SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Mark One)
x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 2010
o TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE EXCHANGE ACT
For the transition period from ___________ to _____________
Commission file number 000- 52630
TURKPOWER CORPORATION
(formerly Global Ink Supply Co.)
(Exact name of small business issuer as specified in its charter)
| Nevada | | 26-2524571 |
| (State or other jurisdiction of incorporation or organization) | | (IRS Employer Identification No.) |
100 Park Avenue Suite 1600 New York, New York 10017 |
| (Address of principal executive offices) |
| (212) 984-0628 |
| (Issuer's telephone number) |
Check whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):
Large Accelerated Filer o Accelerated Filer o Non-Accelerated Filer o Smaller Reporting Company x
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934) (check one): Yes x No o
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 112,575,000 shares of Common Stock, as of October 1, 2010.
Transitional Small Business Disclosure Format (check one): Yes o No x
Explanatory Note: The Registrant is filing this Form 10-Q/A since the original Form 10-Q filed on April 19, 2010 contained financial statements which were not reviewed by the Registrant’s independent public accountants. The financial statements contained within this Form 10-Q/A have been reviewed by the Registrant’s independent public accountants. In addition, it was determined that the Company misstated certain transactions in the previously filed 10-Q. For additional information, see the restatement footnote in the notes to the consolidated financial statements.
TurkPower Corporation (formerly Global Ink Supply Co.)
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REVIEW REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
TurkPower Corporation
(Formerly Global Ink Supply Co.)
New York, New York
We have reviewed the accompanying consolidated balance sheet of TurkPower Corporation as of February 28, 2010 and the related statements of operations for the three and nine months ended February 28, 2010 and of cash flows for the nine months ended February 28, 2010. These interim financial statements are the responsibility of the Company’s management.
We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to the accompanying consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 4 to the consolidated financial statements, the Company has incurred losses from operations and has a working capital deficit as of February 28, 2010, which raises substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters are also described in Note 4. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
As disclosed in Note 3, the Company restated its consolidated financial statements.
/s/ MaloneBailey, LLP
www.malonebailey.com
Houston, Texas
October 1, 2010
(Formerly Global Ink Supply Co. )
Consolidated Balance Sheets
Unaudited
| | | February 28,
2010 | | | May 31, 2009 | |
| | | Restated | | | | |
| | | | | | | |
| ASSETS | | | | | | |
| | | | | | | |
| Current assets: | | | | | | |
| Cash | | $ | 68,926 | | | $ | 120 | |
| Receivables | | | 3,876 | | | | - | |
| Prepaid expenses | | | 4,955 | | | | - | |
| Other current assets | | | 28,857 | | | | - | |
| Total current assets | | | 106,614 | | | | 120 | |
| Property and equipment, net of accumulated depreciation of $585 | | | 7,354 | | | | - | |
| | | | | | | | | |
| Deferred costs | | | 200,000 | | | | - | |
| | | | | | | | | |
| TOTAL ASSETS | | $ | 313,968 | | | $ | 120 | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' DEFICIT | | | | | | | | |
| | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Accounts payable and accrued expenses | | $ | 164,384 | | | $ | 25,132 | |
| Related party payable | | | 2,655 | | | | - | |
| Convertible debt, net of unamortized discount of $39,603 | | | 485,397 | | | | - | |
| Total current liabilities | | | 652,436 | | | | 25,132 | |
| | | | | | | | | |
| Stockholders' Deficit: | | | | | | | | |
| | | | | | | | | |
| Preferred stock: $0.0001 par value; 10,000,000 shares authorized; no shares issued or outstanding | | | - | | | | - | |
| Common stock: $0.0001 par value; 300,000,000 shares authorized; 110,425,000 shares issued and outstanding as of February 28, 2010 and 109,900,000 shares issued and outstanding as of May 31, 2009 | | | 11,043 | | | | 10,990 | |
| Additional paid-in capital | | | 73,934 | | | | 26,260 | |
| Accumulated other comprehensive loss | | | 6,247 | | | | - | |
| Accumulated deficit | | | (429,692 | ) | | | (62,262 | ) |
| Total stockholder’s deficit | | | (338,468 | ) | | | (25,012 | ) |
| | | | | | | | | |
| TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | | $ | 313,968 | | | $ | 120 | |
See accompanying notes to the consolidated financial statements.
(Formerly Global Ink Supply Co.)
