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 June 30, 2026

☐	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 Rule 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 August 19, 2026, was 170,348,374 shares.

TRUTANKLESS, INC.

THREE MONTH PERIOD ENDED JUNE 30, 2026

Index to Report on Form 10-Q

PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	25
Item 3.	Quantitative and Qualitative Disclosure About Market Risk	31
Item 4.	Controls and Procedures	31
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings.	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	32
Item 3.	Defaults Upon Senior Securities.	33
Item 4.	Mine Safety Disclosures	33
Item 5.	Other Information.	33
Item 6.	Exhibits.	34
SIGNATURES		35

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TRUTANKLESS, INC

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	June 30, 2026			December 31, 2025
ASSETS
Current assets
Cash	$	13,133		$	21,619
Accounts receivable		344,190			86,748
Prepaid expenses		1,503,779			1,996
Inventory		925,929			1,574,356
Vendor deposits		137,175			137,175
Total current assets		2,924,206			1,821,894

Other assets
Property, plant and equipment, net		358,805			405,296
Right-to-use asset		677,908			811,599
Trademarks		11,914			11,914
Other assets		61,531			61,531
Total other assets		1,110,158			1,290,340
Total assets	$	4,034,364		$	3,112,234

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Accounts payable and accrued liabilities	$	1,076,032		$	1,466,317
Advances payable - related parties		7,500			7,500
Lease liability		169,817			211,035
Accrued interest payable		389,163			453,274
Accrued interest payable - related parties		1,173,328			973,888
Stock payables liabilities		3,358,390			-
Royalty liabilities payable		564,576			599,997
Notes payable, net of discounts		572,950			765,000
Notes payable, net of discounts - related parties		4,194,119			6,459,753
Convertible notes payable, net of discounts		422,500			747,500
Convertible notes payable, net of discounts - related parties		-			750,000
Total current liabilities		11,928,375			12,434,264

Long-term liabilities
Deferred warranty revenue		21,414			11,205
Lease liability - long-term		535,192			628,779
Notes payable, net of discounts and current portion - related parties		1,908,344			-
Convertible notes payable, net of discounts and current portion - related parties		500,000			-
Total long-term liabilities		2,964,950			639,984
Total liabilities		14,893,325			13,074,248

Commitments and contingencies (Note 11)		-			-

Stockholders’ deficit
Preferred stock - Series A, $0.001 par value, 9,990,000 shares authorized, zero issued and outstanding		-			-
Preferred stock - Series B, $0.001 par value, 10,000 shares authorized, 0 shares issued and outstanding		-			-
Common stock, $0.001 par value, 300,000,000 shares authorized, 148,647,209 and 129,042,898 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively		148,647			129,043
Additional paid in capital		76,161,234			71,761,622
Accumulated deficit		(87,168,842	)		(81,852,679	)
Total stockholders’ deficit		(10,858,961	)		(9,962,014	)
Total liabilities and stockholders’ deficit	$	4,034,364		$	3,112,234

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						For the Six Months Ended
	June 30, 2026			June 30, 2025			June 30, 2026			June 30, 2025
Net sales	$	538,673		$	94,454		$	1,479,139		$	524,541
Cost of sales		238,458			76,451			734,173			402,249
Gross profit (loss)		300,215			18,003			744,966			122,292

Operating expenses
General and administrative expenses		310,578			160,800			715,445			427,466
Research and development		73,213			789			123,565			60,760
Consulting fees (see Note 4)		2,152,497			727,547			3,191,086			1,839,022
Legal and accounting fees		5,774			63,809			38,775			97,696
Audit fees		17,500			27,500			35,000			27,500
Depreciation and amortization expense		23,375			19,376			46,492			32,079
Total operating expenses		2,582,937			999,821			4,150,363			2,484,523
Operating loss		(2,282,722	)		(981,818	)		(3,405,397	)		(2,362,231	)

Other income (expense)
Other income		-			-			-			46,256
Loss on extinguishment of debt		(924,625	)		-			(1,418,518	)		-
Interest expense		(230,861	)		(179,653	)		(492,248	)		(441,377	)
Financing incentive expense		-			(83,250	)		-			(83,250	)
Total other income (expense)		(1,155,486	)		(262,903	)		(1,910,766	)		(478,371	)
Net income (loss)	$	(3,438,208	)	$	(1,244,721	)	$	(5,316,163	)	$	(2,840,602	)

Net loss per share - basic and diluted	$	(0.02	)	$	(0.01	)	$	(0.04	)	$	(0.02	)

Weighted average number of common shares - basic and diluted		145,121,576			131,454,497			139,913,120			130,700,968

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			Accumulated
	Shares		Amount		Shares			Amount			Capital			Deficit			Total
Balance, December 31, 2025		-	$	-		129,042,898		$	129,043		$	71,761,622		$	(81,852,679	)	$	(9,962,014	)
Stock issued for services		-		-		15,196,421			15,196			3,970,480			-			3,985,676
Stock issued for cash		-		-		500,000			500			49,500			-			50,000
Stock issued for conversion of notes payable		-		-		2,175,122			2,175			650,362			-			652,537
Net loss for the period		-		-		-			-			-			(1,877,955	)		(1,877,955	)
Balance, March 31, 2026		-		-		146,914,441			146,914			76,431,964			(83,730,634	)		(7,151,756	)
Stock issued for services		-		-		1,400,000			1,400			344,600			-			346,000
Stock issued for cash		-		-		8,825,000			8,825			873,675			-			882,500
Stock issued for conversion of notes payable		-		-		13,208,933			13,209			1,571,863			-			1,585,072
Stock transactions above authorized shares reported as liabilities		-		-		(21,701,165	)		(21,701	)		(3,336,689	)		-			(3,358,390	)
Forgiveness of related party accounts payable		-		-		-			-			106,300			-			106,300
Forgiveness of related party accrued liabilities		-		-		-			-			169,521			-			169,521
Net loss for the period		-		-		-			-			-			(3,438,208	)		(3,438,208	)
Balance, June 30, 2026		-	$	-		148,647,209		$	148,647		$	76,161,234		$	(87,168,842	)	$	(10,858,961	)

	Preferred Stock				Common Stock						Additional Paid-in			Accumulated
	Shares		Amount		Shares			Amount			Capital			Deficit			Total
Balance, December 31, 2024		-	$	-		128,608,178		$	128,608		$	70,626,721		$	(77,101,969	)	$	(6,346,640	)
Stock issued for services		-		-		1,745,000			1,745			485,242			-			486,987
Stock issued for cash		-		-		420,000			420			55,080			-			55,500
Net loss for the period		-		-		-			-			-			(1,595,881	)		(1,595,881	)
Balance, March 31, 2025		-		-		130,773,178			130,773			71,167,043			(78,697,850	)		(7,400,034	)
Stock issued for services		-		-		500,000			500			105,250			-			105,750
Stock issued for financing incentives		-		-		185,000			185			83,065			-			83,250
Stock issued for cash		-		-		250,000			250			27,250			-			27,500
Net loss for the period		-		-		-			-			-			(1,244,721	)		(1,244,721	)
Balance, June 30, 2025		-	$	-		131,708,178		$	131,708		$	71,382,608		$	(79,942,571	)	$	(8,428,255	)

