Financial Summary: The Coronavirus finally had its effect on our results. Sales
were flat for the nine months ending August 2020 at $2,891,993 as compared to
$2,832,957 in 2019. Anticipating this understandable situation, our operating
and financial oversight management tightened up controls and our gross margin
for the nine months of 2020 improved 55.9% to $505,565 from $326,211 for the
nine months of 2019.
Comparative sales results for the current August quarter were $880,682 versus
$1,229,699 for the 2019 quarter. Our gross margins improved 19.2 % year over
year through continuation of tight cost controls and systems implementation.
For the August 2020 quarter, the consolidated company (Daniels - "DCAC") had net
income attributable to common shareholders of $1,008,885 or $0.03 per share on a
weighted average of 29,933,017. This profit was from a gain in derivative
liabilities on our balance sheet and not from subsidiary or consulting
operations.
Corporate Strategy for the Quarter:
During our third quarter of fiscal year 2020, Daniels, as an incubator,
continued to build upon earlier milestones in fulfillment of its corporate aim.
Cash of $250,029 was raised from the issuance of Callable Preferred Stock and is
reserved on our balance sheet for expansion of our rental fleet. By itself these
funds can double the size and month rental income of our rental fleet. The
decision was made to seek asset-based loans from private investors and
institutions to leverage the funds. Negotiations continue with lenders so trucks
can be purchased for two-thirds equity one-third debt. Forward momentum
continues through the generation of cash flows from our rental business. Our
existing fleet is generating between $21,000 - $24,000 per month in revenues.
These rental cash flows are sustaining the overall Company as the "flip" segment
continues to generate revenues on a more modified level. The goal established
for this quarter - which was the positioning of the Payless subsidiary so
levered asset purchases could be made to accelerate earnings - was advanced. In
the next several quarters, the Company should be in a position to use leverage
to take advantage of the continuing health / dislocations risks in the economy
and then the eventual restart of approximately thirty percent of the US GDP.
Management's on-going efforts in selecting additional start-up or add-on
opportunities as client (subsidiary) candidates is promising. Final discussions
were in progress during the quarter with a research think tank. They will have
the role of supporting the parent company senior oversight management team in
the detailed review and analysis of all candidates. A board decision was made to
focus solely on the Transportation Services segment of the economy through the
further build-out of the Payless Truckers, Inc. subsidiary.
Forward Looking Statements
The statements contained in this report other than statements of historical fact
are "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. These forward-looking statements represent the
Registrant's present expectations or beliefs concerning future events. The
Registrant cautions that such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Registrant to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. Such factors include, among other
things, the uncertainty as to the Registrant's future profitability; the
uncertainty as to the demand for Registrant's services; increasing competition
in the markets that Registrant conducts business; the Registrant's ability to
hire, train and retain sufficient qualified personnel; the Registrant's ability
to obtain financing on acceptable terms to finance its growth strategy; and the
Registrant's ability to develop and implement operational and financial systems
to manage its growth. These forward-looking statements speak only as of the date
of this report. We assume no obligation or undertaking to update or revise any
forward-looking statements contained herein to reflect any changes in its
expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement is based. You should, however, review
additional disclosures we make in the reports we file with the SEC.
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.
18
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 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 lines with its launch and current results coming from the "flip"
business, whose principal activity is to acquire class 8 heavy duty trucks,
refurbish them, add location electronics, advertise and sell to independent
drivers and operators. The second line is the "credit rebuilding business" 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.
This business commenced operations subsequent to the close of our fiscal year.
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-line 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 - a family with
three generations in automotive/trucking. 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 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.
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 growing momentum of this cash flow engine 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 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.
20
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.
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 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 and collection of cash is certain.
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.
We also recognize revenue from the rental of class 8 heavy-duty trucks to
customers. Revenue from these truck rental agreements is recognized based upon
the passage of time over the term of the arrangement once control of the
underlying asset has been transferred to the customer. The arrangements require
weekly payments, and the customer may cancel the agreement at any time by
notifying the Company in writing at least 30 days before such termination.
Fair Value of Assets
We have 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.
21
? 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. We have
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 our financial
statements.
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.
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
2020. 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 2020.
Liquidity and Capital Resources
As of August 31, 2020, we had $250,029 in cash and cash equivalents and a
working capital deficit of $4,490,693.
