UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 2018
OR
☐ 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.
| Yes | ☒ | No | ☐ |
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).
| Yes | ☒ | No | ☐ |
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 ☐ | Accelerated filer ☐ | |||||
| Non-accelerated filer ☐ | Smaller reporting company ☒ | |||||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
| Yes | ☐ | No | ☒ |
As of July 13, 2018 the registrant had 4,225,451,502 shares of common stock outstanding.
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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 May 31, 2018, and November 30, 2017 (Unaudited) | 3 | |
| Condensed Consolidated Statements of Operations and Comprehensive Loss and for the Three and Six Months Ended May 31, 2018 and 2017 (Unaudited) | 4 | |
| Condensed Consolidated Statements of Cash Flows for the Six Months Ended May 31, 2018 and 2017 (unaudited) | 5 | |
| Notes to Condensed Consolidated Financial Statements | 6 | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition | |
| and Results of Operations | 14 | |
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 17 |
| Item 4. | Controls and Procedures | 17 |
| PART II. | OTHER INFORMATION | |
| Item 1. | Legal Proceedings | 20 |
| Item 1A. | Risk Factors | 20 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 20 |
| Item 6. | Exhibits | 20 |
| SIGNATURES | 21 | |
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| DANIELS CORPORATE ADVISORY COMPANY, INC. |
| Consolidated Balance Sheets |
(Unaudited)
| May 31, | November 30, | |||||||
| 2018 | 2017 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | (3 | ) | $ | (3 | ) | ||
| Total current assets | (3 | ) | (3 | ) | ||||
| Total assets | $ | (3 | ) | $ | (3 | ) | ||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 262,992 | $ | 249,014 | ||||
| Derivative liabilities | 463,491 | 362,091 | ||||||
| Notes payable, related party | 685,000 | 685,000 | ||||||
| Notes payable, net of loan discounts | 272,716 | 241,737 | ||||||
| Total current liabilities | 1,684,199 | 1,537,842 | ||||||
| Related party payables | 10,200 | 10,200 | ||||||
| Total liabilities | 1,694,399 | 1,548,042 | ||||||
| Commitments and contingencies | — | — | ||||||
| Stockholders' Deficit: | ||||||||
| Preferred stock, $0.001 par value. 100,000 shares authorized; 100,000 shares issued and outstanding as of May 31, 2018 and November 30, 2017, respectively | 100 | 100 | ||||||
| Common stock, $0.001 par value. 6,000,000,000 shares authorized; 4,225,451,502 and 3,513,247,802 shares issued and outstanding as of May 31, 2018 and November 30, 2017, respectively | 4,225,452 | 3,513,248 | ||||||
| Additional paid-in capital | 2,478,093 | 3,172,491 | ||||||
| Accumulated deficit | (8,333,698 | ) | (8,169,535 | ) | ||||
| Accumulated other comprehensive loss | (64,349 | ) | (64,349 | ) | ||||
| Total stockholders' deficit | (1,694,402 | ) | (1,548,045 | ) | ||||
| Total liabilities and stockholders' deficit | $ | (3 | ) | $ | (3 | ) | ||
The accompanying notes are an integral part of these financial statements.
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| DANIELS CORPORATE ADVISORY COMPANY, INC. |
| Consolidated Statements of Operations and Comprehensive Loss |
(Unaudited)
| Three Months Ended May 31, | Three Months Ended May 31, | Six Months Ended May 31, | Six Months Ended May 31, | |||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Revenue | $ | — | $ | — | $ | — | $ | — | ||||||||
| Operating expenses | 25,000 | 29,760 | 50,000 | 88,529 | ||||||||||||
| Income (loss) from operations | (25,000 | ) | (29,760 | ) | (50,000 | ) | (88,529 | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Derivative expense | (18,489 | ) | — | (63,960 | ) | (101,849 | ) | |||||||||
| Gain (loss) on derivative liabilities | (20,045 | ) | 505,004 | (37,439 | ) | 112,149 | ||||||||||
| Gain (loss) on retirement of debt | — | — | — | 22,000 | ||||||||||||
| Interest income (expense), net | (6,772 | ) | (20,100 | ) | (12,764 | ) | (40,201 | ) | ||||||||
| Total other income (expense) | (45,306 | ) | 484,904 | (114,163 | ) | (7,901 | ) | |||||||||
| Income (loss) before income taxes | (70,306 | ) | 455,144 | (164,163 | ) | (96,430 | ) | |||||||||
| Provision for income taxes (benefit) | — | — | — | — | ||||||||||||
| Net income (loss) before discontinued operations | (70,306 | ) | 455,144 | (164,163 | ) | (96,430 | ) | |||||||||
| Net income (loss) from discontinued operations | — | — | — | — | ||||||||||||
| Net income (loss) | (70,306 | ) | 455,144 | (164,163 | ) | (96,430 | ) | |||||||||
| Basic and diluted earnings (loss) per common share | $ | (0.00 | ) | $ | 0.00 | $ | (0.00 | ) | $ | (0.00 | ) | |||||
| Weighted-average number of common shares outstanding: | ||||||||||||||||
| Basic and diluted | 4,196,442,926 | 3,511,508,672 | 4,091,037,132 | 3,382,312,619 | ||||||||||||
| Comprehensive loss: | ||||||||||||||||
| Net income (loss) | $ | (70,306 | ) | $ | 455,144 | $ | (164,163 | ) | $ | (96,430 | ) | |||||
| Unrealized gain (loss) | — | — | (3,660 | ) | — | |||||||||||
| Comprehensive income (loss) | $ | (70,306 | ) | $ | 455,144 | $ | (167,823 | ) | $ | (96,430 | ) | |||||
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 |
(Unaudited)
| Six Months Ended May 31, | Six Months Ended May 31, | |||||||
| 2018 | 2017 | |||||||
| Cash flows from operating activities of continuing operations: | ||||||||
| Net income (loss) | $ | (164,163 | ) | $ | (96,430 | ) | ||
| Adjustments to reconcile net loss to cash used in operating activities: | ||||||||