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 Six Months Ended
	June 30, 2026			June 30, 2025
Cash flows from operating activities:
Net income (loss)	$	(5,316,163	)	$	(2,840,602	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		46,492			32,079
Stock issued for services		4,331,676			592,738
Shares issued to extend notes		-			83,250
Loss on extinguishment of debt		1,418,518			-
Non-cash operating lease expense		(1,114	)		15,667
Changes in operating assets and liabilities:
Accounts receivable		(257,441	)		5,893
Prepaid expenses		(1,501,784	)		1,017,723
Inventory		648,428			(849,453	)
Vendor deposits		-			(399,011	)
Security deposits		-			(42,584	)
Accounts payable		(105,664	)		453,073
Accrued liabilities		(2,682	)		78,609
Interest payable		41,170			55,344
Interest payable to related parties		238,248			166,194
Royalties payable		(41,539	)		-
Deferred warranty revenue		10,209			2,739
Net cash used in operating activities		(491,646	)		(1,628,341	)

Cash flows from investing activities:
Purchase of property, plant and equipment		-			(253,250	)
Net cash flows from investing activities		-			(253,250	)

Cash flows from financing activities:
Repayment of notes payable		(67,050	)		(129,000	)
Proceeds from notes payable - related parties		503,783			1,379,380
Repayment of notes payable - related party		(861,073	)		(440,432	)
Repayment of convertible notes payable		(25,000	)		(3,500	)
Proceeds from issuance of common stock		932,500			83,000
Net cash provided by financing activities		483,160			889,448

Net change in cash		(8,486	)		(992,143	)
Cash and cash equivalents - beginning of period		21,619			1,004,190
Cash and cash equivalents - end of period	$	13,133		$	12,047

Supplemental disclosures of cash flow information:
Cash paid for interest	$	207,193		$	227,113
Cash paid for income taxes	$	-		$	-

Supplemental non-cash information
Conversion of notes payable into common stock	$	819,090		$	-
Forgiveness of related party accounts payable directly to additional paid-in capital	$	106,300		$	-
Forgiveness of related party accrued liabilities directly to additional paid-in capital	$	169,521		$	-
Stock transactions above authorized shares reported as liabilities	$	3,358,390		$	-
Common stock issued per consulting agreements	$	4,031,676		$	592,738

See accompanying notes to the unaudited condensed consolidated financial statements.

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TRUTANKLESS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

(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 condensed 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 condensed consolidated financial statements for the six months ended June 30, 2026 should be read in conjunction with the condensed consolidated financial statements and accompanying notes included in the Company’s Form 10-K for the Company’s fiscal year ended December 31, 2025, as filed with the SEC.

The consolidated balance sheet as of December 31, 2025, 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 condensed 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, 2026.

Principles of consolidation

The condensed consolidated financial statements include the accounts of Trutankless, Inc. and its wholly owned subsidiaries, Bollente, Inc. and Tankless 365, Inc. On May 16, 2010, the Company acquired 100% of the outstanding stock of Bollente, Inc. On October 20, 2021, the Company formed a wholly owned subsidiary, Tankless365, Inc. All significant inter-company transactions and balances have been eliminated.

Use of estimates

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

Cash and cash equivalents

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

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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 June 30, 2026.

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, 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 June 30, 2026 and December 31, 2025, 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.

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 at June 30, 2026 and December 31, 2025.

Advertising Costs

The Company’s policy regarding advertising is to expense advertising when incurred. The Company incurred advertising expenses of $48,951 and $17,558 during the six months ended June 30, 2026 and 2025, 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 $123,565 and $60,760 for the six months ended June 30, 2026 and 2025, respectively.

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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. Customer orders are received via email, purchase orders or verbally via phone calls or in person. 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.

The Company’s performance obligation is to ship the ordered product to the customer. 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. Payment terms are typically at time of purchase for one-time buyers or net 30 days for wholesale customers.

The Company’s water heater has a two-year warranty on the unit, during which the Company will cover any required parts or repairs. The Company offers an extended five-year warranty that the customer can purchase. This is in addition to the initial two-year warranty. The extended warranty service income is deferred until the initial two-year period is up and then the service fee is amortized over the five-year warranty period.

Inventory

Inventory, including manufacturing cost and shipping are stated at the lower of cost (average cost) or market (net realizable value). During the fiscal year 2025, the Company began improving its inventory tracking by putting in procedures to track all costs related to inventory assets and performing period end counts on a regular basis. Currently, the Company uses physical counts to verify the inventory items supported by the accounting system. All inventory is valued using an average cost method.

Properties, Plant and Equipment

We record properties, plant and equipment at historical cost. We provide depreciation and amortization in amounts sufficient to match the cost of depreciable assets to operations over their estimated service lives or productive value. We capitalize expenditures for improvements that significantly extend the useful life of an asset. We charge expenditures for maintenance and repairs to operations when incurred. Depreciation is computed using the straight-line method over estimated useful lives as follows:

Building		7 to 15 years
Leasehold improvements		3 to 5 years
Vehicles and equipment		3 to 7 years
Production and warehouse equipment		5 to 15 years
Furniture and fixtures		2 to 3 years

Vendor Deposits

The Company orders many parts from over-seas vendors or specialized equipment. These vendors require up-front payment on these parts or equipment. The Company records these advance payments as vendor deposits. Once the parts and/or equipment is received the applicable deposit amount is removed from vendor deposits and moved to appropriate account, for example inventory or fixed assets.

Security Deposits

The Company has two leases for office/warehouse space. Each of these leases required a security deposit. The Company records these payments as security deposits. Once a lease is terminated and the applicable deposit amount is received back by the Company, this deposit is removed from security deposits.

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.

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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.

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 June 30, 2026 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 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 June 30, 2026 and December 31, 2025.

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 condensed 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 condensed 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 begun generating significant revenues from product sales but still not enough to provide sufficient cash flows to enable the Company to finance its operations internally. As of June 30, 2026, the Company had $13,133 cash on hand. On June 30, 2026, the Company has an accumulated deficit of $87,168,842. For the six months ended June 30, 2026, the Company had a net loss of $5,316,163, and cash used in operations of $491,646. 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 condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

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NOTE 3 - ACCOUNTS RECEIVABLE, NET

Accounts receivable consist of the following at:

	June 30, 2026		December 31, 2025
Accounts receivable	$	344,190	$	86,748
Allowance for doubtful accounts		-		-
Total	$	344,190	$	86,748

Based on an analysis by management of the outstanding invoices for each customer and other factors, it was determined that all outstanding balances are expected to be collected. As of June 30, 2026 and December 31, 2025, the allowance for doubtful accounts were $0 and $0, respectively.

NOTE 4 - PREPAID EXPENSES

Prepaid expenses consist of the following at:

	June 30, 2026		December 31, 2025
Prepaid expenses	$	3,441	$	1,425
Prepaid stock-based compensation		1,500,338		571
Total	$	1,503,779	$	1,996

Prepaid stock-based compensation consisted of stock issuances for consulting agreements that are being amortized over the life (six or twelve months) of the agreements. The prepaid stock-based compensation is comprised of the following at June 30, 2026 and December 31, 2025:

Consultant	Shares		Market Price		Value
2026 Agreements
Balance at December 31, 2025					$	571
Non-Affiliates		15,796,421	$	0.2485 - 0.30		4,165,976
		15,796,421				4,166,547
less: Amortizations						(2,666,209	)
Balance at June 30, 2026					$	1,500,338

2025 Agreements
Balance at December 31, 2024					$	1,231,684
Non-Affiliates		1,425,000	$	0.05 - 0.30		391,148
Related Party		20,000	$	0.29		5,790
		1,445,000				1,628,622
less: Amortizations						(1,628,051	)
Balance at December 31, 2025					$	571

During the six months ended June 30, 2026 and 2025, the Company also issued 800,000 and 800,000 shares of common stock, respectively, pursuant to consulting agreements with related parties that vest immediately or periodically throughout the year. These shares were valued at the market price on the day of issuance for a total value of $165,700 and $195,800 for the six months ended June 30, 2026 and 2025, respectively. During the six months ended June 30, 2026 and 2025, the Company reported $2,666,209 and $1,605,724 in stock-based compensation as consulting expense.

