TurnKey Capital, Inc. - FORM 10-Q

Attached files

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EX-32.2 - CERTIFICATION - TurnKey Capital, Inc.	tcki_ex32z2.htm
EX-32.1 - CERTIFICATION - TurnKey Capital, Inc.	tcki_ex32z1.htm
EX-31.2 - CERTIFICATION - TurnKey Capital, Inc.	tcki_ex31z2.htm
EX-31.1 - CERTIFICATION - TurnKey Capital, Inc.	tcki_ex31z1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarter period ended September 30, 2016

¨ 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: 333-186282

TurnKey Capital, Inc.

(Exact name of registrant as specified in its charter)


Nevada	33-1225521
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

2929 East Commercial Blvd., PH-D,

Ft. Lauderdale, Florida 33308

(Address of principal executive offices)(Zip Code)

954-440-4678

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

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 þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions 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	þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

As of November 11, 2016 the issuer had 39,216,665 shares of its common stock issued and outstanding.

TurnKey Capital, Inc.

Form 10-Q


		Page No.
PART I	FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS:	1
	Condensed Consolidated Balance Sheets (unaudited)	1
	Condensed Consolidated Statements of Operations (unaudited)	2
	Condensed Consolidated Statements of Cash Flows (unaudited)	3
	Notes to Unaudited Condensed Consolidated Financial Statements	4
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	11
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	14
ITEM 4.	CONTROLS AND PROCEDURES	14

PART II	OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	16
ITEM 1A.	RISK FACTORS	16
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	16
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	16
ITEM 4.	MINE SAFETY DISCLOSURES	16
ITEM 5.	OTHER INFORMATION	16
ITEM 6.	EXHIBITS	16

FORWARD LOOKING STATEMENTS

Statements made in this Form 10-Q that are not historical or current facts are "forward-looking statements. These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. We intend that such forward- looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future.

However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.

OTHER PERTINENT INFORMATION

Unless specifically set forth to the contrary, when used in this report the terms “TurnKey”, the “Company,” “we”, “us”, “our” and similar terms refer to TurnKey Capital, Inc., a Nevada corporation and its wholly owned subsidiary Turnkey Home Buyers USA, Inc.

PART 1. FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

TURNKEY CAPITAL, INC. AND SUBSIDIARIES

(FORMERLY TRAIN TRAVEL HOLDINGS, INC.)

CONDENSED CONSOLIDATED BALANCE SHEETS


	September 30,			December 31,
	2016			2015
	(Unaudited)			(Audited)
Assets
Current Assets
Cash	$	—		$	127,375
Due from related parties		121,051			182,437
Total current assets		121,051			309,812
Total assets	$	121,051		$	309,812

Liabilities and Stockholders' Equity (Deficit)
Current Liabilities
Accounts payable & accrued expenses	$	52,084		$	35,127
Accounts payable - related party		51,524			45,249
Advances payable		200,000			200,000
Advances - related party		225,417			225,854
Total Current Liabilities		529,025			506,230

Stockholders' Equity (Deficit)
Preferred stock, $0.001 par value, 1,000,000 shares authorized; 600,000 shares issued and outstanding at September 30, 2016 and December 31, 2015.		600			600
Common stock, $0.001 par value, 75,000,000 shares authorized; 39,216,665 and 38,831,665 shares issued and outstanding at September 30, 2016 and December 31, 2015.		39,217			38,832
Additional paid-in capital		1,034,283			1,034,668
Accumulated deficit		(1,482,074	)		(1,270,518	)
Total stockholders' equity (deficit)		(407,974	)		(196,418	)
Total liabilities and stockholders' equity (deficit)	$	121,051		$	309,812

(The accompanying notes are an integral part of these consolidated financial statements)

TURNKEY CAPITAL, INC. AND SUBSIDIARIES

(FORMERLY TRAIN TRAVEL HOLDINGS, INC.)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


	THREE MONTHS ENDED,						NINE MONTHS ENDED,
	SEPTEMBER 30,						SEPTEMBER 30,
	2016			2015			2016			2015
Income
Revenue	$	5,375		$	18,571		$	8,525		$	21,269