Consolidated Statement of Operations
Unaudited
| | | Three Months Ended
February 28, | | | Nine Months Ended
February 28, | |
| | | 2010 | | | 2009 | | | 2010 | | | 2009 | |
| | | Restated | | | | | | Restated | | | | |
| | | | | | | | | | | | | |
| Revenues | | $ | 3,327 | | | $ | - | | | $ | 3,327 | | | $ | - | |
| | | | | | | | | | | | | | | | | |
| Professional fees | | | 100,000 | | | | 1,000 | | | | 101,000 | | | | 3,000 | |
| Selling, general and administrative expenses | | | 255,418 | | | | 200 | | | | 255,551 | | | | 730 | |
| Total operating expenses | | | 355,418 | | | | 1,200 | | | | 356,551 | | | | 3,730 | |
| Loss from operations | | | (352,091 | ) | | | (1,200 | ) | | | (353,224 | ) | | | (3,730 | ) |
| | | | | | | | | | | | | | | | | |
| Other income (expense): | | | | | | | | | | | | | | | | |
| Interest expense | | | (25,877 | ) | | | - | | | | (25,877 | ) | | | - | |
| Interest income | | | 931 | | | | - | | | | 931 | | | | - | |
| Foreign currency gain | | | 10,740 | | | | - | | | | 10,740 | | | | - | |
| Total other expense | | | (14,206 | ) | | | - | | | | (14,206 | ) | | | - | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Net loss | | $ | (366,297 | ) | | $ | (1,200 | ) | | $ | (367,430 | ) | | $ | (3,730 | ) |
| | | | | | | | | | | | | | | | | |
| Net loss per common share - basic and diluted | | $ | (0.00 | ) | | $ | (0.00 | ) | | $ | (0.00 | ) | | $ | (0.00 | ) |
| Weighted average number of common shares outstanding – basic and diluted | | | 110,283,989 | | | | 7,850,000 | | | | 110,025,643 | | | | 7,850,000 | |
See accompanying notes to the consolidated financial statements.
(Formerly Global Ink Supply Co.)
Consolidated Statement of Cash Flows
Unaudited
| | | Nine Months Ended February 28, 2010 | | | Nine Months Ended February 28, 2009 | |
| | | Restated | | | | |
| | | | | | | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | |
| Net loss | | $ | (367,430 | ) | | $ | (3,730 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | |
| Depreciation | | | 585 | | | | - | |
| Amortization of debt discount | | | 8,124 | | | | - | |
| Changes in operating assets and liabilities: | | | | | | | | |
| Receivables | | | (3,876 | ) | | | - | |
| Prepaid expenses | | | (4,955 | ) | | | - | |
| Deferred costs | | | (200,000 | ) | | | | |
| Other current assets | | | (28,857 | ) | | | - | |
| Accounts payable and accrued expenses | | | 139,252 | | | | 3,300 | |
| Related party payable | | | 2,655 | | | | - | |
| NET CASH USED IN OPERATING ACTIVITIES | | | (454,502 | ) | | | (430 | ) |
| | | | | | | | | |
| CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | |
| Purchase of property and equipment | | | (7,939 | ) | | | - | |
| CASH USED IN INVESTING ACTIVITIES | | | (7,939 | ) | | | - | |
| | | | | | | | | |
| CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | |
| Contributions to capital | | | - | | | | 1,250 | |
| Proceeds from convertible debt | | | 525,000 | | | | - | |
| CASH PROVIDED BY FINANCING ACTIVITIES | | | 525,000 | | | | 1,250 | |
| | | | | | | | | |
| EFFECT OF EXCHANGE RATES ON CASH | | | 6,247 | �� | | | - | |
| | | | | | | | | |
| NET CHANGE IN CASH | | | 68,806 | | | | 820 | |
| | | | | | | | | |
| CASH AT BEGINNING OF PERIOD | | | 120 | | | | - | |
| CASH AT END OF PERIOD | | $ | 68,926 | | | $ | 820 | |
| | | | | | | | | |
| NON CASH FINANCING ACTIVITY | | | | | | | | |
| Debt discount due to common stock issued with debt | | $ | 47,727 | | | $ | - | |
See accompanying notes to the consolidated financial statements.
(Formerly Global Ink Supply Co.)
Notes to the Consolidated Financial Statements
(Unaudited)
NOTE 1 – ORGANIZATION AND OPERATIONS
Global Ink Supply Co. was incorporated on November 4, 2004 in Delaware. On May 11, 2010, Global Ink Supply Co. changed its name to TurkPower Corporation (“TurkPower” or the “Company”).
The accompanying consolidated financial statements include the accounts of TurkPower Corporation and its wholly owned foreign subsidiary, TurkPower, Enerji San, ve Tic. A.S. All significant intercompany balances and transactions have been eliminated in the consolidation.
On December 7, 2009, Emmanuel Strategic Partners, Inc. sold 64,900,000 common shares of for $6,490 which resulted in a change of control and the appointment of two additional directors.
On December 23, 2009, the Company changed its business plan and entered into the consulting and service operations business, offering domestic and international clients consulting services. The Company acts as a full-service operator for wind, hydro, solar, and geothermal energy parks in Turkey.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The accompanying interim consolidated financial statements for the nine months ended February 28, 2010 and 2009 are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results of operations realized during an interim period are not necessarily indicative of results to be expected for a full year. These financial statements should be read in conjunction with the information filed as part of the Company’s Annual Report on Form 10-K, which was filed on August 25, 2009.
