Cover
Cover | 9 Months Ended |
Mar. 31, 2020 | |
Cover [Abstract] | |
Document Type | S-1 |
Amendment Flag | false |
Document Fiscal Period Focus | Q3 |
Document Fiscal Year Focus | 2020 |
Entity Registrant Name | DALRADA FINANCIAL CORP |
Entity Central Index Key | 0000725394 |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | true |
Entity Emerging Growth Company | false |
Incorporation state | DE |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Mar. 31, 2020 | Jun. 30, 2019 | Jun. 30, 2018 |
Current assets | |||
Cash and cash equivalents | $ 104,093 | $ 963 | $ 5,486 |
Accounts receivable | 210,897 | 27,959 | 0 |
Other receivables | 267,165 | ||
Inventory | 239,273 | 18,768 | 0 |
Prepaid expenses and other current assets | 109,610 | ||
Due from related party | 124 | ||
Total current assets | 47,690 | 5,486 | |
Property and equipment | 5,500 | 0 | |
Goodwill | 143,152 | ||
Right of use asset, net | 112,116 | ||
Total assets | 53,190 | 5,486 | |
Current liabilities | |||
Accounts payable | 258,677 | ||
Accrued liabilities | 184,133 | ||
Accounts payable and accrued liabilities | 73,681 | 1,073 | |
Accrued payroll taxes, penalties and interest | 10,980,278 | 12,392,022 | |
Accounts payable and accrued liabilities - related parties | 363,274 | 417,133 | 37,469 |
Deferred revenue | 180,745 | ||
Accrued compensation | 0 | 1,615,000 | |
Notes payable - related parties | 2,483,844 | 342,741 | 0 |
Convertible note payable - related party | 1,875,000 | 0 | |
Other current liabilities | 63,512 | ||
Total liabilities | 13,688,833 | 14,045,564 | |
Commitments and contingencies (Note 9) | |||
STOCKHOLDERS' DEFICIT | |||
Preferred stock Authorized: 100,000 shares with a par value of $1,000 per share, Issued and outstanding: nil and nil shares, respectively | 0 | 0 | |
Common stock Authorized: 1,000,000,000 shares with a par value of $0.005 per share Issued and outstanding: 48,281,128 and 47,281,128 shares, respectively | 241,406 | 236,406 | |
Additional paid-in capital | 91,086,179 | 91,052,594 | |
Noncontrolling interests | 51,936 | ||
Accumulated deficit | (104,963,228) | (105,329,078) | |
Accumulated other comprehensive income | 2,159 | ||
Total stockholders' deficit | (13,635,643) | (14,040,078) | |
Total liabilities and stockholders' deficit | $ 1,450,544 | $ 53,190 | $ 5,486 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2020 | Jun. 30, 2019 | Jun. 30, 2018 |
Statement of Financial Position [Abstract] | |||
Preferred stock, par value | $ 100,000 | $ 1,000 | $ 1,000 |
Preferred stock, shares authorized | 0.01 | 100,000 | 100,000 |
Preferred stock, shares issued | 5,000 | 0 | 0 |
Preferred stock, shares outstanding | 5,000 | 0 | 0 |
Common stock, par value | $ 1,000,000,000 | $ .005 | $ .005 |
Common stock, shares authorized | 0.005 | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 63,999,128 | 48,281,128 | 47,281,128 |
Common stock, shares outstanding | 63,999,128 | 48,281,128 | 47,281,128 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Statement [Abstract] | ||||||
Revenue | $ 351,324 | $ 34,407 | $ 400,807 | $ 34,407 | $ 72,155 | $ 0 |
Cost of revenue | 185,902 | 9,955 | 200,006 | 9,955 | 74,996 | 0 |
Gross profit (loss) | 165,422 | 24,452 | 200,801 | 24,452 | (2,841) | 0 |
Selling, general and administrative | 824,506 | 192,913 | 1,688,792 | 352,092 | 721,847 | 91,983 |
Research and development | 177,874 | 0 | 449,809 | 0 | 50,050 | 0 |
Expenses incurred on terminated acquisition | 355 | 58,362 | 169,904 | 167,220 | ||
Total operating expense | 1,002,025 | 251,275 | 2,308,505 | 519,312 | 771,897 | 91,983 |
Loss from operations | (836,603) | (226,823) | (2,107,704) | (494,860) | ||
Loss before other income (expense) | (774,738) | (91,983) | ||||
Expenses incurred on proposed acquisition | (270,577) | 0 | ||||
Interest expense | (853,175) | (945,238) | ||||
Gain on expiration of accrued tax liability | 2,264,340 | 0 | ||||
Gain (loss) on foreign exchange | 16,583 | 0 | 12,171 | 0 | ||
Total other income (expense) | 1,140,588 | (945,238) | ||||
Profit loss | (1,039,503) | 1,803,319 | (1,471,774) | 1,110,914 | ||
Income taxes | 0 | 0 | 0 | 0 | 0 | 0 |
Net income (loss) attributable to noncontrolling interests | (11,064) | 0 | (11,064) | 0 | ||
Net income (loss) attributable to Dalrada Financial Corporation stockholders | (1,039,503) | 1,803,319 | (1,460,710) | 1,110,914 | $ 365,850 | $ (1,037,221) |
Foreign currency translation | 59 | 0 | 2,159 | 0 | ||
Comprehensive income (loss) | $ (1,039,444) | $ 1,803,319 | $ (1,469,615) | $ 1,110,914 | ||
Net income (loss) per share, basic | $ (0.02) | $ 0.04 | $ (0.03) | $ 0.02 | $ 0.01 | $ (0.02) |
Net income (loss) per share, diluted | $ (0.02) | $ 0.02 | $ (0.03) | $ 0.01 | $ 0 | $ (0.02) |
Weighted average common shares outstanding, basic | 60,737,965 | 47,281,128 | 55,897,598 | 47,281,128 | 47,429,073 | 47,281,128 |
Weighted average common shares outstanding, diluted | 60,737,965 | 98,604,657 | 55,897,598 | 96,678,938 | 102,576,132 | 47,281,128 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Deficit - USD ($) | Common Stock | Additional Paid-In Capital | Retained Earnings / Accumulated Deficit | Total |
Beginning balance, shares at Jun. 30, 2017 | 47,281,128 | |||
Beginning balance, value at Jun. 30, 2017 | $ 236,406 | $ 91,052,594 | $ (104,291,857) | $ (13,002,857) |
Net loss | (1,037,221) | (1,037,221) | ||
Ending balance, shares at Jun. 30, 2018 | 47,281,128 | |||
Ending balance, value at Jun. 30, 2018 | $ 236,406 | 91,052,594 | (105,329,078) | (14,040,078) |
Stock issued to related party - reimburse expenses, shares | 1,000,000 | |||
Stock issued to related party - reimburse expenses, value | $ 5,000 | 33,585 | 38,585 | |
Net loss | 365,850 | 365,850 | ||
Ending balance, shares at Jun. 30, 2019 | 48,281,128 | |||
Ending balance, value at Jun. 30, 2019 | $ 241,406 | $ 91,086,179 | $ (104,963,228) | $ (13,635,643) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 9 Months Ended | 12 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | |
Operating activities | ||||
Net income (loss) for the year | $ (1,460,710) | $ 1,110,914 | $ 365,850 | $ (1,037,221) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Research and development expenses associated with asset acquisition | 92,083 | 0 | ||
Common stock issued for services | 172,800 | 0 | ||
Changes in operating assets and liabilities: | ||||
Accounts receivable | (25,394) | (31,186) | (27,959) | 0 |
Other receivables | (108,779) | |||
Inventory | (110,443) | (18,768) | 0 | |
Prepaid and other current assets | (54,905) | (50,000) | ||
Accounts payable | 107,015 | 41,262 | ||
Related party advances | 87,134 | 176,011 | ||
Accrued liabilities | 38,918 | 157,531 | ||
Accounts payable and accrued liabilities | 10,229 | 0 | ||
Accrued payroll taxes, penalties and interest | (712,258) | (1,605,774) | (1,411,744) | 945,238 |
Accrued compensation | 260,000 | 60,000 | ||
Other current liabilities | 42,765 | |||
Net cash used in operating activities | (1,942,838) | (201,242) | (822,392) | (31,983) |
Investing Activities | ||||
Cash acquired pursuant to business combination | 234,261 | 0 | ||
Purchase of property and equipment | (160,515) | (5,500) | (5,500) | 0 |
Net cash used in investing activities | 73,744 | (5,500) | (5,500) | 0 |
Financing activities | ||||
Related party advances and notes payable - related parties | 1,975,200 | 204,689 | 823,369 | 37,469 |
Net cash provided by financing activities | 1,975,200 | 204,689 | 823,369 | 37,469 |
Increase (decrease) in cash | 106,106 | (2,053) | (4,523) | 5,486 |
Effect of exchange rate changes on cash | (2,976) | |||
Cash, beginning of period | 963 | 5,486 | 5,486 | 0 |
Cash, end of period | 104,093 | 3,433 | 963 | 5,486 |
Supplemental Disclosures | ||||
Interest paid | 0 | 0 | 0 | 0 |
Income tax paid | 0 | 0 | 0 | 0 |
Non-cash investing and financing activities: | ||||
Conversion of accrued wages to convertible note payable - related party | 1,875,000 | 0 | ||
Stock issued to related party - reimburse expenses | 436,086 | 0 | $ 38,585 | $ 0 |
Fair value of assets acquired and liabilities assumed in acquisitions | 355,934 | 0 | ||
Fair value of noncontrolling interest acquired in acquisition | 63,000 | 0 | ||
Transfer of related party advances to related party notes payable | 37,469 | 0 | ||
Conversion of accounts payable - related parties to preferred stock | $ 170 | $ 0 |
1. Organization and Nature of O
1. Organization and Nature of Operations | 9 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Organization and Nature of Operations | 1. Organization and Nature of Operations Dalrada Financial Corporation (the “Company”) was incorporated in September 1982 under the laws of the State of California, and reincorporated in May 1983 under the laws of the State of Delaware. In June 2018, the Company created a new subsidiary, Dalrada Precision Corp. (“Dalrada Precision”), a mechanical contract provider. It extends the client’s engineering and operations team by helping devise bespoke manufacturing solutions tailored to its products. Dalrada Precision can enter at any stage of the product lifecycle from concept and design to mass production and logistics. In October 2018, the Company created a new subsidiary, Dalrada Health Products Corp (“Dalrada Health”). Dalrada Health will partner with client companies for the distribution of medical disposables, hospital equipment and furniture, medical devices, laboratory and dental products. In May 2019, Dalrada Health acquired a new subsidiary, C2C Life Sciences, Inc. (“C2C”). On November 1, 2019, the acquisition was rescinded, as the Company never gained control over C2C. Such costs incurred in connection with this rescinded acquisition, have been reflected in these condensed consolidated financial statements as expenses incurred on terminated acquisition. On December 6, 2019, Dalrada, via its wholly owned subsidiary, Dalrada Precision, acquired, by stock exchange agreement, 100% of Likido Ltd. (HQ) (“Likido”) in exchange of 6,118,000 shares of the Company’s common stock. Likido, a United Kingdom engineering-design company, is based in Edinburgh, Scotland. Likido is an international technology 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 the minimized carbon emissions across global supply chains. Likido's technologies enable the effective recovery and recycling of process energy, mitigating against climate change and enhancing quality of life through the provision of low-carbon heating and cooling systems. In connection with the purchase of Likido, the Company is obligated to fund operations for a total up to $600,000 (see Note 3). On January 9, 2020, Dalrada purchased seventy two percent (72%) of the issued and outstanding common equity shares of Prakat Solutions Inc. a Texas corporation, (“Prakat”). The purchase was made by means of a Stock Purchase Agreement (“SPA”). The consideration for the share purchase was three million six hundred thousand, (3,600,000) common equity shares of DFCO. Prakat has a wholly owned subsidiary based in India, Prakat Solutions Private Limited, which provides global customers with software and technology solutions specializing in Test Engineering, Accessibility Engineering, Product Engineering and Application Modernization. The Prakat India team provides end to end Product Engineering services across various domains, including – Banking & Financial Services, Telecom, Retail, Healthcare, Manufacturing, Legal and IT Infrastructure. Prakat India is an ISO 9001 Certified Company. The Company is still determining the impact of this transaction on the financial statements including the purchase price and the allocation of such (see Note 3). The Company's principal executive offices are located at 600 La Terraza Blvd., Escondido, California 92025. 