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 quarterly period ended September 30, 2020

¨ 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 No.)

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)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
N/A	N/A	N/A

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 every Interactive Data File required to be submitted 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 such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer þ	Smaller reporting company þ
	Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

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

As of October 20, 2020, the issuer had 422,699 shares of its common stock issued and outstanding.

TurnKey Capital, Inc. and Subsidiaries

Form 10-Q

For the Quarterly Period Ended September 30, 2020


		Page No.
PART I	FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS:
	Condensed Consolidated Balance Sheets as of September 30, 2020 (unaudited) and December 31, 2019	1
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2020 and 2019 (unaudited)	2
	Condensed Consolidated Statements of Stockholders’ Deficit for the Three and Nine Months Ended September 30, 2020 and 2019 (unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2020 and 2019 (unaudited)	4
	Notes to the Condensed Consolidated Financial Statements (unaudited)	5
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	10
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

PART I. FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

TurnKey Capital, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets


	September 30,			December 31,
	2020			2019
	(Unaudited)
Assets
Current Assets
Cash	$	267		$	1,253
Total current assets		267			1,253

Computer equipment, net		930			1,305

Other investment - related party		1,000			—

Total assets	$	2,197		$	2,558

Liabilities and Stockholders' Deficit
Current Liabilities
Accounts payable and accrued expenses	$	—		$	2,228
Advances payable		200,000			200,000
Accounts payable - related parties		837,985			567,985
Advances - related party		425,273			377,123
Total current liabilities		1,463,258			1,147,336

Commitments and Contingencies (Note 1 and 6)

Stockholders' Deficit
Preferred stock, $0.001 par value, 5,000,000 shares authorized; 600,000 shares issued and outstanding		600			600
Common stock, $0.001 par value, 750,000,000 shares authorized; 422,699 shares issued and outstanding		423			423
Additional paid-in capital		1,202,147			1,202,147
Accumulated deficit		(2,664,231	)		(2,347,948	)
Total stockholders' deficit		(1,461,061	)		(1,144,778	)

Total liabilities and stockholders' deficit	$	2,197		$	2,558

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

TurnKey Capital, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations (Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019

Operating Expenses
General and administrative		7,302			1,851			21,345			14,975
Professional fees - related party		90,000			90,000			270,000			180,000
Legal and professional		6,600			2,332			25,938			29,620
Total operating expenses		103,902			94,183			317,283			224,595

Loss from operations		(103,902	)		(94,183	)		(317,283	)		(224,595	)

Gain on other investment - related party		1,000			—			1,000			—

Loss before income taxes		(102,902	)		(94,183	)		(316,283	)		(224,595	)
Provision for income taxes		—			—			—			—
Net loss	$	(102,902	)	$	(94,183	)	$	(316,283	)	$	(224,595	)

Net loss per common share basic and diluted	$	(0.24	)	$	(0.22	)	$	(0.75	)	$	(0.53	)

Weighted average common shares outstanding basic and diluted		422,699			422,699			422,699			422,699

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

TurnKey Capital, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Deficit


	Preferred Stock				Common Stock				Additional					Total
	$0.001 Par Value				$0.001 Par Value				Paid-In		Accumulated			Stockholders'
	Shares		Amount		Shares		Amount		Capital		Deficit			Deficit

Balance at December 31, 2018		600,000	$	600		422,699	$	423	$	1,202,147	$	(2,023,128	)	$	(819,958	)

Net loss (unaudited)		—		—		—		—		—		(71,847	)		(71,847	)

Balance at March 31, 2019 (unaudited)		600,000		600		422,699		423		1,202,147		(2,094,975	)		(891,805	)

Net loss (unaudited)		—		—		—		—		—		(58,565	)		(58,565	)
Balance at June 30, 2019 (unaudited)		600,000		600		422,699		423		1,202,147		(2,153,540	)		(950,370	)

Net loss (unaudited)		—		—		—		—		—		(94,183	)	$	(94,183	)
Balance at September 30, 2019 (unaudited)		600,000	$	600		422,699	$	423	$	1,202,147	$	(2,247,723	)	$	(1,044,553	)




Balance at December 31, 2019		600,000	$	600		422,699	$	423	$	1,202,147	$	(2,347,948	)	$	(1,144,778	)

Net loss (unaudited)		—		—		—		—		—		(118,552	)		(118,552	)

