UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
(x )QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2005
( )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 000-30695
TURINCO, INC.
(Exact name of registrant as specified in charter)
Nevada 87-0618509
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2610-1066 West Hastings St., Vancouver, British Columbia, Canada V6E 3X2
(Address of principal executive offices) (Zip Code)
604-684-4691
Registrant’s telephone number, including area code
(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), Yes [x ] No [ ] and (2) has been subject to such filing requirements for the past 90 days. Yes [x ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the last practicable date
Class Outstanding as of June 30, 2005
Common Stock, $0.001 9,903,000
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INDEX
Page
Number
PART I.
ITEM 1.
Financial Statements (unaudited)
3
Balance Sheets
4
June 30, 2005 and December 31, 2004
Statements of Operations
For the three and six months ended June 30, 2005 and 2004
5
and the period June 16, 1977 to June 30, 2005
Changes in Stockholders’ Equity 6
Statements of Cash Flows
For six months ended June 30, 2005 and 2004
7
and the period June 16, 1977 to June 30, 2005
Notes to Financial Statements
8
ITEM 2.
Plan of Operations
11
ITEM 3.
Controls and Procedures
11
PART II.
ITEM 2.
Unregistered Sales of Equity Securities 12
ITEM 6.
Exhibits and Reports on Form 8-K
13
Signatures
14
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The accompanying balance sheets of Turinco, Inc. ( development stage company) at June 30, 2005 and December 31, 2004, and the related statements of operations, and statements of cash flows, for the three and six months ended June 30, 2005 and 2004 and the period June 16, 1977 to June 30, 2005, have been prepared by the Company’s management in conformity with accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature.
Operating results for the quarter ended June 30, 2005, are not necessarily indicative of the results that can be expected for the year ending December 31, 2005.
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TURINCO, INC.
(Development Stage Company)
BALANCE SHEETS
June 30, 2005 and December 31, 2004
(unaudited)
Jun 30,
Dec 31,
2005
2004
ASSETS
CURRENT ASSETS
Cash
$563,776
$ 1,232
Total Current Assets
563,776
1,232
INTERCOMPANY ADVANCES
216,527
-
$780,303
$ 1,232
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable
$ 7,747
$ -
Total Current Liabilities
7,747
-
STOCKHOLDERS' EQUITY
Common stock
100,000,000 shares authorized at $0.001 par value;
9,903,000 shares issued and outstanding June 30, 2005
9,903
8,253
Capital in excess of par value
387,560
88,310
Stock subscriptions received
562,500
-
Deficit accumulated during the development stage
(187,407)
(95,331)
Total Stockholders' Equity
772,556
1,232
$ 780,303
$1,232
The accompanying notes are an integral part of these financial statements.
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TURINCO, INC.
(Development Stage Company)
STATEMENTS OF OPERATIONS -unaudited
For the Three and Six Months Ended June 30, 2005, and 2004
and the Period June 16, 1977 (Date of Inception) to June 30, 2005
Three Months
Six Months
Jun 30,
Jun 30,
Jun 30,
Jun 30, Jun 16,1977 to
2005
2004
2005
2004
Jun 30, 2005
REVENUES
$ -
$ -
$ -
$ -
$ -
EXPENSES
Administrative
89,955
562
92,076
3,037
187,407
NET PROFIT (LOSS)
(89,955)
(562)
(92,076)
(3,037)
(187,407)
NET LOSS PER COMMON
SHARE
Basic and diluted
$ (.01)
$ -
$ (.01)
$ -
AVERAGE OUTSTANDING
SHARES – stated in 000’s
Basic
8,403
7,893
9,153
8,073
The accompanying notes are an integral part of these financial statements.
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TURINCO, INC.
(Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Capital in
Common Stock
Excess of
Accumulated
Shares
Amount
Par Value
Deficit
Balance December 31, 2002
7,218,000
7,218
80,228
(87,446)
Issuance of common stock for cash-
December 2003
315,000
315
1,785
-
Contributions to capital-expenses
-
-
3,017
Net operating loss for the year ended
December 31, 2003
-
-
-
(3,650)
______
_______
_______
_______
Balance December 31, 2003
7,533,000
7,533
85,030
(91,096)
Issuance of common stock for cash-
April 2004
720,000
720
3,280
-
Net operating loss for the year ended
December 31, 2004
-
-
-
(4,235)
______
______
______
______
Balance December 31, 2004-audited
8,253,000
8,253
88,310
(95,331)
Return and cancellation of common
stock
(1,350,000)
(1,350)
2,250
-
Issuance of common stock for cash-
May 2005
3,000,000
3,000
297,000
-
Net operating loss for six months
ended June 30, 2005
- - -
(92,076)
Balance June 30, 2005- unaudited
9,903,000
$ 9,903
$ 387,560
$ (187,407)
The accompanying notes are an integral part of these financial statements.
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TURINCO, INC.
(Development Stage Company)
STATEMENTS OF CASH FLOWS -unaudited
For the Six Months Ended June 30, 2005, and 2004
and the Period June 16, 1977 (Date of Inception) to June 30, 2005
Jun 16, 1977
Jun 30,
Jun 30,
to Jun 30
2005
2004
2005
CASH FLOWS FROM
OPERATING ACTIVITIES
Net Loss
$ (92,076)
$ (3,037)
$(187,407)
Adjustments to reconcile net loss to
net cash provided by operating activities
Contributions to capital –expenses
-
-
13,463
Issuance of common stock for services
-
-
19,500
Changes in advance deposits
-
(1,750)
-
Change in accounts payable
7,746
154
7,746
_______
______
_______
Net Cash Used in Operations
(84,330)
(4,633)
(146,698)
CASH FLOWS FROM INVESTING
ACTIVITIES
Intercompany advances
(216,526)
-
(216,526)
CASH FLOWS FROM FINANCING
ACTIVITIES
Contributions to capital
900
-
900
Stock subscriptions received
562,500
-
562,500
Proceeds from issuance of common stock
300,000
4,000
363,600
863,400
4,000
927,000
Net Increase (Decrease) in Cash
562,544
(633)
563,776
Cash at Beginning of Period
1,232
1,467
-
Cash at End of Period
$ 563,776
$ 834
$ 563,776
The accompanying notes are an integral part of these financial statements.
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TURINCO, INC.
( Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2005
1.
ORGANIZATION
The Company was incorporated under the laws of the State of Nevada on June 16, 1977 with authorized common stock of 2,500 shares with a par value of $0.25. On October 16, 1998 the authorized capital stock was increased to 100,000,000 shares with a par value of $0.001.
The Company is in the development stage and has been engaged in the activity of seeking developmental mining properties however it became inactive after 1982.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Methods
The Company recognizes income and expenses based on the accrual method of accounting.
Dividend Policy
The Company has not yet adopted a policy regarding payment of dividends.
Income Taxes
The Company utilizes the liability method of accounting for income taxes. Under the liability method deferred tax assets and liabilities are determined based on the differences between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws that will be in effect, when the differences are expected to reverse. An allowance against deferred tax assets is recorded, when it is more likely than not, that such tax benefits will not be realized.
On June 30, 2005, the Company had a net operating loss carry forward of $187,407. The income tax benefit of approximately $56,000 from the loss carry forward has been fully offset by a valuation reserve because the use of the future tax benefit is undeterminable since the Company has no operations. The net operating loss will expire in 2026.
Basic and Diluted Net Income (Loss) Per Share
Basic net income (loss) per share amounts are computed based on the weighted average number of shares actually outstanding. Diluted net income (loss) per share amounts are computed using the weighted average number of common shares and common equivalent shares outstanding as if shares had been issued on the exercise of any common or preferred share rights unless the exercise becomes antidilutive and then only the basic per share amounts are shown in the report.
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TURINCO, INC.
( Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 2005
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued)
Financial Instruments
The carrying amounts of financial instruments are considered by management to be their estimated fair value due their short term maturities.
Financial and Concentrations Risk
The Company does not have any concentration or related financial credit risk.
Revenue Recognition
Revenue will be recognized on the sale and delivery of a product or the completion of a service provided.
Advertising and Market Development
The company will expense advertising and market development costs as incurred.
Estimates and Assumptions
Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing these financial statements.
Recent Accounting Pronouncements
The Company does not expect that the adoption of other recent accounting pronouncements will have a material impact on its financial statements.
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TURINCO, INC.
( Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 2005
3. CAPITAL STOCK
During 2005 a former officer of the Company returned 1,350,000 post split common shares for cancellation
and the Company completed a forward stock split of nine shares for each outstanding share. This report has been prepared showing post split shares from inception.
During December 2003 the Company completed a private placement of 315,000 post split common shares for $2,100 and during April 2004 720,000 post split common shares for $4,000.
During May 2005 the Company completed a private placement of 3,000,000 common shares for $300,000.
The company received $562,500 in stock subscriptions as partial payment for the purchase of up to 2,000,000 shares of common stock.
4. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES
Officers-directors have acquired 15% of the outstanding common stock of the Company.
5. PROPOSED ACQUISITION OF ALL OUTSTANDING STOCK OF ARVANA
During May, 2005, the Company signed a letter of intent to acquire all outstanding stock of Arvana Networks, Inc, which is a managed voice service provider, incorporated in Barbados. Arvana has VOIP equipment and system software, and purchase agreements with two established companies providing telephone and IP services in Rio de Janeiro and San Paulo, Brazil. Under the terms of the acquisition, the Company will issue 4.5 million common shares in exchange for all outstanding shares of Arvana with an anticipated closing in August 2005.
The Company has advanced Arvana Networks, Inc. $216,527 in anticipation of completing the acquisition.
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__________________________________________________________________________________
ITEM 2. PLAN OF OPERATIONS
__________________________________________________________________________________
The Company’s management is seeking and intends to acquire interests in various business opportunities which, in the opinion of management, will provide a profit to the Company but it does not have the working capital to be successful in this effort. The Company has had discussions with various parties regarding acquisitions. However, no definitive agreement has been entered into with any party.
Continuation of the Company as a going concern is dependent upon obtaining the working capital necessary for its planned activity. The management of the Company has developed a strategy, which they believe can obtain the needed working capital through additional equity funding and long term debt which will enable the Company to continue operations for the coming year.
In May 2005, the Company announced that it has executed a letter of intent to acquire 100% of Arvana Networks, Inc. (“Arvana”) which is a managed voice services provider, dedicated to serving its partners with complete turnkey IP telephone solutions which enable fast deployment of voice services over existing data networks without requiring telephone expertise (VoiP). Upon entry into a definitive agreement and completion of due diligence, the Company anticipates closing the acquisition by the end of August, 2005.
Results of Operations
Results of Operations for the three months ended June 30, 2005 and June 30, 2004
The Company has had no operations during this reporting period.
During the three month period ended June 30, 2005 the Company has expenses of $89,955 compared to expenses of $562 for the same period ended 2004. Expenses increased during the three month period ended June 30, 2005 due to the activities associated with the potential Arvana acquisition and consisted of administrative, legal, travel and consulting fees. Expenses for the same period in 2004 were minimum operating requirements.
Results of Operations for the six months ended June 30, 2005 and June 30, 2004
During the six month period ended June 30, 2005, the Company had expenses of $92,076 compared to expenses of $3,037 for the same period in 2004. For the six months ended June 30, 2005, expenses consisted of $28,293 office costs, $5,063 in legal and accounting fees, $46,204 travel expense, consulting fees of $10,000 and filing/transfer agent fess in the amount of $2,515.
The Company incurred a net loss of $92,076 for the six month period ended June 30, 2005.
