Quarterly Report for Quarter Ending March 31, 2025 (Form 10-Q)

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 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 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", "TKLS", "Trutankless", "Bollente", "the Company", and similar terms refer to Trutankless, Inc. unless otherwise expressly stated or the context otherwise requires.

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 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.trutanklessinc.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 of a written request to us at Trutankless, Inc., 15900 North 88^th Street, Suite 200, Scottsdale, Arizona 85260.

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General

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 subsidiary, Bollente, Inc., a Nevada corporation incorporated on December 3, 2009.

Trutankless is involved in research and development of a high quality, whole-house, smart electric tankless water heater that is more energy efficient than conventional products. Management anticipates the Company's trutankless water heater, with Wi-Fi capability and trutankless' proprietary apps offered in the iOS and Android store, will augment existing products in the hope automation space.

The Company spun off its wholly owned subsidiary, Notation Labs, Inc. with shareholders of the Company to receive pro rata ownership of the spun off company in the form of an equity dividend distribution. Common shares of Notation Labs, Inc. were issued to shareholders of record December 10, 2021 and the spin off occurred on January 24, 2022, with each shareholder of record receiving 1 share in the subsidiary for every 4 shares in the Company held as of the Record Date.

Trutankless® Products

Our trutankless® water heaters were 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 have an improved design and greater efficiency thereby saving energy and offering reduction 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 manufacturing and life-cycle costs with an improved design conceived not only to increase efficiency, but also the longevity of our products versus competitive units. 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 will be available through wholesale plumbing distributors, including Home Depot Pro, Ferguson, Hajoca, WinSupply locations, Morrison Supply, and several regional distributors. A partial listing of wholesalers may be found on our website (www.trutankless.com).

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 are developing systems using upgraded materials, electronics, 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 fiscal year ended December 31, 2016, we generated $429,582 in revenue. As of the fiscal year ended December 31, 2017, we generated $695,857 in revenue. As of the fiscal year ended December 31, 2018, we generated $1,537,958 in revenue. 1, 2019, we generated $1,908,708. As of December 31, 2020, we generated $1,661,278. As of the fiscal year ended December 31, 2021, we generated $246,032 in revenue. As of the fiscal year ended December 31, 2022, we generated $77,009 in revenue. As of December 31, 2023, we generated $3,549 in revenue. As of December 31, 2024, we generated $242,350 in revenue. As of the three months ended March 31, 2025, we generated $430,087 in revenue.

We are developing a new, customizable app and control panel for our smart electric water heaters. Using our app, residential and commercial users will be able to obtain real-time status reports, adjust unit temperature settings, view water usage data, and change notification settings from anywhere in the world on their mobile device.

Our primary markets, Florida, Texas, Arizona, and the rest of the Sunbelt region are centers of growth in the U.S. construction and we plan to continue intend to take advantage of our relationships as we launch our totally redesigned trutankless® brand whole home tankless water heaters.

Www.trutankless.com is available as a service to consumers of trutankless® water heaters. We expect to have new apps available for download from the Apple iOS and Goggle Play stores, which will integrate with other devices in the Smart Home market.

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Industry Recognition and Awards

Leading home improvement website, houzz.com, honored the company with 4 consecutive "Best of Houzz" honors from 2014 through 2018.

We expect our new line of water heaters will garner similar accolades once the product has been launched with proprietary improvements which will continue to lead the market in the tankless water heating technology which we expect will continue to be driven, in large part, through industry professionals in their local markets.

Customers and Markets

We intend to continue selling our products to plumbing wholesale distributors and dealers.

Approximately 100% of our sales in 2022 and 2021, were to wholesale plumbing equipment distributors for commercial and residential repair and replace applications. Additionally, our products have historically been sold to various home builders throughout the United States in both single family and multi-family applications.

Manufacturing and Logistics

We have a Manufacturing Services Agreement establishing our financial and payment arrangements, warranty, shipping, and delivery terms with a large US based contract manufacturer with vertically integrated capabilities for electro-mechanical box builds. Finished product are to be generally shipped Freight on Board (FOB) via standard LTL freight and are to be either drop-shipped to customers directly with some inventory to be warehoused at Associated Global Systems located in Phoenix, Arizona. Merchandise is typically shipped using common carriers or freight companies which are selected at the time of shipment based on order volume and the best available rates.

