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Trutankless Inc.

08/01/2024 | Press release | Distributed by Public on 08/01/2024 04:06

Quarterly Report for Quarter Ending March 31, 2024 (Form 10-Q)

tkls_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2024

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

Commission file number 000-54219

TRUTANKLESS, 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.)

15900 North 78th Street, Suite 200
Scottsdale, AZ		85260
(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 ☐ No ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ 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	☐	Smaller reporting company	☒
(Do not check if a smaller reporting company)		Emerging growth company	☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of Common Stock, $0.001 par value, outstanding on July 30, 2024, was 93,126,511 shares.

TRUTANKLESS, INC.

QUARTERLY PERIOD ENDED MARCH 31, 2024

Index to Report on Form 10-Q

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.		19
Item 3. Quantitative and Qualitative Disclosure About Market Risk		24
Item 4. Controls and Procedures		24
PART II - OTHER INFORMATION		25
Item 1. Legal Proceedings.		25
Item 1A. Risk Factors		25
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.		25
Item 3. Defaults Upon Senior Securities.		26
Item 4. Mine Safety Disclosures		26
Item 5. Other Information.		26
Item 6. Exhibits.		27
SIGNATURES		28

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TRUTANKLESS, INC

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31, 2024			December 31, 2023
	(Unaudited)
ASSETS
Current assets
Cash	$	1,073			$	21,453
Accounts receivable		-				-
Prepaid expenses		173,453				5,000
Total current assets		174,526				26,453

Other assets
Right-to-use asset		182,024				203,477
Trademarks		11,914				11,914
Other assets		13,947				13,947
Total other assets		207,885				229,338
Total assets	$	382,411			$	255,791

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable and accrued liabilities	$	1,014,723			$	956,240
Advances payable - related parties		31,000				31,000
Lease liability		66,548				64,199
Accrued interest payable		449,913				483,238
Accrued interest payable - related parties		492,086				368,952
Royalty liabilities payable		527,500				417,500
Notes payable, net of discounts		855,000				1,030,000
Notes payable, net of discounts - related parties		247,950				241,950
Convertible notes payable, net of discounts		738,500				999,352
Convertible notes payable, net of discounts - related parties		3,207,023				2,840,623
Total current liabilities		7,630,243				7,433,054

Long-term liabilities
Lease liability - long-term		120,035				144,702
Notes payable - net of discounts and current portion - related parties		125,000				125,000
Total long-term liabilities		245,035				269,702
Total liabilities		7,875,278				7,702,756

Commitments and contingencies (Note 7)		-				-

Stockholders' deficit
Preferred stock, $0.001 par value, 9,990,000 shares authorized
Preferred stock - Series B, $0.001 par value, 10,000 shares authorized, 10,000 shares issued and outstanding		10				10
Common stock, $0.001 par value, 150,000,000 shares authorized, 43,873,230 and 38,773,230 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively		43,873				38,773
Additional paid in capital		59,531,335				57,717,685
Subscriptions payable		2,980				1,462,480
Accumulated deficit		(67,071,065	)			(66,665,913	)
Total stockholders' deficit		(7,492,867	)			(7,446,965	)
Total liabilities and stockholders' deficit	$	382,411			$	255,791

See accompanying notes to the unaudited condensed consolidated financial statements.

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TRUTANKLESS, INC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months Ended
	March 31, 2024			March 31, 2023
Net sales	$	-			$	585
Cost of sales		-				-
Gross profit		-				585

Operating expenses
General and administrative expenses		304,811				487,624
Research and development		177,626				56,951
Professional fees		27,565				24,795
Total operating expenses		510,002				569,370
Operating loss		(510,002	)			(568,785	)

Other income (expense)
Gain on extinguishment of debt		276,790				-
Interest expense		(171,940	)			(153,296	)
Total other income (expense)		104,850				(153,296	)
Net loss	$	(405,152	)		$	(722,081	)

Net loss per share - basic and diluted	$	(0.01	)		$	(0.04	)

Weighted average number of common shares - basic and diluted		42,471,032				20,339,391

See accompanying notes to the unaudited condensed consolidated financial statements.

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TRUTANKLESS, INC

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

(Unaudited)

	Preferred Stock		Common Stock			Additional Paid-in	Subscriptions	Accumulated
	Shares		Amount			Shares	Amount	Capital		Payable			Deficit		Total
Balance, December 31, 2023		10,000		$	10		38,773,230	$	38,773		$	57,717,685		$	1,462,480		$	(66,665,913	)	$	(7,446,965	)
Stock issued in accordance with standby letter of credit		-			-		1,050,000		1,050			1,458,450			(1,459,500	)		-			-
Stock issued for conversion of notes payable		-			-		3,000,000		3,000			117,000			-			-			120,000
Stock issued for services		-			-		300,000		300			14,700			-			-			15,000
Stock issued for cash		-			-		750,000		750			223,500			-			-			224,250
Net loss for the Period		-			-		-		-			-			-			(405,152	)		(405,152	)
Balance, March 31, 2024		10,000		$	10		43,873,230	$	43,873		$	59,531,335		$	2,980		$	(67,071,065	)	$	(7,492,867	)

	Preferred Stock		Common Stock			Additional Paid-in	Subscriptions	Accumulated
	Shares		Amount			Shares	Amount	Capital		Payable			Deficit		Total
Balance, December 31, 2022		10,000		$	10		20,367,477	$	20,368		$	54,261,311		$	4,793,611		$	(64,627,455	)	$	(5,552,155	)
Stock issued for services		-			-		90,000		90			(67	)		12			-			35
Stock issued for debt restructuring		-			-		115,973		116			(89	)		(27	)		-			-
Net loss for the period		-			-		-		-			-			-			(722,081	)		(722,081	)
Balance, March 31, 2023		10,000		$	10		20,573,450	$	20,574		$	54,261,155		$	4,793,596		$	(65,349,536	)	$	(6,274,201	)

See accompanying notes to the unaudited condensed consolidated financial statements.

