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Daniels Corporate Advisory Company, Inc. - Quarter Report: 2014 August (Form 10-Q)

Unassociated Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
 
 
x   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended August 31, 2014
 
OR
o     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number 333-169128

DANIELS CORPORATE ADVISORY COMPANY, INC.
(Exact name of Registrant as specified in its charter)
 
Nevada
04-3667624
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification Number)
   
Parker Towers, 104-60, Queens Boulevard
12th Floor
Forest Hills, New York 11375
11375
(Address of principal executive offices)
(Zip Code)
 
(347) 242-3148
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
 
 
Yes
x
 
No
  o  

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
x
 
No
  o  
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
    Large accelerated filer  o
Accelerated filer  o
 
    Non-accelerated filer    o
Smaller reporting company  x
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 
 
Yes
  o  
No
x
 
 
As of August 31, 2014 the registrant had 9,894,319 shares of common stock outstanding.
 
 
1

 
 
Daniels Corporate Advisory Company, Inc.
INDEX TO FORM 10-Q

PART I.
FINANCIAL INFORMATION
Page
     
Item 1.
Condensed Financial Statements:
 
     
 
Condensed Balance Sheets at August 31, 2014(unaudited), and November 30, 2013 (audited)
     
 
Condensed Statements of Operations and for the Nine and Three Months Ended August 31, 2014, and (unaudited) August 31, 2013 (unaudited)
     
 
Condensed Statements of Cash Flows for the Nine Months Ended August 31, 2014 (unaudited) and August 31, 2013 (unaudited)
6
     
 
Condensed Statements of Comprehensive Income for the Nine Months Ended August 31, 2014 (unaudited) and  August 31, 2013 (unaudited)
8
     
 
Notes to Condensed Financial Statements
9
     
Item 2.
Management's Discussion and Analysis of Financial Condition
 
 
and Results of Operations
18
     
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
22
     
Item 4.
Controls and Procedures
23
 
PART II.
OTHER INFORMATION
 
     
Item 1.
Legal Proceedings
24
     
Item 1A.
Risk Factors
24
     
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
24
     
Item 6.
Exhibits
24
     
SIGNATURES
25

 
2

 

Daniels Corporate Advisory Company, Inc.
 
Consolidated Balance Sheets
 
             
   
August 31, 2014
   
November 30, 2013
 
   
Unaudited
   
Audited
 
Assets
 
Current Assets
           
Cash and cash equivalents
  $ 226,453     $ 2,809  
Accounts receivable
    56,044       61,443  
Prepaid expenses
    3,136       6,240  
Deferred taxes
    133,738       133,738  
Investments
    10,200       10,200  
Total Current Assets
  $   429,571     $  214,430  
Liabilities and Equity(Deficit)
 
Current liabilities
               
Accounts payable and accrued expenses
  716,453     $ 1,140,486  
Total Current Liabilities
    716,453       1,140,486  
Related Party - Stockholder loans
    0       0  
Total Liabilities
    716,453       1,140,486  
Commitments and Contingencies (Note 6)
               
Daniels Corporate Advisory Company, Inc.("DCAC") Shareholders' Deficit
         
Preferred Stock, $.001 par value; 100,000 shares authorized 100,000  issued and outstanding 8/31/2014 and 11/30/2013
     100       100  
    Common Stock, $001 par value; 750,000,000 shares authorized 9,894,319 shares issued and outstanding 8/31/2014 and 11/30/2013     9,891       9,891  
Additional paid-in-capital
    3,951,824       3,951,824  
Accumulated deficit
    (4,209,852 )     (4,848,909 )
Accumulated other comprehensive (loss)
    (38,845 )     (38,962 )
Total Equity(Deficit)
    (286,882 )     (926,056 )
Total liabilities and equity(Deficit)
  $ 429,571     $ 214,430  
 
"The accompanying notes are an integral part of these financial statements"
 
 
3

 

Daniels Corporate Advisory Company, Inc.
 
Consolidated Statements of Operations
 
                         
   
For the Three Months Ended
   
For the Nine Months Ended
 
   
August 31, 2014
   
August 31, 2013
   
August 31, 2014
   
August 31, 2013
 
   
Unaudited
   
Unaudited
   
Unaudited
   
Unaudited
 
                         
Revenues
  $ 182,523     $ 0     $ 625,026     $ 114,000  
Cost of Sales
    68,615       0       328,115       0  
Gross Profit
    113,908       0       296,911       114,000  
Operating Expenses
    44,569       60,350       138,149       178,865  
Net Income(Loss) from Operations
    69,339       (60,350 )     158,762       (64,865 )
Other Income (Expense):
                               
Debt forgiveness
    500,000       0       500,000       0  
Net Income(Loss) Before
                               
Provision for Income Taxes
    569,339       (60,350 )     658,762       (64,865 )
Provision for income taxes
    4,302       0       19,705       0  
Net Income(Loss)
  $ 565,037     $ (60,350 )   $ 639,057     $ (64,865 )
Basic and Diluted Loss Per Share
    0.06       (6.04 )     0.06       (6.49 )
Weighted average number of shares outstanding
    9,891,319       10,000       9,891,319       10,000  
 
"The accompanying notes are an integral part of these financial statements"
 
 
4

 

Daniels Corporate Advisory Company, Inc.
 
