OTC: TKLS

The company will continue to focus its efforts on developing products that satisfy growing demand in the electric tankless market. Additionally, the company hopes to launch additional products well suited to its key customers in the repair and replacement wholesale market, as well as home builders and companies associated with new construction in the multifamily and commercial markets.

Home Automation Overview

According to Global Market Insights April 2026 update, the Smart Home Products Market was valued at $169 billion in 2025 and is projected to grow from $185.1 billion in 2026 to $385 billion by 2035. Companies like Nest have helped to introduce the Internet of Things to appliances with a direct impact on how users interact with traditional household appliances and have the ability to reduce energy usage. The trend towards integration with voice assistants is also on the rise with key industry leaders like Alexa and Google Assistant playing larger roles in the home automation industry. Insurance and utility companies have joined this trend by partnering with home automation manufacturers by leveraging different devices to build insurance products including discounts and rebates. While home security and safety monitoring are expected to continue to dominate the overall market, management anticipates energy management and HVAC controls and monitors will be one of the fastest growing markets in the U.S. which accounts for 36% of global demand.

Trutankless was designed to replace inefficient tank water heating technology, which is second to HVAC in energy consumption for most homes. Combined with Wi-Fi capabilities, the system could not only save energy it has the ability to inform users and property owners of energy use, water use, and potential issues like leaks or other failures in the plumbing system. Management plans to roll out additional technologies in the future that can integrate with the Company’s trutankless smart apps. Currently, the product has the ability to notify homeowners in the event of water flow while the system is set in away mode. Leak detection, leak damage mitigation, and hot water recirculation for instant hot water at the point of use are becoming major trends in the home automation space. Management believes new products can be introduced into its growing wholesale network to augment trutankless’ momentum and harness growing trends to a fresh audience of plumbing and other home service professionals.

Homebuilders and plumbing companies have begun selling homes with more technology integrations. The company expects to gain market share based on its ability to offer tech forward products in the wholesale market which supplies plumbing, HVAC, and electrical service companies in the future.

Tankless Industry Overview

The U.S. gas tankless water heater market is dominated by several brands; U.S. electric tankless water heater market is dominated by a few smaller companies, and tank manufacturers maintain the largest market share. Several Japanese and European manufacturers have begun marketing products in the United States, and since 2003, gas tankless products have experienced dramatic growth. Electric tankless systems have not experienced comparable growth due to several factors, primarily product performance, capacity, product quality and electrical power supply and installation issues.

Manufacturers of tank heaters have a competitive advantage due largely to their product categories long established use, name recognition, established distribution, and brand position in the marketplace. Many plumbers and other building industry professionals were opposed to changing brands or to tankless systems because many tankless water heaters have been poorly designed in the past. As a result, there is a perception among some contractors that these water heaters are more complicated and generally less dependable than traditional tank heaters. This perception is often passed along to consumers when making buying decisions or inquiring about switching to a tankless water heater.

While we believe that our products will have superior performance, such as endless hot water, superior longevity, greater efficiency and lower “life cycle” costs than traditional tank water heaters, the Company’s success will depend to a large degree on the successful conversion of traditional water heater buyers to tankless water heater buyers. The acquisition price of tankless water heaters (both gas and electric) is greater than traditional tank water heaters, but the overall cost of ownership will be less than that of traditional tank technologies under typical circumstances. Although the public’s awareness of tankless systems has grown in recent years, and continued growth in the sector is suggestive of increasing awareness of tankless as a viable solution for American homeowners.

Our marketing and promotion plans have been developed to increase the awareness of the Company’s brand as the preferred option to traditional tank systems. Trutankless intends to position itself and its brand to capitalize on the shift to more sustainable construction materials and more efficient systems and appliances.

Trutankless® Products

We manufacture and distribute trutankless® water heaters, a line of new, high-quality, highly efficient electric tankless water heaters are in development. Our trutankless® water heaters have been engineered to outperform and outlast both its tank and tankless predecessors in energy efficiency, output, and durability. It provides endless hot water on demand for a whole household, and it also integrates with home automation systems.

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 to be available solely through wholesale plumbing distributors, including Ferguson, Hajoca, WinSupply, Morrison Supply locations, and several regional distributors. A partial listing of wholesalers may be found on our website (www.trutankless.com).