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TRUTANKLESS, INC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Three Months Ended
	March 31, 2024			March 31, 2023
Cash flows from operating activities:
Net loss	$	(405,152	)		$	(722,081	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		-				102
Amortization of debt discounts		24,148				56,829
Stock issued for services		50,797				35
Gain on extinguishment of debt		(276,790	)			-
Non-cash operating lease expense		(865	)			465
Changes in operating assets and liabilities:
Accounts receivable		-				(150	)
Prepaid expenses		5,000				-
Accounts payable		58,440				319,839
Accounts payable - related parties		-				(124,946	)
Accrued liabilities		43				-
Interest payable		18,466				-
Interest payable to related parties		123,133				6,526
Net cash used in operating activities		(402,780	)			(463,381	)

Cash flows from investing activities:
Net cash flows from investing activities		-				-

Cash flows from financing activities:
Proceeds from convertible notes payable		-				4,000
Proceeds from convertible notes payable - related parties		366,400				441,000
Proceeds from notes payable		135,000				-
Proceeds from notes payable - related parties		6,000				-
Proceeds from royalty payable		110,000				-
Repayment of convertible notes payable		(250,000	)			(65,000	)
Proceeds from issuance of common stock		15,000				-
Net cash provided by financing activities		382,400				380,000

Net change in cash		(20,380	)			(83,381	)
Cash and cash equivalents - beginning of period		21,453				84,034
Cash and cash equivalents - end of period	$	1,073			$	653

Supplemental disclosures of cash flow information:
Cash paid for interest	$	-			$	9,364
Cash paid for income taxes	$	-			$	-

Supplemental non-cash information
Conversion of notes payable into common stock	$	120,000			$	-
Common stock issued per consulting agreements	$	224,250			$	-

See accompanying notes to the unaudited condensed consolidated financial statements.

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TRUTANKLESS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

(UNAUDITED)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

The Company was incorporated on March 7, 2008 under the laws of the State of Nevada, as Alcantara Brands Corporation. On October 5, 2010, the Company amended its articles of incorporation and changed its name to Bollente Companies, Inc. On June 4, 2018, the Company amended its articles of incorporation and changed its name to Trutankless, Inc.

The Company 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. 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 home automation space.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (GAAP) and applicable rules and regulations of the Securities and Exchange Commission (SEC) regarding interim financial reporting. Certain information and note disclosures normally included in the consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in the consolidated financial statements for the three months ended March 31, 2024 should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company's Form 10-K for the Company's fiscal year ended December 31, 2023, as filed with the SEC.

The consolidated balance sheet as of December 31, 2023, included herein was derived from the audited financial statements as of that date, but does not include all disclosures including notes required by GAAP.

The accompanying unaudited consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the year ending December 31, 2024.

Principles of consolidation

The consolidated financial statements include the accounts of Trutankless, Inc. and its wholly owned subsidiaries. On May 16, 2010, the Company acquired 100% of the outstanding stock of Bollente, Inc. On August 20, 2020 the Company formed a wholly owned subsidiary, Notation Labs, Inc. On October 20, 2021 the Company formed a wholly owned subsidiary, Tankless 365, Inc. All significant inter-company transactions and balances have been eliminated.

Spinoff - On January 24, 2022, the Company completed the previously announced spin-off of its subsidiary Notation Labs Inc into a stand-alone company. The historical results of Notation Labs Inc that were contributed to Trutankless Inc in the spinoff have been reflected as discontinued operations in our condensed consolidated financial statements through the date of the spinoff and in the prior year periods as the spinoff represents a strategic shift in our business that has a major effect on operations and financial results. As of December 31, 2022, the assets and liabilities associated with these Notation Labs Inc. are classified as assets and liabilities of discontinued operations in the condensed consolidated balance sheet. The disclosures presented in our notes to the consolidated financial statements are presented on a continuing operations basis.

On July 15, 2023, the Company announced its intention to spin-off its wholly-owned subsidiary, Tankless365, Inc. On a date determined by the Board of Directors of the Company, each Shareholder having common stock as of the Distribution Date will be entitled to receive shares of the common stock of Tankless365, Inc. pro rata based on a 4:1 ratio. Subsequent to this announcement, the Company's management decided that the subsidiary, Tankless 365, Inc. will not be spun-off but will remain as a subsidiary of the Company.

Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations.

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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.

Stock-based compensation

The Company follows ASC 718-10, "Stock Compensation", which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718-10 is a revision to SFAS No. 123, "Accounting for Stock-Based Compensation," and supersedes Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees," and its related implementation guidance. ASC 718-10 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized.

Income Taxes

The Company's calculation of its tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in various taxing jurisdictions. The Company recognizes tax liabilities for uncertain tax positions based on management's estimate of whether it is more likely than not that additional taxes will be required. The Company had no uncertain tax positions as of March 31, 2024.

