DANS CORP
The results of our August quarter reflect the continuation of the success 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,
For the nine months -
During the August quarter, in-house financing potential of aged management award shares - while available and already counted in the outstanding shares total - continued to be held in check in favor of continuing negotiations with financing options which continue to multiply because of proved operating results. The grants were created for a specific purpose - for Senior oversight financial management. operations managers and retained consultants - to participate individually and voluntarily in the in-house control and timing of funding as needed. The eventual use of the award shares could provide selective management of the growth of Payless.
Negotiations with long term straight debt lenders and Preferred Stock financiers continued through the August quarter. More creative approaches were developed and options continue to be studied. The main objective - which continued to take more time than expected - is to create alternatives that (a) that are repaid out of cash flows and/or (b) with equity participation that is accretive. Daniels' senior management believes levered financing - supported by the equity and layered finance options mentioned - will allow Payless to achieve the first plateau of 100 rental fleet trucks in a measured amount of time. We are seriously considering the acquisition of 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 monthly capacity and can only add five to six truck additions to our rental fleet.
The funding options being discussed will eliminate the need for the continuation of expensive private investor funding. Blended Public market-rates for financing, will allow Daniels / Payless to service a larger debt load and accelerate growth prospects. Our cost of capital should drop significantly from current levels.
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As used in this interim report, the terms "we", "us", "our", the "Company", the
"Registrant", "Daniels Corporate Advisory", "DCAC" and "Daniels" mean
Overview
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. 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.
As a result, we formed
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The Payless two-segment trucking model represents a streamlined
We hope to further enhance our plan for growth beginning in our second year by
forming joint-ventures and/or partnerships with truck maintenance companies
across
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.
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
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,
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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 -
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
26 Critical Accounting Policies
Financial Reporting Release No. 60, published by the
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. The adoption of ASC 820 for non-financial assets and liabilities did not have a significant impact on the Company's financial statements.
Use of Estimates
In preparing financial statements in conformity with accounting principles
generally accepted in
27 COVID-19
On
Liquidity and Capital Resources
As of
Net cash provided by operating activities was
Net cash used in investing activities was
Net cash provided by financing activities was
Our primary source of liquidity has been proceeds received from the issuance of Series B convertible preferred stock, convertible debt and loans from related parties. In addition, cash flow generated by our subsidiary Payless Truckers has helped to sustain the consolidated group.
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 operations for the
immediate future. Management estimates that it will need up to
It is the Company's intention to concentrate its efforts on the build-out of its
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.
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Comparison of the Three Months Ended
Sales
Sales totaled
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
Operating Expenses
Operating expenses are primarily comprised of compensation, facilities costs and
outsourced services. Operating expenses totaled
Other Income and Expenses
Other income totaled
Net Income Attributable to Common Stockholders
The Company realized net income attributable to common stockholders of
Comparison of the Nine Months Ended
Sales
Sales totaled
29 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
Operating Expenses
Operating expenses are primarily comprised of compensation, facilities costs and
outsourced services. Operating expenses totaled
Other Income and Expenses
Other income totaled
Net Loss Attributable to Common Stockholders
The Company incurred a net loss attributable to common stockholders of
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