Expenses
General and administrative		8			88,690			25,591			224,682
Sales and marketing		—			—			26,152			—
Legal and professional - related party		40,675			41,462			123,175			162,669
Legal and professional		7,237			44,102			45,163			159,040
Total operating expenses		47,920			174,254			220,081			546,391
Earnings before income taxes		(42,545	)		(155,683	)		(211,556	)		(525,122	)
Provision for income taxes		—			(8,299	)		—			(8,299	)
Net loss	$	(42,545	)	$	(163,982	)	$	(211,556	)	$	(533,421	)

Net (loss) per common share basic	$	—	*	$	—	*	$	(0.01	)	$	(0.01	)

Weighted average common shares outstanding basic		39,100,041			38,729,165			39,100,041			38,729,165

* Denotes a loss of less than $0.01 per share

(The accompanying notes are an integral part of these consolidated financial statements)

TURNKEY CAPITAL, INC. AND SUBSIDIARIES

(FORMERLY TRAIN TRAVEL HOLDINGS, INC.)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	NINE MONTHS ENDED
	SEPTEMBER 30,
	2016			2015
Cash flows from operating activities:
Net loss	$	(211,556	)	$	(533,421	)
Adjustments to reconcile net loss to net cash provided (used in) operating activities:
Changes in assets and liabilities:
(Increase) decrease in other prepaid expenses		—			1,328
Increase (decrease) in accounts payable and accrued expenses		16,957			10,371
Increase (decrease) in related party payable		67,224			—
Net cash provided by (used) in operating activities		(127,375	)		(521,722	)

Cash flows from investing activities:
Additions to real estate		—			(63,011	)
Net cash provided by (used) in investing activities		—			(63,011	)

Cash flows from financing activities:
Proceeds from the sale of common stock		—			353,100
Due to related parties - other costs		—			136,087
Net cash provided by (Used) in financing activities		—			489,187

Increase (decrease) in cash		(127,375	)		(95,546	)
Cash and cash equivalents at beginning of period		127,375			103,324
Cash and cash equivalents at end of period	$	—		$	7,778

Supplemental disclosures of cash flow information
Cash paid during the year for:
Taxes paid	$	—		$	8,299
Interest paid	$	—		$	—

(The accompanying notes are an integral part of these consolidated financial statements)

TURNKEY CAPITAL, INC. AND SUBSIDIARIES

(FORMERLY TRAIN TRAVEL HOLDINGS, INC.)

NOTES TO THE CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015

NOTE 1- ORGANIZATION AND GOING CONCERN

Organization and Description of Business

TurnKey Capital, Inc. (formerly Train Travel Holdings, Inc.) (“the Company,” “we,” or “us”) was incorporated under the laws of the State of Nevada under the name of Vanell, Corp. on September 7, 2012 (“Inception”). The Company changed its name to Train Travel Holdings, Inc. on March 20, 2014 and to TurnKey Capital, Inc. on January 15, 2016

From Inception in 2012 through December 2013, our business operations were limited primarily to the development of a business plan to provide consulting services to commercial growers of coffee in El Salvador, the completion of private placements for the offer and sale of our common stock, discussing the offers of consulting services with potential customers, and the signing of the service agreement with Finca La Esmeralda, a private El-Salvadorian company. We discontinued our coffee business on January 23, 2014.

Commencing January 23, 2014, our business plan changed to the acquisition and operation of entertainment train companies, as well as managing and providing consulting services to entertainment train companies. Since January 2014 our management has spent all of its time and effort on developing our business plan, including identifying specific entertainment railroad acquisition targets, engaging in discussions with these potential targets to ascertain the potential level of interest, negotiating general terms with targets, and undertaking early stage due diligence of potential targets. As a result, we entered into non-binding letters of intent with two acquisition candidates and subsequently performed initial stage due diligence. In one case, the railroad was in such disrepair we determined the acquisition to not be feasible at the price being sought by the target. In another case, we determined the price was too high based on our due diligence and could not reach an agreement with the potential seller. We also entered into a series of agreements to operate a dinner train in Missouri which were subsequently unwound. In light of the forgoing, our management has looked to potential new lines of business in addition to pursuing our current line of business.