Balance at March 31, 2020 (unaudited)		600,000		600		422,699		423		1,202,147		(2,466,500	)		(1,263,330	)

Net loss (unaudited)		—		—		—		—		—		(94,829	)		(94,829	)
Balance at June 30, 2020 (unaudited)		600,000		600		422,699		423		1,202,147		(2,561,329	)		(1,358,159	)

Net loss (unaudited)		—		—		—		—		—		(102,902	)		(102,902	)
Balance at September 30, 2020 (unaudited)		600,000	$	600		422,699	$	423	$	1,202,147	$	(2,664,231	)	$	(1,461,061	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

TurnKey Capital, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)


	Nine Months Ended September 30,
	2020			2019
Cash flows from operating activities:
Net loss	$	(316,283	)	$	(224,595	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		375			375
Gain on other investment - related party		(1,000	)		—
Changes in operating assets and liabilities:
Decrease in accounts payable and accrued expenses		(2,228	)		(6,248	)
Increase in accounts payable - related parties		270,000			175,501
Net cash used in operating activities		(49,136	)		(54,967	)

Cash flows from financing activity -
Increase in advances - related party		48,150			51,890

Net decrease in cash		(986	)		(3,077	)
Cash at beginning of period		1,253			3,398
Cash at end of period	$	267		$	321

Supplemental disclosures of cash flow information
Cash paid during the period for:
Taxes paid	$	—		$	—
Interest paid	$	—		$	—

Non-cash transactions -
Equity Investment – related party	$	1,000		$	—

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

TURNKEY CAPITAL, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITIED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

NOTE 1 – GENERAL

Organization

TurnKey Capital, Inc. (“TKCI,” the “Company,” “we,” “our,” or “us”) was incorporated under the laws of the State of Nevada under the name of Vanell, Corp. on September 7, 2012. The Company changed its name to Train Travel Holdings, Inc. on March 20, 2014 and to TurnKey Capital, Inc. on January 15, 2016 as a result of changes in its line of business.

We are a shell company as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended. Our wholly-owned subsidiaries are Remote Office Management, Inc. (“ROM”), which was formed in 2016 and was inactive in 2020 and 2019, and Turnkey Home Buyers USA, Inc., which was formed in 2014 and was inactive in 2020 and 2019. The Company does not have any paid employees; however, the officers and directors continue to work to further the Company’s business objectives.

Basis of Presentation

The accompanying unaudited, condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, and the Securities and Exchange Commission (“SEC”) rules for interim financial reporting. Certain information and footnote disclosures normally included in the condensed consolidated financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. However, in the opinion of management, the accompanying interim condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the Company’s condensed consolidated financial position as of September 30, 2020 and the condensed consolidated results of operations and cash flows for the periods presented. The condensed consolidated results of operations for interim periods are not necessarily indicative of the results of operations to be expected for any subsequent interim period or for the fiscal year ending December 31, 2020. The accompanying unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on April 1, 2020.

On August 28, 2019, the Company’s Board of Directors approved a 1-for-100 reverse stock split (the “Reverse Split”).

On September 13, 2019, the Company effected the Reverse Split, reducing the number of common shares outstanding from 42,264,665 to 422,699, of which approximately 25% was controlled by related parties. As a result of the Reverse Split, every 100 shares of issued and outstanding common stock were combined into one issued and outstanding share of common stock, without any change in the par value per share. All prior year share amounts and per share calculations have been retrospectively adjusted to reflect the impact of this Reverse Split and to provide data on a comparable basis. Such restatements include calculations regarding the Company’s weighted average shares and loss per share.

Subsequent Events

Management has evaluated events occurring subsequent to the unaudited condensed consolidated balance sheet date, through October 20, 2020, which is the date the unaudited condensed consolidated financial statements were issued, determining no events require disclosure in these unaudited condensed consolidated financial statements, with the exception of the matters described in Note 6.

TURNKEY CAPITAL, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

Going Concern

The accompanying unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. As of September 30, 2020, the Company had $267 of cash and an accumulated deficit of $2,664,231 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. We expect TBG Holdings, Inc. (“TBG”), a related party, to continue to provide supporting services and advances until sufficient capital is raised. The advances are due on demand and are non-interest bearing. The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Income Taxes

The Company accounts for income taxes using the liability method. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset the deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.