Consolidated Statements of Cash Flows
 
             
   
For the Nine Months Ended
 
   
August 31, 2014
   
August 31, 2013
 
   
Unaudited
   
Unaudited
 
Cash flows from operating activities:
 
 
   
 
 
Net income (loss)
  $ 639,057     $ (64,865 )
Common stock issued for expenses
    0       0  
Realized gain(loss) on securities
    117       (8,808 )
Debt forgiveness
    (500,000 )     0  
(Increase)decrease in prepaid expenses
    3,104       0  
(Increase)decrease in other assets
    0       0  
(Increase)decrease in accounts receivable
    5,399       (105,200 )
Increase(decrease) in accounts payable and accrued expenses
    75,967       178,380  
Net cash used in operating activities
    223,644       (493 )
Cash flows from investing activities:
               
None
    0       0  
Net cash provided(used) by investing activities
    0       0  
Cash flows from financing activities:
               
Recapture of unrealized losses
    0       0  
Proceeds from related party loan
    0       330  
Net cash provided(used) by financing activities
    0       330  
Increase in cash and equivalents
    223,644       (163 )
Cash and cash equivalents at beginning of period
    2,809       173  
Cash and cash equivalents at end of period
  $ 226,453     $ 10  
 
"The accompanying notes are an integral part of these financial statements"
 
 
5

 

Daniels Corporate Advisory Company, Inc.
 
Consolidated Statements of Cash Flows
 
             
   
For the Nine Months Ended
 
   
August 31, 2014
   
August 31, 2013
 
   
Unaudited
   
Unaudited
 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
       
Interest
  $ 0     $ 0  
Income taxes
  $ 0     $ 0  
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
 
Unrealized gain (loss) on securities
  $ 117     $ (8,808 )
 
"The accompanying notes are an integral part of these financial statements"
 
 
6

 
 
Daniels Corporate Advisory Company, Inc.
 
Consolidated Statement of Comprehensive Income (Loss)
 
                         
   
For the Nine Months Ended
 
For the Three Months Ended
 
   
August 31, 2014
   
August 31, 2013
   
August 31, 2014
   
August 31, 2013
 
   
Unaudited
   
Unaudited
   
Unaudited
   
Unaudited
 
                         
Net loss
  $ 639,057     $ (64,865 )   $ 565,037     $ (60,350 )
Other comprehensive income (loss)
    0       0       0       0  
Unrealized gains(losses) arising during the period
    117       (8,808 )     129       (4,293 )
Comprehensive income (loss)
  $ 639,174     $ (73,673 )   $ 565,166     $ (64,643 )
 
"The accompanying notes are an integral part of these financial statements"
 
 
7

 
 
Daniels Corporate Advisory Inc.
Notes to Financial Statements
As of August 31, 2014 and 2013
 
NOTE 1-   ORGANIZATION AND BASIS OF PRESENTATION

Daniels Corporate Advisory Company, Inc.(The company) was incorporated in the State of Nevada on May 2, 2002. The Company was organized to offer: (a) corporate financial consulting and (b) merchant banking services for public and private client companies interested in implementing Daniels developed, agreed upon, accelerated growth strategies; including MBO/LBO, Roll-up Transactions. Merchant banking includes equity funding of the growth of client and service companies, as well as funding equity of small public companies. The business became a subsidiary in late 2003 as a result of INfe Human Resources, Inc. (a publicly quoted Nevada Company) acquiring the common stock of Daniels Corporate Advisory Company, Inc.   During August 2010, INfe Human Resources, Inc. underwent a name change to Rhino Human Resources, Inc., but is still public and trades under the same (original) stock symbol: “IFHR.”

The company has a growth goal of providing advisory services to business services as well as non-business services client companies. The company works with companies seeking to create and/or acquire adjunct service businesses, whose services will initially provide better lifestyles for its existing workforce, and ultimately will be packaged, on an additional profit center basis, for sale to other small companies for the retention of their employees. The profits generated from all the financial consulting assignments will be available for venture investment in public or private client companies, as well as other quality business concept/operating companies, both public and private; through the Daniels’ Merchant Bank Division.

The Daniels Merchant Bank has an in-house equity funding program, whereby Daniels will participate in consulting client potential growth by helping finance the growth of public and private client, business service companies, as well as non-business service companies. The Merchant Bank will also participate in non-client potential   growth by the purchase of equity in attractive small public companies whose growth strategies are in line with a philosophy of growth through leveraged acquisitions.

NOTE 2-   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation:

We have prepared the accompanying condensed consolidated financial statements in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) including the instructions to Form S-1 and Rule 10-01 of Regulation S-X.  Such rules and regulations allow us to condense and omit certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America.  We believe these condensed consolidated financial statements reflect all adjustments (consisting of normal, recurring adjustments) that are necessary for a fair presentation of our consolidated financial position and consolidated results of operations for the periods presented.

Election to be treated as an emerging growth company:

For the five year period starting in the first quarter of 2012, Daniels if continuing eligibility applies has elected to use the extended transition period now available for complying with new or revised accounting standards under Section 102(b) (1).  This election allows Daniels to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies.  As a result of the Company still being eligible, the Daniels financial statements may not be comparable to companies that comply with public company effective dates.
 
 
8

 
 
Daniels Corporate Advisory Inc.
Notes to Financial Statements
As of August 31, 2014 and 2013
 
NOTE 2-   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
FASB Codification:
 
  In June 2009, the FASB issued ASC 105, Generally Accepted Accounting Principles, (“Codification”) effective for interim and annual reporting periods ending after September 15, 2009. This statement establishes the Codification as the source of authoritative accounting principles used in the preparation of financial statements in conformity with generally accepted accounting principles. The Codification does not replace or affect guidance issued by the SEC or its staff. As a result of the Codification, the references to authoritative accounting pronouncements included herein in this Annual Report now refer to the Codification topic section rather than a specific accounting rule as was past practice.
 
Use of Estimates:

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.
 
Risk and Uncertainties:

Our future results of operations and financial condition will be impacted by the following factors, among others: our lack of capital resources, dependence on third-party management to operate the companies in which we invest and dependence on the successful development and marketing of any new products in new and existing markets. Generally, we are unable to predict the future status of these areas of risk and uncertainty. However, negative trends or conditions in these areas could have an adverse affect on our business.

Cash and Cash Equivalents:

For financial statement presentation purposes, short-term, highly liquid investments with original maturities of three months or less are considered to be cash equivalents. The Company maintains its cash accounts at several financial institutions, which at times may exceed the insurable FDIC limit, but management believes that there is little risk of loss.
 