On July 6, 2015, the Company completed a share exchange agreement (the “Share Exchange Agreement”) with Turnkey Home Buyers USA, Inc., a Florida corporation (“Turnkey”), TBG Holdings Corporation (“TBG”), each of the Turnkey shareholders and Train Travel Holdings, Inc., a Florida corporation. The Company, Turnkey, TBG and Train Travel Holdings, Inc., a Florida corporation, are all under the common control of Neil Swartz and Tim Hart.

Pursuant to the terms of the Share Exchange Agreement, Turnkey shareholders transferred to the Company all of the issued and outstanding shares of capital stock of Turnkey’s shareholders. In exchange for the acquisition of all of the issued and outstanding shares of Turnkey, the Company issued 15,337,500 shares of its common stock to Turnkey shareholders. Prior to closing, TBG, a principal shareholder of the Company and Turnkey, tendered to Turnkey for cancellation 15,000,000 shares of Turnkey common stock.

The Company shares issued to the Turnkey shareholders were not registered and were issued in a transaction which was exempt from the registration requirements pursuant to Section 4(a)(2) of the Securities Act of 1933. Each of the Turnkey shareholders were accredited investors and no underwriters or placement agents were involved.

As a result of the Share Exchange Agreement, the Turnkey shareholders owned 38.9% of the Company’s common stock and 58.5% of the fully diluted common stock as a result of their ownership of the outstanding preferred stock.

TURNKEY CAPITAL, INC. AND SUBSIDIARIES

(FORMERLY TRAIN TRAVEL HOLDINGS, INC.)

NOTES TO THE CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015

Due to the common control of Turnkey and the Company, pursuant to ASC 805-50-25, “Transactions Between Entities Under Common Control” and other SEC guidance including for lack of economic substance, the Share Exchange Agreement was accounted for as a transfer of the carrying amounts of assets and liabilities under the predecessor value method of accounting. Financial statement presentation under the predecessor values method of accounting as a result of a business combination between entities under common control requires the receiving entity (i.e., the Company) to report the results of operations as if both entities had always been combined. The consolidated financial statements include both entities’ full results since the inception of Turnkey on September 12, 2014.

Founded in September 2014, Turnkey offers clients a full suite of services for residential and commercial real estate transactions. As part of the acquisition, the Company acquired Turnkey’s subsidiary, a real estate brokerage firm, to handle the sales transactions. Turnkey seeks to generate revenue in three primary ways: coaching and mentoring real estate investors to improve their returns, leasing and sales of quality turnkey rental properties, and brokerage of residential and commercial transactions.

In September 2014, Turnkey acquired the intellectual properties of Robert Blair Real Estate, which included videos, instructional books, and an established real estate investor education program. Prior to September 2014, Turnkey’s current management team has been mentoring real estate investors for over 20 years.

Turnkey’s Single-Family Rental home division has developed an acquisition platform that is capable of acquiring large numbers of properties across many acquisition channels in multiple markets. When identifying desirable markets, the company focuses on steady population growth, strong rental demand and a desirable level of distressed sales of homes that can be acquired below replacement cost, providing for attractive potential rental yields and capital appreciation. More specifically, the company looks to acquire single-family homes in select submarkets that are appealing to middle income families, based on its disciplined market selection criteria, such as above-average median household incomes, well-regarded school districts, proximity to employment centers and lifestyle amenities, access to transportation routes and public transit and low crime levels. Turnkey believes that homes in these areas will attract tenants with strong credit profiles, produce high occupancy/rental rates, providing for long-term property appreciation potential.

In pursuit of our existing real estate business, on September 15, 2016 Turnkey entered an asset purchase agreement with ECP Capital Partners, Inc. Pending due diligence and a final closing, in exchange for 5,000,000 shares of Turnkey (convertible into 28,800,083 shares of the Company) the agreement would provide two vacant lots in a Port Charlotte real estate development, and option to purchase another 20 additional lots in the same development, and the rights and title to certain assets associated with Castle Capital Development Group. Due diligence for this transaction is currently underway.