Net cash used in operating activities was $31,854 for the nine months ended
August 31, 2020, compared to net provided by operating activities of $140,063
during the nine months ended August 31, 2019. The decrease in net cash provided
by operating activities is primarily attributable to the change in our working
capital assets, in particular inventory and accounts payable and other accrued
liabilities.
Net cash used in investing activities was $89,239 for the nine months ended
August 31, 2020, compared to $209,722 during the nine months ended August 31,
2019. The decrease is directly attributable to the number of trucks purchased
for use in our credit rebuilding business line.
Net cash provided by financing activities was $231,500 for the nine months ended
August 31, 2020, compared to net cash provided of $112,500 during the nine
months ended August 31, 2019. The increase in net cash provided by financing
activities is directly related to sale of shares of our Series B convertible
preferred stock.
Our primary source of liquidity has been from the issuance of convertible debt
and preferred stock. Since the creation of our subsidiary, Payless Truckers,
Inc., cash flows from the operations of the truck service company have helped to
supplement cash flows provided by our financing activities for the consolidated
group.
22
On February 24, 2020, we filed a certificate of designations with the State of
Nevada, designating 1,000,000 of our available preferred shares as Series B
preferred convertible stock, stated value of $1.00 per share, and with a par
value of $0.001 per share. The certificate of designations provides us with the
opportunity to redeem the Series B shares at various increased prices at time
intervals up to the 6-month anniversary of the closing and mandates full
redemption on the 12-month anniversary. The holder may convert the Series B
shares into shares of our common stock, commencing on the 6-month anniversary of
the closing at a 35% discount to the lowest closing price during the 20-day
trading period immediately preceding the notice of conversion.
On March 19, 2020, we sold 73,000 shares of our Series B convertible preferred
stock, with an annual accruing dividend of 10%, to Geneva Roth Remark Holdings,
Inc. ("Geneva"), for $70,000 pursuant to a Series B preferred stock purchase
agreement. The Series B preferred stock is classified as temporary equity since
the shares are convertible at the option of the shareholder. We recorded a
derivative liability of $144,894, valued using the Black-Scholes Model,
associated with Series B preferred shares.
On May 22, 2020, we sold 103,000 shares of our Series B convertible preferred
stock, with an annual accruing dividend of 10%, to Geneva, for $100,000 pursuant
to a Series B preferred stock purchase agreement. The Series B preferred stock
is classified as temporary equity since the shares are convertible at the option
of the shareholder. We recorded a derivative liability of $408,566, valued using
the Black-Scholes Model, associated with Series B preferred shares.
On July 6, 2020, we sold 58,000 shares of our Series B convertible preferred
stock, with an annual accruing dividend of 10%, to Geneva, for $55,000 pursuant
to a Series B preferred stock purchase agreement. The Series B preferred stock
is classified as temporary equity since the shares are convertible at the option
of the shareholder. We recorded a derivative liability of $92,317, valued using
the Black-Scholes Model, associated with Series B preferred shares.
Financing Activities
We will have to continue to raise capital by means of borrowings, or through a
private placement or registered offering. 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.
Management estimates that it will need up to $2.0 million to fund its
operations. 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, we can still register
profits from our "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 its
trucking operations. 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.
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 Results of Operations for the Three Months Ended August 31,
2020 to the Three Months Ended August 31, 2019
Sales
Sales totaled $800,682 which were comprised of (i) $688,932 from the resale of
refurbished trucks, (ii) $102,930 from vehicle rental agreements, and (iii)
$3,320 from other miscellaneous sources for the three months ended August 31,
2020, compared to sales of $1,229,699 which were comprised of (i) $1,169,831
from the resale of refurbished trucks and (ii) $59,868 from vehicle rental
agreements during the three months ended August 31, 2019. The decrease in sales
for the three months ended August 31, 2020 is believed to be primarily
attributable to the uncertainty of economic conditions caused by the global
COVID-19 pandemic.
23
Gross Profit
Gross profit totaled $184,143 for the three months ended August 31, 2020,
compared to $154,427 during the three months ended August 31, 2019,
respectively. Gross profit percentage was 23.0% and 12.6% for the three months
ended August 31, 2020 and August 31, 2019, respectively. The increase in gross
profit and gross profit percentage for the current year period is directly
attributable to an increase in revenues from truck rental agreements which yield
higher profit margins than truck resales.