Fair Value of Financial Instruments:

In September 2006, the Financial Accounting Standards Board (FASB) introduced a framework for measuring fair value and expanded required disclosure about fair value measurements of assets and liabilities.  The Company adopted the standard for those financial assets and liabilities as of the beginning of the 2008 fiscal year and the impact of adoption was not significant. FASB Accounting Standards Codification (ASC) 820 “ Fair Value Measurements and Disclosures ” (ASC 820) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
 
 
9

 
 
Daniels Corporate Advisory Inc.
Notes to Financial Statements
As of August 31, 2014 and 2013
 
NOTE 2-   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability; either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g. interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3—Inputs that are both significant to the fair value measurement and unobservable.
 
The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments.  These financial instruments include investments in available-for-sale securities and accounts payable and accrued expenses.    The Company has also applied ASC 820 for all non-financial assets and liabilities measured at fair value on a non-recurring basis. The adoption of ASC 820 for non-financial assets and liabilities did not have a significant impact on the Company’s financial statements.
 
Investments:
 
Our investments consist of common stock of publicly quoted companies and are valued based on the closing stock price. We account for our investments in accordance with ASC Topic 320, Investments. We have designated our investments at August 31, 2014 as available-for-sale and reported these investments at fair value, with unrealized gains and losses recorded in other comprehensive income (loss). We determined the fair value of these investments based on the closing quoted stock price on August 31, 2014.  We base the cost of the investment sold on the specific identification method using market rates.
 
Comprehensive Income:
 
ASC Topic 220 (SFAS No. 130) establishes standards for reporting comprehensive income and its components. Comprehensive income is defined as the change in equity during a period from transactions and other events from non-owner sources.  Per the consolidated financial statements, the Company has purchased available-for-sale securities that are subject to this reporting.
 
Other-Than-Temporary Impairment:

All of our non-marketable and other investments are subject to a periodic impairment review. Investments are considered to be impaired when a decline in fair value is judged to be other-than-temporary.

When events or changes in circumstances indicate that long-lived assets other than goodwill may be impaired, an evaluation is performed to determine if a write-down to fair value is required. When an asset is classified as held for sale, the asset's book value is evaluated and adjusted to the lower of its carrying amount or fair value less cost to sell. In addition, depreciation and amortization ceases while it is classified as held for sale.

 
10

 
 
Daniels Corporate Advisory Inc.
Notes to Financial Statements
As of August 31, 2014 and 2013
 
NOTE 2-   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The indicators that we use to identify those events and circumstances include:
  
 
·   the investee’s revenue and earnings trends relative to predefined milestones and overall business prospects;
 
·   the general market conditions in the investee’s industry or geographic area, including regulatory or economic changes;
 
·   factors related to the investee’s ability to remain in business, such as the investee’s liquidity, debt ratios, and the rate at which the investee is using its cash; and
 
·   the investee’s receipt of additional funding at a lower valuation. If an investee obtains additional funding at a valuation lower than our carrying amount or a new round of equity funding is required for the investee to remain in business, and the new round of equity does not appear imminent, it is presumed that the investment is other than temporarily impaired, unless specific facts and circumstances indicate otherwise.
 
Recently Issued Accounting Pronouncements:
 
In May 2009, the FASB issued SFAS No. 165, Subsequent Events (“SFAS 165” or ASC 855).  SFAS 165 (ASC 855) establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued.  SFAS 165 (ASC 855) sets forth (1) The period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, (2) The circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements and (3) The disclosures that an entity should make about events or transactions that occurred after the balance sheet date.  SFAS 165 (ASC 855) was effective for interim or annual financial periods ending after June 15, 2009.
In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles—a replacement of FASB Statement No. 162 (“SFAS 168” or ASC 105-10).  The FASB Accounting Standards Codification (“Codification”) will be the single source of authoritative

Non-governmental U.S. generally accepted accounting principles.  Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants.  SFAS 168 (ASC 105-10) was effective for interim and annual periods ending after September 15, 2009.  All existing accounting standards are superseded as described in SFAS 168.  All other accounting literature not included in the Codification is non-authoritative. Existing GAAP was not intended to be changed as a result of the Codification, and accordingly the change did not impact our financial statements. The ASC does change the way the guidance is organized and presented.

In October 2009, the FASB issued Accounting Standard Update (“ASU”) No. 2009-13, Multiple-Deliverable Revenue Arrangements (“ASU 2009-13. This standard updates FASB ASC 605, Revenue Recognition (“ASC 605”). The amendments to ASC 605 requires entities to allocate revenue in an arrangement using estimated selling prices of the delivered goods and services based on a selling price hierarchy. These amendments to ASC 605 should be applied on a prospective basis for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with early adoption permitted. The Company adopted these amendments on January 1, 2010.  Management does not believe that the adoption of this standard will have any impact on the Company’s financial statements. 
 
In January 2010, the FASB issued ASU No. 2010-06, Fair Value Measurements and Disclosures (“ASU 2010-06”).  This standard updates FASB ASC 820, Fair Value Measurements (“ASC 820”). ASU 2010-06 requires additional disclosures about fair value measurements including transfers in and out of Levels 1 and 2 and separate disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurements. It also clarifies existing fair value disclosures about the level of desegregations and about inputs and valuation techniques used to measure fair value. The standard is effective for interim and annual reporting periods
 
 
11

 
 
Daniels Corporate Advisory Inc.
Notes to Financial Statements
As of August 31, 2014 and 2013
 
NOTE 2-   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
beginning after December 15, 2009 except for the disclosures about purchases, sales, issuances and settlements which is effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years.  The Company adopted ASU 2010-06 on January 1, 2010, which had no material impact on the financial statements. Other recent accounting pronouncements issued by the FASB (including its EITF), the AICPA, and the SEC did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

Revenue and Cost Recognition:

The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.
 
Daniels Corporate Advisory Company, Inc., (Daniels) has revenues as a result of corporate financial consulting services which are recognized as services are performed. Daniels also operates the merchant banking division, which did not have any revenues to recognize.    