Deferred income taxes are recognized in the consolidated financial statements for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates. Temporary differences arise from net operating losses, differences in depreciation methods of archived images, and property and equipment, stock-based and other compensation, and other accrued expenses. A valuation allowance is established when it is determined that it is more likely than not that some or all of the deferred tax assets will not be realized. The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty. Tax laws and regulations themselves are subject to change as a result of changes in fiscal policy, changes in legislation, the evolution of regulations and court rulings. Therefore, the actual liability for U.S., or the various state jurisdictions, may be materially different from management's estimates, which could result in the need to record additional tax liabilities or potentially reverse previously recorded tax liabilities. Interest and penalties are included in tax expense.

The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operation in the provision for income taxes. As of March 31, 2024 and 2023, the Company had no accrued interest or penalties related to uncertain tax positions.

Earnings per share

The Company follows ASC Topic 260 to account for the earnings per share. Basic earnings 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 earnings 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.

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Accounts receivable

Accounts receivable is comprised of uncollateralized customer obligations due under normal trade terms. The Company performs ongoing credit evaluation of its customers and management closely monitors outstanding receivables based on factors surrounding the credit risk of specific customers, historical trends, and other information. The carrying amount of accounts receivable is reviewed periodically for collectability. If management determines that collection is unlikely, an allowance that reflects management's best estimate of the amounts that will not be collected is recorded. Accounts receivables are presented net of an allowance for doubtful accounts of $0 and $0 at March 31, 2024 and December 31, 2023, respectively.

Advertising Costs

The Company's policy regarding advertising is to expense advertising when incurred. The Company incurred advertising expenses of $916 and $4,310 during the three months ended March 31, 2024 and 2023, respectively.

Research and development costs

The Company charges research and development costs to expense when incurred in accordance with FASB ASC 730, "Research and Development". These research and development expenses are not related to the patent that the Company has, but are focused on future product developments. Research and development costs were $177,626 and $56,951 for the three months ended March 31, 2024 and 2023, respectively.

Revenue recognition

Revenue is recognized in accordance with ASC 606. The Company performs the following five steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company applies the five-step model to arrangements that meet the definition of a contract under Topic 606, including when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company evaluates the goods or services promised within each contract related performance obligation and assesses whether each promised good or service is distinct. The Company recognizes as revenue, the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

Revenue recognition occurs at the time product is shipped to customers, when control transfers to customers, provided there are no material remaining performance obligations required of the Company or any matters of customer acceptance.

Fair value of financial instruments

The Company measures fair value in accordance with ASC 820 - Fair Value Measurements. ASC 820 defines fair value and establishes a three-level valuation hierarchy for disclosures of fair value measurements. ASC 820 establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, ASC 820 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by ASC 820 are:

Level 1 - Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Level 2 - Inputs (other than quoted market prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument's anticipated life.

Level 3 - Inputs reflect management's best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Valuation of instruments includes unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

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As defined by ASC 820, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale, which was further clarified as the price that would be received to sell an asset or paid to transfer a liability ("an exit price") in an orderly transaction between market participants at the measurement date.

The reported fair values for financial instruments that use Level 2 and Level 3 inputs to determine fair value are based on a variety of factors and assumptions. Accordingly, certain fair values may not represent actual values of the Company's financial instruments that could have been realized as of March 31, 2024 or that will be recognized in the future, and do not include expenses that could be incurred in an actual settlement. The carrying amounts of the Company's financial assets and liabilities, such as cash, accounts receivable, receivables from related parties, prepaid expenses and other, accounts payable, accrued liabilities, and related party and third-party notes payables approximate fair value due to their relatively short maturities. The Company's notes payable to related parties approximates the fair value of such instrument based upon management's best estimate of terms that would be available to the Company for similar financial arrangements at March 31, 2024 and December 31, 2023.

Recently Issued Accounting Pronouncements

From time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company's financial statements upon adoption.

NOTE 2 - 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, 2024, the Company had $1,073 cash on hand. On March 31, 2024, the Company has an accumulated deficit of $67,071,065. For the three months ended March 31, 2024, the Company had a net loss of $405,152, and cash used in operations of $402,780. 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.

NOTE 3 - ACCOUNTS RECEIVABLE, NET

Accounts receivable consist of the following at:

	March 31, 2024			December 31, 2023
Accounts receivable		186,750				186,750
Allowance for doubtful accounts		(186,750	)			(186,750	)
Total	$	-			$	-

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NOTE 4 - ROYALTY LIABILITIES

Starting November 2023, the Company issued 16 royalty agreements to investors for a total of $527,500. These agreements require the Company to pay up to $50 per unit sold in royalties to these investors based on their investment amounts. The royalty obligation shall commence upon the 500th unit that is produced and sold and continue for 6 (six) calendar years from the anniversary date of the receipt of the first royalty payment. As of March 31, 2024, the Company had not produced any units relating to these royalty agreements, thus there is no royalty obligation accumulated.

NOTE 5 - RELATED PARTY

Accounts payable and accrued liabilities - related party

During the three months ended March 31, 2024 and 2023, the Company received $0 and $15,000 in advances and made payments $0 and $0 from a related party, respectively. As of March 31, 2024 and December 31, 2023, the Company had advances from a related party of $31,000 and $31,000, respectively.

