The results of our quarter ended August 31, 2022, reflect the continuation of
the business process being experienced in the incubation of our premier start-up
subsidiary in the Transportation Services segment of the Trucking Industry.
Daniels continued to umbrella its subsidiary, Payless Truckers, Inc.'s expansion
through financing sources expensive in nature. Parent Company Management
believes the capital costs incurred were warranted as they augmented working
capital levels during a very challenging quarter. After months of negotiations,
several financing options are in final review with some having very favorable
terms including long-term financing.
For the nine months - December 1, 2021, through August 31, 2022 - Total Revenue
was $1,328,599 compared to $3,544,792 for the corresponding quarter of the
previous fiscal year. This was comprised of $785,144 from the Flip business and
$517,951 in fleet rental, $14,591 repairs, and $10,913 miscellaneous income.
While both businesses have the potential to produce high margins, our activities
were severely limited by (1) the substantial increase in prices of used trucks
for our fleet which was partially counteracted when we could afford to
selectively bid at Auctions, (2) In spite of the substantial increase in fuel
costs only the well positioned drivers continued in business. Most of the
drivers in our rental fleet were able to sustain themselves, and (3) the lack of
closings of financing transactions to continue our growth.
Our program rental fleet has the potential to be scale-able and provide
significant growth because of its predictable gross cash flow / potential
earnings stream. We are receiving continuing interest in our products because
they are top of the line brands/models. We are confident that the financing
alternatives being finalized - as noted below - will allow us to meet this
demand soon. In addition, we have recently been able to find identify trucks for
our flip business at reasonable prices that allow us to rebuild and maintain our
historic top line and margins. The demand is growing, and our new financing
arrangements mentioned below will allow us to meet that demand.
The normal short-term financing regularly provided was not provided at historic
levels. This expensive money was necessary to fuel the working capital level to
continue operations at fiscal year 2021 levels. The financier's previous year's
capital commitment proved-out both our incubator and transportation services
(Payless Truckers, Inc.) models. These models are perfect in concept and can
easily have their expansion accelerated with the proper capital now that Class 8
Tractor prices have softened. Unfortunately, the capital needed - asset based
lending at current market rates, and not from the hard money lenders, and
long-term straight debt financing with warrants was still in negotiation. It
could not help the results of the August 2022 quarter.
Negotiations with long-term straight debt lenders and Preferred Stock financiers
are continuing. More creative approaches were developed by concerted efforts
with several investment banking houses, finally centering on the use of our
innovative financing structure which is currently being developed. The main
objective - Daniels' senior management believes levered financing - supported by
equity and layered finance options - will allow Payless to achieve the first
plateau of 100 rental fleet trucks in a measured amount of time. We realize that
we will need to acquire a larger operating facility so we can accelerate the
build out of Payless. Current capital negotiations now include a real estate
component so we can accelerate our fleet expansion. Our current operating
facility has limited capacity and can only add five to six truck additions to
our rental fleet each month.
The funding options being discussed and finalized will eliminate the need for
continuation of expensive private investor funding. The use of our innovative
concept allows for a lower interest rate because the secured loan financing
provided to it is not under the existing heavily burdened capital structure of
the consolidated companies. Blended Public market-rates for financing, - of a
combination of asset based lending and long-term debt with warrants - will allow
Daniels / Payless to attract institutional and retail investors. We will be able
to service a larger debt load. This effort may be multiplied by any equity
capital raised. Our overall cost of capital should drop significantly.
As used in this interim report, the terms "we", "us", "our", the "Company", the
"Registrant", "Daniels Corporate Advisory", "DCAC" and "Daniels" mean Daniels
Corporate Advisory Company, Inc. unless otherwise indicated.
Overview
Daniels Corporate Advisory creates and implements corporate strategy
alternatives for the mini-cap public or private company client. The addition of
new business opportunities and the location of professional talent for
implementation is anticipated through the full-time efforts of our senior
management. These efforts are to be expanded in the United States and in foreign
capitals by an expanding advisory board and through the networks of independent
consultants. Principals of the respective client company will open their
networks to augment professional access for specialties the Daniels corporate
strategy consultants believe are needed in a joint-venture, jointly-controlled
undertaking created for the client's optimum growth.
