Dalrada Faces Legal Battles, Zero R&D Amidst Diverse Operations

TL;DR

**DHTI is a legal quagmire with zero R&D, making it a high-risk bet on future growth and operational stability.**

AI Summary

DALRADA FINANCIAL CORPORATION (DHTI) reported no research and development expenses for the fiscal years ended June 30, 2025, and 2024, indicating a lack of investment in future innovation despite anticipating additional R&D expenses in the next 12 months. The company operates five divisions: Genefic (healthcare), Dalrada Climate Technology, Dalrada Precision Manufacturing, Dalrada Technologies, and Dalrada Corporate. Genefic includes Genefic Specialty Pharmacy, Genefic Infusion Rx, Boost Diagnostics, and Dalrada Career Institute. Dalrada Climate Technology, which includes Likido Ltd. and Dalrada Technology Spain L.T., had its DCT One Series heat pump selected for U.S. Government testing in 2023. The company is involved in multiple legal proceedings, including a breach of contract case with Asset Group, Inc. for $3,240,000 related to face masks, a $2,000,000 counter-suit against MDIQ for unpaid claims, and a fraud case against Stuart Cox regarding the acquisition of Likido. As of September 29, 2025, DHTI had 120,157,113 common shares outstanding and a non-affiliate market value of $4,950,569.

Why It Matters

Dalrada's extensive legal entanglements, including a $3.24 million breach of contract dispute and a $2 million counter-suit, signal significant operational and financial instability for investors. The complete absence of R&D spending in 2024 and 2025 raises concerns about the company's long-term competitiveness and ability to innovate in its diverse, technology-driven sectors like climate tech and precision manufacturing. This lack of investment, coupled with ongoing litigation, could deter potential partners and customers, impacting future revenue streams and employee morale. Competitors in healthcare, climate technology, and manufacturing, who are actively investing in R&D, could gain a significant advantage, further marginalizing Dalrada's market position.

Risk Assessment

Risk Level: high — The company faces significant legal risks, including a $3,240,000 breach of contract claim from Asset Group, Inc. and a $2,000,000 counter-suit against MDIQ, which could materially impact its financial condition. Furthermore, the reported $0 spent on research and development for both the fiscal years ended June 30, 2025, and 2024, indicates a severe lack of investment in innovation, posing a long-term threat to its competitive position across its five diverse business divisions.

Analyst Insight

Investors should exercise extreme caution and thoroughly evaluate the potential financial impact of the ongoing legal disputes, which could result in substantial liabilities. Given the zero R&D spending, consider this a speculative investment with limited organic growth prospects and significant operational headwinds.

Key Numbers

• $0 — Research and Development Expenses (for fiscal years ended June 30, 2025, and 2024, indicating no investment in R&D)
• $4,950,569 — Aggregate Market Value of Common Equity (held by non-affiliates as of the last business day of the most recently completed second fiscal quarter)
• 120,157,113 — Common Shares Outstanding (as of September 29, 2025)
• $3,240,000 — Claim Amount (in breach of contract lawsuit by Asset Group, Inc. against Dalrada Health Products)
• $2,000,000 — Counter-suit Amount (by DFCO against MDIQ for unpaid claims)
• $564,743.48 — Demand Amount (in lawsuit by FFF Enterprises against Genefic, Inc. and DFCO)
• 87,674 — Square Feet Leased (across various locations for office, medical, pharmacy, and warehouse space)
• 5 — Business Divisions (Genefic, Dalrada Climate Technology, Dalrada Precision Manufacturing, Dalrada Technologies, and Dalrada Corporate)

Key Players & Entities

• DALRADA FINANCIAL CORPORATION (company) — registrant
• Asset Group, Inc. (company) — plaintiff in breach of contract lawsuit against Dalrada Health Products
• MDIQ (company) — plaintiff in breach of contract lawsuit against Dalrada Financial Corporation
• Stuart Cox (person) — former owner of Likido company, sued by DFCO for fraud
• Simon Gray (person) — former consultant, sued by DFCO for breach of contract
• DePrey Company (company) — distribution representative, sued by DFCO for breach of contract
• Likido Ltd. (company) — Dalrada Climate Technology subsidiary
• Genefic (company) — Dalrada's healthcare division
• FFF Enterprises (company) — plaintiff in lawsuit against Genefic, Inc. and DFCO
• William Bonar (person) — defendant in lawsuit filed by DFCO

