This Quarterly Report on Form 10-Q contains forward-looking statements. Any statements contained herein that are not historical fact may deem to be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The words "believes," "anticipates," "plans," "expects," "intends," and similar expressions identify some of the forward-looking statements. Forward-looking statements are not guarantees of performance or future results and involve risks, uncertainties and assumptions. These statements include, among other things, statements regarding:
·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
·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;
as well as other statements regarding our future operations, financial condition
and prospects, and business strategies. These forward-looking statements are
subject to certain risks and uncertainties that could cause our actual results
to differ materially from those reflected in the forward-looking statements.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed in this Quarterly Report on Form 10-Q, and in
particular, the risks discussed under the heading "Risk Factors" in Part II,
Item 1A and those discussed in other documents we file with the
References in the following discussion and throughout this Quarterly Report to
"we", "our", "us", "TKLS", "Trutankless", "Bollente", "the Company", and similar
terms refer to
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AVAILABLE INFORMATION
The Company's stock symbol is TKLS, and is presently traded on the OTCQB
maintained by OTC Markets Group, Inc. We file annual, quarterly and other
reports and other information with the
General
Trutankless® Products
We manufacture and distribute trutankless® water heaters, a line of new, high-quality, highly efficient electric tankless water heaters. Our trutankless® water heaters are engineered to outperform and outlast both its tank and tankless predecessors in energy efficiency, output, and durability. It provides endless hot water on demand for a whole household and it also integrates with home automation systems.
We have several features and design innovations which are new to the electric tankless water heater market that we believe will give our products a sustainable competitive advantage over our rivals in the market.
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Our trutankless® water heaters are available through wholesale plumbing
distributors, including Ferguson,
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Our trutankless® water heaters are designed to provide an endless hot water supply because they are designed to heat water as it flows through the system. We believe that our products are capable of higher temperature rise than competitive units at given flow rates because of its improved design and greater efficiency. Our trutankless® water heaters can save energy and reduce operating costs compared to tank systems because unlike tanks, if there is no hot water demand, no energy is being used. In addition, we intend to improve life-cycle costs with an improved design conceived not only to increase efficiency, but also the longevity of our products versus competitive units. Generally, a typical tank water heater lasts about 9 years, whereas gas tankless systems may last longer, but requires more routine maintenance. Our product line is designed to last longer than tank water heaters without any routine maintenance required under most conditions.
We created a custom heat exchanger for our trutankless® product line that utilizes our patented technology to heat water as it flows through the system, which means customers need not worry about running out of hot water. We believe we've selected the best materials available and a collection of exclusive design elements and features to maximize capacity, minimize energy use, and provide a truly maintenance free experience.
Our trutankless® water heaters were officially launched in the first quarter of
2014 and is sold throughout the wholesale plumbing distribution channel. We
began generating revenue in the first quarter of 2014. As of the fiscal year
ended
In July of 2014, we launched a customizable online control panel for our trutankless® line of smart electric water heaters. From the dashboard, residential and commercial users can obtain real-time status reports, adjust unit temperature settings, view up to three years of water usage data, and change notification settings from anywhere in the world, using a computer or web-enabled smart device at home.trutankless.com.
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Additionally, service professionals can also use the www.pro.trutankless.com dashboard to monitor system status on every unit they install, allowing them to proactively contact their customers if a service or warranty appointment is needed.
Our primary markets,
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Home.trutankless.com is available as a service to consumers of trutankless®
water heaters. We have applications available for download from the
Industry Recognition and Awards
Trutankless® received the Best of IBS 2014 Award for Best Home Technology
Product from the
Trutankless® received the Governor's Award of Merit for Energy and Technology Innovation for the trutankless line of electric tankless heaters at Arizona Forward's 2014 Environmental Excellence Awards.
Trutankless® received Kitchen and
In 2015,
That same year,
Customers and Markets
We sell our products to plumbing wholesale distributors and dealers.
Approximately 94% of our sales in 2020, 76% of our sales in 2019, 81% of our
sales in 2018, 90% of our sales in 2017, 96.1% of our sales in 2016, 98.3% of
our sales in 2015 and 93.5% of our sales in 2014 were to wholesale plumbing
equipment distributors for commercial and residential repair and replace
applications. We rely on commissioned manufacturers' representatives to market
our product lines. Additionally, our products are sold to independent dealers
throughout
Manufacturing and Logistics
Our principal supplier is Sinbon Electronics, a contract manufacturer and
engineering company based in
Finished products are generally shipped Free on Board (FOB)
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Recent Developments COVID-19 Pandemic
In
Like most businesses world-wide, the COVID-19 Pandemic has impacted us
financially; however, we cannot presently predict the scope and severity with
which COVID-19 will impact our business, financial condition, results of
operations and cash flows. However, COVID-19 has caused severe disruptions in
client support, development and limited access to the Company's books and
records resulting in limited support from staff and professional advisors. This
has, in turn, delayed the Company's ability to conduct necessary work to
finalize its financial statements which may otherwise impact the Company's
ability to complete its Quarterly Report. Notwithstanding the foregoing, we
anticipate filing our Quarterly Report on or before
RESULTS OF OPERATIONS
Results of Operations for the three months ended
Revenues
In the three months ended
To the knowledge of management, the Company is unaware of any trends or uncertainties in the sales or costs of our products and services for the periods discussed.
Expenses
Operating expenses totaled
General and administrative fees increased
Research and development increased to
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Professional fees increased
Other Expenses
Other expenses decreased to
Net Loss
In the three months ended
Results of Operations for the nine months ended
Revenues
In the nine months ended
To the knowledge of management, the Company is unaware of any trends or uncertainties in the sales or costs of our products and services for the periods discussed.
Expenses
Operating expenses totaled
General and administrative fees increased
Research and development increased
Professional fees decreased
Other Expenses
Other expenses decreased
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Net Loss
In the nine months ended
Going Concern
The accompanying consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in
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
Over the next twelve months management plans to 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. However, there is no guarantee the Company will generate sufficient revenues or raise capital to continue operations. 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. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
In
Liquidity and Capital Resources
At
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 Quarterly Report. To date, we have financed our operations through the issuance of stock and borrowings.
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The following table sets forth a summary of our cash flows for the nine months
ended
Nine months endedSeptember 30, 2021 2020
Net cash used in operating 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
Operating activities - Net cash used in operating activities was
Investing activities - Net cash used in investing activities for the nine months
ended
Financing activities - Net cash provided by financing activities for the nine
months ended
Ongoing Funding Requirements
As of
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.
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.
Critical Accounting Policies and Estimates
The preparation of our financial statements in conformity with accounting
principles generally accepted in
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historical experience and on various other assumptions we believe to be reasonable under the circumstances. Future events, however, may differ markedly from our current expectations and assumptions.
There have been no material changes to our critical accounting policies as
compared to the critical accounting policies and significant judgements and
estimates disclosed in our Annual Report on Form 10-K for the year ended
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