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, 2020, the Company has a working capital deficit of $14,746,043 and an accumulated deficit of $106,423,939. The continuation of the Company as a going concern is dependent upon the continued financial support from its management, related parties, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing, and generating profitable operations from the Company’s future operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These condensed consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. | 1. Organization and Nature of Operations Dalrada Financial Corporation (the “Company”) was incorporated in September 1982 under the laws of the State of California, and reincorporated in May 1983 under the laws of the State of Delaware. In June 2018, the Company created a new subsidiary, Dalrada Precision Corp. (“Dalrada Precision”), a mechanical contract provider. It extends the client’s engineering and operations team by helping devise bespoke manufacturing solutions tailored to its products. Dalrada Precision can enter at any stage of the product lifecycle from concept and design to mass production and logistics. In October 2018, the Company created a new subsidiary, Dalrada Health Products Corp (“Dalrada Health”). Dalrada Health will partner with client companies for the distribution of medical disposables, hospital equipment & furniture, medical devices, laboratory and dental products. In May 2019, Dalrada Health acquired a new subsidiary, C2C Life Sciences, Inc. (“C2C”). On November 1, 2019, the acquisition was rescinded, as the Company never gained control over C2C. Such costs incurred in connection with this rescinded acquisition, have been reflected in these financials as other expense. The Company's principal executive offices are located at 600 La Terraza Blvd., Escondido, California 92025. Going Concern These 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 at June 30, 2019, the Company has a working capital deficit of $13,641,143 and an accumulated deficit of $104,963,228. The continuation of the Company as a going concern is dependent upon the continued financial support from its management, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing, and generating profitable operations from the Company’s future operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. |
2. Summary of Significant Accou
2. Summary of Significant Accounting Policies | 9 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Jun. 30, 2019 | |
Accounting Policies [Abstract] | ||
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies (a) Basis of Presentation These condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars. The Company’s fiscal year end is June 30. We have prepared the accompanying condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These condensed consolidated financial statements are unaudited and, in our opinion, include all adjustments, consisting of normal recurring adjustments and accruals necessary for a fair presentation of our balance sheets, operating results, and cash flows for the periods presented. Operating results for the periods presented are not necessarily indicative of the results that may be expected for fiscal year 2020. Certain information and footnote disclosures normally included in condensed consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been omitted in accordance with the rules and regulations of the SEC. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and accompanying notes. (b) Principles of Consolidation These condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries: Dalrada Precision, a company incorporated in the State of California, since June 25, 2018 (date of incorporation), Dalrada Health, a company incorporated in the State of California, since October 2, 2018 (date of incorporation) and Likido. All inter-company transactions and balances have been eliminated on consolidation. (c) Use of Estimates The preparation of these condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the valuation of inventory, valuation of accrued payroll tax liabilities, valuation of acquired assets and liabilities, variables used in the computation of share-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. (d) Revenue Recognition The Company recognizes and accounts for revenue in accordance with ASC 606 as a principal on the sale of goods. Pursuant to ASC 606 , The Company’s revenue is derived from the sales of its products, which represents net sales recorded in the Company’s condensed consolidated statements of operations. Product sales are recognized when performance obligations under the terms of the contract with the customer are satisfied. Typically, this would occur upon transfer of control, including passage of title to the customer and transfer of risk of loss related to those goods. The Company measures revenue as the amount of consideration to which it expects to be entitled in exchange for transferring goods (transaction price). The Company records reductions to revenue for estimated customer returns, allowances, markdowns and discounts. The Company bases its estimates on historical rates of customer returns and allowances as well as the specific identification of outstanding returns, markdowns and allowances that have not yet been received by the Company. The actual amount of customer returns and allowances is inherently uncertain and may differ from the Company’s estimates. If the Company determines that actual or expected returns or allowances are significantly higher or lower than the reserves it established, it would record a reduction or increase, as appropriate, to net sales in the period in which it makes such a determination. Reserves for returns, and markdowns are included within accrued expenses and other liabilities. Allowance and discounts are recorded in accounts receivable, net and the value of inventory associated with reserves for sales returns are included within prepaid expenses and other current assets on the condensed consolidated balance sheets. The Company also earns revenue from engineering and consulting services from its Prakat subsidiary. These services are recognized when performance obligations have been satisfied and the services are complete. This is generally at a point of time upon written completion and client acceptance of the project, which represents transfer of control to the customer. The following table presents revenue by type: Nine Months Ended March 31, 2020 2019 Product sales $ 155,054 $ 34,407 Engineering and consulting services - third parties 186,847 – Engineering and consulting services - related party 58,906 – Total revenue $ 400,807 $ 34,407 (e) Stock-based Compensation The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation (f) Business Combinations and Acquisitions The Company accounts for acquisitions in which it obtains control of one or more businesses as a business combination. The purchase price of the acquired businesses is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the purchase price over those fair values is recognized as goodwill. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments, in the period in which they are determined, to the assets acquired and liabilities assumed with the corresponding offset to goodwill. If the assets acquired are not a business, the Company accounts for the transaction or other event as an asset acquisition. Under both methods, the Company recognizes the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired entity. In addition, for transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase. (g) Impairment of Long-Lived Assets The Company reviews its long-lived assets (property and equipment) for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. If the sum of the expected cash flows, undiscounted, is less than the carrying amount of the asset, an impairment loss is recognized as the amount by which the carrying amount of the asset exceeds its fair value. Goodwill is tested annually at June 30 for impairment and upon the occurrence of certain events or substantive changes in circumstances. The annual goodwill impairment test allows for the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. An entity may choose to perform the qualitative assessment on none, some or all of its reporting units or an entity may bypass the qualitative assessment for any reporting unit and proceed directly to step one of the quantitative impairment test. If it is determined, on the basis of qualitative factors, that the fair value of a reporting unit is, more likely than not, less than its carrying value, the quantitative impairment test is required. The quantitative impairment test calculates any goodwill impairment as the difference between the carrying amount of a reporting unit and its fair value, but not to exceed the carrying amount of goodwill. As of December 31, 2019, there were no qualitative factors that indicated goodwill was impaired. (h) Foreign Currency Translation The functional currency of the Company is the United States dollar. The functional currency of the Likido subsidiary is the British pound. The financial statements of the Company’s subsidiary were translated to United States dollars in accordance with ASC 830, Foreign Currency Translation Matters consolidated statements of operations. (i) Comprehensive Income 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 period ended December 31, 2019, the Company’s only component of comprehensive income was foreign currency translation adjustments. (j) Basic and Diluted Net Loss per Share The Company computes net income (loss) per share in accordance with ASC 260, Earnings per Share The weighted average number of common stock equivalents related to convertible notes payable was not included in diluted loss per share, because the effects are antidilutive, for the three and nine months ended March 31, 2020. In accordance with ASC 260, “Earnings Per Share”, the following table reconciles basic shares outstanding to fully diluted shares outstanding for the three and nine months ended March 31, 2019: Three Months Ended Nine Months Ended March 31, 2019 March 31, 2019 Weighted average number of common shares outstanding - Basic 47,281,128 47,281,128 Potentially dilutive common stock equivalents (convertible note payable - related party and accrued interest) 51,323,529 49,397,810 Weighted average number of common shares outstanding - Diluted 98,604,657 96,678,938 There were no adjustments to the numerator during the quarters ended March 31, 2020 and 2019. (k) Recent Accounting Pronouncements In August 2018, the FASB issued guidance to improve the effectiveness of fair value measurement disclosures by removing or modifying certain disclosure requirements and adding other requirements. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. Certain amendments should be applied prospectively, while all other amendments should be applied retrospectively to all periods presented. The Company is currently evaluating the impact of the new guidance. In February 2018, the FASB issued guidance that permits the Company to reclassify disproportionate tax effects in accumulated other comprehensive income caused by the Tax Cuts and Jobs Act of 2017 to retained earnings. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the impact of the new guidance. In July 2017, the FASB issued ASU 2017-11 which simplifies the accounting for certain financial instruments with down round features. The new standard will reduce income statement volatility for companies that issue warrants and convertible instruments containing such features. The guidance is effective for fiscal years beginning after December 15, 2018 with early adoption permitted. The Company is currently evaluating the impact of the new guidance. In June 2016, the FASB issued a new credit loss standard that replaces the incurred loss impairment methodology in current GAAP. The new impairment model requires immediate recognition of estimated credit losses expected to occur for most financial assets and certain other instruments. It is effective for annual reporting periods beginning after December 15, 2019 and interim periods within those annual periods, with early adoption permitted. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first effective reporting period. The Company is currently evaluating the impact of the new guidance. In February 2016, the FASB issued new lease accounting guidance in ASU No. 2016-02, “ Leases The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. | 2. Summary of Significant Accounting Policies (a) Basis of Presentation These consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars. The Company’s fiscal year end is June 30. (b) Principles of Consolidation These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries: Dalrada Precision, a company incorporated in the State of California, since June 25, 2018 (date of incorporation), and Dalrada Health, a company incorporated in the State of California, since October 2, 2018 (date of incorporation). All inter-company transactions and balances have been eliminated on consolidation. (c) Use of Estimates The preparation of these 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 valuation of inventory, valuation of accrued payroll tax liabilities, variables used in the computation of share-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. (d) Cash and Cash Equivalents The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. (e) Inventory Inventory is comprised of goods purchased for resale, and is recorded at the lower of cost or net realizable value on a first-in first-out basis. 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. (f) Equipment Equipment is comprised of machinery and is recorded at the lower of cost or net book value and amortized on a straight-line basis over an estimated useful life of three to five years. (g) Financial Instruments Pursuant to ASC 820, Fair Value Measurements and Disclosures Level 1 Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 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 Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The Company’s financial instruments consist principally of cash, accounts receivable, accounts payable and accrued liabilities, notes payable, and amounts due to related parties. Pursuant to ASC 820, the fair value of cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations. (h) Income Taxes The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, Accounting for Income Taxes (i) Revenue Recognition The Company recognizes and accounts for revenue in accordance with ASC 606 as a principal on the sale of goods. Pursuant to ASC 606 , The Company’s revenue is derived from the sales of its products, which represents net sales recorded in the Company’s consolidated statements of operations. Product sales are recognized when performance obligations under the terms of the contract with the customer are satisfied. Typically, this would occur upon transfer of control, including passage of title to the customer and transfer of risk of loss related to those goods. The Company measures revenue as the amount of consideration to which it expects to be entitled in exchange for transferring goods (transaction price). The Company records reductions to revenue for estimated customer returns, allowances, markdowns and discounts. The Company bases its estimates on historical rates of customer returns and allowances as well as the specific identification of outstanding returns, markdowns and allowances that have not yet been received by the Company. The actual amount of customer returns and allowances is inherently uncertain and may differ from the Company’s estimates. If the Company determines that actual or expected returns or allowances are significantly higher or lower than the reserves it established, it would record a reduction or increase, as appropriate, to net sales in the period in which it makes such a determination. Reserves for returns, and markdowns are included within accrued expenses and other liabilities. Allowance and discounts are recorded in accounts receivable, net and the value of inventory associated with reserves for sales returns are included within prepaid expenses and other current assets on the consolidated balance sheets. (j) Stock-based Compensation The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation (k) Comprehensive Loss ASC 220, Comprehensive Income (l) Basic and Diluted Net Loss per Share The Company computes net income (loss) per share in accordance with ASC 260, Earnings per Share Year Ended June 30, 2019 Weighted average number of common shares outstanding - Basic 47,429,073 Potentially dilutive common stock equivalents (convertible note payable - related party) 55,147,059 Weighted average number of common shares outstanding - Diluted 102,576,132 There were no outstanding dilutive securities during the year ended June 30, 2018. There were no adjustments to the numerator during the year ended June 30, 2019. Recent Accounting Pronouncements In August 2018, the FASB issued guidance to improve the effectiveness of fair value measurement disclosures by removing or modifying certain disclosure requirements and adding other requirements. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. Certain amendments should be applied prospectively, while all other amendments should be applied retrospectively to all periods presented. The Company is currently evaluating the impact of the new guidance. In February 2018, the FASB issued guidance that permits the Company to reclassify disproportionate tax effects in accumulated other comprehensive income caused by the Tax Cuts and Jobs Act of 2017 to retained earnings. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements. In July 2017, the FASB issued ASU 2017-11 which simplifies the accounting for certain financial instruments with down round features. The new standard will reduce income statement volatility for companies that issue warrants and convertible instruments containing such features. The guidance is effective for fiscal years beginning after December 15, 2018 with early adoption permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements. In June 2016, the FASB issued a new credit loss standard that replaces the incurred loss impairment methodology in current GAAP. The new impairment model requires immediate recognition of estimated credit losses expected to occur for most financial assets and certain other instruments. It is effective for annual reporting periods beginning after December 15, 2019 and interim periods within those annual periods, with early adoption permitted. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first effective reporting period. The Company is currently evaluating the impact of the new guidance. In February 2016, the FASB issued new lease accounting guidance in ASU No. 2016-02, “ Leases The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. |
3. Accrued Payroll Taxes
3. Accrued Payroll Taxes | 9 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Jun. 30, 2019 | |
Payables and Accruals [Abstract] | ||
Accrued Payroll Taxes | 4. Accrued Payroll Taxes As of March 31, 2020, and June 30, 2019, the Company had $10,268,020 and $10,980,278, respectively, of accrued payroll taxes, penalties and interest relating to calendar years 2004 - 2007. The total balance for accrued payroll taxes has accumulated on a quarterly basis beginning on their respective quarterly filing dates. Accrued interest is compounded daily at an estimated effective interest rate of 7.33%. The quarterly sub-totals that make up the $10,268,020 balance have a calculated expiration date of 10 years according to the Internal Revenue Service statute of limitations. As the tax periods surpass their estimated expiration date, the Company removes the liability from the condensed consolidated balance sheets, and an equivalent amount is recognized as “Gain on expiration of accrued payroll taxes” within other income on the condensed consolidated statements of operations. For the nine months ended March 31, 2020 and 2019, the Company recognized $564,479 and $637,749, respectively, of penalties and interest within interest expense on the condensed consolidated statements of operations. For the nine months ended March 31, 2020 and 2019, the Company recognized $1,276,837 and $2,243,523, respectively, within “Gain on expiration of accrued payroll taxes” as a result of quarterly tax liabilities that expired during the fiscal periods The amount owing may be subject to additional late filing fees and penalties that are not quantifiable as of the date of these condensed consolidated financial statements. In addition, the Company periodically reviews the historical filings in determining if the statute has been paused or extended by the Internal Revenue Service. | 3. Accrued Payroll Taxes As of June 30, 2019, and 2018, the Company had $10,980,278 and $12,392,022, respectively, of accrued payroll taxes, penalties and interest relating to calendar years 2004 - 2007. The total balance for accrued payroll taxes has accumulated on a quarterly basis beginning on their respective quarterly filing dates. Accrued interest is compounded daily at an estimated effective interest rate of 7.33%. The quarterly sub-totals that make up the $10,980,278 balance have a calculated expiration date of 10 years according to the Internal Revenue Service statute of limitations. As the tax periods surpass their estimated expiration date, the Company removes the liability from the consolidated balance sheets, and an equivalent amount is recognized as “Gain on expiration of accrued payroll taxes” within other income on the consolidated statements of operations. For fiscal years ending June 30, 2019 and 2018, the Company recognized $2,264,340 and $0, respectively, within “Gain on expiration of accrued payroll taxes” as a result of quarterly tax liabilities that expired during the fiscal years. The amount owing may be subject to additional late filing fees and penalties that are not quantifiable as at the date of these consolidated financial statements. In addition, the Company periodically reviews the historical filings in determining if the statute has been paused or extended by the Internal Revenue Service. |
4. Notes Payable - Related Part
4. Notes Payable - Related Parties | 9 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Jun. 30, 2019 | |
Debt Disclosure [Abstract] | ||