Use of estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 as well as the reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Receivables
The Company extends unsecured credit to its customers in the ordinary course of business. An allowance for doubtful accounts is established and recorded based on managements’ assessment of customer credit history, overall trends in collections and write-offs, and expected exposures based on facts and prior experience. As of February 28, 2010, the Company had no allowance for doubtful accounts.
Property and equipment
Property and equipment are stated at cost, less accumulated depreciation. Expenditures for additions, major renewals and betterments are capitalized and expenditures for maintenance and repairs are charged to expense as incurred. Depreciation is provided on a straight-line basis, less estimated residual values over the assets’ estimated useful lives. The estimated useful lives are as follows:
| Furniture and fixtures: | 3-5 Years |
Long-lived assets
Long-lived assets held and used by the Company are reviewed for impairment whenever changes in circumstances or events indicate that the carrying amount of an asset may not be recoverable. For purposes of evaluating the recoverability of long-lived assets, the Company considers various factors, including future cash flows, to determine whether the carrying amount exceeds fair value, and in that case, the asset is written down to fair value. No impairment of long-lived assets was determined to exist as of February 28, 2010.
Deferred costs
The Company entered into an agreement with a third party (the “Partner”) to participate in a consulting arrangement (“Consulting Agreement”). The Consulting Agreement provides that the Partner will act as the exclusive advisor to a customer (the Customer”) in the event the Customer is acquired in a transaction (as defined in the Consulting Agreement) and will receive 4% of the purchase price (“fees”) upon completion of the transaction. In connection with the Company’s participation in the Consulting agreement, it was required to pay consulting fees of $200,000 to the Partner and in return will receive 50% of any consulting fees paid by the Customer to the Partner, a 0.5% success fee upon completion of an electricity distribution deal with the Customer and a 2.0% succ ess fee upon completion of an electricity production deal with the Customer. The consulting fees paid to the Partner were deferred and is reported as a long-term deferred cost in the consolidated balance sheet.
Revenue recognition
The Company recognizes revenue when there is persuasive evidence of an arrangement, delivery has occurred or services have been rendered, the price has been fixed or is determinable and collectability can be reasonably assured.
Fair value of financial instruments
The carrying value of cash and cash equivalents, receivables, accounts payable and accrued expenses and debt approximate their fair values because of the short-term nature of these instruments. Management believes the Company is not exposed to significant interest or credit risks arising from these financial instruments.
Foreign currency
The financial statements of the Company’s subsidiary in Turkey, for which the functional currency is the local currency, Turkish Lira (TRY), are translated into the reporting currency, U.S. dollars, using the exchange rate at the balance sheet date for all assets and liabilities. The capital accounts are translated at historical exchange rates prevailing at the time of the transactions while income and expenses items are translated at the average exchange rate for the period. Translation adjustments are included in other comprehensive income (loss) within stockholders’ equity (deficit).
Gain or losses from foreign currency transactions are recognized in income.
Net loss per common share
Basic and diluted net loss per share has been calculated by dividing the net loss for the nine months ended February 28, 2010, by the basic and diluted weighted average number of common shares outstanding. Common stock equivalents pertaining to the convertible debt were not included in the computation of diluted net loss per share because the effect would have been anti-dilutive due to the net loss for the three and nine months ended February 28, 2010.There were no potentially dilutive shares outstanding as of February 28, 2009.
Recently issued accounting pronouncements
In January 2010, the FASB issued ASU No. 2010-06 “Improving Disclosures about Fair Value Measurements”. This Update amends Subtopic 820-10 that require new disclosures about transfers in and out of Levels 1 and 2 and activity in Level 3 fair value measurements. This Update also amends Subtopic 820-10 to clarify certain existing disclosures. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements, which are effective for fiscal years beginning after December 15, 2010. The adoption of ASU 2010-06 did not impact the Compan y’s operating results, financial position or cash flows and related disclosures.
In February 2010, the FASB issued ASU No. 2010-09, “Amendments to Certain Recognition and Disclosure Requirements”, which amended ASC 855-10 and states an entity that is an SEC filer is not required to disclose the date through which subsequent events have been evaluated. This change alleviates potential conflicts between Subtopic 855-10 and SEC requirements. ASU 2010-09 becomes effective upon issuance of the final update. The Company adopted the provisions of ASU 2010-09 for the period ended February 28, 2010.
Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.
