UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February
28, 2015
OR
o TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to
_______
Commission File Number 333-169128
DANIELS CORPORATE ADVISORY COMPANY, INC.
(Exact name of Registrant as specified
in its charter)
Nevada |
04-3667624 |
(State or other jurisdiction of |
(I.R.S. Employer |
incorporation or organization) |
Identification Number) |
|
|
Parker Towers, 104-60, Queens
Boulevard
12th Floor
Forest Hills, New York 11375
|
11375 |
(Address of principal executive offices) |
(Zip Code) |
(347) 242-3148
(Registrant's telephone number, including
area code)
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit
and post such files).
Indicate by check mark
whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.
See definition of “large accelerated filer, “accelerated filer” and “smaller reporting company” in
Rule 12b-2 of the Exchange Act.
Large accelerated filer o |
Accelerated filer o |
|
Non-accelerated filer o |
Smaller reporting company x |
|
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).
As of March 31, 2015
the registrant had 10,791,319 shares of common stock outstanding.
Daniels Corporate Advisory Company, Inc.
INDEX TO FORM 10-Q
PART I. |
FINANCIAL INFORMATION |
Page |
|
|
|
Item 1. |
Condensed Consolidated Financial Statements: |
|
|
|
|
|
Condensed Consolidated Balance Sheets at February 28, 2015(unaudited), and November 30, 2014 (unaudited) |
4 |
|
|
|
|
Condensed Consolidated Statements of Operations and for the Three Months Ended February 28, 2015, and (unaudited) February 29, 2014 (unaudited) |
5 |
|
|
|
|
Condensed Consolidated Statements of Cash Flows for the Three Months Ended February 28, 2015 (unaudited) and February 29, 2014 (unaudited) |
6 |
|
|
|
|
Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended February 28, 2015 (unaudited) and February 29, 2014 (unaudited) |
8 |
|
|
|
|
Notes to Condensed Consolidated Financial Statements |
9 |
|
|
|
Item 2. |
Management's Discussion and Analysis of Financial Condition |
|
|
and Results of Operations |
18 |
|
|
|
Item 3. |
Quantitative and Qualitative Disclosures about Market Risk |
22 |
|
|
|
Item 4. |
Controls and Procedures |
22 |
PART II. |
OTHER INFORMATION |
|
|
|
|
Item 1. |
Legal Proceedings |
23 |
|
|
|
Item 1A. |
Risk Factors |
23 |
|
|
|
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
25 |
|
|
|
Item 6. |
Exhibits |
25 |
|
|
|
SIGNATURES |
27 |
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Daniels Corporate Advisory Company, Inc. |
Consolidated Balance Sheets |
|
|
|
|
|
|
|
|
|
|
|
February 28, 2015 |
|
|
November 30, 2014 |
|
|
|
|
|
"Unaudited" |
|
|
"Unaudited" |
Assets |
Current Assets |
|
|
|
|
|
|
Cash and cash equivalents |
$ |
80,735 |
|
$ |
89,733 |
Accounts receivable |
|
158 |
|
|
4,530 |
Prepaid expenses |
|
3,136 |
|
|
3,136 |
|
Interest receivable |
|
9,245 |
|
|
2,998 |
|
Note receivable
|
|
340,000 |
|
|
205,000 |
Deferred taxes |
|
79,725 |
|
|
79,725 |
Investments
|
|
10,200 |
|
|
10,200 |
|
|
|
|
|
|
|
|
|
|
Total Current Assets |
$ |
523,199 |
|
$ |
395,322 |
|
|
|
|
|
|
|
|
|
Liabilities and Equity(Deficit) |
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
$ |
869,410 |
|
$ |
805,363 |
|
Derivative Liability |
|
56,148 |
|
|
0 |
|
Note payable net of discount |
|
1,042 |
|
|
0 |
|
|
Total Current Liabilities |
|
926,600 |
|
|
805,363 |
|
Related Party - Stockholder loans |
|
0 |
|
|
0 |
|
|
Total Liabilities |
|
926,600 |
|
|
805,363 |
Commitments and Contingencies (Note 6) |
|
|
|
|
|
Daniels Corporate Advisory Company, Inc.("DCAC") Shareholders' Deficit |
|
|
|
|
Preferred Stock, $.001 par value; 100,000 shares authorized |
|
|
|
|
|
|
|
100,000 issued and outstanding 2/28/2015 |
|
|
|
|
|
|
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and 11/30/2014 |
|
100 |
|
|
100 |
|
Common Stock, $001 par value; 750,000,000 shares |
|
|
|
|
|
|
|
authorized 10,791,319 shares issued and outstanding |
|
|
|
|
|
|
|
2/28/2015 and 11/30/2014 |
|
10,791 |
|
|
10,791 |
|
Additional paid-in-capital |
|
4,168,923 |
|
|
4,168,923 |
|
Accumulated deficit |
|
(4,544,370) |
|
|
(4,551,010) |
|
Accumulated other comprehensive (loss) |
|
(38,845) |
|
|
(38,845) |
|
|
Total Equity(Deficit) |
|
(403,401) |