Notes payable - related party consist of the following at:

	March 31, 2024			December 31, 2023
Note payable, secured, 5% interest, due on demand	$	25,450			$	19,450
Note payable, secured, 12% interest, due April 26, 2024		60,000				60,000
Note payable, secured, 12% interest, due April 30, 2024		122,500				122,500
Note payable, secured, 18% interest, due July 25, 2024		40,000				40,000
Notes payable, secured, 18% interest, due August 31, 2025		125,000				125,000
Total notes payable - related party	$	372,950			$	366,950
Less current portion		(247,950	)			(241,950	)
Total notes payable - related party - long term	$	125,000			$	125,000

During the three months ended March 31, 2024, the Company received $6,000 under a note payable from a director of the Company. As of March 31, 2024 and December 31, 2023, the Company had one note payable due to a director of the Company in the amount of $25,450 and $19,450, respectively. The note has an interest rate of 5% and is due on demand.

As of March 31, 2024 and December 31, 2023, the Company had one note payable due to an officer of the Company in the amount of $60,000. The note has an interest rate of 12% and is due April 26, 2024.

On April 30, 2021, the Company entered into a $150,000, 12% grid note payable with a Company controlled by the CEO that is due upon demand but no later than April 30, 2022. As of March 31, 2024 and December 31, 2023 and 2022, the Company has received advances under the note of $0 and $20,500 and made repayment of $0 and $0, respectively. As of March 31, 2024 and December 31, 2023, the note had a balance of $122,500 and is due April 30, 2024.

On January 8, 2021, the Company entered into a $125,000, 30% note payable due on June 8, 2021. Under the note the Company must make interest only payments of $3,125 starting on February 10, 2021 and continuing through maturity. On December 31, 2022, the noteholder extended the due date to June 8, 2022 for $1,250. On September 1, 2023, the noteholder sold the ownership of the note to an entity under common ownership of a related party who concurrently amended the terms of the note with the Company to accrue interest at 18% interest and to extend the maturity date of the note to August 31, 2025. As of March 31, 2024 and December 31, 2023, the balance of the note was $125,000.

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On July 23, 2023, the Company entered into a $40,000, 12% note payable with an entity under common control of a related party on July 22, 2024. As of March 31, 2024 and December 31, 2023, the balance on this note was $40,000.

Interest expense associated with the related party notes for the three months ended March 31, 2024 and 2023 was $52,405 and $6,971 respectively.

Convertible notes payable - related party consist of the following at:

	March 31, 2024			December 31, 2023
Convertible note payable, 8% interest, due December 2024	$	2,322,023			$	2,205,623
Convertible note payable, 12% interest, due December 2023		400,000				400,000
Convertible note payable, 12% interest, due December 2024		150,000				150,000
Convertible note payable, 12% interest, due December 2024		85,000				85,000
Convertible note payable, 12% interest, due March 2025		250,000				-
Total convertible notes payable - related party	$	3,207,023			$	2,840,623
Less current portion		(3,207,023	)			(2,840,623	)
Total convertible notes payable - related party - long-term	$	-			$	-

On September 1, 2022, the Company entered into a $2,500,0008% convertible grid note with Notation Labs, Inc, a company commonly controlled by a director of the Company. The note is due on December 31, 2024 and is convertible at a rate of $0.80 per share. During the year ending December 31, 2023, the Company received $1,190,853 in advances from the note and made payments of $479,160 on the note. During the three months ending March 31, 2024, the Company received $144,000 in advances from the note and made payments of $27,600 on the note. As of March 31, 2024 and December 31, 2023, the balance of the note was $2,322,023 and $2,205,623, respectively.

On July 26, 2022, the Company issued a $400,00012% convertible promissory note to a company commonly controlled by a shareholder of the Company. The note is due on December 15, 2023 and is convertible into shares of the Company's common stock at a rate of $0.08 per share. As of March 31, 2024 and December 31, 2023, the balance of the note was $400,000.

On June 15, 2023, the Company issued a $150,00012% convertible promissory note to a company commonly controlled by a shareholder of the Company. The note is due on December 31, 2024 and is convertible into shares of the Company's common stock at a rate of $0.02 per share. As of March 31, 2024 and December 31, 2023, the balance of the note was $150,000.

On July 25, 2023, the Company issued a $85,00012% convertible promissory note to a company commonly controlled by a shareholder of the Company. The note is due on December 31, 2024 and is convertible into shares of the Company's common stock at a rate of $0.02 per share. As of March 31, 2024 and December 31, 2023, the balance of the note was $85,000.

On March 25, 2024, the Company issued a $250,00012% convertible promissory note to a trust controlled by a shareholder of the Company. The note is due on March 25, 2025 and is convertible into shares of the Company's common stock at a rate of $0.05 per share. As of March 31, 2024 and December 31, 2023, the balance of the note was $250,000 and $0, respectively.

Interest expense on all of the above convertible notes for the three months ended March 31, 2024 and 2023 was $60,706 and $55,626, respectively.