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NOTE 5 – INVENTORY

Inventory consists of the following at:

	June 30, 2026		December 31, 2025
Finished Goods	$	85,821	$	463,945
Work In Process		95,403		97,007
Parts		744,705		1,013,404
Total Inventory	$	925,929	$	1,574,356

Management evaluates the parts and each category of inventory for obsolescence and net resale value at each reporting period. The net resale value is based on the market price of items versus the cost of such items. During the six months ended June 30, 2026 and 2025, the Company wrote down inventory of $111,921 and $0, respectively. During the six months ended June 30, 2026 and 2025, the Company recorded costs of goods sold of $734,173 and $402,249, respectively.

NOTE 6 – PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment at June 30, 2026 and December 31, 2025 consisted of the following:

	June 30, 2026			December 31, 2025
Tools, Machinery and Equipment	$	109,164		$	109,164
Leasehold Improvements		380,444			380,444
Property Plant and Equipment Gross		489,608			489,608
Less Accumulated Depreciation		(130,803	)		(84,312	)
Total Property, Plant and Equipment	$	358,805		$	405,296

During the six months ended June 30, 2026 and 2025, the Company recognized depreciation expense of $46,492 and $32,079, respectively.

NOTE 7 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities at June 30, 2026 and December 31, 2025 consisted of the following:

	June 30, 2026		December 31, 2025
Accounts Payable	$	541,143	$	753,106
Accrued Payroll Taxes		60,962		32,673
Accrued Salaries and Benefits		424,403		651,229
Royalties Payable		23,190		29,309
Revenue Sharing Payable		26,334		-
Total Accounts Payable and Accrued Liabilities	$	1,076,032	$	1,466,317

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NOTE 8 – STOCK PAYABLES LIABILITIES

During the six months ended June 30, 2026, the Company’s stock transactions exceeded the 150,000,000 shares of authorized common stock. There were 19 stock transactions that exceeded the shares of authorized common stock by 21,701,165 shares for $3,358,390. The Company recorded these transactions as stock payables liabilities for $3,358,390 as of June 30, 2026. On August 6, 2026, the Company amended the Articles of Incorporation for the Corporation to change the authorized capital stock of the Corporation to 310,000,000 shares, of which 300,000,000 shall be authorized as common shares and 10,000,000 shall be authorized as preferred shares.

NOTE 9 – ROYALTY AGREEMENT LIABILITIES AND REVENUE SHARING AGREEMENTS

Royalty Agreement Liabilities

In November and December 2023, the Company issued 15 promissory note royalty agreements to investors for a total of $417,500. During the fiscal year ended December 31, 2024, the Company issued 3 additional promissory note royalty agreements to investors for an additional $130,000. During the fiscal year ended December 31, 2025, the Company had one note payable for $75,000 convert to a royalty agreement for a total of $622,500. These agreements require the Company to pay up to $50 per unit sold in royalties to these investors based on their investment amounts. The units sold 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. On February 28, 2025, the Company produced and sold the 500th unit relating to these royalty agreements. As of March 1, 2025, the Company entered the royalty period, which will continue until March 31, 2031. Since the Company began selling its new line of products in mid-2024, sales are increasing at a rapid rate. It is difficult to estimate the number of units that will be sold during the six-year royalty period. The royalty agreements have a “buy-out” feature, in which the Company can buy-out the remaining term of the agreements for 200% of the investment amount. The Company determined that this 200% “buy-out” price is the most appropriate method to use for the estimated future payments of royalties. In accordance with ASC 835-30, the Company recognizes an effective interest rate of 50% on the royalties paid based on an estimated future payment of royalties. During the year ended December 31, 2025, the Company sold 723 units and reported $45,007 in royalties to be paid. Of the $45,007 in royalties payable accrued in 2025, the Company recognized a reduction of the royalties liabilities of $22,503 and interest expense of $22,504. During the six months ended June 30, 2026, the Company sold 1,138 units and reported $70,841 in royalties to be paid. Of the $70,841 in royalties payable accrued during the six months ended June 30, 2026, the Company recognized a reduction of the royalties liabilities of $35,421 and interest expense of $35,420. The royalty liabilities payable is comprised of the following at June 30, 2026 and December 31, 2025:

Royalty Liabilities Agreements	Amount
Balance as of December 31, 2024	$	547,500
Additions		75,000
		622,500
less: Royalties Payable		(22,503	)
Balance as of December 31, 2025		599,997
Additions		-
		599,997
less: Royalties Payable		(35,421	)
Balance as of June 30, 2026	$	564,576

As of December 31, 2025, the Company had paid $15,698 of these royalties and had accrued $29,309 in royalties payable. As of June 30, 2026, the Company paid $76,960 in royalties and had accrued $70,841 in royalties payable. The royalties payable is comprised of the following at June 30, 2026 and December 31, 2025:

Royalties Payable	Amount
Balance as of December 31, 2024	$	-
Principal Liability Additions		22,503
Interest Additions		22,504
		45,007
less: Cash Payments		(15,698	)
Balance as of December 31, 2025	$	29,309
Principal Liability Additions		35,421
Interest Additions		35,420
		100,150
less: Cash Payments		(76,960	)
Balance as of June 30, 2026	$	23,190

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Revenue Sharing Agreements

From April 2026 through June 2026, the Company entered into 12 stock subscription and revenue sharing agreements with individuals for $882,500 in cash. These agreements require the Company issue shares of common stock at $0.10 per share for the investment amounts and to pay $2 per unit sold for every $25,000 invested in revenue sharing to these purchasers. The revenue sharing payment obligation began retroactively on April 1, 2026 and continues for 4 (four) calendar years. The Company reports on the units sold and pays the revenue sharing payments on a quarterly basis. The Company recognizes these revenue sharing payments as a decrease in net revenue. The revenue sharing agreements have a “buyback” feature, in which, in the event the purchaser receives 100% of their investment back from receipt of revenue sharing payments, the Company shall have the right to buy back the shares of common stock received and the purchaser’s interest in the revenue sharing program for 100% of the purchaser’s investment made in the stock subscription and revenue sharing agreements. During the three months ended June 30, 2026, the Company sold 373 units and reported $26,334 in revenue sharing to be paid. The revenue sharing payable is comprised of the following at June 30, 2026 and December 31, 2025:

Revenue Sharing Payable	Amount
Balance as of December 31, 2025	$	-
Revenue Sharing Additions		26,334
		26,334
less: Cash Payments		-
Balance as of June 30, 2026	$	26,334

NOTE 10 - RELATED PARTY

In April 2024, the Company entered into a consulting agreement with Sperry Advisory Services, LLC, which is owned by Rodney Sperry, to provide accounting and financial reporting services to the Company. In November 2024, the Company appointed Rodney Sperry as the chief financial officer of the Company. The Company paid $40,000 and $41,887 in cash payments and issued common stock valued at $92,000 and $127,400 to Sperry Advisory Services, LLC during the six months ended June 30, 2026 and 2025, respectively. For the six months ended June 30, 2026 and 2025, the Company recognized accounting fees of $33,001 and $93,695 from Sperry Advisory Services, LLC. As of June 30, 2026 and December 31, 2025, there was $93,614 and $100,613 in accounts payable for Sperry Advisory Services, LLC, respectively.

