Trutankless, Inc 10-Q for FY2021 Q3

Trutankless, Inc. (TKLS)

10-Q 2021-11-15 For: 2021-09-30

Added on April 06, 2026

About this 10-Q

Trutankless, Inc filed this 10-Q on November 15, 2021, covering the quarter ended September 30, 2021 (FY2021 Q3).

Headline figures

Quarter ended September 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $16.56K; down 95.4% from $361.01K a year earlier
Net loss: $2.42M; compared with a net loss of $1.22M a year earlier

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7025 E. Greenway Parkway, Suite 200
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.	24
Item 3. Quantitative and Qualitative Disclosure About Market Risk	32
Item 4. Controls and Procedures	32
PART II - OTHER INFORMATION	33
Item 1. Legal Proceedings.	33
Item 1A. Risk Factors	33
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	33
Item 3. Defaults Upon Senior Securities.	33
Item 4. Mine Safety Disclosures	33
Item 5. Other Information.	34
Item 6. Exhibits.	34
SIGNATURES	35

	September 30, 2021		December 31, 2020
ASSETS
Current assets
Cash	$	168,325	$	151,628
Accounts receivable		1,950		109,966
Inventory		66,826		24,654
Prepaid consulting expenses		353,264		585,460
Total current assets		590,365		871,708

Other Assets
Prepaid consulting expenses - long term		1,509,749		877,515
Right to use asset		21,807		33,990
Other assets		30,565		13,722
Total other assets		1,562,121		925,227
Total assets	$	2,152,486	$	1,796,935

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Accounts payable and accrued liabilities		1,431,290		1,144,989
Lease liability		24,462		16,424
Accrued interest payable - related party		241,523		206,933
Derivative liability		-		302,249
Payroll protection program loan payable		6,158		107,485
Royalty liability		90,000		-
Royalty liability - related party		250,000		-
Notes payable - related party		216,850		69,350
Notes payable, net of debt discount		1,112,853		480,801
Convertible notes payable, net of debt discount		1,430,874		970,839
Total current liabilities		4,804,010		3,299,070

Lease liability - long-term		-		20,765
Notes payable - long term, net of debt discount		-		249,247
Convertible notes payable - long term, net of debt discount		15,411		91,335
Notes payable - related party		300,000		500,000
Total long-term liabilities		315,411		861,347
Total liabilities		5,119,421		4,160,417

Stockholders’ deficit
Preferred stock, $0.001 par value, 9,990,000 shares authorized, 0 and 76,000 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		-		-
Series B Preferred stock, $0.001 par value, 10,000 shares authorized, 10,000 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		10		10
Common stock, $0.001 par value, 100,000,000 shares authorized, 13,051,380 and 9,225,621 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		13,052		9,226
Additional paid in capital		45,388,479		39,961,979
Subscriptions payable		733,446		658,374
Accumulated deficit		(49,101,922)		(42,993,071)
Total stockholders’ deficit		(2,966,935)		(2,363,482)
Total liabilities and stockholders’ deficit	$	2,152,486	$	1,796,935

	For the three months ended September 30,				For the nine months ended September 30,
	2021		2020		2021		2020

Revenue	$	16,557	$	361,008	$	199,371	$	1,439,271

Cost of goods sold		(5,663)		(309,269)		(145,635)		(1,099,277)

Gross profit		10,894		51,739		53,736		339,994

Operating expenses
General and administrative		688,199		288,770		1,309,112		1,071,675
Research and development		37,273		29,734		214,037		93,812
Professional fees		1,423,185		645,812		3,140,925		4,394,334
Total operating expenses		2,148,657		964,316		4,664,074		5,559,821

Loss from operations		(2,137,763)		(912,577)		(4,610,338)		(5,219,827)

Other income (expenses)
Interest expense		(387,068)		(385,028)		(1,489,638)		(1,114,491)
Gain/Loss on change of derivative liability		-		82,645		149,798		21,063
Loss on extinguishment of notes		-		(9,850)		(260,000)		(2,018,215)
Gain on debt forgiveness		101,327		-		101,327		-
Total income (expenses)		(285,741)		(312,233)		(1,498,513)		(3,111,643)

Net loss before tax provision		(2,423,504)		(1,224,810)		(6,108,851)		(8,331,470)
Tax provision		-		-		-		-
Net loss	$	(2,423,504)	$	(1,224,810)	$	(6,108,851)	$	(8,331,470)