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NOTE 6 - NOTES PAYABLE

Notes payable consist of the following at:

	March 31, 2024			December 31, 2023
Note payable, secured, 12% interest, due June 2024	$	-			$	300,000
Notes payable, secured, 12% interest, due April 2022		95,000				95,000
Notes payable, secured, 12% interest, due December 2023		10,000				10,000
Notes payable, 12% interest, due starting August 2024		750,000				625,000
Total notes payable	$	855,000			$	1,030,000
Less current portion		(855,000	)			(1,030,000	)
Total Notes Payable - long term	$	-			$	-

On January 1, 2020, the Company entered into an agreement to consolidate three notes payable above dated September 2, 2016 and February 2, 2018 into one $300,000, 12% note due September 1, 2021. As consideration the Company issued the note holder 175,000 shares of common stock valued at $61,250 which was recorded as financing expense. On May 1, 2022, for the issuance of 25,000 shares valued at $29,000 on the date of commitment, the loan was further extended to September 1, 2024. The Company evaluated the modification under ASC 470-50 and determined that the modifications were considered substantial and qualified for extinguishment accounting under such guidance. As such the Company recorded a loss on extinguishment of debt of $61,250 associated with the excess reacquisition cost of the new debt over the carrying value of the original debt. On January 19, 2024, the Company issued 3,000,000 shares of common stock in settlement of the principal amount of $300,000 and accrued interest of $10,948. As of March 31, 2024 and December 31, 2023, the balance of the note was $0 and $300,000, respectively.

On April 26, 2021, the Company entered into a $95,000, 12% note payable due on April 26, 2022. As of March 31, 2024 and December 31, 2023, the balance of the note was $95,000.

On August 18, 2021, the Company entered into a $10,000, 12% note payable due on August 18, 2022. On April 10, 2022 the note was amended to have a due date of December 7, 2023. As of March 31, 2024 and December 31, 2023, the balance of the note was $10,000.

On August 3, 2023 the Company's wholly owned subsidiary initiated an offering of 12% Notes with maturity dates of 12 months starting on August 3, 2024. As of March 31, 2024 and December 31, 2023, the Company has raised $750,000 and $625,000, respectively, under the offering.

Interest expense including amortization of the associated debt discount for the three months ended March 31, 2024 and 2023 was $29,634 and $27,754, respectively.

Convertible notes payable, net of debt discount consist of the following:

	March 31, 2024			December 31, 2023
Convertible note payable, secured, 12% interest, due August 31, 2019, in default	$	50,000			$	50,000
Convertible note payable, secured, 10% interest, due February 2024		45,000				45,000
Convertible note payable, secured, 12% interest, due Feb 15, 2024		75,000				75,000
Convertible notes payable, secured, 4% interest, due October 14, 2020, in default		75,000				75,000
Convertible note payable ,12% interest, due May 2020, in default		108,500				108,500
Convertible note payable, secured, 10% interest, due May 1, 2024		350,000				350,000
Convertible notes payable, secured, 4% interest, due March 3, 2021, in default		25,000				25,000
Convertible notes payable, 8% interest, due December 2023		-				295,000
Convertible notes payable, 8% interest, due March 2025		10,000				-
Total convertible notes payable		738,500				1,023,500
Less unamortized discounts		-				(24,148	)
Total convertible notes payable, net of discounts		738,500				999,352
Less current portion		(738,500	)			(999,352	)
Total convertible notes payable, net of discounts - long-term	$	-			$	-

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On September 2, 2016, the Company issued $50,000 of principal amount of 12% secured convertible promissory notes and 6,250 warrants to purchase common stock (post-split). The note was due on August 31, 2018, was later extended to August 31, 2019, bears interest of twelve percent (12%) and is currently in default. The outstanding principal amounts and accrued but unpaid interest of the notes is convertible at any time at the option of the holder into common stock at a conversion price of $8.00 per share (post-split). The notes were issued with warrants to purchase up to 6,250 shares of the Company's common stock at an exercise price of $12 per share. As of March 31, 2024 and December 31, 2023, the balance of the note was $50,000.

On May 2, 2017, the Company issued $50,000 of principal amount of 10% secured convertible promissory notes and 10,000 warrants to purchase common stock. The note was due on May 2, 2020 and is secured by the Company's accounts receivable and inventory. On April 22, 2020, the note was extended to May 2, 2021. The outstanding principal amounts and accrued but unpaid interest of the notes is convertible at any time at the option of the holder into common stock at a conversion price of $4 per share (post-split). The notes were issued with warrants to purchase up to 1,250 shares (post-split) of the Company's common stock at an exercise price of $8.00 per share. One December 31, 2021 the note was amended to cease accruing interest as of May 1,2022 and the due date of the note was amended to April 1, 2023 and on February 8, 2023 the note was extended to February 8, 2024. As of March 31, 2024 and December 31, 2023, the balance of the note was $45,000.

On February 15, 2018, the Company issued a $75,00012% secured convertible promissory note. The note was due on February 24, 2020 and is secured by the Company's accounts receivable and inventory. On April 22, 2020, the due date of the note was extended to February 15, 2021 for the issuance of 6,250 shares of common stock valued at $8,995 and is currently in default. On February 22, 2022 the due date of the note was further extended to February 15, 2024. As of March 31, 2024 and December 31, 2023, the balance of the note was $75,000.

On February 8, 2019, the Company issued a $50,000 10% convertible note. The note was due on February 8, 2020 and is currently in default. As an incentive to enter into the agreement, the noteholder was also granted 7,500 shares valued at $30,000, which was recognized as a debt discount. On February 19, 2019, the Company issued a $25,0004% convertible note. The note was due on August 19, 2019 and is convertible at a rate of $4 per share. On February 14, 2019, the noteholder agreed to extend the note through October 14, 2020. As an incentive to enter into the agreement, the noteholder was also granted 625 shares valued at $2,500, which was recognized as a debt discount. These notes were merged into one note at the time of extension with a principal amount of $75,000. As of March 31, 2024 and December 31, 2023, the balance of the note was $75,000.

