TKLS 10-Q

Trutankless, Inc. (TKLS)

10-Q 2026-08-19 For: 2026-06-30

View Original

Added on August 19, 2026

15900 North 78th Street, Suite 200
Scottsdale, AZ		85260
(Address of principal executive offices)		(Zip Code)

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated Filer	☐	Smaller reporting company	☒
(Do not check if a smaller reporting company)		Emerging growth company	☐

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

	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

	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

	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	)

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

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

	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

	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

	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

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

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

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

		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		$	-

	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	$	-

		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		$	-		$	-

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

	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	$	-				$	-

	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	$	-		$	-

	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	)

	·	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;

	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

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).

By:	/s/ Guy Newman
	Guy Newman, CEO, Principal Executive Officer

	Date: August 19, 2026