Daniels may provide the client with multiple corporate strategies/opportunities
including joint-ventures, marketing opportunity agreements and/or potential
acquisitions structured in leveraged buyout format. One or a combination of
these strategies would allow the client to enter new market niches or expand
further into existing ones.
Recent Business Developments
The Company is operating through the corporate strategy segment of its business.
It is attempting to build its own critical mass by creation of start-up
subsidiaries it believes have promise/potential. The stated goal is for the
parent (DCAC) company to consolidate the critical mass of the
subsidiary/start-ups with that of the parent for eventually listing on a major
stock exchange. We have continued to focus our efforts on the build out of the
Daniels corporate strategy model. We adjusted our strategy as it relates to the
development of subsidiary start-ups and potential acquisitions for common stock
in light of the Coronavirus outbreak with its changes in how people and
businesses operate as well as the inflationary trend in the US economy. However,
in light of these new circumstances, we concentrate on identifying projects that
have the potential to produce significant earnings on the leveraged capital base
of both the parent and the subsidiary/start-up within an expedited time period.
We formed Payless Truckers, Inc. ("Payless"), a wholly-owned subsidiary which
was incorporated in the State of Nevada, on April 11, 2018. Payless is a
start-up, service company in the trucking industry. It has two business segments
with its launch and current results coming from the "flip" segment, whose
principal business is to acquire class 8 heavy duty trucks, refurbish them, add
location electronics, advertise and sell to independent drivers and operators.
The second segment is the "credit rebuilding segment" where class 8 heavy duty
trucks, owned by Daniels/Payless, are rented to experienced independent drivers.
These independent drivers rent for a period of up to five years and have the
option to buy the vehicle at retail value every six months. In an effort to grow
quickly and profitably, Daniels entered into an operating agreement with a
senior operating management team in an effort to drive the business and better
realize its earnings and growth potential.
The Payless two-segment trucking model represents a streamlined Transportation
Services Company; one Daniels believes can be restructured/redirected to survive
any potential future slow-downs in the economy. The model was developed to allow
for the maximum utilization of each truck as it is put into immediate service in
numbers that are manageable without causing excess capacity. Top brand/model
Tractors with low mileage are handpicked by our operations team. Our drivers
continue to be handpicked for their driving skills and their established hauling
networks. They rent/switch trailers to meet the available work on Load Boards or
haul for major hauling companies using hauling company trailers. Due to the
current dislocations in every industry due to the Coronavirus, our independent
contractor drivers are constantly on the road.
We hope to further enhance our plan for growth beginning in future years by
forming joint-ventures and/or partnerships with truck maintenance companies
across the United States in key traffic hubs. This will potentially afford
independent drivers and operators the opportunity to be serviced by trusted
maintenance facilities under our warranty program. This growth plan is a natural
result of our ability to build our truck rental fleet.
Business Strategy - Current Operational Strategy & Current Client Projects
Daniels creates and implements corporate strategy alternatives for the mini-cap
public or private company client. The addition of new business opportunities and
the location of professional talent for implementation is anticipated through
the full-time efforts of our senior management. These efforts are to be expanded
in the US and in Foreign capitals by an expanding advisory board and through the
networks of independent consultants. Principals of the respective client company
will open their networks to augment professional access for specialties the
Daniels corporate strategy consultants believe are needed in a joint venture,
(jointly-controlled) undertaking created for the client's optimum growth.
Daniels may provide the client with multiple corporate strategies/opportunities
including joint-ventures, marketing opportunity agreements and/or potential
acquisitions structured in a leveraged buyout format. One or a combination of
these strategies would allow the client to enter new market niches or expand
further into existing ones.
19
One of the Company's primary objectives is to be listed on a major exchange
listing. Senior management is estimating at least twenty-four months from
commencement of a corporate strategy assignment. Financial results, aided by all
participating players, should be forthcoming and recorded in SEC filings. At the
same time, a senior management team and Board expanded with highly-credible
interim (or permanent) professionals (directors) will be organized in order to
successfully navigate the listing process of a major stock exchange. While
Daniels believes this process should be successful in the above-noted time
period, there is some uncertainty in the process which is dependent upon any
past issues the listing committee of a specific exchange may deem necessary to
be addressed prior to uplifting. In addition, it may take added time to find the
appropriate outside directors that can not only satisfy the listing committee of
the exchange but who can also provide added networking/services to build the
parent's and subsidiary's potential for accelerated growth.
