Item
1. Business.
Overview
Daniels
Corporate Advisory creates and implements corporate strategy alternatives for the mini-cap public or private company client. The
addition of new business opportunities and the location of professional talent for implementation is anticipated through the full-time
efforts of our senior management. These efforts are to be expanded in the United States and in foreign capitals by an expanding
advisory board and through the networks of independent consultants. Principals of the respective client company will open their
networks to augment professional access for specialties the Daniels corporate strategy consultants believe are needed in a joint-venture,
jointly-controlled undertaking created for the client’s optimum growth.
Daniels
may provide the client with multiple corporate strategies/opportunities including joint-ventures, marketing opportunity agreements
and/or potential acquisitions structured in leveraged buyout format. One or a combination of these strategies would allow the
client to enter new market niches or expand further into existing ones.
Reverse Stock Split
All common share
amounts (except par value and par value per share amounts) referred to in this Report prior to September 27, 2019 have been retroactively
restated to reflect the Company’s one-for-200 reverse capital stock split effective September 27, 2019.
Recent
Business Developments
The
Company is operating through the corporate strategy segment of its business. It is attempting to build its own critical mass by
creation of start-up subsidiaries it believes have promise/potential. The stated goal is for the parent (DCAC) company to consolidate
the critical mass of the subsidiary/start-ups with that of the parent for eventually listing on a major stock exchange. We have
continued to focus our efforts on the build out of the Daniels corporate strategy model. We adjusted our strategy as it relates
to the development of subsidiary start-ups and potential acquisitions for common stock. We concentrate on identifying projects
that have the potential to produce significant earnings on the leveraged capital base of both the parent and the subsidiary/start-up
within an expedited time period.
As
a result, we formed Payless Truckers, Inc. (“Payless”), a wholly-owned subsidiary which was incorporated in the State
of Nevada, on April 11, 2018. Payless is a start-up, service company in the trucking industry. It has two business segments with
its launch and current results coming from the “flip” segment, whose principal business is to acquire class 8 heavy
duty trucks, refurbish them, add location electronics, advertise and sell to independent drivers and operators. The second segment
is the “credit rebuilding segment” where class 8 heavy duty trucks, owned by Daniels/Payless, are rented to experienced
independent drivers. These independent drivers rent for a period of up to five years, and have the option to buy the vehicle at
retail value every six months. This segment commenced operations subsequent to the close of our fiscal year. In an effort to grow
quickly and profitably, Daniels entered into an operating agreement with a senior operating management team in an effort to drive
the business and better realize its earnings and growth potential.
The
Payless two-segment trucking model represents a streamlined trucking service company; one Daniels believes should survive any
potential future slow-downs in the economy. The model was developed to allow for the maximum utilization of each truck. The first
phase of operations has already been implemented and has covered all the start-up costs plus its own operating expenses.
We
hope to further enhance our plan for growth beginning in our third year by forming joint-ventures and/or partnerships with truck
maintenance companies across the United States in key traffic hubs. This will potentially afford independent drivers and operators
the opportunity to be serviced by trusted maintenance facilities under our warranty program.
Business
Strategy - Current Operational Strategy & Current Client Projects:
Daniels
creates and implements corporate strategy alternatives for the mini-cap public or private company client. The addition of new
business opportunities and the location of professional talent for implementation is anticipated through the full-time efforts
of our senior management. These efforts are to be expanded in the US and in Foreign capitals by an expanding advisory board and
through the networks of independent consultants. Principals of the respective client company will open their networks to augment
professional access for specialties the Daniels corporate strategy consultants believe are needed in a joint venture, (jointly-controlled)
undertaking created for the client’s optimum growth.
Daniels
may provide the client with multiple corporate strategies /opportunities including joint-ventures, marketing opportunity agreements
and/or potential acquisitions structured in a leveraged buyout format. One or a combination of these strategies would allow the
client to enter new market niches or expand further into existing ones.
The
Goal: A major exchange listing. Senior management is estimating at least twenty-four months from commencement of a corporate
strategy assignment. Financial results, aided by all participating players, should be forthcoming and recorded in SEC filings.
