Trutankless, Inc 10-K for FY2021

Trutankless, Inc. (TKLS)

10-K 2022-11-28 For: 2021-12-31

Added on April 06, 2026

About this 10-K

Trutankless, Inc filed this 10-K on November 28, 2022, covering the fiscal year ended December 31, 2021 (FY2021).

Headline figures

Fiscal year ended December 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $246.03K; down 85.2% from $1.66M a year earlier
Net loss: $17.38M; compared with a net loss of $10.57M a year earlier

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PART I		4
ITEM 1. BUSINESS		4
ITEM 1A. RISK FACTORS		10
ITEM 1B. UNRESOLVED STAFF COMMENTS		13
ITEM 2. PROPERTIES		13
ITEM 3. LEGAL PROCEEDINGS		13
PART II		14
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASE OF EQUITY SECURITIES		14
ITEM 6. SELECTED FINANCIAL DATA		19
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		19
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		22
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA		22
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE		22
ITEM 9A (T) CONTROLS AND PROCEDURES		22
ITEM 9B. OTHER INFORMATION		23
PART III		24
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE		24
ITEM 11. EXECUTIVE COMPENSATION		26
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS		28
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE		29
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES		30
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES		31
SIGNATURES		33

	·	our ability to diversify our operations;
	·	inability to raise additional financing for working capital;
	·	the fact that our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and they may require our management to make estimates about matters that are inherently uncertain;
	·	our ability to attract key personnel;
	·	our ability to operate profitably;
	·	deterioration in general or regional economic conditions;
	·	adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;
	·	changes in U.S. GAAP or in the legal, regulatory and legislative environments in the markets in which we operate;
	·	the inability of management to effectively implement our strategies and business plan;
	·	inability to achieve future sales levels or other operating results;
	·	the unavailability of funds for capital expenditures;
	·	other risks and uncertainties detailed in this report;

	1.	Regional and national plumbing and electrical wholesalers (also called “distributors”);
	2.	Plumbers and electricians on a direct basis, in those areas where wholesalers have not yet been set up; and,
	3.	Builders on a direct basis, in those areas where wholesalers & mechanical contractors have not yet been set up.

	·	Deliver to the customer, and obtain a written receipt for, a disclosure document;
	·	Disclose certain price information about the stock;
	·	Disclose the amount of compensation received by the broker-dealer or any associated person of the broker-dealer;
	·	Send monthly statements to customers with market and price information about the penny stock; and
	·	In some circumstances, approve the purchaser’s account under certain standards and deliver written statements to the customer with information specified in the rules.

	·	our financial condition;
	·	earnings;
	·	need for funds;
	·	capital requirements;
	·	prior claims of preferred stock to the extent issued and outstanding; and
	·	other factors, including any applicable laws.

	Year ended December 31,
	2021			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

	·	inadequate controls over maintenance of records
	·	deficiencies in the period-end reporting process and accounting policies;
	·	inadequate internal controls relating to the authorization, recognition, capture, and review of transactions, facts, circumstances, and events that could have a material impact on the Company’s financial reporting process

Name	Age	Title	Since
Robertson James Orr	47	Secretary, Treasurer & Director	May 12, 2010
Michael Stebbins	39	Chief Executive Officer, President & Director	June 23, 2016

	1.	Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
	2.	Full, fair, accurate, timely and understandable disclosure in reports and documents that are filed with, or submitted to, the Commission and in other public communications made by an issuer;
	3.	Compliance with applicable governmental laws, rules and regulations;
	4.	The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and
	5.	Accountability for adherence to the code.

	·	been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences);
	·	had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;
	·	been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;
	·	been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
	·	been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
	·	been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

SUMMARY COMPENSATION TABLE

Name and Principal Positions	Year	Salary ($)	Bonus ($)	Stock Awards ($)	Option Awards ($)	Non- Equity Incentive Plan Compen- sation ($)	Non-qualified Deferred Compensation Earnings ($)	All Other Compen- sation ($)	Total ($)
Robertson James Orr⁽¹⁾,	2021	75,000	-0-	400,000⁽⁷⁾	-0-	-0-	-0-	-0-	1,746,198
Former President, Former CEO,	2020	11,000	-0-	1,735,198⁽²⁾	-0-	-0-	-0-	-0-	1,746,198
Secretary, Treasurer & Director	2019	-0-	-0-	-0-	-0-	-0-	-0-	-0-	-0-

Michael Stebbins⁽⁴⁾,	2021	210,000	-0-	2,142,980⁽⁸⁾	-0-	-0-	-0-	-0-	2,116,798
President & Director	2020	165,000	-0-	1,951,798⁽⁵⁾	-0-	-0-	-0-	-0-	2,116,798
	2019	165,000	-0-	-0-	-0-	-0-	-0-	-0-	165,000

