NOTE 1- ORGANIZATION AND BASIS OF PRESENTATION
Daniels Corporate Advisory
Company, Inc.(The company) was incorporated in the State of Nevada on May 2, 2002. The Company was organized to offer: (a) corporate
financial consulting and (b) merchant banking services for public and private client companies interested in implementing Daniels
developed, agreed upon, accelerated growth strategies; including MBO/LBO, Roll-up Transactions. Merchant banking includes equity
funding of the growth of client and service companies, as well as funding equity of small public companies. The business became
a subsidiary in late 2003 as a result of INfe Human Resources, Inc. (a publicly quoted Nevada Company) acquiring the common stock
of Daniels Corporate Advisory Company, Inc. During August 2010, INfe Human Resources, Inc. underwent a name change
to Rhino Human Resources, Inc., but is still public and trades under the same (original) stock symbol: “IFHR.”
The company has a growth
goal of providing advisory services to business services as well as non-business services client companies. The company works with
companies seeking to create and/or acquire adjunct service businesses, whose services will initially provide better lifestyles
for its existing workforce, and ultimately will be packaged, on an additional profit center basis, for sale to other small companies
for the retention of their employees. The profits generated from all the financial consulting assignments will be available for
venture investment in public or private client companies, as well as other quality business concept/operating companies, both public
and private; through the Daniels’ Merchant Bank Division.
The Daniels Merchant Bank
has an in-house equity funding program, whereby Daniels will participate in consulting client potential growth by helping finance
the growth of public and private client, business service companies, as well as non-business service companies. The Merchant Bank
will also participate in non-client potential
growth by the purchase of equity in attractive small public companies
whose growth strategies are in line with a philosophy of growth through leveraged acquisitions.
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation:
We have prepared the accompanying
condensed consolidated financial statements in accordance with the rules and regulations of the Securities and Exchange Commission
(“SEC”) including the instructions to Form S-1 and Rule 10-01 of Regulation S-X. Such rules and regulations
allow us to condense and omit certain information and footnote disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States of America. We believe these condensed
consolidated financial statements reflect all adjustments (consisting of normal, recurring adjustments) that are necessary for
a fair presentation of our consolidated financial position and consolidated results of operations for the periods presented.
Election to be treated as an emerging growth company:
For the five year period
starting in the first quarter of 2012, Daniels if continuing eligibility applies has elected to use the extended transition
period now available for complying with new or revised accounting standards under Section 102(b) (1). This election allows
Daniels 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 the Company still being eligible, the Daniels
financial statements may not be comparable to companies that comply with public company effective dates.
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
FASB Codification:
In June 2009,
the FASB issued ASC 105,
Generally Accepted Accounting Principles,
(“Codification”) effective for interim and
annual reporting periods ending after September 15, 2009. This statement establishes the Codification as the source of authoritative
accounting principles used in the preparation of financial statements in conformity with generally accepted accounting principles.
The Codification does not replace or affect guidance issued by the SEC or its staff. As a result of the Codification, the references
to authoritative accounting pronouncements included herein in this Annual Report now refer to the Codification topic section rather
than a specific accounting rule as was past practice.
Use of Estimates:
The preparation of financial
statements in conformity with accounting principles generally accepted in the United States of America requires management to make
estimates and assumptions that affect the 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.
Risk and Uncertainties:
Our future results of operations
and financial condition will be impacted by the following factors, among others: our lack of capital resources, dependence on third-party
management to operate the companies in which we invest and dependence on the successful development and marketing of any new products
in new and existing markets. Generally, we are unable to predict the future status of these areas of risk and uncertainty. However,
negative trends or conditions in these areas could have an adverse affect on our business.
Cash and Cash Equivalents:
For financial statement presentation purposes,
short-term, highly liquid investments with original maturities of three months or less are considered to be cash equivalents. The
Company maintains its cash accounts at several financial institutions, which at times may exceed the insurable FDIC limit, but
management believes that there is little risk of loss.
Fair Value of Financial Instruments:
In September 2006, the
Financial Accounting Standards Board (FASB) introduced a framework for measuring fair value and expanded required disclosure about
fair value measurements of assets and liabilities. The Company adopted the standard for those financial assets and liabilities
as of the beginning of the 2008 fiscal year and the impact of adoption was not significant. FASB Accounting Standards Codification
(ASC) 820 “
Fair Value Measurements and Disclosures
” (ASC 820) defines fair value as the price that would be
received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed
based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about
market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The
fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets
for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the
fair value hierarchy are described below:
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
●
|
Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
|
●
|
Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability; either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g. interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
●
|
Level 3—Inputs that are both significant to the fair value measurement and unobservable.
|
The respective carrying
value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These
financial instruments include investments in available-for-sale securities and accounts payable and accrued expenses. The
Company has also applied ASC 820 for all non-financial assets and liabilities measured at fair value on a non-recurring basis.