At the same time, a senior management team and Board expanded with highly-credible interim (or permanent) professionals (directors)
will be organized in order to successfully navigate the listing process of a major stock exchange. While Daniels believes this
process should be successful in the above-noted time period, there is some uncertainty in the process which is dependent upon
any past issues the listing committee of a specific exchange may deem necessary to be addressed prior to uplifting. In addition,
it may take added time to find the appropriate outside directors that can not only satisfy the listing committee of the exchange
but who can also provide added networking/services to build the parent’s and subsidiary’s potential for accelerated
growth.
A
similar effort will be provided to tailor an optimum growth program for the private company client, whether it chooses to remain
private or to become a public company through alternative merger opportunities.
OPTIMUM
GROWTH STRATEGY:
Twenty-Four
Month Horizons for Daniels’ Objectives:
Daniels’
believes that the validity of its corporate strategy model will be proven further through the success of its initial subsidiary
incubation, Payless Truckers, Inc. The growing momentum of this cash flow engine should generate the interest of long-term financing
sources that will realize upfront that debt service can/ will be covered. This “collective approach” to growth should
provide several initial seed capital sources for other startup subsidiaries or the acquisition and joint-development of early
stage companies. Daniels plans to use its publicly traded common stock in a variety of securities packages, including convertible
preferred stock, to launch promising subsidiary start-ups, initially for generic sales/profits growth. Subsequent growth options
noted above will be applied as external growth becomes a secondary goal. This method of two stage (generic and then external)
growth is designed to leave existing client management with commanding equity and operating control positions. Eventually, an
optimum exit strategy will be developed for the subsidiary, one that returns a significant return on corporate (parent) capital.
The choices of optimum exit strategies could include bringing a subsidiary public, directly through a spin-off strategy, or merging
it with an exchange listed public company that requires added critical mass. This infusion of cash flow and profits will allow
expansion in one of the more profitable niches of any market designated for expansion. The same corporate strategy model can/will
be applied to any independent mini-cap public client.
Senior
management believes our corporate strategy business model to be scalable. Based upon the potential success of the initial corporate
strategy consulting assignments creating our uplifting to a major stock exchange, Daniels may entertain the creation of a franchising
plan for key US cities and foreign capitals or finance centers.
Sales
and Marketing
Daniels
senior management will concentrate its efforts to expand its corporate strategy and financial advisory services and related specialties
in the mini-cap segment of the private and public markets, where Daniels believes it will be effective. Marketing efforts will
increase through social and print media efforts and will be in addition to those methods already mentioned herein.
Daniels
objective is to create and help manage implementation of accelerated expansion strategies and in so doing, aid in the creation
of financing alternatives to accomplish client goals.
Competition
Existing
and new competitors will continue to improve their services and introduce new services with competitive price and performance
characteristics.
In
periods of reduced demand for our services, we can either choose to maintain market share by reducing our prices to meet competition
or maintain prices and choose only those assignments with new clients that have pressing goals to be met that offer Daniels optimum
potential for profits and growth.
The
“collective” corporate financial services, direct and referral, including merchant banking/private equity, are very
competitive and fragmented in the Company’s market niche. There are limited barriers to entry and new competitors frequently
enter the market. A significant number of our competitors possess substantially greater resources. We are and will continue to
offer equity compensation to our team of advisory board members, and independent strategy consultants in order to keep a stable,
cohesive team of professionals, which is necessary and key to the creation of operating and capital solutions in a timely fashion.
Item
1A. Risk Factors.
An
investment in our Common Stock is highly speculative, involves a high degree of risk and should be considered only by those persons
who are able to afford a loss of their entire investment. In evaluating our business, prospective investors should carefully consider
the following risk factors in addition to the other information included in this Annual Report.
Risks
Relating to Our Business
We
have a limited operating history which may not serve as an adequate basis to judge our future prospects and results of operations.
Daniels
Corporate Advisory Company, Inc., which was incorporated on August 22, 2002, has a limited operating history upon which an evaluation
of our future performance and prospects can be made. We have a limited revenue history. Our prospects must be considered in light
of the risks, expenses, delays, problems and difficulties frequently encountered in the establishment of a new business. As an
early-stage operating company, Daniels Corporate Advisory faces risks and uncertainties relating to its ability to successfully
implement its business plan, which are described in more detail below.
Since
inception, as a subsidiary of INfe Human Resources, Inc., Daniels Corporate Advisory has always been an operating company, furnishing
its advisory services to all phases of operations, finance and in the management of the staffing industry roll-up for its parent
company for which revenues were eliminated during consolidations.
