory subsidiary which processes molecular diagnostic and antibody tests to support the diagnosis of COVID-19 and the detection of immune response to the virus. Boost Diagnostics has built up and maintained the testing capacity to handle surges in COVID-19 testing demands. Boost Diagnostics also offers genetic testing capabilities including Pharmacogenomics, Nutraceutical, Nutrition/Diet DNA and Exercise/Fitness DNA tests.
Dalrada Career Institute (“DCI”) (aka International Health Group (“IHG”)) - IHG provides highly trained nursing and medical assistants for hospitals and home health facilities since 2006. IHG Medical Assistant programs include Certified Nursing Assistant (“CNA”) and Home Health Aide (“HHA”) training and the fast-track 22-Day CNA Certification Program at its state-approved testing facility. DCI started its first RN, nursing class in February of 2024 and this first class will be completed in December 2024. It is the intent of DCI to double their class size when they begin their second class in 2025.
| 9 |
Dalrada Climate Technology (formerly Dalrada Energy Services)
Dalrada Climate Technology (“DCT”) is a segment which incapsulates energy services and technology within the climate sustainability space. DCT employs next-generation technology and services which enhances clean energy efforts while reducing the world’s carbon footprint. As a premier industrial heat pump manufacturer, Dalrada delivers innovation and efficiency, building solutions that reduce energy consumption and minimize carbon footprints, increase operational efficiencies, meet environmental, social, and governance (ESG) goals, and lower energy costs for clients.
Dalrada Technology Limited (“DTL”)- DTL is a holding company for all United Kingdom and European based Dalrada Climate Technology entities.
Likido Ltd. (“Likido”)- Likido is an international engineering company developing advanced solutions for the harvesting and recycling of energy. Using its novel, heat pump systems (patent pending), Likido is working to revolutionize the renewable energy sector with the provision of innovative modular process technologies to maximize the capture and reuse of thermal energy for integrated heating and cooling applications. With uses across industrial, commercial and residential sectors, Likido provides cost savings and minimized carbon emissions across global supply chains. Likido’s technologies enable the effective recovery and recycling of process energy, mitigating against climate change and expected enhancement of quality of life through the provision of low-carbon heating and cooling systems. Likido’s products currently include the DCT One Heat Pumps (formerly Likido®ONE) and DCT Cryo Chiller. Likido also offers heat pump solutions specifically designed for residential purposes.
During the prior year, the U.S. Government selected DCT One Series high-performance, low-carbon heat pump for real-world testing in a clean energy program. The implementation of the DCT One Series testing is still in process.
Dalrada Technology Spain L.T. (“DTS”)- DTS was established as a Spanish subsidiary of DTL for the expansion of the manufacturing and sale of the DCT One Series and DCT Cryo Chiller throughout Europe.
Dalrada Energy Services (“DES”)- DES provides end-to-end comprehensive energy service solutions in a robust commercial capacity. DES helps organizations meet ESG goals and standards while mitigating negative environmental impacts.
Bothof Brothers Construction (“Bothof”)- Bothof is a licensed general contractor which provides a wide range of development, construction and design capabilities and expertise throughout the United States. Through Bothof’s extensive experience in construction and contracting, the DES division can provide a myriad of additional services to its private and public works customers.
Grand Entrances- Grand Entrances is a California based custom door and hardware retail store.
| 10 |
Dalrada Precision Manufacturing
Dalrada Precision Manufacturing creates total manufacturing solutions that start with the design and development of high-quality machine parts and components, and end with an efficient global supply chain. This specialized business division can meet today’s high demands and solves industry challenges. Dalrada Precision Manufacturing is confident that it redefines the critical quality of the world’s top components and responds with in-house research, design, engineering, and distribution through a highly reliable global supply chain and improved time-to-market capabilities.
Dalrada Precision Parts (“Precision”) - Precision extends the client its engineering and operations team by helping devise unique manufacturing solutions tailored to their products. Dalrada Precision can enter at any stage of the product lifecycle from concept and design to mass production and logistics.
Deposition Technologies (“DepTec”) - DepTec designs, develops, manufactures, and services chemical vapor and physical vapor deposition systems for the microchip and semiconductor industries.
DepTec has built an impressive catalogue of precision OEM parts for PVD (Physical vapor deposition) systems and the Company’s refurbished systems which allows clients the option of purchasing the same model of system they’ve been using for decades –but with significant upgrades and improved efficiencies. Older systems can now operate more reliably with additional control and monitoring plus longer lifespans. DepTec also has its own PVD and CVD (Chemical Vapor Deposition) systems, EVOS-PVD and EVOS -CVD, which deposits metals and non-metals for microchips used in almost every standard and specialized microdevices made today and in the future. These systems can produce a superior film layer utilized in rugged high-stress environment designs.
Dalrada Technologies
Dalrada Technologies has worked with some of the world’s most recognizable companies, providing digital engineering for cutting-edge software systems and offering a host of robust digital services. This business division connects the world with integrated technology and innovative solutions, delivering advanced capabilities and error-free results. Dalrada Technologies creates digital products with expert computer information technology and software engineering services for a variety of technical industries and clients in both B2B and B2C environments.
Prakat (“Prakat”)- Prakat is an ISO 9001-certified company that provides end-to-end technology services across various industries, improving the value chain. The Company specializes in test engineering, accessibility engineering, product engineering, application modernization, billing and revenue management, CRM, and block chain. Prakat provides global customers with software and technology solutions specializing in Test Engineering, Accessibility Engineering, Product Engineering and Application Modernization.
Dalrada Corporate
Dalrada Corporate covers the activities which support the entire suite of Dalrada subsidiaries. Dalrada Corporate includes the areas of administration, finance, human resources, legal advice, information technology, and marketing. It also contains executive management and shareholder-related services.
Liquidity and Going Concern
These condensed consolidated
financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and
discharge its liabilities in the normal course of business. As of March 31, 2026, and June 30, 2025, the Company had negative working capital
of $
The Company’s ability to continue as a going concern is dependent upon its ability to improve operating performance, generate positive cash flows from operations, collect outstanding accounts receivable balances, including receivables from medical insurance providers, and obtain additional capital through debt financings, equity financings, strategic transactions, or other capital sources.
Management has implemented and continues to evaluate initiatives intended to improve liquidity and reduce operating cash burn, including focusing resources on subsidiaries and projects expected to generate near-term revenue and positive cash flows, reducing expenditures related to non-core initiatives, pursuing operational efficiencies, and evaluating additional financing opportunities. The Company also expects future liquidity to be supported through anticipated collections of outstanding receivables, continued growth and future deployment of DCT heat pump systems, and revenue growth from ongoing customer projects across certain subsidiaries.
However, there can be no assurance that the Company will be successful in implementing its plans, achieving profitable operations, collecting outstanding receivable balances on anticipated timelines, or obtaining additional financing on acceptable terms, if at all. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.
| 11 |
| 2. | Summary of Significant Accounting Policies |
| (a) | Basis of Presentation |
These unaudited interim condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information and in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”),. Accordingly, certain information and disclosures required by US GAAP for annual financial statements have been omitted. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. Unless otherwise indicated, balances are expressed in U.S. dollars. These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto as of and for the year ended June 30, 2025 (the “2025 Annual Audited Financials”), included in the Company’s Annual Report on Form 10-K filed with the SEC on September 29, 2025 (the “Form 10-K”). The results of operations as of and for the three and nine months ended March 31, 2026 are not necessarily indicative of the results to be expected for the 2026 full year or any future periods. The accompanying consolidated balance sheet as of June 30, 2025 has been derived from the audited consolidated balance sheet as of June 30, 2025 contained in the 2025 Annual Audited Financials included in the Form 10-K.
| (b) | Principles of Consolidation |
The unaudited interim condensed consolidated financial statements include the accounts of the Company and its subsidiaries, as well as the accounts of any entities over which the Company has a controlling financial interest in accordance with Accounting Standards Codification (“ASC”) 810 Consolidation. All transactions and balances between these entities have been eliminated upon 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 condensed consolidated Statements of operations and comprehensive loss and the noncontrolling interest is reflected as a separate component of the condensed consolidated statements of stockholders’ equity, condensed consolidated balance sheets, and condensed consolidated statements of cash flows.
| (c) | Use of Estimates |
The preparation of these unaudited interim 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 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 revenue, valuation of inventory, valuation of acquired assets and liabilities, variables used in the computation of share-based compensation, litigation, contingent consideration, and evaluation of goodwill and intangible assets for impairment.
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.
| 12 |
| (d) | Cash and Cash Equivalents |
Cash and cash equivalents include cash deposits in financial institutions, and 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, accounts receivable, 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.
