DALRADA FINANCIAL CORPORATION (A Delaware Company)

Transcription

1 DALRADA FINANCIAL CORPORATION (A Delaware Company) QUARTERLY REPORT: For the Quarter ended December 31, 2018 Item (1): The exact name of the issuer and its predecessor (if any): The exact name of the Issuer is Dalrada Financial Corporation Name Change history: April 2, 2004: Imaging Technologies Corporation to Dalrada Financial Corporation May 1995 to Imaging Technologies Corporation May 1983 Incorporated as Principal Computer Products, Inc. Item (2): The Issuers principal place of business: 2880 Bicentennial Parkway Henderson, NV Item (3): Security Information Security Symbol: DFCO CUSIP Number 45244U401 Common Stock: 1,000,000,000 authorized Preferred Stock: 7,500 authorized NO CUSIP number for the preferred. The number of share or total amount of the securities outstanding for each class of securities authorized. Period end date: December 31, 2018 Common Stock i) As of December 31, 2018 ii) 1,000,000,000 authorized iii) 47,281,128 issued and outstanding iv) 38,786,834 freely tradable shares v) 3 beneficial shareholders vi) 540 shareholders of record

2 Preferred Stock i) as of December 31, 2018 ii) 7,500 authorized iii) 0 issued and outstanding Period end date: June 30, 2018 Common Stock i) As of June 30, 2018 ii) 1,000,000,000 authorized iii) 47,281,128 issued and outstanding iv) 38,786,834 freely tradable shares v) 3 beneficial shareholders vi) 540 shareholders of record Preferred Stock iv) as of June 30, 2018 v) 7,500 authorized vi) 0 issued and outstanding Transfer Agent: Standard Register and Transfer company, Inc. 440 E 400 S Suite 200 Salt Lake City, UT Phone: (801) Fax: (801) support@standardregistrar.com Registered under the Exchange Act and regulated by the SEC. Item (4 ) Issuance History There were no shares issued during the Quarters ended December 31, 2018 and Item (5): Annual Financial Statements The following Annual financial statements are incorporated by reference. Balance Sheet for December 31, 2018 and June 30, 2018 Statement of Income for the Six months ended December 31, 2018 and 2017 Statement of changes in stockholders equity as of December 31, 2018 Statement of cash flows for the Six months ended December 31, 2018 Financial Notes as of December 31, 2018

3 Legal Proceedings There are no current, past, pending or threatened legal proceedings or administrative actions either by or against the Company that could have a material effect on the Company s business, financial condition or operations. All judgments and liabilities are reflected in the unaudited financial statements and notes thereto. Item (6): Nature of the Issuer s Business A. a description of the issuer s business operations; The Company provides management consulting services to clients and has signed contracts that will generate revenue s in the quarter ending March 31. At present, management consulting services is the primary line of business for the Company. In addition, the company is looking for possible acquisition candidates. In June 2018 Dalrada Financial Corp created a new subsidiary, Dalrada Precision Corp, to become the marketing arm of the corporation. Dalrada Precision will facilitate sales through previously established and new sales channel. The company will provide Management Services to other corporations by finding sourcing solutions. In October 2018 Dalrada Financial Corp. created a new subsidiary, Dalrada Health Products Corp. Dalrada Health Products Corp will partner with client companies for the distribution of medical disposables, hospital equipment & furniture, medical devices, laboratory and dental products. B. Date and State of Incorporation; The Company was incorporated in May 1983 as Principal Computer Products, Inc. In May 1995, the Company changed its name to Imaging Technologies Corporation. On April 4, 2004 the Company changed its name to Dalrada Financial Corporation. It is a Delaware Corporation. C. the issuer s primary SIC code: Primary 0742 Secondary - D. the issuer s fiscal year end date; June 30 E. Principal products or services, and their markets; We provide management consulting services to clients in similar businesses as described above.

