Trutankless, Inc 10-Q for FY2022 Q1

Trutankless, Inc. (TKLS)

10-Q 2023-05-11 For: 2022-03-31

Added on April 06, 2026

About this 10-Q

Trutankless, Inc filed this 10-Q on May 11, 2023, covering the quarter ended March 31, 2022 (FY2022 Q1).

Headline figures

Quarter ended March 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $15.68K; down 90.9% from $172.84K a year earlier
Net loss: $1.43M; compared with a net loss of $2.28M a year earlier

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14646 North Kierland Boulevard, Suite 270
Scottsdale, AZ		85254
(Address of principal executive offices)		(Zip Code)

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated Filer	☐	Smaller reporting company	☒
(Do not check if a smaller reporting company)		Emerging growth company	☐

PART I - FINANCIAL INFORMATION		3
Item 1. Financial Statements		3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.		22
Item 3. Quantitative and Qualitative Disclosure About Market Risk		28
Item 4. Controls and Procedures		28
PART II - OTHER INFORMATION		29
Item 1. Legal Proceedings.		29
Item 1A. Risk Factors		29
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.		29
Item 3. Defaults Upon Senior Securities.		30
Item 4. Mine Safety Disclosures		30
Item 5. Other Information.		30
Item 6. Exhibits.		31
SIGNATURES		32

	March 31, 2022			December 31, 2021
ASSETS
Current assets
Cash	$	1,559		$	38,895
Accounts receivable, net		13,419			5,424
Inventory		124,162			119,418
Assets of discontinued opperations		-			20,831
Total current assets		139,140			184,568

Other Assets
Right to use asset		13,683			17,744
Other assets		23,329			26,439
Total other assets		37,012			44,183

Total assets	$	176,152		$	228,751

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Accounts payable and accrued liabilities		912,065			888,531
Accounts payable and accrued liabilities - related party		129,700			129,700
Lease liability		15,168			19,960
Accrued interest payable - related party		79,439			77,419
Notes payable - related party		121,350			106,350
Notes payable, net of debt discount		744,122			799,377
Convertible notes payable, net of debt discount		1,235,634			1,031,432
Convertible notes payable - related party		821,251			-
Liabilities of discontinued operations		-			758,279
Total current liabilities		4,058,729			3,811,048

Notes payable - long term, net of debt discount		178,420			201,000
Notes payable - related party, non current		110,500			110,500
Total long-term liabilities		288,920			311,500

Total liabilities		4,347,649			4,122,548

Stockholders’ deficit

Preferred stock, $0.001 par value, 9,990,000 shares authorized, 76,000 and 76,000 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively		-			-

Series B Preferred stock, $0.001 par value, 10,000 shares authorized,10,000 and 0 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively		10			10
Common stock, $0.001 par value, 1,000,000,000 shares authorized, 20,387,667 and 20,217,577 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively		20,387			20,217
Additional paid in capital		54,317,838			54,170,266
Subscriptions payable		2,897,541			2,288,551
Accumulated deficit		(61,407,273	)		(60,372,841	)
Total stockholders’ deficit		(4,171,497	)		(3,893,797	)

Total liabilities and stockholders’ deficit	$	176,152		$	228,751

	For the three months ended
	March 31, 2022			March 31, 2021

Revenue	$	15,680		$	172,838

Cost of goods sold		(6,752	)		(135,092	)

Gross profit		8,928			37,746

Operating expenses
General and administrative		1,150,632			356,609
Research and development		45,158			140,490
Professional fees		39,912			1,265,374
Total operating expenses		1,235,702			1,762,473

Loss from operations		(1,226,774	)		(1,724,727	)

Other income (expenses)
Interest expense		(172,610	)		(442,017	)
Gain/Loss on change of derivative liability		-			149,798
Loss on extinguishment of notes payable		-			(260,000	)
Total income (expenses)		(172,610	)		(552,219	)