When estimating its allowance for credit losses related to revenues from pharmaceutical sales, the Company differentiates its receivables based on the following customer types: healthcare insurers, government payers, and cash payers. Additionally, the Company applies assumptions and judgments for assessing collectability and determining net revenues and accounts receivable from its customers. Management considers various historical collection factors for assessing collectability and determining net revenues and accounts receivable from our customers which include the period that the receivables have been outstanding, history of payment amounts, status of collections due, and applicable statutes of limitations.
During the three months ended March
31, 2026, and 2025, healthcare insurers and government payers accounted for 13% and 46% of total revenues, respectively. During the nine
months ended March 31, 2026, and 2025, healthcare insurers and government payers accounted for
| (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, deferred revenue, 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.
| 13 |
The fair value of the contingent consideration obligations was based on a probability weighted approach derived from the estimates of earn-out criteria and the probability assessment with respect to the likelihood of achieving those criteria. The measurement was based on significant inputs that were not observable in the market, therefore, the Company classified this liability as Level 3 in the following tables:
| Fair Value Measurements as of March 31, 2026: | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Liabilities: | ||||||||||||||||
| Contingent consideration | $ | $ | $ | $ | ||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Fair Value Measurements as of June 30, 2025: | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Liabilities: | ||||||||||||||||
| Contingent consideration | $ | $ | $ | $ | ||||||||||||
| $ | $ | $ | $ | |||||||||||||
The fair value of the contingent consideration liability related to the Company’s business combinations is valued based on a forward contract and the guaranteed equity value at settlement as defined in the acquisition agreement (see “Note 3. Business Combinations and Asset Acquisition).
| (g) | Convertible Instruments |
The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC Topic 815, Derivatives and Hedging Activities (“ASC 815”).
Applicable U.S. GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments according to certain criteria. The criteria includes circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.
The Company accounts for convertible instruments (when the Company has determined that the embedded conversion options should not be bifurcated from their host instruments) as follows. The Company records, when necessary, deemed dividends for the intrinsic value of conversion options embedded in shares based upon the differences between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the shares.
| 14 |
| (h) | Accounts Receivable |
Accounts receivables are derived from
products and services delivered to customers and are stated at their net realizable value. Each month, the Company reviews its receivables
on a customer-by-customer basis and evaluates whether an allowance for doubtful accounts is necessary based on any known or perceived
collection issues. Any balances that are eventually deemed uncollectible are written off against the allowance after all means of collection
have been exhausted and the potential for recovery is considered remote. As of March 31, 2026, and June 30, 2025, the Company had an allowance
of doubtful accounts $
| (i) | Inventory |
Inventory is recorded at the lower of cost or net realizable value on a first-in first-out basis. As March 31, 2026, and year ended June 30, 2025, 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 realizable value based upon assumptions about future market conditions.
| (j) | Property and Equipment |
Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization expense is recognized using the straight-line method over the estimated useful life of each asset, as follows:
| Estimated Useful Life | |
| Computer and office equipment | |
| Machinery and equipment | |
| Leasehold improvements |
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 Consolidated Balance Sheet and any resulting gains or losses are included in the Consolidated Statement of Operations in the period of disposal.
| (k) | Business Combinations and Acquisitions |
The Company accounts for acquisitions in which it obtains control of one or more businesses as a business combination. The purchase price of the acquired businesses is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the purchase price over those fair values is recognized as goodwill. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments, in the period in which they are determined, to the assets acquired and liabilities assumed with the corresponding offset to goodwill. If the assets acquired are not a business, the Company accounts for the transaction or other event as an asset acquisition. Under both methods, the Company recognizes the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired entity. In addition, for transactions that are business combinations, the Company evaluates the existence of goodwill, indefinite life intangible assets, or a gain from a bargain purchase.
| 15 |
| (l) | Contingent Consideration |
Certain acquisitions include contingent
consideration as part of the purchase price. The fair value of the contingent consideration is estimated as of the acquisition date based
on the present value of the contingent payments to be made using a weighted probability of possible payments. The unobservable inputs
used in the determination of the fair value of the contingent consideration include managements assumptions about the likelihood of payment
based on the established benchmarks and discount rates based on internal rate of return analysis. The fair value measurement includes
inputs that are Level 3 measurement as discussed in Note 4 to our consolidated financial statements included in this quarterly report
on Form 10-Q. Should actual results increase or decrease as compared to the assumption used in our analysis, the fair value of the contingent
consideration obligations will increase or decrease, up to the contracted limit, as applicable. Changes in the fair value of the contingent
earn-out consideration could cause a material impact and volatility in our operating results. As of March 31, 2026, and June 2025, the
Company had a fair value of the contingent consideration $
| (m) | Impairment of Long-Lived Assets |
The Company reviews its long-lived assets (property and equipment and amortizable intangible assets) 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 tests. 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. During the quarter ended March 31, 2026, the Company performed a qualitative assessment of its reporting units to evaluate whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. As a result of the qualitative impairment assessment performed, the Company did not recognize goodwill impairment.
An intangible asset is an identifiable non-monetary asset without physical substance. Such an asset is identifiable when it is separable, or when it arises from contractual or other legal rights. Separable assets can be sold, transferred, licensed, etc. Examples of intangible assets include computer software, licenses, trademarks, patents, films, and copyrights. The Company’s intangible assets are finite lived assets and are amortized on a straight-line basis over the estimated useful lives of the assets.
| 16 |
| (n) | Revenue Recognition |
The Company determines revenue recognition in accordance with Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, and its related amendments (collectively known as “ASC 606”) 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. Each month, deferred revenue is analyzed and adjusted for customer deposits received on construction projects for Bothof and on doors for Grand Entrances. These deposits are not considered revenue until the progress has been met for Bothof and for Grand Entrances it is reported when the door is delivered to the customer. There are also deferred revenues for Dalrada Career Institute because some of their students pay up front for courses which last several months These revenues are considered as the course progresses. All deferred revenue is expected to be collected within 12 months of March 31, 2026.
Sales are recognized at an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring control of goods or services to the customer. The Company recognizes revenue, net of taxes and expected returns, at the time it sells merchandise, provides services or dispenses prescription drugs to the customer. The Company estimates revenue based on expected reimbursements from third-party payors (e.g., pharmacy benefit managers, insurance companies and governmental agencies) for dispensing prescription drugs. The estimates are based on all available information including historical experience and are updated to actual reimbursement amounts.
The Company recognizes revenue when control of the prescription drugs is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those prescription drugs. The Company has established the following revenue recognition policies for the Pharmacy Services segment:
Revenues generated from prescription drugs sold by mail service dispensing pharmacies are recognized when the prescription drug is delivered to the client plan member. At the time of delivery, the Company has performed substantially all of its performance obligations under its client contracts and does not experience a significant level of returns or reshipments.
The Company’s retail drugstores recognize revenue at the time the customer takes possession of the merchandise. For pharmacy sales, each prescription claim is its own arrangement with the customer and is a performance obligation, separate and distinct from other prescription claims under other retail network arrangements. Revenues are adjusted for refunds owed to third party payers resulting from pricing guarantees and performance against defined value-based service and performance metrics. The inputs to these estimates are not subject to a high degree of subjectivity or volatility.
| 17 |
Boost, 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. Boost 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. We regularly assess the state of our billing operations in order to identify issues which may impact the collectability of receivables or revenue estimates. We believe that the collectability of our receivables is directly linked to the quality of our billing processes, most notably those related to obtaining the correct information in order to bill effectively for the services we provide. As such, we strive to implement “best practices” and work with our third-party billing company to reduce the number of requisitions that we receive from healthcare providers with missing or incorrect billing information. We believe that our collection and revenue estimation processes, along with our close monitoring of our billing operations, help to reduce the risk associated with material adjustments to reserve estimates. However, changes to our estimate of the impact of contractual allowances (including payer denials) and patient price concessions could have a material impact on our results of operations and financial condition in the period that the estimates are adjusted. 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.
DES recognizes revenue on energy savings contracts where it provides design, engineering and equipment upgrades to obtain energy savings through Environmental, Social, and Governance (“ESG”) targets. DES recognizes revenue through two performance obligations: 1) the Energy Savings Report (point in time); and 2) functional IP license (point in time with a significant financing component and royalty and variable consideration constraint). Up to and upon completion of an energy savings project, DES calculates the monthly energy savings based on prior and current energy consumption totals. Upon completion of a project, the customer pays monthly fixed payments which represents a financing component. DES recognized monthly interest income and “royalty” revenue when the constraint from the energy savings percentage is known. DES records revenue as it provides additional management, consulting, and other services as they are incurred.
DepTec and Bothof recognize revenues using a cost-based input method, by which we use actual costs incurred relative to the total estimated contract costs to determine, as a percentage, progress toward contract completion. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined.
