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SEC-RPT-Panel

UNITED STATES OF AMERICA 
Before the 
SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 91716 / April 29, 2021 
 
ACCOUNTING AND AUDITING ENFORCEMENT 
Release No. 4213 / April 29, 2021 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-20269 
 
 
In the Matter of 
 
TRUTANKLESS, INC.,  
 
Respondent. 
 
 
 
ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO 
SECTION 21C OF THE SECURITIES 
EXCHANGE ACT OF 1934, MAKING 
FINDINGS, AND IMPOSING A CEASE-
AND-DESIST ORDER 
  
I. 
 
 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities 
Exchange Act of 1934 (“Exchange Act”), against TruTankless, Inc. (“TruTankless” or 
“Respondent”). 
 
II. 
 
 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
purpose of these proceedings and any other proceedings brought by or on behalf of the 
Commission, or to which the Commission is a party, and without admitting or denying the findings 
herein, except as to the Commission’s jurisdiction over it and the subject matter of these 
proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-
and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making 
Findings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below.  
 
 
 
 
 
 
 2 
 
 
III. 
 
 On the basis of this Order and Respondent’s Offer, the Commission finds1 that:  
 
Summary 
 
 1. These proceedings arise out of the violation of Exchange Act Rule 12b-25, which 
requires that issuers that fail to file timely a periodic report shall file a Form 12b-25 “Notification of 
Late Filing,” commonly known as “Form NT,” which contains, among other things, reasonable 
detail as to why the issuer’s periodic report could not be filed on time and an explanation of any 
anticipated, significant changes in the issuer’s results of operations.  
 
 2. In August 2019, TruTankless violated Rule 12b-25 by filing a Form 12b-25 with the 
Commission in which TruTankless failed to disclose why, in sufficient detail under the 
circumstances presented, its second-quarter, fiscal year (“FY”) 2019 Form 10-Q could not be timely 
filed.  TruTankless’s Form 12b-25 also failed to acknowledge anticipated, significant changes in 
TruTankless’s results of operations for the second quarter of FY2019, compared with TruTankless’s 
operating results in the second quarter of FY2018, and to provide an explanation of the changes, as 
required under the rule.  Four days after filing its Form 12b-25, TruTankless filed its second-quarter 
FY2019 Form 10-Q disclosing to investors and the market a restatement of its financial statements 
for the first quarter of FY2019.  TruTankless, however, had failed to include in its Form 12b-25 
any disclosure that the discovery, and ongoing correction, of errors in its first-quarter FY2019 
financial statements were among the principal reasons that it was unable to file timely the subject 
second-quarter FY2019 Form 10-Q. 
 
Respondent 
 
3. TruTankless, a Nevada corporation based in Scottsdale, Arizona, manufactures and 
sells whole-house, electric tankless water heaters.  TruTankless common stock is registered under 
Section 12(g) of the Exchange Act and is quoted on the OTCQB Venture Market. 
 
Legal Framework and Facts 
 
 4. Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13 thereunder require 
issuers with a security registered pursuant to Section 12 of the Exchange Act to file with the 
Commission annual reports on Form 10-K and quarterly reports on Form 10-Q. 
 
 5. Rule 12b-25 provides that if an issuer fails to file a Form 10-K or 10-Q within the 
time period prescribed for such report, the issuer, no later than one business day after the due date 
                                                            
1  The findings herein are made pursuant to Respondent's Offer of Settlement and are not binding on any 
other person or entity in this or any other proceeding. 
 
 3 
for such report, shall file a Form 12b-25 with the Commission, disclosing the issuer’s inability 
to file the report timely and the reasons therefore in reasonable detail.2  Form 12b-25 requires the 
issuer to affirm, among other things, that the subject periodic report will be filed within fifteen 
calendar days, for a Form 10-K, or within five calendar days, for a Form 10-Q, of the report’s 
prescribed due date, and requires that the report actually be filed within such period.  Form 12b-25 
also requires the issuer to confirm whether or not it anticipates that any significant change in 
results of operations from the corresponding period for the prior fiscal year will be reflected by the 
earnings statements to be included in the subject periodic report.  If such change is anticipated, the 
issuer must attach a narrative and quantitative explanation of the anticipated change and, if 
appropriate, state the reasons why a reasonable estimate of the results cannot be made.   
 
  6. On August 15, 2019, TruTankless filed with the Commission a Form 12b-25 
disclosing that TruTankless could not file timely its Form 10-Q for its FY2019 second quarter, 
ended June 30, 2019, because it had “encountered some difficulty in compiling necessary 
disclosures and compilation of its financial statements for review by its independent public 
accountant for the quarter ended June 30, 2019.”   
 