|
|
(410,041) |
|
Total liabilities and equity(Deficit) |
$ |
523,199 |
|
$ |
395,322 |
|
|
|
|
|
|
|
|
|
"The accompanying notes are an integral part of these financial statements" |
|
|
|
|
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|
Daniels Corporate Advisory Company, Inc. |
Consolidated Statements of Operations |
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
|
February 28, 2015 |
|
February 28, 2014 |
|
|
"Unaudited" |
|
"Unaudited" |
|
|
|
|
|
|
|
Revenues |
|
$ |
195,761 |
|
$ |
259,979 |
|
|
|
|
|
|
|
Cost of Sales |
|
|
86,128 |
|
|
114,001 |
|
|
|
|
|
|
|
Gross Profit |
|
|
109,633 |
|
|
145,978 |
|
|
|
|
|
|
|
Operating Expenses |
|
|
81,815 |
|
|
40,636 |
|
|
|
|
|
|
|
Net Income(Loss) from Operations |
|
|
27,818 |
|
|
105,342 |
|
|
|
|
|
|
|
Other Income (Expense): |
|
|
|
|
|
|
Interest income |
|
|
6,247 |
|
|
0 |
Interest expense |
|
|
(19,919) |
|
|
0 |
Derivative liability gain |
|
|
229 |
|
|
0 |
|
|
|
(13,443) |
|
|
0 |
Net Income(Loss) Before |
|
|
|
|
|
|
Provision for Income Taxes |
|
|
14,375 |
|
|
105,342 |
|
|
|
|
|
|
|
Provision for income taxes |
|
|
7,735 |
|
|
10,082 |
|
|
|
|
|
|
|
Net Income(Loss) |
|
$ |
6,640 |
|
$ |
95,260 |
|
|
|
|
|
|
|
Basic and Diluted Loss Per Share |
|
|
0.00 |
|
|
0.01 |
|
|
|
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|
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|
Weighted average number |
|
|
|
|
|
|
of shares outstanding |
|
|
10,791,319 |
|
|
9,891,319 |
|
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|
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|
|
"The accompanying notes are an integral part of these financial statements" |
|
|
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Daniels Corporate Advisory Company, Inc. |
Consolidated Statements of Cash Flows |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
|
February 28, 2015 |
|
February 28, 2014 |
|
|
"Unaudited" |
|
"Unaudited" |
Cash flows from operating activities: |
|
|
|
|
|
|
Net income (loss) |
|
$ |
6,640 |
|
$ |
95,260 |
Common stock issued for expenses |
|
|
0 |
|
|
0 |
Gain(loss) on derivative liability |
|
|
(229) |
|
|
0 |
Debt discount amortization |
|
|
19,919 |
|
|
0 |
|
|
|
|
|
|
|
(Increase)decrease in prepaid expenses |
|
|
0 |
|
|
0 |
(Increase)decrease in other assets |
|
|
(6,247) |
|
|
4,215 |
(Increase)decrease in accounts receivable |
|
|
4,372 |
|
|
4,902 |
Increase(decrease) in accounts payable and accrued expenses |
|
64,047 |
|
|
11,246 |
Net cash used in operating activities |
|
|
88,502 |
|
|
115,623 |
Cash flows from investing activities: |
|
|
|
|
|
|
None |
|
|
0 |
|
|
0 |
Net cash provided(used) by investing activities |
|
|
0 |
|
|
0 |
Cash flows from financing activities: |
|
|
|
|
|
|
Proceeds from loans |
|
|
37,500 |
|
|
0 |
Disbursements for loan receivable |
|
|
(135,000) |
|
|
0 |
Net cash provided(used) by financing activities |
|
|
(97,500) |
|
|
0 |
|
|
|
|
|
|
|
Increase in cash and equivalents |
|
|
(8,998) |
|
|
115,623 |
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of period |
|
|
89,733 |
|
|
2,809 |
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
$ |
80,735 |
|
$ |
118,432 |
|
|
|
|
|
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|
"The accompanying notes are an integral part of these financial statements" |
|
|
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Daniels Corporate Advisory Company, Inc. |
Consolidated Statements of Cash Flows |
|
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|
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For the Three Months Ended |
|
|
|
|
February 28, 2015 |
|
February 28, 2014 |
|
|
|
|
"Unaudited" |
|
"Unaudited" |
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest |
|
|
$ |
0 |
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
Income taxes |
|
|
$ |
0 |
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss) on securities |
|
$ |
0 |
|
$ |
(67) |
|
|
|
|
|
|
|
|
|
"The accompanying notes are an integral part of these financial statements" |
|
|
|
|
|
|
|
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Daniels Corporate Advisory Company, Inc. |
Consolidated Statement of Comprehensive Income (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
|
February 28, 2015 |