On November 19, 2019, the Company entered in to a $281,000 convertible note payable, including an original issue discount of $28,100 convertible promissory note pursuant to which $150,000 was borrowed, including a $18,500 discount during the year ended December 31, 2019. Interest under the convertible promissory note is 12% per annum, and the principal and all accrued but unpaid interest is due 180 days from funding, which has July 19, 2020 for the first tranche. On May 20, 2020, the noteholder agreed to extend the due date of the first tranche of funding until July 19, 2020 and is currently past due. The note is convertible at the lesser of (i) 70% multiplied by the lowest Trading Price during the previous twenty-five (25) trading day period ending on the latest complete Trading Day prior to the date of the note and 70% of the market price with a floor of $0.01. As an incentive to enter into the agreement, the noteholder was also granted 53,375 shares valued at $175,070. As of March 31, 2024 and December 31, 2023, the balance of the note was $108,500.

On May 5, 2020, the Company issued a $350,000 10% convertible note. The note is due on May 1, 2021 and is convertible at a rate of $1 per share (post-split). As an incentive to enter into the agreement the noteholder was also granted 187,500 shares (post-split) valued at $207,000, which was recognized as a debt discount. On April 21, 2021, the noteholder agreed to extend the note through May 1, 2022. As an incentive to enter into the agreement, the noteholder was also granted 12,500 shares (post-split) valued at $20,000, which was recognized as financing expense. On May 1, 2022, for the issuance of 75,000 shares valued at $87,000 on the date of commitment, the loan was further extended to May 1, 2024. As of March 31, 2024 and December 31, 2023, the balance of the note was $350,000.

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On March 3, 2021, the Company issued a $25,000 4% convertible note. The note is due on March 3, 2022 and is convertible at a rate of $0.80 per share. As of March 31, 2024 and December 31, 2023, the balance of the note was $25,000.

On February 22, 2022 the Company entered into a $385,000, 12% note payable due on February 22, 2023. The note is convertible upon default at the higher of the closing price of the common stock on the closing date, or par value. As an inducement to enter into the agreement the Company also granted the noteholder 165,216 shares of common stock (post-split). The issuance of the note and shares resulted in a total debt discount of $158,147, with $123,147 attributable to the shares. On February 8, 2023, the note was extended to December 31, 2023. During the year ended December 31, 2023, the Company made principal payments totaling $60,000. On March 26, 2024, the Company entered a settlement agreement with the noteholder, in which the noteholder agreed to accept payment of $250,000 as settlement in full for all principal and accrued interest. As of March 31, 2024 and December 31, 2023, the balance of the note was $0 and $295,000.

On July 18, 2022, the Company entered into a $150,0008% convertible grid note. The note is due on July 18, 2023 and is convertible at a rate of $0.80 per share. During the year ending December 31, 2023, the Company received $4,000 in advances from the note. During the year ended December 31, 2023, the Company converted the balance of the note and accrued interest into 2,254,986 shares of common stock valued at $45,100. On March 26, 2024, the Company received $10,000 in advance from the note. As of March 31, 2024 and December 31, 2023, the balance of the note was $10,000 and $0, respectively.

Interest expense including financing cost and amortization of the associated debt discount on all of the above convertible notes for the three months ended March 31, 2024 and 2023 was $28,752 and $87,470, respectively.

NOTE 7 - COMMITMENTS AND CONTINGENCIES

Operating Lease Agreements

The Company determines whether or not a contract contains a lease based on whether or not it provides the Company with the use of a specifically identified asset for a period of time, as well as both the right to direct the use of that asset and receive the significant economic benefits of the asset. The Company elected the transition relief package of practical expedients, and as a result, we did not assess 1) whether existing or expired contracts contain embedded leases, 2) lease classification for any existing or expired leases, and 3) whether lease origination costs qualified as initial direct costs. We elected the short-term lease practical expedient by establishing an accounting policy to exclude leases with a term of 12 months or less.

The discount rate utilized for classification and measurement purposes as of the inception date of the lease is based on the Company's collateralized incremental interest rate to borrow of 12%, as the rate implicit in the lease is not determinable.

The Company has entered into lease agreements as a lessee for the use of office space. These lease agreements are classified as operating leases, and the liability and right-of-use asset are recognized on the balance sheet at lease commencement. Leases with an initial term of 12 months or less are not recorded on the balance sheet and are recognized as lease expense on a straight-line basis over the lease term.

During 2018, the Company executed a lease agreement. The lease term is 39 months at a rate of $1,680 per month with 3% increases beginning January 1, 2021 and rent commencing on January 1, 2019. The Company was required to pay a $1,781 security deposit. The Company agreed to renew the lease through December 31, 2025.

On August 24, 2023, the Company executed a lease agreement. The lease term is 39 months at a starting rate of $5,624 per month with 4% increases beginning December 1, 2024 and rent commencing on September 1, 2023. As a result of the adoption of ASC 842, the Company recognized an operating lease liability and right-of-use asset of $171,276 and $171,798 associated with the lease.

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In early 2022, the Company spun-off a wholly owned subsidiary, Notation Labs, Inc. ("Notation Labs"). Notation Labs and the Company have continued to share office and warehouse spaces. The agreement is that Notation Labs pays portions of the leases based on agreements between the two companies for usage and other factors. The Company does not recognize rent expense on amounts paid by Notation Labs nor is it required to repay Notation Labs.