Fixed Assets:

Fixed assets acquired would be reported at cost less accumulated depreciation, which is generally provided on the straight-line method over the estimated useful lives of the assets. Upon sale or retirement of an asset, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is recognized.
 
Financing Fees:

Financing fees were being amortized over the life of the related liability on the straight-line method which is not materially different than using the effective interest method. All amortization has been expensed since the ongoing staffing operations have discontinued from which the finance fees were originally accrued.
 
Net Income (Loss) Per Share

The Company reports basic and diluted earnings per share (EPS) according to the provisions of ASC Topic 260, which requires the presentation of basic EPS and, for companies with complex capital structures, diluted EPS. Basic EPS excludes dilution and is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted EPS is computed by dividing net income (loss) available to common stockholders, adjusted by other changes in income or loss that would result from the assumed conversion of those potential common shares, by the weighted number of common shares and common share equivalents (unless their effect is anti dilutive) outstanding. Common stock equivalents are not included in the computation of diluted earnings per share when the Company reports a loss because to do so would be anti-dilutive. Thus, these equivalents are not included in the calculation of diluted income(loss) per share, resulting in basic and diluted income(loss) per share being equal. The following is a reconciliation of the computation for basic and diluted EPS for the nine months ended August 31, 2014 and August 31, 2013:

 
12

 
 
Daniels Corporate Advisory Inc.
Notes to Financial Statements
As of August 31, 2014 and 2013
 
NOTE 2-   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

   
8/31/2014
   
8/31/2013
 
Net  (Loss)
  $ 639,057     $ (64,865 )
                 
Weighted-average common shares outstanding  basic
               
                 
Weighted-average common stock
    9,891,319       10,000  
Equivalents
               
  Stock options
    -       -  
  Warrants
    -       -  
  Convertible Notes
    -       -  
                 
Weighted-average common shares outstanding- basic and diluted
    9,891,319       10,000  
 
Income Taxes:
 
The Company, a C-corporation, accounts for income taxes under ASC Topic 740 (SFAS No. 109) . Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
 
The Company adopted the provisions of FASB ASC 740-10 “ Uncertainty in Income Taxes ” (ASC 740-10), on January 1, 2007. The Company has not recognized a liability as a result of the implementation of ASC 740-10. A reconciliation of the beginning and ending amount of unrecognized tax benefits has not been provided since there is no unrecognized benefit since the date of adoption. The Company has not recognized interest expense or penalties as a result of the implementation of ASC 740-10.  If there were an unrecognized tax benefit, the Company would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses.

Currently the Daniels has projected $962,125 as of August 31, 2014 in Net Loss Operating Loss carry-forwards available. The benefits of the potential tax savings will be recognized in the recorded to date.
 
NOTE 3-   RELATED PARTY TRANSACTIONS
 
The Company currently rents space from Arthur Viola, CEO and shareholder. This is a month to month rental and there is no commitment beyond each month. The monthly rent is $2,025 and three months was expensed in the quarter ending August 31, 2014.
 
 
13

 

Daniels Corporate Advisory Inc.
Notes to Financial Statements
As of August 31, 2014 and 2013
 
NOTE 4- INVESTMENTS

Investments consist of a portfolio of common stocks trading on the OTC: BB.  The fair market values of the investments held for sale were $0 and $78 at May 31, 2014 and November 30, 2013, respectively. Due to the immaterial amounts and that they are liquid they have been classified as cash equivalents. Investments held as other assets as long term investments had fair market values of $10,200 and $10,200 at May 31, 2014 and November 30, 2013, respectively. Other assets are securities of the Company’s clients for long term capital appreciation. The total net unrealized loss for the period ended May 31, 2014 was $78 and the total net unrealized gain for the period ended May 31, 2013 was $9,994.

Cash Equivalents are marketable securities that are available-for-sale and not deemed long term investments by the Company. During the periods ended May 31, 2014 and May 31, 2013, there were no available-for-sale securities sold and gross realized (losses) gains on these sales were zero. For purpose of determining gross realized gains, the cost of securities when sold is based on the FIFO method of valuation. Net unrealized holding gains (losses) on available-for-sale securities both in cash and investments was $(39,040) and $(38,962), respectively, for May 31, 2014 and November 30, 2013 and have been included in accumulated other comprehensive income.
 
NOTE 5-   GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. Currently, the Company has recurring operating losses, and as of August 31, 2014 the Company had a working capital deficit of $286,882 and an accumulated deficit of $4,209,853. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management believes that the Company’s capital requirements will depend on many factors including the success of the Company’s development efforts and its efforts to raise capital. Management also believes the Company needs to raise additional capital for working capital purposes. There is no assurance that such financing will be available in the future.   The conditions described above raise substantial doubt about our ability to continue as a going concern. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
 
NOTE 6-   COMMITMENTS AND CONTINGENCIES

Commitments:
 
The Company currently has no long term commitments.
 
Contingencies:
 
None
 
 
14

 

Daniels Corporate Advisory Inc.
Notes to Financial Statements
As of August 31, 2014 and 2013
  
NOTE 7- INCOME TAXES
 
As of August 31, 2014, the Company had approximately $962,125 in net operating loss carry forwards for federal income tax purposes which expire between 2011 and 2029.  Generally, these can be carried forward and applied against future taxable income at the tax rate applicable at that time. We are currently using a 35% effective tax rate for our projected available net operating loss carry-forward. However, as a result of potential stock offerings and stock issuance in connection with potential acquisitions, as well as the possibility of the Company not realizing it’s business plan objectives and having future taxable income to offset, the Company’s use of these NOLs may be limited under the provisions of Section 382 of the Internal Revenue Code of 1986, as amended.  The Company is in the process of evaluating the implications of Section 382 on its ability to utilize some or all of its NOLs.