| Amortization of debt discount | - | 27,308 | ||||||
| Derivative expense | 63,960 | 101,849 | ||||||
| (Gain) loss on derivative liabilities | 37,439 | (112,149 | ) | |||||
| (Gain) loss on retirement of debt | - | (22,000 | ) | |||||
| Accounts payable and accrued liabilities | 26,764 | 60,892 | ||||||
| Net cash provided by (used in) operating activities | (36,000 | ) | (40,530 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Net cash provided by (used in) financing activities | - | - | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of convertible debentures | 36,000 | 47,051 | ||||||
| Net cash provided by (used in) financing activities | 36,000 | 47,051 | ||||||
| Net increase (decrease) in cash and cash equivalents | — | 6,521 | ||||||
| Cash and cash equivalents at beginning of period | (3 | ) | 33 | |||||
| Cash and cash equivalents at end of period | $ | (3 | ) | $ | 6,554 | |||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | — | $ | — | ||||
| Cash paid for income taxes | $ | — | $ | — | ||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Beneficial conversion features and original issuance discounts on convertible debentures | $ | 85,412 | $ | 54,617 | ||||
| Common stock issued to reduce convertible and promissory notes payable | $ | 17,806 | $ | 19,264 | ||||
| Unrealized gain (loss) on securities | $ | (3,660 | ) | $ | — | |||
The accompanying notes are an integral part of these financial statements.
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DANIELS CORPORATE ADVISORY COMPANY, INC.
Notes to Unaudited Financial Statements
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
Daniels Corporate Advisory Company, Inc. (“Daniels” or 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. During the quarter ending August 31, 2015 the Company discontinued these operations until further analysis could be done on the overall effectiveness of all Company operations.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation:
We have prepared the accompanying consolidated financial statements in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and in accordance with generally accepted accounting principles in the United States of America. We believe these 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. 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.
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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 effect 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:
| ● | 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. |
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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, 2018 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, 2018. 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.
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. |
8
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.
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., generates revenues as a result of corporate financial consulting services which are recognized as services are performed. Daniels also operates a merchant banking division. During the three months ended May 31, 2018 and 2017, the Company did not generate any revenues.
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.
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.
9
Currently, the Company has projected $8,333,696 as of May 31, 2018 in Net 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 expense is $2,025.
Effective December 15, 2015, Mr. Viola entered into a $685,000 convertible promissory note agreement with the Company and forgave all remaining amounts outstanding at that time. The note matures on December 15, 2018 and bears interest at a rate of 10% per annum. Mr. Viola has the option to convert any portion of the unpaid principal balance into the Company’s common shares at any time.
During 2016, our President Arthur Viola infused $10,200 in advances for working capital. These funds were advanced interest free with no payback terms of twelve months and one day. No repayments have been made against these advances as of May 31, 2018.
NOTE 4 - 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, 2018 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 5 - COMMITMENTS AND CONTINGENCIES
Commitments:
The Company currently has no long-term commitments.
Contingencies:
None
NOTE 6 - LEGAL PROCEEDINGS
We are not engaged in any other litigation and management is unaware of any claims or complaints that could result in future litigation. Management will seek to minimize disputes with its customers but recognizes the inevitability of legal action in today's business environment as an unfortunate price of conducting business.
NOTE 7 - INCOME TAXES
As of May 31, 2018, the Company had approximately $8,333,696 in net operating loss carry forwards for federal income tax purposes which expire between 2018 and 2034. 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 21% 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.
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Components of deferred tax assets and (liabilities) are as follows:
| 31-May-18 | 30-Nov-17 | |||||||
| Net operating loss carry forwards valuation available | $ | 8,333,696 | $ | 8,169,535 | ||||
| Less: Valuation Allowances | (8,333,696 | ) | (8,169,535 | ) | ||||
| Deferred Tax Asset | $ | – | $ | – | ||||
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 $8,333,696 at May 31, 2018. The Company did not utilize any NOL deductions for the full fiscal year ended November 30, 2017.