A similar effort will be provided to tailor an optimum growth program for the
private company client, whether it chooses to remain private or to become a
public company through alternative merger opportunities.
Growth Strategy - Short-Term Objectives
Daniels believes that the validity of its corporate strategy model is proven
through the success of its initial subsidiary incubation, Payless Truckers, Inc.
The fast growth experience of this start-up is generating the interest of
long-term financing sources. They recognize the obvious - the cash flows from
the fleet truck program can cover significant debt service on longer-term
financing which can accelerate the levered growth of the Company. Daniels has
used, and will continue to use, its publicly traded common stock in a variety of
securities packages, including convertible preferred stock, to launch its
premier subsidiary start-up, (Payless Truckers) and will do so for other
start-up opportunities being reviewed. Initial subsidiaries (start-up clients)
are those that can generate significant return on invested capital so that
growth acceleration comes from generic sales/profit growth. Alternative growth
options - joint-ventures, marketing agreements, acquisitions/LBO's - will be
applied secondarily as external growth opportunities are entered into to bring
the start-up (now considered an early-stage company) to critical mass for
stability.
Senior management believes our corporate strategy business model - as an
incubator of subsidiary / spin-off companies - to be scalable. Based upon the
potential success of the initial corporate strategy consulting assignments
creating Daniels' uplifting to a major stock exchange, Daniels (the publicly
traded Exchange listed parent incubator with sophisticated senior advisory and
capital raised at very advantageous rates) - may entertain the creation of a
franchising program for key US cities and foreign finance centers.
Sales and Marketing
Daniels' senior management will concentrate its efforts to expand its corporate
strategy and financial advisory services and related specialties in the mini-cap
segment of the private and public markets, where Daniels believes it will be
effective. Marketing efforts will increase through social and print media
efforts and will be in addition to those methods already mentioned herein.
Daniels' objective is to create and help manage implementation of accelerated
expansion strategies and in so doing, aid in the creation of financing
alternatives to accomplish client goals.
Competition
Existing and new competitors will continue to improve their services and
introduce new services with competitive price and performance characteristics.
In periods of reduced demand for our services, we can either choose to maintain
market share by reducing our prices to meet competition or maintain prices and
choose only those assignments with new clients that have pressing goals to be
met that offer Daniels optimum potential for profits and growth.
The "collective" corporate financial services, direct and referral, including
merchant banking/private equity, are very competitive and fragmented in the
Company's market niche. There are limited barriers to entry and new competitors
frequently enter the market. A significant number of our competitors possess
substantially greater resources. We will continue to offer equity compensation
to our team 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.
The above competitive considerations are no longer considered by senior
advisory/oversight management to be as important as they once were. More
importantly, we are now known for the success of our visionary growth strategies
and their execution in the development and launch of our premier subsidiary -
Payless Truckers Inc. The return on investment on early stages of our developing
100 truck fleet should generate the positive cash flow that will eventually
create excess profits and help launch other promising new candidates (start-up
clients) as subsidiary deals. The challenges of the past year have caused
management to rededicate its mission to find creative ways to serve our
customers in ways that allow us to regain our growth momentum from satisfied
customers.
20
General
Our discussion and analysis of our financial condition and results of operations
is based on our financial statements, Actual results may differ from these
estimates under different assumptions or conditions. We believe the following
critical accounting policies affect our most significant judgments and estimates
used in preparation of our financial statements. which have been prepared in
accordance with accounting principles generally accepted in the U.S. The
preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities and expenses.
We base our estimates on historical experience and on various other assumptions
that we believe to be reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources.
Critical Accounting Policies
Financial Reporting Release No. 60, published by the SEC, recommends that all
companies include a discussion of critical accounting policies used in the
preparation of their financial statements. While all these significant
accounting policies impact our financial condition and results of operations and
we view certain of these policies as critical. Policies determined to be
critical are those policies that have the most significant impact on our
consolidated financial statements and require management to use a greater degree
of judgment and estimates. Actual results may differ from those estimates.
We believe that given current facts and circumstances, it is unlikely that
applying any other reasonable judgments or estimate methodologies would cause a
material effect on our consolidated results of operations, financial position or
liquidity for the periods presented in this report.
