Trutankless, Inc. - Quarter Report: 2016 March (Form 10-Q)

bolc_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2016

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 000-54219

BOLLENTE COMPANIES, INC.

(Exact name of registrant as specified in its charter)

Nevada		26-2137574
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

8800 N. Gainey Dr., Suite 270
Scottsdale, Arizona		85258
(Address of principal executive offices)		(Zip Code)

(480) 275-7572

(Registrant’s telephone number, including area code)

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Ruble 12b-2 of the Exchange Act.

Large accelerated filer ¨	Accelerated filer ¨

Non-accelerated filer ¨ (Do not check if a smaller reporting company)	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

The number of shares of Common Stock, $0.001 par value, outstanding on June 2, 2016, was 20,818,186 shares.

BOLLENTE COMPANIES INC.

QUARTERLY PERIOD ENDED MARCH 31, 2016

Index to Report on Form 10-Q

		Page No.
	PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements	1

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	10

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17

Item 4.	Controls and Procedures	18

	PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	19

Item1A.	Risk Factors	19

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19

Item 3.	Defaults Upon Senior Securities	20

Item 4.	Mine Safety Disclosures	20

Item 5.	Other Information	21

Item 6.	Exhibits	21

	Signature	22

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

BOLLENTE COMPANIES, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)


	March 31,			December 31,
	2016			2015

ASSETS

Current assets:
Cash	$	1,589		$	3,618
Accounts receivable		90,025			72,533
Inventory		134,312			222,537
Prepaid expenses		189,183			205,886
Prepaid stock compensation		219,375			306,217
Total current assets		634,484			810,791

Fixed assets, net		4,783			5,885

Other assets:
Security deposits		1,500			1,500
Trademarks		10,464			8,083
Prepaid stock compensation - long term portion		63,889			-
Software		10,000			10,000
Website		16,277			21,160
Total other assets		102,130			40,743

Total assets	$	741,397		$	857,419


LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
Accounts payable	$	605,614		$	620,910
Credit cards		24,707			15,971
Customer deposits		600			600
Accrued salaries - related party		50,476			26,040
Accrued payroll taxes		13,419			11,984
Notes payable - related party		600			600
Notes payable - related party, net of debt discount		197,500			195,000
Line of credit - related party		17,500			16,000
Accrued interest payable		4			4
Accrued interest payable - related party		2,819			4,316
Total current liabilities		913,239			891,425

Long-term liabilities:
Notes payable - related party		233,000			233,000
Total long-term liabilities		233,000			233,000

Total liabilities		1,146,239			1,124,425

Stockholders' equity (deficit):
Preferred stock, $0.001 par value, 10,000,000 shares
authorized, no shares issued and outstanding
as of March 31, 2016 and December 31, 2015, respectively		-			-
Common stock, $0.001 par value, 100,000,000 shares
authorized, 20,818,186 and 19,350,182 shares issued and outstanding
as of March 31, 2016 and December 31, 2015, respectively		20,819			19,351
Additional paid-in capital		18,255,354			16,763,822
Subscriptions payable		180,000			750,000
Accumulated deficit		(18,861,015	)		(17,800,179	)
Total stockholders' equity (deficit)		(404,842	)		(267,006	)

Total liabilities and stockholders' equity (deficit)	$	741,397		$	857,419

See accompanying notes to consolidated financial statements.

BOLLENTE COMPANIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)




	For the three months ended
	March 31,
	2016			2015

Revenue	$	115,524		$	60,904

Cost of goods sold		(99,143	)		(77,933	)

Gross profit		16,381			(17,029	)

Operating expenses:
General and administrative		445,354			317,600
Executive compensation		48,750			108,750
Research and development		931			124,758
Professional fees		566,106			443,805

Total operating expenses		1,061,141			994,913

Other income(expenses):
Other income		193			-
Interest expense - related party		(15,503	)		(1,966	)
Interest expense		(766	)		-

Total other income(expenses)		(16,076	)		(1,966	)


Net loss	$	(1,060,836	)	$	(1,013,908	)

Net loss per common share - basic	$	(0.05	)	$	(0.06	)

Weighted average number of common shares		20,229,284			17,236,321
outstanding - basic

See accompanying notes to consolidated financial statements.