FAQ

Risk Factors

• Pending Litigation [high — legal]: Dalrada Financial Corp is involved in multiple legal proceedings. These include a breach of contract case with Asset Group, Inc. for $3,240,000, a $2,000,000 counter-suit against MDIQ for unpaid claims, and a fraud case against Stuart Cox regarding the acquisition of Likido. Additionally, FFF Enterprises has filed a lawsuit against Genefic, Inc. and DFCO for $564,743.48.
• Lack of R&D Investment [medium — operational]: The company reported no research and development expenses for the fiscal years ended June 30, 2025, and 2024. This indicates a lack of investment in future innovation, despite anticipating additional R&D expenses in the next 12 months.
• Dependence on Key Personnel and Acquisitions [medium — operational]: The fraud case against Stuart Cox concerning the acquisition of Likido highlights potential risks associated with key personnel and the due diligence process for acquisitions. The company's growth strategy may be impacted by the success and integration of acquired entities.
• Climate Technology Market Adoption [medium — market]: While Dalrada Climate Technology's DCT One Series heat pump was selected for U.S. Government testing, the broader market adoption and commercial success of its climate solutions remain a key factor for future revenue generation.
• Leased Property Footprint [low — operational]: The company leases 87,674 square feet across various locations for office, medical, pharmacy, and warehouse space. Managing these facilities and associated costs is an operational consideration.

Industry Context

Dalrada Financial Corporation operates across diverse sectors including healthcare, climate technology, and precision manufacturing. The healthcare sector is characterized by increasing demand for specialized services like infusion pharmacies and diagnostics, driven by an aging population and advancements in medical treatments. The climate technology sector is experiencing significant growth due to global initiatives to combat climate change and government incentives for green technologies. The company's strategy appears to involve acquiring and integrating specialized businesses to address specific market needs.

Regulatory Implications

The company's healthcare divisions, particularly Genefic Specialty Pharmacy and Genefic Infusion Rx, are subject to stringent regulations governing pharmaceutical dispensing, compounding, and patient care. Compliance with state and federal pharmacy laws, as well as healthcare data privacy regulations (like HIPAA), is critical. The involvement in legal proceedings, such as the breach of contract and fraud cases, also carries regulatory scrutiny and potential financial penalties.

What Investors Should Do

1. Monitor R&D Spending
2. Track Legal Proceedings
3. Evaluate Climate Technology Progress
4. Analyze Divisional Performance

Key Dates

• 2023-XX-XX: DCT One Series heat pump selected for U.S. Government testing — Indicates potential validation and future market opportunities for Dalrada Climate Technology's products.
• 2025-06-30: Fiscal year end — Reporting period for financial statements, including zero R&D expenses.
• 2025-09-29: Common shares outstanding recorded — Provides a snapshot of the company's equity structure.

Glossary

Genefic

A division of Dalrada Financial Corporation focused on advanced healthcare solutions, including specialty pharmacy and diagnostics. (Represents a significant segment of the company's operations and potential revenue streams.)

Dalrada Climate Technology

A division of Dalrada Financial Corporation focused on developing solutions to address climate change, such as heat pumps. (Highlights the company's diversification into environmental solutions and potential for growth in this sector.)

Genefic Specialty Pharmacy

An Alabama-based pharmacy with over 30 years of experience, licensed in all 50 states, specializing in comprehensive prescription management and disease state management. (A key operational unit within the Genefic division, contributing to the healthcare segment.)

Genefic Infusion Rx

A Louisiana-based infusion pharmacy handling intravenous and subcutaneous fluid and medication infusion, with a state-of-the-art compounding facility. (Another specialized healthcare service provider within the Genefic division, focusing on complex medication delivery.)