On September 1, 2016, the Company formed a new subsidiary, Remote Office Management, Inc. (“ROM”) to market bundled accounting and computer/IT services. Simultaneously, ROM entered into an professional services agreement with R3 Accounting, (an accounting firm owned by Timothy Hart, a director, secretary and CFO of the Company) and PC Lauderdale (an unrelated computer/IT company). The purpose of the agreement was to form a joint venture where by these entities would cross market professional services under ROM for one stop computer/IT and accounting services.

Change of Control

On January 23, 2014, Mr. Francisco Douglas Magana (“Magana”), our then president and controlling shareholder, entered into a Common Stock Purchase Agreement (the “Agreement”) with the Company and Train Travel Holdings Inc. (“Travel Train Holdings Florida”) wherein Magana sold 15,000,000 shares of the Company’s common stock constituting 77.32% of the Company’s issued and outstanding shares of common stock to Travel Train Holdings Florida for an aggregate purchase price of $150,000. The principals of Travel Train Holdings Florida are Neil Swartz and Timothy Hart.

As part of the Agreement, Magana tendered his letter of resignation as the President, Secretary, Treasurer, Director and member of the Company Board effective as of the date of the Agreement.

TURNKEY CAPITAL, INC. AND SUBSIDIARIES

(FORMERLY TRAIN TRAVEL HOLDINGS, INC.)

NOTES TO THE CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015

On January 23, 2014, in Lieu of a Special Meeting the Board of Directors of the Company, we accepted the resignation of Magana and elected Neil Swartz to the positions of Director, President and CEO of the Company and Timothy Hart to the positions of Director, Secretary and CFO.

Going Concern

The financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. As of September 30, 2016, the Company had $0 of cash, has incurred losses since Inception of $1,482,074 and further losses are anticipated in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and, or, obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. There is no assurance that these events will be satisfactorily completed.

NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to interim financial information and the requirements of Form 10-Q and Article 10 of Regulation S-X of the SEC. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States for complete consolidated financial statements. Interim results are not necessarily indicative of results for a full year. In the opinion of the management, all adjustments considered necessary for a fair representation of the financial position and the results of operations and cash flows for the interim periods have been included.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All intercompany transactions and balances have been eliminated in consolidation. The results of our subsidiary are consolidated with the Company’s based on guidance from the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) No. 810, “Consolidation” (“ASC 810”).

Accounting estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) 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 significantly from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes.

TURNKEY CAPITAL, INC. AND SUBSIDIARIES

(FORMERLY TRAIN TRAVEL HOLDINGS, INC.)

NOTES TO THE CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015

Fair Value Measurement

The Company measures fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The Company utilizes a three-tier hierarchy which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 1. Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access. The Company has no assets or liabilities valued with Level 1 inputs.

Level 2. Valuations based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. The Company has no assets or liabilities valued with Level 2 inputs.

Level 3. Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company has no assets or liabilities valued with Level 3 inputs.

Fair Value of Financial Instruments

The carrying value of cash and cash equivalents, accounts payable, accrued liabilities and related party advances approximate their fair value because of the short- term nature of these instruments and their liquidity. Management is of the opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments.

Income Taxes

The Company follows the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis (temporary differences). The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Revenue Recognition

We anticipate earning income from the operations of residential real estate properties classified as real estate owned. Revenue is recognized when all of the following criteria were met: persuasive evidence of an arrangement existed, services had been provided, all significant contractual obligations had been satisfied, and collection was reasonably assured.

Real Estate Owned and Held-For-Sale

Real estate owned, shown net of accumulated depreciation and impairment charges, is comprised of real property acquired for cash or through partial or full settlement of mortgage debt. Real estate acquired is recorded at its estimated fair value at the time of acquisition.

We allocate the purchase price of our operating properties to land and building and to any other identified intangible assets or liabilities. We finalize our purchase price allocation on these assets within one year of the acquisition date.

Real estate assets are depreciated using the straight-line method over their estimated useful lives. Ordinary repairs and maintenance which are not reimbursed by the tenants are expensed as incurred. Major replacements and betterments which improve or extend the life of the asset are capitalized and depreciated over their estimated useful life.