BOLLENTE COMPANIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)




	For the three months ended
	March 31,
	2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(1,060,836	)	$	(1,013,908	)
Adjustments to reconcile net loss from continuing operations
to net cash used in operating activities from continuing operations:
Shares issued for services		463,000			204,600
Depreciation		1,102			1,004
Shares issued for employment agreement		280,000			130,000
Shares issued for prepaid stock compensation		22,953			53,875
Amortization of website costs		4,883			4,883
Amortization of debt discount		2,500			-
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable		(17,492	)		(11,336	)
(Increase) decrease in inventory		88,225			68,703
(Increase) decrease in prepaid expenses		16,703			16,370
(Increase) in other receivables		-			(17,173	)
Increase in accounts payable		(18,745	)		(9,300	)
Increase in accounts payable - related party		3,449			-
Increase in credit card		8,736			6,841
Increase in accrued salaries		-			2,074
Increase in accrued salaries - related party		24,436			15,615
Increase in accrued payroll taxes		1,435			53
Increase in accrued interest payable - related party		(1,497	)		1,907

Net cash used in operating activities		(181,148	)		(545,792	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase trademarks		(2,381	)		-

Net cash used in investing activities		(2,381	)		-

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable		-			200,000
Repayments from notes payable		-			(10,050	)
Proceeds from line of credit - related party		12,000			-
Repayments of line of credit - related party		(10,500	)		-
Proceeds from sale of common stock, net of offering costs		155,000			325,000
Proceeds from royalty payments		25,000			-

Net cash provided by financing activities		181,500			514,950


NET CHANGE IN CASH		(2,029	)		(30,842	)

CASH AT BEGINNING OF THE PERIOD		3,618			40,446

CASH AT END OF THE PERIOD	$	1,589		$	9,604


SUPPLEMENTAL INFORMATION:
Interest paid	$	14,500		$	-

Non-cash investing and financing activities:
Shares issued for prepaid stock compensation	$	100,000		$	164,600

See accompanying notes to consolidated financial statements.

BOLLENTE COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management, are necessary for a fair presentation of the information contained therein. It is suggested that these interim financial statements be read in conjunction with the financial statements of the Company for the years ended December 31, 2015 and 2014 and notes thereto included in the Company’s 10-K annual report. The Company follows the same accounting policies in the preparation of interim reports.

Principles of consolidation

The consolidated financial statements include the accounts of Bollente Companies, Inc. and its wholly owned subsidiaries. On May 16, 2010, the Company acquired 100% of the outstanding stock of Bollente, Inc. On the date of acquisition, Bollente, Inc. was 2.78% owned and controlled 100% by Robertson J. Orr, a majority shareholder and officer and director of Bollente Companies, Inc. and the acquisition was accounted for by means of a pooling of the entities from the date of inception of Bollente Companies, Inc. on March 7, 2008 because the entities were under common control. On August 13, 2015, the Company formed a wholly owned subsidiary, Bollente International, Inc. All significant inter-company transactions and balances have been eliminated.

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ significantly from those estimates.

Cash and cash equivalents

For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. The carrying value of these investments approximates fair value.

Website

The Company capitalizes the costs associated with the development of the Company’s website pursuant to ASC Topic 350. Other costs related to the maintenance of the website are expensed as incurred. Amortization is provided over the estimated useful lives of 3 years using the straight-line method for financial statement purposes. The Company plans to commence amortization upon completion and release of the Company’s fully operational website.

BOLLENTE COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Stock-based compensation

The Company records stock based compensation in accordance with the guidance in ASC Topic 505 and 718 which requires the Company to recognize expenses related to the fair value of its employee stock option awards. This eliminates accounting for share-based compensation transactions using intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award.

The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with FASB ASC 718-10 and the conclusions reached by the FASB ASC 505-50. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by FASB ASC 505-50.

Earnings per share

The Company follows ASC Topic 260 to account for the earnings per share. Basic earning per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earning per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation.

Inventory

Inventories are stated at the lower of cost (average cost) or market (net realizable value).

Revenue recognition

The Company records revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is probable. The Company records revenue from the sale of product upon shipment or delivery of the products to the customer. The Company also records the shipping income when the products are sent to the customer.

Fair value of financial instruments

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of March 31, 2016. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash and accounts payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand.

Level 1: The preferred inputs to valuation efforts are “quoted prices in active markets for identical assets or liabilities,” with the caveat that the reporting entity must have access to that market. Information at this level is based on direct observations of transactions involving the same assets and liabilities, not assumptions, and thus offers superior reliability. However, relatively few items, especially physical assets, actually trade in active markets.