Components of deferred tax assets and (liabilities) are as follows:

   
31-May-14
   
30-Nov-13
 
Net operating loss carry forwards valuation available
  $ 962,125     $ 1,601,182  
                 
Valuation Allowances
    (962,125 )     (1,601,182 )
Difference
  $ 0     $ 0  

In accordance with FASB ASC 740 “Income Taxes”, valuation allowances are provided against deferred tax assets, if based on the weight of available evidence, some or all of the deferred tax assets may or will not be realized. The Company has evaluated its ability to realize some or all of the deferred tax assets on its balance sheet and has established a valuation allowance in the amount of $962,125 at August 31, 2014 and $1,601,182 at November 30, 2013. The Company did not utilize any NOL deductions for the full fiscal year ended November 30, 2013 and expects to use $639,057 for the fiscal year ending November 30, 2014.
 
NOTE 8 – SEGMENT INFORMATION

The accounting standards for reporting information about operating segments define operating segments as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is the Chief Executive Officer. The Company is organized by line of business. While the Chief Executive Officer evaluates results in a number of different ways, the line of business management structure is the primary basis for which the allocation of resources and financial results are assessed. Under the aforementioned criteria, the Company operates in two operating and reporting segments: corporate consulting and logistics. Our parent Daniels Corporate Advisory Company, Inc. is one segment of the Company that derives its corporate consulting. Our other business segment is our wholly owned subsidiary Daniels Logistics, Inc., which provides niche logistic services.


The information provided below is obtained from internal information that is provided to the Company’s chief operating decision maker for the purpose of corporate management. The Company uses operating income (loss) to measure segment performance. The Company does not allocate corporate interest income and expense, income taxes, other income and expenses related to corporate activity or corporate expense for management and administrative services that benefit both segments. In addition, the Company does not allocate restructuring charges to the segment operating income (loss) because management does not include this information in its measurement of the performance of the operating segments. Because of this unallocated income and expense, the operating income (loss) of each reporting segment does not reflect the operating income (loss) the reporting segment would report as a stand-alone business and  therefore we do not present indirect operating expenses. Intersegment transactions have not been eliminated in order to reflect the comprehensive results of each segment.
 
 
15

 

Daniels Corporate Advisory Inc.
Notes to Financial Statements
As of August 31, 2014 and 2013
Note 8  -  SEGMENT INFORMATION (CONTINUED)

The table below illustrates the Company’s results by reporting segment for the nine months ended August 31, 2014 and 2013:
 
Segment Information
           
             
   
8/31/2014
   
8/31/2013
 
Revenue
           
             
Consulting
  $ 0     $ 114,000  
Logistics
    625,026       0  
                 
Total Revenue
  $ 625,026     $ 114,000  
                 
   
8/31/2014
   
8/31/2013
 
Cost of Sales
               
                 
Consulting
  $ 0     $ 0  
Logistics
    328,115       0  
 
               
Total Product Cost
  $ 328,115     $ 0  
                 
   
8/31/2014
   
8/31/2013
 
Net Operating Income
               
                 
Consulting
  $ (83,324 )   $ (64,865 )
Logistics
    242,086       0  
 
               
Total Net Operating Income(Loss)
  $ 158,762     $ (64,865 )
 
 
16

 
 
PART I

ITEM 2.    DESCRIPTION OF BUSINESS

Overview

Daniels Corporate Advisory intends to provide the corporate strategy consulting services noted below, through two methods: first prior to the issuance of additional shares in a private placement or a registered offering, Mr. Viola will loan Daniels Corporate Advisory the necessary capital to accomplish the initial purchase of rights to be the provider of choice to offer a financial specialty called corporate strategy to clients network’s of other financial/business services companies.  While rights agreements of this nature are not typical, senior management, drawing on personal contacts, believes that offering to provide a very select service that is very costly to create in-house and will augment other financial services already being offered/implemented by the financial/business services firm entering into the rights agreement with Daniels Corporate Advisory, will be an acceptable addition.  However, there is no assurance that has time goes by a client may decide to enter our business and there is no provision in our agreement to prevent that from happening.  However, our senior management believes that our success with the ultimate client, the client network member of a financial/business services client, will determine whether Daniels Corporate Advisory retains the client or not.
 
The services incorporated into corporate strategy advisory and implementation to help formulate a path for the acceleration of corporate development (growth) include market analysis, negotiation, deal structure and determination of finance alternatives for the creation of joint-ventures, marketing agreements, new product/creation additions and acquisitions.  Daniels Corporate Advisory has a loosely organized cadre of highly-qualified, independent contractors/consultants available to perform the necessary services to achieve the optimum corporate strategy for a client.  We will need to raise approximately $150,000 in the future to hire the most seasoned consultants as full time senior management and/or as our advisory board.  While conversations with various parties have taken place, nothing has been finalized and there is no assurance that these funds will be raised.
 
A key service to be provided to clients is their recommendation to financing options/sources and our participation in the negotiation of amounts and terms.  The average cost of financing for any one of the accelerated growth alternatives mentioned above may be below market because of our participation, as the client may be offered in-house, short-term financing at preferential rates/terms.  To accommodate these needs, going forward, we plan to engage in our own financing in the future.  We have not decided on the amount or timing of any such financing.  It is at the discretion of our sole officer, Mr. Viola, whether these funds are offered, with the decision to participate based upon the long term growth potential of the client, its current projections for the availability of excess cash flows for repayment of the advanced funds which would be provided by Daniels Corporate Advisory as low interest rate loans for short term working capital additions and with the understanding Daniels Corporate Advisory will be retained for further advisory.
 