|
February 28, 2014 |
|
|
"Unaudited" |
|
"Unaudited" |
|
|
|
|
|
|
|
Net loss |
|
$ |
6,640 |
|
$ |
95,260 |
|
|
|
|
|
|
|
Other comprehensive income (loss) |
|
|
0 |
|
|
0 |
|
|
|
|
|
|
|
Unrealized gains(losses) arising during the period |
|
|
0 |
|
|
(67) |
Comprehensive income (loss) |
|
$ |
6,640 |
|
$ |
95,193 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
"The accompanying notes are an integral part of these financial statements" |
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 24010, 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.
The Company formed
on October 11, 2013 Daniel's Logistics Inc. a wholly owned operating subsidiary in the field of logistics was incorporated in the
state of Nevada to take advantage of niche operating opportunities and possible acquisitions in the logistics field.
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 February 28, 2013 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 February 28, 2013. 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:
The Company has implemented all new accounting
pronouncements that are in effect and that may impact its consolidated financial statements and does not believe that there are
any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results
of operations.
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
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 antidilutive) 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 loss per share, resulting in basic and diluted loss per share being equal. The following
is a reconciliation of the computation for basic and diluted EPS for the three months ended February 28, 2015 and February 29,
2014:
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2/28/2015 |
|
2/28/2014 |
Net (Loss) |
$ |
6,640 |
|
$ |
95,260 |
|
|
|
|
|
|
Weighted-average common shares outstanding basic |
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common stock |
|
10,791,319 |
|
|
9,891,319 |
Equivalents |
|
|
|
|
|
Stock options |
|
- |
|
|
- |
Warrants |
|
- |
|
|
- |
Convertible Notes |
|
- |
|
|
- |
|
|
|
|
|
|
Weighted-average common shares outstanding- basic and diluted |
|
10,791,319 |
|
|
9,891,319 |
|
|
|
|
|
|
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 $4,753,649 as of February
28, 2014 in Net Loss Operating Loss carryforwards 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 February 28, 2015.
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 $195
and $195 at February 28, 2015 and November 30, 2014, 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 February 28, 2015 and November 30, 2014, respectively. Other assets are securities of the Company’s clients
for long term capital appreciation. The total net unrealized loss for the period ended February 28, 2015 was $0 and the total net
unrealized gain for the period ended February 28, 2015 was $0
Cash Equivalents are
marketable securities that are available-for-sale and not deemed long term investments by the Company. During the periods ended
February 28, 2015 and February 29, 2014, 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 $(38,845)
and $(38,845), respectively, for February 28, 2015 and November 30, 2014 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 February 28, 2015 the Company had a working capital deficit and an accumulated deficit. 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 February 28,
2015, the Company had approximately $1,58,475 in net operating loss carry forwards for federal income tax purposes which expire
between 2016 and 2032. 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
carryforward. 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 its 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:
|
28-Feb-15 |
|
30-Nov-14 |
Net operating loss carry forwards valuation available |
$ |
1,584,475 |
|
$ |
1,584,475 |
|
|
|
|
|
|
Valuation Allowances |
|
1,504,750 |
|
|
1,504,750 |
Deferred Tax Asset |
$ |
79,725 |
|
$ |
79,725 |
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 $1,584,475 at February 28, 2014 and November 30, 2014. The Company did not utilize any NOL deductions for the full fiscal year
ended November 30, 2014 and expects to use $79,725 for the fiscal year ending November 30, 2015.