During the six months ended June 30, 2026 and 2025, the Company received $0 and $0 in advances and made payments $0 and $0 from a related party, respectively. As of June 30, 2026 and December 31, 2025, the Company had advances from a related party of $7,500 and $7,500, respectively.

Notes payable - related party consist of the following at:

		June 30, 2026			December 31, 2025
Note payable, secured, 5% interest, due on demand		$	59,450		$	59,450
Note payable, secured, 18% interest, due December 2028			40,000			40,000
Note payable, 8% interest, due December 31, 2024	In Default		4,120,697			3,963,939
Notes payable, secured, 18% interest, due December 2028			125,000			125,000
Note payable, secured, 18% interest, due December 2028			1,318,344			1,382,054
Note payable, secured, 12% interest, due April 26, 2026	In Default		7,124			42,400
Note payable, secured, 12% interest, due April 30, 2026	In Default		6,848			19,700
Note payable, secured, 12% interest, due December 2028			425,000			827,210
Total notes payable - related party		$	6,102,463		$	6,459,753
Less current portion			(4,194,119	)		(6,459,753	)
Total notes payable - related party - long term		$	1,908,344		$	-

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During the year ended December 31, 2025, the Company received $31,000 under a note payable from a director of the Company under this note. As of June 30, 2026 and December 31, 2025, the Company had one note payable due to a director of the Company in the amount of $59,450 and $59,450, respectively. The note has an interest rate of 5% and is due on demand.

As of June 30, 2026 and December 31, 2025, the Company had one note payable due to a former officer of the Company in the amount of $7,124 and $42,400, respectively. This Note is currently in default. The Company has not received a notice of default from the lender. The note has an interest rate of 12% and is due April 26, 2026.

On April 30, 2021, the Company entered into a $150,000, 12% grid note payable with a Company controlled by the former CEO that is due upon demand but no later than April 30, 2026. As of June 30, 2026 and December 31, 2025, the Company has received advances under the note of $0 and $0 and made repayment of $12,852 and $80,500, respectively. This Note is currently in default. The Company has not received a notice of default from the lender. As of June 30, 2026 and December 31, 2025, the note had a balance of $6,848 and $19,700, respectively.

On January 11, 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, 2021, 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 Built Right Holdings, LLC, an entity under common ownership of a related party who concurrently amended the terms of the note with the Company to accrue interest and to extend the maturity date of the note to August 31, 2025. This assignment makes this a related party note. On January 1, 2026, this note was extended until December 29, 2028. As of June 30, 2026 and December 31, 2025, the balance of the note was $125,000 and $125,000, respectively.

On September 1, 2022, the Company entered into a $2,500,000 8% convertible grid note with Notation Labs, Inc, a company commonly controlled by a director of the Company. The note was due on December 31, 2024 and is currently in default.

No notice of default has been received on this note. The Company is working with the lender to get this note extended. and the Company continues to receive and payback funds under this note agreement. During the year ending December 31, 2024, the Company received $868,300 in net advances from the note and made payments of $721,284 on the note. During the year ending December 31, 2025, the Company received $2,652,230 in net advances from the note and made payments of $1,050,529 on the note. During the six months ended June 30, 2026, the Company received $905,993 in net advances from the note, which includes the increase of $402,209 relating to the December 28, 2025 note detailed below and made payments of $749,235 on the note. As of June 30, 2026 and December 31, 2025, the balance of the note was $4,120,697 and $3,963,939, respectively.

On July 23, 2023, the Company entered into a $40,000, 12% note payable with Built Right Holdings, LLC, an entity under common control of a related party and matures on July 25, 2024. On January 1, 2026, this note was extended until December 29, 2028. As of June 30, 2026 and December 31, 2025, the balance of the note was $40,000 and $40,000, respectively.

On December 16, 2024, the Company entered into a $1,500,000, 18% note payable with Built Right Holdings, LLC, an entity under common control of a related party and matures on December 16, 2025. During the year ended December 31, 2025, the Company made payments of $117,946 towards the note balance. During the six months ended June 30, 2026, the Company made payments of $63,710 towards the note balance. On January 1, 2026, this note was extended until December 29, 2028. As of June 30, 2026 and December 31, 2025, the balance of the note was $1,318,344 and $1,382,054, respectively.

On December 28, 2025, the Company entered into a $827,209, 12% note payable with the Rod and Kim Cullum Trust, an entity under common control of a related party and matures on December 28, 2026 for a charge on the stand by letter of credit to settle the agreement with the contract manufacturer. Under the Company’s agreement with its contract manufacturer, a stand by letter of credit was required. Rod Cullum agreed to provide the stand by letter of credit for this arrangement and it has been in place since 2023. This agreement with the contract manufacturer was terminated in August 2025 and the settlement amount was being negotiated by both sides. On December 28, 2025, the payment of $827,209 settled the agreement and the stand by letter of credit is no longer needed. On January 1, 2026, this stand by letter of credit charge was formalized with a note agreement and matures on December 29, 2028. The stand by letter of credit charge of $827,209 was split between the Company at $425,000 and its related entity, Notation Labs, at $402,209. The note balance was decreased by $402,209 and the Notation Labs note payable, which was initially lowered on December 28, 2025, was increased by $402,209 on January 1, 2026 as well. As of June 30, 2026 and December 31, 2025, the balance of the note was $425,000 and $827,209, respectively.

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Interest expense associated with the related party notes for the six months ended June 30, 2026 and 2025 was $323,774 and $262,239, respectively.

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

	June 30, 2026		December 31, 2025
Convertible note payable, 12% interest, due March 2025	$	-	$	250,000
Convertible note payable, 15% interest, due December 2028		500,000		500,000
Total convertible notes payable - related party	$	500,000	$	750,000
Less current portion		-		(750,000	)
Total convertible notes payable - related party - long-term	$	500,000	$	-

On March 26, 2024, the Company issued a $250,000 12% 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. On June 9, 2026, the Company issued 5,776,165 shares of common stock pursuant to a conversion notice for the $250,000 note balance and $38,808 in accrued interest. The Company recognized $404,332 in loss on extinguishment of debt. As of June 30, 2026 and December 31, 2025, the balance of the note was $0 and $250,000, respectively.

On July 25, 2024, the Company issued a $500,000 15% convertible promissory note to a company commonly controlled by a shareholder of the Company. The note is due on July 25, 2025 and is convertible into shares of the Company’s common stock at a rate of $0.15 per share. On January 1, 2026, this note was extended until December 29, 2028. As of June 30, 2026 and December 31, 2025, the balance of the note was $500,000 and $500,000, respectively.

Interest expense on all of the above convertible notes for the six months ended June 30, 2026 and 2025 was $39,986 and $52,068, respectively.

NOTE 11 - NOTES PAYABLE

Notes payable consist of the following at:

		June 30, 2026			December 31, 2025
Note payable, secured, 12% interest, due April 2026	In Default	$	84,950		$	95,000
Notes payable, secured, 12% interest, due December 2023	In Default		10,000			10,000
Notes payable, 12% interest, due starting August 2024	In Default		85,000			210,000
Notes payable, 18% interest, due starting April 2025	In Default		93,000			100,000
Note payable, 18% interest, due January 2025	In Default		100,000			100,000
Note payable, 18% interest, due November 2025			-			50,000
Note payable, 24% interest, due February 2026			100,000			100,000
Note payable, 24% interest, due April 2026			100,000			100,000
Total notes payable		$	572,950		$	765,000
Less current portion			(572,950	)		(765,000	)
Total Notes Payable - long term		$	-		$	-

On April 26, 2021, the Company entered into a $95,000, 12% note payable due on April 26, 2026. This Note is currently in default. The Company has not received a notice of default from the lender. As of June 30, 2026 and December 31, 2025, the balance of the note was $84,950 and $95,000, respectively.