The Company also earns service revenue from its other subsidiaries, including information technology and consulting services via Prakat, educational programs, and courses via DCI, management services for Genefic Wellness Group, and custom parts manufacturing for Dalrada Precision Parts. For Prakat, Genefic Wellness Group, Grand Entrances and Dalrada Precision Parts, 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 or product, which represents transfer of control to the customer. For DCI, revenues are recognized over the course of a semester while services are performed.
Disaggregation of Revenue
The following table presents the Company’s revenue disaggregated by revenue source:
| Three Months Ended | Nine Months Ended | |||||||||||||||
| March 31, | March 31, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Product sales - third parties | $ | $ | $ | $ | ||||||||||||
| Product sales - related party | ||||||||||||||||
| Service revenue - third parties | ||||||||||||||||
| Service revenue - related party | ||||||||||||||||
| Total revenue | $ | $ | $ | $ | ||||||||||||
| 18 |
Accounts Receivable and Deferred Revenue
The following table provides information about receivables and contract liabilities from contracts with customers:
| March 31, | June 30, | |||||||
| 2026 | 2025 | |||||||
| Accounts receivable, net | $ | $ | ||||||
| Accounts receivable, net - related parties | ||||||||
| Long-term receivables | ||||||||
| Long-term receivables - related parties | ||||||||
| Deferred revenue | ||||||||
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.
| (o) | 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 | Nine Months Ended | |||||||||||||||
| March 31, | March 31, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Product sales | $ | $ | $ | $ | ||||||||||||
| Service revenue | ||||||||||||||||
| Total cost of revenue | $ | $ | $ | $ | ||||||||||||
| (p) | Advertising |
Advertising costs are expensed as incurred.
During the three months ended March 31, 2026 and 2025, advertising expenses were $
| (q) | 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 three months ended March 31, 2026 and 2025, stock-based compensation was $ and $, respectively. During the nine months ended March 31, 2026 and 2025, stock-based and consulting based compensation expense was $ and $, respectively.
| 19 |
| (r) | Foreign Currency Translation |
The functional currency of the Company is the United States dollar. The functional currency of the Likido, DepTec, and Dalrada Technology subsidiaries is the Great British Pound. The functional currency of Prakat is the Indian Rupee. The functional currency of Dalrada Technology Spain is the Euro. 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.
| (s) | 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 three and nine months ended March 31, 2026, and 2026, the Company’s only component of comprehensive loss was foreign currency translation adjustments.
| (t) | Non-controlling Interests |
Non-controlling interests are classified as a separate component of equity in the Company’s condensed consolidated balance sheets and condensed consolidated statements of changes in stockholders’ equity (deficit). Net loss attributable to non-controlling interests are reflected separately from consolidated net loss in the condensed consolidated statements of comprehensive loss and condensed consolidated statements of changes in stockholders’ equity (deficit). Any change in ownership of a subsidiary while the controlling financial interest is retained is accounted for as an equity transaction between the controlling and non-controlling interests. In addition, when a subsidiary is deconsolidated, any retained non-controlling equity investment in the former subsidiary will be initially measured at fair value and the difference between the carrying value and fair value of the retained interest will be recorded as a gain or loss.
As of March 31, 2026, and June 30, 2025, non-controlling interests pertained to the Company’s Prakat subsidiary.
| (u) | 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 cashless warrants are and for the nine months ended March 31, 2026, and 2025 respectively, and was not included in diluted loss per share, because the effects are antidilutive.
There were no adjustments to the numerator during the nine months ended March 31, 2026.
| 20 |
| (v) | 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. The Company had a full valuation allowance at March 31, 2026, and June 30, 2025.
| (w) | Recent Accounting Pronouncements |
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment's profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. This ASU was adopted in our fiscal year 2025.
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). The ASU includes amendments requiring enhanced income tax disclosures, primarily related to standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. ASU 2023-09 was effective for us for the fiscal year ended January 31, 2026. This guidance was applied on a prospective basis and retrospectively.
In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”) and in January 2025, the FASB issued ASU 2025-01, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”), which clarified the effective date of ASU 2024-03. ASU 2024-03 is intended to improve disclosures about a public business entity’s expenses, primarily through additional disaggregation of income statement expenses. ASU 2024-03 will be effective for the annual period beginning after December 15, 2026 and interim reporting periods within annual reporting periods beginning after December 15, 2027, with the option to early adopt at any time prior to the effective date and should be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively to any or all prior periods presented in the financial statements. We are currently evaluating the impact of the standard on our financial statements and disclosures.
| 21 |
| 3. | Business Combinations and Asset Acquisition |
Fiscal 2025 Transactions
Grand Entrances
On August 21, 2024, the Company acquired
As a result of the
| Cash - Payment | $ | |||
| Contingent consideration | ||||
| Total purchase price consideration | $ | |||
The Company acquired Grand Entrances to vertically integrate custom door and hardware products into Bothof Brothers’ real estate construction pipelines and scale its profit margins.
The Grand Entrances transaction was accounted for as a business combination in accordance with ASC Topic 805, Business Combinations (“ASC 805”). The Company has determined preliminary fair values of the assets acquired and liabilities assumed. These values are subject to change as we perform additional reviews of our assumptions utilized.
The Company has made a preliminary allocation of the purchase price regarding the acquisition related to the assets acquired and liabilities assumed as of the purchase date. The following table summarizes the purchase price allocation as of August 21, 2024:
| Preliminary Purchase Price Allocation | ||||
| Cash and cash equivalents | $ | |||
| Accounts receivable, net | ||||
| Prepaid expenses | ||||
| Inventory | ||||
| Property and equipment, net | ||||
| Goodwill | ||||
| Accounts payable | ( | ) | ||
| Deferred revenue | ( | ) | ||
| Ally loan | ( | ) | ||
| Fundation loan | ( | ) | ||
| MCA servicing loan | ( | ) | ||
| BA EIDL loan | ( | ) | ||
| Purchase price consideration | $ | |||
| 22 |
| 4. | Selected Balance Sheet Elements |
Inventories
Inventories consisted of the following as of March 31, 2026 and June 30, 2025:
| March 31, | June 30, | |||||||
| 2026 | 2025 | |||||||
| Raw materials | $ | $ | ||||||
| Work-in-progress | ||||||||
| Finished goods | ||||||||
| Total inventories | $ | $ | ||||||
Property and Equipment, Net
Property and equipment, net consisted of the following as of March 31, 2026 and June 30, 2025:
| March 31, | June 30, | |||||||
| 2026 | 2025 | |||||||
| Machinery and equipment | $ | $ | ||||||
| Leasehold improvements | ||||||||
| Computer and office equipment | ||||||||
| Property and equipment, gross | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Depreciation expense was $
| 23 |
Intangible Assets, Net
Intangible assets, net consisted of the following as of March 31, 2026:
| Developed | ||||||||||||||||||||||||
| technology, | ||||||||||||||||||||||||
| Curriculum | Customer | software, | ||||||||||||||||||||||
| development | Licenses | relationships | Trademarks | and other | Totals | |||||||||||||||||||
| Balance: June 30, 2025 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Additions | ||||||||||||||||||||||||
| Balance: March 31, 2026 | ||||||||||||||||||||||||
| Less: Accumulated amortization | ||||||||||||||||||||||||
| Balance: June 30, 2025 | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Additions | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Balance: March 31, 2026 | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Net book value: March 31, 2026 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Amortization expense of $
| 5. | Notes Receivable |
Notes Receivable – Related Parties
On October 1, 2025, the Company executed a loan
agreement with Bandy Ranch Development, LLC for an initial principal target amount of $
| 24 |
| 6. | Notes Payable |
Notes Payable - Related Parties
The following is a summary of notes payable – related parties on March 31, 2026 and June 30, 2025:
| March 31, 2026 | ||||||||
| Outstanding | Accrued | |||||||
| Principal | Interest | |||||||
| Related entity 2 | $ | $ | ||||||
| Related entity 4 | ||||||||
| Related entity 6 | ||||||||
| $ | $ | |||||||
| June 30, 2025 | ||||||||
| Outstanding | Accrued | |||||||
| Principal | Interest | |||||||
| Related entity 2 | $ | $ | ||||||
| Related entity 4 | ||||||||
| Related entity 6 | ||||||||
| $ | $ | |||||||
The following is a summary of current and long-term notes payable – related parties as of March 31, 2026 and June 30, 2025:
| March 31, 2026 | ||||||||||||
| Current | Long-Term | |||||||||||
| Portion | Portion | Total | ||||||||||
| Related entity 2 | $ | $ | $ | |||||||||
| Related entity 4 | ||||||||||||
| Related entity 6 | ||||||||||||
| $ | $ | $ | ||||||||||
| June 30, 2025 | ||||||||||||
| Current | Long-Term | |||||||||||
| Portion | Portion | Total | ||||||||||
| Related entity 2 | $ | $ | $ | |||||||||
| Related entity 4 | ||||||||||||
| Related entity 6 | ||||||||||||
| $ | $ | $ | ||||||||||
| 25 |
Notes Payable
Notes payable includes the following:
| March 31, | June 30, | |||||||
| 2026 | 2025 | |||||||
| Current portion | $ | $ | ||||||
| Long-term portion | ||||||||
| Total | $ | $ | ||||||
The Company’s Economic Injury Disaster Loan
(“EIDL”) dated May 10, 2020, include a 3.75% interest rate for up to 30 years; the payments are deferred for the first two
years (during which interest will accrue), and payments of principal and interest are made over the remaining 28 years. The EIDL loan
has no penalty for prepayment. The EIDL loan attaches collateral which includes the following property that EIDL borrower owns or shall
acquire or create immediately upon the acquisition or creation thereof: all tangible and intangible personal property, including, but
not limited to: (a) inventory, (b) equipment, (c) instruments, including promissory notes (d) chattel paper, including tangible chattel
paper and electronic chattel paper, (e) documents, (f) letter of credit rights, (g) accounts, including health-care insurance receivables
and credit card receivables, (h) deposit accounts, (i) commercial tort claims, (j) general intangibles, including payment intangibles
and software and (k) as-extracted collateral as such terms may from time to time be defined in the Uniform Commercial Code. The security
interest the EIDL borrower grants includes all accessions, attachments, accessories, parts, supplies and replacements for the collateral,
all products, proceeds and collections thereof and all records and data relating thereto. The balance of the Company’s EIDL is $
The Company’s COVID-19 Government Loan includes
a
The Company has a loan totaling $54,269 and $
On July 25, 2023, the Company entered into an
agreement with OnPoint LTB, LLC, for a credit line and funding of up to $
On January 4, 2024, the Company executed a revenue
purchase agreement with NewCo Capital Group LLC for $
| 26 |
On May 2, 2024, the Company executed a revenue
purchase agreement with Credit Line Capital Group for $
On May 16, 2024, the Company entered into a promissory
note with 1800 Diagonal Lending, LLC for $
On May 16, 2024, the Company entered into a term
loan with Agile Capital Funding, LLC for $
On June 25, 2024, the Company executed a revenue
purchase agreement with Cucumber Capital LLC for $
On July 29, 2024, the Company executed a revenue
purchase agreement with Tycoon Capital Group with a total advance of $125,000 and payback of $
On August 23, 2024, the Company executed a revenue
purchase agreement with Quick Funding with a total advance of $170,000 and payback of $
On September 20, 2024, the Company executed a
revenue purchase agreement with QFS Capital, LLC with a total advance of up to $
On September 18, 2025, the Company entered into
a promissory note with Vanquish Funding Group, Inc. for $140,300. The promissory note includes a one-time interest charge of
On November 6, 2025, the Company entered into
a revenue purchase agreement with AMF Team Inc. for $
On November 14, 2025, the Company entered into
a revenue purchase agreement with Flow Capital Funding for $
On November 14, 2025, the Company entered into
a revenue purchase agreement with Quick Funding Group for $
On November 17, 2025, the Company entered into
a promissory note with Vanquish Funding Group, Inc. for $
| 27 |
On December 16, 2025, the Company entered into
a revenue purchase agreement with Verve Funding for $
On December 16, 2025, the Company entered into
a revenue purchase agreement with Alpha Equity Fund for $
On December 22, 2025, the Company entered into
a revenue purchase agreement with MCI Group LLC dba CC Split for $
On January 20, 2026, the Company entered into
a revenue purchase agreement with Fuji West LLC for $
On January 22, 2026, the Company entered into
a revenue purchase agreement with Spring Funding HC LLC for $
On February 3, 2026, the Company entered into
a revenue purchase agreement with Liberty Funding Source for $
On February 4, 2026, the Company entered into
a revenue purchase agreement with Dependance Platinum for $
On March 6, 2026, the Company entered into a revenue
purchase agreement with Silverline for $
On March 6, 2026, the Company entered into a revenue
purchase agreement with Silverline for $
On March 10, 2026, the Company entered into a
revenue purchase agreement with Flow Capital Funding for $
| 28 |
On March 11, 2026, the Company entered into a
revenue purchase agreement with Turning Point Capital Group for $
On March 12, 2026, the Company entered into a
revenue purchase agreement with Blue Sky Advance for $
On March 17, 2026, the Company entered into a
revenue purchase agreement with Liberty Funding Source for $
On March 18, 2026, the Company entered into a
revenue purchase agreement with Timeless Funding LLC for $
On March 20, 2026, the Company entered into a
revenue purchase agreement with Spring Funding HC LLC for $
| 7. | Convertible Note Payable – Related Parties |
On June 30, 2024, the Company converted $
On June 25, 2025, the Company converted $
| 8. | Related Party Transactions |
Fiscal 2026 Transactions
During the nine months ended March 31, 2026 and 2025, the Company received cash funding or expenses paid on behalf of the Company from related parties. The expenses paid on their behalf primarily relate to operational expenditure and payroll. In most cases, promissory notes were created on a quarterly basis totaling the amounts referenced above. The remaining amounts are included within accounts payable – related parties for which the related parties expect repayment. The above-referenced expenses relate to three corporations that the Company has classified as related parties. These corporations are all owned and/or operated by an individual who has a familial relationship with the Company’s CEO.
As of March 31, 2026 and June 30, 2025
amounts included within accounts payable and accrued liabilities – related parties for related party expenses was $
The following is a summary of revenues recorded by the Companies to related parties with common ownership:
| Three Months Ended | Nine Months Ended | |||||||||||||||
| March 31, | March 31, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Bothof Brothers | $ | $ | $ | $ | ||||||||||||
| $ | $ | $ | $ | |||||||||||||
| 29 |
Fiscal 2025 Transactions
During the year ended June 30, 2025, the Company
received cash funding or expenses paid on behalf of the Company from related parties totaling $
As of June 30, 2025, amounts included within accounts
payable and accrued liabilities – related parties for related party expenses were $
During the year ended June 30, 2025, the Company’s
Bothof Brothers and Grand Entrances subsidiaries recognized revenue for construction services and custom door sales totaling $
See Notes 5, 7, 9, 10, and 11 for additional related party transactions.
| 30 |
| 9. | Preferred Stock |
On March 29, 2024, the Company converted $
Pursuant to the acquisition agreement dated April
6, 2022 between the Company and Silicon Services Consortium Ltd. (“SSCe”), the sellers of SSCe were to be issued
shares of its common stock evenly every quarter for 24 months with the initial distribution to take place on the effective date (the “Share
Consideration”). If at the end of the 24-month stock distribution period, beginning on the effective date of April 7, 2022 (the
“Distribution Period”), the value of common stock consideration does not equate to 4,000,000 GBP (the “Target Amount”)
in value, then the Company shall issue additional stock equal to the shortfall between the value of the Share Consideration and the Target
Amount (the “Valuation Shortfall”). At the end of the Distribution Period, the sellers of SSCe were to be issued an additional
$
On June 30, 2024, the Company converted $
On October 3, 2024, the Company converted an additional shares of its common stock related to the SSCe Valuation Shortfall shares to shares of Series I Stock.
On October 14, 2024, the Company converted shares of Series I Stock to shares of its common stock.
On June 25, 2025, the Company converted $
There were various related party debt convertible notes that occurred during 2025 and 2024 (see “Note 7. Convertible Note Payable – Related Parties” for more information).
| 31 |
| 10. | Stockholders’ Equity |
Common Stock Transactions – Fiscal 2025
On October 14, 2024, the Company converted shares of Series I Stock to shares of its common stock.