4 Item (7): Issuer s Facilities Describe the general character and locations of all materially important properties held or intended to be acquired by or leased to the Issuer and describe the present or proposed use of such properties and their suitability and adequacy for such use. We lease space in Henderson, NV. The term of the lease is month to month. Item 8 Officers, Directors and control Persons A. Officers, Directors and Control Persons. In responding to this item, please provide the following information for each of the issuer s executive officers, directors, general partners and control persons, as of the date of this information statement. Brian Bonar, CEO and Chairman of the Board Von Karman Avenue, Suite 1440 Irvine, CA Dalrada Compensation is incentive based. Mr. Bonar controls 5,000,000 Common Shares B. Legal/Disciplinary History Please also identify whether any of the foregoing persons have, in the last five years, been the subject of: 1. A conviction in a criminal proceeding or named as a defendant in a pending criminal proceeding (excluding traffic violations and other minor offenses): 2. The entry of an order, judgment, or decree, not subsequently reversed, suspended or vacated, by a court of competent jurisdiction that permanently or temporarily enjoined, barred, suspended or otherwise limited such persons involvement in any type of business, securities, commodities, or banking activities: 3. A finding or judgment by a court of competent jurisdiction (in a civil action), the SED, the CFTC, or a state securities regulator of a violation of federal or state securities or commodities law, which finding or judgment has not been reversed, suspended, or vacated; or

5 4. The entry of an order by a self-regulatory organization that permanently or temporarily barred suspended or otherwise limited such person s involvement in any type of business or securities activities. C. Beneficial Shareholders The following table sets forth the ownership for each class of equity securities of the Issuer owned beneficially and of record by all directors and officers of the Issuer. Title or Amount Percentage of Owner Class Owned Voting Shares Brian Bonar Common 5,000,000 restricted 10.5% Item 9 Third Party Providers The name, address, telephone number and address of each of the following outside providers that advise the issuer on matters relating to the operations, business development and disclosure: 1. Investment Banker:. 2. Promoters: 3. Counsel: Legal Counsel (Outside Corporate): Law Office of Mark H. Cheung Securities Counsel Laguna Hills, CA Accountant or Auditor: In house 5. Public Relations Consultant:

6 6. Investor Relations Consultant: 10. Advisory:

7 Item (10): Issuer s Certification I Brian Bonar certify that: I have reviewed this quarterly Company and Disclosure Statement of Dalrada Financial Corporation 1. Based upon my knowledge and belief, this disclosure statement does not contain any untrue statements made, in light of the circumstances under which such statements were made not misleading with respect to the period(s) covered by this disclosure statement; and 2. Based on my knowledge, the financial statements, and other financial information included or incorporated by reference in this disclosure statement, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for the periods presented in this disclosure statement. 3. The undersigned hereby certifies that the information herein is true and correct to the best of their knowledge and belief: Dated this 22nd day of February, 2019 DALRADA FINANCIAL CORPORATION /s/ Brian Bonar Certified by: Brian Bonar, CEO and Chairman Name: Position Web-page Brian Bonar CEO and Chairman Bbonar@Dalrada.com

8 SECTION II Dalrada Financial Corporation Compiled Financial Statements and notes thereto for the Six months ended December 31, 2018 and 2017, respectively, and Balance Sheets for the periods then ended. Balance Sheets as of December31, 2018 and June 30, 2016 (unaudited) 1 PAGE Statements of Operations for the six months ended December 31, 2018 and Statements of Changes in Stockholders' Deficit for the six months ended December 31, 2018 Statements of Cash Flows for the six months ended December 31, 2018 and 2017 (unaudited) 3 4 Notes to the Financial Statements 5

9 DALRADA FINANCIAL CORPORATION BALANCE SHEET As of December 31, 2018 and June 30, 2018 (in thousands, except share data) (unaudited) ASSETS December 31, 2018 (unaudited) June 30, 2018 (unaudited) CURRENT ASSETS Cash and cash equivalents $ 2 $ 5 Accounts receivable, net of allowance - - Prepaid expenses - - Due from affiliates - - TOTAL CURRENT ASSETS 5 5 FIXED ASSETS NET OF DEPRECIATION - INVESTMENT IN SUBSIDIARY - - TOTAL ASSETS $ 2 $ 5 LIABILITIES AND STOCKHOLDERS' DEFICIT CURRENT LIABILITIES Accounts payable $ - $ - PEO payroll taxes and other payroll deductions 8, Accrued compensation 1,375 1,375 Notes payable 39 - Other accrued expenses Due to affiliates - TOTAL CURRENT LIABILITIES 9,689 13,616 TOTAL LIABILITIES 9,689 13,616 COMMITMENTS AND CONTINGENCIES - STOCKHOLDERS' DEFICIT Series A convertible, redeemable preferred stock, $1,000 par value, 7,500 shares authorized 0 shares issued and outstanding - Common stock; $0.005 par value; 1,000,000,000 shares authorized; 47,281,128 shares issued and outstanding at December 31, 2018 and June 30, Additional paid-in capital 91,053 91,053 Accumulated deficit (100,976) (104,900) TOTAL STOCKHOLDERS' DEFICIT (9,6487 (13,611) TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 2 $ - The accompanying notes are an integral part of these unaudited financial statements 1