Pursuant to accounting standards related to the accounting for uncertainty in income taxes, the evaluation of a tax position is a two-step process. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50% likelihood of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer met. The accounting standard also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures and transition.

The Company assessed its earning history, trends and estimates of future earnings and determined that the deferred tax asset could not be realized as of September 30, 2020. Accordingly, a valuation allowance was recorded against the net deferred tax asset.

Revenue Recognition

The Company records revenue when all of the following have occurred: (1) persuasive evidence of an arrangement exists, (2) service delivery has occurred, (3) the sales price to the customer is fixed and determinable, and (4) collectability is reasonably assured.

Revenue is recognized at point of sale, with no further obligations. The Company had no revenue during the three and nine months ended September 30, 2020 and 2019.

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 as follows:

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.

TURNKEY CAPITAL, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

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, accounts payable and accrued expenses, advances payable, accounts payable – related parties, and advances – related party approximates their fair values because of the short-term nature of these instruments and their liquidity. The carrying value of other investment – related party represents its historic carrying amount because it was accounted for as a transaction between entities with common ownership that lacks economic substance, as discussed in Note 5. Management is of the opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments.

Loss Per Share

The computation of basic loss per share (“LPS”) is based on the weighted-average number of shares of common stock 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 LPS is based on the number of basic weighted-average shares of common stock outstanding plus the number of common shares that would be issued assuming the exercise of all potentially dilutive common shares of common stock outstanding using the treasury stock method. The computation of diluted net loss per share does not assume conversion, exercise or contingent issuance of securities that would have an anti-dilutive effect on loss per share. Therefore, when calculating LPS if the Company experienced a loss, there is no inclusion of dilutive securities as their inclusion in the LPS calculation is anti-dilutive.

Following is the computation of basic and diluted net loss per share for the three and nine month periods ended September 30, 2020 and 2019:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Basic and Diluted LPS Computation
Numerator:
Loss available to common stockholders	$	(102,902	)	$	(94,183	)	$	(316,283	)	$	(224,595	)

Denominator:
Weighted average number of common shares outstanding		422,699			422,699			422,699			422,699

Basic and diluted LPS	$	(0.24	)	$	(0.22	)	$	(0.75	)	$	(0.53	)

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

Three Months Ended
September 30,

Nine Months Ended
September 30,

2020

2019

2020

2019

Preferred stock (convertible)

291,000

TURNKEY CAPITAL, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

Recent Accounting Pronouncements

On December 18, 2019, the Financial Accounting Standards Board issued the Accounting Standards Update 2019-12 “Income taxes (Topic 740)—Simplifying the accounting for income taxes”. The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general principles and also improve consistent application by clarifying and amending existing guidance, such as franchise taxes and interim recognition of enactment of tax laws or rate changes. The amendments in this update are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted. The Company does not expect the adoption of this accounting pronouncement to have a material impact on its condensed consolidated financial statements.

Reclassifications

Certain amounts in the condensed consolidated financial statements were reclassified to allow for consistent presentation for the periods presented.

NOTE 2 – RELATED PARTY TRANSACTIONS

Amounts due to related parties at September 30, 2020 and December 31, 2019 are detailed below:


	September 30,			December 31,
	2020			2019
Accounts payable - related parties	$	837,985	⁽¹⁾	$	567,985	⁽¹⁾
Advances - related parties	$	425,273	⁽²⁾	$	377,123	⁽²⁾

———————


⁽¹⁾	Represents (a) amounts owed to R3 Accounting, LLC (“R3”), owned by Timothy Hart, Chief Financial Officer (“CFO”), a member of the Company’s board of directors, and a primary shareholder, for accounting related services and are payable on demand and (b) amounts owed to TBG, jointly owned by Timothy Hart and Neil Swartz, for management and consulting services such as corporate strategic planning and financial strategy and are payable on demand. Effective July 1, 2019, the Company revised its existing agreement with TBG to increase the monthly fee from $10,000 to $25,000. Neil Swartz is the Company’s Chief Executive Officer (“CEO”), a member of the Company’s board of directors, and a primary shareholder.

⁽²⁾	Represents advances of cash from TBG to us which are payable on demand and are non-interest bearing.

During the three and nine months ended September 30, 2020, the Company incurred $75,000 and $225,000 of expense related to TBG management fees and $15,000 and $45,000 of accounting fees owed to R3. During the three and nine month periods ended September 30, 2019, the Company incurred $75,000 and $135,000, respectively, of expense related to TBG management fees and $15,000 and $45,000, respectively, of accounting fees owed to R3.