Notes Payable - Related Parties | 5. Notes Payable – Related Parties a) During the year ended June 30, 2019, the Company issued a $38,615 promissory note to a related party for compensation paid by the related party on behalf of the Company. Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 360 days from the date of issuance. As of March 31, 2020, the outstanding principal balance of the promissory note was $38,615 and the accrued interest is $869. b) During the year ended June 30, 2019, the Company issued a $37,469 promissory note to a related party for legal services and other expenses incurred to reinstate the Company to a current status with the state of Delaware. Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 360 days from the date of issuance. As of March 31, 2020, the outstanding principal balance of the promissory note was $37,469 and the accrued interest is $843. c) As of June 30, 2019, the Company owed $2,250 to a related party company controlled by the Chief Executive Officer of the Company for management fees, which consists of accounting and administrative services. The Company is charged $4,500 on a monthly basis, $1,125 of which is allocated each month to Dalrada Health Products. Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 360 days from the date of issuance. As of March 31, 2020, the outstanding principal balance of the promissory note was $2,250 and the accrued interest is $51. d) As of June 30, 2019, the Company owed $1,630 to a related party for reimbursement of expenses paid by the related party on behalf of the Company related to the proposed C2C acquisition which did not occur. Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 360 days from the date of issuance. As of March 31, 2020, the outstanding principal balance of the promissory note was $1,630 and the accrued interest is $37. e) As of June 30, 2019, the Company owed $262,197 to a related party for reimbursement of compensation to employees and payroll services paid by the related party on behalf of the Company. Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 360 days from the date of issuance. As of March 31, 2020, the outstanding principal balance of the promissory note was $262,197 and the accrued interest is $5,899. f) On September 30, 2019, the Company issued a $131,265 promissory note to a related party for reimbursement of compensation to employees and payroll services paid by the related party on behalf of the Company. Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 360 days from the date of issuance. As of March 31, 2020, the outstanding principal balance of the promissory note was $131,265 and the accrued interest is $1,969. g) On September 30, 2019, the Company issued a $2,075 promissory note to a related party for reimbursement of expenses paid by the related party on behalf of the Company related to the proposed C2C acquisition which did not occur. Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 360 days from the date of issuance. As of March 31, 2020, the outstanding principal balance of the promissory note was $2,075 and the accrued interest is $31. h) On September 30, 2019, the Company issued a $3,375 promissory note to a related party company controlled by the Chief Executive Officer of the Company for management fees, which consists of accounting and administrative services for which the Company is charged $1,125 on a monthly basis. Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 360 days from the date of issuance. As of March 31, 2020, the outstanding principal balance of the promissory note was $3,375 and the accrued interest is $51. i) On September 30, 2019, the Company issued a $36,370 promissory note to a related party for reimbursement of operating expenses paid by the related party on behalf of the Company. Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 360 days from the date of issuance. As of March 31, 2020, the outstanding principal balance of the promissory note was $36,370 and the accrued interest is $546. j) On September 30, 2019, the Company issued a $1,865 promissory note to a related party for reimbursement of expenses paid by the related party on behalf of the Company related to the proposed C2C acquisition which did not occur. Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 360 days from the date of issuance. As of March 31, 2020, the outstanding principal balance of the promissory note was $1,865 and the accrued interest is $42. k) On September 30, 2019, the Company issued a $93,137 promissory note to a related party for reimbursement of operating expenses paid by the related party on behalf of the Company. Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 360 days from the date of issuance. As of March 31, 2020, the outstanding principal balance of the promissory note was $93,137 and the accrued interest is $1,397. l) On December 31, 2019, the Company issued a $18,669 promissory note to a related party for reimbursement of operating expenses paid by the related party on behalf of the Company. Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 360 days from the date of issuance. As of March 31, 2020, the outstanding principal balance of the promissory note was $18,669 and the accrued interest is $140. m) On December 31, 2019, the Company issued a $16,165 promissory note to a related party for reimbursement of operating expenses paid by the related party on behalf of the Company. Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 360 days from the date of issuance. As of March 31, 2020, the outstanding principal balance of the promissory note was $16,165 and the accrued interest is $121. n) On December 31, 2019, the Company issued a $1,125 promissory note to a related party company controlled by the Chief Executive Officer of the Company for management fees, which consists of accounting and administrative services. The Company is charged $4,500 on a monthly basis, $1,125 of which is allocated each month to Dalrada Health Products. Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 360 days from the date of issuance. As of March 31, 2020, the outstanding principal balance of the promissory note was $1,125 and the accrued interest is $8. o) On December 31, 2019, the Company issued a $152,282 promissory note to a related party for reimbursement of operating expenses paid by the related party on behalf of the Company. Funds were used for medical device listing fees, computer software, travel expenses, and professional consultant services Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 360 days from the date of issuance. As of March 31, 2020, the outstanding principal balance of the promissory note was $152,282 and the accrued interest is $1,142. p) On December 31, 2019, the Company issued a $5,270 promissory note to a related party for reimbursement of operating expenses paid by the related party on behalf of the Company. Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 360 days from the date of issuance. As of March 31, 2020, the outstanding principal balance of the promissory note was $5,270 and the accrued interest is $40. q) On December 31, 2019, the Company issued a $720,914 promissory note to a related party for reimbursement of operating expenses paid by the related party on behalf of the Company. Funds were used for travel expenses, professional consultant services, software, international shipping charges, and office supplies Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 360 days from the date of issuance. As of March 31, 2020, the outstanding principal balance of the promissory note was $720,914 and the accrued interest is $5,407. r) On March 31, 2020, the Company issued a $233,886 promissory note to a related party for reimbursement of operating expenses paid by the related party on behalf of the Company. Funds were used for travel expenses, professional consultant services, software, international shipping charges, and office supplies Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 360 days from the date of issuance. s) On March 31, 2020, the Company issued a $1,120 promissory note to a related party for reimbursement of operating expenses paid by the related party on behalf of the Company. Funds were used for travel expenses, professional consultant services, software, international shipping charges, and office supplies Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 360 days from the date of issuance. t) On March 31, 2020, the Company issued a $175,742 promissory note to a related party for reimbursement of operating expenses paid by the related party on behalf of the Company. Funds were used for travel expenses, professional consultant services, software, international shipping charges, and office supplies Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 360 days from the date of issuance. u) On March 31, 2020, the Company issued a $14,655 promissory note to a related party for reimbursement of operating expenses paid by the related party on behalf of the Company. Funds were used for travel expenses, professional consultant services, software, international shipping charges, and office supplies Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 360 days from the date of issuance. v) On March 31, 2020, the Company issued a $1,165 promissory note to a related party for reimbursement of operating expenses paid by the related party on behalf of the Company. Funds were used for travel expenses, professional consultant services, software, international shipping charges, and office supplies Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 360 days from the date of issuance. w) On March 31, 2020, the Company issued a $417,996 promissory note to a related party for reimbursement of operating expenses paid by the related party on behalf of the Company. Funds were used for travel expenses, professional consultant services, software, international shipping charges, and office supplies Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 360 days from the date of issuance. x) On March 31, 2020, the Company issued a $79,866 promissory note to a related party for reimbursement of operating expenses paid by the related party on behalf of the Company. Funds were used for travel expenses, professional consultant services, software, international shipping charges, and office supplies Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 360 days from the date of issuance. y) On March 31, 2020, the Company issued a $55,868 promissory note to a related party for reimbursement of operating expenses paid by the related party on behalf of the Company. Funds were used for travel expenses, professional consultant services, software, international shipping charges, and office supplies Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 360 days from the date of issuance. | 4. Notes Payable – Related Parties a) During the year ended June 30, 2019, the Company issued a $38,615 promissory note to a related party for compensation paid by the related party on behalf of the Company. Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 180 days from the date of issuance. As at June 30, 2019, the outstanding balance of the promissory note was $39,195 (2018 - $nil). b) During the year ended June 30, 2019, the Company issued a $37,469 promissory note to a related party for legal services and other expenses incurred to reinstate the Company to a current status with the state of Delaware. Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 180 days from the date of issuance. As at June 30, 2019, the outstanding balance of the promissory note was $37,469 (2018 - $37,469, reflected as accounts payable accrued liabilities related party). c) As at June 30, 2019, the Company owed $2,250 (2018 – $nil) to a related party company controlled by the Chief Executive Officer of the Company for management fees, which consists of accounting and administrative services for which the Company is charged $4,500 on a monthly basis. The amount is unsecured, bears interest at 3% per annum, and due 360 days from the date of issuance. d) As at June 30, 2019, the Company owed $1,630 (2018 – $nil) to a related party for reimbursement of expenses paid by the related party on behalf of the Company related to the proposed C2C acquisition which did not occur. The amount is unsecured, bears interest at 3% per annum, and due 360 days from the date of issuance. e) As at June 30, 2019, the Company owed $262,197 (2018 – $nil) to a related party for reimbursement of compensation to employees and payroll services paid by the related party on behalf of the Company in connection with the C2C acquisition which did not occur. The amount is unsecured, bears interest at 3% per annum, and due 360 days from the date of issuance. |