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 are capable of higher temperature rise than competitive units at given flow rates because of their improved design and greater efficiency. Our trutankless® water heaters can save energy and reduce 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 life-cycle costs with an improved design conceived not only to increase efficiency, but also the longevity of our products versus competitive units. Generally, a typical tank water heater lasts about 9 years, whereas gas tankless systems may last longer, but requires more routine maintenance. Our product line is designed to last longer than tank water heaters without any routine maintenance required under most conditions.

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 believe we’ve selected the best materials available 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. As of the fiscal year ended December 31, 2019, we generated $1,908,708. As of December 31, 2020, we generated $1,661,278. As of December 31, 2021, we generated $246,032. As of December 31, 2022, we generated $73,009 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.

In July of 2014, we launched a customizable online control panel for our trutankless® line of smart electric water heaters. From the dashboard, residential and commercial users can obtain real-time status reports, adjust unit temperature settings, view up to three years of water usage data, and change notification settings from anywhere in the world, using a computer or web-enabled smart device at home.trutankless.com.

Our primary markets, Florida, Texas, Arizona, and the rest of the Sunbelt region are centers of growth in the U.S. construction industry with green building at an all-time high, and an unprecedented appliance replacement cycle. We intend to take advantage of these powerful macro-economic trends.

Industry Recognition and Awards

Trutankless® received the Best of IBS 2014 Award for Best Home Technology Product from the National Association of Home Builders (NAHB) at that year’s International Builders Show (IBS) in Las Vegas. The IBS is produced by NAHB and is the largest annual light construction show in the world – featuring more than 1,100 exhibitors and attracting 75,000 attendees including high level decision makers from some of the largest homebuilders in the world as well as plumbing and HVAC professionals from top companies in major markets.

Trutankless® received the Governor’s Award of Merit for Energy and Technology Innovation for the trutankless line of electric tankless heaters at Arizona Forward’s 2014 Environmental Excellence Awards.

Trutankless® received Kitchen and Bath Business Magazine’s 2014 K*BB Product Innovator’s Award Judges Choice Product.

In 2015, Trutankless was named in Buildings Magazine’s 2015 listing of “Money Savings Products” in the Energy Saving Measures category and received a Special Mention in the Architizer A+ Awards.

That same year, Appliance Design Magazine named Trutankless among the winners of their annual Excellence in Design Award, and the editors of Green Builder Magazine named Trutankless as one of their picks as “Hot Product”.

Consumer Reports Magazine featured Trutankless in its Top 5 Remodeling Trends for 2016, and leading home improvement website, houzz.com, honored the company with 4 consecutive “Best of Houzz” honors from 2014 through 2018.

Customers and Markets

We sell our products to plumbing wholesale distributors and dealers. Approximately, 95% of our sales have been to wholesale plumbing equipment distributors for commercial and residential repair and replace applications. We rely on commissioned manufacturers’ representatives to market our product lines. Additionally, our products are sold to independent dealers throughout the United States.

Manufacturing and Logistics

We have engineering agreements with outside development and production engineers, which is ongoing and currently being executed. In December 2020, we executed a second Manufacturing Services Agreement establishing our pricing and payment terms, warranty, shipping, and delivery terms with a North American manufacturer. Finished products are generally shipped Free on Board (FOB) and are 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.

Intellectual Property & Proprietary Rights

We regard substantial elements of our brands and underlying intellectual property as proprietary and attempt to protect them by relying on trademark, service mark and trade secret laws, restrictions on disclosure and transferring title and other methods.

Our plans are to actively pursue patent and trademark protection for all newly developed products, both domestically and abroad. We have novel and proprietary technologies related to our product line and the central focus of our patent counsel has been successfully building a defensible set of patent claims which have been granted.

To date, we have filed and received a United States federal trademark registration for trutankless® and our logo design with the help of our outside marketing and branding experts and have acquired several unique domain registrations reflective of our online marketing strategy (www.Trutankless.com).

During the year ended December 31, 2013, our patent agent filed a provisional patent with the US Patent and Trademark Office with the US Patent and Trademark Office with 37 claims based on our prototype design. Upon completion of our engineered prototype, we filed additional patents with additional claims. We have been able to obtain a formal patent for our tankless water heater with a total of 34 individual and dependent claims.