In February 2025, the Company approved a consulting
agreement whereby the consultant shall be issued shares of common stock over a three-year period beginning May 1, 2024. The
consulting fees associated with the consulting agreement is $
| 11. | Stock-Based Compensation |
| Weighted | ||||||||||
| Common | Weighted | Average | ||||||||
| Stock | Average | Remaining | ||||||||
| Warrants | Exercise Price | Contractual Life | ||||||||
| Outstanding - June 30, 2024 | $ | |||||||||
| Granted | ||||||||||
| Exercised | ||||||||||
| Forfeited | ( |
) | ||||||||
| Outstanding - June 30, 2025 | $ | |||||||||
| Granted | ||||||||||
| Exercised | ||||||||||
| Forfeited | ( |
) | ||||||||
| Outstanding – March 31, 2026 | $ | |||||||||
| Exercisable – March 31, 2026 | $ | |||||||||
The Company recorded stock-based compensation of $ and $ for the three months ended March 31, 2026 and 2025, and $ and $ for the nine months ended March 31, 2026 and 2025, respectively. Total unrecognized compensation cost of non-vested options was $ on March 31, 2026, which will be recognized through fiscal year ending June 30, 2029.
| 32 |
| 12. | Segment Reporting |
The Company operates in
Segment information for the three months and nine months ended March 31, 2026, and 2025 is as follows:
| Three Months Ended March 31, 2026 | ||||||||||||||||||||||||
| Genefic | Dalrada Climate Technology | Dalrada Precision Manufacturing | Dalrada Technologies | Corporate | Consolidated | |||||||||||||||||||
| Revenues | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Cost of revenues | ||||||||||||||||||||||||
| Selling, general and administration | ||||||||||||||||||||||||
| Research and development | ||||||||||||||||||||||||
| Goodwill impairment | ||||||||||||||||||||||||
| Other segment expenses | ||||||||||||||||||||||||
| Income (loss) from operations | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Other income (expenses) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Income tax benefit (provision) | ||||||||||||||||||||||||
| Net income (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Three Months Ended March 31, 2025 | ||||||||||||||||||||||||
| Genefic | Dalrada Climate Technology | Dalrada Precision Manufacturing | Dalrada Technologies | Corporate | Consolidated | |||||||||||||||||||
| Revenues | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Cost of revenues | ||||||||||||||||||||||||
| Selling, general and administration | ||||||||||||||||||||||||
| Research and development | ||||||||||||||||||||||||
| Goodwill impairment | ||||||||||||||||||||||||
| Other segment expenses | ||||||||||||||||||||||||
| Income (loss) from operations | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Other income (expenses) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Income tax benefit (provision) | ||||||||||||||||||||||||
| Net income (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| 33 |
| Nine Months Ended March 31, 2026 | ||||||||||||||||||||||||
| Genefic | Dalrada Climate Technology | Dalrada Precision Manufacturing | Dalrada Technologies | Corporate | Consolidated | |||||||||||||||||||
| Revenues | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Cost of revenues | ||||||||||||||||||||||||
| Selling, general and administration | ||||||||||||||||||||||||
| Research and development | ||||||||||||||||||||||||
| Goodwill impairment | ||||||||||||||||||||||||
| Other segment expenses | ||||||||||||||||||||||||
| Income (loss) from operations | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Other income (expenses) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Income tax benefit (provision) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Net income (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Nine Months Ended March 31, 2025 | ||||||||||||||||||||||||
| Genefic | Dalrada Climate Technology | Dalrada Precision Manufacturing | Dalrada Technologies | Corporate | Consolidated | |||||||||||||||||||
| Revenues | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Cost of revenues | ||||||||||||||||||||||||
| Selling, general and administration | ||||||||||||||||||||||||
| Research and development | ||||||||||||||||||||||||
| Goodwill impairment | ||||||||||||||||||||||||
| Other segment expenses | ||||||||||||||||||||||||
| Income (loss) from operations | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Other income (expenses) | ( | ) | | ( | ) | ( | ) | ( | ) | |||||||||||||||
| Income tax benefit (provision) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Net income (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| 34 |
Geographic Information
The following table presents revenue by country:
| Nine Months Ended | ||||||||
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| United States | $ | $ | ||||||
| Scotland | ||||||||
| Spain | ||||||||
| India | ||||||||
| $ | $ | |||||||
The following table presents inventories by country:
| March 31, | June 30, | |||||||
| 2026 | 2025 | |||||||
| United States | $ | $ | ||||||
| Scotland | ||||||||
| $ | $ | |||||||
The following table presents property and equipment, net, by country:
| March 31, | June 30, | |||||||
| 2026 | 2025 | |||||||
| United States | $ | $ | ||||||
| Scotland | ||||||||
| Spain | ||||||||
| India | ||||||||
| $ | $ | |||||||
| 35 |
| 13. | Commitments and Contingencies |
Lease Commitments - Operating Leases
Right of Use Assets and Liabilities
In August 2024, the Company entered into a two-year
and eight-month operating lease agreement to lease manufacturing and office space in Portland, Oregon related to the deposition technology
business. The Company recognized a right-of-use asset and lease liability of $
In October 2024, Grand Entrances assigned its
lease to Bothof Brothers. The lease is ten-year and one-month operating lease for retail showroom and warehouse space in San Diego, California.
The Company recognized a right-of-use asset and lease liability of $
In July 2025, the Company amended the lease for
a medical clinic in Metairie, Louisiana for a five-year period from October 1, 2025 through September 31, 2030 related to IV pharmaceutical
services. The Company recognized a right-of use asset and lease liability of
The following are the expected maturities of lease liabilities for operating leases as of March 31, 2026, including the total amount of imputed interested related:
| Fiscal Year Ended June 30, | ||||
| Remaining 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total lease payments | ||||
| Less: imputed interest | ( |
) | ||
| Present value of lease liabilities | $ | |||
Other information related to operating leases as of March 31, 2026 and June 30, 2025, respectively, were as follows:
| March 31, 2026 | June 30, 2025 | |||||||
| Weighted average remaining lease term - years | ||||||||
| Weighted average discount rate | ||||||||
| 36 |
Legal Proceedings
In September 2023, Asset Group, Inc. (“Asset”)
filed a breach of contract with Dalrada Health Products (“DHP”) in the Superior Court of San Diego. The case arises out of
a Purchase Order wherein Asset agreed to pay DHP the sum of $3,240,000 for the purchase of 1,800,000 IRIS Ear Loop Face Masks during the
COVID-19 pandemic. Asset filed a complaint alleging DHP did not have authority to sell the masks. However, DHP have provided their counsel
with proof of authority and are preparing a Cross-Complaint for Asset’s material breach of the contract. This matter is currently
set for trial January 31, 2025. On January 15, 2025 DHP filed a cross-complaint against Asset Group and Dimco Holdings for tortious interference
with contractual business relations. DHP contends that Asset and Dimco owe DHP the profits it would have made ($
In March 2024, MDIQ filed a breach of contract
with Dalrada Technology Group, Inc. (“DHTI”) in Collin County Texas Superior Court. MDIQ was hired to process insurance claims
for COVID-19 testing performed by Empower Genomics. MDIQ failed to perform yet filed a civil collection case against DHTI for failure
to pay the invoices. DHTI is now in the process of counter suing for approximately $
A former consultant, Simon Gray, and distribution representative, DePrey Company, acted in concert with supplier Zhongshan Mide Hardware Products Co., Ltd. (“Mide”) to misappropriate Fastenal Company purchase orders and ultimately extract Dalrada Manufacturing out of its contractual relationship. DHTI has filed a lawsuit against DePrey Company and Simon Gray in July for a breach of contract and intentional interference with contractual relationships in the California Southern District Court. No trial date has been set in this matter and the parties are in the process of conducting discovery.
In June 2024, DHTI filed a case in the California Southern District Court alleging, among other causes of action, fraud, breach of contract, unjust enrichment following DHTI purchasing Likido company from Stuart Cox and his failure to disclose pertinent financial liabilities he had incurred prior to the sale of the company to DHTI. Case was thought to be resolved at mediation, but Mr. Cox filed a motion to vacate the settlement agreement and proceed with litigation. The Court has denied Cox’s motions. However, the Court has allowed us to amend the complaint to further prove that Cox availed himself of California/US laws. An amended complaint was filed 1-29-2026.
On November 19, 2024, DHTI filed a lawsuit in the Southern Calif. District Court against William Bonar, Samantha and Ian MacKenzie, Jillian Hughes and Marion Bonar (“Defendants”) alleging numerous causes of action, including but not limited to fraud, tortious interference with contractual relations, and misappropriation of trade secrets. The Defendants were employed by or were directors of DHTI’s UK subsidiaries located in Scotland and England. No trial date has been set and DHTI is in the process of conducting discovery.
On November 27, 2024, FFF Enterprises filed a
lawsuit against Genefic, Inc. and DHTI as an alleged breach of a service agreement with a demand for $
| 37 |
On June 20, 2024, a former employee filed a complaint alleging numerous labor law violations after being laid off along with several other employees. A jury trial has been scheduled for May 8, 2026. DHTI is in the process of conducting in depth discovery in this matter. Settlement discussions are ongoing.
On March 27, 2025, Lamie RB Investments, LLC filed a suit for breach of a lease contract with Genefic, Inc. Lamie RB Investments, LLC is seeking damages in the amount equal to the term of the lease. Genefic, Inc. has issued discovery requests for Lamie to provide proof that they have mitigated their damages by trying to market and re-lease the property. Trial has been scheduled for June 5, 2026. Settlement discussions are ongoing.
On July 7, 2025, the Company filed a lawsuit against Wells Fargo for having released the Pala funds while the account was frozen for litigation. The lawsuit is a civil case filed in San Diego Superior Court. This case has settled and subsequently dismissed.
On August 11, 2025 Dalrada Precision Manufacturing Inc., a subsidiary of DHTI, filed a complaint in the San Diego Superior Court against Global Resources Sustainability Group, LLC and Richard Abernathy for fraud, conversion, breach of contract and violation of Bus. & Prof. Code 17200. We have filed a default against all parties.