Limited
revenues and ongoing losses.
While
Daniels is still considered a Company with limited revenues, it has formed a wholly-owned subsidiary that is estimated to change
things over the next 18 to 24 months; including booking profits with accelerating sales revenue. All the start-up costs of the
Payless Truckers, Inc. subsidiary have been absorbed in our 2018 fiscal year.
Our
business strategy is unproven and our prospects must be considered speculative.
Our
business strategy is unproven, even though our Payless Truckers, Inc. subsidiary is producing positive results with an established
momentum, and we may not be successful in addressing early stage challenges, such as establishing our position in the market and
developing effective marketing of our services. To implement our business plan, capital may be provided from existing and possibly
new consulting business revenue and through outside financing. We have not yet located additional financing to implement our business
plan in its entirety. Initial growth may be very limited and based solely on internally generated cash flow from Payless Truckers
and on compensation from small, consulting assignments with no guarantee of obtaining additional assignments over the next twelve
months. The other potential growth segment of our business plan, after the Payless Truckers model is proven further, is the acquisition
of marketing rights for our services through the client networks of other business services companies. This will only occur if
we can obtain outside financing. Internally generated funds, alone, will not be sufficient to implement this phase of our business
plan.
Our
prospects must be considered speculative, considering the risks, expenses, and difficulties frequently encountered in the establishment
of a new business, specifically the risks inherent in developmental stage companies. We expect to continue to incur significant
operating and capital expenditures and, as a result, we expect significant net losses in the future. It is possible that we will
not be able to achieve profitable operations or, if profitability is achieved, that it will be maintained for any significant
period, or at all.
The
JOBS Act allows us to delay the adoption of new or revised accounting standards that have different effective dates for public
and private companies.
Since,
we have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1)
of the JOBS Act, this election allows us to delay the adoption of new or revised accounting standards that have different effective
dates for public and private companies until those standards apply to private companies. As a result of this election, our financial
statements may not be comparable to companies that comply with public company effective dates.
We
have different disclosure requirements than other public companies as an Emerging Growth Company (EGC).
Pursuant
to Section 107 of the Jumpstart Our Business Startups Act (the “JOBS Act”) which was signed into law on April 5, 2012,
we have elected to claim the exemption provided to emerging growth companies.
The
JOBS Act provides an “IPO on ramp” for “emerging growth companies” (a newly created category of issuer
under the Securities Act), which are issuers with annual gross revenues of less than $1 billion during the most recently completed
fiscal year. Emerging growth companies may take advantage of the scaled disclosure requirements that already have been available
to “smaller reporting companies” (defined by the Securities Act as companies having a public float of less than $75
million). The scaled disclosure includes a requirement to include only two, rather than three, years of audited financial statements
in the issuer’s initial public offering (“IPO”) registration statement and, during the “IPO on ramp”
period, the ability to omit the auditor’s attestation on internal control over financial reporting required by the Sarbanes-Oxley
Act of 2002.
Also,
during the “IPO on ramp” period, emerging growth companies would not need to submit say-on-pay votes to their stockholders
(including say-on-pay frequency or golden parachute votes) and would face more limited executive compensation disclosure requirements
than larger companies.
We
may not be successful in the implementation of our business strategy or our business strategy may not be successful, either of
which will impede our development and growth.
Daniels
Corporate Advisory is engaged in the business of offering corporate financial consulting services, including referrals for capital
referral and merchant banking services. In some situations, it may use its own funds to help in the launch of a client.
We
do not know whether we will be able to continue successfully implementing our business strategy or whether our business strategy
will ultimately be successful. In assessing our ability to meet these challenges, a potential investor should take into account
our lack of operating history, our management’s relative inexperience, the competitive conditions existing in our industry
and general economic conditions. Our growth is largely dependent on our ability to successfully implement our business strategy.
Our revenues may be adversely affected if we fail to implement our business strategy or if we divert resources to a business strategy
that ultimately proves unsuccessful.
Our
service offerings may not be accepted.
We
constantly seek to modify our service offerings to the marketplace. As is typically the case evolving service offerings, anticipation
of demand and market acceptance are subject to a high level of uncertainty. The success of our service offerings primarily depends
on the interest of our customers. In general, achieving market acceptance for our services will require substantial marketing
efforts and the expenditure of significant funds, which we may not have available, to create awareness and demand among customers.