Net loss before tax provision		(1,399,384	)		(2,276,946	)
Tax provision		-			-
Net loss from continuing operations	$	(1,399,384	)	$	(2,276,946	)
Net loss from discontinued operations before tax provision		(26,489	)		-
Tax provision for discontinued operations		-			-
Net loss from discontinued operations	$	(26,489	)	$	-
Net loss	$	(1,425,873	)	$	(2,276,946	)

Net loss per common share from continuing operations - basic and diluted	$	(0.07	)	$	(0.23	)
Net loss per common share from discontinued operations- basic and diluted	$	-		$	-
Net loss per common share - basic and diluted	$	(0.07	)	$	(0.23	)

Weighted average number of common shares outstanding - basic and diluted		20,249,728			9,844,228

	Preferred Stock				Common Stock					Additional Paid-in		Subscriptions		Accumulated			Total Stockholders’
	Shares		Amount		Shares			Amount		Capital		Payable		Deficit			Deficit
Balance, December 31, 2021		10,000	$	10		20,217,577		$	20,217	$	54,170,266	$	2,288,551	$	(60,372,841	)	$	(3,893,797	)
Stock issued for services		-		-		5,000			5		4,995		608,990		-			613,990
Shares issued for debt discount		-		-		165,216			165		122,982		-		-			123,147
Spin-off of Notation labs		-		-		-			-		-		-		391,441			391,441
Rounding shares cancellation		-		-		(126	)		-		-		-		-			-
Imputed interest		-		-		-			-		19,595		-		-			19,595
Net loss		-		-		-			-		-		-		(1,425,873	)		(1,425,873	)
Balance, March 31, 2022		10,000	$	10		20,387,667		$	20,387	$	54,317,838	$	2,897,541	$	(61,407,273	)	$	(4,171,497	)

Assets
Cash and cash equivalents	79,517
Due to related party	486,500
Total Assets of Discontinued Operations	566,017

Liabilities
Trade accounts payable and accrued liabilities	75,918
Due to related party	200
Notes payable - related party	400,000
Notes payable	21,340
Royalty liability	460,000
Total current liabilities of discontinued operations	957,458
Net liabilites spun off to shareholders	(391,441	)

	December 31
	2021
Assets
Cash and cash equivalents		20,831
Total Assets of Discontinued Operations

Liabilities
Trade accounts payable and accrued liabilities		76,739
Due to related party		200
Notes payable - related party		200,000
Notes payable		21,340
Royalty liability		460,000
Total current liabilities of discontinued operations		758,279

	March 31,
	2022
Selling, general and administrative		683
Research and development		25,804
Other (income) expense, net		2
loss from discontinued operations before taxes		26,489
Taxes on income		-
Loss from discontinued operations, net of taxes		26,489

	March 31
Cash Flows from Operating Activities:	2022
Retained earnings transferred to Notation labs		391,441
Net assets transferred to Notation labs		134,831
Net liabilites tranferred to Notation labs		(536,114	)
Accounts payable and accrued liabilities		(825	)
Net transfers to Notation Labs included in Net Cash used in operating activites included in Discontinued Operations		(10,667	)

Cash Flows from Financing Activities:
Proceeds from notes payable related party		(114,000	)
Net transfer to Notation labs from financing activites		151,160
Net transfers to Notation Labs included in Net Cash Provided by Financing activites Discontinued Operations		37,160

	March 31, 2022		December 31, 2021
Finished goods		124,162		119,418
Total	$	124,162	$	119,418

	March 31, 2022			December 31, 2021
Accounts receivable		192,800			184,805
Allowance for doubtful accounts		(179,381	)		(179,381	)
Total	$	13,419		$	5,424