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 three months ended February 28, 2015 and 2014:
Segment Information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/28/2015 |
|
2/28/2014 |
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting |
|
|
|
|
$ |
0 |
|
$ |
18,472 |
Logistics |
|
|
|
|
|
195,761 |
|
|
259,979 |
|
|
|
|
|
|
|
|
|
|
Total Revenue |
|
|
|
$ |
195,761 |
|
$ |
278,451 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/28/2015 |
|
2/28/2014 |
Cost of Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting |
|
|
|
|
$ |
0 |
|
$ |
0 |
Logistics |
|
|
|
|
|
86,128 |
|
|
114,001 |
|
|
|
|
|
|
|
|
|
|
Total Product Cost |
|
|
|
$ |
86,128 |
|
$ |
114,001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/28/2015 |
|
2/28/2014 |
Net Operating Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting |
|
|
|
|
$ |
(79,468) |
|
$ |
(22,165) |
Logistics |
|
|
|
|
|
86,108 |
|
|
117,425 |
|
|
|
|
|
|
|
|
|
|
Total Net Operating Income(Loss) |
|
|
$ |
6,640 |
|
$ |
95,260 |
|
|
|
|
|
|
|
|
|
|
Intersegment Transactions non reportable in consolidated statements |
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting Fees |
|
|
|
$ |
8,996 |
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
Administrative Expense Logistics |
|
|
$ |
(8,996) |
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
Note 9 - DERIVATIVE LIABILITIES
The Company accounts for derivative financial
instruments in accordance with ASC 815, which requires that all derivative financial instruments be recorded in the balance sheets
either as assets or liabilities at fair value.
The Company’s derivative liability
is an embedded derivative associated with one of the Company’s convertible promissory notes. The convertible promissory note
was issued on February 23, 2015, (the "Note"), is a hybrid instruments which contain an embedded derivative feature which
would individually warrant separate accounting as a derivative instrument under Paragraph 815-10-05-4. The embedded derivative
feature includes the conversion feature to the Note. Pursuant to Paragraph 815-10-05-4, the value of the embedded derivative liability
have been bifurcated from the debt host contract and recorded as a derivative liability resulting in a reduction of the initial
carrying amount (as unamortized discount) of the notes, which are amortized as debt discount to be presented in other (income)
expenses in the statements of operations using the effective interest method over the life of the notes.
The embedded derivative within the note
have been valued using the Black Scholes approach, recorded at fair value at the date of issuance; and marked-to-market at each
reporting period end date with changes in fair value recorded in the Company’s statements of operations as “change
in the fair value of derivative instrument”.
As of February 23, 2015 and February
28, 2015, the estimated fair value of derivative liability was determined to be $56,377 and $56,148, respectively. On February
23, 2014, the derivative liability was recognized with a debt discount of $37,500. During the three months ended February 28, 2015,
amortization of $19,919 was recorded against the discount. The change in the fair value of derivative liabilities for the nine
months ended September 30, 2014 was $229 resulting in an aggregate gain on derivative liabilities of $229.