NOTE 8 - NOTES PAYABLE
Other than as described below, there were no issuances of securities without registration under the Securities Act of 1933 during the reporting period which were not previously included in our previous form 10K.
On August 31, 2015, the Company entered in convertible note agreement with a private and accredited investor, LG Capital, in the amount of $75,000, unsecured, with principal and interest (stated at 8%) amounts due and payable upon maturity on February 28, 2016. After six months, the note holder has the option to convert any portion of the unpaid principal balance into the Company’s common shares at any time. The Company has determined that the conversion feature in this note is not indexed to the Company’s stock and is considered to be a derivative that requires bifurcation. The Company calculated the fair value of this conversion feature using the Black-Scholes model and the following assumptions: Risk-free interest rates ranging from .03% to .08%; Dividend rate of 0%; and, historical volatility rates ranging from 195% to 236%. As of May 31, 2018, the note balance was $55,224 and all associated loan discounts were fully amortized.
On December 30, 2015, the Company entered in convertible note agreement with a private and accredited investor, Auctus Private Equity Fund LLC, in the amount of $130,000, unsecured, with principal and interest (stated at 10%) amounts due and payable upon maturity on September 30, 2016. After six months, the note holder has the option to convert any portion of the unpaid principal balance into the Company’s common shares at any time. The Company has determined that the conversion feature in this note is not indexed to the Company’s stock and is considered to be a derivative that requires bifurcation. The Company calculated the fair value of this conversion feature using the Black-Scholes model and the following assumptions: Risk-free interest rates ranging from .03% to .16%; Dividend rate of 0%; and, historical volatility rates ranging from 208% to 269%. As of May 31, 2018, the note balance was $113,992 and all associated loan discounts were fully amortized.
On January 21, 2016, the Company entered in convertible note agreement with a private and accredited investor, John De La Cross Capital Partners Inc., in the amount of $8,000, unsecured, with principal and interest (stated at 5%) amounts due and payable upon demand. The note holder has the option to convert any portion of the unpaid principal balance into the Company’s common shares at any time. The Company has determined that the conversion feature in this note is not indexed to the Company’s stock and is considered to be a derivative that requires bifurcation. The Company calculated the fair value of this conversion feature using the Black-Scholes model and the following assumptions: Risk-free interest rates ranging from .03% to .16%; Dividend rate of 0%; and, historical volatility rates ranging from 208% to 269%. As of May 31, 2018, the note balance was $6,500 and all associated loan discounts were fully amortized.
11
On November 23, 2016, the Company entered in convertible note agreement with a private and accredited investor, Auctus Private Equity Fund LLC, in the amount of $61,000, unsecured, with principal and interest (stated at 12%) amounts due and payable upon maturity on August 23, 2017. After six months, the note holder has the option to convert any portion of the unpaid principal balance into the Company’s common shares at any time. The Company has determined that the conversion feature in this note is not indexed to the Company’s stock and is considered to be a derivative that requires bifurcation. The Company calculated the fair value of this conversion feature using the Black-Scholes model and the following assumptions: Risk-free interest rates ranging from .03% to .16%; Dividend rate of 0%; and, historical volatility rates ranging from 208% to 269%. During the three months ended May 31, 2018, the Company amended this agreement and received an additional $10,000 in funding under this note. As of May 31, 2018, the note balance was $97,000 and all associated loan discounts were fully amortized.
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 notes issued, (the "Note"), are a hybrid instrument 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 May 31, 2018 and November 30, 2017, the estimated fair value of derivative liability was determined to be $463,490 and $362,091, respectively. For the three months ended May 31, 2018, new derivative liability was recognized of $18,489. The change in the fair value of derivative liabilities for the three months ended February 28, 2018 was $20,045 resulting in an aggregate loss on derivative liabilities.
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 | 463,490 | – | – | 463,490 | 463,490 | |||||||||||||||
| Total derivative liabilities | $ | 463,490 | $ | – | $ | – | $ | 463,490 | $ | 463,490 | ||||||||||
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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 six months ended May 31, 2018:
| Derivative Liability | ||||
| Fair value, November 30, 2017 | $ | 362,091 | ||
| Additions | 63,960 | |||
| Change in fair value | 37,439 | |||
| Transfers in and/or out of Level 3 | – | |||
| Fair value, February 28, 2018 | $ | 463,490 | ||
NOTE 10 – SUBSEQUENT EVENTS
In accordance with FASB ASC 855-10 Subsequent Events, the Company has analyzed its operations subsequent to May 31, 2018 to the date these consolidated financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these consolidated financial statements.