The adoption of ASC 820 for non-financial assets and liabilities did not have a significant impact on the Company’s financial
statements.
Investments:
Our investments consist
of common stock of publicly quoted companies and are valued based on the closing stock price. We account for our investments in
accordance with ASC Topic 320,
Investments.
We have designated our investments at May 31, 2014 as available-for-sale and
reported these investments at fair value, with unrealized gains and losses recorded in other comprehensive income (loss). We determined
the fair value of these investments based on the closing quoted stock price on May 31, 2014. We base the cost of the
investment sold on the specific identification method using market rates.
Comprehensive Income:
ASC Topic 220 (SFAS No. 130)
establishes standards for reporting comprehensive income and its components. Comprehensive income is defined as the change in equity
during a period from transactions and other events from non-owner sources. Per the consolidated financial statements,
the Company has purchased available-for-sale securities that are subject to this reporting.
Other-Than-Temporary Impairment:
All of our non-marketable
and other investments are subject to a periodic impairment review. Investments are considered to be impaired when a decline in
fair value is judged to be other-than-temporary.
When events or changes
in circumstances indicate that long-lived assets other than goodwill may be impaired, an evaluation is performed to determine if
a write-down to fair value is required. When an asset is classified as held for sale, the asset's book value is evaluated and adjusted
to the lower of its carrying amount or fair value less cost to sell. In addition, depreciation and amortization ceases while it
is classified as held for sale.
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
The indicators that we
use to identify those events and circumstances include:
|
·
the investee’s revenue and earnings trends relative to predefined milestones and overall business prospects;
|
|
·
the general market conditions in the investee’s industry or geographic area, including regulatory or economic changes;
|
|
·
factors related to the investee’s ability to remain in business, such as the investee’s liquidity, debt ratios, and the rate at which the investee is using its cash; and
|
|
·
the investee’s receipt of additional funding at a lower valuation. If an investee obtains additional funding at a valuation lower than our carrying amount or a new round of equity funding is required for the investee to remain in business, and the new round of equity does not appear imminent, it is presumed that the investment is other than temporarily impaired, unless specific facts and circumstances indicate otherwise.
|
Recently Issued Accounting Pronouncements:
In May 2009, the FASB issued
SFAS No. 165,
Subsequent Events
(“SFAS 165” or ASC 855). SFAS 165 (ASC 855) establishes general standards
of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or
are available to be issued. SFAS 165 (ASC 855) sets forth (1) The period after the balance sheet date during which management
of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial
statements, (2) The circumstances under which an entity should recognize events or transactions occurring after the balance sheet
date in its financial statements and (3) The disclosures that an entity should make about events or transactions that occurred
after the balance sheet date. SFAS 165 (ASC 855) was effective for interim or annual financial periods ending after
June 15, 2009.
In June 2009, the FASB
issued SFAS No. 168,
The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles—a
replacement of FASB Statement No. 162
(“SFAS 168” or ASC 105-10). The FASB Accounting Standards Codification
(“Codification”) will be the single source of authoritative
Non-governmental U.S. generally
accepted accounting principles. Rules and interpretive releases of the SEC under authority of federal securities laws
are also sources of authoritative GAAP for SEC registrants. SFAS 168 (ASC 105-10) was effective for interim and annual
periods ending after September 15, 2009. All existing accounting standards are superseded as described in SFAS
168. All other accounting literature not included in the Codification is non-authoritative. Existing GAAP was not intended
to be changed as a result of the Codification, and accordingly the change did not impact our financial statements. The ASC does
change the way the guidance is organized and presented.
In October 2009, the FASB
issued Accounting Standard Update (“ASU”) No. 2009-13,
Multiple-Deliverable Revenue Arrangements
(“ASU
2009-13. This standard updates FASB ASC 605,
Revenue Recognition
(“ASC 605”). The amendments to ASC 605 requires
entities to allocate revenue in an arrangement using estimated selling prices of the delivered goods and services based on a selling
price hierarchy. These amendments to ASC 605 should be applied on a prospective basis for revenue arrangements entered into or
materially modified in fiscal years beginning on or after June 15, 2010, with early adoption permitted. The Company adopted these
amendments on January 1, 2010. Management does not believe that the adoption of this standard will have any impact on
the Company’s financial statements.