During the year ended December 31, 2021, our patent counsel filed a provisional patent application with the US Patent and Trademark Office and the patent was granted with 14 claims based on our proprietary flowmeter design. We will continue to protect our intellectual property through confidentiality agreements with vendors and consultants and trade secret protocols employed by employees, consultants, and contractors.

During the year ended December 31, 2022, our patent counsel collaborated with our engineering team to augment our research and development efforts related to future products which yielded positive results. By affirming our development path and product road map, we expect to file several new patents for novel technologies which we expect to launch in the future, including next generation electric tankless technologies along which will be designed to work with technologies that are able to employ artificial intelligence to help reduce water and energy consumption. We expect to receive additional benefits from our technology and data collection with cloud-based software as a service and apps which may be adapted for use by insurance companies, utilities, and municipalities.

Growth Strategy

Trutankless’ product launched in the first quarter of 2014 and was sold through the wholesale plumbing distribution channel. Gas tankless manufacturers’ support of this sales channel was critical in their ability to quickly capture appreciable market share in the replacement market estimated to be larger than $4 Billion nationwide. To our knowledge, no electric tankless has been available solely through wholesale distributors which welcomed the arrival of Trutankless. Trutankless’ sales and service training programs geared towards plumbers and contractors are the primary focal point of the Company’s sales strategy to quickly scale sales and educate distributors, plumbers, builders, and contractors.

The company has also leveraged online marketing strategies and social media. By presenting an immersive and educational web experience at www.trutankless.com. Trutankless intends to continue building brand awareness among consumers efficiently online. Launch efforts are expected to be focused in Arizona, Texas, and the Southeast at first, which account for over 1,000,000 electric water heater shipments annually. Licensing and co-branding opportunities may be assessed, since strategic partnerships would eliminate the channel conflicts that have historically obstructed previous electric tankless entries in the marketplace.

In addition, we have determined that as part of our growth strategy, we will seek to partner with or acquire entities operating in various fields, with a bias towards green and “clean-tech” sectors. Our management has experience in marketing, product launches, business development strategies, and certain other areas specific to the success of growth companies. We will operate with a view towards identifying acquisition candidates as we seek the rights to provide the market with products and services geared toward environmental responsibility, innovative technology in the plumbing industry, and home automation technology.

Margin Expansion

Cost reduction measures, including outsourcing of key components and certain quality control testing protocols, will be undertaken on an expedited basis to rapidly reduce costs and improve manufacturing scalability. Such reductions are expected to take place in stages over the next several quarters, and we believe may result in gross sales margins approaching 50% or more.

Market Outlook

Trutankless entered the market in front of the largest water heater replacement cycle ever at a time when homeowners were seeking ways to reduce their carbon footprint without sacrificing comfort. Many of the heaters which were replaced at that time will need to be replaced, echoing the prior cycle. Statistics have shown a trend towards electric water heating in many markets as part of a trend known as “electrification”. This trend is part of a shift, which some municipalities are making mandatory, away from natural gas and other fossil fuels to sustainable energy sources, namely solar generated electricity among others which we expect to continue their proliferation throughout North America.

Florida, Texas, and Arizona, and areas where electric water heaters dominate the market, have been epicenters of the residential new construction strength in the US. In the new construction market, builders are increasingly marketing “green” features and trutankless fit well along with other energy saving innovations. In commercial markets, we feel that our commercial line of trutankless products is well suited to thousands of customers in the retail, quick serve and fast casual restaurants, hair salons, and other businesses with moderate hot water use required. In addition to residential new construction and replacement markets, we feel the commercial applications for which our products are appropriate represent a large portion of the commercial water heater market.

In April 2015, the Federal Government mandated that standard electric water heaters over 55 gallons may not be sold (started effectively forcing the market to use alternative technologies like tankless water heaters. The electrification of the overall appliance market has also begun due to the rapid progression of energy generation technologies with more efficient and renewable energy sources seen as a growing and sustainable trend.

Recent Developments

On April 14, 2023, we announced a key product development milestone had been reached with entry into the engineering verification testing phase in the development of its second-generation product.

On May 11, 2023, the Company release further information relating to its next generation electric tankless, indicating improved performance over prior models with a completely reinvented mobile app. Further, the Company had engaged sales and marketing consultants with experience building integrated sales systems using the latest technology to incorporate lead generation, sales processes, tracking and forecasting with a proprietary app.