TURNKEY CAPITAL, INC. AND SUBSIDIARIES

(FORMERLY TRAIN TRAVEL HOLDINGS, INC.)

NOTES TO THE CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015

Our properties are individually reviewed for impairment each quarter, if events or circumstances change indicating that the carrying amount of the assets may not be recoverable. We recognize impairment if the undiscounted estimated cash flows to be generated by the assets are less than the carrying amount of those assets. Measurement of impairment is based upon the estimated fair value of the asset. In the evaluation of a property for impairment, many factors are considered, including estimated current and expected operating cash flows from the property during the projected holding period, costs necessary to extend the life or improve the asset, expected capitalization rates, projected stabilized net operating income, selling costs, and the ability to hold and dispose of such real estate owned in the ordinary course of business. Impairment charges may be necessary in the event discount rates, capitalization rates, lease-up periods, future economic conditions, and other relevant factors vary significantly from those assumed in valuing the property.

Real estate is classified as held-for-sale when management commits to a plan of sale, the asset is available for immediate sale, there is an active program to locate a buyer, and it is probable the sale will be completed within one year. Real estate assets that are expected to be disposed of are valued, on an individual asset basis, at the lower of their carrying amount or their fair value less costs to sell.

We recognize sales of real estate properties upon closing. Payments received from purchasers prior to closing are recorded as deposits. Gain on real estate sold is recognized using the full accrual method when the collectability of the sale price is reasonably assured and we are not obligated to perform significant activities after the sale. Gain may be deferred in whole or in part until collectability of the sales price is reasonably assured and the earnings process is complete.

Advertising Costs

The Company’s policy regarding advertising is to expense advertising when incurred. The Company incurred advertising expense of $0 during the nine-month period ended September 30, 2016.

Stock-Based Compensation

As of September 30, 2016 the Company has not issued any stock-based payments. Stock-based compensation is accounted for at fair value in accordance with SFAS ASC 718, when applicable. To date, the Company has not adopted a stock option plan and has not granted any stock options.

Net Income (Loss) Per Share

The computation of basic earnings per share (“EPS”) is based on the weighted average number of shares that were outstanding during the period, including shares of common stock that are issuable at the end of the reporting period. The computation of diluted EPS is based on the number of basic weighted-average shares outstanding plus the number of common shares that would be issued assuming the exercise of all potentially dilutive common shares outstanding using the treasury stock method. The computation of diluted net income per share does not assume conversion, exercise or contingent issuance of securities that would have an antidilutive effect on earnings per share. Therefore, when calculating EPS if the Company experienced a loss, there is no inclusion of dilutive securities as their inclusion in the EPS calculation is antidilutive. Furthermore, options and warrants will have a dilutive effect under the treasury stock method only when the average market price of the common stock during the period exceeds the exercise price of the options or warrants (they are in the money).

TURNKEY CAPITAL, INC. AND SUBSIDIARIES

(FORMERLY TRAIN TRAVEL HOLDINGS, INC.)

NOTES TO THE CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015

Following is the computation of basic and diluted net loss per share for the nine months ended September 30, 2016 and 2015:

Basic and Diluted EPS Computation


	Nine Months Ended
	September 30,
	2016			2015
Numerator:
Loss available to common stockholders'	$	(211,556	)	$	(533,421	)

Denominator:
Weighted average number of common shares outstanding		39,100,041			38,729,165

Basic and diluted EPS	$	(0.01	)	$	(0.01	)

Potentially dilutive securities not included in the calculation of diluted net loss per share attributable to common stockholders because to do so would be anti- dilutive are as follows (in common stock equivalent shares):


Preferred stock convertible into common stock			29,100,000				29,100,000

Recent accounting pronouncements

We review new accounting standards as issued. Although some of these accounting standards issued or effective after the end of our previous fiscal year may be applicable to us, we have not identified any standards that we believe merit further discussion. We believe that none of the new standards will have a significant impact on our financial statements.

NOTE 3 – REAL ESTATE OWNED

During the nine months ended September 30, 2016, the Company did not purchase any properties.