Undiscounted Cash Flows

As of March 31, 2024, the right of use asset and lease liability were shown on the consolidated balance sheet at $182,024 and $186,583, respectively. The table below reconciles the fixed component of the undiscounted cash flows and the total remaining years to the operating lease liability recorded on the consolidated balance sheet as of March 31, 2024:

Amounts due as of March 31, 2024	Operating Leases
2024	$	62,194
2025		87,654
2026		72,998
Total minimum lease payments		222,846
Less: effect of discounting		(36,263	)
Present value of future minimum lease payments		186,583
Less: current obligations under leases		(66,548	)
Long-term lease obligations	$	120,035

Legal Matters

On July 6, 2020, we received a letter from the staff of the Division of Enforcement of the Securities and Exchange Commission (the "Staff") that indicated the Company may have violated certain rules and regulations regarding a late filing notification filed by the Company and that the Staff is conducting an informal inquiry into the matter. On April 29, 2021, the Company agreed to pay civil penalties of $25,000 to the Securities and Exchange Commission in settlement of the matter. Payment shall be made in the following four installments: (1) $5,000 within 14 days of entry of the order; (2) $7,500 within 180 days of entry of the order; (3) $6,250 within 270 days of entry of the order; and (4) $6,250 within 360 days of entry of the order. As of March 31, 2024, $20,000 remained due.

On April 6, 2023, the Company was served a Summons for an Amended Complaint filed in the state of Florida with claims for Strict Liability, Negligence and Breach of Implied Warranty. The complaint, filed by an insurance company, stems from its payments for claims filed by a policy holder on two separate occasions. The first insurance claim payment was due to a leak caused by improper installation in which the contractor failed to meet local codes. The second insurance claim payment followed the contractor's failure to properly repair the improper installation. The complaint states that the contractor failed to follow basic installation guidelines supplied with the product in either incident, resulting in damages. On June 8, 2023, the Court of Duval County, FL entered a default judgement for $38,768. As of March 31, 2024, the Company has not paid any of this balance.

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NOTE 8 - STOCK WARRANTS

The following is a summary of stock warrants activity during the period ended March 31, 2024:

	Number of Shares			Weighted Average Exercise Price
Balance, December 31, 2023		1,317,387			$	0.20
Warrants expired		(415,500	)			1.00
Balance outstanding and exercisable, March 31, 2024		901,887			$	0.23

NOTE 9 - 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 October 26, 2020, the Board of Directors (the Board), authorized the Company to amend the Articles of Incorporation of the Corporation to increase the authorized capital stock of the Corporation to 1,010,000,000 shares, of which 1,000,000,000 shall be authorized as common shares and 10,000,000 shall be authorized as preferred shares. Additionally, the Board authorized the execution of a reverse split of the issued and outstanding shares of the Corporation's common stock at a ratio of up to one post-split share per twenty-five pre-split shares (1:25) at a time and exact ratio amount the Board of Directors deems appropriate. On September 27, 2021, FINRA approved a 1-for-8 reverse stock split of the Company's common stock that was approved by the Company's Board of Directors. The Company's equity transactions have been retroactively restated to reflect the effect of the stock split.

The Company has also designated 76,000 shares of Series A Preferred Stock. Each share of Series A Preferred Stock is convertible, at any time, at the option of the holder, into five shares of our common stock and one warrant to purchase one share of our common stock at $1.00 per share. All Preferred Stock automatically converts into shares of the Company's common stock and warrants after three years from the original issue date of the Preferred Stock. On February 19, 2020 the Company converted the 76,000 outstanding Series A preferred shares, based on the automatic conversion terms into 205,000 common shares and 76,000 warrants have been issued, with the remaining 175,000 shares of common stock still to be issued and recognized as stock payable.

On January 18, 2024, the Company issued 1,050,000 shares pursuant to amendments to a related party promissory note which were made on October 20, 2021.

On January 19, 2024, the Company issued 3,000,000 shares for a notice of conversion of a promissory note.

On February 15, 2024, the Company issued 200,000 shares for cash at $0.05 per share for a total of $10,000.

On February 19, 2024, the Company issued 750,000 shares for services pursuant to two consulting agreements.

On February 19, 2024, the Company issued 100,000 shares for cash at $0.05 per share for a total of $5,000.

NOTE 10 - SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the date the financial statements were issued. The Company has determined that there are no other such events that warrant disclosure or recognition in the financial statements other than as set forth below.

On April 3, 2024, the Company issued 3,857,143 shares pursuant to a promissory note amendment and conversion dated April 3, 2023.

On April 4, 2024, the Company entered into a note agreement for $100,000 for a 12-month period and interest rate of 18%.

On April 4, 2024, the Company issued 36,893,398 shares to convert certain related party convertible notes dated July 26, 2022, June 15, 2023 and July 25, 2023.

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On April 10, 2024, the Company entered into a note agreement for $75,000 for a 9-month period and interest rate of 12%.

On April 11, 2024 the Company issued 1,000,000 shares for services pursuant to a consulting agreement.

On April 22, 2024, the Company entered into a consulting agreement with an individual for a six-month period. As compensation, the Company will issue 300,000 shares of common stock to the consultant immediately upon signing the agreement.