In May, 2005, the Company signed a letter of intent to acquire all the outstanding stock of Arvana Networks, Inc., which is a managed voice service provider. Arvana has VoiP equipment and system software and purchase agreements with two established companies providing telephone and IP services in Brazil. Under the terms of the acquisition, the Company intends to issue 4,500,000 restricted common shares in exchange for all the issued and outstanding shares of Arvana. Subject to entry into a definitive agreement and completion of due diligence, the Company anticipates closing the acquisition in August, 2005. In anticipation of the acquisition, the Company has advanced $216,527 to Arvana Networks, Inc.
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Liquidity and Capital Resources
As of June 30, 2005, the Company had assets of $780,303 consisting of $563,776 in cash and $216,527 in intercompany advances. Total current liabilities as of June 30, 2005 were $7,747. During the quarter ended June 30, 2005, the Company completed a private placement of 3,000,000 restricted common shares for $300,000 and received $562,500 in stock subscriptions as partial payment for the purchase of up to 2,000,000 shares of restricted common stock. The proceeds from the private placement are being used for the Company’s expenses associated with the potential acquisition of Arvana Networks, Inc. The Company may need additional working capital to finance its planned activity.
____________________________________________________________________________________
ITEM 3. CONTROLS AND PROCEDURES
____________________________________________________________________________________
Based on an evaluation as of the date of the end of the period covered by this Form 10-QSB, our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as required by Exchange Act Rule 13a-15. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective 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 by the SEC’s rules and forms.
Changes in Internal Controls
There were no significant changes in our internal controls over financial reporting that occurred during the quarter ended June 30, 2005 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on the Effectiveness of Controls
We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
PART 2 – OTHER INFORMATION
_____________________________________________________________________________________
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES
_____________________________________________________________________________________
On May 16, 2005, Turinco, Inc. closed a private placement of its common stock. The Company sold 3,000,000 shares of its common stock, $.001 par value, for a total of $300,000 to 28 investors. The shares were sold in a private transaction and the Company relied on an exemption from registration pursuant to Regulation S, Rules Governing Offers and Sales Made Outside the United States Without Registration Under the Securities Act of 1933. No broker was involved and no commissions were paid in the transaction.
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________________________________________________________________________________
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
______________________________________________________________________________
(a) Exhibits
Exhibit 31.1
Rule 13a-14(a)/15d-14(a) Certification
.
Exhibit 31.2
Rule 13a-14(a)/15d-14(a) Certification
Exhibit 32.1
Certification by the Chief Executive Officer Relating to a Periodic Report Containing Financial Statements.*
Exhibit 32.2
Certification by the Chief Financial Officer Relating to a Periodic Report Containing Financial Statements.*
(b) Reports on Form 8-K.
On May 23, 2005, The Company filed an 8K covering the following matters:
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES
On May 16, 2005, Turinco, Inc. closed a private placement of its common stock. The Company sold 3,000,000 shares of its common stock, $.001 par value, for a total of $300,000 to 28 investors. The shares were sold in a private transaction and the Company relied on an exemption from registration pursuant to Regulation S, Rules Governing Offers and Sales Made Outside the United States Without Registration Under the Securities Act of 1933. No broker was involved and no commissions were paid in the transaction.
ITEM 5.02 CHANGE OF DIRECTORS/PRINCIPAL OFFICERS
Effective May 20, 2005, Penney L. Smith has resigned as an officer and director of the Company for personal reasons. Sir John Baring, Bt, has been appointed a director of the Company and President and Secretary to fill the vacancy left by Ms. Smith’s resignation.
* The Exhibit attached to this Form 10-Q shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to liability under that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.
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________________________________________________________________________________
SIGNATURES
_________________________________________________________________________________
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned there unto duly authorized.
Turinco, Inc.
Date: August 15, 2005
S/ Sir John Baring
Sir John Baring, President and CEO
Date: August 15, 2005
S/ Leonard G. Gordon
Leonard G. Gordon, Chief Financial Officer
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