NOTE 4 – DUE FROM / TO RELATED PARTIES & RELATED PARTY TRANSACTIONS

Amounts due from and to related parties as of September 30, 2016 and December 31, 2015 are detailed below:


	September 30,			December 31,
	2016			2015
Due from related parties	$	121,051	⁽¹⁾	$	182,437	⁽¹⁾
Accounts payable - related party		(51,524)	⁽²⁾		(45,249)	⁽²⁾
Advances - related party		(225,417)	⁽³⁾		(225,854)	⁽³⁾

(1)

Due from related parties represents Turnkey Home Buyers USA, Inc. advances paid to TBG for services that are being expensed at a rate of $10,000 per month.

(2)

Related to accounting services provided by the Company to Travel Train Holdings Florida.

(3)

Non-interest bearing balances are due to Travel Train Holdings Florida, and are repayable on demand.

All of the Company’s revenue were earned by a subsidiary controlled by Timothy Hart, a director, secretary and CFO of the Company.

TURNKEY CAPITAL, INC. AND SUBSIDIARIES

(FORMERLY TRAIN TRAVEL HOLDINGS, INC.)

NOTES TO THE CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015

NOTE 5 – ADVANCES PAYABLE

During the three months ended December 31, 2015, the Company received proceeds of $200,000 for an anticipated business transaction. The details of the transaction were to be negotiated in the first quarter of 2016. Subsequent to December 31, 2015, the terms of the transaction had not been agreed to, thus the Board of Directors has considered various alternatives to satisfy this liability and has proposed to issue 2,000,000 shares of common stock at $.10 per share to consummate the transaction.

NOTE 6 – PREFERRED STOCK

On January 13, 2016, The Company filed a Certificate of Amendment with the State of Nevada to amend its Articles of Incorporation to increase its authorized shares of preferred stock from 1,000,000 to 5,000,000 shares with a par value of $ 0.001 per share.

NOTE 7 – COMMON STOCK

As of September 30, 2016 and December 31, 2015, 39,216,665 and 38,831,665 shares of our common stock were issued and outstanding, respectively.

On January 13, 2016, The Company filed a Certificate of Amendment with the State of Nevada to amend its Articles of Incorporation to increase its authorized shares of common stock from 75,000,000 to 750,000,000 shares with a par value of $ 0.001 per share.

During November and December 2015, the Company issued 102,500 restricted shares of common stock related to a prior years’ PPM adjustment.

On July 6, 2015, the Company completed a Share Exchange Agreement for 100% of the issued and outstanding shares of Turnkey Home Buyers USA, Inc. by issuing 15,337,500 shares of common stock. Due to the common control of Turnkey and the Company, pursuant to ASC 805-50-25, “Transactions Between Entities Under Common Control” and other SEC guidance including for lack of economic substance, the Agreement was accounted for as a transfer of the carrying amounts of assets and liabilities under the predecessor value method of accounting. Financial statement presentation under the predecessor values method of accounting requires the receiving entity to report the results of operations as if both entities had always been combined. As a result, the Company has reflected the shares issued pursuant to the Agreement retrospectively.

During the three months ended March 31, 2016 the Company issued 385,000 restricted shares of common stock related to a prior years’ PMM adjustment.

NOTE 8 – SUBSEQUENT EVENTS

Management has reviewed material events subsequent to the quarterly period ended September 30, 2016 and prior to the filing of financial statements in accordance with FASB ASC 855 “Subsequent Events”. There were no additional disclosures deemed necessary.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

This report on Form 10-Q and other reports filed by Train Travel from time to time with the U.S. Securities and Exchange Commission (collectively, the “Filings”) contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the filings, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward- looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including the risks contained in elsewhere in this report, relating to the Company’s industry, the Company’s operations and results of operations, and any businesses that the Company may acquire. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.

Entertainment Train Operations

Commencing January 23, 2014, our business changed to the acquisition and operation of entertainment train companies. We also intend to manage and provide consulting services to entertainment train companies. We believe that there are several entertainment train companies that may be targeted for acquisition but as of this date we do not have any letters of intent or agreements. Any acquisition will be contingent on our ability to obtain the necessary funding for such acquisition, as well as the acquisition candidate having audited financial statements.