On April 23, 2024, the Company entered into a convertible note agreement for $150,000 for a 24-month period and interest rate of 12% and is convertible at $0.10 per share.

On May 3, 2024, the Company issued 7,002,740 shares of common stock for the conversion of $350,000 in principal and $140,192 in accrued interest on a convertible note.

On May 7, 2024, the Company issued 100,000 shares of common stock valued at $47,835, which was recorded in the prior year in Stock payable as an incentive to enter into a certain note payable.

On May 14, 2024, the Company entered into a convertible note agreement for $25,000 for a 12-month period and interest rate of 12% and is convertible at $0.15 per share.

On May 14, 2024 the Company issued 100,000 shares for services pursuant to a consulting agreement.

On May 29, 2024, the Company entered into a convertible note agreement for $100,000 for a 24-month period and interest rate of 12% and is convertible at $0.15 per share.

On July 10, 2024, the Company issued 200,000 shares for services pursuant to two separate consulting agreements.

On July 14, 2024, the Company issued 100,000 shares for services pursuant to a consulting agreement.

On July 16, 2024, the Company received $10,000 in advances on a continuing grid loan.

On July 23, 2024, the Company entered into a convertible note agreement for $50,000 for a 24-month period and interest rate of 12% and is convertible at $0.15 per share.

On July 24, 2024, the Company entered into a note agreement for $50,000 for a 6-month period and interest rate of 18%. The Company issued 300,000 shares of common stock as incentive for this financing agreement.

On July 25, 2024, the Company entered into a convertible note agreement for $500,000 for a 12-month period and interest rate of 15% and is convertible at $0.15 per share.

On July 26, 2024, the Company entered into a note agreement for $100,000 for a 6-month period and interest rate of 18%. The Company issued 600,000 shares of common stock as incentive for this financing agreement.

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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 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^th, 2021 and the spin off occurred on January 24^th, 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 the fiscal year ended December 31, 2023, we generated $3,549 in revenue. For the three months ended March 31, 2024, we generated $0.

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, 2024 compared with the three months ended March 31, 2023.

Revenues

In the three months ended March 31, 2024, we generated $0 in revenues, as compared to $585 in revenues in the prior year. The decrease in sales was attributable to less sales of our trutankless® residential and light commercial products.

Cost of goods sold was $0 in the three months ended March 31, 2024, as compared to $0 in the three months ended March 31, 2023.

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 $510,002 during the three months ended March 31, 2024 as compared to $569,370 in the prior year. In the three-month period ended March 31, 2024, our expenses primarily consisted of General and Administrative of $304,811, Research and development of $177,626 and Professional fees of $27,565.

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General and administrative expenses decreased by $182,813, or approximately 37% to $304,811 for the three months ended March 31, 2024 from $487,624 for the three months ended March 31, 2023. This decrease was primarily the result of a decrease in consulting fees.

Research and development expenses increased by $120,675, or approximately 212% to $177,626 for the three months ended March 31, 2024 from $56,951 for the three months ended March 31, 2023. This increase is attributed primarily to the increased consulting fees associated with the Company's research and development efforts.

Professional fees increased by $2,770, or approximately 11% to $27,565 for the three months ended March 31, 2024 from $24,795 for the three months ended March 31, 2023. Professional fees increased due to a decrease in consulting fees associated with business development.

Other Expenses

Other expenses decreased by $258,146 to ($104,850) in the three months ended March 31, 2024 from $153,296 in the three months ended March 31, 2023. The decrease was the result of a gain on extinguishment of debt.

Net Loss

In the three months ended March 31, 2024, we generated a net loss of $405,152, a decrease of $316,929 from $722,081 for the three months ended March 31, 2023. This decrease was attributable to a decrease in overall expenditures and the gain on extinguishment of debt.

Going Concern

Liquidity and Capital Resources

At March 31, 2024, we had an accumulated deficit of $67,071,065. Primarily because of our history of operating losses and our recording of note payables, we have a working capital deficiency of $7,457,130 at March 31, 2024. Losses have been funded primarily through issuance of common stock and borrowings from our stockholders and third-party debt. As of March 31, 2024, we had $1,073 in cash, $0 in accounts receivable, and $0 in inventory. We used net cash in operating activities of $402,780 for the three months ended March 31, 2024.

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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, 2024 and 2023:

	Three months ended
	March 31, 2024			March 31, 2023
Net cash used in operating activities	$	(402,780	)		$	(463,381	)
Net cash used in investing activities		-				-
Net cash provided by financing activities		382,400				380,000
Net increase/(decrease) in Cash		(20,380	)			(83,381	)
Cash, beginning		21,453				84,034
Cash, ending	$	1,073			$	653

Operating activities - Net cash used in operating activities was $402,780 for the three months ended March 31, 2024, as compared to $463,381 used in operating activities for the same period in 2023. The decrease in net cash used in operating activities was primarily due to a decrease in operating expenses.

Financing activities - Net cash provided by financing activities for the three months ended March 31, 2024 was $382,400 as compared to $380,000 for the same period of 2023. The increase of net cash provided by financing activities was mainly attributable to increased equity and debt financing.

Ongoing Funding Requirements

As of March 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. 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.

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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, 2023, filed with the SEC on June 26, 2024.

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 not 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.

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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.

Item 1A. Risk Factors

The risk factors listed in our 2023 Form 10-K, filed with the Securities Exchange Commission on June 26, 2024, are hereby incorporated by reference.

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