13
PART I
ITEM 2. MANAGEMNT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
Overview
Daniels Corporate Advisory has established a permanent capital and talent base upon which to provide the corporate strategy consulting services noted below. A variety of methods to support this two-pronged effort include the issuance of additional shares of the parent and the subsidiary housing the incubating client. This can be achieved through private placement and/or issuance of Convertible Preferred Stock and loans from senior officers and other direct management or investment participants. A sustained flow of Strategy Assignments is expected through the networking of senior executives and board and advisory board additions. This may include the purchase of rights to provide financial strategy packages to clients of other financial/business services companies. While rights agreements of this nature are not typical, senior management, drawing on personal contacts and those of credentialed members of its Corporate Strategy Advisory Board believes that offering to provide a very select cost-effective service that with our permanent in-house professionals will augment other financial services already being offered by the financial/business services firm entering into the rights agreement is an acceptable additional option for accelerating the growth of Daniels. However, there is no assurance that has time goes by a financial/business service business 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 of a financial/business services firm contracting with us for our strategy services, 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) for the ultimate (end user) client include market analysis, deal negotiation and structure, determination of optimum finance alternatives, the creation of joint-ventures, marketing agreements, new product/creation additions and acquisitions. Daniels 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.
Daniels is developing direct methods for obtaining clients, namely creating brand advertising in industry niches of interest and subsequent referral by a stockholder or partner. Name brand recognition will be refined and expanded with bigger budget dollars after one or two successful corporate strategy assignments have been completed.
The “specialty” services that have been perfected through success will be publicizing on our and the client’s website for worldwide recognition.
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 added financing options with more competitive firms are expected to materialize for the benefit of all 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
The Company is operating through the corporate strategy segment of its business. It is attempting to build its own critical mass by creation of start-up subsidiaries it believes have promise/potential. The stated goal is for the parent (DCAC) company to consolidate the critical mass of subsidiaries to meet the financial requirements for up-listing to a major Stock Exchange.
Senior management and our advisory board are developing a corporate strategy platform for a specific client.
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The Company conducts on-going networking and business development in corporate strategy through its chairman, on a chairman to chairman basis, through the networks of its Advisory Board Members and its expanded, independent contractor consulting team. A full range of disciplines are offered to the mini-cap public and private company through personalized relationship networking to keep initial marketing costs at a minimum. Disciplines being offered are operational strategies, market-planning, senior oversight management and financial alternatives consulting on optimum paths for the client to take. This could include but not be limited to external growth alternatives requiring advisory on M & A, levered transactions, capital structure, bridge loans, and equity financing.
Business Strategy - Current Operational Strategy & Current Client Projects:
Daniels creates and implements corporate strategy alternatives for the mini-cap public or private company client. The addition of new business opportunities and the location of professional talent for implementation is anticipated through the full-time efforts of our senior management. These efforts are to be expanded in the US and in Foreign capitals by an expanding advisory board and through the networks of independent consultants. Principals of the respective client company will open their networks to augment professional access for specialties the Daniels corporate strategy consultants believe are needed in a jointly-venture, (jointly-controlled) undertaking created for the client’s optimum growth.
Daniels may provide the client with multiple corporate strategies /opportunities including joint-ventures, marketing opportunity agreements and/or potential acquisitions structured in LBO format. One or a combination of these strategies would allow the client to enter new market niches or expand further into existing ones.
The Goal: Within twenty-four months from commencement of a Corporate Strategy Assignment, financial results, aided by all participating players, should be forthcoming and recorded in SEC Filings. At the same time, a senior management team and Board expanded with highly-credible interim (or permanent) professionals (directors) will be provided in order to successfully navigate the listing process of a major Stock Exchange. While Daniels believes this process should be successful in the above-noted, time period, there is some uncertainty in the process which is dependent upon any past issues the listing committee of a specific exchange may deem necessary to be addressed prior to uplifting.
A similar effort will be provided to tailor an optimum growth program for the private company client, whether it chooses to remain private or to become a public company through alternative merger opportunities.
OPTIMUM GROWTH STRATEGY:
Twelve to Twenty-Four Month Horizons for Daniels’ Objectives:
Daniels’ believes that the validity of its corporate strategy model will be proven further through the success of several of its client/incubation/subsidiary deals. The Company plans to use its publicly traded common stock, in a variety of securities packages, including anti-dilutive Convertible Preferred Stock, to finance a subsidiary start-up, initially for generic sales/profits growth. Subsequent growth options noted above will be applied as external growth becomes a secondary goal. This method of two stage (generic and then external) growth is designed to leave existing client management with commanding equity and operating control positions. Eventually, an optimum exit strategy will be developed for the subsidiary, one that returns a significant return on corporate (parent) capital. The choices of optimum exit strategies could include bringing a subsidiary public, directly, or merging it with a public company operating in one of the more profitable niches of the specific market designated for expansion. The same corporate strategy model can/will be applied to any independent mini-cap public client.
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We believe our business model to be scalable. Based upon the potential success of the initial corporate strategy consulting assignments creating our uplifting to a major Stock Exchange, Daniels may entertain the creation of a franchising plan for key US Cities and Foreign Capitals or Finance Centers.
Sales and Marketing
Daniels senior management will concentrate its efforts to expand its corporate strategy and financial advisory services and related specialties in the mini-cap segment of the private and public markets, where Daniels believes it will be effective. Marketing efforts will increase through social and print media efforts and will be in addition to those methods already mentioned herein.