The accounting policies identified as critical are as follows:
Revenue and Cost Recognition
We recognize revenue when we satisfy performance obligations by the transfer of
control of products or services to our customers, in an amount that reflects the
consideration we expect to be entitled to in exchange for those products or
services. We recognize revenue from class 8 heavy duty truck sales to customers
when we satisfy our performance obligation, at a point in time, when title to
the truck is transferred to the customer. Delivery or shipping charges billed to
customers, if applicable, are included in product sales and the related shipping
costs are included in cost of goods sold.
Fair Value of Assets
The Company has adopted the standard FASB Accounting Standards Codification (ASC
820) "Fair Value Measurements and Disclosures" which 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.
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.
Use of Estimates
In preparing financial statements in conformity with accounting principles
generally accepted in the United States of America, management is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and revenue and expenses during the reporting
period. Actual results could differ from those estimates.
21
COVID-19
On January 30, 2020, the World Health Organization ("WHO") announced a global
health emergency in response to a new strain of a coronavirus (the "COVID-19
outbreak"). In March 2020, the WHO classified the COVID-19 outbreak as a
pandemic based on the rapid increase in exposure globally. The full impact of
the COVID-19 outbreak continues to evolve as of the date of this report.
Management is actively monitoring the global situation and its effects on the
Company's industry, financial condition, liquidity, and operations. Given the
daily evolution of the COVID-19 outbreak and the global responses to curb its
spread, the Company is not able to estimate the effects of the COVID-19 outbreak
on its results of operations, financial condition, or liquidity for fiscal year
2022. However, if the pandemic continues, it may have a material adverse effect
on the Company's results of future operations, financial position, and liquidity
in fiscal year 2022.
Liquidity and Capital Resources
August 31, November 30, Changes
Working Capital Data: 2022 2021 Amount %
Current Assets $ 161,527 $ 403,584 $ (242,057 ) (60 )%
Current Liabilities $ (4,414,399 ) $ (3,967,120 ) $ (447,279 ) 11 %
Working Capital Deficiency $ (4,252,872 ) $ (3,563,536 ) $ (689,336 ) 19 %
As of August 31, 2022, we had $49,071 in cash and cash equivalents and a working
capital deficit of $4,252,872.
Our working capital deficit at August 31, 2022 was $4,252,872 as compared to
working capital deficit of $3,563,536 as of November 30, 2021. The increase in
working capital deficit was mainly attributed to an increase in derivative
liabilities, an increase in interest costs, the classification of past due loans
as current liabilities, a decrease in cash and cash equivalents and an increase
in accounts payable to the related party.
The following table sets forth certain information about our cash flow during
the nine months August 31, 2022 and 2021:
Nine Months Ended
August 31, Changes
Cash Flows Data: 2022 2021 Amount %
Cash Flows provided by (used in)
Operating Activities $ (328,235 ) $ 2,818 $ (331,053 ) (11748 )%
Cash Flows provided by (used in)
Investing Activities 152,745 (238,498 ) 391,243 (164 )%
Cash Flows provided by Financing
Activities 43,473 329,555 (286,082 ) (87 )%
Net increase (decrease) in cash
during period $ (132,017 ) $ 93,875 $ (225,892 ) (241 )%
Net cash used in operating activities was $328,235 for the nine months August
31, 2022, compared to net cash provided by operating activities of $2,818 during
the nine months ended August 31, 2021. The decrease in net cash provided by
operating activities is attributable to the change in our working capital assets
and reduced revenues compared to the nine months ended August 31, 2021.
Net cash provided by investing activities was $152,745 for the nine months
August 31, 2022, compared to net used of $238,498 during the nine months August
31, 2021. The decrease in net cash used is directly attributable to not
purchasing trucks for use in our credit rebuilding business line during the
period and the proceeds from disposal of property and equipment.
Net cash provided by financing activities was $43,473 for the nine months August
31, 2022, compared to net cash provided of $329,555 for the nine months August
31, 2021. The decrease in net cash provided by financing activities is directly
related to the increased repayments of loans payable used to finance vehicle
purchases. During the nine months August 31, 2022, we received $284,500 in
proceeds from loans payable and repaid $240,856 of principal on the loans.