5. Convertible Note Payable - R
5. Convertible Note Payable - Related Parties | 9 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Jun. 30, 2019 | |
Debt Disclosure [Abstract] | ||
Convertible Note Payable - Related Parties | 6. Convertible Note Payable – Related Parties As of June 30, 2019, the Company issued a convertible note for $1,875,000 to the Chief Executive Officer of the Company for compensation. Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 360 days from the date of issuance. On June 30, 2019, the Company issued note agreement which included a conversion feature of the outstanding balance at $0.034 per share. As the conversion price was equal to the fair value of the common shares on the date of the agreement, there was no beneficial conversion feature. As of March 31, 2020, the outstanding principal balance of the promissory note was $1,875,000 and the accrued interest is $42,758. | 5. Convertible Note Payable – Related Parties As at June 30, 2019, the Company owed $1,875,000 (2018 – $1,615,000, reflected as accrued compensation) to the Chief Executive Officer of the Company for compensation. The amount is unsecured, bears interest at 3% per annum, due one year from the date of issuance. On June 30, 2019, the Company issued note agreement which included a conversion feature of the outstanding balance at $0.034 per share. As the conversion price was equal to the fair value of the common shares on the date of the agreement, there was no beneficial conversion feature. During the year ended June 30, 2019, the Company incurred $260,000 (2018 - $60,000) in consulting fees to the Chief Executive Officer of the Company. At the time, the Company didn’t have a formal arrangement with the Chief Executive Officer for the payment of such. |
6. Common Shares
6. Common Shares | 12 Months Ended |
Jun. 30, 2019 | |
Equity [Abstract] | |
Common Shares | 6. Common Shares On May 7, 2019, the Company issued 1,000,000 common shares to a direct relative of the Chief Executive Officer for reimbursement of expenses. The fair value of the common stock issued was similar to that of the fair market value on the date of issuance. |
7. Related Party Transactions
7. Related Party Transactions | 9 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Jun. 30, 2019 | |
Related Party Transactions [Abstract] | ||
Related Party Transactions | 7. Related Party Transactions As of March 31, 2020, and June 30, 2019, the Company owed $363,274 and $479,512 respectively to related parties for reimbursement of various operating expenses, which has been recorded in accounts payable and accrued liabilities – related parties. This amount includes $54,000 of management fees, which consists of accounting and administrative services to Trucept Inc., a related party company controlled by the Chief Executive Officer of the Company. The management fee agreement calls for monthly payments of $4,500. The agreement is ongoing until terminated by either party. During the three months end March 31, 2020, the Company’s Prakat subsidiary recorded revenues of $58,906 for engineering and consulting services provided to Trucept. In November 2019, the Chief Executive Officer converted $170 in amounts owed from the Company into 5,000 shares of Series F Super Preferred Stock. On July 1, 2019, the Company formalized an employment agreement with its Chief Executive Officer, which entitles him to compensation of three hundred and ninety-three thousand dollars ($393,000) per year. Annual increases will be up to 10% based performance criteria to be determined at a later date. He will be issued common stock of the Company sufficient to provide a 10% ownership position post reverse split which shares be maintained for a period of two years. In addition to all other benefits and compensation, he shall be eligible for a quarterly bonus of $47,000 based on if the Company achieves a net profit for that quarter. As of March 31, 2020, the Company had $294,750 accrued within accounts payable and accrued liabilities – related parties. On January 6, 2020, the Directors affirmed and ratified the final agreement of the employment terms of Fawad Nisar as the Chief Operating Officer of Dalrada Financial Corp. The Company and Mr. Nisar have agreed in the Employment Terms, to, among other items, the issuance, as consideration for his accepting the position of COO of the Company, of 3,000,000 shares of the Company’s common stock. The fair value of $172,800 is included in selling, general and administrative expenses in the consolidated statements of operations. See Notes 5 and 6 for additional related party transactions. | 7. Related Party Transactions As at June 30, 2019, the Company owed $417,133 (2018 - $nil) to related parties for reimbursement of various operating expenses, which has been recorded in accounts payable and accrued liabilities – related parties. This amount includes $27,000 of management fees, which consists of accounting and administrative services to Trucept Inc., a related party company controlled by the Chief Executive Officer of the Company. The management fee agreement calls for monthly payments of $4,500. The agreement is ongoing until terminated by either party. See Notes 4, 5, 6 and 9 for additional related party transactions. |
8. Income Taxes
8. Income Taxes | 12 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 8. Income Taxes We file income tax returns in the United States federal jurisdiction and in various state and local jurisdictions. In the normal course of business, we are subject to examination by taxing authorities. The tax years ending 2017 through 2019 remain subject to examination for federal tax purposes and remain subject to examination in significant state tax jurisdictions. The Company has yet to file their income tax return for the year ended June 30, 2019. As of June 30, 2019, the Company had federal and state net operating loss carry forwards of $818,000 that may be offset against future taxable income which will begin to expire in 2038 through 2041. The reconciliation of income tax expense computed at the U.S. federal statutory rate to the income tax provision for the years ended June 30, 2019 and 2018 is as follows: 2019 2018 Current: Federal $ – $ – State – – Foreign – – – – Deferred: Federal (165,038 ) (6,716 ) State (45,852 ) (1,866 ) (210,890 ) (8,582 ) Valuation allowance 210,890 8,582 Total provision for income taxes $ – $ – Deferred income taxes reflect the net tax effects of: (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes; and (b) operating loss and tax credit carry-forwards. We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. Significant components of deferred tax assets as of June 30, 2019 and 2018 were as follows: 2019 2018 Net Operating Loss Carryforwards $ 219,472 $ 8,582 Gross Deferred Tax Assets 219,472 8,582 Valuation Allowance (219,472 ) (8,582 ) Net Deferred Tax Assets $ – $ – Reconciliation of the statutory federal income tax to the Company's effective tax: The difference in the effective rate and the statutory rate is due to permanent differences, primarily deductibility of penalties and interest on accrued payroll tax liabilities and the gains related to the expiration of the statute of limitations for accrued payroll tax liabilities. |
9. Commitments and Contingencie
9. Commitments and Contingencies | 9 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Commitments and Contingencies | 9. Commitments and Contingencies Lease Commitments The Company determines if an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys to the Company the right to control the use of an explicitly or implicitly identified fixed asset for a period of time in exchange for consideration. Control of an underlying asset is conveyed to the Company if the Company obtains the rights to direct the use of and to obtain substantially all of the economic benefits from using the underlying asset. The Company has lease agreements which include lease and non-lease components, which the Company has elected to account for as a single lease component for all classes of underlying assets. Lease expense for variable lease components are recognized when the obligation is probable. Operating lease right of use (“ROU”) assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Operating lease payments are recognized as lease expense on a straight-line basis over the lease term. The Company primarily leases buildings (real estate) which are classified as operating leases. ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. As an implicit interest rate is not readily determinable in the Company's leases, the incremental borrowing rate is used based on the information available at commencement date in determining the present value of lease payments. The lease term for all of the Company's leases includes the non-cancellable period of the lease plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor. Options for lease renewals have been excluded from the lease term (and lease liability) for the majority of the Company's leases as the reasonably certain threshold is not met. Lease payments included in the measurement of the lease liability are comprised of fixed payments, variable payments that depend on index or rate, and amounts probable to be payable under the exercise of the Company option to purchase the underlying asset if reasonably certain. Variable lease payments not dependent on a rate or index associated with the Company's leases are recognized when the event, activity, or circumstance in the lease agreement on which those payments are assessed as probable. Variable lease payments are presented as operating expenses in the Company's income statement in the same line item as expense arising from fixed lease payments. As of and during the nine months ended March 31, 2020, management determined that there were no variable lease costs. Right of Use Asset In September 2019, the Company entered into a three-year lease agreement to lease a commercial building in Escondido, California. The building is owned by a related party. The Company recognized a right of use asset and liability of $132,860 and used an effective borrowing rate of 3% within the calculation. The lease agreements mature in September 2022. Minimum remaining rental payments in 2020, 2021 and 2022 are $34,109, $46,726 and $35,827, respectively, and the imputed interest is $6,316. | 9. Commitments and Contingencies (a) On September 1, 2019, the Company, entered into a three-year lease agreement to lease a commercial building in Escondido, California. The building is owned by related party. Under the terms of the lease agreement, the Company is committed to the following minimum lease payments: Fiscal year ended $ June 30, 2020 12,804 June 30, 2021 17,457 June 30, 2022 17,980 June 30, 2023 18,112 Total minimum lease payments 66,353 |
10. Subsequent Events
10. Subsequent Events | 9 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Jun. 30, 2019 | |
Subsequent Events [Abstract] | ||