Daniels objective is to create and help manage implementation of accelerated expansion strategies and in so doing, aid in the creation of financing alternatives to accomplish client goals.
Competition
Existing and new competitors will continue to improve their services and introduce new services with competitive price and performance characteristics.
In periods of reduced demand for our services, we can either choose to maintain market share by reducing our prices to meet competition or maintain prices and choose only those assignments with new clients, that have pressing goals to be met, that offer Daniels optimum potential for profits and growth.
The “collective” corporate financial services, including merchant banking/private equity, are very competitive and fragmented in the Company’s market niche. There are limited barriers to entry and new competitors frequently enter the market. A significant number of our competitors possess substantially greater resources. We are and will continue to offer equity compensation to our team of Advisory Board Members, and independent strategy consultants in order to keep a stable, cohesive team of professionals, which is necessary and key to the creation of operating and capital solutions in a timely fashion.
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, 2018, we had ($3) in cash and cash equivalents and a working capital deficit.
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.
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Results of Operations – For the Three Months ended May 31, 2018
Revenues
The Company did not have sales for the three months ending May 31, 2018 or 2017.
Operating Expenses
During the three months ended May 31, 2018, we incurred $25,000 in expenses, compared to $29,760 in the same period ended May 31, 2017 a decrease of $4,760. Our sole cost is wages which was remained constant $25,000 in the current quarter.
Other Income and Expenses
During the quarter ending May 31, 2018 we incurred a loss from the change in derivative liabilities of $20,045, as compared to a gain from the change in derivative liabilities of $505,004 which accounted for most of the increase in other charges. The Company also incurred derivative expense charges of $18,489 for the quarter.
Net Income
The Company had a net loss for the three months ended May 31, 2018 of $70,305 compared to net income of $455,144 for the three months ended May 31, 2017. .
Results of Operations – For the Six Months Ended May 31, 2018
Revenues
The Company did not have sales for the six months ending May 31, 2018 or 2017.
Operating Expenses
During the six months ended May 31, 2018, we incurred $50,000 in expenses, compared to $88,529 in the same period ended May 31, 2017a decrease of $38,529. Our sole cost is wages which was remained constant $50,000 in the current quarter.
Other Income and Expenses
During the six months ending May 31, 2018 we incurred derivative expense charge of $63,690, as compared to $101,849 in the prior year period. We incurred a loss from the change in derivative liabilities of $37,439, as compared to a gain from the change in derivative liabilities of $112,149 which accounted for most of the increase in other charges.
Net Income
The Company had a net loss for the six months ended May 31, 2018 of $164,163 compared to a net loss of $96,430 for the nine months ended May 31, 2017.
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.
17
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 November 30, 2017. 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 November 30, 2017, 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 November 30, 2017, 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, 2017 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, 2017, we determined that control deficiencies existed that constituted material weaknesses, as described below:
| 1) | lack of documented policies and procedures; | |
| 2) | inadequate resources dedicated to the financial reporting function; and | |
| 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 May 31, 2018 based on criteria established in Internal Control—Integrated Framework issued by COSO.
18
Changes in Internal Control Over Financial Reporting.
There were no changes in our internal control over financial reporting during the quarter ended May 31, 2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
19
PART II
ITEM 1. LEGAL PROCEEDINGS
We are not engaged in any other litigation and management is unaware of any claims or complaints that could result in future litigation. Management will seek to minimize disputes with its customers but recognizes the inevitability of legal action in today's business environment as an unfortunate price of conducting business.
| Item 1A. | Risk Factors. |
Not applicable
ITEM 2. RECENT SALES OF UNREGISTERED SECURITIES
During the three months ended May 31, 2018, the Company issued 200,828,600 shares of unregistered common stock to for various convertible loan conversions to qualified investors.
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
| No. | Description | |
| 31.1 | Certification of Chief Executive Officer/CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1 | 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 July 16, 2018 | |||
| Daniels Corporate Advisory Company, Inc. | |||
| (Registrant) | |||
| By: | /s/ Arthur D. Viola | ||
| Arthur D. Viola | |||
| Chief Executive Officer | |||
| and Chief Financial Officer | |||
21
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: July 16, 2018
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: July 16, 2018
| /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.