Summary of Fair Value of Financial
Assets and Liabilities Measured on a Recurring Basis
Financial assets and liabilities measured
at fair value on a recurring basis are summarized below and disclosed on the balance sheets:
| |
| |
| |
| |
| |
|
| |
Fair Value Measurement Using |
| |
Carrying Value | |
Level 1 | |
Level 2 | |
Level 3 | |
Total |
Derivative liabilities on conversion feature | |
| 56,148 | | |
| — | | |
| — | | |
| 56,148 | | |
| 56,148 | |
Total derivative liabilities | |
$ | 56,148 | | |
$ | — | | |
$ | — | | |
$ | 56,148 | | |
$ | 56,148 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Summary of the Changes in Fair
Value of Level 3 Financial Liabilities
The table below provides a summary of
the changes in fair value, including net transfers in and/or out, of all financial assets and liabilities measured at fair value
on a recurring basis using significant unobservable inputs (Level 3) during the nine months ended September 30, 2014:
| |
| Derivative Liability | |
Fair value, December 1, 2014 | |
$ | — | |
Additions | |
| 56,377 | |
Change in fair value | |
| (229 | ) |
Transfers in and/or out of Level 3 | |
| — | |
Fair value, February 28, 2015 | |
$ | 56,148 | |
PART I
ITEM 2. MANAGEMNT
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
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 last fiscal year,
(ending November 30, 2014), 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. which has continually booked pretax profits through the end of current
quarter at February 28, 2015 since its inception.
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.
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 February 28, 2015, we had $80,735 in cash and cash equivalents and a working capital deficit of $403,401.
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 logistics income continues
to provide enough working capital to fund our operations. We are continually seeking to raise funds for our projects through both
debt and equity measures.
Results of Operations – For
the Three Months ended February 28, 2015
Revenues
Sales for the three months ended February
28, 2015 were $195,761 compared to $259,979 for the three months ended ended February 28, 2014 an decrease of $64,218.
This reflects revenue from our start up logistics subsidiary which has a slow down in the current quarter due to activity levels
at port locations we service.
Cost of Sales
During the three months ended February
28, 2015, we incurred $86,128 in expenses, compared to $114,001 in the same period ended February 28, 2014 an decrease of $27,873.
This is cost of sales relating to our logistics subsidiary started in the prior year. Our cost of sales decrease was a direct by
product of our decreased sales volume.
Operating Expenses
During the three months ended February 28, 2015, we incurred
$81,815 in expenses, compared to $40,636 in the same period ended February 28, 2014 a increase of $41,179. Our major cost is wages
which was remained constant $25,000 in the current quarter. This quarter saw an increase in consulting expenses as we continue
to develop our logistics business internally.
Other Income and Expenses
During the first quarter ending February
28, 2015 we incurred interest expense charges which was the c=accretion of debt discount of $19,919 and we charged $6,247of finance
charges on loans we had made. The prior period had no other income and expense items.
Net Income
The Company had a net income for the three
months ended February 28, 2015 of $6,640 compared to a net income of $95,260 for the three months ended February 28, 2014. This
decrease of $88,620 was in majority due to our logistics subsidiary slowdown which generated profits in 2015 at a slower rate than
2014 along with other minor items described above.
ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
None.
ITEM 4 CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures.
We maintain disclosure controls and procedures designed
to provide reasonable assurance that information required to be disclosed in reports filed under the Securities Exchange Act of
1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the specified time periods
and accumulated and communicated to our management, including our principal executive officer and principal financial officer,
as appropriate to allow timely decisions regarding disclosure.
Our management, with the participation of our Chief
Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), evaluated the effectiveness of our disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) as of February 28, 2014.
In designing and evaluating disclosure controls and procedures, we and our management recognize that any disclosure controls and
procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objective.
As of February 28, 2015, based on the evaluation of these disclosure controls and procedures, and in light of the material weaknesses
found in our internal controls, the CEO and CFO concluded that our disclosure controls and procedures were not effective.
In light of the conclusion that our internal controls
over financial reporting were ineffective as of February 28, 2014, we have applied procedures and processes as necessary to ensure
the reliability of our financial reporting in regards to this quarterly report on Form 10-Q. Accordingly, management believes,
based on its knowledge, that: (i) this quarterly report does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading
with respect to the periods covered by this report; and (ii) the financial statements, and other financial information included
in this quarterly report, fairly present in all material respects our financial condition, results of operations and cash flows
as at, and for, the periods presented in this quarterly report.