Subsequent Events | 10. Subsequent Events Management has evaluated all activity and concluded that no subsequent events have occurred that would require recognition in these financial statements or disclosure in the notes to these financial statements. | 10. Subsequent Events (a) On July 1, 2019, the Company formalized an employment agreement with its Chief Executive Officer, which entitles him to compensation of three hundred and ninety-three thousand dollars ($393,000.00) per year. Annual increases will be up to 10% based performance criteria to be determined at a later date. He will be issued common stock of the Company sufficient to provide a 10% ownership position post reverse split which shares be maintained for a period of two years. In addition to all other benefits and compensation, he shall be eligible for a quarterly bonus of $47,000 based on if the Company achieves a net profit for that quarter. (b) On September 30, 2019, the Company issued a $131,265 promissory note to a related party for compensation paid by the related party on behalf of the Company. Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 360 days from the date of issuance. (c) On September 30, 2019, the Company issued a $2,075 promissory note to a related party for reimbursement of expenses paid by the related party on behalf of the Company related to the proposed C2C acquisition which did not occur. Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 360 days from the date of issuance. (d) On September 30, 2019, the Company issued a $3,375 promissory note to a related party company controlled by the Chief Executive Officer of the Company for management fees, which consists of accounting and administrative services. Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 360 days from the date of issuance. (e) On September 30, 2019, the Company issued a $36,370 promissory note to a related party for reimbursement of operating expenses paid by the related party on behalf of the Company. Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 360 days from the date of issuance. (f) On September 30, 2019, the Company issued a $1,865 promissory note to a related party for reimbursement of expenses paid by the related party on behalf of the Company related to the proposed C2C acquisition which did not occur. Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 360 days from the date of issuance. (g) On September 30, 2019, the Company issued a $93,137 promissory note to a related party for reimbursement of operating expenses paid by the related party on behalf of the Company. Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 360 days from the date of issuance. (h) Likido Ltd. (HQ) On December 6, 2019, Dalrada, via its wholly owned subsidiary, Dalrada Precision, acquired, by stock exchange agreement, one hundred percent of Likido Ltd. (HQ) in exchange of 6,118,000 shares of the Company’s common stock. Likido, a United Kingdom engineering-design company based in Edinburgh, Scotland. Likido is an international technology 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 the minimized carbon emissions across global supply chains. Likido's technologies enable the effective recovery and recycling of process energy, mitigating against climate change and enhancing quality of life through the provision of low-carbon heating and cooling systems. In connection with the purchase of Likido, the Company is obligated to fund operations for a total up to $600,000. Subsequent to June 30, 2019, the Company incurred research and development expenses of $260,000. On July 1, 2019, the Company entered into an employment agreement with the Chief Executive Officer of the Company. Pursuant to the agreement, the Company will compensate the Chief Executive Officer a base salary of $393,000 per annum, annual increases of 10% and a quarterly bonus based on whether the Company achieve a net profit. He will be issued common stock of the Company sufficient to provide a 10% ownership position post reverse split which shares be maintained for a period of two years. In addition to all other benefits and compensation, he shall be eligible for a quarterly bonus of $47,000 based on if the Company achieves a net profit for that quarter. |
3. Business Combinations and Ac
3. Business Combinations and Acquisition (March 2020 Note) | 9 Months Ended |
Mar. 31, 2020 | |
Business Combinations [Abstract] | |
Business Combinations and Acquisition | 3. Business Combinations and Acquisition Likido Effective December 6, 2019, the Company acquired 100% of the interests of Likido. In consideration for the acquisition, the Company issued 6,118,000 shares of its common stock at $0.0448 per share, or a total fair value of $274,086. The Likido transaction was accounted for as a business combination in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations The Company has made a provisional allocation of the purchase price in regard to the acquisition related to the assets acquired and the liabilities assumed as of the purchase date. The following table summarizes the preliminary purchase price allocation: Preliminary Purchase Price Allocation Cash and cash equivalents $ 172,362 Other receivables 36,196 Prepaid expenses and deposits 10,000 Inventories 110,062 Due from related party 131 Property and equipment, net 80,348 Goodwill 143,152 Accounts payable (92,799 ) Accrued liabilities (7,651 ) Deferred revenue (177,715 ) Purchase price consideration $ 274,086 The Company has not completed the valuations necessary to finalize the acquisition fair values of the assets acquired and liabilities assumed and related allocation of purchase price of the Likido acquisition. Once the valuation process is finalized, there could be changes to the reported values of the assets acquired and liabilities assumed, including goodwill and identifiable intangible assets and those changes could differ materially from what is presented above. Prakat Effective January 9, 2020, the Company acquired 72% of the common equity shares of Prakat. In consideration for the acquisition, the Company issued 3,600,000 shares of its common stock at $0.0450 per share, or a total fair value of $162,000. The Prakat transaction was accounted for as a business combination in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations The Company has made a provisional allocation of the purchase price in regard to the acquisition related to the assets acquired, liabilities assumed and noncontrolling interests as of the purchase date. The following table summarizes the preliminary purchase price allocation: Preliminary Purchase Price Allocation Cash and cash equivalents $ 61,899 Accounts receivable, net 157,544 Other receivables 122,190 Prepaid expenses and other current assets 44,573 Property and equipment, net 7,189 Accounts payable (33,614) Accrued liabilities (114,212) Other current liabilities (20,569) Noncontrolling interests (63,000) Purchase price consideration $ 162,000 The Company has not completed the valuations necessary to finalize the acquisition fair values of the assets acquired and liabilities assumed and related allocation of purchase price of the Prakat acquisition. Once the valuation process is finalized, there could be changes to the reported values of the assets acquired and liabilities assumed, including goodwill and identifiable intangible assets and those changes could differ materially from what is presented above. Shark On March 23, 2020, the Company entered into a Stock Purchase Agreement to acquire Shark Innovative Technologies Corp. (“Shark”). The Company acquired all of the issued and outstanding common shares, including business plans and access to contacts of Shark. In consideration for the acquisition, the Company issued 3,000,000 shares of its common stock at $0.0310 per share, or a total fair value of $93,000. The Company evaluated the acquisition of the purchased assets under ASC 805 and concluded that as substantially all of the fair value of the gross assets acquired is concentrated in an identifiable group of similar assets, the transaction did not meet the requirements to be accounted for as a business combination and therefore was accounted for as an asset acquisition. The purchase price of the Shark assets are as follows: Cash and cash equivalents $ 917 Research and development 92,083 Purchase price consideration $ 93,000 The acquired research and development was recorded as an expense in the consolidated statements of operations. Unaudited Pro Forma Financial Information The following unaudited pro forma financial information presents the Company’s financial results as if the Likido and Prakat’s acquisitions had occurred as of July 1, 2018. The unaudited pro forma financial information is not necessarily indicative of what the financial results actually would have been had the acquisition been completed on this date. In addition, the unaudited pro forma financial information is not indicative of, nor does it purport to project the Company’s future financial results. The pro forma information does not give effect to any estimated and potential cost savings or other operating efficiencies that could result from the acquisitions: Nine Months Ended March 31, 2020 2019 Revenues $ 1,094,860 $ 1,147,123 Net income (loss) attributable to Dalrada $ (1,363,426 ) $ 1,493,306 Net income (loss) per common share $ (0.02 ) $ 0.03 |
8. Preferred Stock (March 2020
8. Preferred Stock (March 2020 Note) | 9 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Preferred Stock | 8. Preferred Stock The Company has 100,000 shares authorized of Series F Super Preferred Stock, par value, $0.01, of which 5,000 shares (at a fair value of $170) were issued to the CEO as of December 31, 2019. Each share of Series F Super Preferred Stock entitles the holder to the greater of (i) one hundred thousand votes for each share of Series F Super Preferred Stock, or (ii) the number of votes equal to the number of all outstanding shares of Common Stock, plus one additional vote such that the holders of Series F Super Preferred Stock shall always constitute a majority of the voting rights of the Corporation. In any vote or action of the holders of the Series F Super Preferred Stock voting together as a separate class required by law, each share of issued and outstanding Series F Super Preferred Stock shall entitle the holder thereof to one vote per share. The holders of Series F Super Preferred Stock shall vote together with the shares of Common Stock as one class. |
2. Summary of Significant Acc_2
2. Summary of Significant Accounting Policies (Policies) | 9 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Jun. 30, 2019 | |
Accounting Policies [Abstract] | ||
Basis of Presentation | (a) Basis of Presentation These condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars. The Company’s fiscal year end is June 30. We have prepared the accompanying condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These condensed consolidated financial statements are unaudited and, in our opinion, include all adjustments, consisting of normal recurring adjustments and accruals necessary for a fair presentation of our balance sheets, operating results, and cash flows for the periods presented. Operating results for the periods presented are not necessarily indicative of the results that may be expected for fiscal year 2020. Certain information and footnote disclosures normally included in condensed consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been omitted in accordance with the rules and regulations of the SEC. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and accompanying notes. | (a) Basis of Presentation These consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars. The Company’s fiscal year end is June 30. |