Document and Entity Information - shares |
6 Months Ended | |
|---|---|---|
May 31, 2018 |
Jul. 13, 2018 |
|
| Document And Entity Information | ||
| Entity Registrant Name | Daniels Corporate Advisory Company, Inc. | |
| Entity Central Index Key | 0001498291 | |
| Document Type | 10-Q | |
| Document Period End Date | May 31, 2018 | |
| Amendment Flag | false | |
| Current Fiscal Year End Date | --11-30 | |
| Entity Filer Category | Smaller Reporting Company | |
| Entity Common Stock, Shares Outstanding | 4,225,451,502 | |
| Trading Symbol | DCAC | |
| Document Fiscal Period Focus | Q2 | |
| Document Fiscal Year Focus | 2018 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
May 31, 2018 |
Nov. 30, 2017 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Preferred stock, par value | $ 0.001 | $ .001 |
| Preferred stock, shares authorized | 100,000 | 100,000 |
| Preferred stock, shares issued | 100,000 | 100,000 |
| Preferred stock, shares outstanding | 100,000 | 100,000 |
| Common stock, par value | $ 0.001 | $ 0.001 |
| Common stock, shares authorized | 6,000,000,000 | 6,000,000,000 |
| Common stock, shares issued | 4,225,451,502 | 3,513,247,802 |
| Common stock, shares outstanding | 4,225,451,502 | 3,513,247,802 |
Consolidated Statements of Operations - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
May 31, 2018 |
May 31, 2017 |
May 31, 2018 |
May 31, 2017 |
|
| Consolidated Statements Of Operations | ||||
| Revenues | ||||
| Operating Expenses | 25,000 | 29,760 | 50,000 | 88,529 |
| Income (loss) from operations | (25,000) | (29,760) | (50,000) | (88,529) |
| Other income (expense) | ||||
| Derivative expense | (18,489) | 63,960 | 101,849 | |
| Gain (loss) on derivative liabilities | (20,045) | 505,004 | 37,439 | (112,149) |
| Gain (loss) on retirement of debt | 22,000 | |||
| Interest income (expense), net | (6,772) | (20,100) | (12,764) | (40,201) |
| Total Other Income (Expense) | (45,306) | 484,904 | (114,163) | (7,901) |
| Income (loss) before income taxes | (70,306) | 455,144 | (164,163) | (96,430) |
| Provision for income taxes (benefit) | ||||
| Net income (loss) before discontinued operations | (70,306) | 455,144 | (164,163) | (96,430) |
| Net income (loss) from discontinued operations | ||||
| Net Income (Loss) | $ (70,306) | $ 455,144 | $ (164,163) | $ (96,430) |
| Basic and diluted earnings (loss) per common share | $ (0.00) | $ 0 | $ (0.00) | $ (0.00) |
| Weighted-average number of common shares outstanding: Basic and diluted | 4,196,442,926 | 3,511,508,672 | 4,091,037,132 | 3,382,312,619 |
| Comprehensive loss: | ||||
| Net income (loss) | $ (70,306) | $ 455,144 | $ (164,163) | $ (96,430) |
| Unrealized gain (loss) | (3,660) | |||
| Comprehensive income (loss) | $ (70,306) | $ 455,144 | $ (167,823) | $ (96,430) |
Organization and Basis of Presentation |
6 Months Ended |
|---|---|
May 31, 2018 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Organization and Basis of Presentation | NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
Daniels Corporate Advisory Company, Inc. (“Daniels” or 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. During the quarter ending August 31, 2015 the Company discontinued these operations until further analysis could be done on the overall effectiveness of all Company operations. |
Summary of Significant Accounting Policies |
6 Months Ended | ||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
May 31, 2018 | |||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||
| Summary of Significant Accounting Policies | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation:
We have prepared the accompanying consolidated financial statements in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and in accordance with generally accepted accounting principles in the United States of America. We believe these 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. 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.
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 effect 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:
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, 2018 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, 2018. 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.
The indicators that we use to identify those events and circumstances include:
8 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.
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., generates revenues as a result of corporate financial consulting services which are recognized as services are performed. Daniels also operates a merchant banking division. During the three months ended May 31, 2018 and 2017, the Company did not generate any revenues.
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.
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 Company has projected $8,333,696 as of May 31, 2018 in Net Operating Loss carryforwards available. The benefits of the potential tax savings will be recognized in the recorded to date.
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Related Party Transactions |
6 Months Ended |
|---|---|
May 31, 2018 | |
| Related Party Transactions [Abstract] | |
| Related Party Transactions | 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 expense is $2,025.
Effective December 15, 2015, Mr. Viola entered into a $685,000 convertible promissory note agreement with the Company and forgave all remaining amounts outstanding at that time. The note matures on December 15, 2018 and bears interest at a rate of 10% per annum. Mr. Viola has the option to convert any portion of the unpaid principal balance into the Company’s common shares at any time.
During 2016, our President Arthur Viola infused $10,200 in advances for working capital. These funds were advanced interest free with no payback terms of twelve months and one day. No repayments have been made against these advances as of May 31, 2018. |
Going Concern |
6 Months Ended |
|---|---|
May 31, 2018 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Going Concern | NOTE 4 - 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, 2018 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. |
Commitments and Contingencies |
6 Months Ended |
|---|---|
May 31, 2018 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments and Contingencies | NOTE 5 - COMMITMENTS AND CONTINGENCIES
Commitments:
The Company currently has no long-term commitments.
Contingencies:
None |
Legal Proceedings |
6 Months Ended |
|---|---|
May 31, 2018 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Legal Proceedings | NOTE 6 - LEGAL PROCEEDINGS
We are not engaged in any other litigation and management is unaware of any claims or complaints that could result in future litigation. Management will seek to minimize disputes with its customers but recognizes the inevitability of legal action in today's business environment as an unfortunate price of conducting business.