In January 2010, the FASB issued ASU No. 2010-06,
Fair Value Measurements and Disclosures
(“ASU 2010-06”). This standard updates FASB ASC 820,
Fair
Value Measurements
(“ASC 820”). ASU 2010-06 requires additional disclosures about fair value measurements including
transfers in and out of Levels 1 and 2 and separate disclosures about purchases, sales, issuances, and settlements relating to
Level 3 measurements. It also clarifies existing fair value disclosures about the level of desegregations and about inputs and
valuation techniques used to measure fair value. The standard is effective for interim and annual reporting periods
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
beginning after December 15, 2009 except for
the disclosures about purchases, sales, issuances and settlements which is effective for fiscal years beginning after December
15, 2010 and for interim periods within those fiscal years. The Company adopted ASU 2010-06 on January 1, 2010, which
had no material impact on the financial statements. Other recent accounting pronouncements issued by the FASB (including its EITF),
the AICPA, and the SEC did not or are not believed by management to have a material impact on the Company’s present or future
financial statements.
Revenue and Cost Recognition:
The Company applies paragraph
605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized
or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are
met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to
the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.
Daniels Corporate Advisory
Company, Inc., (Daniels) has revenues as a result of corporate financial consulting services which are recognized as services are
performed. Daniels also operates the merchant banking division, which did not have any revenues to recognize.
Fixed Assets:
Fixed assets acquired would
be reported at cost less accumulated depreciation, which is generally provided on the straight-line method over the estimated useful
lives of the assets. Upon sale or retirement of an asset, the related costs and accumulated depreciation are removed from the accounts
and any gain or loss is recognized.
Financing Fees:
Financing fees were being
amortized over the life of the related liability on the straight-line method which is not materially different than using the effective
interest method. All amortization has been expensed since the ongoing staffing operations have discontinued from which the finance
fees were originally accrued.
Net Income (Loss) Per Share
The Company reports basic
and diluted earnings per share (EPS) according to the provisions of ASC Topic 260, which requires the presentation of basic EPS
and, for companies with complex capital structures, diluted EPS. Basic EPS excludes dilution and is computed by dividing net income
(loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted
EPS is computed by dividing net income (loss) available to common stockholders, adjusted by other changes in income or loss that
would result from the assumed conversion of those potential common shares, by the weighted number of common shares and common share
equivalents (unless their effect is anti dilutive) outstanding. Common stock equivalents are not included in the computation of
diluted earnings per share when the Company reports a loss because to do so would be anti-dilutive. Thus, these equivalents are
not included in the calculation of diluted income(loss) per share, resulting in basic and diluted income(loss) per share being
equal. The following is a reconciliation of the computation for basic and diluted EPS for the six months ended May 31, 2014 and
May 31, 2013:
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
|
|
|
|
|
|
5/31/2014
|
|
5/31/2013
|
Net (Loss)
|
$
|
74,020
|
|
$
|
(71,781)
|
|
|
|
|
|
|
Weighted-average common shares outstanding basic
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common stock
|
|
9,891,319
|
|
|
10,000
|
Equivalents
|
|
|
|
|
|
Stock options
|
|
-
|
|
|
-
|
Warrants
|
|
-
|
|
|
-
|
Convertible Notes
|
|
-
|
|
|
-
|
|
|
|
|
|
|
Weighted-average common shares outstanding- basic and diluted
|
|
9,891,319
|
|
|
10,000
|
|
|
|
|
|
|
Income Taxes:
The Company, a C-corporation,
accounts for income taxes under ASC Topic 740 (SFAS No. 109)
.
Under this method, deferred tax assets and liabilities
are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using
the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are established
when necessary to reduce deferred tax assets to the amount expected to be realized.
The Company adopted the
provisions of FASB ASC 740-10 “
Uncertainty in Income Taxes
” (ASC 740-10), on January 1, 2007. The Company
has not recognized a liability as a result of the implementation of ASC 740-10. A reconciliation of the beginning and ending amount
of unrecognized tax benefits has not been provided since there is no unrecognized benefit since the date of adoption. The Company
has not recognized interest expense or penalties as a result of the implementation of ASC 740-10. If there were an unrecognized
tax benefit, the Company would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties
in operating expenses.
Currently the Daniels has projected $4,500,784 as of May 31, 2014
in Net Loss Operating Loss carry-forwards available. The benefits of the potential tax savings will be recognized in the recorded
to date.
NOTE 3- RELATED PARTY TRANSACTIONS
The Company currently rents space from Arthur Viola, CEO and shareholder.
This is a month to month rental and there is no commitment beyond each month. The monthly rent is $2,025 and three months was expensed
in the quarter ending May 31, 2014.
NOTE 4- INVESTMENTS
Investments consist of
a portfolio of common stocks trading on the OTC: BB. The fair market values of the investments held for sale were $0 and
$78 at May 31, 2014 and November 30, 2013, respectively. Due to the immaterial amounts and that they are liquid they have been
classified as cash equivalents. Investments held as other assets as long term investments had fair market values of $10,200 and
$10,200 at May 31, 2014 and November 30, 2013, respectively. Other assets are securities of the Company’s clients for long
term capital appreciation. The total net unrealized loss for the period ended May 31, 2014 was $78 and the total net unrealized
gain for the period ended May 31, 2013 was $9,994.