Services will also be provided in corporate financial advisory, which, like corporate strategy, is a specialized segment of corporate advisory.  It deals more with operations/cost control issues that can be done in-house with the aid of our professionals.  The corporate strategy and corporate financial advisory expertise that we will offer would be extremely expensive to do in-house by any potential financial service firm retaining Daniels Corporate Advisory, because of the talent compensation costs involved on a full time basis.  Daniels Corporate Advisory, even though it currently lacks financing to operate on a viable scale, is still able to provide its specialized services to its one client through our chairman, Arthur D. Viola.  Also it takes time and money to organize a qualified team that can work together, in a variety of industry environments.  Daniels Corporate Advisory has already assembled a team through verbal agreements and with no contingent compensation being offered or asked for by the interested parties, whom are all professionals known personally by Mr. Viola.  These verbal agreements may be formalized once subsequent financing of at least $100,000 is achieved.  In the interim, and going forward, should financing not be available, Mr. Viola will personally loan funding, if necessary, to retain those professionals needed to complete the current corporate strategy assignment and commence any other.  The potential profits contemplated from the sales of appreciate equity upon completion of the corporate strategy assignment of our one client is expected to provide adequate working capital for our internal needs for the next assignment.  Our sole officer, Mr. Viola, believes we will be cash flow positive at that time.  Open communication has transpired amongst the team over the past six months to assure it will be able to react quickly in any situation.  In addition, we may use our own in-house funds initially provided by Mr. Viola and from any potential profits from our one corporate strategy assignment for any implementation process; something none of the potential financial/business service clients like accounting, financial planning, estate planning, tax firms and those other firms specifically earmarked by Daniels Corporate Advisory to approach for business will not do because of rules set up by their industry or government regulatory bodies/authorities.  This could be a costly method for Daniels Corporate Advisory to gain business, but it is believed by our senior management to be one of the fastest ways to fill our pipeline and produce profits enabling Daniels Corporate Advisory to direct hire the most seasoned independent contractor/consultants as additions to our senior management.
 
 
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The second method Daniels Corporate Advisory will use to provide its corporate strategy consulting services is more direct and less costly.  It will mean the development of advertising and end-user, client referrals.  Name brand recognition is expected to be created after one or two successful corporate strategy assignments and the publicizing of these events on web sites related to this specialty and through an aggressive in-house direct-marketing campaign to micro-cap public companies.
 
Daniels Corporate Advisory is operating at the present time through the corporate strategy segment of its business.  Our sole officer, Mr. Viola, is providing preliminary services to one additional client potential, in addition to our one contracted client, as we continue to negotiate the equity portion of fee arrangements.  Our one contracted client has already paid the retainer portion of its fee and has agreed to the portion of the fee to be paid through stock participation.  Once the full cash retainer amount is paid a formal contract will be entered into between client and Daniels Corporate Advisory.  The scope of the contracted client’s corporate strategy assignment is being developed with planned additions to our staff being determined based on the requirements to do the assignment.  The shares received as part payment of the retainer will be handled in the following manner: part will be sold off at the culmination of the advisory assignment for consultant payments and the balance will be held in an in-house portfolio to be sold off as funds are needed for expansion in the future.  Our sole officer, Mr. Viola, expects to effectively carry out the current corporate strategy assignment through the use of his own personal reserves.  In addition, potential candidates for our advisory board are being reviewed.  The merchant banking segment of our business model will become operational if funding is raised in the future, either through loans, or by a Private Placement Offering.
 
As our presence in the market place becomes more visible, through publication on client websites of our successes in our initial corporate strategy consulting assignments coupled with an assumed resulting improvement in the client’s common stock price, added financing options are expected to materialize for the benefit of our clients.  Capital companies and high-net worth (accredited) individuals may contact us to see if they may participate directly in subsequent assignments.
 
Recent Business Developments

Daniels  Corporate  Advisory  conducts  on-going networking and business development  in  corporate strategy and consulting, primarily through chairman to chairman contacts. A full range of disciplines are being offered to the  nano-cap  public  company  through  this personalized chairman to chairman networking to keep initial marketing costs at a minimum. Daniels Corporate Advisory will advises its clients on operational strategies, market-planning, senior oversight management and financial alternatives consulting on optimum paths for the client to take; which could include but not be limited to external growth alternatives requiring advisory on M & A, levered transactions, capital structure, bridge loans, and equity financing. In order to effectively advise for the optimum market value of the clients’ stock the status of the client’s common stock must be improved, if necessary
 
Business Strategy - Current Operational Strategy & Current Client Projects:
 
Daniels creates and implements corporate strategy alternatives for the mini-cap public or private company client.   Through the singular, full-time efforts of its Chairman and several initial independent contractor specialists working on a “when needed basis,” soon to be full time employees, Daniels provides an outsourced talent pool of senior level executive and visionary talent on an affordable basis for the mini-cap company.  The client pays a reasonable cash upfront retainer, work- in-progress retainers and a final cash retainer determined by results.
 
Daniels may provide the client with multiple corporate strategies /opportunities including joint-ventures, marketing opportunity agreements and/or a variety of potential acquisitions structured in LBO format. One or a combination of these strategies would allow the client to enter new market niches or expand further into existing ones.  For the public client company, our recommended consensus is implemented through an optimum deal structure so that the possibility exists, in "One Step," for the client to achieve the necessary financial criteria - (Net Worth and Pre-tax Earnings) for listing on a Major US Stock Exchange, (American/Small Cap NASDAQ). The Goal: Within fourteen to twenty-four months from commencement of a Corporate Strategy Assignment, financial results should be forthcoming and recorded in SEC Filings, a highly-credible, expanded Board and Senior Management Team assembled and the Exchange listing process guided to completion, all by Daniels.
 
A similar effort will be provided to tailor an optimum growth program for the private company client, whether it chooses to remain private or to become a public company through alternative merger opportunities. 

In addition to the “specific need” contracted for within the Corporate Advisory Assignment, Daniels Senior Management may elect to also create and provide implementation Advisory to the client on multiple business opportunities including but not limited to a variety of potential acquisitions structured in LBO format. This will allow the client entry into other promising new market niches and/or its further expansion into established ones. Every effort will be made by Daniels through all phases of an Assignment to structure generic and/or external growth alternatives to help the client achieve the necessary financial criteria - (Net Worth and Pre-tax Earnings) for listing on a Major US Stock Exchange, (American/Small Cap NASDAQ).
 
 
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Current Project:  Start-Up: Daniels Logistics, Inc.
 