Net loss per common share - basic and diluted	$	(0.20)	$	(0.18)	$	(0.56)	$	(1.25)

Weighted average number of common shares outstanding - basic and diluted		12,515,897		6,970,361	$	10,979,879	$	6,667,460

	Preferred Stock		Common Stock
	Shares	Amount	Shares	Amount	Additional Paid-in Capital	Subscriptions Payable	Accumulated Deficit	Total Stockholders’ Deficit

Balance, December 31, 2020	10,000	10	9,225,621	9,226	39,961,979	658,374	(42,993,071)	(2,363,482)
Stock issued for cash	-	-	218,750	219	174,781	205,000	-	380,000
Stock issued for services	-	-	771,250	771	1,474,296	-	-	1,475,067
Shares for beneficial conversion feature	-	-	199,898	200	382,840	(74,780)	-	308,260
Shares for extinguishment of debt	-	-	-	-	-	460,000	-	460,000
Derivative liability written off to APIC	-	-	-	-	152,451	-	-	152,451
Net loss	-	-	-	-	-	-	(2,276,946)	(2,276,946)
Balance, March 31, 2021	10,000	10	10,415,518	10,416	42,146,347	1,248,594	(45,270,017)	(1,864,650)
Stock issued for cash	-	-	536,574	537	428,722	(35,000)	-	394,259
Stock issued for services	-	-	-	-	-	177,500	-	177,500
Shares for extinguishment of debt	-	-	275,000	275	439,725	(440,000)	-	-
Shares for beneficial conversion feature	-	-	5,200	5	159,756	214,050	-	373,811
Net loss	-	-	-	-	-	-	(1,408,401)	(1,408,401)
Balance, June 30, 2021	10,000	10	11,232,292	11,232	43,174,550	1,165,144	(46,678,418)	(2,327,481)
Stock issued for cash	-	-	537,500	538	349,462	(225,000)	-	125,000
Stock issued for services	-	-	1,113,125	1,114	1,680,938	(27,500)	-	1,654,552
Shares for beneficial conversion feature	-	-	168,463	168	183,529	(179,198)	-	4,498
Net loss	-	-	-	-	-	-	(2,423,504)	(2,423,504)
Balance, September 30, 2021	10,000	10	13,051,380	13,052	45,388,479	733,446	(49,101,922)	(2,966,935)

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

	Amount
Balance December 31, 2020	$	302,249
Change in fair market value of derivative liabilities		(149,798)
Settlement of derivative liability		(152,451)
Balance September 30, 2021	$	-

	September 30, 2021		December 31, 2020
Finished goods		66,826		24,654
Total	$	66,826	$	24,654

	September 30, 2021		December 31, 2020
Accounts receivable		181,331		292,156
Allowance for doubtful accounts		(179,381)		(182,191)
Total	$	1,950	$	109,966

	September 30, 2021		December 31, 2020
Note payable, secured, 5% interest, due May 2022	$	4,350	$	4,350
Note payable, secured, 11% interest, due January 2023		300,000		500,000
Note payable, secured, 12% interest, due April 2022		110,500		65,000
Note payable, secured, 10% interest, due April 2022		102,000		-
Total Notes Payable - related party	$	516,850	$	569,350
Less unamortized debt discounts		-		-
Total Notes Payable		516,850		569,350
Less current portion		(216,850)		(69,350)
Total Notes Payable - long term	$	300,000	$	500,000

	September 30, 2021		December 31, 2020
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, 12% interest, due May 2, 2020		50,000		50,000
Convertible note payable, secured, 12% interest, due May 22, 2020, in default		5,000		5,000
Convertible note payable, secured, 12% interest, due Feb 15, 2021		75,000		75,000
Convertible notes payable, secured, 4% interest, due October 14, 2020		75,000		75,000
Convertible note payable, secured, 10% interest, due February 8, 2020		-		50,000
Convertible note payable ,12% interest, due May 2020		-		-
Convertible note payable ,12% interest, due May 2020, in default		162,750		168,750
Convertible note payable, secured, 10% interest, due February 8, 2020		-		50,000
Convertible note payable, secured, 12% interest		68,205		44,060
Convertible note payable, secured, 10% interest, due October 2021		-		23,000
Convertible note payable, secured, 10% interest, due April 2022		-		26,000
Convertible note payable, secured, 10% interest, due May 2022		350,000		350,000
Convertible note payable, secured, 10% interest, due October 18, 2021		26,083		26,083
Convertible notes payable, secured, 10% interest, due May through November 2022		560,000		435,000
Convertible note payable, secured, 10% interest, due January 6, 2022		119,143		-
Convertible note payable, secured, 12% interest, due February 8, 2022		100,000		-
Convertible notes payable, secured, 4% interest, due March 3, 2021		25,000		-
Convertible notes payable, secured, 10% interest, due December 2021		10,000		-
Convertible notes payable, secured, 10% interest, due August 2022		10,000		-
Total notes payable		1,786,181		1,527,893