Cash Equivalents are marketable
securities that are available-for-sale and not deemed long term investments by the Company. During the periods ended May 31, 2014
and May 31, 2013, there were no available-for-sale securities sold and gross realized (losses) gains on these sales were zero.
For purpose of determining gross realized gains, the cost of securities when sold is based on the FIFO method of valuation. Net
unrealized holding gains (losses) on available-for-sale securities both in cash and investments was $(39,040) and $(38,962), respectively,
for May 31, 2014 and November 30, 2013 and have been included in accumulated other comprehensive income.
NOTE 5- GOING CONCERN
The accompanying financial
statements have been prepared assuming that the Company will continue as a going concern. Currently, the Company has recurring
operating losses, and as of May 31, 2014 the Company had a working capital deficit of $852,114 and an accumulated deficit of $4,774,889.
These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management believes that
the Company’s capital requirements will depend on many factors including the success of the Company’s development efforts
and its efforts to raise capital. Management also believes the Company needs to raise additional capital for working capital purposes.
There is no assurance that such financing will be available in the future. The conditions described above raise substantial
doubt about our ability to continue as a going concern. The financial statements of the Company do not include any adjustments
relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might
be necessary should the Company be unable to continue as a going concern.
NOTE 6- COMMITMENTS AND CONTINGENCIES
Commitments:
The Company currently has no long term commitments.
Contingencies:
None
NOTE 7- INCOME TAXES
As of May 31, 2014, the
Company had approximately $4,500,784 in net operating loss carry forwards for federal income tax purposes which expire between
2011 and 2029. Generally, these can be carried forward and applied against future taxable income at the tax rate applicable
at that time. We are currently using a 35% effective tax rate for our projected available net operating loss carry-forward. However,
as a result of potential stock offerings and stock issuance in connection with potential acquisitions, as well as the possibility
of the Company not realizing it’s business plan objectives and having future taxable income to offset, the Company’s
use of these NOLs may be limited under the provisions of Section 382 of the Internal Revenue Code of 1986, as amended. The
Company is in the process of evaluating the implications of Section 382 on its ability to utilize some or all of its NOLs.
Components of deferred tax assets and (liabilities) are as follows:
|
|
|
|
|
|
|
31-May-14
|
|
30-Nov-13
|
Net operating loss carry forwards valuation available
|
$
|
1,575,274
|
|
$
|
1,601,182
|
|
|
|
|
|
|
Valuation Allowances
|
|
(1,441,536)
|
|
|
(1,601,182)
|
Difference
|
$
|
133,738
|
|
$
|
0
|
|
|
|
|
|
|
In accordance with FASB
ASC 740 “Income Taxes”, valuation allowances are provided against deferred tax assets, if based on the weight of available
evidence, some or all of the deferred tax assets may or will not be realized. The Company has evaluated its ability to realize
some or all of the deferred tax assets on its balance sheet and has established a valuation allowance in the amount of $1,441,536
at May 31, 2014 and $1,601,182 at November 30, 2013. The Company did not utilize any NOL deductions for the full fiscal year ended
November 30, 2013 and expects to use $133,738 for the fiscal year ending November 30, 2014.
NOTE 8 – SEGMENT INFORMATION
The accounting standards for reporting information
about operating segments define operating segments as components of an enterprise for which separate financial information is available
that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.
The Company’s chief operating decision maker is the Chief Executive Officer. The Company is organized by line of business.
While the Chief Executive Officer evaluates results in a number of different ways, the line of business management structure is
the primary basis for which the allocation of resources and financial results are assessed. Under the aforementioned criteria,
the Company operates in two operating and reporting segments: corporate consulting and logistics. Our parent Daniels Corporate
Advisory Company, Inc. is one segment of the Company that derives its corporate consulting. Our other business segment is our wholly
owned subsidiary Daniels Logistics, Inc., which provides niche logistic services.
The information provided below is obtained
from internal information that is provided to the Company’s chief operating decision maker for the purpose of corporate management.
The Company uses operating income (loss) to measure segment performance. The Company does not allocate corporate interest income
and expense, income taxes, other income and expenses related to corporate activity or corporate expense for management and administrative
services that benefit both segments. In addition, the Company does not allocate restructuring charges to the segment operating
income (loss) because management does not include this information in its measurement of the performance of the operating segments.
Because of this unallocated income and expense, the operating income (loss) of each reporting segment does not reflect the operating
income (loss) the reporting segment would report as a stand-alone business and therefore we do not present indirect
operating expenses. Intersegment transactions have not been eliminated in order to reflect the comprehensive results of each segment.