NOTE 3 - RESTATEMENT
The Company is restating certain assets, liabilities, revenues, and expenses as of and for the three and nine months ended February 18, 2010 in the consolidated financial statements. The amounts previously reported in the 10-Q filing dated April 19, 2010 were prior to certain post-closing entries needed to be recorded by the Company. The following table reflects the impact of the restatement to the consolidated balance sheet as of February 28, 2010, the consolidated statement of operations for the three and nine months ended February 28, 2010 and the consolidated statement of cash flows for the nine months ended February 28, 2010:
| Consolidated Balance Sheet | | As previously reported | | | Adjustments | | | | | As restated | |
| ASSETS | | | | | | | | | | | |
| | | | | | | | | | | | |
| Current assets: | | | | | | | | | | | |
| Cash | | $ | 284,752 | | | | (215,826 | ) | a) | | | $ | 68,926 | |
| Receivables | | | 3,876 | | | | - | | | | | | 3,876 | |
| Prepaid expenses | | | 4,955 | | | | - | | | | | | 4,955 | |
| Other current assets | | | 57,784 | | | | (28,927 | ) | b) | | | | 28,857 | |
| Total current assets | | | 351,367 | | | | (244,753 | ) | | | | | 106,614 | |
| Property and equipment, net | | | 7,109 | | | | 245 | | c) | | | | 7,354 | |
| Deferred costs | | | - | | | | 200,000 | | d) | | | | 200,000 | |
| | | | | | | | | | | | | | | |
| TOTAL ASSETS | | $ | 358,476 | | | | (44,508 | ) | | | | $ | 313,968 | |
| | | | | | | | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' DEFICIT | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Current liabilities: | | | | | | | | | | | | | | |
| Accounts payable and accrued expenses | | $ | 104,106 | | | | 60,278 | | e) | | | $ | 164,384 | |
| Advances | | | 30,180 | | | | (30,180 | ) | f) | | | | - | |
| Shareholder loans | | | 200,730 | | | | (200,730 | ) | g) | | | | - | |
| Related party payable | | | - | | | | 2,655 | | h) | | | | 2,655 | |
| Convertible debt, net | | | 242,366 | | | | 243,031 | | i) | | | | 485,397 | |
| Total current liabilities | | | 577,382 | | | | 75,054 | | | | | | 652,436 | |
| | | | | | | | | | | | | | | |
| Stockholders' Deficit: | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Preferred stock | | | - | | | | - | | | | | | - | |
| Common stock | | | 19,095 | | | | (8,052 | ) | j) | | | | 11,043 | |
| Additional paid-in capital | | | 33,893 | | | | 40,041 | | k) | | | | 73,934 | |
| Accumulated other comprehensive loss | | | 5,491 | | | | 756 | | l) | | | | 6,247 | |
| Accumulated deficit | | | (277,385 | ) | | | (152,307 | ) | m) | | | | (429,692 | ) |
| Total stockholder’s deficit | | | (218,906 | ) | | | (119,562 | ) | | | | | (338,468 | ) |
| | | | | | | | | | | | | | | |
| TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | | $ | 358,476 | | | | (44,508 | ) | | | | $ | 313,968 | |
Consolidated Statement of Operations
| | | Three Months Ended February 28, 2010 | | | Nine Months Ended February 28, 2010 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | As previously reported | | | Adjustments | | | | | As restated | | | As previously reported | | | Adjustments | | | | | As restated | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Revenues | | $ | 3,327 | | | | - | | | | | $ | 3,327 | | | $ | 3,327 | | | | - | | | | | $ | 3,327 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Professional fees | | | - | | | | 100,000 | | n) | | | | 100,000 | | | | 1,000 | | | | 100,000 | | n) | | | | 101,000 | |
| Selling, general and administrative expenses | | | 220,153 | | | | 35,265 | | n) | | | | 255,418 | | | | 220,286 | | | | 35,265 | | n) | | | | 255,551 | |
| Total operating expenses | | | 220,153 | | | | 135,265 | | | | | | 355,418 | | | | 221,286 | | | | 135,265 | | | | | | 356,551 | |
| Loss from operations | | | (216,826 | ) | | | (135,265 | ) | | | | | (352,091 | ) | | | (217,959 | ) | | | (135,265 | ) | | | | | (353,224 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Other income (expense): | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest expense | | | - | | | | (25,877 | ) | o) | | | | (25,877 | ) | | | - | | | | (25,877 | ) | o) | | | | (25,877 | ) |
| Interest income | | | 3,026 | | | | (2,095 | ) | p) | | | | 931 | | | | 3,026 | | | | (2,095 | ) | p) | | | | 931 | |
| Other expense | | | (2,607 | ) | | | 2,607 | | q) | | | | - | | | | (2,607 | ) | | | 2,607 | | q) | | | | - | |
| Foreign currency gain | | | - | | | | 10,740 | | r) | | | | 10,740 | | | | - | | | | 10,740 | | r) | | | | 10,740 | |
| Total other expense | | | 419 | | | | (14,625 | ) | | | | | (14,206 | ) | | | 419 | | | | (14,625 | ) | | | | | (14,206 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net loss | | $ | (216,407 | ) | | | (149,890 | ) | | | | $ | (366,297 | ) | | $ | (217,540 | ) | | | (149,890 | ) | | | | $ | (367,430 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net loss per common share - basic and diluted | | $ | (0.00 | ) | | | (0.00 | ) | | | | $ | (0.00 | ) | | $ | (0.00 | ) | | | (0.00 | ) | | | | $ | (0.00 | ) |