During our 2013 fiscal year, (ending November 30, 2013), Daniels, performed an extensive due diligence and market-planning analysis review of the Logistics Industry, specifically the feasibility of entrance into and profitability for a start-up company in the most profitable market-niches in “Supply Chain Management;” The consensus results were very positive causing Daniels to create newly-incorporated 100% owned Subsidiary: “Daniels Logistics, Inc.” The subsidiary entered initial specified market niches, as Consultants / Advisors to clients by analyzing the segments in their Supply Chain where Daniels Logistics, Inc. (through its Independent Contractor Logistics specialists) could network to develop/provide a lower-cost option for the client with Daniels Logistics, Inc. then also acting in the advisory capacity of facilitator. Through its current, limited, hand-picked, client base, Daniels Logistics, Inc. has entered selective domestic US Areas as well as some Foreign Markets; all, in the estimation of the Daniels Team, possessing the most promise for profitability based an extensive analysis.
 
Initial financial results are supportive of the Daniels Corporate Advisory’s decision to enter the Supply Chain Management segment of the Transportation Industry through its subsidiary, Daniels Logistics, Inc. During the nine months ended August 31, 2014 results from the Daniels Logistics subsidiary has booked pretax profits of $242,086.
 
OPTIMUM GROWTH STRATEGY:

Twelve to Twenty four Month Horizons for Daniels ' Objectives:
 
The funding received in our recent offering should provide sufficient working capital to establish a quality, in-house Senior Management Team and to provide retainers for our outsourced independent contractor advisors for one micro-cap public company client (to be added and advised) and to fund the development/expansion of Daniels Logistics, Inc., our wholly owned subsidiary. We plan to expand our logistics subsidiary in the most profitable niches within the supply chain management segment of the Transportation Industry. We intend to keep this Offering open until December 31, 2014, should  that  be  necessary,  in  order  to  raise  the  necessary funding  to implement our   two  pronged  growth  strategy.
 
Daniels' believes that the validity of our corporate strategy model will be proven through the success of its newly-formed subsidiary, Daniels Logistics, Inc. We intend to use our publicly traded common stock, in a variety of  securities  packages,  to  finance  a  subsidiary  start-up,  initially  for  generic  sales  growth prospects. Potential exit strategies, which will be developed for optimizing the potential of the subsidiary and a return on corporate capital, could include bringing the subsidiary public or merging it with a public company operating in one of the more profitable niches of the specific market. This same corporate strategy model will be applied to any independent mini-cap public client. The client will experience a very limited dilution financing option provided primarily from capital raised in this Offering.
 
We believe our business model to be scalable. Based upon the success of the initial corporate strategy consulting assignments and/or the development of its own subsidiary and its ultimate launch in the public market; Daniels could achieve the critical mass, itself, for listing of our common stock on a major stock exchange. We would then achieve one of our main goals as a provider of corporate strategy advisory and low-cost financing for strategy implementation for our clients.
 
Sales and Marketing
 
Daniels senior management will concentrate its efforts to expand its corporate strategy advisory and consulting (for implementation of assignment results) services and related specialties in the nano-cap segment of the public market, where Daniels believes it will be effective.  Marketing efforts will increase through social and print media efforts and will be in addition to those methods already mentioned above.  Daniels objective is to create and help manage implementation of accelerated expansion strategies; in so doing it may from time to time provide investment in a client company to help achieve the optimum results.
 
Competition
 
We  believe  that  existing  and  new  competitors  will  continue  to  improve  their  services  and  introduce  new  services   with  competitive  price  and performance  characteristics.
 
In periods of reduced demand for our services, we can either choose to maintain market share by reducing our prices to meet competition or maintain prices, which would likely sacrifice market share.  Sales and overall profitability could be reduced in either case.  In addition, competitors may enter our existing markets, or we may be unable to compete successfully against existing or new competition.
 
 
19

 
 
The corporate financial services merchant banking/private equity industries are very competitive and fragmented in the market niche in which Daniels Corporate Advisory operates. There are limited barriers to entry and new competitors frequently enter the market. A significant number of our competitors possess substantially greater resources than we possess. Additionally , we face substantial competition for potential clients and for technical and professional personnel from providers of similar financial specialties, which range from giant national companies headquartered on Wall Street to local well known affiliates of some of the largest accounting firms in the United States.
 
Large national companies that offer corporate financial consulting and merchant banking services capabilities could easily expand into the nano cap niche intended for occupation by Daniels Corporate Advisory. Other companies with whom we compete include the affiliates of well known , national accounting firms. Numerous, local, owner-operated finder entities and their capital referral networks are also competitors, and each geographical market generally has many competitors. National and regional consulting firms also offer similar financial advisory services and capital networking advice. In addition, we will always be exposed to the risk that certain of our prospective clients will decide to hire. full-time senior corporate development, market-planning and finance executives who can provide the relevant services internally.
 
Liquidity and Capital Resources

Our primary source of liquidity has been the operating profits of our logistics subsidiary.  As of August 31, 2014, we had $226,453 in cash and cash equivalents and a working capital deficit of $286,882.

Financing Activities

We will have to raise capital by means of borrowings or through a private placement or a subsequent registered offering..  At present, we do not have any commitments with respect to future financings.  If we are unable to raise adequate capital, in the near term, to finance all phases of a client corporate consulting assignment, our proposed business will experience slow growth because it will be very hard to compete for business without a sound capital base to support advisory and implementation efforts on our suggested corporate growth strategies.
 
At present, we do have sufficient capital on hand to fund very limited operations for the immediate future.  Our consulting income on current and expected assignments (and continued support from Arthur D. Viola, our sole officer and director, is believed to be sufficient to support current capital demands.  Management estimates that we will need at least $2 million to fund client corporate development consulting projects over the next 12 months.  However, even if limited funds are raised, consulting services can still be provided for Phase One of assignments, (the providing of consulting expertise).  Phase Two, (the providing of short term capital to client companies), will have to be curtailed because of a limited capital raise or be provided by Mr. Viola and/or a joint-venture partner who will share in the potential revenues from Phase Two portions of any project.  This joint-venture sharing will limit the amount of profit we can earn in any one project.
 