	1.	Mr. Orr was appointed President, CEO, Secretary, Treasurer, and Director of the Company on May 12, 2010. On February 2, 2017, Mr. Orr resigned as president and on July 29, 2019, Mr. Orr resigned as CEO.
	2.	Amount represents the fair market value of 800,000 shares of common stock and 5,000 share of preferred stock issued for services as an employee.
	3.	Amount represents the fair market value of 120,000 shares of common stock issued for services as an employee.
	4.	Mr. Stebbins was appointed President of the Company on February 2, 2017 and CEO of the Company on July 29, 2019.
	5.	Amount represents the fair market value of 1,500,000 shares of common stock and 5,000 share of preferred stock issued for services as an employee.
	6.	Amount represents the fair market value of 250,000 shares of common stock issued for services as an employee.
	7.	Amount represents the fair market value of 1,200,000 shares of common stock issued for services as an employee.
	8.	Amount represents the fair market value of 7,850,000 shares of common stock issued for services as an employee.

Title of Class	Name of Beneficial Owner⁽¹⁾	Number Of Shares	Percent Beneficially Owned
Common	Robertson James Orr - Director⁽²⁾	1,165,541	5.7%
Common	Built Right Holdings, LLC⁽⁴⁾	3,253,750	16.0%
Common	Michael Stebbins - CEO and President and Director⁽²⁾⁽³⁾	1,689,289⁽³⁾	8.3%
	All Directors, Officers and Principal Stockholders as a Group	6,108,580	30.0%

	1.	As used in this table, “beneficial ownership” means the sole or shared power to vote, or to direct the voting of, a security, or the sole or shared investment power with respect to Common Stock (i.e., the power to dispose of, or to direct the disposition of, a security).
	2.	The address of each Officer and Director is c/o Trutankless, Inc., 14646 North Kierland Boulevard, Suite 270, Scottsdale, AZ 85254.
	3.	Of the total shares of Common Stock owned or controlled by Mr. Stebbins, 43,750 shares are held by White Isle Holdings, Inc., 1,875 shares are held by Core Financial Companies LLC and 1,000,000 shares are held by Level Point Corp.
	4.	These shares are owned directly by Built Right Holdings, LLC, an Arizona limited liability company, and Rodney Cullum may be deemed to have an indirect interest in these securities as the manager of Built Right Holdings, LLC.

Fee Category	Fiscal 2021 Fees		Fiscal 2020 Fees

Audit Fees	$	41,000	$	50,000
Audit Related Fes		-		-
Tax Fees		-		-
All Other Fees		-		-

Total Fees	$	41,000	$	50,000

	1.	The financial statements listed in the “Index to Consolidated Financial Statements” on page 29 are filed as part of this report.
	2.	Financial statement schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.
	3.	Exhibits included or incorporated herein: See index to Exhibits.

Exhibit Number	Exhibit Description
2.1	Acquisition Agreement and Plan of Merger - dated March 3, 2011⁽³⁾
2.2	Addendum No. 1 to Acquisition Agreement and Plan of Merger - Dated April 27, 2011⁽⁴⁾
2.3	Agreement and Plan of Merger between Bollente Companies, Inc. and Bollente Name Change Subsidiary, Inc. - Dated June 4, 2018⁽⁵⁾
3(i)(a)	Articles of Incorporation of Bollente Companies, Inc. (Formerly Alcantara Brands Corporation)⁽¹⁾
3(i)(b)	Certificate of Amendment - Name Change - Dated March 2, 2011⁽²⁾
3(i)(c)	Certificate of Change - 50:1 Reverse Split - Dated September 23, 2010⁽²⁾
3(i)(d)	Articles of Incorporation of Bollente Name Change Subsidiary, Inc. - Dated June 4, 2018⁽⁵⁾
3(i)(e)	Articles of Merger between Bollente Companies, Inc. and Bollente Name Change Subsidiary, Inc. - Dated June 4, 2018⁽⁵⁾
3(i)(f)	Certificate of Designation of Series B Preferred Stock - Dated April 2, 2020⁽⁷⁾
3(i)(g)	Certificate of Change - Increase Authorized - Dated May 25, 2021⁽⁶⁾
3(ii)(a)	Bylaws of Trutankless, Inc. ⁽¹⁾
31.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act*
32.1	Certification pursuant to 18 U.S.C. Section 350*
101.INS	XBRL Instance
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation
101.DEF	XBRL Taxonomy Extension Definition
101.LAB	XBRL Taxonomy Extension Label
101.PRE	XBRL Taxonomy Extension Presentation*

1.	Incorporated by reference from the Company’s Registration Statement on Form SB-2 filed on March 19, 2008.
2.	Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed on November 24, 2010.
3.	Incorporated by reference from the Company’s Current Report on Form 8-K filed on March 10, 2011.
4.	Incorporated by reference from the Company’s Current Report on Form 8-K filed on May 6, 2011.
5.	Incorporated by reference from the Company’s Current Report on Form 8-K filed on June 6, 2018
6.	Incorporated by reference from the Company’s Current Report on Form 8-K filed on May 25, 2021.
7.	Incorporated by reference from the Company’s Annual Report on Form 10-K filed on April 23, 2020.
*	Filed herewith.