Note 8 - SEGMENT INFORMATION (CONTINUED)
The table below illustrates the Company’s results by reporting
segment for the six months ended May 31, 2014 and 2013:
Segment Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/31/2014
|
|
5/31/2013
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting
|
|
|
|
|
$
|
26,129
|
|
$
|
50,000
|
Logistics
|
|
|
|
|
|
442,503
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
Total Revenue
|
|
|
|
$
|
468,632
|
|
$
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/31/2014
|
|
5/31/2013
|
Cost of Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting
|
|
|
|
|
$
|
0
|
|
$
|
0
|
Logistics
|
|
|
|
|
|
259,500
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
Total Product Cost
|
|
|
|
$
|
259,500
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/31/2014
|
|
5/31/2013
|
Net Operating Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting
|
|
|
|
|
$
|
(67,450)
|
|
$
|
(71,781)
|
Logistics
|
|
|
|
|
|
141,471
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
Total Net Operating Income(Loss)
|
|
|
$
|
74,021
|
|
$
|
(71,781)
|
PART I
ITEM 2. DESCRIPTION OF BUSINESS
Overview
Daniels Corporate Advisory
intends to provide the corporate strategy consulting services noted below, through two methods: first prior to the issuance of
additional shares in a private placement or a registered offering, Mr. Viola will loan Daniels Corporate Advisory the necessary
capital to accomplish the initial purchase of rights to be the provider of choice to offer a financial specialty called corporate
strategy to clients network’s of other financial/business services companies. While rights agreements of this
nature are not typical, senior management, drawing on personal contacts, believes that offering to provide a very select service
that is very costly to create in-house and will augment other financial services already being offered/implemented by the financial/business
services firm entering into the rights agreement with Daniels Corporate Advisory, will be an acceptable addition. However,
there is no assurance that has time goes by a client may decide to enter our business and there is no provision in our agreement
to prevent that from happening. However, our senior management believes that our success with the ultimate client, the
client network member of a financial/business services client, will determine whether Daniels Corporate Advisory retains the client
or not.
The services incorporated
into corporate strategy advisory and implementation to help formulate a path for the acceleration of corporate development (growth)
include market analysis, negotiation, deal structure and determination of finance alternatives for the creation of joint-ventures,
marketing agreements, new product/creation additions and acquisitions. Daniels Corporate Advisory has a loosely organized
cadre of highly-qualified, independent contractors/consultants available to perform the necessary services to achieve the optimum
corporate strategy for a client. We will need to raise approximately $150,000 in the future to hire the most seasoned
consultants as full time senior management and/or as our advisory board. While conversations with various parties have
taken place, nothing has been finalized and there is no assurance that these funds will be raised.
A key service to be provided
to clients is their recommendation to financing options/sources and our participation in the negotiation of amounts and terms. The
average cost of financing for any one of the accelerated growth alternatives mentioned above may be below market because of our
participation, as the client may be offered in-house, short-term financing at preferential rates/terms. To accommodate
these needs, going forward, we plan to engage in our own financing in the future. We have not decided on the amount
or timing of any such financing. It is at the discretion of our sole officer, Mr. Viola, whether these funds are offered,
with the decision to participate based upon the long term growth potential of the client, its current projections for the availability
of excess cash flows for repayment of the advanced funds which would be provided by Daniels Corporate Advisory as low interest
rate loans for short term working capital additions and with the understanding Daniels Corporate Advisory will be retained for
further advisory.
Services will also be provided
in corporate financial advisory, which, like corporate strategy, is a specialized segment of corporate advisory. It
deals more with operations/cost control issues that can be done in-house with the aid of our professionals. The corporate
strategy and corporate financial advisory expertise that we will offer would be extremely expensive to do in-house by any potential
financial service firm retaining Daniels Corporate Advisory, because of the talent compensation costs involved on a full time basis. Daniels
Corporate Advisory, even though it currently lacks financing to operate on a viable scale, is still able to provide its specialized
services to its one client through our chairman, Arthur D. Viola. Also it takes time and money to organize a qualified
team that can work together, in a variety of industry environments. Daniels Corporate Advisory has already assembled
a team through verbal agreements and with no contingent compensation being offered or asked for by the interested parties, whom
are all professionals known personally by Mr. Viola. These verbal agreements may be formalized once subsequent financing
of at least $100,000 is achieved. In the interim, and going forward, should financing not be available, Mr. Viola will
personally loan funding, if necessary, to retain those professionals needed to complete the current corporate strategy assignment
and commence any other. The potential profits contemplated from the sales of appreciate equity upon completion of the
corporate strategy assignment of our one client is expected to provide adequate working capital for our internal needs for the
next assignment. Our sole officer, Mr. Viola, believes we will be cash flow positive at that time. Open communication
has transpired amongst the team over the past six months to assure it will be able to react quickly in any situation. In
addition, we may use our own in-house funds initially provided by Mr. Viola and from any potential profits from our one corporate
strategy assignment for any implementation process; something none of the potential financial/business service clients like accounting,
financial planning, estate planning, tax firms and those other firms specifically earmarked by Daniels Corporate Advisory to approach
for business will not do because of rules set up by their industry or government regulatory bodies/authorities. This
could be a costly method for Daniels Corporate Advisory to gain business, but it is believed by our senior management to be one
of the fastest ways to fill our pipeline and produce profits enabling Daniels Corporate Advisory to direct hire the most seasoned
independent contractor/consultants as additions to our senior management.