We
have limited marketing experience, and have extremely limited financial, personnel and other resources to undertake extensive
marketing activities. Accordingly, we are uncertain as to the acceptance of any of our services or our ability to generate the
revenues necessary to remain in business.
Risks
associated with our ability to manage expansion through acquisitions.
The
growth of our business depends in large part on our ability to manage expansion, control costs in our operations and consolidate
acquisitions into existing operations. This strategy will entail reviewing and potentially reorganizing acquired operations, corporate
infrastructure and system and financial controls. Unforeseen expenses, difficulties, complication and delays frequently encountered
in connection with the rapid expansion of operations could inhibit our growth and adversely affect our financial condition, results
of operations or cash flow.
Risks
associated with our inability to identify suitable acquisition or subsidiary/spin-off candidates.
We
may be unable to identify acquisition candidates that would result in the most successful combinations or be unable to consummate
acquisitions on acceptable terms. The magnitude, timing and nature of future acquisitions will depend upon various factors, including
our success in establishing the corporate development “pilot programs” for consulting clients as a viable means of
growth acceleration, the availability of suitable acquisition candidates that have the client base suitable for cross-marketing
opportunities, the negotiation of acceptable terms, our financial capabilities, the availability of skilled employees to manage
acquired companies and general economic and business conditions.
We
may be unable to obtain financing for the acquisitions or subsidiary/spin-offs that are available to us.
We
are currently attempting to obtain financing for our corporate financial consulting and merchant banking services lines of business
as well as for acquisition opportunities which could result in material dilution to our existing stockholders. We may be unable
to obtain adequate financing for further development of our proposed services and for any acquisition for cross-marketing of services
purposes, or that, if available, such financing will be on favorable terms.
Our
future financial results are uncertain, and our operating results may fluctuate, due to, among other things, consumer trends,
seasonal fluctuations and market demand.
Our
short and sporadic operating history makes it difficult to accurately forecast our revenue. Further, we have little historical
financial data upon which to base planned operating expenses. We base our current and future expense levels on our operating plans
and estimates of future expenses. Our expenses are dependent in large part upon expenses associated with our proposed marketing
expenditures and related overhead expenses, and the costs of hiring and maintaining qualified personnel to carry out our respective
services. Sales and operating results are difficult to forecast because they will depend on the growth of our customer base, changes
in customer demands and consumer trends, the degree of utilization of our advertising services as well as the mix of services
and services sold. As a result, we may be unable to make accurate financial forecasts and adjust our spending in a timely manner
to compensate for any unexpected revenue shortfall. This inability could cause our net losses in a given quarter to be greater
than expected.
We
rely on the services of Arthur D. Viola.
Our
business relies mainly on the efforts and talents of our chief executive officer and director, Arthur D. Viola. The loss of his
services could have a very negative impact on our ability to fulfill our business plan. During our 2018 fiscal year and subsequently,
the Company’s senior management team has been expanded so that “continuity of management purpose” will be achieved
going forward.
We
may fail to establish and maintain strategic relationships.
We
believe that the establishment of strategic partnerships will greatly benefit the growth of our business, and we intend to seek
out and enter into strategic alliances. We may not be able to enter into these strategic partnerships on commercially reasonable
terms, or at all. Even if we enter into strategic alliances, our partners may not attract significant numbers of customers or
otherwise prove advantageous to our business. Our inability to enter into new distribution relationships or strategic alliances
could have a material and adverse effect on our business.
We
may incur significant costs to ensure compliance with U.S. corporate governance and accounting requirements.
We
may incur significant costs associated with our public company reporting requirements, costs associated with newly applicable
corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by
the SEC. We expect all of these applicable rules and regulations to increase our legal and financial compliance costs and to make
some activities more time-consuming and costly. We also expect that these applicable rules and regulations may make it more difficult
and more expensive for us to obtain director and officers liability insurance and we may be required to accept reduced policy
limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult
for us to attract and retain qualified individuals to serve on our board of directors or as executive officers. We are currently
evaluating and monitoring developments with respect to these newly applicable rules, and we cannot predict or estimate the amount
of additional costs we may incur or the timing of such costs.