10 DALARDA FINANCIAL CORPORATION STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED December 31, 2018 AND 2017 (in thousands) December 31, December 31, REVENUE $ - $ - COST OF REVENUE $ - $ - GROSS PROFIT - - OPERATING EXPENSES Selling, general and administrative 42 - TOTAL OPERATING EXPENSES 42 - PROFIT (LOSS) FROM OPERATIONS ( 42) - OTHER INCOME (EXPENSES): Gain on extinguishment of debt - - Retired Tax Liability 1,252 - Tax Variances 2,714 - TOTAL OTHER INCOME (EXPENSE) 3,966 - PROVISION FOR INCOME TAXES - - NET INCOME 3,924 - EARNINGS PER SHARE - BASIC AND DILUTED $ 0.08 $ - WEIGHTED AVERAGE COMMON EQUIVALENT SHARES OUSTANDING - BASIC AND DILUTED 47,717,970 47,717,970 The accompanying notes are an integral part of these unaudited financial statements 2

11 DALRADA FINANCIAL CORPORATION STATEMENTS OF STOCKHOLDERS' DEFICIT FOR THE PERIOD ENDED December 31, 2018 (in thousands, except share data) (unaudited) Additional Common Stock Paid-in Accumulated Shares Amount Capital Deficit Total Balance, June 30, ,281,128 $236 $91,503 ($104,868) ($13,579) Net Income - - Balance, June 30, ,281,128 $236 $91,503 ($104,868) ($13,579) Net Loss (32) (32) Balance, June 30, ,281,128 $236 $91,503 ($104,900) ($13,611) Net Income Six Months 3,924 3,924 Balance, December 31, ,281,128 $236 $91,503 ($100,976) ($9,687 The accompanying notes are an integral part of these unaudited financial statements 3

12 DALRADA FINANCIAL CORPORATION STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED December 31, 2018 AND 2018 December 31, December 31, CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 3,924 $ - Adjustment to reconcile net income to net cash provided by operating activities Changes in operating assets and liabilities: - - (Increase) decrease in: Accounts receivable - - Due from related party - - Due from affiliates - - Increase (decrease) in: - - Accounts payable and accrued expenses 1 - Accrued compensation - - Accrued payroll taxes - - Due to affiliates - - Net cash provided by operating activities 3,924 - CASH FLOWS FROM INVESTING ACTIVITIES: Cash paid for investment in affiliated company - - Net cash used in investing activities - - CASH FLOWS FROM FINANCING ACTIVITIES: Payment from notes payable 39 - Decrease in accrued payroll taxes payable (3,966) - Net cash provided by (used in) financing activities (3,927) - NET INCREASE (DECREASE) IN CASH AND CASH EQUILVALENTS (3) - CASH AND CASH EQUIVALENTS, Beginning of period 5 - CASH AND CASH EQUIVALENTS, End of period $ 2 $ - The accompanying notes are an integral part of these unaudited financial statements 4

13 Dalrada Financial Corporation Notes to Financial Statements December 31, 2018 Note 1 - Organization and Basis of Presentation Organization and Line of Business Dalrada Financial Corporation 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. The Company is currently seeking business opportunities and possible acquisitions. The Company's principal executive offices are located at 2880 Bicentennial Parkway Henderson, NV Segment Reporting SFAS No. 131, Disclosure about Segments of an Enterprise and Related Information requires use of the management approach model for segment reporting. The management approach model is based on the way a company s management organizes segments within the company for making operating decisions and assessing performance. The Company determined it has one operating segment. Disaggregation of the Company s operating results is impracticable, because the Company s operating activities and its assets overlap, and management reviews its business as a single operating segment. Thus, discrete financial information is not available by more than one operating segment. Use of Estimates The preparation of the audited consolidated financial statements in conformity with generally accepted accounting principles in the United States of America 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