The second method Daniels
Corporate Advisory will use to provide its corporate strategy consulting services is more direct and less costly. It
will mean the development of advertising and end-user, client referrals. Name brand recognition is expected to be created
after one or two successful corporate strategy assignments and the publicizing of these events on web sites related to this specialty
and through an aggressive in-house direct-marketing campaign to micro-cap public companies.
Daniels Corporate Advisory
is operating at the present time through the corporate strategy segment of its business. Our sole officer, Mr. Viola,
is providing preliminary services to one additional client potential, in addition to our one contracted client, as we continue
to negotiate the equity portion of fee arrangements. Our one contracted client has already paid the retainer portion
of its fee and has agreed to the portion of the fee to be paid through stock participation. Once the full cash retainer
amount is paid a formal contract will be entered into between client and Daniels Corporate Advisory. The scope of the
contracted client’s corporate strategy assignment is being developed with planned additions to our staff being determined
based on the requirements to do the assignment. The shares received as part payment of the retainer will be handled
in the following manner: part will be sold off at the culmination of the advisory assignment for consultant payments and the balance
will be held in an in-house portfolio to be sold off as funds are needed for expansion in the future. Our sole officer,
Mr. Viola, expects to effectively carry out the current corporate strategy assignment through the use of his own personal reserves. In
addition, potential candidates for our advisory board are being reviewed. The merchant banking segment of our business
model will become operational if funding is raised in the future, either through loans, or by a Private Placement Offering.
As our presence in the
market place becomes more visible, through publication on client websites of our successes in our initial corporate strategy consulting
assignments coupled with an assumed resulting improvement in the client’s common stock price, added financing options are
expected to materialize for the benefit of our clients. Capital companies and high-net worth (accredited) individuals
may contact us to see if they may participate directly in subsequent assignments.
Recent Business Developments
Daniels Corporate Advisory conducts on-going
networking and business development in corporate strategy and consulting, primarily through chairman to chairman contacts.
A full range of disciplines are being offered to the nano-cap public company through this
personalized chairman to chairman networking to keep initial marketing costs at a minimum. Daniels Corporate Advisory will advises
its clients on operational strategies, market-planning, senior oversight management and financial alternatives consulting on optimum
paths for the client to take; which could include but not be limited to external growth alternatives requiring advisory on M &
A, levered transactions, capital structure, bridge loans, and equity financing. In order to effectively advise for the optimum
market value of the clients’ stock the status of the client’s common stock must be improved, if necessary
Business Strategy - Current Operational
Strategy & Current Client Projects:
Daniels creates and implements corporate
strategy alternatives for the mini-cap public or private company client. Through the singular, full-time efforts
of its Chairman and several initial independent contractor specialists working on a “when needed basis,” soon to be
full time employees, Daniels provides an outsourced talent pool of senior level executive and visionary talent on an affordable
basis for the mini-cap company. The client pays a reasonable cash upfront retainer, work- in-progress retainers and
a final cash retainer determined by results.
Daniels may provide the client with
multiple corporate strategies /opportunities including joint-ventures, marketing opportunity agreements and/or a variety of potential
acquisitions structured in LBO format. One or a combination of these strategies would allow the client to enter new market niches
or expand further into existing ones. For the public client company, our recommended consensus is implemented through
an optimum deal structure so that the possibility exists, in "One Step," for the client to achieve the necessary financial
criteria - (Net Worth and Pre-tax Earnings) for listing on a Major US Stock Exchange, (American/Small Cap NASDAQ). The Goal: Within
fourteen to twenty-four months from commencement of a Corporate Strategy Assignment, financial results should be forthcoming and
recorded in SEC Filings, a highly-credible, expanded Board and Senior Management Team assembled and the Exchange listing process
guided to completion, all by Daniels.
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.