 7. Furthermore, in its Form 12b-25, TruTankless affirmed that it would file the subject 
Form 10-Q within the five-calendar-day extension period and indicated that it did not anticipate 
that any significant change in results of operations from the corresponding period for the prior 
fiscal year would be reflected in the subject Form 10-Q.   
 
 8. On August 19, 2019, TruTankless filed with the Commission a Form 10-Q for its 
FY2019 second-quarter, ended June 30, 2019, disclosing the following restatement: “[TruTankless] 
has restated the financial statements for the three months ended March 31, 2019 to correct the 
accounting for the conversion of the convertible promissory notes…. [T]he notes holders of 
$110,000 of convertible notes originally convertible at $1.00 agreed to convert the notes and 
accrued interest of the notes at $0.25.  The Company evaluated the adjustment of the conversion 
price under ASC 470, and recorded a loss on conversion of $126,813.”  This materially increased 
TruTankless’s net loss for the first quarter of FY2019 to $1,261,643. 
 
9. TruTankless’s inability to meet the filing deadline for its second-quarter FY2019 
Form 10-Q was due, in large part, to the discovery, and ongoing correction, of errors in its first-
quarter FY2019 financial statements.  In its Form 12b-25, however, TruTankless failed to disclose 
this information and failed to provide the detailed narratives and quantitative explanation 
specifically called for by the form.  The company anticipated that its second-quarter FY2019 
financial results, when reported, would differ significantly from its second-quarter FY2018 
financial results, including a 55% increase in quarterly loss versus second quarter FY2018.   
 
 
 
 
 
                                                            
2  Form 12b-25 specifies a “narrative” disclosure.  (See Form 12b-25, Part III.) 
 4 
Violations 
 
 10. As a result of the conduct described above, TruTankless violated Section 13(a) of 
the Exchange Act and Rule 12b-25 thereunder. 
 
IV. 
 
 In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
agreed to in Respondent TruTankless’s Offer. 
 
 Accordingly, it is hereby ORDERED that: 
 
 A. Pursuant to Section 21C of the Exchange Act, Respondent TruTankless cease and 
desist from committing or causing any violations and any future violations of Section 13(a) of the 
Exchange Act and Rule 12b-25 thereunder. 
 
B. Respondent shall pay civil penalties of $25,000 to the Securities and Exchange 
Commission for transfer to the general fund of the United States Treasury, subject to Exchange Act 
Section 21F(g)(3).  Payment shall be made in the following four installments: (1) $5,000 within 14 
days of entry of this order; (2) $7,500 within 180 days of entry of this order; (3) $6,250 within 270 
days of entry of this order; and (4) $6,250 within 360 days of entry of this order.  Payments shall 
be applied first to post order interest, which accrues pursuant to 31 U.S.C. 3717.  Prior to making 
the final payment set forth herein, Respondent shall contact the staff of the Commission for the 
amount due.  If Respondent fails to make any payment by the date agreed and/or in the amount 
agreed according to the schedule set forth above, all outstanding payments under this Order, 
including post-order interest, minus any payments made, shall become due and payable 
immediately at the discretion of the staff of the Commission without further application to the 
Commission. 
 
Payment must be made in one of the following ways:   
 
(1) Respondent may transmit payment electronically to the Commission, which 
will provide detailed ACH transfer/Fedwire instructions upon request;  
 
(2) Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
 
(3) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  
 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
 5 
Oklahoma City, OK 73169 
 
Payments by check or money order must be accompanied by a cover letter identifying 
TruTankless as a Respondent in these proceedings, and the file number of these proceedings; a 
copy of the cover letter and check or money order must be sent to Anita B. Bandy, Associate 
Director, Division of Enforcement, Securities and Exchange Commission, 100 F St., NE, 
Washington, DC 20549.   
 
 C. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 
treated as penalties paid to the government for all purposes, including all tax purposes.  To 
preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 
Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 
award of compensatory damages by the amount of any part of Respondent’s payment of a civil 
penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a 
Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting 
the Penalty Offset, notify the Commission's counsel in this action and pay the amount of the 
Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed 
an additional civil penalty and shall not be deemed to change the amount of the civil penalty 
imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” means a 
private damages action brought against Respondent by or on behalf of one or more investors based 
on substantially the same facts as alleged in the Order instituted by the Commission in this 
proceeding. 
 
 
 By the Commission. 
 
 
 
Vanessa A. Countryman 
Secretary 
 
 
 

	UNITED STATES OF AMERICA
	Before the
	SECURITIES AND EXCHANGE COMMISSION

	SECURITIES EXCHANGE ACT OF 1934
	Release No. 91716 / April 29, 2021

	ACCOUNTING AND AUDITING ENFORCEMENT
	Release No. 4213 / April 29, 2021

	ADMINISTRATIVE PROCEEDING
	File No. 3-20269


	In the Matter of

	TRUTANKLESS, INC.,

	Respondent.