Boost Diagnostics

A wholly owned subsidiary focused on processing molecular diagnostic and antibody tests, including for COVID-19. (Contributes to the company's diagnostic capabilities within the healthcare sector.)

Likido Ltd.

A company acquired by Dalrada, related to the Dalrada Climate Technology division, and involved in a fraud case. (Its acquisition and associated legal issues represent a specific risk and operational challenge for the company.)

Year-Over-Year Comparison

Information comparing key metrics to the previous year, such as revenue growth, margin changes, and new risks, is not available in the provided text. The filing focuses on the current operational status and legal challenges without direct year-over-year comparative financial data.

Key Financial Figures

• $0.005 — nge on which registered Common Stock, $0.005 par value per share DFCO None Ind
• $0 — s. Research and Development We spent $0 on research and development activities
• $3,240,000 — rein Asset agreed to pay DHP the sum of $3,240,000 for the purchase of 1,800,000 IRIS Ear
• $2,000,000 — cess of counter suing for approximately $2,000,000 of unpaid claims that we would have ben
• $564,743.48 — f a service agreement with a demand for $564,743.48. Genefic/DFCO has filed a motion to dis
• $60,000 — ount of 1,200,000. The company ascribed $60,000 to those shares recorded as a debt disc
• $14,413 — greement with Prakat Solutions Inc. for $14,413. This issuance was a follow on with cer
• $106,250 — pecialty Pharmacy. The Company ascribed $106,250 to those shares recorded at the value o
• $173,000 — stock pursuant to a loan agreement for $173,000. The Company issued these shares of com
• $200,947 — to the acquisition of DepTec (SSCe) for $200,947. The Company issued these shares of com

Filing Documents

• dalrada_i10k-063025.htm (10-K) — 1539KB
• dalrada_ex1400.htm (EX-14) — 45KB
• dalrada_ex3101.htm (EX-31.1) — 11KB
• dalrada_ex3201.htm (EX-32.1) — 5KB
• 0001683168-25-007318.txt ( ) — 8798KB
• dfco-20250630.xsd (EX-101.SCH) — 73KB
• dfco-20250630_cal.xml (EX-101.CAL) — 86KB
• dfco-20250630_def.xml (EX-101.DEF) — 277KB
• dfco-20250630_lab.xml (EX-101.LAB) — 525KB
• dfco-20250630_pre.xml (EX-101.PRE) — 455KB
• dalrada_i10k-063025_htm.xml (XML) — 1425KB

Risk Factors

Risk Factors 4 Item 1B. Unresolved Staff Comments 4 Item 1C. Cybersecurity 4 Item 2. Description of Property 5 Item 3.

Legal Proceedings

Legal Proceedings 5 Item 4. Mine Safety Disclosures 6 PART II Item 5. Market for Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities 7 Item 6.

Selected Financial Data

Selected Financial Data 9 Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operation

Management's Discussion and Analysis of Financial Condition and Results of Operation 9 Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 18 Item 8.

Financial Statements and Supplementary Data

Financial Statements and Supplementary Data 19 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 20 Item 9A.

Controls and Procedures

Controls and Procedures 20 Item 9B. Other Information 21 PART III Item 10. Directors, Executive Officers and Corporate Governance 22 Item 11.

Executive Compensation

Executive Compensation 26 Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 29 Item 13. Certain Relationships, Related Transactions and Director Independence 30 Item 14. Principal Accountant Fees and Services 31 Item 15. Exhibits and Financial Statement Schedules 31

