Trutankless Inc. was incorporated in the state of Nevada on March 7, 2008. The
Company is headquartered in Scottsdale, Arizona and currently operates through
its wholly-owned subsidiary, Bollente, Inc., a Nevada corporation incorporated
on December 3, 2009.
Trutankless is involved in sales, marketing, research and development of a high
quality, whole-house, smart electric tankless water heater that is more energy
efficient than conventional products. See "Item 1. Business."
RESULTS OF OPERATIONS
In the year ended December 31, 2021 we generated $246,032 in revenues, as
compared to $1,661,278 in revenues in the prior year. The decrease in sales was
attributable to less sales of our trutankless® residential and light commercial
products. Cost of goods sold was $127,669, as compared to $1,304,946 in the
Operating expenses totaled $11,518,635 during the year ended December 31, 2021,
as compared to $7,246,905 in the prior year. In the year ended December 31,
2021, our expenses primarily consisted of General and Administrative of
$10,617,832, Research and Development of $354,045 and Professional fees of
General and administrative fees increased $3,831,932 from the year ended
December 31, 2020, to the year ended December 31, 2021. General and
administrative fees increased due to an increase in consulting fees associated
with business development.
Research and Development increased $166,461 from the year ended December 31,
2020, to the year ended December 31, 2021. Research and Development fees
decreased due to development of new products.
Professional fees increased $273,337 from the year ended December 31, 2020, to
the year ended December 31, 2021. Professional fees increased due to an increase
in legal and accounting fees associated with the normal operations of the
Other expense increased $2,302,982 to $5,979,498 in the year ended December 31,
2021, from $3,676,516 for the year ended December 31, 2020. The increase was the
result of the loss on extinguishment of notes payable and interest expense
during the year.
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In the year ended December 31, 2021, we generated a net loss of $17,379,770, an
increase of $6,812,681 from $10,567,089 for the year ended December 31, 2020.
This increase was attributable to an increase in stock based consulting payments
and interest expense.
The financial statements included in this filing have been prepared in
conformity with generally accepted accounting principles that contemplate the
continuance of the Company as a going concern.
Management evaluated all relevant conditions and events that are reasonably
known or reasonably knowable, in the aggregate, as of the date the consolidated
financial statements are issued and determined that substantial doubt exists
about the Company's ability to continue as a going concern. The Company's
ability to continue as a going concern is dependent on the Company's ability to
generate revenues and raise capital. The Company has not generated sufficient
revenues from product sales to provide sufficient cash flows to enable the
Company to finance its operations internally. As of December 31, 2021, the
Company had $59,726 cash on hand. At December 31, 2021, the Company has an
accumulated deficit of $60,372,841. For the year ended December 31, 2021, the
Company had a net loss of $17,379,770, and cash used in operations of
$2,431,848. These factors raise substantial doubt about the Company's ability to
continue as a going concern within one year from the date of filing.
Over the next twelve months management plans raise additional capital and to
invest its working capital resources in sales and marketing in order to increase
the distribution and demand for its products. If the Company fails to generate
sufficient revenue and obtain additional capital to continue at its expected
level of operations, the Company may be forced to scale back or discontinue its
sales and marketing efforts. However, there is no guarantee the Company will
generate sufficient revenues or raise capital to continue operations. The
consolidated financial statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going concern.
Liquidity and Capital Resources
At December 31, 2021, we had an accumulated deficit of $60,372,841. Primarily
because of our history of operating losses and our recording of note payables,
we have a working capital deficiency of $3,582,297 at December 31, 2021. Losses
have been funded primarily through issuance of common stock and borrowings from
our stockholders and third-party debt. As of December 31, 2021, we had $59,726
in cash, $5,424 in accounts receivable, $119,418 in inventory.
Cash Flows from Operating, Investing and Financing Activities
The following table provides detailed information about our net cash flow for
all financial statement periods presented in this Annual Report. To date, we
have financed our operations through the issuance of stock and borrowings.
The following table sets forth a summary of our cash flows for the years ended
December 31, 2021 and 2020:
Net cash used in operating activities $ (2,431,848 ) $ (1,474,939 )
Net cash used in investing activities
(25,298 ) -
Net cash provided by financing activities 2,365,244 1,622,225
Net increase/(decrease) in Cash
(91,902 ) 147,286
Cash, beginning 151,628 4,342
Cash, ending $ 59,726 $ 151,628
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Net cash used in operating activities was $2,431,848 for the year ended December
31, 2021, as compared to $1,474,939 used in operating activities for the same
period in 2020. The increase in net cash used in operating activities was
primarily due to lower volume of units sold and increase in consulting contract
Net cash used in investing activities was $25,298 for the year ended December
31, 2021, as compared to $0 used in investing activities for the same period in
2020. The increase in net cash used in investing activities was primarily due to
the purchase of equipment during 2021.
Net cash provided by financing activities for the year ended December 31, 2021
was $2,365,244, as compared to $1,622,225 for the same period of 2020. The
increase of net cash provided by financing activities was mainly attributable
more cash raised from debt, equity, and royalty financing.
Ongoing Funding Requirements
As of December 31, 2021, we continue to use traditional and/or debt financing to
provide the capital we need to run the business. It is possible that we may need
additional funding to enable us to fund our operating expenses and capital
Until such time, if ever, as we can generate substantial product revenues, we
intend to finance our cash needs through a combination of equity offerings, debt
financings, collaborations, strategic alliances and licensing arrangements.
There can be no assurance that any of those sources of funding will be available
when needed on acceptable terms or at all. To the extent that we raise
additional capital through the sale of equity or convertible debt securities,
the ownership interests of existing stockholders will be diluted, and the terms
of these securities may include liquidation or other preferences that adversely
affect the rights of existing stockholders. Debt financing, if available, may
involve agreements that include covenants limiting or restricting our ability to
take specific actions, such as incurring additional debt, making capital
expenditures or declaring dividends. If we raise funds through collaborations,
strategic alliances or licensing arrangements with third parties, we may have to
relinquish valuable rights to our technologies, future revenue streams, research
programs or product candidates or to grant licenses on terms that may not be
favorable to us.
If we are unable to raise additional funds through equity or debt financings or
relationships with third parties when needed or on acceptable terms, we may be
required to delay, limit, reduce or terminate our product development or future
commercialization efforts; abandon our business strategy of growth through
acquisitions; or grant rights to develop and market product candidates that we
would otherwise prefer to develop and market ourselves.
Critical Accounting Polices
In December 2001, the SEC requested that all registrants list their most
"critical accounting polices" in the Management Discussion and Analysis. The SEC
indicated that a "critical accounting policy" is one which is both important to
the portrayal of a company's financial condition and results, and requires
management's most difficult, subjective or complex judgments, often as a result
of the need to make estimates about the effect of matters that are inherently
uncertain. Our critical accounting policies are disclosed in Note 1 of our
audited consolidated financial statements included in the Form 10-K filed with
Off-Balance Sheet Arrangements
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 is material to investors.
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