Annual Report for Fiscal Year Ending 12-31, 2024 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Background

Trutankless 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 subsidiaries, Bollente, Inc., a Nevada corporation incorporated on December 3, 2009 and Tankless365, Inc., a Nevada corporation incorporated on October 20, 2021.

Trutankless is involved in sales, marketing, research and development of a high quality, whole-house, smart electric tankless water heater that is more energy efficient than conventional products. See "Item 1. Business."

RESULTS OF OPERATIONS

Revenues

In the year ended December 31, 2024 we generated $242,350 in revenues, as compared to $3,549 in revenues in the prior year. The increase in sales was attributable to the initial launch of the next generation of our trutankless® residential and light commercial products. Cost of goods sold was $279,356, as compared to $0 in the prior year.

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.

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Expenses

Operating expenses totaled $5,220,044 during the year ended December 31, 2024 as compared to $1,345,917 in the prior year. In the year ended December 31, 2024, our expenses primarily consisted of General and Administrative of $783,359, Research and Development of $432,847, Professional Fees of $3,960,987 and Depreciation Expense of $3,845.

General and administrative fees increased by $321,639 from the year ended December 31, 2023 to the year ended December 31, 2024. General and administrative fees increased due to an increase in inventory write-off expense of $296,130, a decrease in payroll expenses of $640,717 and a decrease in expenses for a change in accounting estimation policy of $623,220

Research and Development increased by $216 from the year ended December 31, 2023 to the year ended December 31, 2024. Research and Development fees increased as the Company completed Gen3 development and began the initial launch of this new generation of products.

Professional fees increased $3,511,421 from the year ended December 31, 2023 to the year ended December 31, 2024. Professional fees increased due to an increase in stock-based consulting fees.

Other Expenses

Other expense increased by $4,157,952 to $4,966,058 in the year ended December 31, 2024 from $808,106 for the year ended December 31, 2023. The increase was the result of an increase in financing incentive expense.

Net Loss

In the year ended December 31, 2024, we generated a net loss of $10,186,102, an increase of $8,035,628 from $2,150,474 for the year ended December 31, 2023. This decrease was attributable to the factors discussed above.

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.

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 December 31, 2024 and 2023, the Company had $1,004,190 and $21,452 cash on hand, respectively. At December 31, 2024 and 2023, the Company has an accumulated deficit of $77,101,969 and $66,915,867, respectively. For the years ended December 31, 2024 and 2023, the Company had a net loss of $10,186,102 and $2,150,474, and cash used in operations of $2,315,411 and $1,990,470, respectively. These factors raise substantial doubt about the Company's ability to continue as a going concern within one year from the date of filing.

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.

Liquidity and Capital Resources

At December 31, 2024, we had an accumulated deficit of $77,101,969 and a working capital deficiency of $5,931,423. As of December 31, 2024, we had 1,004,190 in cash.

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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 Annual 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 years ended December 31, 2024 and 2023:

		Years ended
		December 31, 2024				December 31, 2023
Net cash used in operating activities		$	(2,315,411	)		$	(1,990,470	)
Net cash used in investing activities			(191,917	)			-
Net cash provided by financing activities			3,490,066				1,926,118
Net increase/(decrease) in Cash			982,738				(64,352	)
Cash, beginning			21,452				85,804
Cash, ending		$	1,004,190			$	21,452

Operating activities

Net cash used in operating activities was $2,315,411 for the year ended December 31, 2024, as compared to $1,990,470 used in operating activities for the same period in 2023. The decrease in net cash used in operating activities was primarily due to the increase in net loss during the year ended December 31, 2024.

Investing activities

Net cash used in investing activities for the year ended December 31, 2024 was $191,917, as compared to $0 for the same period of 2023. The increase of net cash used in investing activities was mainly from the purchase of property, plant and equipment during the year ended December 31, 2024.

Financing activities

Net cash provided by financing activities for the year ended December 31, 2024 was $3,490,066, as compared to $1,926,118 for the same period of 2023. The decrease of net cash provided by financing activities was mainly to a increase in debt financing during the year ended December 31, 2024.

Ongoing Funding Requirements

As of December 31, 2024, 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.

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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.

Critical Accounting Polices

In December 2001, the SEC requested that all registrants list their most "critical accounting polices" in the Management Discussion and Analysis. The SEC indicated that a "critical accounting policy" is one which is both important to the portrayal of a company's financial condition and results, and requires management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our critical accounting policies are disclosed in Note 1 of our audited consolidated financial statements included in the Form 10-K filed with the SEC.

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.