	ORDER INSTITUTING CEASE-AND-
	DESIST PROCEEDINGS PURSUANT TO
	SECTION 21C OF THE SECURITIES
	EXCHANGE ACT OF 1934, MAKING
	FINDINGS, AND IMPOSING A CEASE-
	AND-DESIST ORDER

	I.

	The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
	and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities
	Exchange Act of 1934 (“Exchange Act”), against TruTankless, Inc. (“TruTankless” or
	“Respondent”).

	II.

	In anticipation of the institution of these proceedings, Respondent has submitted an Offer
	of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the
	purpose of these proceedings and any other proceedings brought by or on behalf of the
	Commission, or to which the Commission is a party, and without admitting or denying the findings
	herein, except as to the Commission’s jurisdiction over it and the subject matter of these
	proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-
	and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making
	Findings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below.






	2


	III.

	On the basis of this Order and Respondent’s Offer, the Commission finds1 that:

	Summary

	1. These proceedings arise out of the violation of Exchange Act Rule 12b-25, which
	requires that issuers that fail to file timely a periodic report shall file a Form 12b-25 “Notification of
	Late Filing,” commonly known as “Form NT,” which contains, among other things, reasonable
	detail as to why the issuer’s periodic report could not be filed on time and an explanation of any
	anticipated, significant changes in the issuer’s results of operations.

	2. In August 2019, TruTankless violated Rule 12b-25 by filing a Form 12b-25 with the
	Commission in which TruTankless failed to disclose why, in sufficient detail under the
	circumstances presented, its second-quarter, fiscal year (“FY”) 2019 Form 10-Q could not be timely
	filed. TruTankless’s Form 12b-25 also failed to acknowledge anticipated, significant changes in
	TruTankless’s results of operations for the second quarter of FY2019, compared with TruTankless’s
	operating results in the second quarter of FY2018, and to provide an explanation of the changes, as
	required under the rule. Four days after filing its Form 12b-25, TruTankless filed its second-quarter
	FY2019 Form 10-Q disclosing to investors and the market a restatement of its financial statements
	for the first quarter of FY2019. TruTankless, however, had failed to include in its Form 12b-25
	any disclosure that the discovery, and ongoing correction, of errors in its first-quarter FY2019
	financial statements were among the principal reasons that it was unable to file timely the subject
	second-quarter FY2019 Form 10-Q.

	Respondent

	3. TruTankless, a Nevada corporation based in Scottsdale, Arizona, manufactures and
	sells whole-house, electric tankless water heaters. TruTankless common stock is registered under
	Section 12(g) of the Exchange Act and is quoted on the OTCQB Venture Market.

	Legal Framework and Facts

	4. Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13 thereunder require
	issuers with a security registered pursuant to Section 12 of the Exchange Act to file with the
	Commission annual reports on Form 10-K and quarterly reports on Form 10-Q.

	5. Rule 12b-25 provides that if an issuer fails to file a Form 10-K or 10-Q within the
	time period prescribed for such report, the issuer, no later than one business day after the due date

	1 The findings herein are made pursuant to Respondent's Offer of Settlement and are not binding on any
	other person or entity in this or any other proceeding.

	3
	for such report, shall file a Form 12b-25 with the Commission, disclosing the issuer’s inability
	to file the report timely and the reasons therefore in reasonable detail.2 Form 12b-25 requires the
	issuer to affirm, among other things, that the subject periodic report will be filed within fifteen
	calendar days, for a Form 10-K, or within five calendar days, for a Form 10-Q, of the report’s
	prescribed due date, and requires that the report actually be filed within such period. Form 12b-25
	also requires the issuer to confirm whether or not it anticipates that any significant change in
	results of operations from the corresponding period for the prior fiscal year will be reflected by the
	earnings statements to be included in the subject periodic report. If such change is anticipated, the
	issuer must attach a narrative and quantitative explanation of the anticipated change and, if
	appropriate, state the reasons why a reasonable estimate of the results cannot be made.

	6. On August 15, 2019, TruTankless filed with the Commission a Form 12b-25
	disclosing that TruTankless could not file timely its Form 10-Q for its FY2019 second quarter,
	ended June 30, 2019, because it had “encountered some difficulty in compiling necessary
	disclosures and compilation of its financial statements for review by its independent public
	accountant for the quarter ended June 30, 2019.”

	7. Furthermore, in its Form 12b-25, TruTankless affirmed that it would file the subject
	Form 10-Q within the five-calendar-day extension period and indicated that it did not anticipate
	that any significant change in results of operations from the corresponding period for the prior
	fiscal year would be reflected in the subject Form 10-Q.