Risks
Relating to Our Stock
Arthur
D. Viola owns 100,000 shares of our super voting preferred stock entitling him to vote 66 2/3 percent of the common stock shares
in any common stock vote. This concentration of ownership could discourage or prevent a potential takeover of Daniels Corporate
Advisory that might otherwise result in our stockholders receiving a premium over the market price for their common stock.
Mr.
Viola owns 152,334 shares of our common stock as well as 100,000 shares of the Daniels Corporate Advisory Super-Voting preferred
stock which has voting rights equal to 66 2/3 percent of the votes in any Common Stock Election. Mr. Viola’s ownership and
voting rights in our common stock allows Mr. Viola to have voting control on all matters submitted to our stockholders for approval
and to be able to control our management and affairs, including extraordinary transactions such as mergers and other changes of
corporate control, and going private transactions. Additionally, this concentration of voting power could discourage or prevent
a potential takeover of Daniels Corporate Advisory that might otherwise result in our stockholders receiving a premium over the
market price for their common stock.
We
may need to raise additional capital. If we are unable to raise necessary additional capital, our business may fail or our operating
results and our stock price may be materially adversely affected.
Because
we are a newly operational company, we need to secure adequate funding. Selling additional stock, either privately or publicly,
would dilute the equity interests of our stockholders. If we borrow more money, we will have to pay interest and may also have
to agree to restrictions that limit our operating flexibility. If we are unable to obtain adequate financing, we may have to curtail
our operations and our business might fail.
Our
issuance of additional common stock in exchange for services or to repay debt would dilute our stockholders’ proportionate
ownership and voting rights and could have a negative impact on the market price of our common stock.
The
stated listing requirements for the OTCBB are as follows:
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Fully
reporting with the Securities and Exchange Commission;
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Not
a blank check or inactive company;
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Minimum
of 40 stockholders of record holding at least 100 shares each (note: this number is informal and has been moving up);
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Directors,
officers, and stockholders will be scrutinized for previous involvements in other OTCBB companies, in particular, blank check
companies; and
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Must
have a market maker submit a Rule 15c211 application to FINRA and agree to act as market maker for securities of company.
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Even
if our shares become publicly quoted, they may not be “free-trading.”
Investors
should understand that their shares of our common stock will not become “free-trading” merely because Daniels Corporate
Advisory is a publicly-quoted company. In order for the shares to become “free-trading,” the shares must be registered,
or entitled to an exemption from registration under applicable law. See “Shares Eligible for Future Sale.”
We
may need to raise additional capital. If we are unable to raise necessary additional capital, our business may fail or our operating
results and our stock price may be materially adversely affected.
Because
we are a newly operational company, we need to secure adequate funding. Selling additional stock, either privately or publicly,
would dilute the equity interests of our stockholders. If we borrow more money, we will have to pay interest and may also have
to agree to restrictions that limit our operating flexibility. If we are unable to obtain adequate financing, we may have to curtail
our operations and our business would fail.
Our
issuance of additional common stock in exchange for services or to repay debt would dilute our stockholders’ proportionate
ownership and voting rights and could have a negative impact on the market price of our common stock.
Our
sole director, Mr. Viola, may generally issue shares of common stock to pay for debt or services, without further approval by
our stockholders based upon such factors as our board of directors may deem relevant at that time. It is likely that we will issue
additional securities to pay for services and reduce debt in the future. It is possible that we will issue additional shares of
common stock under circumstances we may deem appropriate at the time.
We
have never paid or declared any dividends on our common stock.
We
have never paid or declared any dividends on our common stock. Likewise, we do not anticipate paying, dividends or distributions
on our common stock or our common stock to be sold in this offering. Any future dividends will be declared at the discretion of
our board of directors and will depend, among other things, on our earnings, our financial requirements for future operations
and growth, and other facts as we may then deem appropriate.
Our
directors have the right to authorize the issuance of shares of our preferred stock and additional shares of our common stock.
Our
sole director, Mr. Viola, within the limitations and restrictions contained in our articles of incorporation and without further
action by our stockholders, has the authority to issue shares of preferred stock from time to time in one or more series and to
fix the number of shares and the relative rights, conversion rights, voting rights, and terms of redemption, liquidation preferences
and any other preferences, special rights and qualifications of any such series. We currently have no intention of issuing additional
shares of preferred stock. Any additional issuance of shares of preferred stock could adversely affect the rights of holders of
our common stock.