BOLLENTE COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Level 2: FASB acknowledged that active markets for identical assets and liabilities are relatively uncommon and, even when they do exist, they may be too thin to provide reliable information. To deal with this shortage of direct data, the board provided a second level of inputs that can be applied in three situations.

Level 3: If inputs from levels 1 and 2 are not available, FASB acknowledges that fair value measures of many assets and liabilities are less precise. The board describes Level 3 inputs as “unobservable,” and limits their use by saying they “shall be used to measure fair value to the extent that observable inputs are not available.” This category allows “for situations in which there is little, if any, market activity for the asset or liability at the measurement date”. Earlier in the standard, FASB explains that “observable inputs” are gathered from sources other than the reporting company and that they are expected to reflect assumptions made by market participants.

NOTE 2 – GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. As a result, the Company incurred accumulated net losses for the three months ended March 31, 2016 of ($18,861,015). In addition, the Company’s development activities since inception have been financially sustained through debt and equity financing.

The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital from the sale of common stock and, ultimately, the achievement of significant operating revenues. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

NOTE 3 – INVENTORY

Inventories consist of the following at:

	March 31, 2016		December 31, 2015

Raw materials	$	42,061	$	42,061
Finished goods		92,251		180,476

Total	$	134,312	$	222,537

BOLLENTE COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 4 – WEBSITE

Website consists of the following at:

	March 31, 2016			December 31, 2015

Website	$	58,598		$	58,598

Less: Accumulated amortization		(42,321	)		(37,438	)

Website, net	$	16,277		$	21,160

Amortization expense for the three months ended March 31, 2016 and 2015 was $4,883 and $4,883, respectively.

NOTE 5 – NOTES PAYABLE – RELATED PARTY

Notes payable consist of the following at:

	March 31, 2016		December 31, 2015

Note payable to an officer, director and shareholder, unsecured, 0% interest, due upon demand	$	600	$	600

Note payable from a shareholder, secured, 12% interest, due June 2016		197,500		195,000

Notes Payable – Current	$	198,100	$	195,600

	March 31, 2016		December 31, 2015
Note payable from a shareholder, secured, 12% interest, due March 2017	$	200,000	$	200,000

Note payable, to an officer, director and shareholder, secured, 5% interest, due April 2017		33,000		33,000

Notes payable – Long Term	$	233,000	$	233,000

Interest expense from continuing operations for the three months ended March 31, 2016 and 2015 was $16,076 and $1,966, respectively.

BOLLENTE COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 6 – ROYALTY PAYMENTS

The Company has agreed to allow accredited investors the ability to receive a royalty on products sold in an effort to fund its distribution and marketing advances internationally by purchasing units. Each unit represents 0.625% royalty interest in the Gross Margin of product sold by Bollente International, Inc., costing $25,000 per unit. As of March 31, 2016, twenty-six units have been sold totaling $650,000. This amount is included in additional paid in capital since there is no obligation to repay the funds.

NOTE 7 – STOCKHOLDERS’ EQUITY

The Company is authorized to issue 10,000,000 shares of it $0.001 par value preferred stock and 100,000,000 shares of its $0.001 par value common stock.

On Feburary 2, 2016, the Company issued 120,000 shares of common stock for cash received of $120,000, of which $100,000 of the funds were received as of December 31, 2015 and recorded as stock payable.

On Feburary 2, 2016, the Company issued 690,000 shares of common stock for services performed of $690,000, of which $530,000 was expensed as of December 31, 2015 and recorded as stock payable.

On February 2, 2016, the Company issued 250,000 shares of common stock owed to an employee of the Company as a bonus totaling $250,000.

On Feburary 10, 2016, the Company issued 105,000 shares of common stock for cash received of $105,000, of which $60,000 of the funds were received as of December 31, 2015 and recorded as stock payable.

On February 22, 2016, the Company issued 303,000 shares of common stock for services totaling $303,000.

In March 2016, the Company sold 90,000 shares of common stock to three investors for cash totaling $90,000 and are recorded to stock payable. As of the date of this filing, the shares have not been issued.

On March 31, 2016, the Company recorded a stock payable totaling $30,000 for 30,000 shares of common stock earned by the President of the Company as part of their employment agreement. As of the date of this filing, the shares have not been issued.

BOLLENTE COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 9 – PREPAID STOCK COMPENSATION

During the three month ended March 31, 2016, the Company issued a total of 100,000 shares of common stock as part of a consulting agreement totaling $100,000. The value of the shares was recorded as prepaid expense and is being amortized over three years which is the related service period of the agreement.