Management’s Report on Internal Control
over Financial Reporting
Our management is responsible for establishing and
maintaining effective internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Because of
its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement
of our financial statements would be prevented or detected. Under the supervision of our CEO and PFO, the Company conducted an
evaluation of the effectiveness of our internal control over financial reporting as of November 30, 2014 using the criteria established
in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
A material weakness is a deficiency, or combination
of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement
of our annual or interim financial statements will not be prevented or detected on a timely basis. In our assessment of the effectiveness
of internal control over financial reporting as of November 30, 2014, we determined that control deficiencies existed that constituted
material weaknesses, as described below:
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1) |
lack of documented policies and procedures; |
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2) |
inadequate resources dedicated to the financial reporting function; and |
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3) |
ineffective separation of duties due to limited staff. |
Subject to the Company’s ability to obtain
financing and hire additional employees, the Company expects to be able to design and implement effective internal controls in
the future that address these material weaknesses.
Accordingly, we concluded that these control deficiencies
resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented
or detected on a timely basis by the Company's internal controls.
As a result of the material weaknesses described
above, our CEO and CFO have concluded that the Company did not maintain effective internal control over financial reporting as
of February 28, 2015 based on criteria established in Internal Control—Integrated Framework issued by COSO.
Changes in Internal Control Over Financial Reporting.
There were no changes in our internal control over
financial reporting during the quarter ended February 28, 2015 that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.
PART
II
ITEM 1. LEGAL
PROCEEDINGS
Daniels Corporate Advisory
is not engaged in any litigation, and we are unaware of any claims or complaints that could result in future litigation. We
will seek to minimize disputes with our customers and others but recognize the inevitability of legal action in today’s business
environment as an unfortunate price of conducting business.
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 RELATED TO OUR BUSINESS DURING
SLOW ECONOMIC ACTIVITY
Our business environment
including potential real estate projects are running at an extremely slow economic pace and may continue to do so for the foreseeable
future. Our prospects must be considered within that framework and in light of the risks, expenses, delays, problems and difficulties
frequently encountered in the re-establishment of a business. As such, we face risks and uncertainties relating to our ability
to successfully implement our business plan.
WE HAVE AN ACCUMULATED DEFICIT AND
MAY CONTINUE TO HAVE LOSSES IN THE FUTURE, WHICH COULD HAVE A NEGATIVE IMPACT ON OUR OPERATIONS
Since inception, we
have generated an accumulated deficit of $4,753,649 as of February 28, 2014. We are increasing development, growth and acquisition
activity which will result in increased expenses which could result in additional losses in the next 12 months. These losses could
continue until such time, as we are able to generate sufficient revenues to finance our operations and the costs of continuing
expansion. As of February 28, 2014, we had cash and cash equivalents of $118,421.
OUR AUDITORS ISSUED A GOING CONCERN
OPINION WHICH MEANS WE MAY NOT BE ABLE TO ACHIEVE OUR OBJECTIVES AND MAY HAVE TO SUSPEND OR CEASE OPERATIONS.
Our auditors issued
a going concern opinion for the fiscal years ended November 30, 2013 and November 30, 2012. This means that there is substantial
doubt that we can continue as an ongoing business without additional financing and/or generating profits. If we cannot raise additional
capital or generate sufficient revenues to operate profitably, we may have to suspend or cease operations. If that occurs, you
will lose your investment.
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 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. Those additional issuances of our common stock would
result in a reduction of an existing holder's percentage interest in Broadleaf Capital Partners, Inc.. 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.
There has been a limited
public market for our common stock, and an active trading market for our common stock may not develop. 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.
OUR COMMON STOCK IS DEEMED A "PENNY
STOCK," WHICH MAY MAKE IT MORE DIFFICULT FOR INVESTORS TO RESELL THEIR SHARES DUE TO SUITABILITY REQUIREMENTS.
The Securities and
Exchange Commission or SEC has adopted regulations which generally define “penny stock” to be an equity security that
has a market price of less than $5.00 per share, subject to specific exemptions. The market price of our common stock on the Bulletin
Board has been substantially less than $5.00 per share and therefore we are currently considered a “penny stock” according
to SEC rules. This designation requires any broker-dealer selling these securities to disclose certain information concerning the
transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase
the securities. These rules limit the ability of broker-dealers to solicit purchases of our common stock and therefore reduce the
liquidity of the public market for our shares.
NEVADA LAW AND OUR CERTIFICATE OF
INCORPORATION MAY PROTECT OUR DIRECTORS FROM CERTAIN TYPES OF LAWSUITS WHICH COULD RESULT IN LIABILITY FOR INFE 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.