Should
we issue additional shares of our common stock, each investor’s ownership interest in our stock would be proportionally
reduced. No investor will have any preemptive right to acquire additional shares of our common stock, or any of our other securities.
If
our shares become publicly quoted and our shares are quoted on the Pink Sheets or the OTCBB, and we fail to remain current in
our reporting requirements, we could be removed from the OTCBB, which would limit the ability of broker-dealers to sell our securities
and the ability of stockholders to sell their securities in the secondary market.
Companies
whose shares are quoted for sale on the OTCBB and some whose shares are quoted for sale on the Pink Sheets must be reporting issuers
under Section 12 of the Exchange Act and must be current in their reports under Section 13 of the Exchange Act, to maintain price
quotation privileges on the Pink Sheets and OTCBB. If our shares become publicly quoted and our shares are quoted for sale on
the OTCBB, and we fail to remain current in our reporting requirements, we could be removed from the OTCBB. As a result, the market
liquidity for our securities could be adversely affected by limiting the ability of broker-dealers to sell our securities and
the ability of stockholders to sell their securities in the secondary market.
If
our shares become publicly quoted, the market price for our common stock will most likely be particularly volatile given our status
as a relatively unknown company with a small and thinly quoted public float, limited operating history and lack of net revenues
which could lead to wide fluctuations in our share price. The price at which stockholders purchase our common stock may not be
indicative of the price that will prevail in the trading market.
If
our shares become publicly quoted, the market for our common stock will most likely be characterized by significant price volatility
when compared to seasoned issuers, and we expect that our share price will be more volatile than a seasoned issuer for the indefinite
future. The volatility in our share price would be attributable to several factors. First, as noted above, the shares of our common
stock will likely be sporadically and/or thinly quoted. As a consequence of this lack of liquidity, the trading of relatively
small quantities of shares by our stockholders may disproportionately influence the price of those shares in either direction.
The price for our shares could, for example, decline precipitously if shares of our common stock are sold on the market without
commensurate demand, as compared to a seasoned issuer which could better absorb those sales without adverse impact on its share
price.
Secondly,
we will most likely be a speculative or “risky” investment due to our dependence on an initial flow of corporate consulting
assignments and their implementation producing positive results to attract new clients. Because of this enhanced risk, more risk-adverse
investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be
more inclined to sell their shares on the market more quickly and at greater discounts than would be the case with the stock of
a seasoned issuer.
There
may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a mature
issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse
effect on share price. It is possible that a broader or more active public trading market for our common stock will not develop
or be sustained, or that current trading levels will continue.
Shares
eligible for future sale by our current stockholders may adversely affect our stock price.
The
sale of a significant number of shares of common stock at any particular time could be difficult to achieve at the market prices
prevailing immediately before such shares are offered. In addition, sales of substantial amounts of common stock, including shares
issued upon the exercise of outstanding options and warrants, under Securities and Exchange Commission Rule 144 or otherwise could
adversely affect the prevailing market price of our common stock and could impair our ability to raise capital at that time through
the sale of our securities.
Anti-takeover
provisions may impede the acquisition of Daniels Corporate Advisory.
Certain
provisions of the Nevada Revised Statutes have anti-takeover effects and may inhibit a non-negotiated merger or other business
combination. These provisions are intended to encourage any person interested in acquiring Daniels Corporate Advisory to negotiate
with, and to obtain the approval of, our sole director, Mr. Viola, in connection with such a transaction. As a result, certain
of these provisions may discourage a future acquisition of Daniels Corporate Advisory, including an acquisition in which the stockholders
might otherwise receive a premium for their shares.
Our
stockholders may be unable to sell their common stock at or above their purchase price, which may result in substantial losses.
The
following factors may add to the volatility in the price of our common stock: actual or anticipated variations in our quarterly
or annual operating results; government regulations, announcements of significant acquisitions, strategic partnerships or joint
ventures; our capital commitments; and additions or departures of our key personnel. Many of these factors are beyond our control
and may decrease the market price of our common stock, regardless of our operating performance. We cannot make any predictions
or projections as to what the prevailing market price for our common stock will be at any time, including as to whether our common
stock will sustain the current market price, or as to what effect the sale of shares or the availability of common stock for sale
at any time will have on the prevailing market price.