On November 12, 2025 Cardinal Health filed a complaint for breach of contract in Ohio against Genefic Specialty RX alleging non-payment of invoices. An answer has been filed and counsel is currently working on a settlement.
On November 19, 2025, former counsel to Dalrada on the Kroger v. Genefic case filed a lawsuit for non-payment of attorney fees in San Diego Superior Court. An answer has been filed and the case is in the process of discussing a settlement.
| 14. | Subsequent Events |
On April 28, 2026, the Company entered into a revenue purchase agreement with Spring Funding HC LLC for $450,000, which includes an estimated 19.6% purchase rate and a total estimated purchased amount of $674,550 at the end of the term. The agreement includes $45,000 in closing costs.
| 38 |
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 $4,326,287 and $14,813,937 during the three and nine months ended March 31, 2026, respectively. We will be required to raise substantial capital to fund our capital expenditures, working capital, and other cash requirements. We will continue to rely on related parties and seek other financing to complete our business plans. The successful outcome of future financing activities cannot be determined at this time and there are no assurances that, if achieved, we will have sufficient funds to execute our intended business plan or generate positive operational results.
In addition to our current deficit, we may incur additional losses during the foreseeable future, until we are able to successfully execute our business plan. There is no assurance that we will be able to obtain additional financing through private placements and/or public offerings necessary to support our working capital requirements. To the extent that funds generated from any private placements and/or public offerings are insufficient, we will have to raise additional working capital through other sources, such as bank loans and/or financings. No assurance can be given that additional financing will be available, or if available, will be on acceptable terms.
We are incurring increased costs as a result of being a publicly traded company. As a public company, we incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act of 2002, as well as new rules subsequently implemented by the Securities and Exchange Commission, have required changes in corporate governance practices of public companies. These new rules and regulations have increased our legal and financial compliance costs and have made some activities more time-consuming and costly. For example, as a result of becoming a public company, we have created additional board committees and have adopted policies regarding internal controls and disclosure controls and procedures. In addition, we have incurred additional costs associated with our public company reporting requirements. As a result of the new rules, it may become more difficult for us to attract and retain qualified persons to serve on our Board of Directors or as executive officers. We cannot predict or estimate the amount of additional costs we may incur as a result of being a public company or the timing of such costs.
| 39 |
RESULTS OF OPERATIONS
Three Months Ended March 31, 2026 and 2025
The following table sets forth the results of our operations for the three months ended March 31, 2026 and 2025:
| Three Months Ended March 31, 2026 | ||||||||||||||||||||||||
| Genefic | Dalrada Climate Technology | Dalrada Precision Manufacturing | Dalrada Technologies | Corporate | Consolidated | |||||||||||||||||||
| Revenues | $ | 901,255 | $ | 1,408,784 | $ | 44,904 | $ | 212,161 | $ | – | $ | 2,567,104 | ||||||||||||
| Loss from Operations | $ | (541,044 | ) | $ | (544,650 | ) | $ | (370,947 | ) | $ | (9,560 | ) | $ | (1,818,319 | ) | $ | (3,,284,520 | ) | ||||||
| Three Months Ended March 31, 2025 | ||||||||||||||||||||||||
| Genefic | Dalrada Climate Technology | Dalrada Precision Manufacturing | Dalrada Technologies | Corporate | Consolidated | |||||||||||||||||||
| Revenues | $ | 1,397,361 | $ | 2,777,108 | $ | 127,674 | $ | 272,133 | $ | – | $ | 4,574,276 | ||||||||||||
| Loss from Operations | $ | (1,003,742 | ) | $ | (658,799 | ) | $ | (196,423 | ) | $ | (75,964 | ) | $ | (2,003,845 | ) | $ | (3,938,773 | ) | ||||||
Revenues and Cost of Revenues
Revenues
Genefic:
Revenues for the three months ended March 31, 2026, was $901,255 compared with revenue of $1,397,361 during the three months ended March 31, 2025, a decrease of $496,106, or35.5%. The decrease in revenues was primarily attributable to limited working capital to continue revenue growth and a shift in the sales pipelines of Genefic Specialty Pharmacy.
Dalrada Climate Technology:
Revenues for the three months ended March 31, 2026, was $1,408,784 compared with revenue of $2,777,108 during the three months ended March 31, 2025, a decrease of $1,368,324, or 49.27%. a reduction in projects under Bothof Brothers during the three month period ended March 31, 2026 compared to March 31, 2025.
Dalrada Precision Manufacturing:
Revenues for the three months ended March 31, 2026, was $44,904 compared with revenue of $127,674 during the three months ended March 31, 2025, a decrease of $82,770, or 644.8%. Deposition Technology closing out projects during fiscal 2026 and working to backfill the sales pipeline.
Dalrada Technologies:
Revenues for the three months ended March 31, 2026, was $212,161 compared with revenue of $272,133 during the three months ended March 31, 2025, a decrease of $59,972, or 22.04%. The decrease in revenue was a result of closing on new contracts.
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Costs and Expenses
Cost of Revenues
Genefic:
Cost of Revenues for the three months ended March 31, 2026, was $440,114 compared to cost of revenues of $754,113 during the three months ended March 31, 2025, a decrease of $313,999, or 41.6%. The decrease in cost of revenues was primarily a result of limited working capital to continue revenue growth and a shift in the sales pipelines of Genefic Specialty Pharmacy.
Dalrada Climate Technology:
Cost of Revenues for the three months ended March 31, 2026, was $1,119,930, compared to cost of revenues of $2,116,964 during the three months ended March 31, 2025, a decrease of $997,034, or 47.1%. The decrease in cost of revenue is due to a reduction in projects under Bothof Brothers during the three month period ended March 31, 2026 compared to March 31, 2025.
Dalrada Precision Manufacturing:
Cost of Revenues for the three months ended March 31, 2026, was $81,770 compared to cost of revenues of $73,479 during the three months ended March 31, 2025, a increase of $8,291, or 11.28%. The increase in cost of revenue is due to Deposition Technology closing out projects with inventory during fiscal 2026.
Dalrada Technologies:
Cost of Revenues for the three months ended March 31, 2026, was $144,255 compared to cost of revenues of $208,738 during the three months ended March 31, 2025, a decrease of $64,483 or 30.9%. The decrease in cost of revenues was primarily a result of closing new contracts.
Operating Expenses
Genefic:
Operating expenses for the three months ended March 31, 2026, was $1,002,185 compared to operating expenses of $1,646,990 during the three months ended March 31, 2025, a decrease of $644,805 or 39.2%. The decrease in operating expenses was the result of an increase an overall decrease in operating activity and sales within the segment.
Dalrada Climate Technology:
Operating expenses for the three months ended March 31, 2026, was $833,504 compared to operating expenses of $1,318,943 during the three months ended March 31, 2025, aa decrease of $485,439, or 36.8%. The decrease in operating expenses was a result of a decrease of activity in Bothof Brothers Construction and Dalrada Technology Spain for the three months ended March 31, 2026.
Dalrada Precision Manufacturing:
Operating expenses for the three months ended March 31, 2026 was $334,081 compared to operating expenses of $250,618 during the three months ended March 31, 2025,an increase of $83,463 or 33.3%. The increase in operating expenses was a result of an increase
in overhead associated with Deposition Technologies.
Dalrada Technologies:
Operating expenses for the three months ended March 31, 2026 was $77,466 compared to operating expenses of $139,359 during the three months ended March 31, 2025, a decrease of $61,893, or 44.4%. The decrease in operating expenses was primarily attributable to a decrease in overall sales volumes in Prakat.
Corporate:
Operating expenses for the three months ended March 31, 2026 was $1,817,728 compared to operating expenses of $1,987,822 during the three months ended March 31, 2025, a decrease of $170,094, or 8.6%. During the three months ended December 31, 2025 and 2025, the Company recorded stock compensation expense of $134,196 and $264,041, respectively, to consultants, employees, executives, and the Board of Directors, which is included in operating expenses.
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Other Income (Expense)
Other income (expense) consists of asset sales, currency transitions and within interest expense, penalties are included on the consolidated statements of operations. Interest expense was $1,053,546 and $298,028 for the three months ended March 31, 2026 and 2025, respectively.
Net Income (Loss)
Net loss for the three months ended March 31, 2026 was $4,326,287 compared to net loss of $4,222,529 for the three months ended March 31, 2025.