SINCE WE HAVE NOT PAID ANY DIVIDENDS
ON OUR COMMON STOCK AND DO NOT INTEND TO DO SO IN THE FORESEEABLE FUTURE, A PURCHASER OF OUR COMMON STOCK WILL ONLY REALIZE AN
ECONOMIC GAIN ON HIS OR HER INVESTMENT FROM AN APPRECIATION, IF ANY, IN THE MARKET PRICE OF OUR COMMON STOCK.
We have never paid,
and have no intentions in the foreseeable future to pay, any cash dividends on our common stock. Therefore an investor in our common
stock, in all likelihood, will only realize a profit on his investment if the market price of our common stock increases in value.
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. These applicable requirements may first apply
to our annual report on Form 10-KSB for any fiscal years ending December 31, 2002. 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 prospectus 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.
INVESTORS IN OUR SECURITIES MAY SUFFER
DILUTION.
The issuance of shares
of our common stock, or shares of our common stock underlying warrants, options or preferred stock will dilute the equity interest
of existing stockholders who do not have anti-dilution rights and could have a significant adverse effect on the market price of
our common stock. The sale of our common stock acquired at a discount could have a negative impact on the market price of our common
stock and could increase the volatility in the market price of our common stock. 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. Those additional issuances of our common stock would result in a reduction of an existing
holder's percentage interest in Daniels Corporate Advisory, Inc.. Our business, financial condition and results of operations could
suffer adverse consequences if we are unable to obtain additional capital when needed.
ITEM 2. RECENT
SALES OF UNREGISTERED SECURITIES
The Company had no
sales of unregistered securities for the quarter ending February 28, 2015.
ITEM 6. EXHIBITS,
REPORTS ON FORM 8-K AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
Exhibits required to
be attached by Item 601 of Regulation S-B are listed in the Index to Exhibits and are incorporated herein by this reference.
EXHIBIT
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No. |
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Description |
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31.1 |
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Certification of Chief Executive Officer/CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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32.1 |
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Certification of Chief Executive Officer/CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Dated April 20, 2015 |
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Daniels Corporate Advisory Company, Inc. |
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(Registrant) |
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By: |
/s/ Arthur D. Viola |
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Arthur D. Viola |
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Chief Executive Officer |
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and Chief Financial Officer |
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EXHIBIT 31.1
PRINCIPAL EXECUTIVE OFFICER
CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Arthur D. Viola, certify that:
1. I have reviewed this quarterly report
on Form 10-Q of Daniels Corporate Advisory Company, Inc. (the “registrant”);
2. Based on my knowledge, this report does
not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial
statements, and other financial information included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s)
and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
(a) Designed such disclosure controls and
procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Designed such internal control over
financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the
registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change
in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter
(the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s)
and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors
and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material
weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect
the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material,
that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
By: /s/ Arthur D. Viola
Chief Executive Officer |
and Chief Financial Officer |
Dated: April 20, 2015
Exhibit 32.1
CERTIFICATION OF THE PRINCIPAL EXECUTIVE
OFFICER
PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT
OF 2002
(18 U.S.C. SECTION 1350)
Pursuant to 18 U.S.C. Section 1350, as
created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned Chief Executive Officer of Daniels Corporate Advisory,
Inc. (the "Company") does hereby certify, to the best of such officer's knowledge, that:
1. The Quarterly Report on Form 10-Q of
Daniels Corporate Advisory Company, Inc. (the Company) fully complies with the requirements of Section 13(a) or Section 15(d),
as applicable, of the Securities Exchange Act of 1934, as amended; and
2. The information contained in the Report
fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: April 20, 2015
/s/ Arthur D. Viola
Chief Executive Officer |
and Chief Financial Officer |
The certifications set forth above are
being furnished as an exhibit solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed to be "filed"
for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference
in any filing under the Securities Act of 1933, as amended.
A signed original of this written statement
required by Section 906, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed
form within the electronic version of this written statement required by Section 906, has been provided to Daniels Corporate Advisory
Company, Inc. and will be retained by Daniels Corporate Advisory Company, Inc. and furnished to the Securities and Exchange Commission
or its staff upon request.
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