Principles of Consolidation | (b) Principles of Consolidation These condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries: Dalrada Precision, a company incorporated in the State of California, since June 25, 2018 (date of incorporation), Dalrada Health, a company incorporated in the State of California, since October 2, 2018 (date of incorporation) and Likido. All inter-company transactions and balances have been eliminated on consolidation. | (b) Principles of Consolidation These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries: Dalrada Precision, a company incorporated in the State of California, since June 25, 2018 (date of incorporation), and Dalrada Health, a company incorporated in the State of California, since October 2, 2018 (date of incorporation). All inter-company transactions and balances have been eliminated on consolidation. |
Use of Estimates | (c) Use of Estimates The preparation of these condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the valuation of inventory, valuation of accrued payroll tax liabilities, valuation of acquired assets and liabilities, variables used in the computation of share-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. | (c) Use of Estimates The preparation of these 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 valuation of inventory, valuation of accrued payroll tax liabilities, variables used in the computation of share-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. |
Cash and Cash Equivalents | (d) Cash and Cash Equivalents The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. | |
Inventory | (e) Inventory Inventory is comprised of goods purchased for resale, and is recorded at the lower of cost or net realizable value on a first-in first-out basis. 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. | |
Equipment | (f) Equipment Equipment is comprised of machinery and is recorded at the lower of cost or net book value and amortized on a straight-line basis over an estimated useful life of three to five years. | |
Financial Instruments | (g) Financial Instruments Pursuant to ASC 820, Fair Value Measurements and Disclosures Level 1 Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 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 Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The Company’s financial instruments consist principally of cash, accounts receivable, accounts payable and accrued liabilities, notes payable, and amounts due to related parties. Pursuant to ASC 820, the fair value of cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations. | |
Income Taxes | (h) Income Taxes The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, Accounting for Income Taxes | |
Revenue Recognition | (d) Revenue Recognition The Company recognizes and accounts for revenue in accordance with ASC 606 as a principal on the sale of goods. Pursuant to ASC 606 , The Company’s revenue is derived from the sales of its products, which represents net sales recorded in the Company’s condensed consolidated statements of operations. Product sales are recognized when performance obligations under the terms of the contract with the customer are satisfied. Typically, this would occur upon transfer of control, including passage of title to the customer and transfer of risk of loss related to those goods. The Company measures revenue as the amount of consideration to which it expects to be entitled in exchange for transferring goods (transaction price). The Company records reductions to revenue for estimated customer returns, allowances, markdowns and discounts. The Company bases its estimates on historical rates of customer returns and allowances as well as the specific identification of outstanding returns, markdowns and allowances that have not yet been received by the Company. The actual amount of customer returns and allowances is inherently uncertain and may differ from the Company’s estimates. If the Company determines that actual or expected returns or allowances are significantly higher or lower than the reserves it established, it would record a reduction or increase, as appropriate, to net sales in the period in which it makes such a determination. Reserves for returns, and markdowns are included within accrued expenses and other liabilities. Allowance and discounts are recorded in accounts receivable, net and the value of inventory associated with reserves for sales returns are included within prepaid expenses and other current assets on the condensed consolidated balance sheets. The Company also earns revenue from engineering and consulting services from its Prakat subsidiary. These services are recognized when performance obligations have been satisfied and the services are complete. This is generally at a point of time upon written completion and client acceptance of the project, which represents transfer of control to the customer. The following table presents revenue by type: Nine Months Ended March 31, 2020 2019 Product sales $ 155,054 $ 34,407 Engineering and consulting services - third parties 186,847 – Engineering and consulting services - related party 58,906 – Total revenue $ 400,807 $ 34,407 | (i) Revenue Recognition The Company recognizes and accounts for revenue in accordance with ASC 606 as a principal on the sale of goods. Pursuant to ASC 606 , The Company’s revenue is derived from the sales of its products, which represents net sales recorded in the Company’s consolidated statements of operations. Product sales are recognized when performance obligations under the terms of the contract with the customer are satisfied. Typically, this would occur upon transfer of control, including passage of title to the customer and transfer of risk of loss related to those goods. The Company measures revenue as the amount of consideration to which it expects to be entitled in exchange for transferring goods (transaction price). The Company records reductions to revenue for estimated customer returns, allowances, markdowns and discounts. The Company bases its estimates on historical rates of customer returns and allowances as well as the specific identification of outstanding returns, markdowns and allowances that have not yet been received by the Company. The actual amount of customer returns and allowances is inherently uncertain and may differ from the Company’s estimates. If the Company determines that actual or expected returns or allowances are significantly higher or lower than the reserves it established, it would record a reduction or increase, as appropriate, to net sales in the period in which it makes such a determination. Reserves for returns, and markdowns are included within accrued expenses and other liabilities. Allowance and discounts are recorded in accounts receivable, net and the value of inventory associated with reserves for sales returns are included within prepaid expenses and other current assets on the consolidated balance sheets. |
Stock-based Compensation | (e) Stock-based Compensation The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation | (j) Stock-based Compensation The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation |
Business Combinations and Acquisitions | (f) Business Combinations and Acquisitions The Company accounts for acquisitions in which it obtains control of one or more businesses as a business combination. The purchase price of the acquired businesses is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the purchase price over those fair values is recognized as goodwill. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments, in the period in which they are determined, to the assets acquired and liabilities assumed with the corresponding offset to goodwill. If the assets acquired are not a business, the Company accounts for the transaction or other event as an asset acquisition. Under both methods, the Company recognizes the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired entity. In addition, for transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase. | |
Impairment of Long-Lived Assets | (g) Impairment of Long-Lived Assets The Company reviews its long-lived assets (property and equipment) for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. If the sum of the expected cash flows, undiscounted, is less than the carrying amount of the asset, an impairment loss is recognized as the amount by which the carrying amount of the asset exceeds its fair value. Goodwill is tested annually at June 30 for impairment and upon the occurrence of certain events or substantive changes in circumstances. The annual goodwill impairment test allows for the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. An entity may choose to perform the qualitative assessment on none, some or all of its reporting units or an entity may bypass the qualitative assessment for any reporting unit and proceed directly to step one of the quantitative impairment test. If it is determined, on the basis of qualitative factors, that the fair value of a reporting unit is, more likely than not, less than its carrying value, the quantitative impairment test is required. The quantitative impairment test calculates any goodwill impairment as the difference between the carrying amount of a reporting unit and its fair value, but not to exceed the carrying amount of goodwill. As of December 31, 2019, there were no qualitative factors that indicated goodwill was impaired. | |
Foreign Currency Translation | (h) Foreign Currency Translation The functional currency of the Company is the United States dollar. The functional currency of the Likido subsidiary is the British pound. The financial statements of the Company’s subsidiary were translated to United States dollars in accordance with ASC 830, Foreign Currency Translation Matters consolidated statements of operations. | |
Comprehensive Loss | (i) Comprehensive Income 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 period ended December 31, 2019, the Company’s only component of comprehensive income was foreign currency translation adjustments. | (k) Comprehensive Loss ASC 220, Comprehensive Income |
Basic and Diluted Net Loss per Share | (j) Basic and Diluted Net Loss per Share The Company computes net income (loss) per share in accordance with ASC 260, Earnings per Share The weighted average number of common stock equivalents related to convertible notes payable was not included in diluted loss per share, because the effects are antidilutive, for the three and nine months ended March 31, 2020. In accordance with ASC 260, “Earnings Per Share”, the following table reconciles basic shares outstanding to fully diluted shares outstanding for the three and nine months ended March 31, 2019: Three Months Ended Nine Months Ended March 31, 2019 March 31, 2019 Weighted average number of common shares outstanding - Basic 47,281,128 47,281,128 Potentially dilutive common stock equivalents (convertible note payable - related party and accrued interest) 51,323,529 49,397,810 Weighted average number of common shares outstanding - Diluted 98,604,657 96,678,938 There were no adjustments to the numerator during the quarters ended March 31, 2020 and 2019. | (l) Basic and Diluted Net Loss per Share The Company computes net income (loss) per share in accordance with ASC 260, Earnings per Share Year Ended June 30, 2019 Weighted average number of common shares outstanding - Basic 47,429,073 Potentially dilutive common stock equivalents (convertible note payable - related party) 55,147,059 Weighted average number of common shares outstanding - Diluted 102,576,132 There were no outstanding dilutive securities during the year ended June 30, 2018. There were no adjustments to the numerator during the year ended June 30, 2019. |