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. This Note is currently in default. The Company has not received a notice of default from the lender. As of June 30, 2026 and December 31, 2025, the balance of the note was $10,000 and $10,000, respectively.

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On August 3, 2023 the Company’s wholly owned subsidiary initiated an offering of 12% Notes with maturity dates starting on August 3, 2024. As of December 31, 2023, the Company has raised $625,000 under the offering. During the year ended December 31, 2024, the Company converted $290,000 of the notes and accrued interest of $24,353 into 4,657,143 shares of common stock. During the year ended December 31, 2025, the Company paid off one of the notes for $125,000. During the six months ended June 30, 2026, the Company converted $125,000 of the notes and accrued interest of $33,644 into 2,175,122 shares of common stock. The Company recognized a loss on extinguishment of debt of $493,893. These Notes are currently in default. The Company has not received a notice of default from any of the lenders. As of June 30, 2026 and December 31, 2025, the balance of the notes was $85,000 and $210,000, respectively.

On April 4, 2024 the Company’s wholly owned subsidiary issued a $100,000 18% promissory note with a maturity date of April 4, 2025. This Note is currently in default. The Company has not received a notice of default from the lender. As of June 30, 2026 and December 31, 2025, the balance of the notes was $100,000 and $100,000, respectively.

On July 24, 2024 the Company issued a $50,000 18% promissory note with a maturity date of January 24, 2025. On April 28, 2026, the Company made a payment of $61,178 towards the $50,000 note balance and $11,178 in accrued interest. The note was paid in full. As of June 30, 2026 and December 31, 2025, the balance of the notes was $0 and $50,000, respectively.

On July 26, 2024 the Company issued a $100,000 18% promissory note with a maturity date of January 25, 2025. This Note is currently in default. The Company has not received a notice of default from the lender. As of June 30, 2026 and December 31, 2025, the balance of the notes was $100,000 and $100,000, respectively.

On August 5, 2024 the Company issued a $100,000 24% promissory note with a maturity date of February 5, 2025. This Note is currently in default. The Company has not received a notice of default from the lender. As of June 30, 2026 and December 31, 2025, the balance of the notes was $100,000 and $100,000, respectively.

On November 5, 2024 the Company issued a $100,000 24% promissory note with a maturity date of May 5, 2025. This Note is currently in default. The Company has not received a notice of default from the lender. As of June 30, 2026 and December 31, 2025, the balance of the notes was $100,000 and $100,000, respectively.

Interest expense including amortization of the associated debt discount for the six months ended June 30, 2026 and 2025 was $58,131 and $88,665, respectively.

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

		June 30, 2026			December 31, 2025
Convertible note payable, secured, 12% interest, due August 31, 2019	In Default	$	40,000		$	40,000
Convertible note payable, secured, 10% interest, due February 2024	In Default		45,000			45,000
Convertible note payable, secured, 12% interest, due Feb 15, 2026	In Default		75,000			75,000
Convertible note payable ,12% interest, due May 2020,	In Default		108,500			108,500
Convertible note payable, 12% interest, due May 2025			-			25,000
Convertible notes payable, 8% interest, due March 2025	In Default		30,000			30,000
Convertible notes payable, 0% interest, due March 2026	In Default		64,000			64,000
Convertible notes payable, 12% interest, due April 2026			-			150,000
Convertible notes payable, 12% interest, due May 2026			-			100,000
Convertible note payable, 12% interest, due July 2026			-			50,000
Convertible note payable, 0% interest, due December 2025	In Default		60,000			60,000
Total convertible notes payable			422,500			747,500
Less current portion			(422,500	)		(747,500	)
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 Company has not received a notice of default from the lender. 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 (post-split). During the year ended December 31, 2024, the Company made a payment of $10,000 towards the principal balance. As of June 30, 2026 and December 31, 2025, the balance of the note was $40,000 and $40,000, respectively.

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 (post-split). 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. This Note is currently in default. The Company has not received a notice of default from the lender. As of June 30, 2026 and December 31, 2025, the balance of the note was $45,000 and $45,000, respectively.

On February 15, 2018, the Company issued a $75,000 12% 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 (post-split) 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. On September 3, 2024, the due date of the note was extended until February 15, 2026. This Note is currently in default. The Company has not received a notice of default from the lender. As of June 30, 2026 and December 31, 2025, the balance of the note was $75,000 and $75,000, respectively.

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 Company has not received a notice of default from the lender. 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 (post-split) valued at $175,070. As of June 30, 2026 and December 31, 2025, the balance of the note was $108,500 and $108,500, respectively.

On July 18, 2022, the Company entered into a $150,000 8% convertible grid note. The note is due on July 18, 2023 and is convertible at a rate of $0.80 per share (post-split). 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. During the year ended December 31, 2024, the Company received $30,000 under this grid 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. This Note is currently in default. The Company has not received a notice of default from the lender. As of June 30, 2026 and December 31, 2025, the balance of the note was $30,000 and $30,000, respectively.

On April 23, 2024 the Company issued a $150,000 12% convertible promissory note with a maturity date of April 23, 2026 and is convertible at a rate of $0.10 per share. On May 13, 2026, the Company issued 3,739,726 shares of common stock pursuant to a conversion notice for the $150,000 note balance and $36,986 in accrued interest. The Company recognized $261,781 in loss on extinguishment of debt. As of June 30, 2026 and December 31, 2025, the balance of the notes was $0 and $150,000, respectively.

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On May 14, 2024 the Company issued a $25,000 12% convertible promissory note with a maturity date of May 14, 2025 and is convertible at a rate of $0.15 per share. On June 2, 2026, the Company made a payment of $30,636 towards the $25,000 note balance and $5,636 in accrued interest. The note was paid in full. As of June 30, 2026 and December 31, 2025, the balance of the notes was $0 and $25,000, respectively.

On May 29, 2024 the Company issued a $100,000 12% convertible promissory note with a maturity date of May 29, 2026 and is convertible at a rate of $0.15 per share. On May 13, 2026, the Company issued 2,469,480 shares of common stock pursuant to a conversion notice for the $100,000 note balance and $23,474 in accrued interest. The Company recognized $172,864 in loss on extinguishment of debt. As of June 30, 2026 and December 31, 2025, the balance of the notes was $0 and $100,000, respectively.

On July 3, 2024 the Company issued a $50,000 12% convertible promissory note with a maturity date of July 3, 2026 and is convertible at a rate of $0.15 per share. On May 14, 2026, the Company issued 1,223,562 shares of common stock pursuant to a conversion notice for the $50,000 note balance and $11,178 in accrued interest. The Company recognized $85,649 in loss on extinguishment of debt. As of June 30, 2026 and December 31, 2025, the balance of the notes was $0 and $50,000, respectively.

On September 3, 2024, the Company negotiated a consolidated 12% secured convertible promissory note with a lender. The note consolidated a $75,000 note from February 18, 2018 and a $25,000 note from March 3, 2021 and forgave $20,353 in accrued interest. The Company recognized a gain on the settlement of $20,353. The new agreement also required monthly payments toward the note balance and the new maturity date is April 23, 2026. During the year ended December 31, 2024, the Company made payments of $23,500. During the year ended December 31, 2025, the Company made payments of $12,500 towards the note balance. This Note is currently in default. The Company has not received a notice of default from the lender. As of June 30, 2026 and December 31, 2025, the balance of the note was $64,000 and $64,000, respectively.