In addition to the “specific
need” contracted for within the Corporate Advisory Assignment, Daniels Senior Management may elect to also create and provide
implementation Advisory to the client on multiple business opportunities including but not limited to a variety of potential acquisitions
structured in LBO format. This will allow the client entry into other promising new market niches and/or its further expansion
into established ones. Every effort will be made by Daniels through all phases of an Assignment to structure generic and/or external
growth alternatives to help the client achieve the necessary financial criteria - (Net Worth and Pre-tax Earnings) for listing
on a Major US Stock Exchange, (American/Small Cap NASDAQ).
Current Project: Start-Up: Daniels
Logistics, Inc.
During our 2013 fiscal year, (ending
November 30, 2013), Daniels, performed an extensive due diligence and market-planning analysis review of the Logistics Industry,
specifically the feasibility of entrance into and profitability for a start-up company in the most profitable market-niches in
“Supply Chain Management;” The consensus results were very positive causing Daniels to create newly-incorporated 100%
owned Subsidiary: “Daniels Logistics, Inc.” The subsidiary entered initial specified market niches, as Consultants
/ Advisors to clients by analyzing the segments in their Supply Chain where Daniels Logistics, Inc. (through its Independent Contractor
Logistics specialists) could network to develop/provide a lower-cost option for the client with Daniels Logistics, Inc. then also
acting in the advisory capacity of facilitator. Through its current, limited, hand-picked, client base, Daniels Logistics, Inc.
has entered selective domestic US Areas as well as some Foreign Markets; all, in the estimation of the Daniels Team, possessing
the most promise for profitability based an extensive analysis.
Initial financial results are supportive
of the Daniels Corporate Advisory’s decision to enter the Supply Chain Management segment of the Transportation Industry
through its subsidiary, Daniels Logistics, Inc. During the six months ended May 31, 2014 results from the Daniels Logistics subsidiary
has booked pretax profits of $141,471.
OPTIMUM GROWTH STRATEGY:
Twelve to Twenty four Month Horizons for
Daniels ' Objectives:
The funding received in our recent
offering should provide sufficient working capital to establish a quality, in-house Senior Management Team and to provide retainers
for our outsourced independent contractor advisors for one micro-cap public company client (to be added and advised) and to fund
the development/expansion of Daniels Logistics, Inc., our wholly owned subsidiary. We plan to expand our logistics subsidiary in
the most profitable niches within the supply chain management segment of the Transportation Industry. We intend to keep this Offering
open until December 31, 2014, should that be necessary, in order to raise the necessary
funding to implement our two pronged growth strategy.
Daniels' believes that the validity
of our corporate strategy model will be proven through the success of its newly-formed subsidiary, Daniels Logistics, Inc. We intend
to use our publicly traded common stock, in a variety of securities packages, to finance a subsidiary start-up, initially for generic sales growth
prospects. Potential exit strategies, which will be developed for optimizing the potential of the subsidiary and a return on corporate
capital, could include bringing the subsidiary public or merging it with a public company operating in one of the more profitable
niches of the specific market. This same corporate strategy model will be applied to any independent mini-cap public client. The
client will experience a very limited dilution financing option provided primarily from capital raised in this Offering.
We believe our business model to
be scalable. Based upon the success of the initial corporate strategy consulting assignments and/or the development of its own
subsidiary and its ultimate launch in the public market; Daniels could achieve the critical mass, itself, for listing of our common
stock on a major stock exchange. We would then achieve one of our main goals as a provider of corporate strategy advisory and low-cost
financing for strategy implementation for our clients.
Sales and Marketing
Daniels senior management will concentrate
its efforts to expand its corporate strategy advisory and consulting (for implementation of assignment results) services and related
specialties in the nano-cap segment of the public market, 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 above. Daniels
objective is to create and help manage implementation of accelerated expansion strategies; in so doing it may from time to time
provide investment in a client company to help achieve the optimum results.
Competition
We believe that 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, which
would likely sacrifice market share. Sales and overall profitability could be reduced in either case. In
addition, competitors may enter our existing markets, or we may be unable to compete successfully against existing or new competition.
The corporate financial services
merchant banking/private equity industries are very competitive and fragmented in the market niche in which Daniels Corporate Advisory
operates. There are limited barriers to entry and new competitors frequently enter the market. A significant number of our competitors
possess substantially greater resources than we possess. Additionally , we face substantial competition for potential clients and
for technical and professional personnel from providers of similar financial specialties, which range from giant national companies
headquartered on Wall Street to local well known affiliates of some of the largest accounting firms in the United States.
Large national companies that offer corporate
financial consulting and merchant banking services capabilities could easily expand into the nano cap niche intended for occupation
by Daniels Corporate Advisory. Other companies with whom we compete include the affiliates of well known , national accounting
firms. Numerous, local, owner-operated finder entities and their capital referral networks are also competitors, and each geographical
market generally has many competitors. National and regional consulting firms also offer similar financial advisory services and
capital networking advice. In addition, we will always be exposed to the risk that certain of our prospective clients will decide
to hire. full-time senior corporate development, market-planning and finance executives who can provide the relevant services internally.