| Weighted average number of common shares outstanding – basic and diluted | | | 109,900,000 | | | | 383,989 | | | | | | 110,283,989 | | | | 109,900,000 | | | | 125,643 | | | | | | 110,025,643 | |
| Consolidated Statement of Cash Flows | | As previously
reported | | | Adjustments | | | As restated | |
| | | | | | | | | | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | |
| Net loss | | $ | (215,123 | ) | | $ | (152,307 | ) | | $ | (367,430 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | | |
| Depreciation | | | 830 | | | | (245 | ) | | | 585 | |
| Amortization of debt discount | | | - | | | | 8,124 | | | | 8,124 | |
| Changes in operating assets and liabilities: | | | | | | | | | | | | |
| Receivables | | | (3,876 | ) | | | - | | | | (3,876 | ) |
| Prepaid expenses | | | (4,955 | ) | | | - | | | | (4,955 | ) |
| Other current assets | | | (57,784 | ) | | | 28,927 | | | | (28,857 | ) |
| Deferred costs | | | - | | | | (200,000 | ) | | | (200,000 | ) |
| Accounts payable and accrued expenses | | | 78,974 | | | | 60,278 | | | | 139,252 | |
| Related party payable | | | 30,180 | | | | (27,525 | ) | | | 2,655 | |
| NET CASH USED IN OPERATING ACTIVITIES | | | (171,754 | ) | | | (282,748 | ) | | | (454,502 | ) |
| | | | | | | | | | | | | |
| CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | | | | | |
| Purchase of property and equipment | | | (7,939 | ) | | | - | | | | (7,939 | ) |
| CASH USED IN INVESTING ACTIVITIES | | | (7,939 | ) | | | - | | | | (7,939 | ) |
| | | | | | | | | | | | | |
| CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | | | |
| Proceeds from issuance of shareholder loans | | | 200,730 | | | | (200,730 | ) | | | - | |
| Proceeds from convertible debt | | | 242,366 | | | | 282,634 | | | | 525,000 | |
| Contribution to capital | | | 15,738 | | | | (15,738 | ) | | | - | |
| CASH PROVIDED BY FINANCING ACTIVITIES | | | 458,834 | | | | 66,166 | | | | 525,000 | |
| | | | | | | | | | | | | |
| EFFECT OF EXCHANGE RATES ON CASH | | | 5,491 | | | | 756 | | | | 6,247 | |
| | | | | | | | | | | | | |
| NET INCREASE IN CASH | | | 284,632 | | | | (215,826 | ) | | | 68,806 | |
| | | | | | | | | | | | | |
| CASH AT BEGINNING OF YEAR | | | 120 | | | | - | | | | 120 | |
| CASH AT END OF YEAR | | $ | 284,752 | | | $ | (215,826 | ) | | $ | 68,926 | |
| | | | | | | | | | | | | |
| NON CASH FINANCING ACTIVITY | | | | | | | | | | | | |
| Debt discount due to common stock issued with debt | | $ | - | | | $ | 47,727 | | | $ | 47,727 | |
| a) | To reconcile cash balances. |
| b) | To write-off to expense certain other current assets. |
| c) | To record a post closing adjustment to property and equipment. |
| d) | To defer costs that were previously expensed. |
| e) | To record additional accounts payable and accrued expenses. |
| f) | To reclassify advances as convertible debt and accounts payable and accrued expenses. |
| g) | To reclassify shareholder loans as convertible debt. |
| h) | To reclassify certain accounts payable and accrued expenses as related party payable. |
| i) | To reclassify shareholder loans and advances as convertible debt and to record as debt discount the relative fair value of common shares issued with the convertible debt net of the related amortization. |
| j) | To reconcile the common shares outstanding. |
| k) | To record additional paid-in capital in connection with the debt discount convertible debt. |
| l) | To correct accumulated other comprehensive loss as a result of the post-closing entries recorded. |
| m) | To reflect the net impact of the post-closing entries to revenues and expenses. |
| n) | To record additional expenses previously not recorded. |
| o) | To record interest expense on convertible debt. |
| p) | To correct interest income. |
| q) | To reclassify to selling, general and administrative expenses. |
| r) | To record foreign currency gain. |
NOTE 4 – GOING CONCERN
As shown in the accompanying consolidated financial statements the Company had net losses of $367,430 for the nine months ended February 28, 2010 and a working capital deficit as of February 28, 2010 of $545,822. These conditions raise substantial doubt about the Company’s ability to continue as a going concern .
The Company intends to raise additional working capital either through debt or equity financing. If adequate working capital is not available, the Company may cease its operations. The consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE 5 – CONVERTIBLE DEBT
On various dates from December 1, 2009 to February 28, 2010, the Company issued convertible debentures totaling $525,000 to third party investors together with 525,000 common shares. The convertible debentures bear annual interest at 18%, mature in one year and, together with any unpaid interest, are convertible into common shares at a conversion rate of $0.25 per share. The relative fair value of the 525,000 common shares at the time of issuance is $47,727 and was recorded as a debt discount with a corresponding increase in equity. The discount is amortized to interest expense over the terms of the debentures using effective interest method. For the nine months ended February 28, 2010, amortization expense recorded to interest amounted to $8,124.
