10-K/A: Trutankless Inc. Files Amended 10-K, Restating Financials for 2023 and 2022

Trutankless Inc. has filed an amended 10-K report to restate its financial statements for the years ended December 31, 2023, and December 31, 2022, due to adjustments identified during an audit by a newly appointed independent accounting firm.

Summary

• Trutankless Inc. filed an amendment to its annual report on Form 10-K to restate its financial statements for the years ended December 31, 2023, and December 31, 2022.
• The restatement was prompted by adjustments identified during an audit conducted by a newly appointed independent accounting firm.
• The company's previous auditor's registration was revoked by the Public Accounting Oversight Board, leading to the appointment of a new firm.
• The restatements are made in accordance with ASC 250, requiring disclosure of the nature of the error and its effect on financial statement line items.
• The company generated revenues of $3,549 in 2023, a significant decrease from $73,008 in 2022.
• Operating expenses totaled $1,345,917 in 2023, compared to $3,766,160 in the prior year.
• The company reported a net loss of $2,150,474 for 2023, a decrease from $4,757,516 in 2022.
• As of December 31, 2023, the company had an accumulated deficit of $66,915,867 and cash on hand of $21,452.
• The company's ability to continue as a going concern is dependent on its ability to generate revenues and raise capital.
• Management plans to raise additional capital and invest in sales and marketing to increase product demand.

Sentiment

Score: 3

Explanation: The sentiment is negative due to the restatement of financials, significant decrease in revenue, substantial accumulated deficit, and concerns about the company's ability to continue as a going concern.

Positives

• The company's net loss decreased from $4,757,516 in 2022 to $2,150,474 in 2023.
• Operating expenses decreased from $3,766,160 in 2022 to $1,345,917 in 2023.
• The company is actively seeking to raise additional capital and invest in sales and marketing.

Negatives

• Revenue decreased significantly from $73,008 in 2022 to $3,549 in 2023.
• The company has a substantial accumulated deficit of $66,915,867 as of December 31, 2023.
• There is substantial doubt about the company's ability to continue as a going concern.
• The company has a working capital deficiency of $7,499,731.

Risks

• The company's ability to continue as a going concern is dependent on its 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.
• 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, it may be forced to scale back or discontinue its sales and marketing efforts.

Future Outlook

Management plans to raise additional capital and invest its working capital resources in sales and marketing in order to increase the distribution and demand for its products.

Management Comments

• 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.
• Management believes new products can be introduced into its growing wholesale network to augment trutankless momentum and harness growing trends to a fresh audience of plumbing and other home service professionals.

Industry Context

The company operates in the electric tankless water heater market, which is experiencing growing demand due to trends towards renewable energy and electrification. The company intends to capitalize on the shift to more sustainable construction materials and more efficient systems and appliances.

Comparison to Industry Standards

• The U.S. gas tankless water heater market is dominated by several brands, while the U.S. electric tankless water heater market is dominated by a few smaller companies.
• Manufacturers of tank heaters have a competitive advantage due largely to their product categories long established use, name recognition, established distribution, and brand position in the marketplace.
• The company intends to position itself and its brand to capitalize on the shift to more sustainable construction materials and more efficient systems and appliances.

Management Changes

Legal Proceedings

• On April 29, 2021, the Company agreed to pay civil penalties of $25,000 to the Securities and Exchange Commission in settlement of a matter regarding a late filing notification.
• On April 6, 2023, the Company was served a Summons for an Amended Complaint filed in the state of Florida with claims for Strict Liability, Negligence and Breach of Implied Warranty related to improper product installation.
• On June 8, 2023, the Court of Duval County, FL entered a default judgement for $38,768 related to the Amended Complaint.

Related Party Transactions

• The company has several notes payable and convertible notes payable with related parties, including directors and officers.
• Interest expense associated with the related party notes for the years ended December 31, 2023 and 2022 was $66,100 and $30,456 respectively.
• Interest expense on all of the above convertible notes for the years ended December 31, 2023 and 2022 was $251,463 and $184,244, respectively.

Stakeholder Impact

• Shareholders face the risk of losing their investment if the company is unable to continue as a going concern.
• Employees may be affected if the company is forced to scale back or discontinue its operations.
• Customers may be impacted if the company is unable to continue providing its products and services.
• Creditors face the risk of not being repaid if the company is unable to generate sufficient revenue or raise capital.

Next Steps

• Management plans to raise additional capital.
• Management plans to invest in sales and marketing to increase product demand.
• The company intends to continue building brand awareness among consumers efficiently online.

Key Dates

Keywords

Trutankless, financial restatement, tankless water heaters, going concern, financial results, audit, revenue, net loss, operating expenses, capital raise