Operating Expenses
Operating expenses are primarily comprised of compensation, facilities costs and
outsourced services. Operating expenses totaled $267,455 for the three months
ended August 31, 2020, compared to operating expenses of $251,042 during the
three months ended August 31, 2019 representing an increase of $16,413 or 6.5%.
The increase in operating expenses is generally related to the increase in our
use of consulting and professional services for corporate matters and increased
operating activities at Payless.
Other Income (Expenses), Net
Net other income totaled $1,233,465 for the three months ended August 31, 2020,
compared to net other expense of $873,852 during the three months ended August
31, 2019 representing an increase of $2,137,033 or 220.2%. Interest expense
decreased to $97,811 for the three months ended August 31, 2020 from $128,955
during the three months ended August 31, 2019. The decrease in interest expense
is due to less amortization of debt discounts attributable to our notes payable.
We recorded a gain from the change in fair value of derivative liabilities of
$1,331,276 during the three months ended August 31, 2020, compared to a loss
from the change in fair value of derivative liabilities of $594,397 during the
three months ended August 31, 2019.
Net Income (Loss) Attributable to Common Stockholders
The Company realized net income attributable to common stockholders of
$1,008,885 for the three months ended August 31, 2020, compared to a net loss
attributable to common stockholders of $970,467 incurred during the three months
ended August 31, 2019. The increase is largely attributable to the unrealized
gain associated with our derivative liabilities offset in part by deemed
dividends of $141,268 to our Series B preferred stockholders and the change in
fair value of our derivative liabilities. There were no deemed dividends to
preferred stockholders during the three months ended August 31, 2019.
Comparison of the Results of Operations for the Nine Months Ended August 31,
2020 to the Nine Months Ended August 31, 2019
Sales
Sales totaled $2,891,993 which were comprised of (i) $2,570,250 from the resale
of refurbished trucks, (ii) $298,255 from vehicle rental agreements, and (iii)
$23,488 from other miscellaneous sources for the nine months ended August 31,
2020, compared to sales of $2,832,957 which were comprised of (i) $2,655,276
from the resale of refurbished trucks and (ii) $177,381 from vehicle rental
agreements during the nine months ended August 31, 2019.
Gross Profit
Gross profit totaled $505,565 for the nine months ended August 31, 2020,
compared to $326,211 during the nine months ended August 31, 2019, respectively.
Gross profit percentage was 17.5% and 11.5% for the nine months ended August 31,
2020 and August 31, 2019, respectively. The increase in gross profit and gross
profit percentage for the current year period is directly attributable to an
increase in revenues from truck rental agreements which yield higher profit
margins than truck resales.
Operating Expenses
Operating expenses are primarily comprised of compensation, facilities costs and
outsourced services. Operating expenses totaled $750,774 for the nine months
ended August 31, 2020, compared to operating expenses of $510,359 during the
nine months ended August 31, 2019 representing an increase of $240,415 or 47.1%.
The increase in operating expenses is generally related to the increase in our
use of consulting and professional services for corporate matters and increased
operating activities at Payless.
24
Other Income (Expenses), Net
Net other expenses totaled $35,224 for the nine months ended August 31, 2020,
compared to net other expenses of $996,025 during the nine months ended August
31, 2019 representing a decrease of $960,801 or 76.2%. Interest expense
decreased to $264,515 for the nine months ended August 31, 2020 from $499,925
during the nine months ended August 31, 2019. The decrease in interest expense
is due to less amortization of debt discounts attributable to our notes payable.
We recorded a gain from the change in fair value of derivative liabilities of
$233,727 during the nine months ended August 31, 2020, compared to a loss from
the change in fair value of derivative liabilities of $241,421 during the nine
months ended August 31, 2019.
Net Income (Loss) Attributable to Common Stockholders
The Company incurred a net loss attributable to common stockholders of $823,153
for the nine months ended August 31, 2020, compared to a net loss attributable
to common stockholders of $1,180,173 incurred during the nine months ended
August 31, 2019. The decrease in our net loss attributable to common
stockholders is largely attributable to the reduction in our net other expenses
offset in part by deemed dividends of $542,720 to our Series B preferred
stockholders and the change in fair value of our derivative liabilities. There
were no deemed dividends to preferred stockholders during the nine months ended
August 31, 2019.
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