On December 1, 2024 the Company issued a $60,000 0% convertible promissory note with a maturity date of December 1, 2025 and is convertible at a rate of $0.15 per share. This Note is currently in default. The Company has not received a notice of default from the lender. As of June 30, 2026 and December 31, 2025, the balance of the notes was $60,000 and $60,000, respectively.

Interest expense including financing cost and amortization of the associated debt discount on all of the above convertible notes for the six months ended June 30, 2026 and 2025 was $34,937 and $38,404, respectively.

NOTE 12 - COMMITMENTS AND CONTINGENCIES

Operating Lease Agreements

In accordance with ASC 842, 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.

In January 2023, the Company executed a lease agreement. The lease term is 40 months at a rate of $5,624 per month and rent commencing on September 1, 2023. The Company was required to pay a $12,166 security deposit.

On February 1, 2025, the Company executed a lease agreement. The lease term is 60 months at an initial rate of $18,962 per month with a 4% increase each year with rent commencing on February 1, 2025. The Company was required to pay a $44,365 security deposit.

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The current 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 18%, as the rate implicit in the lease is not determinable.

Undiscounted Cash Flows

As of June 30, 2026, the right of use asset and lease liability were shown on the condensed consolidated balance sheet at $677,908 and $705,009, respectively. In accordance with ASC 842, the right-of-use asset of $677,908 differs from the lease liability of $705,009 due to the $27,101 difference between straight-line lease cost recognized and cash payments applied to the liability. 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 condensed consolidated balance sheet as of June 30, 2026:

Amounts due as of June 30, 2026	Operating Leases
2026	$	154,820
2027		245,318
2028		255,130
2029		265,336
2030		22,182
Total minimum lease payments		942,786
Less: effect of discounting		(237,777	)
Present value of future minimum lease payments		705,009
Less: current obligations under leases		(169,817	)
Long-term lease obligations	$	535,192

Legal Matter

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 June 30, 2026 and as of the date of this filing, $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 June 30, 2026 and as of the date of this filing, the Company has not paid any of this balance.

NOTE 13 - INCOME TAXES

As of June 30, 2026 and December 31, 2025, the Company has net operating loss carry forwards of $15,292,597 and $15,070,424, respectively, which may be available to reduce future years’ taxable income through 2045. The Company’s net operating loss carry forwards may be subject to annual limitations, which could reduce or defer the utilization of the losses as a result of an ownership change as defined in Section 382 of the Internal Revenue Code.

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The Company’s tax expense differs from the “expected” tax expense for Federal income tax purposes (computed by applying the United States Federal tax rate of 21% and state tax rate of 0% to loss before taxes for fiscal years 2026 and 2025), as follows:

SCHEDULE OF TAX EXPENSE FOR FEDERAL INCOME TAX PURPOSES

	June 30, 2026					December 31, 2025
Federal tax benefit at the statutory rate	$	(1,116,394	)	21.00	%	$	(997,649	)	21.00	%
State tax benefit at the statutory rate		-		0.00	%		-		0.00	%
Unallowed deductions		1,632		-0.03	%		587		-0.01	%
Stock based forbearance fee expense		-		0.00	%		87,792		-1.85	%
Stock based compensation expense		594,701		-11.19	%		387,503		-8.16	%
Loss on settlement of debt		297,889		-5.60	%		-		0.00	%
Amortization of debt discount		-		0.00	%		-		0.00	%
Change in valuation allowance		222,172		-4.18	%		521,767		-10.98	%
Total	$	-				$	-

The tax effects of the temporary differences between reportable financial statement income and taxable income are recognized as deferred tax assets and liabilities.

The tax effect of significant components of the Company’s deferred tax assets and liabilities at June 30, 2026 and December 31, 2025, are as follows:

SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES

	June 30, 2026			December 31, 2025
Deferred tax assets:
Net operating loss carryforward	$	15,292,597		$	15,070,424
Timing differences		-			-
Total gross deferred tax assets		15,292,597			15,070,424
Less: Deferred tax asset valuation allowance		(15,292,597	)		(15,070,424	)
Total net deferred taxes	$	-		$	-

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

Because of the historical earnings history of the Company, the net deferred tax assets for 2026 and 2025 were fully offset by a 100% valuation allowance. The valuation allowance for the remaining net deferred tax assets was $15,292,597 and $15,070,424 as of June 30, 2026 and December 31, 2025, respectively.

The tax years 2021 – 2025 remain open to examination by federal agencies and other jurisdictions in which it operates.

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NOTE 14 - 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. On August 6, 2026, the Company amended the Articles of Incorporation for the Corporation to change the authorized capital stock of the Corporation to 310,000,000 shares, of which 300,000,000 shall be authorized as common shares and 10,000,000 shall be authorized as preferred shares.

The Series B Preferred Stock does not pay a dividend, does not have any liquidation preference over other securities issued by the Company and are not convertible into shares of the Company’s common stock. For so long as any shares of the Series B Preferred Stock remain issued and outstanding, the holders thereof, voting separately as a class, shall have voting power equal to a controlling 51% of the total vote on all shareholder matters of the Company. Upon or after the third anniversary of the initial issuance date, the Company shall have the right, at the Company’s option, to redeem all or a portion of the shares of Series B Preferred Stock, at a price per share equal to par value.

Common Stock

On January 1, 2026, the Company issued 200,000 shares for services pursuant to a consulting agreement.

On January 22, 2026, the Company issued 5,300,000 shares to an unrelated individual pursuant to a consulting agreement. These shares were valued at $0.2485 per share for a total value of $1,317,050 and will be amortized over the twelve-month term of the agreement.

On January 26, 2026, the Company issued 100,000 shares per a subscription agreement at $0.10 per share for $10,000 in cash.

On February 1, 2026, the Company issued 200,000 shares for services pursuant to a consulting agreement.

On February 2, 2026, the Company issued 3,000,000 shares to an unrelated individual pursuant to a consulting agreement. These shares were valued at $0.20 per share for a total value of $600,000 and will be amortized over the six-month term of the agreement.

On February 16, 2026, the Company issued 200,000 shares per a subscription agreement at $0.10 per share for $20,000 in cash.

On February 16, 2026, the Company issued 50,000 shares for services pursuant to a consulting agreement.

On February 19, 2026, the Company issued 200,000 shares per a subscription agreement at $0.10 per share for $20,000 in cash.

On February 23, 2026, the Company issued 6,446,421 shares to an unrelated individual for management services pursuant to a consulting agreement. These shares were valued at $0.30 per share for a total value of $1,933,926 and will be amortized over the six-month term of the agreement.

On February 24, 2026, the Company issued 2,175,122 shares of common stock for the conversion of $125,000 note issued on August 23, 2023 and $33,644 in accrued interest (see Note 10 – April 3, 2023 offering). This note was converted in full and the balance due after the conversion is $0.

On April 1, 2026, the Company issued 200,000 shares for services pursuant to a consulting agreement.

Between April 21, 2026 through June 2, 2026, the Company entered into twelve revenue sharing/subscription agreements. The Company issued 8,825,000 shares of common stock for $882,500 in cash per the subscription agreements.

On May 1, 2026, the Company issued 200,000 shares for services pursuant to a consulting agreement.

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On May 13, 2026, the Company issued 3,739,726 shares of common stock for the conversion of $150,000 note issued on April 23, 2024 and $36,986 in accrued interest (see Note 10). This note was converted in full and the balance due after the conversion is $0.