Limited growth prospects, because of lack of sufficient capital to implement results of corporate consulting assignments, may very well not produce sufficient profit to cover the costs that will now be incurred by Daniels Corporate Advisory.  Legal and accounting expenses are significant for a reporting company and we will have to cover them out of limited consulting operations fees due to lack of adequate funding.  This may place additional constraints on the growth prospects of Daniels Corporate Advisory as it may have to curtail added assignments for lack of adequate working capital to manage these new assignments.  If sufficient capital is not raised over the next 12 months, the limited consulting assignments current available will not be sufficient to sustain our long term operations as a public company, and we could fail.

Results of Operations – For the Three Months ended August 31, 2014

Revenues

Sales for the three months ended August 31, 2014 were $182,524 compared to $0 for the three months ended ended August 31, 2013 an increase of $182,523. This reflects revenue from our start up logistics subsidiary of $182,524. Current sales have followed historic seasonal sales patterns in the industry.

 
20

 

Cost of Sales

During the three months ended August 31, 2014, we incurred $68,615 in expenses, compared to $0 in the same period ended August 31, 2013 an increase of $68,615. This is cost of sales relating to our logistics subsidiary started in the current year. There were no logistics' activity in the prior year. Further details are provided in our operating segment footnote.

Operating Expenses

During the three months ended August 31, 2014, we incurred $44,569 in expenses, compared to $60,350 in the same period ended August 31, 2013 a decrease of $15,781. Our major cost is wages which was decreased by $25,000 in the current quarter. This was partially offset by an increase in professional fees and consulting expenses relating to our registration statement filings from a year ago.

Net Income

The Company had a net income for the three months ended August 31, 2014 of $565,037 compared to a net loss of $60,350 for the three months ended August 31, 2013. This increase of $625,387 was in majority due to a onetime non operating reduction of $500,000 in accrued wage debt due to our President which was forgiven and taken off the books in the current quarter. Additionally, our logistics subsidiary which generated profits in 2014 and was not operating in 2013 along with other minor items described above.

Results of Operations – For the Nine Months ended August 31, 2014

Revenues

Sales for the nine months ended August 31, 2014 were $625,026 compared to $140,000 for the nine months ended August 31, 2014 resulting in an increase of $511,026. This reflects revenue from our start up logistics subsidiary of $511,026. As mentioned above it should be noted the Company has reduced revenue growth in the second quarter caused by pier owned mechanical breakdowns, which in turn are reflected here in the nine month results.

Cost of Sales

During the nine months ended August 31, 2014, we incurred $328,115 in expenses, compared to $0 in the same period ended August 31, 2013 an increase of $328,115. This is cost of sales relating to our logistics subsidiary started in the current year. There were no logistics' activity in the prior year. Further details are provided in our operating segment footnote.

Operating Expenses

During the nine months ended August 31, 2014, we incurred $138,149 in operating expenses, compared to $178,865 in the same period ended August 31, 2013 a decrease of $40,716. Our major cost is wages which was decreased by $75,000 in the current nine month period. This was partially offset by an increase in professional fees and consulting expenses relating to our registration statement filings from a year ago. Both periods presented included a small amounts of general and administrative cost.

Net Income

 The Company had a net income for the nine months ended August 31, 2014 of $639,057 compared to a net loss of $64,865 for the nine months ended August 31, 2013. This increase of $703,922 was in majority due to a onetime non operating reduction of $500,000 in accrued wage debt due to our President which was forgiven and taken off the books in the current nine month period. Additionally, our logistics subsidiary which generated profits in 2014 and was not operating in 2013 along with other minor items described above.
 
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

None.
 
 
21

 
 
ITEM 4  CONTROLS AND PROCEDURES
 

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
 
Our Chief Executive Officer and Chief Financial Officer (the "Certifying Officer") maintains a system of disclosure controls and procedures that is designed to provide reasonable assurance that information, which is required to be disclosed, is accumulated and communicated to management timely. Under the supervision and with the participation of management, the Certifying Officer evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule [13a-14(c)/15d-14(c)] under the Exchange Act) within 45 days prior to the filing date of this report. Based upon that evaluation, the Certifying Officer concluded that our disclosure controls and procedures are not effective in timely alerting them to material information relative to our company required to be disclosed in our periodic filings with the SEC.
 
CHANGES IN INTERNAL CONTROLS

During the Quarter ended August 31, 2014, there were no changes made to our internal controls over financial reporting that are reasonably likely to affect the reliability of those controls, or the accuracy of our financial reporting.  
 
LIMITATIONS

Our management, including our Principal Executive Officer and Principal Financial Officer, does not expect that our disclosure controls or internal controls over financial reporting will prevent all errors or all instances of fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and any design may not succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitation of a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

 
22

 

PART II
 
ITEM 1.    LEGAL PROCEEDINGS
 
Daniels Corporate Advisory is not engaged in any litigation, and we are unaware of any claims or complaints that could result in future litigation.  We will seek to minimize disputes with our customers and others but recognize the inevitability of legal action in today’s business environment as an unfortunate price of conducting business.

ITEM 1A.    RISK FACTORS

We are a "smaller reporting Company" as defined by Rule 12b-2 of the Securities Exchange Act of 1934 (the "Exchange Act") and are not required to provide information under this item.

ITEM 2.  RECENT SALES OF UNREGISTERED SECURITIES

The Company had no sales of unregistered securities for the quarter ending August 31, 2014.
 
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

 
23

 
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 October 14, 2014
     
   
Daniels Corporate Advisory Company, Inc.
 
   
 (Registrant)
 
       
 
By:
/s/ Arthur D. Viola
 
   
Arthur D. Viola
 
   
Chief Executive Officer
 
   
and  Chief Financial Officer
 
 
 
24