The Company analyzed the convertible debentures for derivative accounting consideration and determined that derivative accounting does not apply to these instruments.
The convertible debentures were analyzed for a beneficial conversion feature at which time it was concluded that the related debentures do not contain any beneficial contingent feature since the commitment-date share prices were lower than the effective conversion price.
NOTE 6 – STOCKHOLDERS’ EQUITY
On June 19, 2009, the Company adopted an Amended and Restated Certificate of Incorporation. This Amendment (i) increased the number of the authorized shares from 25,000,000 shares to 310,000,000 of which 300,000,000 shares are common stock with par value of $0.0001 per share and 10,000,000 shares are preferred stock with par value of $0.0001 per share; (ii) effectuated a forward stock split of their issued and outstanding Common Stock by changing and reclassifying each 1 share of issued and outstanding common share into fourteen common shares; and (iii) authorized the Board of Directors to provide for the issuance of shares of preferred stock in series and to establish from time to time the number of shares to be included in each such series, and to fix the designation, power, preferences and rights of the shares of each suc h series and the qualifications, limitations and restrictions thereof.
The stock split does not affect the number of common stock authorized for issuance. All share and per share information has been retroactively adjusted to reflect the reverse stock split in the financial statements and in the notes to financial statements for all periods presented, to reflect the stock split as if it occurred on the first day of the first period presented.
NOTE 7 – RELATED PARTY TRANSACTIONS
The Company has a related party payable to an executive of the Company for the reimbursement of expenses. As of February 28, 2010 and May 31, 2009, the amount owed to this executive was $2,655 and $0, respectively.
The Company also paid legal fees to a shareholder amounting to $100,000 during the nine months ended February 28, 2010.
NOTE 8 – SUBSEQUENT EVENTS
On April 27, 2010, the Company borrowed €450,000 (Euros) ($555,692) from a third party. The loan is unsecured, bears annual interest at 25.0% and is payable in full on October 27, 2010.
On April 29, 2010, the Company entered into a nonbinding share transfer and shareholders agreement with Endeks Holding and Avrasya Yapi for the purchase of 50% of their ownership in Exxaro Madencilik Sanayi ve Ticaret A.S. company (“Exxaro”) for €6,500,000 ($8,574,800). Exxaro’s principal asset is an iron ore mine. In May 2010, the Company made an advance payment to the sellers of €1,000,000 ($1,284,673) with the balance due on June 15, 2010.
On various dates from March 1, 2010 to May 31, 2010, the Company issued convertible debentures totaling $275,000 to third party investors together with 275,000 common shares. The convertible debentures bear annual interest at 18%, mature in one year and, together with any unpaid interest, are convertible into common shares at a conversion rate of $0.25 per share.
On May 4, 2010, the Company sold 1,625,000 common shares for cash totaling $406,250, or $0.25/share.
On May 6, 2010, the Company sold 250,000 common shares for cash totaling $250,000, or $1/share.
The Company entered into a line of credit with a financial institution for 1,100,000 TRL ($669,105) on June 16, 2010, of which the Company borrowed 1,000,000 TRL ($635,550). Amounts borrowed under the line of credit bear interest at 11% annually and are due in full on November 30, 2010. The proceeds of the line of credit borrowing were used in connection with the proposed acquisition of the Exxaro shares as consideration for extending the June 15, 2010 due date.
On August 30, 2010, the Company also obtained an additional unsecured loan amounting to $50,000 loan , bear annual interest of 30.0% and is due on March 1, 2011.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Information set forth herein contains "forward-looking statements" which can be identified by the use of forward-looking terminology such as "believes," "expects," "may,” “should" or "anticipates" or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy. No assurance can be given that the future results covered by the forward-looking statements will be achieved. The Company cautions readers that important factors may affect the Company’s actual results and could cause such results to differ materially from forward-looking statements made by or on behalf of the Company. These factors include the Company’s lack of historically profitable operations, dependence on key personnel, the success of the Company’s business, ability to manage anticipated growth and other factors identified in the Company's filings with the Securities and Exchange Commission, press releases and/or other public communications.
(a) Plan of Operation
We are currently organized as a vehicle to investigate and, if such investigation warrants, acquire a target company or business seeking the perceived advantages of being a publicly held corporation. Our principal business objective for the next 12 months and beyond such time will be to achieve long-term growth potential through a combination with a business rather than immediate, short-term earnings. We will not restrict our potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire any type of business. We may also have to raise funds from a private placement of our securities pursuant to Regulation D under the Securities Act.
(b) Management’s Discussion and Analysis of Financial Condition and Results of Operation.
For the three months ended February 29, 2010 and February 28, 2009, we incurred losses of $366,297 and $1,200, respectively. The increase in losses was largely related to legal expenses and the commencement of our operations in Turkey.
For the nine months ended February 29, 2010 and February 28, 2009, we incurred losses of $367,430 and $3,730, respectively. The increase in losses was largely related to legal expenses and the commencement of our operations in Turkey.