On May 13, 2026, the Company issued 2,469,480 shares of common stock for the conversion of $100,000 note issued on May 29, 2024 and $23,474 in accrued interest (see Note 10). This note was converted in full and the balance due after the conversion is $0.

On May 14, 2026, the Company issued 1,223,562 shares of common stock for the conversion of $50,000 note issued on July 3, 2024 and $11,178 in accrued interest (see Note 10). This note was converted in full and the balance due after the conversion is $0.

On June 9, 2026, the Company issued 5,776,165 shares of common stock for the conversion of $250,000 note issued on March 26, 2024 and $38,808 in accrued interest (see Note 9). This note was converted in full and the balance due after the conversion is $0.

NOTE 15 – FORGIVENESS OF RELATED PARTY ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

During 2023 and 2024, the Company was not able to pay the former CEO the salary per his employment agreement. This unpaid salary has been accrued as a liability. On August 5, 2024, the Company negotiated with the former CEO and agreed that his accrued salary of $169,521 would be forgiven. This document was never turned in to the accounting firm during the management transition and was never recorded. The document was found during the six months ended June 30, 2026. The Company evaluated the materiality of this transaction and determined that it is not material for either the year ended December 31, 2024 or the six months ended June 30, 2026. Since the former CEO is a related entity, the Company charged the amount of $169,521 for this forgiven accrued salary directly to additional paid-in capital.

The Company has carried an accounts payable amount of $106,300 to a company controlled by the former CEO. On May 19, 2026, the Company received a signed letter from the former CEO stating that due to an accounting error this amount was not owed by the Company and that there was no money owed to the company under his control. Since the former CEO is a related entity, the Company charged the amount of $106,300 for the reduction of accounts payable directly to additional paid-in capital.

NOTE 16 – SEGMENT INFORMATION

The Company operates as one operating segment. The Company’s chief operating decision maker (“CODM”) is its chief executive officers, who review financial information presented on a consolidated basis. The CODM uses consolidated operating margin and net income (loss) to assess financial performance and allocate resources. These financial metrics are used by the CODM to make key operating decisions, such as the allocation of budget between cost of revenues, sales and marketing, professional fees, and general and administrative expenses.

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The following table presents selected financial information with respect to the Company’s single operating segment for the three and six months ended June 30, 2026 and 2025:

	For the Three Months Ended
	June 30, 2026			June 30, 2025
Net sales	$	538,673		$	94,454
Cost of sales		238,458			76,451
Gross profit (loss)		300,215			18,003

Operating expenses
General and administrative expenses		310,578			160,800
Research and development		73,213			789
Consulting fees		2,152,497			727,547
Legal and accounting fees		5,774			63,809
Audit fees		17,500			27,500
Depreciation and amortization expense		23,375			19,376
Total operating expenses		2,582,937			999,821
Operating loss		(2,282,722	)		(981,818	)
Operating margin		-424	%		-1039	%

Other income (expenses)
Loss on extinguishment of debt		(924,625	)		-
Interest expense		(230,861	)		(179,653	)
Financing incentive expense		-			(83,250	)
Total other income (expense)		(1,155,486	)		(262,903	)
Loss before income tax expense		(3,438,208	)		(1,244,721	)
Income tax expense		-			-
Net loss	$	(3,438,208	)	$	(1,244,721	)

	For the Six Months Ended
	June 30, 2026			June 30, 2025
Net sales	$	1,479,139		$	524,541
Cost of sales		734,173			402,249
Gross profit (loss)		744,966			122,292

Operating expenses
General and administrative expenses		715,445			427,466
Research and development		123,565			60,760
Consulting fees		3,191,086			1,839,022
Legal and accounting fees		38,775			97,696
Audit fees		35,000			27,500
Depreciation and amortization expense		46,492			32,079
Total operating expenses		4,150,363			2,484,523
Operating loss		(3,405,397	)		(2,362,231	)
Operating margin		-230	%		-450	%

Other income (expenses)
Other income		-			46,256
Loss on extinguishment of debt		(1,418,518	)		-
Interest expense		(492,248	)		(441,377	)
Financing incentive expense		-			(83,250	)
Total other income (expense)		(1,910,766	)		(478,371	)
Loss before income tax expense		(5,316,163	)		(2,840,602	)
Income tax expense		-			-
Net loss	$	(5,316,163	)	$	(2,840,602	)

The Company had $358,805 and $405,296 in long-lived tangible assets as of June 30, 2026 and December 31, 2025, respectively.

NOTE 17 - 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 July 13, 2026 the Company issued a $110,000 12% convertible promissory note with a maturity date of July 13, 2027 and is convertible at a rate of $0.05 per share.

On July 29, 2026 the Company issued a $100,000 12% convertible promissory note with a maturity date of October 29, 2027 and is convertible at a rate of $0.05 per share.

Since June 30, 2026, the Company has made payments totaling $153,250 to five lenders (one related and four unrelated) towards principal and accrued interest on five of its outstanding promissory notes.

On August 6, 2026, the Company amended the Articles of Incorporation for the Corporation to change the authorized capital stock of the Corporation to 310,000,000 shares, of which 300,000,000 shall be authorized as common shares and 10,000,000 shall be authorized as preferred shares.

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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 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 78^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 home 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 December 31, 2025, we generated $1,082,887 in revenue. As of the six months ended June 30, 2026, we generated $1,479,139 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.

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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.

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 June 30, 2026 compared with the three months ended June 30, 2025.

Revenues

In the three months ended June 30, 2026, we generated $538,673 in revenues, as compared to $94,454 in revenues in the prior year. The increase in sales was attributable to increased efforts for sales of our new Gen 3 trutankless^® residential products.

Cost of goods sold was $238,458 in the three months ended June 30, 2026, as compared to $76,451 in the three months ended June 30, 2025.

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 $2,582,937 during the three months ended June 30, 2026 as compared to $999,821 in the prior year. In the three-month period ended June 30, 2026, our expenses primarily consisted of General and Administrative of $310,578, Research and Development of $73,213, Consulting Fees of $2,152,497, Legal and Accounting Fees of $5,774, Audit Fees of $17,500 and Depreciation of $23,375.

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General and administrative expenses increased by $149,778, or approximately 93.1% to $310,578 for the three months ended June 30, 2026 from $160,800 for the three months ended June 30, 2025. This increase was primarily the result of efforts to increase sales and increase in sales people and office staff.

Research and development expenses increased by $72,424, or approximately 9,179.2% to $73,213 for the three months ended June 30, 2026 from $789 for the three months ended June 30, 2025. This increase is attributed primarily to improvements to the Gen 3 products and on-going developments for a new controller card and wireless connectivity.

Consulting fees increased by $1,424,950, or approximately 195.9% to $2,152,497 for the three months ended June 30, 2026 from $727,547 for the three months ended June 30, 2025. Consulting fees increased due to two new larger consulting agreements.

Legal and accounting fees decreased by $58,035, or approximately 91.0% to $5,774 for the three months ended June 30, 2026 from $63,809 for the three months ended June 30, 2025. Legal and accounting fees decreased due to the normal fluctuations in time and costs of accounting.

Audit fees decreased by $10,000, or approximately 36.4% to $17,500 for the three months ended June 30, 2026 from $27,500 for the three months ended June 30, 2025. Audit fees decreased due to some of the audit fees for the 2025 audit being included the first three months of 2026.

Depreciation increased by $3,999, or approximately 20.6% to $23,375 for the three months ended June 30, 2026 from $19,376 for the three months ended June 30, 2025. Depreciation increased due to fixed assets being added later in 2025.