Less unamortized discounts		(339,896)		(465,719)
Total convertible notes payable, net	$	1,446,285	$	1,062,174
Less current portion		(1,430,874)		(970,839)

Convertible notes payable, net - Long-term	$	15,411	$	91,335

Amounts due as of September 30, 2021	Operating Leases
2021		4,502
2022		20,054
Total minimum lease payments	$	24,556
Less: effect of discounting		(94)
Present value of future minimum lease payments	$	24,462
Less: current obligations under leases		(24,462)
Long-term lease obligations	$	-

	Number of Shares	Weighted Average Exercise Price
Balance, December 31, 2020	1,848,985	$8.00
Warrants granted and assumed	1,144,000	$1.00
Warrants expired	-	-
Warrants canceled	-	-
Warrants exercised	-	-
Balance outstanding and exercisable, September 30, 2021	2,992,985	$1.76

	Number of Shares	Weighted Average Exercise Price
Balance, December 31, 2019	309,766	$8.00
Warrants granted and assumed	1,043,595	$0.96
Warrants expired	-	-
Warrants canceled	(208,333)	$8.00
Warrants exercised	-	-
Balance outstanding and exercisable, September 30, 2020	1,145,028	$0.96

	Preferred Stock		Common Stock
	Shares	Amount	Shares	Amount	Additional Paid-in Capital	Subscriptions Payable	Accumulated Deficit	Total Stockholders’ 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	-	-	25,000	25	49,975	125,000	-	175,000
Stock issued for services	-	-	501,875	502	1,235,888	63,610	-	1,300,000
Rescission and retirement of shares for services	-	-	(62,500)	(63)	(124,938)	-	-	(125,000)
Shares and warrants issued for debt extensions	-	-	72,332	72	164,276	-	-	164,348
Conversion of preferred stock to common	(76,000)	(76)	25,625	26	15	35	-	-
Shares and warrants issued to extinguish debt	-	-	545,250	545	2,243,554	-	-	2,244,099
Net loss	-	-	-	-	-	-	(3,502,149)	(3,502,149)
Balance, March 31, 2020	-	-	6,785,995	6,786	32,536,603	613,350	(35,928,131)	(2,771,392)
Stock issued for cash	-	-	225,000	225	274,775	(118,000)	-	157,000
Stock issued for services	10,000	10	3,125	3	3,079,092	106,396	-	3,185,501
Rescission and retirement of shares for services	-	-	(84,250)	(84)	(175,156)	-	-	(175,240)
Share and warrants issued for debt extensions	-	-	-	-	34,086	8,995	-	43,081
Share and warrants issued for debt	-	-	371,011	371	807,178	5,670	-	813,219
Reclass of derivative upon payoff of debt	-	-	-	-	338,176	-	-	338,176
Net loss	-	-	-	-	-	-	(3,604,511)	(3,604,511)
Balance, June 30, 2020	-	-	7,300,881	7,301	36,894,754	616,411	(39,532,642)	(2,014,166)
Stock issued for cash	-	-	374,375	374	299,126	(57,000)	-	242,500
Stock issued for services	-	-	645,625	646	1,059,683	155,524	-	1,215,853
Shares and warrants issued for debt extensions			6,250	6	9,844	-	-	9,850
Share and warrants issued for debt	-	-	125,365	125	183,205	-	-	183,330
Derivative liability written off to APIC	-	-	-	-	188,276	-	-	188,276
Net loss	-	-	-	-	-	-	(1,224,810)	(1,224,810)
Balance, September 30, 2020	10,000	10	8,452,496	8,452	38,634,888	714,935	(40,757,452)	(1,399,167)

	Nine months ended September 30,
	2021		2020
Net cash used in operating activities	$	(1,335,425)	$	(1,390,802)
Net cash used in investing activities		(25,298)		-
Net cash provided by financing activities		1,337,420		1,413,145
Net increase/(decrease) in Cash		16,697		22,343
Cash, beginning		151,628		4,342
Cash, ending	$	168,325	$	26,685

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		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