Recent Accounting Pronouncements | (k) Recent Accounting Pronouncements In August 2018, the FASB issued guidance to improve the effectiveness of fair value measurement disclosures by removing or modifying certain disclosure requirements and adding other requirements. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. Certain amendments should be applied prospectively, while all other amendments should be applied retrospectively to all periods presented. The Company is currently evaluating the impact of the new guidance. In February 2018, the FASB issued guidance that permits the Company to reclassify disproportionate tax effects in accumulated other comprehensive income caused by the Tax Cuts and Jobs Act of 2017 to retained earnings. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the impact of the new guidance. In July 2017, the FASB issued ASU 2017-11 which simplifies the accounting for certain financial instruments with down round features. The new standard will reduce income statement volatility for companies that issue warrants and convertible instruments containing such features. The guidance is effective for fiscal years beginning after December 15, 2018 with early adoption permitted. The Company is currently evaluating the impact of the new guidance. In June 2016, the FASB issued a new credit loss standard that replaces the incurred loss impairment methodology in current GAAP. The new impairment model requires immediate recognition of estimated credit losses expected to occur for most financial assets and certain other instruments. It is effective for annual reporting periods beginning after December 15, 2019 and interim periods within those annual periods, with early adoption permitted. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first effective reporting period. The Company is currently evaluating the impact of the new guidance. In February 2016, the FASB issued new lease accounting guidance in ASU No. 2016-02, “ Leases The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. | Recent Accounting Pronouncements In August 2018, the FASB issued guidance to improve the effectiveness of fair value measurement disclosures by removing or modifying certain disclosure requirements and adding other requirements. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. Certain amendments should be applied prospectively, while all other amendments should be applied retrospectively to all periods presented. The Company is currently evaluating the impact of the new guidance. In February 2018, the FASB issued guidance that permits the Company to reclassify disproportionate tax effects in accumulated other comprehensive income caused by the Tax Cuts and Jobs Act of 2017 to retained earnings. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements. In July 2017, the FASB issued ASU 2017-11 which simplifies the accounting for certain financial instruments with down round features. The new standard will reduce income statement volatility for companies that issue warrants and convertible instruments containing such features. The guidance is effective for fiscal years beginning after December 15, 2018 with early adoption permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements. In June 2016, the FASB issued a new credit loss standard that replaces the incurred loss impairment methodology in current GAAP. The new impairment model requires immediate recognition of estimated credit losses expected to occur for most financial assets and certain other instruments. It is effective for annual reporting periods beginning after December 15, 2019 and interim periods within those annual periods, with early adoption permitted. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first effective reporting period. The Company is currently evaluating the impact of the new guidance. In February 2016, the FASB issued new lease accounting guidance in ASU No. 2016-02, “ Leases The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. |
2. Summary of Significant Acc_3
2. Summary of Significant Accounting Policies (Tables) | 9 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Jun. 30, 2019 | |
Accounting Policies [Abstract] | ||
Weighted average shares outstanding | Three Months Ended Nine Months Ended March 31, 2019 March 31, 2019 Weighted average number of common shares outstanding - Basic 47,281,128 47,281,128 Potentially dilutive common stock equivalents (convertible note payable - related party and accrued interest) 51,323,529 49,397,810 Weighted average number of common shares outstanding - Diluted 98,604,657 96,678,938 | Year Ended June 30, 2019 Weighted average number of common shares outstanding - Basic 47,429,073 Potentially dilutive common stock equivalents (convertible note payable - related party) 55,147,059 Weighted average number of common shares outstanding - Diluted 102,576,132 |
Schedule of revenue by type |
8. Income Taxes (Tables)
8. Income Taxes (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Reconciliation of Income Taxes | 2019 2018 Current: Federal $ – $ – State – – Foreign – – – – Deferred: Federal (165,038 ) (6,716 ) State (45,852 ) (1,866 ) (210,890 ) (8,582 ) Valuation allowance 210,890 8,582 Total provision for income taxes $ – $ – |
Schedule of deferred taxes | 2019 2018 Net Operating Loss Carryforwards $ 219,472 $ 8,582 Gross Deferred Tax Assets 219,472 8,582 Valuation Allowance (219,472 ) (8,582 ) Net Deferred Tax Assets $ – $ – |
9. Commitments and Contingenc_2
9. Commitments and Contingencies (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Minimum lease payments | Fiscal year ended $ June 30, 2020 12,804 June 30, 2021 17,457 June 30, 2022 17,980 June 30, 2023 18,112 Total minimum lease payments 66,353 |
3. Business Combination (March
3. Business Combination (March 2020 Note) (Tables) | 9 Months Ended |
Mar. 31, 2020 | |
Pro forma information | Nine Months Ended March 31, 2020 2019 Revenues $ 1,094,860 $ 1,147,123 Net income (loss) attributable to Dalrada $ (1,363,426 ) $ 1,493,306 Net income (loss) per common share $ (0.02 ) $ 0.03 |
Likido [Member] | |
Purchase price allocation | Preliminary Purchase Price Allocation Cash and cash equivalents $ 172,362 Other receivables 36,196 Prepaid expenses and deposits 10,000 Inventories 110,062 Due from related party 131 Property and equipment, net 80,348 Goodwill 143,152 Accounts payable (92,799 ) Accrued liabilities (7,651 ) Deferred revenue (177,715 ) Purchase price consideration $ 274,086 |
Prakat [Member] | |
Purchase price allocation | Preliminary Purchase Price Allocation Cash and cash equivalents $ 61,899 Accounts receivable, net 157,544 Other receivables 122,190 Prepaid expenses and other current assets 44,573 Property and equipment, net 7,189 Accounts payable (33,614) Accrued liabilities (114,212) Other current liabilities (20,569) Noncontrolling interests (63,000) Purchase price consideration $ 162,000 |
Shark [Member] | |
Purchase price allocation | Cash and cash equivalents $ 917 Research and development 92,083 Purchase price consideration $ 93,000 |
1. Organization and Nature of_2
1. Organization and Nature of Operations (Details) - shares | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||
Weighted average shares outstanding - basic | 60,737,965 | 47,281,128 | 55,897,598 | 47,281,128 | 47,429,073 | 47,281,128 |
Potentially dilutive common stock equivalents | 55,147,059 | |||||
Weighted average common shares outstanding - diluted | 60,737,965 | 98,604,657 | 55,897,598 | 96,678,938 | 102,576,132 | 47,281,128 |
1. Organization and Nature of_3
1. Organization and Nature of Operations (Details Narrative) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Working capital | $ (13,641,143) | |
Accumulated deficit | $ (104,963,228) | $ (105,329,078) |
3. Accrued Payroll Taxes (Detai
3. Accrued Payroll Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Payables and Accruals [Abstract] | ||
Accrued payroll taxes, penalties and interest | $ 10,980,278 | $ 12,392,022 |
Accrued interest rate | 7.33% compounded daily | |
Penalties and interest expense | $ 852,595 | 945,238 |
Gain on expiration of accrued tax liability | $ 2,264,340 | $ 0 |
4. Notes Payable - Related Pa_2
4. Notes Payable - Related Parties (Details Narrative) - USD ($) | Mar. 31, 2020 | Jun. 30, 2019 | Jun. 30, 2018 |
Accounts payable and accrued liabilities – related parties | $ 363,274 | $ 417,133 | $ 37,469 |
Note Payable Related Party A [Member] | |||
Debt face amount | $ 38,615 | ||
Debt stated interest rate | 3.00% | ||
Note payable - related party balance | $ 39,195 | ||
Note Payable Related Party B [Member] | |||
Debt face amount | $ 37,469 | ||
Debt stated interest rate | 3.00% | ||
Accounts payable and accrued liabilities – related parties | $ 37,469 | ||
Note Payable Related Party C [Member] | |||
Debt stated interest rate | 3.00% | ||
Accounts payable and accrued liabilities – related parties | $ 2,250 | ||
Note Payable - Related Party D [Member] | |||
Debt stated interest rate | 3.00% | ||
Accounts payable and accrued liabilities – related parties | $ 1,630 | ||
Note Payable - Related Party E [Member] | |||
Debt face amount | $ 262,197 | ||
Debt stated interest rate | 3.00% | ||
Note payable - related party balance | $ 262,197 |
5. Convertible Note Payable -_2
5. Convertible Note Payable - Related Parties (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Convertible note payable – related party | $ 1,875,000 | $ 0 |
Chief Executive Officer [Member] | ||
Convertible note payable – related party | $ 1,875,000 | 1,615,000 |
Debt stated interest rate | 3.00% | |
Conversion price | $ 0.034 | |
Consulting fees | $ 260,000 | $ 60,000 |
6. Common Shares (Details Narra
6. Common Shares (Details Narrative) | 12 Months Ended |
Jun. 30, 2019shares | |
Chief Executive Officer [Member] | |
Stock issued to related party - reimburse expenses, shares | 1,000,000 |
7. Related Party Transactions (
7. Related Party Transactions (Details Narrative) - USD ($) | Mar. 31, 2020 | Jun. 30, 2019 | Jun. 30, 2018 |
Accounts payable and accrued liabilities – related parties | $ 363,274 | $ 417,133 | $ 37,469 |
Management Fees [Member] | |||
Accounts payable and accrued liabilities – related parties | $ 27,000 |
8. Income Taxes (Details - Inco
8. Income Taxes (Details - Income tax reconciliation) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||||||
Current federal tax expense | $ 0 | $ 0 | ||||
Current state tax expense | 0 | 0 | ||||
Current foreign tax expense | 0 | 0 | ||||
Total current tax expense | 0 | 0 | ||||
Federal deferred tax expense | (6,716) | |||||
State deferred tax expense | (45,852) | (1,866) | ||||
Total deferred tax expense | (210,890) | (8,582) | ||||
Valuation allowance | 210,890 | 8,582 | ||||
Total provision for income taxes | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
8. Income Taxes (Details - Defe
8. Income Taxes (Details - Deferred taxes) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforwards | $ 219,472 | $ 8,582 |
Gross deferred tax assets | 219,472 | 8,582 |
Valuation allowance | (219,472) | (8,582) |
Net deferred tax assets | $ 0 | $ 0 |
8. Income Taxes (Details Narrat
8. Income Taxes (Details Narrative) | 12 Months Ended |
Jun. 30, 2019USD ($) | |
Income Tax Disclosure [Abstract] | |
NOL carryforward | $ 818,000 |
NOL carryforward expiration date | Dec. 31, 2038 |
9. Commitments and Contingenc_3
9. Commitments and Contingencies (Details Narrative) | Jun. 30, 2019USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2020 | $ 12,804 |
2021 | 17,457 |
2022 | 17,980 |
2023 | 18,112 |
Total miminum lease payments | $ 66,353 |