	March 31, 2022			December 31, 2021
Note payable, secured, 5% interest, due May 2022	$	19,350		$	4,350
Note payable, secured, 12% interest, due May 2030		110,500			110,500
Note payable, secured, 12% interest, due April 2022		102,000			102,000
Total Notes Payable - related party	$	231,850		$	216,850
Less unamortized debt discounts		-			-
Total Notes Payable		231,850			216,850
Less current portion		(121,350	)		(106,350	)
Total Notes Payable - long term	$	110,500		$	110,500

	March 31, 2022			December 31, 2021
Convertible note payable, secured, 12% interest, due August 31, 2019, in default		50,000			50,000
Convertible note payable, secured, 12% interest, due May 2, 2022		100,000			100,000
Convertible note payable, secured, 10% interest, due May 2, 2021 in default		45,000			50,000
Convertible note payable, secured, 10% interest, due May 22, 2020, in default		5,000			5,000
Convertible note payable, secured, 12% interest, due Feb 15, 2021, in default		75,000			75,000
Convertible notes payable, secured, 4% interest, due October 14, 2020, in default		75,000			75,000
Convertible note payable ,12% interest, due May 2020, in default		162,750			162,750
Convertible note payable, secured, 10% interest, due May 1, 2022		350,000			350,000
Convertible note payable, secured, 12% interest, due January 6, 2022		-			30,382
Convertible note payable, secured, 12% interest, due February 8, 2022		95,000			100,000
Convertible notes payable, secured, 4% interest, due March 3, 2021, in default		25,000			25,000
Convertible notes payable, secured, 10% interest, due December 2021, in default		10,000			10,000
Convertible notes payable, 8% interest, due February 2023		385,000			-
Total notes payable		1,377,750			1,033,132

Less unamortized discounts		(142,116	)		(1,700	)
Total convertible notes payable, net	$	1,235,634		$	1,031,432
Less current portion		(1,235,634	)		(1,031,432	)

Convertible notes payable, net - Long-term	$	-		$	-

Amounts due as of March 31, 2022	Operating Leases
2022		16,027
Total minimum lease payments	$	16,027
Less: effect of discounting		(859	)
Present value of future minimum lease payments	$	15,168
Less: current obligations under leases		(15,168	)
Long-term lease obligations	$	-

	Number of Shares		Weighted Average Exercise Price
Balance, December 31, 2021		2,510,485	$	1.85
Warrants granted and assumed		-		-
Warrants expired		-		-
Warrants canceled		-		-
Warrants exercised		-		-
Balance outstanding and exercisable, March 31, 2022		2,510,485	$	1.85

	Number of Shares			Weighted Average Exercise Price
Balance, December 31, 2020		1,848,985		$	2.16
Warrants granted and assumed		1,144,000		$	1.00
Warrants expired		-			-
Warrants canceled		-			-
Warrants exercised		(482,500	)	$	1.00
Balance outstanding and exercisable, December 31, 2021		2,510,485		$	1.85

	·	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;

	Three months ended March 31,
	2022			2021
Net cash used in operating activities	$	(724,684	)	$	(866,744	)
Net cash used in investing activities		-			(22,753	)
Net cash provided by financing activities		687,348			784,043
Net increase/(decrease) in Cash		(37,336	)		(105,454	)
Cash, beginning		38,895			151,628
Cash, ending	$	1,559		$	46,174

Exhibit No.		Description

31.1*		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*		Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		Inline XBRL Instance Document

101.SCH		Inline XBRL Taxonomy Extension Schema

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase

104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

By:	/s/ Michael Stebbins
	Michael Stebbins, CEO, Principal Financial Officer and Principal Executive Officer

	Date: May 10, 2023

1.	I have reviewed this Form 10-Q of Trutankless, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d.	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

By:	/s/ Michael Stebbins
	Principal Executive Officer and
	Principal Financial Officer

	1)	The Report fully complies with the requirement of Section 13(a) or 15 (d) of the Securities Exchange Act of 1934; and

	2)	The information contained in the Report fairly presents, in all material respects, the Company's financial position and results of operations.