Turnkey Home Buyers USA Operations

Founded in September 2014, Turnkey offers clients a full suite of services for residential and commercial real estate transactions. Turnkey seeks to generate revenue in three primary ways: coaching and mentoring real estate investors to improve their returns, leasing and sales of quality turnkey rental properties, and brokerage of residential and commercial transactions.

Turnkey and its existing subsidiary will be run as subsidiary companies and are planning to execute aggressive marketing campaigns and live seminars that will drive traffic to both the education and coaching programs, as well as the wholesale turnkey properties that Turnkey offers to its clients.

Initially, Turnkey is purchasing properties in the single-family rental home market in Florida, due to the favorable environment for investment and high rental demand, as well as yield potential. As the Company grows its portfolio, it will be better positioned to acquire properties on a much larger scale. Turnkey intends to continually evaluate potential new markets where it could invest and establish operations as opportunities emerge.

We cannot accurately predict the amount of funding or the time required to successfully implement our business plan. The actual cost and time required to achieve profitability may vary significantly depending on, among other things, the ability to acquire entertainment train operations on favorable terms, the health of our targeted real estate markets, the cost of developing, acquiring, and operating rental properties, the availability of qualified personnel and marketing and other costs associated with the planned operations. Because of this uncertainty, even if financing is available to us, we may secure insufficient funding to effectuate our business plan.

As of September 30, 2016, we had negative working capital of $407,974 and cash of $0. Based upon current and near term anticipated level of operations and expenditures, we believe that cash on hand is not sufficient to enable us to continue operations for the next twelve months. Management recognizes that in order for us to meet our capital requirements, and continue to operate, additional financing will be necessary. We expect to raise additional funds through private or public equity investment in order to expand the range and scope of our business operations. We will seek access to private or public equity but there is no assurance that such additional funds will be available for us to finance our operations on acceptable terms, if at all. If we are unable to raise additional capital or generate positive cash flow, it is unlikely that we will be able to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Results of Operations

Three Months Ended September 30, 2016 Compared to the Three Month Period Ended September 30, 2015 Revenue

During the three-month period ended September 30, 2016 and 2015, we generated revenues of $5,375 and $18,571, respectively. The revenue in the three-month period ended September 30, 2016 related to the ROM professional services agreement that was recently executed. The revenue in the three-month period ended September 30, 2015 related to real estate consulting.

Operating expenses

During the three-month period ended September 30, 2016, we incurred total operating expenses of $47,920 compared to $174,254 incurred for the three months ended September 30, 2015.

During the three-month period ended September 30, 2016, we incurred general and administrative expenses of $8 compared to $88,690 incurred for the three months ended September 30, 2015.

General and administrative and professional fee related party expenses incurred during the two periods were generally related to corporate overhead, accounting fees, financial and administrative contracted services, such developmental costs associated with the acquisition and operation of entertainment trains, and marketing expenses.

Legal and professional fees – related party

During the three-month period ended September 30, 2016, we incurred professional fees related party of $40,675 compared to $41,462 for the three months ended September 30, 2015.

Net Losses

Our net loss for the three-month period ended September 30, 2016 was $(42,545) compared to a net loss of $(163,982) for the three months ended September 30, 2015.

Nine Months Ended September 30, 2016 Compared to the Nine Month Period Ended September 30, 2015

Revenue

During the nine-month period ended September 30, 2016 and 2015, we generated revenues of $8,525 and $21,269, respectively. The revenue in the nine-month period ended September 30, 2016 related to the ROM professional services agreement that was recently executed. The revenue in the nine-month period ended September 30, 2015 related to real estate consulting.

Operating expenses

During the nine-month period ended September 30, 2016, we incurred total operating expenses of $220,081 compared to $546,391 incurred for the nine months ended September 30, 2015.

During the nine-month period ended September 30, 2016, we incurred general and administrative expenses of $25,591 compared to $224,682 incurred for the nine months ended September 30, 2015.

Legal and professional fees – related party

During the nine-month period ended September 30, 2016, we incurred professional fees related party of $123,175 compared to $162,669 for the nine months ended September 30, 2015.