	8. On August 19, 2019, TruTankless filed with the Commission a Form 10-Q for its
	FY2019 second-quarter, ended June 30, 2019, disclosing the following restatement: “[TruTankless]
	has restated the financial statements for the three months ended March 31, 2019 to correct the
	accounting for the conversion of the convertible promissory notes…. [T]he notes holders of
	$110,000 of convertible notes originally convertible at $1.00 agreed to convert the notes and
	accrued interest of the notes at $0.25. The Company evaluated the adjustment of the conversion
	price under ASC 470, and recorded a loss on conversion of $126,813.” This materially increased
	TruTankless’s net loss for the first quarter of FY2019 to $1,261,643.

	9. TruTankless’s inability to meet the filing deadline for its second-quarter FY2019
	Form 10-Q was due, in large part, to the discovery, and ongoing correction, of errors in its first-
	quarter FY2019 financial statements. In its Form 12b-25, however, TruTankless failed to disclose
	this information and failed to provide the detailed narratives and quantitative explanation
	specifically called for by the form. The company anticipated that its second-quarter FY2019
	financial results, when reported, would differ significantly from its second-quarter FY2018
	financial results, including a 55% increase in quarterly loss versus second quarter FY2018.






	2 Form 12b-25 specifies a “narrative” disclosure. (See Form 12b-25, Part III.)
	4
	Violations

	10. As a result of the conduct described above, TruTankless violated Section 13(a) of
	the Exchange Act and Rule 12b-25 thereunder.

	IV.

	In view of the foregoing, the Commission deems it appropriate to impose the sanctions
	agreed to in Respondent TruTankless’s Offer.

	Accordingly, it is hereby ORDERED that:

	A. Pursuant to Section 21C of the Exchange Act, Respondent TruTankless cease and
	desist from committing or causing any violations and any future violations of Section 13(a) of the
	Exchange Act and Rule 12b-25 thereunder.

	B. Respondent shall pay civil penalties of $25,000 to the Securities and Exchange
	Commission for transfer to the general fund of the United States Treasury, subject to Exchange Act
	Section 21F(g)(3). Payment shall be made in the following four installments: (1) $5,000 within 14
	days of entry of this order; (2) $7,500 within 180 days of entry of this order; (3) $6,250 within 270
	days of entry of this order; and (4) $6,250 within 360 days of entry of this order. Payments shall
	be applied first to post order interest, which accrues pursuant to 31 U.S.C. 3717. Prior to making
	the final payment set forth herein, Respondent shall contact the staff of the Commission for the
	amount due. If Respondent fails to make any payment by the date agreed and/or in the amount
	agreed according to the schedule set forth above, all outstanding payments under this Order,
	including post-order interest, minus any payments made, shall become due and payable
	immediately at the discretion of the staff of the Commission without further application to the
	Commission.

	Payment must be made in one of the following ways:

	(1) Respondent may transmit payment electronically to the Commission, which
	will provide detailed ACH transfer/Fedwire instructions upon request;

	(2) Respondent may make direct payment from a bank account via Pay.gov
	through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or

	(3) Respondent may pay by certified check, bank cashier’s check, or United
	States postal money order, made payable to the Securities and Exchange
	Commission and hand-delivered or mailed to:

	Enterprise Services Center
	Accounts Receivable Branch
	HQ Bldg., Room 181, AMZ-341
	6500 South MacArthur Boulevard
	5
	Oklahoma City, OK 73169

	Payments by check or money order must be accompanied by a cover letter identifying
	TruTankless as a Respondent in these proceedings, and the file number of these proceedings; a
	copy of the cover letter and check or money order must be sent to Anita B. Bandy, Associate
	Director, Division of Enforcement, Securities and Exchange Commission, 100 F St., NE,
	Washington, DC 20549.

	C. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be
	treated as penalties paid to the government for all purposes, including all tax purposes. To
	preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor
	Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any
	award of compensatory damages by the amount of any part of Respondent’s payment of a civil
	penalty in this action (“Penalty Offset”). If the court in any Related Investor Action grants such a
	Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting
	the Penalty Offset, notify the Commission's counsel in this action and pay the amount of the
	Penalty Offset to the Securities and Exchange Commission. Such a payment shall not be deemed
	an additional civil penalty and shall not be deemed to change the amount of the civil penalty
	imposed in this proceeding. For purposes of this paragraph, a “Related Investor Action” means a
	private damages action brought against Respondent by or on behalf of one or more investors based
	on substantially the same facts as alleged in the Order instituted by the Commission in this
	proceeding.


	By the Commission.



	Vanessa A. Countryman
	Secretary