We
may need to raise additional capital. If we are unable to raise necessary additional capital, our business may be negatively impacted
or our operating results and our stock price may be materially adversely affected.
We
may need to secure adequate funding. If we are unable to obtain adequate funding, we may not be able to successfully develop and
market our proposed products and our business will most likely fail. We do not have commitments for additional financing. To secure
additional financing, we may need to borrow money or sell more securities, which may reduce the value of our outstanding securities.
We may be unable to secure additional financing on favorable terms or at all.
Selling
additional stock, either privately or publicly, would dilute the equity interests of our stockholders. If we borrow more money,
we will have to pay interest and may also have to agree to restrictions that limit our operating flexibility. If we are unable
to obtain adequate financing, we may have to curtail business operations, which would have a material negative effect on operating
results and most likely result in a lower stock price.
If
our shares become publicly quoted, an active trading market in our shares may not be sustained.
If
our shares become publicly quoted, an active trading market in our shares may not be sustained. Factors such as those discussed
in this “Risk Factors” section may have a significant impact upon the market price of the securities to be distributed
by us. Many brokerage firms may not be willing to participate in transactions in a security if a low price develops in the trading
of the security. Even if a purchaser finds a broker willing to effect a transaction in our securities, the combination of brokerage
commissions, state transfer taxes, if any, and any other selling costs may exceed the selling price. Further, many lending institutions
will not permit the use of our securities as collateral for any loans.
If
our shares become publicly quoted, our common stock will most likely be subject to the “penny stock” rules of the
Securities and Exchange Commission, and the trading market in our common stock will be limited, which would make transactions
in our stock cumbersome and may reduce the investment value of our stock.
If
our shares become publicly quoted, our shares of common stock will most likely be “penny stocks” because they most
likely will not be registered on a national securities exchange or listed on an automated quotation system sponsored by a registered
national securities association, pursuant to Rule 3a51-1(a) under the Exchange Act. For any transaction involving a penny stock,
unless exempt, the rules require:
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That
a broker or dealer approve a person’s account for transactions in penny stocks; and
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That
the broker or dealer receives from the investor a written agreement to the transaction, setting forth the identity and quantity
of the penny stock to be purchased.
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The
broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Securities
and Exchange Commission relating to the penny stock market, which, in highlight form:
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Sets
forth the basis on which the broker or dealer made the suitability determination; and
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That
the broker or dealer received a signed, written agreement from the investor prior to the transaction.
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Generally,
brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make
it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.
Disclosure
also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the
commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the
rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to
be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny
stocks.
The
market for penny stocks has suffered in recent years from patterns of fraud and abuse.
Stockholders
should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns
of fraud and abuse. Such patterns include:
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Control
of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;
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Manipulation
of prices through prearranged matching of purchases and sales and false and misleading press releases;
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Boiler
room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced salespersons;
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Excessive
and undisclosed bid-ask differential and markups by selling broker-dealers; and
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The
wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level,
along with the resulting inevitable collapse of those prices and with consequential investor losses.
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Our
management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to dictate
the behavior of the market or of broker-dealers who participate in the market, if our shares become publicly quoted, management
will strive within the confines of practical limitations to prevent the described patterns from being established with respect
to our securities. The occurrence of these patterns or practices could increase the volatility of our share price.
We
may need to raise additional funds in the future for our operations and if we are unable to secure such financing, we may not
be able to support our operations.
Future
events, including the problems, delays, expenses and difficulties frequently encountered by growing companies, may lead to cost
and expense increases that could make our revenues insufficient to support our operations and business plans. We may seek additional
capital, including an offering of our equity securities, an offering of debt securities or obtaining financing through a bank
or other entity. We have not established a limit as to the amount of debt we may incur nor have we adopted a ratio of our equity
to a debt allowance. If we need to obtain additional financing, there is no assurance that financing will be available from any
source, that it will be available on terms acceptable to us, or that any future offering of securities will be successful.
We
may seek additional financing which may result in the issuance of additional shares of our common stock and/or rights to acquire
additional shares of our common stock. The issuance of our common stock in connection with such financing may result in substantial
dilution to the existing holders of our common stock who do not have anti-dilution rights. Our business, financial condition and
results of operations could suffer adverse consequences if we are unable to obtain additional capital when needed.