Net Losses

Our net loss for the nine-month period ended September 30, 2016 was $(211,556) compared to a net loss of $(533,421) for the nine months ended September 30, 2015.

Liquidity and Capital Resources

As of September 30, 2016 our current assets were $121,051 compared to $309,812 at December 31, 2015. As of September 30, 2016, our current liabilities were $529,025 compared to $506,230 at December 31, 2015. At September 30, 2016 current liabilities consisted of advances and accounts payable from related parties totaling $276,941 and advances and accounts payable of $252,084. As of December 31, 2015, current liabilities consisted of advances and accounts payable from related parties totaling $271,103 and $235,127 advances and accounts payable.

As at September 30, 2016 the Company had $0 of cash, has incurred losses since inception of $1,482,074 and further losses are anticipated in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and, or, obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. There is no assurance that these events will be satisfactorily completed.

Stockholders’ deficit increased from $196,418 as of December 31, 2015 to $407,974 as of September 30, 2016.

Cash Flows from Operating Activities

During the nine months ended September 30, 2016, net cash flows used in operating activities was $(127,375) compared to $(521,722) used during the nine months ended September 30, 2015.

Cash Flows from Investing Activities

During the nine months ended September 30, 2016 we used cash flows in investing activities of $0 compared to cash used of (63,011) during the nine months ended September 30, 2015.

Cash Flows from Financing Activities

During the nine months ended September 30, 2016, we generated cash from financing activities of $0 compared to $489,187 during the nine months ended September 30, 2015.

Plan of Operation and Funding

With the acquisition of Turnkey we anticipate that Turnkey will generate cash flow for working capital requirements. In addition, and if necessary, we expect that working capital requirements may continue to be funded through further loans from Train Travel Holdings Florida and further issuances of securities for the short term until acquisitions are identified and in place generating positive cash flow. Our working capital requirements are expected to increase in line with the growth of our business.

We have minimal working capital, nor do we have lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures. We intend to finance these expenses with further issuances of securities, and debt issuances. Thereafter, we expect we will need to raise additional capital and generate revenues to meet short-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of expenses during the reported periods. We also have other key accounting policies, which involve the use of estimates, judgments and assumptions that are significant to understanding our results, which are described in Note 1 to our condensed financial statements appearing elsewhere in this report.

Off Balance Sheet Arrangements

As of the date of this report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.

ITEM 4.

CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

An evaluation was conducted under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2016. Based on that evaluation, our management concluded that our disclosure controls and procedures were effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS.

Management is not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this Quarterly Report, no director, officer or affiliate is (i) a party averse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties.

ITEM 1A.

RISK FACTORS.

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4.

MINES SAFETY DISCLOSURES.

Not applicable to our Company.

ITEM 5.

OTHER INFORMATION.

None.

ITEM 6.

EXHIBITS.

Exhibits:


No.		Description
31.1*		Certification of Neil Swartz, Chief Executive Officer of TurnKey Capital, Inc., pursuant to 18 U.S.C. §1350, as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Timothy Hart, Chief Financial Officer of TurnKey Capital, Inc., pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification of Neil Swartz, Chairman and Chief Executive Officer of TurnKey Capital, Inc., pursuant to 18 U.S.C. §1350, as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002.
32.2*		Certification of Timothy Hart, Chief Financial Officer of TurnKey Capital, Inc., pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.
101.INS*		XBRL Instance Document
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase
101.LAE*		XBRL Taxonomy Extension Label Linkbase
101.DEF*		XBRL Taxonomy Extension Definition Linkbase
101.SCH*		XBRL Taxonomy Extension Schema
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase

———————


*	filed herewith

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.


	TurnKey Capital, Inc.

Dated: November 14, 2016	By:	/s/ Timothy S. Hart
		Timothy S. Hart
		Chief Financial Officer, principal financial and accounting officer


Dated: November 14, 2016	By:	/s/ Neil Swartz
		Neil Swartz
		Chief Executive Officer, principal executive officer

TurnKey Capital, Inc. - FORM 10-Q - November 14, 2016

Attached files

TurnKey Capital, Inc. Reports