Signatures

Signatures 33 i PART I

Description of Business

Item 1. Description of Business Company Overview Moving the world forward takes bold resolve that turns ideas into actions and builds real-time solutions that positively impact people and the planet. Dalrada Financial Corporation ("Dalrada" or the "Company") accelerates positive change for current and future generations by harnessing true potential and developing products and services that become transformative innovations. Dalrada has five business divisions: Genefic , Dalrada Climate Technology , Dalrada Precision Manufacturing , Dalrada Technologies and Dalrada Corporate . Within each of these divisions, the Company drives transformative innovation while creating solutions that are sustainable, accessible, and affordable. Dalrada's global solutions directly address climate change, gaps in the health care industry, and technology needs that facilitate a new era of human behavior and interaction and ensure a bright future for the world around us. Genefic Genefic delivers advanced health care solutions with dedicated products, services, and systems. From virus and disease screening capabilities to pharmaceutical goods and holistic wellness clinics, When the world needs advanced health care, Genefic delivers with ingenuity, accessibility, and affordability. This specialized division is committed to developing key health products, lifesaving medications and building comprehensive systems to increase capability, strive to keep people healthy with the goals of improving their quality of life and increasing their longevity– on a global level. Genefic Specialty Pharmacy ("Genefic Pharmacy") - Genefic Pharmacy (formerly Genefic Specialty Pharmacy Rx Solutions) is an Alabama-based pharmacy with more than 30 years of experience in the retail medical and pharmaceutical industries. Genefic Pharmacy specializes in providing expert care and managing disease states through comprehensive prescription management, education, nursing, and total health solutions. Genefic Phar

Risk Factors

Item 1A. Risk Factors Not applicable to smaller reporting companies.

Unresolved Staff Comments

Item 1B. Unresolved Staff Comments Not applicable to smaller reporting companies.

Cybersecurity

Item 1C. Cybersecurity Risk management and strategy Cybersecurity risk management is an important part of the Company's overall risk management efforts. We maintain a comprehensive enterprise-wide information security program that comprises policies and controls designed to identify, safeguard against, detect, respond to, mitigate and manage reasonably foreseeable cybersecurity risks and threats. Our approach utilizes diverse security tools to prevent, identify, investigate, resolve and recover from vulnerabilities and security incidents. These include, but are not limited to, internal reporting, monitoring and detection tools. We use a collaborative, enterprise-wide strategy to address cybersecurity risks and allocate significant resources to our cybersecurity and risk management processes, which efforts are intended to adapt to the evolving cybersecurity landscape and promptly address emerging threats. Our cybersecurity risk management program aligns with the National Institute of Standards and Technology (NIST) framework and is organized into five key functions: identification, protection, detection, response and recovery. We regularly assess the threat landscape and employ a layered cybersecurity strategy to prevent, detect and mitigate threats. We assess risks associated with third-party providers as part of our overall cybersecurity risk management framework by reviewing system and organization controls reports, when available, and other independent reports. We also generally require third parties to, among other things, maintain security controls to protect our confidential information and to promptly notify us of material breaches that may impact our data. Our security controls include: Network traffic monitoring and filtering Usage of Sentinelone Proofpoint to protect against phishing attacks OS/Hardware hardening OS/Software hardening Physical barriers to hardware access Usage of on prem hardware firewall VLANs in order to keep less sec

Description of Property

Item 2. Description of Property We currently lease 87,674 square feet of office, medical, pharmacy and warehouse space in California, Alabama, Oregon, Louisiana, Scotland, Spain, and India, with leases that expire through 2030. Square Footage Lease Location Type (approximate) Expiration Escondido, California Corporate Headquarters 6,964 6/30/2027 San Diego, California Office 8,228 3/14/2028 Escondido, California Office 2,992 6/30/2027 Chula Vista, California Office, Medical Suite 3,200 1/31/2027 San Diego, California Office, Medical Suite 9,016 8/31/2028 Bengaluru, India Office 3,300 4/1/2026 Florence, Alabama (1) Pharmacy 1,443 5/31/2025 Livingston, Scotland Office, Warehouse 4,500 8/27/2025 Escondido, California Office 562 12/31/2027 Livingston, Scotland Office, Warehouse 19,000 11/2/2027 Bergondo, Spain Office, Warehouse 9,000 5/31/2028 Metairie, Louisiana Office, Medical Suite 6,468 9/30/2025 San Diego, California Office, Warehouse 7,351 5/1/2030 Portland, Oregon Office, Warehouse 5,650 4/30/2027 (1) This lease expired on 5/31/25 and resumed on a month-to-month basis.