TRUTANKLESS INC.

By:	/s/ Michael Stebbins
	Michael Stebbins, Chief Executive Officer

Date: November 28, 2022

Signature	Title	Date

/s/ Michael Stebbins	Chief Executive Officer (Principal Executive Officer), Director and Principal Financial Officer	November 28, 2022
Michael Stebbins

/s/ Robertson J. Orr	Director	November 28, 2022
Robertson James Orr

	PAGES

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID: 2738)	F-4

CONSOLIDATED BALANCE SHEETS	F-5

CONSOLIDATED STATEMENTS OF OPERATIONS	F-6

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT	F-7

CONSOLIDATED STATEMENTS OF CASH FLOWS	F-8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	F-10

	·	Determination of whether products and services are considered distinct performance obligations that should be accounted for separately.
	·	The pattern of delivery (i.e., timing of when revenue is recognized) for each distinct performance obligation.
	·	Identification and treatment of contract terms that may impact the timing and amount of revenue recognized.

	·	We evaluated management's significant accounting policies related to these customer agreements for reasonableness.
	·	We selected a sample of customer agreements and performed the following procedures:

	o	Obtained and read contract source documents for each selection, and other documents.
	o	Tested management's identification and treatment of contract terms.
	o	Assessed the terms in the customer agreement and evaluated the appropriateness of management's application of their accounting policies, along with their use of estimates, in the determination of revenue recognition conclusions.
	o	Performed analytical procedures including but not limited to.

	·	We tested the mathematical accuracy of management's calculations of revenue and the associated timing of revenue recognized in the financial statements.
	·	Compared amounts to those of prior periods or other expectations by product line, geographic location, and in total.

	·	Obtained cash flow forecast from the Company, performed audit procedures to evaluate the reasonableness of the forecast by comparing to historical financial statements, financing agreements and cash infusion by shareholders.
	·	Obtained subsequent sales information and agreed to shipping records.

/s/ M&K CPAS, PLLC

We have served as the Company’s auditor since 2021.

Houston, Texas

November 15, 2022

	December 31, 2021			December 31, 2020
ASSETS
Current assets
Cash	$	59,726		$	151,628
Accounts receivable, net		5,424			109,966
Inventory		119,418			24,654
Prepaid consulting expenses		-			585,460
Total current assets		184,568			871,708

Other Assets
Prepaid consulting expenses - long term		-			877,515
Right to use asset		17,744			33,990
Other assets		26,439			13,722
Total other assets		44,183			925,227

Total assets	$	228,751		$	1,796,935

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Accounts payable and accrued liabilities		895,470			1,015,289
Accounts payable and accrued liabilities - related party		199,700			129,700
Lease liability		19,960			16,424
Accrued interest payable - related party		77,419			206,933
Derivative liability		-			302,249
Payroll protection program loan payable		-			107,485
Royalty liability with affiliates		460,000			-
Notes payable - related party		306,350			69,350
Notes payable, net of debt discount		820,717			481,021
Convertible notes payable, net of debt discount		1,031,432			970,839
Total current liabilities		3,811,048			3,299,290

Lease liability - long-term		-			20,765
Notes payable - long term, net of debt discount		201,000			249,027
Convertible notes payable - long term, net of debt discount		-			91,335
Notes payable - related party, non current		110,500			500,000
Total long-term liabilities		311,500			861,127

Total liabilities		4,122,548			4,160,417

Stockholders’ deficit
Preferred stock, $0.001 par value, 9,990,000 shares authorized, 0 and 0 shares issued and outstanding as of December 31, 2021 and 2020, respectively		-			-
Series B Preferred stock, $0.001 par value, 10,000 shares authorized, 10,000 and 10,000 shares issued and outstanding as of December 31, 2021 and 2020, respectively		10			10
Common stock, $0.001 par value, 1,000,000,000 shares authorized, 20,217,577 and 9,225,621 shares issued and outstanding as of December 31, 2021 and 2020, respectively		20,217			9,226
Additional paid in capital		54,170,266			39,961,979
Subscriptions payable		2,288,551			658,374
Accumulated deficit		(60,372,841	)		(42,993,071	)
Total stockholders’ deficit		(3,893,797	)		(2,363,482	)