Other Income/Expenses

Other expenses increased by $892,583 to ($1,155,486) in the three months ended June 30, 2026 from other expenses of ($262,903) in the three months ended June 30, 2025. The increase was due to the loss on extinguishment of debt in the current year.

Net Loss

In the three months ended June 30, 2026, we generated a net loss of $3,438,208, an increase of $2,193,487 from net loss of $1,244,721 for the three months ended June 30, 2025. This increase was attributable to the overall expenditures discussed above.

Results of Operations for the six months ended June 30, 2026 compared with the six months ended June 30, 2025.

Revenues

In the six months ended June 30, 2026, we generated $1,479,139 in revenues, as compared to $524,541 in revenues in the prior year. The increase in sales was attributable to increased efforts for sales of our new Gen 3 trutankless^® residential products.

Cost of goods sold was $734,173 in the six months ended June 30, 2026, as compared to $402,249 in the six months ended June 30, 2025.

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 $4,150,363 during the six months ended June 30, 2026 as compared to $2,484,523 in the prior year. In the six months ended June 30, 2026, our expenses primarily consisted of General and Administrative of $715,445, Research and Development of $123,565, Consulting Fees of $3,191,086, Legal and Accounting Fees of $38,775, Audit Fees of $35,000 and Depreciation of $46,492.

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General and administrative expenses increased by $287,979, or approximately 67.4% to $715,445 for the six months ended June 30, 2026 from $427,466 for the six months ended June 30, 2025. This increase was primarily the result of efforts to increase sales and increase in sales people and office staff.

Research and development expenses increased by $62,805, or approximately 103.4% to $123,565 for the six months ended June 30, 2026 from $60,760 for the six months ended June 30, 2025. This increase is attributed primarily to improvements to the Gen 3 products and on-going developments for a new controller card and wireless connectivity.

Consulting fees increased by $1,352,064, or approximately 73.5% to $3,191,086 for the six months ended June 30, 2026 from $1,839,022 for the six months ended June 30, 2025. Consulting fees increased due to two new larger consulting agreements.

Legal and accounting fees decreased by $58,921, or approximately 60.3% to $38,775 for the six months ended June 30, 2026 from $97,696 for the six months ended June 30, 2025. Legal and accounting fees decreased due to the normal fluctuations in time and costs of accounting.

Audit fees increased by $7,500, or approximately 27.3% to $35,000 for the six months ended June 30, 2026 from $27,500 for the six months ended June 30, 2025. Audit fees increased due to the audit fees for the 2025 audit being completed during the six months ended June 30, 2026.

Depreciation increased by $14,413, or approximately 44.9% to $46,492 for the six months ended June 30, 2026 from $32,079 for the six months ended June 30, 2025. Depreciation increased due to fixed assets being added later in 2025.

Other Income/Expenses

Other expenses increased by $1,432,395 to ($1,910,766) in the six months ended June 30, 2026 from other expenses of ($478,371) in the six months ended June 30, 2025. The increase was due to the loss on extinguishment of debt and other income in the current year.

Net Loss

In the six months ended June 30, 2026, we generated a net loss of $5,316,163, an increase of $2,475,561 from net loss of $2,840,602 for the six months ended June 30, 2025. This increase was attributable to the overall expenditures discussed above.

Going Concern

Management evaluated all relevant conditions and events that are reasonably known or reasonably knowable, in the aggregate, as of the date the condensed 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 June 30, 2026, the Company had $13,133 cash on hand. On June 30, 2026, the Company had an accumulated deficit of $87,168,842. For the six months ended June 30, 2026, the Company had a net loss of $5,316,163, and cash used in operations of $491,646. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year from the date of filing.

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Liquidity and Capital Resources

At June 30, 2026, we had an accumulated deficit of $87,168,842. Primarily because of our history of operating losses and the existing note payables, we have a working capital deficiency of $9,004,169 at June 30, 2026. Losses have been funded primarily through issuance of common stock and borrowings from our stockholders and third-party debt. As of June 30, 2026, we had $13,133 in cash, $344,190 in accounts receivable, and $1,503,779 in prepaid expenses. We used net cash in operating activities of $491,646.

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 six months ended June 30, 2026 and 2025:

	Six Months Ended
	June 30, 2026			June 30, 2025
Net cash used in operating activities	$	(491,646	)	$	(1,628,341	)
Net cash used in investing activities		-			(253,250	)
Net cash provided by financing activities		483,160			889,448
Net increase/(decrease) in Cash		(8,486	)		(992,143	)
Cash, beginning		21,619			1,004,190
Cash, ending	$	13,133		$	12,047

Operating activities- Net cash used in operating activities was $491,646 for the six months ended June 30, 2026, as compared to $1,628,341 used in operating activities for the same period in 2025. The decrease in net cash used in operating activities was primarily due to increased revenues for 2026.

Investing activities - Net cash used in investing activities was $0 for the six months ended June 30, 2026, as compared to $253,250 used in investing activities for the same period in 2025. This decrease in net cash used in investing activities was primarily due to no additional equipment and leasehold improvements needed for production.

Financing activities - Net cash provided by financing activities for the six months ended June 30, 2026 was $483,160 as compared to $889,448 provided by financing activities for the same period of 2025. The decrease of net cash provided by financing activities was mainly attributable to increased stock sales, increased repayment of related party notes and less proceeds from related party notes in 2026.

Ongoing Funding Requirements

As of June 30, 2026, 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, 2025, filed with the SEC on May 22, 2026.

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 2025 Form 10-K, filed with the Securities Exchange Commission on May 22, 2026, are hereby incorporated by reference.

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

On January 1, 2026, the Company issued 200,000 shares for services pursuant to a consulting agreement.

On January 22, 2026, the Company issued 5,300,000 shares to Lou Werner III pursuant to a consulting agreement. These shares were valued at $0.2485 per share for a total value of $1,317,050 and will be amortized over the twelve-month term of the agreement.

On January 26, 2026, the Company issued 100,000 shares per a subscription agreement at $0.10 per share for $10,000 in cash.

On February 1, 2026, the Company issued 200,000 shares for services pursuant to a consulting agreement.

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On February 2, 2026, the Company issued 3,000,000 shares to Zackary Smoll for services pursuant to a consulting agreement. These shares were valued at $0.20 per share for a total value of $600,000 and will be amortized over the six-month term of the agreement.

On February 16, 2026, the Company issued 200,000 shares per a subscription agreement at $0.10 per share for $20,000 in cash.

On February 16, 2026, the Company issued 50,000 shares for services pursuant to a consulting agreement.

On February 19, 2026, the Company issued 200,000 shares per a subscription agreement at $0.10 per share for $20,000 in cash.

On February 23, 2026, the Company issued 6,446,421 shares to James Burns, Jr. for management services pursuant to a consulting agreement. These shares were valued at $0.30 per share for a total value of $1,933,926 and will be amortized over the six-month term of the agreement.

On April 1, 2026, the Company issued 200,000 shares for services pursuant to a consulting agreement.

On May 1, 2026, the Company issued 200,000 shares for services pursuant to a consulting agreement.

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

Issuer Purchases of Equity Securities

The Company did not repurchase any of its equity securities during the period ended June 30, 2026.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information.

None.

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Item 6. Exhibits.

Exhibit No.		Description

31.1*		Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*		Certifications of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*		Certifications of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		Inline XBRL Instance Document

101.SCH		Inline XBRL Taxonomy Extension Schema

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase

104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

* Filed herewith.

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SIGNATURES

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

TRUTANKLESS, INC.

(Registrant)