RESULTS OF OPERATIONS

Results of Operations for the three months ended March 31, 2025 compared with the three months ended March 31, 2024.

Revenues

In the three months ended March 31, 2025, we generated $430,087 in revenues, as compared to $0 in revenues in the prior year. The increase in sales was attributable to sales of our new Gen 3 trutankless® residential products.

Cost of goods sold was $325,798 in the three months ended March 31, 2025, as compared to $0 in the three months ended March 31, 2024.

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 $1,484,702 during the three months ended March 31, 2025 as compared to $510,002 in the prior year. In the three-month period ended March 31, 2025, our expenses primarily consisted of General and Administrative of $266,666, Research and Development of $59,971, Professional Fees of $1,145,362 and Depreciation of $12,703.

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General and administrative expenses decreased by $38,145, or approximately 12.5% to $266,666 for the three months ended March 31, 2025 from $304,811 for the three months ended March 31, 2024. This decrease was primarily the result of watching overall expenses of the Company.

Research and development expenses decreased by $117,655, or approximately 66.2% to $59,971 for the three months ended March 31, 2025 from $177,626 for the three months ended March 31, 2024. This increase is attributed primarily to the sales starting for the Gen 3 products and ramp up of production.

Professional fees increased by $1,117,797, or approximately 4,055.1% to $1,145.362 for the three months ended March 31, 2025 from $27,565 for the three months ended March 31, 2024. Professional fees increased due to the increase in consulting expenses getting ready for production.

Other Income/Expenses

Other expenses increased by $320,318 to ($215,468) in the three months ended March 31, 2025 from other income of $104,850 in the three months ended March 31, 2024. The increase was due to increased interest expense and decrease in gain on extinguishment of debt from 2024.

Net Loss

In the three months ended March 31, 2025, we generated a net loss of $1,610,881, an increase of $1,205,729 from $405,152 for the three months ended March 31, 2024. This increase was attributable to the overall expenditures discussed above.

Going Concern

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.

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 March 31, 2025, the Company had $11,404 cash on hand. On March 31, 2025, the Company had an accumulated deficit of $78,697,850. For the three months ended March 31, 2025, the Company had a net loss of $1,595,881, and cash used in operations of $707,142. 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 March 31, 2025, we had an accumulated deficit of $78,697,850. Primarily because of our history of operating losses and our recording of note payables, we have a working capital deficiency of $7,130,342 at March 31, 2025. Losses have been funded primarily through issuance of common stock and borrowings from our stockholders and third-party debt. As of March 31, 2025, we had $11,404 in cash, $107,665 in accounts receivable, and $612,414 in inventory. We used net cash in operating activities of $707,142 for the three months ended March 31, 2025.

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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 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, 2025 and 2024:

		Three Months Ended
		March 31, 2025				March 31, 2024
Net cash used in operating activities		$	(707,142	)		$	(402,780	)
Net cash used in investing activities			(203,514	)			-
Net cash provided by financing activities			(82,130	)			382,400
Net increase/(decrease) in Cash			(992,786	)			(20,380	)
Cash, beginning			1,004,190				21,453
Cash, ending		$	11,404			$	1,073

Operating activities - Net cash used in operating activities was $707,142 for the three months ended March 31, 2025, as compared to $402,780 used in operating activities for the same period in 2024. The decrease in net cash used in operating activities was primarily due to an increase in operating expenses gearing up production and sales.

Investing activities - Net cash used in investing activities was $203,514 for the three months ended March 31, 2025, as compared to $0 used in investing activities for the same period in 2024. This increase in net cash used in investing activities was primarily due to increase equipment and leasehold improvements needed for production.

Financing activities - Net cash provided used in financing activities for the three months ended March 31, 2025 was $82,130 as compared to $382,400 provided by financing activities for the same period of 2024. The decrease of net cash provided by financing activities was mainly attributable to decreased equity and debt financing.

Ongoing Funding Requirements

As of March 31, 2025, 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.

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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.

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 December 31, 2024, filed with the SEC on August 28, 2025.