14 Revenue Recognition at present Comprehensive Income The Company has adopted SFAS No. 130, "Reporting Comprehensive Income." SFAS No. 130 establishes standards for reporting and presentation of comprehensive income and its components in a full set of financial statements. During the quarters ended December 31, 2018 and 2017, the Company had no elements of comprehensive income. Earnings per Share Basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. There were no potentially dilutive securities as of the quarters ended December 31, 2018 and Cash and Cash Equivalents Cash and cash equivalents include cash in hand and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less. The Company maintains its cash in bank deposit accounts, which at times, may exceed federally insured limits. The Company has not experienced any losses related to this concentration of risk. At December 31, 2018 and 2017, the Company did not have any deposits. Accounts Receivable The Company is required to make estimates of the collectability of accounts receivables. Management analyzes historical bad debts, customer concentrations, customer creditworthiness, current economic trends and changes in the customers' payment tendencies when evaluating the adequacy of the allowance for doubtful accounts. If the financial condition of our customers deteriorates, resulting in an impairment of their ability to make payments, additional allowances may be required. For the six months ended December 31, 2018, the Company recorded $Nil bad debt expense. Stock-Based Compensation The Company accounts for its stock-based compensation in accordance with SFAS No. 123R, Share-Based Payment, and an Amendment of FASB Statement No The Company recognizes in the statements of operations and other comprehensive loss the grant-date fair value of stock options and other equity-based compensation issued to employees and non-employees. There were zero warrants outstanding as of December 31, 2018 and 2017.

15 Long-Lived Assets The Company applies the provisions of the Financial Accounting Standards Board (the "FASB") Statement of Financial Accounting Standards ("SFAS") No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets ( SFAS 144 ), which addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of, and the accounting and reporting provisions of the Accounting Principles Board Opinion No. 30, Reporting the Results of Operations for a Disposal of a Segment of a Business. The Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with SFAS 144. SFAS 144 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal. Taxes The Company utilizes SFAS No. 109, Accounting for Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequence attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to be applied to taxable income in the years in which those temporary differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statement of operations in the period that includes the enactment date. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain. There were no current or deferred income tax expense or benefits for the quarters ended December 31, 2018 or The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, on January 1, As a result of the implementation of FIN 48, the Company made a comprehensive review of its portfolio of tax positions in accordance with recognition standards established by FIN 48. As a result of the implementation of Interpretation 48, the Company recognized no material adjustments to liabilities or stockholders equity. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest associated with unrecognized tax benefits are classified as interest expense and penalties are classified in selling, general and Administrative expenses in the statements of operations and other comprehensive loss. The adoption of FIN 48 did not have a material impact on the Company s financial statements.

16 In the Six months ended December 31, 2018, there was a retirement of $1,252,222 of tax liability from the years 2003, 2004 and 2005, as we had a favorable other tax variances of $2,714,000. Fair Value of Financial Instruments On January 1, 2008, the Company adopted SFAS No. 157, Fair Value Measurements ( SFAS 157 ). SFAS 157 defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosures requirements for fair value measures. The carrying amounts reported in the balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels are defined as follow: Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets; Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument; and Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement. As of December 31, 2018, the Company reported $Nil assets and $13,616,000 in liabilities. Note 2 - Going Concern The accompanying unaudited consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As of December 31, 2018, the Company had a working capital deficit of $13,613,000 and had a stockholders' deficit of $104,902,000. These conditions raise substantial doubt about its ability to continue as a going concern. Management believes that it can continue to raise debt and equity financing to support its operations. The Company must obtain additional funds to provide adequate working capital and finance operations. However, there can be no assurance that the Company will be able to complete any additional debt or equity financings on favorable terms or at all, or that any such financings, if completed, will be adequate to meet the Company's capital requirements. Any additional equity or convertible debt financings could result in substantial dilution to the Company's stockholders. If adequate funds are not available, the Company may be required to delay, reduce or eliminate some or all of its planned activities. The Company's inability to fund its capital requirements would have a material adverse effect on the Company. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Note 3 Convertible Debt Financing and Derivative Liabilities There were no convertible debt as of December 31, All notes previously reported have been written off based upon their forgiveness.

17 Note 4 Notes Payable There was one note payable as of December 31, Tipp Investment LLC was issued a six month note payable at 3% per annum interest for $38, dated , Note 5 Stockholders Deficit Stock Issuances During the six months ended December 31, 2018, the Company did not issue and common stock. Common Stock Warrants Note 6 Loss on Impairment of Assets No assets. Note 7 Related Party Transactions There were no related party transactions for the six months ended December 31, All related party transactions previously reported have been written off based upon their forgiveness The Company's CEO and Chairman, Mr. Brian Bonar, is also a member of the Board of Directors of TRUCEPT, Inc.