During the next 12 months we anticipate incurring costs related to:
(i) filing of Exchange Act reports, and
(ii) costs relating to consummating an acquisition.
We believe we will be able to meet these costs through use of funds in our treasury and additional amounts, as necessary, to be loaned by or invested in us by our stockholder, management or other investors.
We may consider a business which has recently commenced operations, is a developing company in need of additional funds for expansion into new products or markets, is seeking to develop a new product or service, or is an established business which may be experiencing financial or operating difficulties and is in need of additional capital. In the alternative, a business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital, but which desires to establish a public trading market for its shares, while avoiding, among other things, the time delays, significant expense, and loss of voting control which may occur in a public offering.
Our sole officer/director has not had any preliminary contact or discussions with any representative of any other entity regarding a business combination with us. Any target business that is selected may be a financially unstable company or an entity in its early stages of development or growth, including entities without established records of sales or earnings. In that event, we will be subject to numerous risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies. In addition, we may effect a business combination with an entity in an industry characterized by a high level of risk, and, although our management will endeavor to evaluate the risks inherent in a particular target business, there can be no assurance that we will properly ascertain or assess all significant risks.
Our management anticipates that it will likely be able to effect only one business combination, due primarily to our limited financing, and the dilution of interest for present and prospective stockholders, which is likely to occur as a result of our management’s plan to offer a controlling interest to a target business in order to achieve a tax-free reorganization. This lack of diversification should be considered a substantial risk in investing in us, because it will not permit us to offset potential losses from one venture against gains from another.
We anticipate that the selection of a business combination will be complex and extremely risky. Because of general economic conditions, rapid technological advances being made in some industries and shortages of available capital, our management believes that there are numerous firms seeking even the limited additional capital which we will have and/or the perceived benefits of becoming a publicly traded corporation. Such perceived benefits of becoming a publicly traded corporation include, among other things, facilitating or improving the terms on which additional equity financing may be obtained, providing liquidity for the principals of and investors in a business, creating a means for providing incentive stock options or similar benefits to key employees, and offering greater flexibility in structuring acquisitions, joint ventures and the like through the issuance of stock. Potentially available business combinations may occur in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex.
Off-Balance Sheet Arrangements
As of the date of this Quarterly Report, the Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term "off-balance sheet arrangement" generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with the Company is a party, under which the Company has (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such a ssets.
Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.
Critical Accounting Policies
Use of estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 as well as the reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Receivables
The Company extends unsecured credit to its customers in the ordinary course of business. An allowance for doubtful accounts is established and recorded based on managements’ assessment of customer credit history, overall trends in collections and write-offs, and expected exposures based on facts and prior experience. As of February 28, 2010, the Company had no allowance for doubtful accounts.
Property and equipment
Property and equipment are stated at cost, less accumulated depreciation. Expenditures for additions, major renewals and betterments are capitalized and expenditures for maintenance and repairs are charged to expense as incurred. Depreciation is provided on a straight-line basis, over the assets’ estimated useful lives. The estimated useful lives are as follows:
| Furniture and fixtures: | 3-5 Years |
Long-lived assets
Long-lived assets held and used by the Company are reviewed for impairment whenever changes in circumstances or events indicate that the carrying amount of an asset may not be recoverable. For purposes of evaluating the recoverability of long-lived assets, the Company considers various factors, including future cash flows, to determine whether the carrying amount exceeds fair value, and in that case, the asset is written down to fair value. No impairment of long-lived assets was determined to exist as of February 28, 2010.
Deferred costs
The Company entered into an agreement with a third party (the “Partner”) to participate in a consulting arrangement (“Consulting Agreement”). The Consulting Agreement provides that the Partner will act as the exclusive advisor to a customer (the Customer”) in the event the Customer is acquired in a transaction (as defined in the Consulting Agreement) and will receive 4% of the purchase price (“fees”) upon completion of the transaction. In connection with the Company’s participation in the Consulting agreement, it was required to pay consulting fees of $200,000 to the Partner and in return will receive 50% of any consulting fees paid by the Customer to the Partner, a 0.5% success fee upon completion of an electricity distribution deal with the Customer and a 2.0% succ ess fee upon completion of an electricity production deal with the Customer. The consulting fees paid to the Partner were deferred and is reported as a long-term deferred cost in the consolidated balance sheet.
Revenue recognition
The Company recognizes revenue where there is persuasive evidence of an arrangement, delivery has occurred or services have been rendered, the price has been fixed or is determinable and collectability can be reasonably assured.
Fair value of financial instruments
The carrying value of cash and cash equivalents, receivables, accounts payable and accrued expenses deferred revenue, and debt approximate their fair values because of the short-term nature of these instruments. Management believes the Company is not exposed to significant interest or credit risks arising from these financial instruments.