Liquidity and Capital Resources
Our primary source of liquidity
has been expenses paid by Arthur D. Viola, our sole officer and director and controlling stockholder. As of May 31,
2014, we had $178,470 in cash and cash equivalents and a working capital deficit of $852,114.
Financing Activities
We will have to raise capital
by means of borrowings or through a private placement or a subsequent registered offering.. At present, we do not have
any commitments with respect to future financings. If we are unable to raise adequate capital, in the near term, to
finance all phases of a client corporate consulting assignment, our proposed business will experience slow growth because it will
be very hard to compete for business without a sound capital base to support advisory and implementation efforts on our suggested
corporate growth strategies.
At present, we do have
sufficient capital on hand to fund very limited operations for the immediate future. Our consulting income on current
and expected assignments (and continued support from Arthur D. Viola, our sole officer and director, is believed to be sufficient
to support current capital demands. Management estimates that we will need at least $2 million to fund client corporate
development consulting projects over the next 12 months. However, even if limited funds are raised, consulting services
can still be provided for Phase One of assignments, (the providing of consulting expertise). Phase Two, (the providing
of short term capital to client companies), will have to be curtailed because of a limited capital raise or be provided by Mr.
Viola and/or a joint-venture partner who will share in the potential revenues from Phase Two portions of any project. This
joint-venture sharing will limit the amount of profit we can earn in any one project.
Limited growth prospects,
because of lack of sufficient capital to implement results of corporate consulting assignments, may very well not produce sufficient
profit to cover the costs that will now be incurred by Daniels Corporate Advisory. Legal and accounting expenses are
significant for a reporting company and we will have to cover them out of limited consulting operations fees due to lack of adequate
funding. This may place additional constraints on the growth prospects of Daniels Corporate Advisory as it may have
to curtail added assignments for lack of adequate working capital to manage these new assignments. If sufficient capital
is not raised over the next 12 months, the limited consulting assignments current available will not be sufficient to sustain our
long term operations as a public company, and we could fail.
Results of Operations – For the
Three Months ended May 31, 2014
Revenues
Sales for the three months ended May 31, 2014
were $182,524 compared to $0 for the three months ended ended May 31, 2013 an increase of $182,524. This reflects revenue
from our start up logistics subsidiary of $182,524. Current quarter income was reduced from first quarter income by $77,455 due
to disruptions on the piers from mechanical breakdowns of pier owned equipment.
Cost of Sales
During the three months ended May 31,
2014, we incurred $145,499 in expenses, compared to $0 in the same period ended May 31, 2013 an increase of $145,499. This is cost
of sales relating to our logistics subsidiary started in the current year. There were no logistics' activity in the prior year.
Operating Expenses
During the three months ended May 31, 2014, we incurred $52,942
in expenses, compared to $68,064 in the same period ended May 31, 2013 a decrease of $15,122. Our major cost is wages which was
decreased by $25,000 in the current quarter. This was partially offset by an increase in professional fees and consulting expenses
relating to our registration statement filings from a year ago.
Net Income
The Company had a net loss for the three months
ended May 31, 2014 of $21,238 compared to a net loss of $18,742 for the three months ended May 31, 2013. This increase of $2,496
was in majority due to our logistics subsidiary which generated profits in 2014 and was not operating in 2013 along with other
minor items described above.
Results of Operations – For the
Six Months ended May 31, 2014
Revenues
Sales for the six months
ended May 31, 2014 were $482,503 compared to $50,000 for the six months ended May 31, 2014 resulting in an increase of
$392,503. This reflects revenue from our start up logistics subsidiary of $182,524. As mentioned above it should be noted the Company
has reduced revenue growth in the second quarter caused by pier owned mechanical breakdowns.
Cost of Sales
During the six months ended May 31, 2014,
we incurred $259,500 in expenses, compared to $0 in the same period ended May 31, 2013 an increase of $259,500. This is cost of
sales relating to our logistics subsidiary started in the current year. There were no logistics' activity in the prior year.
Operating Expenses
During the six months ended May 31, 2014, we incurred $93,580
in expenses, compared to $121,103 in the same period ended May 31, 2013 a decrease of $27,523.
Our
major cost is wages which was decreased by $50,000 in the current period. This was partially offset by an increase in professional
fees and consulting expenses relating to our registration statement filings from a year ago. Both periods presented included a
small amounts of general and administrative cost.
Net Income
The Company had a net income
for the six months ended May 31, 2014 of $74,020 compared to a net loss of $71,781 for the six months ended May 31, 2013.
This increase of $145,801 was in majority due to our logistics subsidiary which generated profits in 2014 and was not operating
in 2013 along with other minor items described above.