Nine Months Ended March 31, 2026 and 2025
The following table sets forth the results of our operations for the nine months ended March 31, 2026 and 2025:
| Nine Months Ended March 31, 2026 | ||||||||||||||||||||||||
| Genefic | Dalrada Climate Technology | Dalrada Precision Manufacturing | Dalrada Technologies | Corporate | Consolidated | |||||||||||||||||||
| Revenues | $ | 4,409,642 | $ | 4,421,437 | $ | 284,413 | $ | 810,331 | $ | – | $ | 9,925,823 | ||||||||||||
| Income (Loss) from Operations | $ | (2,049,744 | ) | $ | (3,118,178 | ) | $ | (1,009,708 | ) | $ | (36,150 | ) | $ | (5,963,316 | ) | $ | (12,177,096 | ) | ||||||
| Nine Months Ended March 31, 2025 | ||||||||||||||||||||||||
| Genefic | Dalrada Climate Technology | Dalrada Precision Manufacturing | Dalrada Technologies | Corporate | Consolidated | |||||||||||||||||||
| Revenues | $ | 7,600,892 | $ | 4,748,630 | $ | 380,283 | $ | 989,984 | $ | – | $ | 13,719,789 | ||||||||||||
| Income (Loss) from Operations | $ | (4,412,225 | ) | $ | (2,561,903 | ) | $ | (878,119 | ) | $ | (122,360 | ) | $ | (6,739,645 | ) | $ | (14,714,252 | ) | ||||||
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Revenues and Cost of Revenues
Revenues
Genefic:
Revenues for the nine months ended March 31, 2026, was $4,409,642 compared with revenue of $7,600,892 during the nine months ended March 31, 2025, an decrease of$3,191,250 42.0%. The decrease in revenues was primarily attributable to limited working capital to continue revenue growth and a shift in the sales pipelines of Genefic Specialty Pharmacy.
Dalrada Climate Technology:
Revenues for the nine months ended March 31, 2026, was $4,421,437 compared with revenue of $4,748,630 during the nine months ended March 31, 2025, an increase of $327,193, or 6.9%. The increase in revenue was due to Bothof Brothers the larger number of projects that Bothof Brothers worked on during the nine months ended March 31, 2026 compared to March 31, 2025.
Dalrada Precision Manufacturing:
Revenues for the nine months ended March 31, 2026, was $284,413 compared with revenue of $380,283 during the nine months ended March 31, 2025, a decrease of $95,870, or 25.2%. The decrease in revenue is due to Deposition Technology finalizing a number of projects during prior periods and reduced sales in the Precision Parts subsidiary.
Dalrada Technologies:
Revenues for the nine months ended March 31, 2026, was $810,331 compared with revenue of $989,984 during the nine months ended March 31, 2025, a decrease of $179,653, or 18.1%.
Costs and Expenses
Cost of Revenues
Genefic:
Cost of Revenues for the nine months ended March 31, 2026, was $2,785,231 compared to cost of revenues of $6,033,704 during the nine months ended March 31, 2025, a decrease of $3,248,473, or 53.8%. The decrease in cost of revenue was primarily attributable to limited working capital to continue revenue growth and a shift in the sales pipelines of Genefic Specialty Pharmacy.
Dalrada Climate Technology:
Cost of Revenues for the nine months ended March 31, 2026, was $3,848,323, compared to cost of revenues of $3,285,123 during the nine months ended March 31, 2025, an increase of $563,200, or 17.1%. The increase in cost of revenue is due to the larger number of projects that Bothof Brothers worked on during the nine months ended March 31, 2026 compared to March 31, 2025.
Dalrada Precision Manufacturing:
Cost of Revenues for the nine months ended March 31, 2026, was $269,450 compared to cost of revenues of $315,280 during the nine months ended March 31, 2025, a decrease of $45,830, or 14.5%. The decrease in cost of revenue is due to Deposition Technology finalizing a number of projects during prior periods and reduced sales in the Precision Parts subsidiary.
Dalrada Technologies:
Cost of Revenues for the nine months ended March 31, 2026, was $547,278 compared to cost of revenues of $649,648 during the nine months ended March 31, 2025, a decrease of $163,493 or 15.8%. The decrease in cost of revenues was primarily a result of closing new contracts.
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Operating Expenses
Genefic:
Operating expenses for the nine months ended March 31, 2026, was $3,674,155 compared to operating expenses of $5,979,413 during the nine months ended March 31, 2025, a decrease of $2,305,258 or 38.6%. The decrease in operating expenses was the result of an overall decrease in operating activity and sales within the segment.
Dalrada Climate Technology:
Operating expenses for the nine months ended March 31, 2026 was $3,691,292 compared to operating expenses of $4,025,410 during the nine months ended March 31, 2025, a decrease of $332,772, or 8.3%. The decrease in operating expenses was a result of an effort to reduce overhead for the segment during the nine month period ended March 31, 2026.
Dalrada Precision Manufacturing:
Operating expenses for the nine months ended March 31, 2026 was $1,024,671 compared to operating expenses of $943,122 during the nine months ended March 31, 2025, an increase of $81,549, or 8.6%. The increase in operating expenses was a result of overall activity within the segment during the nine month period ended March 31, 2026.
Dalrada Technologies:
Operating expenses for the nine months ended March 31, 2026 was $299,203 compared to operating expenses of $462,696 during the nine months ended March 31, 2025, a decrease of $163,493, or 35.3%.
Corporate:
Operating expenses for the nine months ended March 31, 2026 was $5,953,294 compared to operating expenses of $6,701,619 during the nine months ended March 31, 2025, a decrease of $748,325, or 11.2%. During the nine months ended March 31, 2026 and 2025, the Company recorded stock compensation expense of $410,224 and $1,647,067, respectively, to consultants, employees, executives, and the Board of Directors, which is included in operating expenses.
Other Income (Expense)
Other income (expense) consists of asset sales, currency transitions and within interest expense, penalties are included on the consolidated statements of operations. Interest expense was $2,631,664 and $2,397,642 for the nine months ended March 31, 2026 and 2025, respectively.
Net Income (Loss)
Net loss for the nine months ended March 31, 2026 was $14,813,937 compared to net loss of $17,768,606 for the nine months ended March 31, 2025.
Liquidity and Capital Resources
The Company continues to incur recurring operating losses, negative cash flows from operations, and significant working capital deficits, which raise substantial doubt regarding the Company’s ability to continue as a going concern within one year after the date these condensed consolidated financial statements are issued. The Company anticipates requiring additional liquidity over the next twelve months to fund ongoing operations, satisfy existing obligations, support working capital requirements, and continue strategic growth initiatives across certain subsidiaries and operating divisions.
The Company’s anticipated capital requirements include funding for the continued expansion and commercialization of DCT heat pump systems, operational growth initiatives within its pharmacy operations, expansion of Bothof Brothers Construction’s development activities, ongoing investments in precision manufacturing capabilities, and support for DepTec’s deposition system operations and related customer projects. The Company also continues to evaluate operational efficiencies, cost containment measures, and prioritization of resources toward business segments and projects that management believes have the greatest potential to generate near-term revenue growth and positive cash flows.
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Management’s plans to alleviate the conditions giving rise to the substantial doubt include improving operating performance, increasing revenues from existing subsidiaries, accelerating sales and marketing efforts related to high-margin product offerings and services, collecting outstanding accounts receivable balances, and pursuing additional sources of liquidity through debt financings, equity financings, strategic investments, asset monetization opportunities, and other capital raising activities. The Company has historically relied on financing from related parties, external investors, and the issuance of equity securities to support operations and fund growth initiatives, and expects to continue relying on such sources of capital in the near term.
The Company’s ability to continue as a going concern is dependent upon a number of factors, including its ability to successfully execute its business plan, achieve and sustain profitable operations and positive operating cash flows, improve liquidity, collect outstanding receivables on anticipated timelines, maintain support from certain related parties and stakeholders, and obtain additional financing on commercially reasonable terms, if at all. The issuance of additional equity securities would result in dilution to existing stockholders, and there can be no assurance that additional debt or equity financing will be available when needed or on terms acceptable to the Company. In addition, there are currently no plans to induce the conversion of existing debt obligations into equity.
There can be no assurance that management’s plans will be successful or that the Company will be able to generate sufficient revenues, improve cash flows, or obtain adequate financing to continue operations. Accordingly, the accompanying condensed consolidated financial statements do not include any adjustments relating to the recoverability or classification of recorded asset amounts, or the amounts and classification of liabilities, that may result should the Company be unable to continue as a going concern.
The Company’s primary sources of liquidity historically have consisted of cash generated from operations, proceeds from debt and equity financings, and advances from related parties. The Company’s primary liquidity requirements include funding working capital needs, debt service obligations, operating lease commitments, capital expenditures, subsidiary expansion initiatives, and general corporate purposes.
As of March 31, 2026, we maintained a cash and cash equivalents balance of $411,932 (Restricted cash CD $329,307 which will be released when the Pala project is complete with Bothof Construction which is estimated to be July 2026) with a working capital deficit of $21,953,663.