On July 15, 2023, we announced the Company’s intention to spin-off its wholly-owned subsidiary, Tankless365, Inc. whereby each shareholder having common stock as of the distribution date will be entitled to receive shares of the common stock of Tankless365, Inc. pro rata based on a 4:1 ratio. The press release was attached as an exhibit to the Company’s 8-K filed with the SEC on July 19, 2023.

On August 28, 2023 the Company filed a PRE 14C Preliminary Information Statement with the SEC, as amended in a PRER14C filed on August 30, 2023, to disclose the terms of the spinoff transaction announced in the July 15, 2023 press release and subsequent 8-K report.

On September 12, 2023, the Company filed its’ DEF 14C Definitive Information Statement which was mailed to the Company’s shareholders of record with further disclosures giving notice to shareholder further describing the corporate actions including the terms of the spinoff and a name change authorized by the Company’s Board of Directors. Early in 2024, the Company made the decision to reverse this decision and keep Tankless365, Inc. as a wholly-owned subsidiary.

In July 2024, the Company began sales of its Gen3 tankless water heater and has continued developing sales of its product through the fiscal year ended December 31, 2025.

Target Markets

The United States market for residential tank water heaters in 2022 was approximately 8.7 million units according to data released by the Air-Conditioning, Heating, and Refrigeration Institute (AHRI). 52.5% of those shipments were electric storage water heater heaters, representing a 2.9% gain in market share versus gas storage water heaters in the prior year. We feel this is a good indicator that there is growing demand for electric solutions in the water heater market, which we expect will impact future sales for the Company’s electric tankless water heaters.

Trutankless is initially marketing its products to contractors, home builders, remodelers, and distributors in the southern and western U.S. These areas of the country have been selected because of generally higher ground water temperatures, which improves the effects of the performance and capacity of all brands of tankless water heaters. This area of the country also traditionally has the largest share of population growth and new housing starts, accounting for almost two-thirds of all housing starts in 2019, according to recent data. Additionally, the southern U.S., and specifically the southeastern U.S., has the highest usage of electric water heaters.

Distribution Plan

Initially, we will be distributing our primary product lines throughout the southern and western U.S. using an existing network of plumbing and electrical wholesalers (distributors), manufacturers’ representatives and dealers. We believe that we will continue to build on existing relationships with major companies in the building and plumbing industries to rapidly expand awareness of Trutankless and our products in the water heater market in the U.S and Canada.

Sales will continue to be pursued through the following channels:

1.

Regional and national plumbing, HVAC, and electrical wholesalers (also called “distributors”);

2.

Plumbers and electricians on a direct basis, in those areas where wholesalers have not yet been set up; and,

3.

Builders on a direct basis, in those areas where wholesalers & mechanical contractors have not yet been set up.

We intend to market to industry professionals and end-users through more traditional marketing efforts as well, including print advertising, attendance of select national trade shows, and attendance of select regional consumer shows. We also expect Trutankless will be successful in providing education, training, and support to our sales and installer networks as part of our distribution and marketing efforts.

We believe our products will be a differentiating factor for industry professionals and builders as they market to their customers. Additionally, our electric tankless products are expected to provide these professionals and their companies with a mechanism to increase revenue and improve gross margin as compared to more traditional water heating products.

Employees

We currently have six employees, including our CEO, production/warehouse manager and part-time employees. We expect to increase the number of employees to expand our sales and technical staff. We will continue to rely on independent consultants and contractors to perform various professional services. We believe that this use of third-party service providers may enhance our ability to contain operating, general expenses and capital costs.

Available Information

Our periodic reports filed with the SEC, which include Form 10-K, Form 10-Q, Form 8-K and amendments thereto, may be accessed by the public free of charge from the SEC. Electronic copies of these reports can be accessed at the SEC’s website (http://www.sec.gov). Copies of these reports may also be obtained, free of charge, upon written request to: Trutankless Inc., 15900 North 78th Street, Suite 200, Scottsdale, Arizona 85260, Attn: Corporate Secretary. The public may read or obtain copies of these reports from the SEC at the SEC’s Public Reference Room at 450 Fifth N.W., Washington, D.C. 20549 (1-800-SEC-0330).