Summary of TURKPOWER CORP - Yahoo! Finance

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

This Report contains statements that constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, (the "Securities Act) and the Securities Exchange Act of 1934, as amended, (the "Exchange Act"). Various matters discussed in this document and in documents incorporated by reference herein, including matters discussed under the caption "Plan of Operation," may constitute forward-looking statements for purposes of the Securities Act and the Exchange Act. These statements are based on many assumptions and estimates and are not guarantees of future performance and may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. The words "expect," "anticipate," "intend," "plan," "believe," "seek," "estimate," and similar expressions are intended to identify such forward-looking statements. The Company's actual results may differ materially from the results anticipated in these forward-looking statements due to a variety of factors, including, without limitation, 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) Overview

TurkPower is a Turkish-American consulting and service operations firm and junior mining company. TurkPower offers its domestic and international clients consulting services and acts as a full service operator for wind, hydro, solar, coal and geothermal energy parks in Turkey. In addition to its energy business, TurkPower aims to increase its involvement in the mining industry by acquiring and consolidating operational mines with proven reserves utilizing economies of scale to increase returns. TurkPower's strategy is to identify and evaluate properties with promising mineral potential, add further value through exploration, and then develop such properties either on its own or through collaborative agreements with industry partners having substantial experience and financial strength.

In November of 2011, the Company ceased all operation in Turkey and will sell its Turkish subsidiary, including the Investment in the Mining Company.

The Company has entered into an Agreement and Plan of Share Exchange with BEST, LLC ("BEST") and the equityholders of BEST to acquire all of the capitalization of BEST in a subsidiary to be formed for such purpose, in exchange for an aggregate of (i) one hundred twenty million (120,000,000) newly issued shares of the Company's common stock, par value $0.0001 per share (the "Common Stock");
(ii) one thousand (1,000) shares of a newly-created Series A Convertible Preferred Stock, par value $0.0001 per share which are convertible into and vote as two hundred sixty million (260,000,000) shares of Common Stock (the "Series A"); and (iii) one thousand (1,000) shares of a newly-created Series B Perpetual, Convertible Preferred Stock, par value $0.0001 per share which are convertible into and vote as one hundred million (100,000,000) million shares of Common Stock, have a liquidation preference of $25,000 per share (the "Series B") (collectively, the "Exchange Shares").

BEST is a company organized under the laws of the Russian Federation and is the holder of a forty-nine (49) year lease to develop operate and mine Zavyalov Square, Part 1 at the Toguchina Coal Filed, located in Novosibirsk, Russia with a minimum forecasted extractable quantity of coal of 100,000,000 metric tons of coal and the owner of saleable coking coal stock of at least $20,000,000.

(b) Going Concern

As shown in the accompanying consolidated financial statements, the Company had net losses of $5,667,251 for the six months ended November 30, 2011 and had a working capital deficit as of November 30, 2011 of $5,229,725. 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. 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.

For the Six Months Ended November 30, 2011

For the six months ended November 30, 2011 and 2010, our professional fees were $479,552 and $97,552, respectively. The increase in professional fees was due to legal and accounting expenses, due diligence, and investor relations expenses.

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For the six months ended November 30, 2011 and 2010, our selling, general and administrative expenses were $886,459 and $26,241, respectively. The increase in selling, general and administrative expenses was largely due to stock compensation, payroll related expenses, and consulting expenses.

For the six months ended November 30, 2011 and 2010, we recorded other expense of $1,020,897 and $233,997, respectively. The increase in other expense was due to interest expense incurred in connection with our convertible debt and change in fair value of the derivative liabilities.

For the six months ended November 30, 2011 and 2010, we recorded a loss from discontinued operations of $3,280,343 compared to $540,109. The increase in the loss from discontinued operations was due to an impairment of our Investment in Mining Company of $1,961,190 during the six months ended November 30, 2011. Also, the Company recorded severance expense during the six months ended November 30, 2011 as a result of the Company's decision to cease operations in Turkey and terminate all employees.

For the Three Months Ended November 30, 2011

For the three months ended November 30, 2011 and 2010, our professional fees were $225,429 and $63,343, respectively. The increase in professional fees was due to legal and accounting expenses, due diligence, and investor relations expenses.

For the three months ended November 30, 2011 and 2010, our selling, general and administrative expenses were $301,048 and $8.831, respectively. The increase in selling, general and administrative expenses was largely due to stock compensation, payroll related expenses, and consulting expenses.

For the three months ended November 30, 2011 and 2010, we recorded other expense of $458,046 and $117,438, respectively. The increase in other expense was due to interest expense incurred in connection with our convertible debt and change in fair value of the derivative liabilities.

For the three months ended November 30, 2011 and 2010, we recorded a loss from discontinued operations of $3,079,347 compared to $278,975. The increase in the loss from discontinued operations was due to an impairment of our Investment in Mining Company of $1,961,190 during the three months ended November 30, 2011. Also, the Company recorded severance expense during the six months ended November 30, 2011 as a result of the Company's decision to cease operations in Turkey and terminate all employees.

(d) Liquidity and Capital Resources

At November 30, 2011, we had cash of $12,146, as compared to $217,312 at May 31, 2011. This decrease was a result of cash used in operating activities of $804,264 and cash used in investing activities of $920,247 partially offset by cash provided by financing activities of $1,485,000.

During the next 12 months we anticipate incurring costs related to filing of Exchange Act reports, and consummation of the acquisition of BEST.

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 stockholders, management or other investors.

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 assets.

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.

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Critical Accounting Policies

Use of estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates.

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.

Seasonality

To date, we have not noted any significant seasonal impacts.