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Income Taxes |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||
| Income Taxes | NOTE 7 - INCOME TAXES
As of May 31, 2018, the Company had approximately $8,333,696 in net operating loss carry forwards for federal income tax purposes which expire between 2018 and 2034. 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 21% 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:
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 $8,333,696 at May 31, 2018. The Company did not utilize any NOL deductions for the full fiscal year ended November 30, 2017.
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Derivative Liabilities |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Liabilities | 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 notes issued, (the "Note"), are a hybrid instrument 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 May 31, 2018 and November 30, 2017, the estimated fair value of derivative liability was determined to be $463,490 and $362,091, respectively. For the three months ended May 31, 2018, new derivative liability was recognized of $18,489. The change in the fair value of derivative liabilities for the three months ended February 28, 2018 was $20,045 resulting in an aggregate loss on derivative liabilities.
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:
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 six months ended May 31, 2018:
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Notes Payable |
6 Months Ended |
|---|---|
May 31, 2018 | |
| Receivables [Abstract] | |
| Note Payable | NOTE 8 - NOTES PAYABLE
Other than as described below, there were no issuances of securities without registration under the Securities Act of 1933 during the reporting period which were not previously included in our previous form 10K.
On August 31, 2015, the Company entered in convertible note agreement with a private and accredited investor, LG Capital, in the amount of $75,000, unsecured, with principal and interest (stated at 8%) amounts due and payable upon maturity on February 28, 2016. After six months, the note holder has the option to convert any portion of the unpaid principal balance into the Company’s common shares at any time. The Company has determined that the conversion feature in this note is not indexed to the Company’s stock and is considered to be a derivative that requires bifurcation. The Company calculated the fair value of this conversion feature using the Black-Scholes model and the following assumptions: Risk-free interest rates ranging from .03% to .08%; Dividend rate of 0%; and, historical volatility rates ranging from 195% to 236%. As of May 31, 2018, the note balance was $55,224 and all associated loan discounts were fully amortized.
On December 30, 2015, the Company entered in convertible note agreement with a private and accredited investor, Auctus Private Equity Fund LLC, in the amount of $130,000, unsecured, with principal and interest (stated at 10%) amounts due and payable upon maturity on September 30, 2016. After six months, the note holder has the option to convert any portion of the unpaid principal balance into the Company’s common shares at any time. The Company has determined that the conversion feature in this note is not indexed to the Company’s stock and is considered to be a derivative that requires bifurcation. The Company calculated the fair value of this conversion feature using the Black-Scholes model and the following assumptions: Risk-free interest rates ranging from .03% to .16%; Dividend rate of 0%; and, historical volatility rates ranging from 208% to 269%. As of May 31, 2018, the note balance was $113,992 and all associated loan discounts were fully amortized.
On January 21, 2016, the Company entered in convertible note agreement with a private and accredited investor, John De La Cross Capital Partners Inc., in the amount of $8,000, unsecured, with principal and interest (stated at 5%) amounts due and payable upon demand. The note holder has the option to convert any portion of the unpaid principal balance into the Company’s common shares at any time. The Company has determined that the conversion feature in this note is not indexed to the Company’s stock and is considered to be a derivative that requires bifurcation. The Company calculated the fair value of this conversion feature using the Black-Scholes model and the following assumptions: Risk-free interest rates ranging from .03% to .16%; Dividend rate of 0%; and, historical volatility rates ranging from 208% to 269%. As of May 31, 2018, the note balance was $6,500 and all associated loan discounts were fully amortized.
On November 23, 2016, the Company entered in convertible note agreement with a private and accredited investor, Auctus Private Equity Fund LLC, in the amount of $61,000, unsecured, with principal and interest (stated at 12%) amounts due and payable upon maturity on August 23, 2017. After six months, the note holder has the option to convert any portion of the unpaid principal balance into the Company’s common shares at any time. The Company has determined that the conversion feature in this note is not indexed to the Company’s stock and is considered to be a derivative that requires bifurcation. The Company calculated the fair value of this conversion feature using the Black-Scholes model and the following assumptions: Risk-free interest rates ranging from .03% to .16%; Dividend rate of 0%; and, historical volatility rates ranging from 208% to 269%. During the three months ended May 31, 2018, the Company amended this agreement and received an additional $10,000 in funding under this note. As of May 31, 2018, the note balance was $97,000 and all associated loan discounts were fully amortized. |
SUBSEQUENT EVENTS |
6 Months Ended |
|---|---|
May 31, 2018 | |
| Subsequent Events [Abstract] | |
| Subsequnet Events | NOTE 10 – SUBSEQUENT EVENTS
In accordance with FASB ASC 855-10 Subsequent Events, the Company has analyzed its operations subsequent to May 31, 2018 to the date these consolidated financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these consolidated financial statements.
|
Summary of Significant Accounting Policies (Policies) |
6 Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
May 31, 2018 | |||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||
| Basis of Presentation | Basis of Presentation:
We have prepared the accompanying consolidated financial statements in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and in accordance with generally accepted accounting principles in the United States of America. We believe these 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. |
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| Election to be Treated as an Emerging Growth Company | 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. |
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| FASB Codification | 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. |
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| Use of Estimates | 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. |
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| Risk and Uncertainties | 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 effect on our business. |
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| Cash and Cash Equivalents | 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.