For the three months ended March 31, 2016, the Company expensed $222,953 as professional fees with a remaining prepaid expense amount totaling $283,264 at March 31, 2016.

NOTE 10 – AGREEMENTS

Lease agreement

In January 2015, the Company executed a sublease agreement with Perigon Companies, LLC, a related party. The lease term is one year at a rate of $4,000 per month with an option to continue on a month to month basis. The Company paid a refundable security deposit of $1,500.

In January 2015, the Company executed a sublease agreement with Templar Asset Group, LLC, a related party. The lease term is one year at a rate of $2,800 per month with an option to continue on a month to month basis. The Company was not required to pay a security deposit.

Rent expense for the three months ended March 31, 2016 and 2015 was $20,400 and $24,677, respectively.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This Quarterly Report on Form 10-Q contains forward-looking statements. Any statements contained herein that are not historical fact may deemed 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 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;

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 Securities and Exchange Commission. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

References in the following discussion and throughout this Quarterly Report to “we”, “our”, “us”, “BOLC”, “Bollente”, “the Company”, and similar terms refer to Bollente Companies Inc. unless otherwise expressly stated or the context otherwise requires.

AVAILABLE INFORMATION

We file annual, quarterly and other reports and other information with the SEC. You can read these SEC filings and reports over the Internet at the SEC's website at www.sec.gov or on our website at www.bollentecompanies.com. You can also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, NE, Washington, DC 20549 on official business days between the hours of 10:00 am and 3:00 pm. Please call the SEC at (800) SEC-0330 for further information on the operations of the public reference facilities. We will provide a copy of our annual report to security holders, including audited financial statements, at no charge upon receipt to of a written request to us at Bollente Companies, Inc., 8800 N. Gainey Dr., Suite 270, Scottsdale, Arizona 85258.

General

Bollente Companies Inc. was incorporated in the state of Nevada on March 7, 2008. The Company is headquartered in Scottsdale, Arizona and currently operates through its wholly-owned subsidiary, Bollente, Inc., a Nevada corporation incorporated on December 3, 2009.

Bollente manufactures and sells a high quality, whole-house, electric tankless water heater that is more energy efficient than conventional products.

On August 13, 2015, we formed a wholly-owned subsidiary, Bollente International, Inc. (“Bollente International”), to begin international manufacturing and sales expansion for our trutankless® line of water hearters.

Bollente International has partnered with international manufacturing firm to increase production and efficiently handle distribution to customers in the United Kingdom and throughout Europe, Asia, Dubai, Australia and New Zealand. We have begun the testing and certification process for several international standards, demonstrating that the product complies with the essential requirements of European health, safety and environmental protection legislation and opening the gate for future sales to more than 30 European countries.

Products

Trutankless®

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.

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 11 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 patent pending Velix 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 December 31, 2014, we generated $238,912 in revenue. As of the fiscal year ended December 31, 2015, we generated $265,504 in revenue. As of the three months ended March 31, 2016, we generated $115,524 in revenue.

In July of 2014, we launched MYtankless, 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 www.mytankless.com.

Additionally, service professionals can also use the 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, Florida, Texas, Arizona, and the rest of the Sunbelt region are centers of growth in the U.S. construction industry with green building at an all-time high, and an unprecedented appliance replacement cycle. We intend to take advantage of these powerful macro-economic trends.

Industry Recognition and Awards

Bollente’s trutankless® received the Best of IBS 2014 Award for Best Home Technology Product from the National Association of Home Builders (NAHB) at this year’s International Builders Show (IBS) in Las Vegas. The IBS is produced by NAHB and is the largest annual light construction show in the world - featuring more than 1,100 exhibitors and attracting 75,000 attendees including high level decision makers from some of the largest home builders in the world as well as plumbing and HVAC professionals from top outfits in major markets.

Bollente’s 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.

Bollente’s trutankless® received Kitchen and Bath Business Magazine’s 2014 K*BB Product Innovator’s Award Judges Choice Product.

truCirc

truCirc is a high-tech, smart-home water circulation pump. The energy reducing, water-saving truCirc can be used as a standalone product or with our multi-award winning trutankless® electric tankless water heater. truCirc represents the next step in our mission to pioneer forward-thinking technology that changes the way people think about hot water.