Legal Proceedings

Item 3. Legal Proceedings In September 2023, Asset Group, Inc. ("Asset") filed a breach of contract with Dalrada Health Products ("DHP") in the Superior Court of San Diego. The case arises out of a Purchase Order wherein Asset agreed to pay DHP the sum of $3,240,000 for the purchase of 1,800,000 IRIS Ear Loop Face Masks during the COVID-19 pandemic. Asset filed a complaint alleging DHP did not have authority to sell the masks. However, DHP have provided their counsel with proof of authority and are preparing a Cross-Complaint for Asset's material breach of the contract. This matter is currently set for trial January 31, 2025. On January 15, 2025 DHP filed a cross-complaint against Asset Group and Dimco Holdings for tortious interference with contractual business relations. DHP contends that Asset and Dimco owe DHP the profits it would have made ($3,240,000) had Dimco not interfered with the sale. A jury trial is now scheduled for April 2026. Discovery is currently ongoing. In March 2024, MDIQ filed a breach of contract with Dalrada Financial Corporation ("DFCO") in Collin County Texas Superior Court. MDIQ was hired to process insurance claims for COVID-19 testing performed by Empower Genomics. MDIQ failed to perform yet filed a civil collection case against DFCO for failure to pay the invoices. DFCO is now in the process of counter suing for approximately $2,000,000 of unpaid claims that we would have benefitted from had MDIQ performed according to the contract. No trial date has been set in this matter and the parties are in the process of conducting discovery. A former consultant, Simon Gray, and distribution representative, DePrey Company, acted in concert with supplier Zhongshan Mide Hardware Products Co., Ltd. ("Mide") to misappropriate Fastenal Company purhcase orders and ultimately extract Dalrada Manufacturing out of its contractual relationship. DFCO has filed a lawsuit against DePrey Company and Simon Gray in July for a breach of contract and intention

Mine Safety Disclosures

Item 4. Mine Safety Disclosures Not applicable to our Company. 6 PART II

Market for Common Equity, Related Stockholder Matters and

Item 5. Market for Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities Market Information Our shares of common stock are quoted on the OTC Markets Group's Pink Open Market under the symbol DFCO. Set forth below are high and low bid prices for our common stock for each quarterly period in the two most recent fiscal years. Such quotations reflect inter-dealer prices, without retail mark-up, markdown or commissions and may not necessarily represent actual transactions in the common stock. Period High Low Fiscal 2025 First Quarter ended September 30, 2024 $ 0.2000 $ 0.1100 Second Quarter ended December 31, 2024 $ 0.1500 $ 0.0400 Third Quarter ended March 31, 2025 $ 0.0900 $ 0.0000 Fourth Quarter ended June 30, 2025 $ 0.0500 $ 0.0100 Fiscal 2024 First Quarter ended September 30, 2023 $ 0.3500 $ 0.1100 Second Quarter ended December 31, 2023 $ 0.4600 $ 0.1800 Third Quarter ended March 31, 2024 $ 0.2100 $ 0.1400 Fourth Quarter ended June 30, 2024 $ 0.2400 $ 0.1400 Number of Holders There were 120,157,113 and 88,699,139 issued and outstanding shares of common stock held by a total of 605 and 560 shareholders of record as of June 30, 2025, and 2024, respectively. Dividends No cash dividends were paid on our shares of common stock during the fiscal years ended June 30, 2025, and 2024. We have not paid any cash dividends since our inception and do not foresee declaring any dividends on our common stock in the foreseeable future. Recent Sales of Unregistered Securities In July 2023, the Company issued 500,000 shares of common stock in connection with a fee for a third-party loan in the amount of 1,200,000. The company ascribed $60,000 to those shares recorded as a debt discount. The Company issued these shares of common stock pursuant to the exemption from registration provided by Section 4(a)(2) of the Act in that such issuance did not constitute a public offering. In July 2023

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