Working Capital
As of March 31, 2026, the Company had current assets of $7,950,045 and current liabilities $29,903,708 compared with current assets of $7,741,021 and current liabilities $15,742,840 on June 30, 2025. The decrease in the working capital was primarily a result of increased accounts payable to fund payroll and pay outstanding vendors.
Cash Flows
| Nine Months Ended | ||||||||
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Net cash used by operating activities | $ | (6,063,517 | ) | $ | (6,143,953 | ) | ||
| Net cash used in investing activities | – | (479,798 | ) | |||||
| Net cash provided by financing activities | 5,710,889 | 6,223,344 | ||||||
| Net change in cash during the period, before effects of foreign currency | $ | (352,628 | ) | $ | (400,407 | ) | ||
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Cash flow from Operating Activities
During the nine months ended March 31, 2026, the Company used $6,063,517 of cash for operating activities compared to used $6,143,953 during the nine months ended March 31, 2025. The primary decrease in the use of cash for operating activities was a result of a reduction in accounts receivable.
Cash flow from Investing Activities
During the nine months ended March 31, 2026, the Company used no cash for investing activities compared to $479,798 used during the nine months ended March 31, 2025.
Cash flow from Financing Activities
During the nine months ended March 31, 2026, the Company received $5,710,889 in net cash for financing activities compared to receiving $6,223,344 during the nine months ended March 31, 2025. The decrease was primarily due to a reduction in stock issued.
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, and related party transactions.
Critical Accounting Policies
Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in note (1) of the notes to our financial statements. In general, management’s estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes for the reporting period. Significant areas requiring the use of management estimates relate to the valuation of its mineral leases and claims and our ability to obtain final government permission to complete the project. As of March 31, 2026 there have been no material changes to our critical accounting policies and estimates from those previously disclosed in our Annual Report on Form 10-K for the year ended June 30, 2025.
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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.
Recently Issued Accounting Pronouncements
We have reviewed all 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 Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this Quarterly Report on Form 10-Q, concluded that our disclosure controls and procedures were ineffective as of that date primarily due to a material weakness in internal control over financial reporting described below.
(b) Changes in internal control over financial reporting. Material Weakness in Internal Control Over Financial Reporting Management has identified a material weakness in the Company’s internal control over financial reporting as of December 31, 2025. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
The identified material weakness primarily relates to preparing adequate and complete schedules across the various consolidated entities including roll forwards, revenue recognition, and allowance estimates. This deficiency could result in a reasonable possibility of material misstatements in the financial statements that would not have been prevented or detected.
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Remediation Steps Being Taken
Management has taken and continues to take the following actions to remediate the material weakness:
| · | Implemented enhanced review and approval controls, including multi-level reviews for all significant transactions, journal entries, and account reconciliations, supported by detailed checklists and documentation requirements. | |
| · | Engaged external consultants and specialists to assist in the design, documentation, and testing of improved internal control procedures, including the adoption of new accounting software with automated controls. |
Management believes these measures address the root causes of the material weakness. The Company expects the remediation to be substantially complete and fully tested by the end of the fourth quarter of fiscal 2026 (June 30, 2026), at which time management anticipates concluding that the material weakness has been remediated.
However, the successful remediation of a material weakness requires sustained execution and validation through testing. There can be no assurance that the material weakness will be fully remediated on the anticipated timeline, or that additional material weaknesses will not be identified in the future. Until remediated, the Company will continue to perform additional manual procedures and reviews to mitigate the risk of misstatement.
There were no other changes in our internal control over financial reporting during the fiscal quarter ended December 31, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting aside from the ongoing remediation efforts described above.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
In September 2023, Asset Group, Inc. (“Asset”) filed a breach of contract with Dalrada Health Products (“DHP”) in the Superior Court of San Diego. The case arises out of a Purchase Order wherein Asset agreed to pay DHP the sum of $3,240,000 for the purchase of 1,800,000 IRIS Ear Loop Face Masks during the COVID-19 pandemic. Asset filed a complaint alleging DHP did not have authority to sell the masks. However, DHP have provided their counsel with proof of authority and are preparing a Cross-Complaint for Asset’s material breach of the contract. This matter is currently set for trial January 31, 2025. On January 15, 2025 DHP filed a cross-complaint against Asset Group and Dimco Holdings for tortious interference with contractual business relations. DHP contends that Asset and Dimco owe DHP the profits it would have made ($3,240,000) had Dimco not interfered with the sale. A jury trial is now scheduled for April 2026. Discovery is currently ongoing.
In March 2024, MDIQ filed a breach of contract with Dalrada Technology Group Inc (“DHTI”) in Collin County Texas Superior Court. MDIQ was hired to process insurance claims for COVID-19 testing performed by Empower Genomics. MDIQ failed to perform yet filed a civil collection case against DHTI for failure to pay the invoices. DHTI is now in the process of counter suing for approximately $2,000,000 of unpaid claims that we would have benefitted from had MDIQ performed according to the contract. This case has now settled. Both the lawsuit and our counterclaims have been dismissed.
A former consultant, Simon Gray, and distribution representative, DePrey Company, acted in concert with supplier Zhongshan Mide Hardware Products Co., Ltd. (“Mide”) to misappropriate Fastenal Company purhcase orders and ultimately extract Dalrada Manufacturing out of its contractual relationship. DHTI has filed a lawsuit against DePrey Company and Simon Gray in July for a breach of contract and intentional interference with contractual relationships in the California Southern District Court. No trial date has been set in this matter and the parties are in the process of conducting discovery.
In June 2024, DHTI filed a case in the California Southern District Court alleging, among other causes of action, fraud, breach of contract, unjust enrichment following DHTI purchasing Likido company from Stuart Cox and his failure to disclose pertinent financial liabilities he had incurred prior to the sale of the company to DHTI. Case was thought to be resolved at mediation, but Mr. Cox filed a motion to vacate the settlement agreement and proceed with litigation. The Court has denied Cox’s motions. However, the Court has allowed us to amend the complaint to further prove that Cox availed himself of California/US laws. An amended complaint was filed 1-29-2026.
On November 19, 2024, DHTI filed a lawsuit in the Southern Calif. District Court against William Bonar, Samantha and Ian MacKenzie, Jillian Hughes and Marion Bonar (“Defendants”) alleging numerous causes of action, including but not limited to fraud, tortious interference with contractual relations, and misappropriation of trade secrets. The Defendants were employed by or were directors of DHTI’s UK subsidiaries located in Scotland and England. No trial date has been set and DFCO is in the process of conducting discovery.
On November 27, 2024, FFF Enterprises filed a lawsuit against Genefic, Inc. and DHTI as an alleged breach of a service agreement with a demand for $564,743.48. Genefic/DHTI has filed a motion to dismiss DHTI as a defendant because they were never a party to the agreement and filed an Answer on behalf of Genefic. The case has been settled and no further liability is owed.
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On June 20, 2024, a former employee filed a complaint alleging numerous labor law violations after being laid off along with several other employees. A jury trial has been scheduled for May 8, 2026. DFCO is in the process of conducting in depth discovery in this matter. Settlement discussions are ongoing.
On March 27, 2025, Lamie RB Investments, LLC filed a suit for breach of a lease contract with Genefic, Inc. Lamie RB Investments, LLC is seeking damages in the amount equal to the term of the lease. Genefic, Inc. has issued discovery requests for Lamie to provide proof that they have mitigated their damages by trying to market and re-lease the property. Trial has been scheduled for June 5, 2026. Settlement discussions are ongoing.
On July 7, 2025, the Company filed a lawsuit against Wells Fargo for having released the Pala funds while the account was frozen for litigation. The lawsuit is a civil case filed in San Diego Superior Court. This case has settled and subsequently dismissed.
On August 11, 2025 Dalrada Precision Manufacturing Inc., a subsidiary of DHTI, filed a complaint in the San Diego Superior Court against Global Resources Sustainability Group, LLC and Richard Abernathy for fraud, conversion, breach of contract and violation of Bus. & Prof. Code 17200. We have filed a default against all parties.
On November 12, 2025 Cardinal Health filed a complaint for breach of contract in Ohio against Genefic Specialty RX alleging non-payment of invoices. An answer has been filed and counsel is currently working on a settlement.
On November 19, 2025, former counsel to Dalrada on the Kroger v. Genefic case filed a lawsuit for non-payment of attorney fees in San Diego Superior Court. An answer has been filed and the case is in the process of discussing a settlement.
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Item 1A. Risk Factors.
Not applicable to smaller reporting entities
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.
During the
quarter ended March 31, 2026, no director or officer of the Company
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 and 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) |
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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 Technology Group, Inc. | |
| By: /s/ Brian Bonar | |
| Date: May 20, 2026 | Brian Bonar |
| Chief Executive Officer (Principal Executive, Accounting and Financial 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 (Principal Executive, Accounting and Financial Officer) | May 20, 2026 |
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