NOTE 3 – ADVANCES PAYABLE

During 2015, the Company received proceeds of $200,000 that were contingent upon completion of a business transaction. During 2016, it became clear that the transaction would not be consummated. The Board of Directors is considering various alternatives to satisfy this liability and has proposed to issue 20,000 shares (as amended for the 1-for-100 Reverse Split) of common stock at $10.00 per share (as amended for the 1-for-100 Reverse Split). As of September 30, 2020, the liability is still unpaid. The advances payable have no stated maturity and bear no interest.

NOTE 4 – PREFERRED STOCK

The 600,000 outstanding preferred shares are convertible into 291,000 common shares. The preferred shares are held by Timothy Hart and Neil Swartz. The preferred shares do not pay dividends. The number of votes for the preferred shares shall be the same as the amount of shares of common shares that would be issued upon conversion.

TURNKEY CAPITAL, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

NOTE 5 – OTHER INVESTMENT - RELATED PARTY

On September 13, 2019, the Company entered into a Definitive Acquisition Agreement (the “DAA”) with Egg Health Hub, Inc. (“EGG”), a related party. Pursuant to the terms of the DAA, EGG and the Company agreed to commence the negotiation and preparation of a definitive share exchange agreement (the “Definitive Agreement”) pursuant to which EGG would exchange all of its issued and outstanding shares of common stock for shares of the Company’s common stock on a one-for-one basis which, upon the closing of the transactions contemplated by the Definitive Agreement, would constitute 70,000,000 shares of EGG’s issued and outstanding common stock. EGG has no employees, does not currently conduct operations and has no financial assets and liabilities.

EGG is a brand new model for healthcare and wellness that brings together top physicians and wellness professionals into co-practicing communities with shared access to a full-stack technology platform – scheduling, billing, client acquisition, and telemedicine – and flexible access to office space designed to optimize both the physician and client experience. This model creates a compelling new option for re-tenanting traditional shopping centers and mixed-use space.

On July 27, 2020, the Company and MediXall Group, Inc. (“MediXall”), a related party, entered into an assignment of the DAA. As a result of the COVID-19 Outbreak, the Company determined that the original opportunity that existed with EGG was no longer practical in the short-term. The Company and MediXall believed, however, that the EGG concept remained a viable concept on a virtual basis, and MediXall possesses the infrastructure and willingness to pursue this opportunity. In exchange for 1,000,000 shares of MediXall’s common stock, the Company assigned its interest in the DAA to MediXall. The receipt of MediXall’s common stock was accounted for as a transaction between entities with common ownership that lacks economic substance. As such, the receipt of MediXall’s common stock was recorded at its historic carrying amount of $1,000. This investment is accounted for in accordance with GAAP, using the cost-method. At September 30, 2020 there were no identified events or changes in circumstances that may have a significant adverse effect on the carrying value of the investment.

NOTE 6 – SUBSEQUENT EVENTS

COVID-19 Pandemic

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus (the “COVID-19 Outbreak”). In March 2020, the WHO classified the COVID-19 Outbreak as a pandemic, based on the rapid increase in exposure globally. The full impact of the COVID-19 Outbreak continues to evolve. The impact of the COVID-19 Outbreak on the Company’s results of operations, financial position and cash flows will depend on future developments, including the duration and spread of the outbreak and related advisories and restrictions. These developments and the impact of the COVID-19 Outbreak on the financial markets and the overall economy are highly uncertain and cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended period, the Company’s results of operations, financial position and cash flows may be materially adversely affected.

ITEM 2.

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

This quarterly report on Form 10-Q and other reports filed by TurnKey Capital, Inc. (the “Company,” “we,” “us” or “our”) from time to time with the U.S. Securities and Exchange Commission (“SEC”) (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 factors, risks, and uncertainties contained in Part I, Item 1A, “Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019. 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.

Overview

We are a shell company as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Our wholly owned subsidiaries are Remote Office Management, Inc. (“ROM”), which was formed in 2016 and was inactive in 2020 and 2019, and Turnkey Home Buyers USA, Inc., which was formed in 2014 and was inactive in 2020 and 2019. The Company does not have any paid employees; however, the officers and directors continue to work to further the Company’s business objectives.