A traditional water circulation pump circulates hot water through a home’s pipes, enabling homeowners to have instant, on-demand hot water as soon as they turn on the faucet and saving countless gallons of water that would have been wasted. truCirc takes the traditional pump to the next level with multiple hot water delivery strategies including a self-aware learning mode that tracks water usage in a household and predicts when hot water will be needed-- thereby using energy to keep water hot only when it’s desired. truCirc’s simple, modern, high-tech interface allows homeowners to quickly and easily change delivery modes or choose a zone or fixture to send hot water. Thermostatic shut-off valves can be installed at showerhead points of use throughout a home to further eliminate wasted water.

Our new product, truCirc, was unveiled on January 20, 2015 at the 2015 International Builders’ Show in Las Vegas.

Vero

On April 16, 2015, we announced the release of Vero, our new line of electric tankless water heaters geared towards budget-driven customers. Vero boasts the same water heating performance, durability and space savings of our flagship tankless water heater.

RESULTS OF OPERATIONS

Results of Operations for the three months ended March 31, 2016 compared with the three months ended March 31, 2015.

Revenues

In the three months ended March 31, 2016, we generated $115,524 in revenues, as compared to $60,904 in revenues in the prior year. The $54,620, or 89%, increase for the three months ended March 31, 2016 was due to higher volumes of units sold.

Cost of Goods

In the three months ended March 31, 2016, cost of goods was $99,143, as compared to $77,933 in the three months ended March 31, 2015. The $21,210, or 27%, increase in cost of goods for the three months ended March 31, 2016 was primarily attributable to the increase in sales of units.

Gross Profit

Our gross profit increased $33,410, or approximately 196%, to $16,381 for the three months ended March 31, 2016 from ($17,029) for the three months ended March 31, 2015. This increase in gross profit was primarily attributable to a substantial decrease in cost of products sold.

Expenses

Operating expenses totaled $1,061,141 during the three months ended March 31, 2016 as compared to $994,313 in the prior year. In the three month period ended March 31, 2016, our expenses primarily consisted of General and Administrative of $445,354, Executive Compensation of $48,750, Research and Development of $931, and Professional fees of $566,106.

General and administrative fees increased $127,754, or approximately 40% to $445,354 for the three months ended March 31, 2016 from $317,600 for the three months ended March 31, 2015. This increase was primarily due to an increase in wages and marketing.

Executive Compensation decreased $60,000, or approximately 55% to $48,750 for the three months ended March 31, 2016 from $108,750 for the three months ended March 31, 2015. Executive Compensation decreased due to a decrease in cash and stock based compensation to the President of the Company.

Research and development decreased $123,827, or approximately 99% to $931 for the three months ended March 31, 2016 from $124,758 for the three months ended March 31, 2015. This decrease is attributed primarily to the Company spending less towards developing its technology.

Professional fees increased $122,301, or approximately 28% to $566,106 for the three months ended March 31, 2016 from $443,805 for the three months ended March 31, 2015. Professional fees increased due to an increase in consulting fee associated with business development.

Other Expenses

Interest expense – related party increased $13,537 to $15,503 in the three months ended March 31, 2016 from $1,966 in the three months ended March 31, 2015. The increase was the result of an increase in notes payable – related party with interest accruals.

Interest expense increased $766 to $766 in the three months ended March 31, 2016 from $0 in the three months ended March 31, 2015. The increase was the result of an increase in interest accruals from note payables.

Net Loss

In the three months ended March 31, 2016, we generated a net loss of $1,060,836, an increase of $46,928 from $1,013,908 for the three months ended March 31, 2015. This increase was attributable to a higher volume of units sold and increased consulting fee associated with business development.

Going Concern

The financial statements included in this filing have been prepared in conformity with generally accepted accounting principles that contemplate the continuance of the Company as a going concern. The Company may not have a sufficient amount of cash required to pay all of the costs associated with operating and marketing of its products. Management intends to use borrowings and security sales to mitigate the effects of cash flow deficits; however, no assurance can be given that debt or equity financing, if and when required, will be available. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and classification of liabilities that might be necessary should the Company be unable to continue existence.

Liquidity and Capital Resources

At March 31, 2016, we had an accumulated deficit of $18,861,015. Primarily because of our history of operating losses and our recording of note payables, we have a working capital deficiency of $278,755 at March 31, 2016. Losses have been funded primarily through issuance of common stock and borrowings from our stockholders and third-party debt. As of March 31, 2016, we had $1,589 in cash, $90,025 in accounts receivable, $134,312 in inventory, $189,183 in prepaid expenses and $219,375 in prepaid stock compensation. We used net cash in operating activities of $181,148 for the three months ended March 31, 2016.

Debt Financing

Cash Flows from Operating, Investing and Financing Activites

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.