Our primary source of liquidity has been proceeds received from the issuance of
Series B convertible preferred stock, convertible debt and commercial loans. In
addition, cash flow generated by our subsidiary Payless Truckers has helped to
sustain the consolidated group.
22
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 not have sufficient capital on hand to fund operations for the
immediate future. Management estimates that it will need up to $2.0 million to
fund its PayLess Truckers subsidiary. It is possible that we can still achieve
our objectives by use of asset-based lending whereby we can leverage our truck
purchases. However, because of the start-up nature of the subsidiary this
financing may be harder to achieve than normal. Even if limited funds are
raised, PayLess will still be able to register profits from its "flip" program
while cost-effective funding for the "credit enhancement" program can be
arranged. The Company does have funding available under a commitment letter but
these funds are very expensive; management is trying to avoid their use.
It is the Company's intention to concentrate its efforts on the build-out of the
business components of its PayLess Truckers, Inc. subsidiary. Once solidly on
its growth path, meeting projections and generating positive operating cash
flows, additional subsidiary/start-up businesses will be entertained be the
parent company.
Senior Management believes it will have sufficient cash flows to continue in
business for the foreseeable future. While legal and accounting expenses are
significant for a reporting company, we will cover them out of operating cash
flows.
Comparison of the Three Months August 31, 2022 to the Three Months August 31,
2021 Results of Operations
Our operating results for the three months August 31, 2022 and 2021, and the
changes between those periods for the respective items are summarized as
follows:
Three Months Ended
August 31, Changes
Statement of Operations Data: 2022 2021 Amount %
Revenue $ 335,366 $ 1,189,371 $ (854,005 ) (72 )%
Cost of Services (205,161 ) (828,142 ) 622,981 (75 )%
Gross profit 130,205 361,229 (231,024 ) (64 )%
Total operating expenses (274,510 ) (276,309 ) 1,799 (1 )%
Other income (expense) (149,152 ) 151,120 (300,272 ) (199 )%
Net Income (loss) $ (293,457 ) $ 236,040 $ (529,497 ) (224 )%
Sales
Sales totaled $335,366 which were comprised of (i) $169,369 from the resale of
refurbished trucks and (ii) $159,278 from vehicle rental agreements, (iii)
$2,195 from repair income and (iv) $4,524 from other miscellaneous sources for
the three months August 31, 2022, compared to sales of $1,189,371 which were
comprised of (i) $952,231 from the resale of refurbished trucks and (ii)
$215,227 from vehicle rental agreements, and (iii) $21,913 from other
miscellaneous sources for the three months ended August 31, 2021. The
substantial decrease in revenue is directly related to the large increase in
diesel fuel cost, the volatility in truck market prices and overall significant
inflation.
Gross Profit
Gross profit is calculated by subtracting cost of goods sold from sales. Gross
profit percentage is calculated by dividing gross margins by revenue. Current
gross profit percentages may not be indicative of future gross profit
performance. Gross profit totaled $130,205 for the three months August 31, 2022,
compared to $361,229, during the three months ended August 31, 2021,
respectively. Gross profit percentage was 39.0% and 30.0% for the three months
August 31, 2022 and 2021, respectively. The increase in gross profit is composed
of reduced trucks available for sale from increased purchase prices and included
higher percentage mix of revenues from truck rental agreements, which typically
yield higher profit margins, and relatively consistent profit margins from the
resale of our trucks compared to the quarter ended August 31, 2021.
Operating Expenses
Operating expenses are primarily comprised of compensation, facilities costs,
outsourced services and disposal of vehicles and equipment. Operating expenses
totaled $274,510 for the three months August 31, 2022, compared to operating
expenses of $276,309 during the three months ended August 31, 2021 representing
a decrease of $1,799 or 1%. The decrease in operating expenses is generally
related to the increase in our use of outsourced services, reductions in
consulting and professional services for corporate matters, financing efforts,
gains on disposal of vehicles and wages.
23
Other Income and Expenses
Other expenses totaled $149,152 for the three months August 31, 2022, compared
to other income of $151,120 during the three months ended August 31, 2021
representing an increase in other expense of $300,272 or 199%. Interest expense
decreased to $153,393 for the three months ended August 31, 2022 from $183,077
during the three months ended August, 2021. We recorded a gain from the change
in fair value of derivative liabilities of $4,241 during the three months August
31, 2022, compared to a gain from the change in fair value of derivative
liabilities of $334,197 during the three months ended August 31, 2021.