As of September 30, 2020, we had an accumulated deficit of $2,664,231, negative working capital of $1,462,991 and cash of $267. Based upon current and near-term anticipated level of operations and expenditures, we believe that our lack of cash precludes us from continuing operations for the next twelve months. We expect TBG Holdings, Inc. (“TBG”), a related party, will continue to provide support services until sufficient capital is raised. Management recognizes that in order for us to meet our capital requirements, and continue to operate, additional financing will be necessary. We may seek to raise additional funds through private or public equity investment in order to expand the range and scope of our business operations. We may 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 unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Recent Developments

COVID-19 Pandemic

Equity Investment – related party

Appointment of Company President

On September 16, 2020, the Company announced the appointment of Alan A. Tucker as President of the Company. Mr. Tucker brings significant experience working directly with business startups and micro-cap companies. The Company is in the process of finalizing an employment agreement with Mr. Tucker.

Results of Operations

Three Month Period Ended September 30, 2020 Compared to the Three Month Period Ended September 30, 2019

Revenue

During the three month periods ended September 30, 2020 and 2019, we did not generate any revenue.

Operating Expenses

A summary of our operating expenses for the three month periods ended September 30, 2020 and 2019 follows:


	Three Months Ended
	September 30,
	2020		2019		Increase

General and administrative	$	7,302	$	1,851	$	5,451
Professional fees - related party		90,000		90,000		—
Legal and professional		6,600		2,332		4,268
Total operating expenses	$	103,902	$	94,183	$	9,719

General and administrative ("G&A") costs include costs related to public company costs and other office related costs.

Professional fees – related party costs primarily include costs for management services provided by TBG and costs related to R3.

Legal and professional expenses related to amounts incurred by the external audit firm and lawyers.

Nine Month Period Ended September 30, 2020 Compared to the Nine Month Period Ended September 30, 2019

Revenue

During the nine month periods ended September 30, 2020 and 2019, we did not generate any revenue.

Operating Expenses

A summary of our operating expenses for the nine month periods ended September 30, 2020 and 2019 follows:


	Nine Months Ended
	September 30,				Increase/
	2020		2019		(Decrease)

General and administrative	$	21,345	$	14,975	$	6,370
Professional fees - related party		270,000		180,000		90,000
Legal and professional		25,938		29,620		(3,682	)
Total operating expenses	$	317,283	$	224,595	$	92,688

G&A costs include costs related to public company costs and other office related costs.

Professional fees – related party costs primarily include costs for management services provided by TBG and costs related to R3. The increase in costs resulted due to the increase in the fees being charged by TBG.

Legal and professional expenses related to amounts incurred by the external audit firm and lawyers.

Liquidity and Capital Resources

Our available working capital and capital requirements will depend upon numerous factors, including our ability to make accretive acquisitions, and our ability to attract and retain key employees.

During the nine month period ended September 30, 2020, because of our operating losses, we did not generate positive operating cash flows. As of September 30, 2020, we had an accumulated deficit of $2,664,231, cash on hand of $267 and negative working capital of $1,462,991. As a result, we have significant short-term cash needs. These needs historically have been satisfied through proceeds from the sales of our securities and advances from TBG, a related party. We are expecting to reduce the need for such short-term financing as we work to establish a sustainable business. (See "Plan of Operation and Funding" below). In order to repay our obligations in full or in part when due, we will be required to raise capital from other sources. There is no assurance, however, that we will be successful in these efforts.

Cash used in operating activities was $49,136 for the nine month period ended September 30, 2020, as compared to cash used of $54,967 during the nine month period ended September 30, 2019.

Cash provided by financing activities was $48,150 for the nine month period ended September 30, 2020 as compared to cash provided by financing activities of $51,890 for the nine month period ended September 30, 2019.

We expect TBG will continue to provide support services until sufficient capital is raised.

Plan of Operation and Funding

We expect that working capital requirements will continue to be funded through further related party advances and issuances of securities until we establish business activities that can generate positive cash flow. Our working capital requirements are expected to increase in line with the growth of our business.

We have negative working capital, and we do not have any 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 and related party advances. 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.