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| Fair Value of Financial Instruments | 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:
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. |
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| Investments | 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 November 30, 2017 and 2016 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 November 30, 2017 and 2016. We base the cost of the investment sold on the specific identification method using market rates. |
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| Comprehensive Income | 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. |
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| Other-Than-Temporary Impairment | 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.
The indicators that we use to identify those events and circumstances include:
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| Recently Issued Accounting Pronouncements | 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.
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| Revenue and Cost Recognition | 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., generates revenues as a result of corporate financial consulting services which are recognized as services are performed. Daniels also operates a merchant banking division. During the years ended December 31, 2017 and 2016, the Company did not generate any revenues. |
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| Fixed Assets | 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. |
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| Financing Fees | 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. |
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| Net Income (Loss) Per Share | 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.
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Income Taxes (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Deferred Tax Assets and Liabilities | Components of deferred tax assets and (liabilities) are as follows:
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Derivative Liabilities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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:
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| Summary of the Changes in Fair Value of Level 3 Financial Liabilities | 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 six months ended May 31, 2018:
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Summary of Significant Accounting Policies - Schedule of Reconciliation of Computation for Basic and Diluted EPS (Details Narrative) |
Nov. 30, 2017
USD ($)
|
|---|---|
| Accounting Policies [Abstract] | |
| Net loss operating loss carry forwards | $ 8,428,607 |
Summary of Significant Accounting Policies - Schedule of Reconciliation of Computation for Basic and Diluted EPS (Details) - USD ($) |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|---|
May 31, 2018 |
May 31, 2017 |
May 31, 2018 |
May 31, 2017 |
Nov. 30, 2016 |
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| Accounting Policies [Abstract] | |||||
| Net (Loss) | $ (70,306) | $ 455,144 | $ (164,163) | $ (96,430) | |
| Weighted-average common stock | 1,594,701,282 | 21,127,708 | |||
| Weighted-average common shares outstanding- basic and diluted | 4,196,442,926 | 3,511,508,672 | 4,091,037,132 | 3,382,312,619 | |
Related Party Transactions (Details Narrative) |
6 Months Ended |
|---|---|
|
May 31, 2018
USD ($)
| |
| Related Party Transactions [Abstract] | |
| Monthly rent | $ 2,025 |
Income Taxes (Details Narrative) - USD ($) |
6 Months Ended | 9 Months Ended | |
|---|---|---|---|
May 31, 2018 |
Aug. 31, 2016 |
Nov. 30, 2017 |
|
| Operating loss carry forwards | $ 8,428,607 | ||
| Effective tax rate | 35.00% | ||
| Valuation allowance | $ 8,428,607 | ||
| Federal Income Tax Purposes [Member] | |||
| Operating loss carry forwards | $ 8,428,607 | ||
| Operating loss carry forwards expiration term | expire between 2017 and 2033 |
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) |
Nov. 30, 2017 |
Nov. 30, 2016 |
|---|---|---|
| Income Tax Disclosure [Abstract] | ||
| Net operating loss carry forwards valuation available | $ 8,428,607 | $ 7,513,779 |
| Deferred Tax Asset | $ 0 | $ 0 |
Derivative Liabilities (Details Narrative) - USD ($) |
9 Months Ended | ||||
|---|---|---|---|---|---|
Aug. 31, 2016 |
May 31, 2018 |
Nov. 30, 2017 |
Feb. 29, 2016 |
Nov. 30, 2015 |
|
| Estimated fair value of derivative liability | $ 463,491 | $ 362,091 | |||
| Derivative Liability [Member] | |||||
| Estimated fair value of derivative liability | $ 387,345 | $ 383,396 | |||
| Additional derivative liabilities | $ 202,897 | ||||
| Amortization of debt discount | 97,373 | ||||
| Loss on derivative liabilities | $ 42,045 |
Derivative Liabilities - Summary of Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis (Details) - Fair Value, Inputs, Level 3 [Member] |
Aug. 31, 2016
USD ($)
|
|---|---|
| Derivative liabilities on conversion feature | $ 341,351 |
| Total derivative liabilities | $ 341,351 |
Derivative Liabilities - Summary of the Changes in Fair Value of Level 3 Financial Liabilities (Details 1) |
6 Months Ended |
|---|---|
|
May 31, 2018
USD ($)
| |
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
| Fair value, December 1, 2015 | $ 341,351 |
| Additions | 256,344 |
| Change in fair value | 65,218 |
| Transfers in and/or out of Level 3 | $ (363,607) |
Note Payable (Details Narrative) |
Nov. 30, 2017 |
|---|---|
| Receivables [Abstract] | |
| Unsecured demand note with stated interest rate | 8.00% |