Net Income Attributable to Common Stockholders
The Company realized net loss attributable to common stockholders of $294,647
for the three months August 31, 2022, compared to net income of attributable to
common stockholders of $97,102 realized during the three months ended August 31,
2021. The decrease in our net income and net loss attributable to common
stockholders is largely attributable to the reduced gain associated with the
change in fair value of derivative liabilities and decreased revenue.
Comparison of the Nine Months August 31, 2022 to the Nine Months Ended August
31, 2021 Results of Operations
Our operating results for the nine months August 31, 2022 and 2021, and the
changes between those periods for the respective items are summarized as
follows:
Nine Months Ended
August 31, Changes
Statement of Operations Data: 2022 2021 Amount %
Revenue $ 1,328,599 $ 3,544,792 $ (2,216,193 ) (63 )%
Cost of services (812,859 ) (2,486,524 ) 1,673,665 (67 )%
Gross profit 515,740 1,058,268 (542,528 ) (51 )%
Total operating expenses (887,952 ) (928,219 ) 40,267 4.3 %
Other expense (1,250,676 ) 217,163 (1,467,839 ) (676 )%
Net loss $ (1,622,888 ) $ 347,212 $ (1,970,100 ) (567 )%
Sales
Sales totaled $1,328,599 which were comprised of (i) $785,144 from the resale of
refurbished trucks and (ii) $517,951 from vehicle rental agreements, (iii)
$14,591 from repair income and (iv) $10,913 from other miscellaneous sources for
the nine months August 31, 2022, compared to sales of $3,544,792 which were
comprised of (i) $2,885,121 from the resale of refurbished trucks and (ii)
$625,873 from vehicle rental agreements, and (iii) $33,798 from other
miscellaneous sources for the nine months ended August 31, 2021. The substantial
decrease in revenue is directly related to the large increase in diesel fuel
cost, the volatility in truck market prices and overall significant inflation.
Gross Profit
Gross profit is calculated by subtracting cost of goods sold from sales. Gross
profit percentage is calculated by dividing gross margins by revenue. Current
gross profit percentages may not be indicative of future gross profit
performance. Gross profit totaled $515,740 for the nine months August 31, 2022,
compared to $1,058,268, during the nine months August 31, 2021. Gross profit
percentage was 38.8% and 29.9% for the nine months August 31, 2022 and 2021,
respectively. The increase in gross profit is composed of reduced trucks
available for sale from increased purchase prices and included higher percentage
mix of revenues from truck rental agreements, which typically yield higher
profit margins, and relatively consistent profit margins from the resale of our
trucks compared to the quarter ended August 31, 2021.
Operating Expenses
Operating expenses are primarily comprised of compensation, facilities costs,
outsourced services and disposal of vehicles and equipment. Operating expenses
totaled $887,952 for the nine months August 31, 2022, compared to operating
expenses of $928,219 during the nine months August 31, 2021 representing a
decrease of $40,267 or 4.3%. The decrease in operating expenses is generally
related to the increase in our use of outsourced services, reductions in
consulting and professional services for corporate matters and financing
efforts, gains on disposal of vehicles and wages.
Other Expenses
Other expense totaled $1,250,676 for the nine months August 31, 2022, compared
to other income of $217,163 during the nine months August 31, 2021 representing
an increase in other expense of $1,467,839 or 676%. Interest expense increased
to $561,672 for the nine months August 31, 2022 from $541,341 during the nine
months August 31, 2021. We recorded a loss from the change in fair value of
derivative liabilities of $561,672 during the nine months August 31, 2022,
compared to a gain from the change in fair value of derivative liabilities of
$758,504 during the nine months August 31, 2021.
Net Income Attributable to Common Stockholders
The Company realized net loss attributable to common stockholders of $1,622,888
for the nine months August 31, 2022, compared to net loss attributable to common
stockholders of $1,009 realized during the nine months August 31, 2021. The
increase in our net loss attributable to common stockholders is largely
attributable to the change from a gain to a loss associated with the change in
fair value of derivative liabilities and lower revenues.
24
© Edgar Online, source Glimpses