Foreign currency
The financial statements of the Company’s subsidiary in Turkey, for which the functional currency is the local currency, Turkish Lira (TRY or TRL), are translated into the reporting currency, U.S. dollars, using the exchange rate at the balance sheet date for all assets and liabilities. The capital accounts are translated at historical exchange rates prevailing at the time of the transactions while income and expenses items are translated at the average exchange rate for the period. Translation adjustments are included in other comprehensive income (loss) within stockholders’ equity (deficit).
Gain or losses from foreign currency transactions are recognized in income.
Recently Issued Accounting Pronouncements
In January 2010, the FASB issued ASU No. 2010-06 “Improving Disclosures about Fair Value Measurements”. This Update amends Subtopic 820-10 that require new disclosures about transfers in and out of Levels 1 and 2 and activity in Level 3 fair value measurements. This Update also amends Subtopic 820-10 to clarify certain existing disclosures. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements, which are effective for fiscal years beginning after December 15, 2010. The adoption of ASU 2010-06 did not impact the Compan y’s operating results, financial position or cash flows and related disclosures.
In February 2010, the FASB issued ASU No. 2010-09, “Amendments to Certain Recognition and Disclosure Requirements”, which amended ASC 855-10 and states an entity that is an SEC filer is not required to disclose the date through which subsequent events have been evaluated. This change alleviates potential conflicts between Subtopic 855-10 and SEC requirements. ASU 2010-09 becomes effective upon issuance of the final update. The Company adopted the provisions of ASU 2010-09 for the period ended February 28, 2010.
Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.
Seasonality
To date, we have not noted any significant seasonal impacts.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is subject to certain market risks, including changes in interest rates and currency exchange rates. The Company does not undertake any specific actions to limit those exposures.
ITEM 4. CONTROLS AND PROCEDURES.
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit to the SEC under the Securities Exchange Act of 1934 (“Exchange Act”), is recorded, processed, summarized, and reported within the time periods specified by the SEC’s rules and forms, and that information is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. These disclosure controls were not effective as of February 28, 2010.
We have determined that we have a material weakness relating to the Company not having personnel with knowledge of generally accepted accounting principles. Our executive management does not possess accounting expertise and our Company does not have an audit committee. This weakness was due to our lack of working capital to hire additional staff during the period covered by this report. We intend to obtain this knowledge of generally accepted accounting principles by hiring a contractor and/or hiring additional accounting personnel.
Changes in Internal Controls over Financial Reporting
There were no changes in the Company’s internal controls over financial reporting, known to executive management that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
To the best knowledge of our officers and sole director, the Company is not a party to any legal proceeding or litigation.
ITEM 1A. RISK FACTORS.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
For period ended February 28, 2010, the Company offered and sold an aggregate of $525,000 of units comprised of convertible debentures and the Company’s Common Stock for the purchase price of $50,000 per unit. Each unit was comprised of 50,000 shares of the Company’s Common Stock and a debenture in the principal amount of $50,000, with interest at the rate of 18% and convertible into shares of the Company’s Common Stock at the rate of $0.25 per share.
Except as noted above, the sales of the securities identified above were made pursuant to privately negotiated transactions that did not involve a public offering of securities and, accordingly, we believe that these transactions were exempt from the registration requirements of the Securities Act pursuant to Section 4(2) of the Securities Act and Rule 506 of Regulation D and Regulation S promulgated thereunder. The agreements executed in connection with this sale contain representations to support the Registrant’s reasonable belief that the Investor had access to information concerning the Registrant’s operations and financial condition, the Investor acquired the securities for their own account and not with a view to the distribution thereof in the absence of an effective registration statement or an applicable exemption from registration, and that the Investor are sophisticated within the meaning of Section 4(2) of the Securities Act and are “accredited investors” (as defined by Rule 501 under the Securities Act). In addition, the issuances did not involve any public offering; the Registrant made no solicitation in connection with the sale other than communications with the Investor; the Registrant obtained representations from the Investor regarding their investment intent, experience and sophistication; and the Investor either received or had access to adequate information about the Registrant in order to make an informed investment decision. All of the foregoing securities are deemed restricted securities for purposes of the Securities Act.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On March 24, 2010, a majority of our stockholders approved an amendment to the Amended and Restated Certificate of Incorporation of the Company to change the name of the Company to “TurkPower Corporation” (the “Name Change”).
ITEM 5. OTHER INFORMATION.
None.
EXHIBITS
| Exhibit Number | | Description |
| | Section 302 Certification Of Chief Executive Officer and Chief Financial Officer |
| | | |
| | Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002 – Chief Executive Officer and Chief Financial Officer |
SIGNATURES
Pursuant to the requirements of the Section 13 or 15(d) of the Exchange Act, TurkPower Corporation (formerly Global Ink Supply Co.) has duly caused this report to be signed on its behalf by the undersigned persons, and in the capacities so indicated.
October 1, 2010
| | TURKPOWER CORPORATION (formerly Global Ink Supply Co.) |
| | (Registrant) |
| | |
| | By: /s/Aykut Ferah |
| | Name: Aykut Ferah |
| | Title: Chief Executive Officer and Chief Financial Officer |