Our
common stock may be affected by limited trading volume and may fluctuate significantly.
The
Company filed with FINRA for a 1/200 Reverse Split. On September 27, 2019, the reverse split was approved by FINRA and made effective.
Prior to the application of the reverse split, the Company’s stock traded actively on both the OTCBB and then in the OTC
Markets. There is no guarantee that history will repeat itself, the Company’s stock may take time to rebuild an active market
after the processing of the reverse split. As a result, this could reduce our shareholders’ ability to sell our common stock
in short time periods, or possibly at all. Our common stock has experienced, and is likely to experience in the future, significant
price and volume fluctuations which could reduce the market price of our common stock without regard to our operating performance.
In addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the overall economy
or the condition of the financial markets could cause the price of our common stock to fluctuate substantially.
Nevada
law and our certificate of incorporation may protect our directors from certain types of lawsuits which could result in liability
for Daniels and negatively impact our liquidity or operations.
Nevada
law provides that our officers and directors will not be liable to us or our stockholders for monetary damages for all but certain
types of conduct as officers and directors. Our Bylaws permit us broad indemnification powers to all persons against all damages
incurred in connection with our business to the fullest extent provided or allowed by law. These exculpation provisions may have
the effect of preventing stockholders from recovering damages against our officers and directors caused by their negligence, poor
judgment or other circumstances. The indemnification provisions may require us to use our limited assets to defend our officers
and directors against claims, including claims arising out of their negligence, poor judgment, or other circumstances.
If
we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results. As
a result, current and potential stockholders could lose confidence in our financial reporting, which could harm our business and
the trading price of our common stock.
We
are subject to reporting obligations under the U.S. securities laws. The Securities and Exchange Commission as required by Section
404(a) of the Sarbanes-Oxley Act of 2002, adopted rules requiring every public company to include a management report on such
company’s internal controls over financial reporting in its annual report, which contains management’s assessment
of the effectiveness of the company’s internal controls over financial reporting. Since our election to be treated as an
emerging growth company we are exempt from Section 404(b) which is an independent registered public accounting firm attesting
to and reporting on management’s assessment of the effectiveness of the company’s internal controls over financial
reporting. Our management may conclude that our internal controls over our financial reporting are not effective. Moreover, even
if our management concludes that our internal controls over financial reporting are effective, our independent registered public
accounting firm may still decline to attest to our management’s assessment or may issue a report that is qualified if they
are not satisfied with our controls or the level at which our controls are documented, designed, operated or reviewed, or if it
interprets the relevant requirements differently from us.
Our
reporting obligations as a public company will place a significant strain on our management, operational and financial resources
and systems for the foreseeable future. If we fail to timely achieve and maintain the adequacy of our internal controls, we may
not be able to conclude that we have effective internal controls over financial reporting at a reasonable assurance level. Moreover,
effective internal controls over financial reporting are necessary for us to produce reliable financial reports and are important
to help prevent fraud. As a result, our failure to achieve and maintain effective internal controls over financial reporting could
result in the loss of investor confidence in the reliability of our financial statements, which in turn could harm our business
and negatively impact the trading price of our common stock. Furthermore, we anticipate that we will incur considerable costs
and use significant management time and other resources in an effort to comply with Section 404(a) and other requirements of the
Sarbanes-Oxley Act. As of the date of this report we do not have an estimate of the costs to the company of compliance with the
Act.
We
are preparing for compliance with Section 404(a) by strengthening, assessing and testing our system of internal controls to provide
the basis for our report. The process of strengthening our internal controls and complying with Section 404(a) is expensive and
time consuming and requires significant management attention. We cannot be certain that these measures will ensure that we will
maintain adequate controls over our financial processes and reporting in the future. Furthermore, as we rapidly grow our business,
our internal controls will become more complex and will require significantly more resources to ensure our internal controls overall
remain effective. Failure to implement required new or improved controls, or difficulties encountered in their implementation,
could harm our operating results or cause us to fail to meet our reporting obligations. If we or our auditors discover a material
weakness, the disclosure of that fact, even if quickly remedied, could reduce the market’s confidence in our financial statements
and harm our stock price.