Going Concern

The accompanying unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. As of September 30, 2020, the Company had $267 of cash and an accumulated deficit of $2,664,231 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. We expect TBG to continue to provide supporting services and advances until sufficient capital is raised. The advances are due on demand and are non-interest bearing. The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Critical Accounting Policies and Estimates

The preparation of condensed consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires us to make judgments, assumptions and estimates that have a significant impact on the results that we report in our condensed consolidated financial statements. Some of our accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates regarding matters that are inherently uncertain. Note 1 of the notes to condensed consolidated financial statements describes the significant accounting policies used in the preparation of the condensed consolidated financial statements. Certain of these significant accounting policies require us to make critical accounting estimates, as defined below.

A critical accounting estimate is defined as one that is both material to the presentation of our condensed consolidated financial statements and requires management to make difficult, subjective or complex judgments that could have a material effect on our financial condition and results of operations. Specifically, critical accounting estimates have the following attributes:


	·	we are required to make assumptions about matters that are highly uncertain at the time of the estimate; and
	·	different estimates we could reasonably have used, or changes in the estimate that are reasonably likely to occur, would have a material effect on our financial condition or results of operations.

Estimates and assumptions about future events and their effects cannot be determined with certainty. We base our estimates on historical experience and on various other assumptions believed to be applicable and reasonable under the circumstances. These estimates may change as new events occur, as additional information is obtained and as our operating environment changes. These changes have historically been minor and have been included in the condensed consolidated financial statements as soon as they became known. Based on a critical assessment of our accounting policies and the underlying judgments and uncertainties affecting the application of those policies, management believes that our condensed consolidated financial statements are fairly stated in accordance with GAAP and present a meaningful presentation of our financial condition and results of operations.

Our most critical accounting estimates include:


	·	the recognition and measurement of current and deferred income taxes, which impact our provision for taxes.

Below, we discuss these policies further, as well as the estimates and judgments involved.

Income Taxes

Pursuant to accounting standards related to the accounting for uncertainty in income taxes, the evaluation of a tax position is a two-step process. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50% likelihood of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer met. The accounting standard also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures and transition.

Off-Balance Sheet Arrangements

As of September 30, 2020, 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

We carried out an evaluation as required by paragraph (b) of Rule 13a-15 and 15d-15 of the Exchange Act, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our financial disclosures, controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of September 30, 2020.

A material weakness is a deficiency or combination of deficiencies in internal control, such that there is a reasonable possibility that a material misstatement of the entity's condensed consolidated financial statements will not be prevented, or detected and corrected on a timely basis.

Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of September 30, 2020 our disclosure controls and procedures were not effective, based on the following deficiencies:


	·	Weaknesses in Accounting and Finance Personnel: We have no accounting staff and we do not have the resources and expertise needed to meet complex and intricate GAAP and SEC reporting requirements of a U.S. public company. This is deemed by management to be a material weakness in preparing condensed consolidated financial statements.

	·	We have written accounting policies and control procedures, but we do not have any staff to implement the related controls. Management had determined that this lack of the implementation of segregation of duties, as required by our written procedures, represents a material weakness in our internal controls.

	·	Internal control has as its core a basic tenant of segregation of duties. Due to our limited size and economic constraints, the Company is not able to segregate for control purposes various asset control and recording duties and functions to different employees. This lack of segregation of duties had been evaluated by management, and has been deemed to be a material control deficiency.

The Company has determined that the above internal control weaknesses and deficiencies could result in a reasonable possibility for interim condensed consolidated financial statements that a material misstatements will not be prevented or detected on a timely basis by the Company’s internal controls.

Management is currently evaluating what steps can be taken in order to address these material weaknesses. As a growing small business, the Company continuously devotes resources to the improvement of our internal control over financial reporting. Due to budget constraints, the staffing size, proficiency and specific expertise in the accounting department is below requirements for the operation. The Company is anticipating correcting deficiencies as funds become available.

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.

None.

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.

MINE 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 §302 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 §906 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.SCH*		XBRL Taxonomy Extension Schema
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase
101.DEF*		XBRL Taxonomy Extension Definition Linkbase
101.LAB*		XBRL Taxonomy Extension Label Linkbase
101.PRE*		XBRL Taxonomy Extension Presentation 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: October 20, 2020	By:	/s/ Neil Swartz
		Neil Swartz
		Chief Executive Officer (principal executive officer)


Dated: October 20, 2020	By:	/s/ Timothy S. Hart
		Timothy S. Hart
		Chief Financial Officer (principal financial officer and principal accounting officer)

TurnKey Capital, Inc. 10-Q