Total liabilities and stockholders’ deficit	$	228,751		$	1,796,935

	For the years ended December 31,
	2021			2020

Revenue	$	246,032		$	1,661,278

Cost of goods sold		(127,669	)		(1,304,946	)

Gross profit		118,363			356,332

Operating expenses
General and administrative		10,617,832			6,785,900
Research and development		354,045			187,584
Professional fees		546,758			273,421
Total operating expenses		11,518,635			7,246,905

Loss from operations		(11,400,272	)		(6,890,573	)

Other income (expenses)
Interest expense		(5,018,470	)		(1,705,165	)
Gain/Loss on change of derivative liability		149,798			46,864
Loss on extinguishment of notes		(1,212,153	)		(2,018,215	)
Gain on debt forgiveness of PPP loan		101,327			-
Total income (expenses)		(5,979,498	)		(3,676,516	)

Net loss before tax provision		(17,379,770	)		(10,567,089	)
Tax provision		-			-
Net loss	$	(17,379,770	)	$	(10,567,089	)

Net loss per common share - basic and diluted	$	(1.38	)	$	(1.40	)

Weighted average number of common shares outstanding - basic and diluted		12,578,271			7,521,287

	Preferred Stock						Common Stock						Additional Paid-in			Subscriptions			Accumulated			Total Stockholders’
	Shares			Amount			Shares			Amount			Capital			Payable			Deficit			Deficit
Balance, December 31, 2019		76,000			76			5,678,413			5,678			28,967,833			424,705			(32,425,982	)		(3,027,690	)

Stock issued for cash		-			-			727,500			728			706,272			100,000			-			807,000
Stock issued for services		10,000			10			1,820,625			1,821			6,374,754			39,210			-			6,415,795
Rescission and retirement of shares for services		-			-			(62,500	)		(63	)		(124,937	)		-			-			(125,000	)
Share and warrants issued for debt extensions					-			12,500			13			40,673			74,945			-			115,631
Conversion of preferred stock to common		(76,000	)		(76	)		25,625			26			15			35			-			-
Shares and warrants issued to extinguish debt		-			-			545,250			545			2,248,384			-			-			2,248,929
Stock and warrants issued for debt discounts		-			-			562,458			562			1,397,689			19,479			-			1,417,730
Derivative written off to additional paid in capital		-			-			-			-			526,452			-			-			526,452
Rescission and retirement of shares for debt		-			-			(84,250	)		(84	)		(175,156	)		-			-			(175,240	)
Net loss		-			-			-			-			-			-			(10,567,089	)		(10,567,089	)
Balance, December 31, 2020		10,000			10			9,225,909			9,226			39,961,979			658,374			(42,993,071	)		(2,363,482	)

Stock issued for cash		-			-			2,062,850			2,068			1,649,697			(157,500	)		-			1,494,265
Stock issued for services		-			-			5,782,477			5,785			8,112,386			1,826,990			-			9,945,161
Shares issued for beneficial conversion feature		-			-			199,566			200			458,826			(3,774	)		-			455,252
Shares issued for debt restructuring		-			-			98,495			98			257,633			(56,154	)		-			201,577
Shares issued for extinguishment of notes		-			-			2,064,780			2,056			2,610,099			20,615			-			2,632,770
Shares issued for the settlement of accrued expenses		-			-			783,500			784			962,921			-			-			963,705
Derivative liability written off to APIC		-			-			-			-			152,451			-			-			152,451
Imputed interest		-			-			-			-			4,274			-			-			4,274
Net loss		-			-			-			-			-			-			(17,379,770	)		(17,379,770	)
Balance, December 31, 2021		10,000			10			20,217,577			20,217			54,170,266			2,288,551			(60,372,841	)		(3,893,797	)

	Level 1		Level 2		Level 3		Total
Liabilities
Derivative Financial Instruments	$	-	$	-	$	302,249	$	302,249

	Amount
Balance December 31, 2019	$	613,716
Debt discount originated from derivative liabilities		261,845
Derivative reclassed to additional paid in capital		(526,452	)
Change in fair market value of derivative liabilities		(46,860	)
Balance December 31, 2020	$	302,249
Change in fair market value of derivative liabilities		(149,798	)
Derivative liability reclassified to additional paid in capital		(152,451	)
Balance December 31, 2021	$	-

	December 31, 2021		December 31, 2020
Finished goods		119,418		24,654
Total	$	119,418	$	24,654

	December 31, 2021			December 31, 2020
Accounts receivable		184,805			292,157
Allowance for doubtful accounts		(179,381	)		(182,191	)
Total	$	5,424		$	109,966