The following table sets forth a summary of our cash flows for the three months ended March 31, 2016 and 2015:

	Three months ended March 31,
	2016			2015
Net cash used in operating activities	$	(181,148	)	$	(545,792	)
Net cash used in investing activities		(2,381	)		-
Net cash provided by financing activities		181,500			514,950
Net increase/(decrease) in Cash		(2,029	)		(30,842	)
Cash, beginning		3,618			40,446
Cash, ending	$	1,589		$	9,604

Operating activities - Net cash used in operating activities was $181,148 for the three months ended March 31, 2016, as compared to $545,792 used in operating activities for the same period in 2015. The decrease in net cash used in operating activities was primarily due to a higher volume of units sold and decrease in research and development and consulting contract cost.

Investing activities - Net cash used in investing activities was $2,381 for the three months ended March 31, 2016, as compared to $0 used in investing activities for the same period in 2015. The increase in net cash used in investing activities was primarily due to a purchase of trademarks.

Financing activities - Net cash provided by financing activities for the three months ended March 31, 2016 was $181,500, as compared to $514,950 for the same period of 2015. The decrease of net cash provided by financing activities was mainly attributable to less financing from notes payable.

Ongoing Funding Requirements

As of March 31, 2016, we continue to use traditional and/or debt financing to provide the capital we need to run the business. It is possible that we may need additional funding to enable us to fund our operating expenses and capital expenditures requirements.

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 the United States requires us to make estimates and judgments that affect our reported assets, liabilities, revenues, and expenses, and the disclosure of contingent assets and liabilities. We base our estimates and judgments on 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. See Note 1 – Summary of Significant Accounting Policies in our Notes to Consolidated Financial Statements.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

This item in not applicable as we are currently considered a smaller reporting company.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures

As required by Rule 13a-15 under the Exchange Act, as of the end of the Company’s last fiscal quarter, the Company carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of the Company’s current management, including the Company’s Chief Executive Officer and Principal Financial Officer (Principal Financial and Accounting Officer), who concluded that the Company’s disclosure controls and procedures are effective.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in the Company reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in Company reports filed under the Exchange Act is accumulated and communicated to management, including the Company’s Chief Executive Officer and Principal Financial Officer (Principal Financial and Accounting Officer), as appropriate, to allow timely decisions regarding required disclosure.

Changes in internal control over financial reporting

Management reviews the Company’s system of internal control over financial reporting and makes changes to the Company’s processes and systems to improve controls and increase efficiency, while ensuring that the Company maintains an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, consolidating activities and migrating processes.

During the Company’s last fiscal quarter, there was no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are not presently a party to any material litigation, nor to the knowledge of management is any litigation threatened against us, which may materially affect us.

Item 1A. Risk Factors

The risk factors listed in our 2015 Form 10-K, filed with the Securities Exchange Commission on May 9, 2016, are hereby incorporated by reference.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On Feburary 2, 2016, the Company issued 690,000 shares of common stock for services performed of $690,000, of which $530,000 was expensed as of December 31, 2015 and recorded as stock payable.

On February 2, 2016, the Company issued 250,000 shares of common stock owed to an employee of the Company as a bonus totaling $250,000.

On February 22, 2016, the Company issued 303,000 shares of common stock for services totaling $303,000.

On March 31, 2016, the Company recorded a stock payable totaling $30,000 for 30,000 shares of common stock earned by the President of the Company as part of their employment agreementAs of the date of this filing, the shares have not been issued.

We believe that the issuance and sale of the securities was exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2) and Regulation D Rule. The securities were sold directly by us and did not involve a public offering or general solicitation. The recipients of the securities were afforded an opportunity for effective access to files and records of the Registrant that contained the relevant information needed to make their investment decision, including the financial statements and 34 Act reports. We reasonably believed that the recipients, immediately prior to the sale of the securities, were accredited investors and had such knowledge and experience in our financial and business matters that they were capable of evaluating the merits and risks of their investment. The management of the recipients had the opportunity to speak with our management on several occasions prior to their investment decision. There were no commissions paid on the issuance and sale of the securities.

Issuer Purchases of Equity Securities

We did not repurchase any of our equity securities from the time of our inception on March 7, 2008 through the period ended March 31, 2016.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

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

* XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BOLLENTE COMPANIES INC.

(Registrant)

By: /s/ Robertson J. Orr

Robertson J. Orr, President,

Principal Financial Officer and

Principal Executive Officer

Date: June 6, 2016