MDWerks, Inc.

For the Years Ended December 31, 2025 and 2024

NOTE 1 -ORGANIZATION AND DESCRIPTION OF THE BUSINESS

MDwerks, Inc. (collectively “MDWerks” the “Company,” “we,” “us,” “our,” “it,” or “MDWK”), a Delaware corporation, is a technology company pioneering the development of innovative energy wave solutions for industrial and other commercial enterprises. Our expertise in radio wave technologies and microwave technologies has led to multiple breakthroughs with applications both industrial and commercial. Our patented energy wave technology introduces a revolutionary approach to industrial processes by specific molecular targeting, which can be applied at precise and multiple locations in a system in ways that conventional single point heat sources cannot, resulting in improved efficiency, higher quality, and reduced processing time. In December 2023, we completed the acquisition of RF Specialties, LLC (“RFS”) and Two Trees Beverage Co. and its subsidiaries (“Two Trees”).

Two Trees produces a variety of aged alcoholic beverages using an innovative rapid-aging system. This scalable technology results in all-natural, high-quality products, efficiently produced, with a reduced environmental impact. Our products are nearly indistinguishable from those that are traditionally aged. Two Trees created a proprietary process that mirrors and accelerates the natural aging process that occurs when alcohol is aged in wooden barrels over time. The true art of our craft spirits lives within the balance between the grain selection, local water, and the full-bodied flavors from our toasted wood chip varieties. Our wood chips are selected to pair with specific grains and toasted to just the right char, bringing rich flavor profiles to life with a hint of smoke.

RFS is an innovative company pushing the boundaries of sustainable Radio Frequency applications. For over 14 years, RF Specialties has addressed companies’ most pressing challenges by implementing automated Radio Frequency Technology in a sustainable way and reducing energy costs and increasing speed to market when compared to traditional methods. By bringing Radio Frequency applications to market RFS has successfully elevated a wide range of industries including structural engineering, food & beverage, and manufacturing.

NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

**Basis of Presentation -**The financial statements present the financial position, results of operations and cash flows of the Company in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Two Trees Beverage Company, Prost Beverage Co, Radio Aged Beer LLC, RF Kettle Company LLC, Two Trees Distilling Company, RAS LLC, (collectively referred to as “Two Trees”) and RF Specialties, LLC. All intercompany accounts, transactions and balances have been eliminated in consolidation.

Cash and Cash Equivalents - The Company considers all highly liquid instruments with original maturities of three months or less when acquired, to be cash equivalents. The Company had $211,948 cash equivalents at December 31, 2025 and $11,159 cash at December 31, 2024.

**Use of Estimates and Assumptions -**The preparation of financial statements in accordance with US GAAP requires the Company’s 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 consolidated financial statements and the reported amounts of expenses during the reporting period. Actual results can, and in many cases will, differ from those estimates.

Accounts Receivable and the Allowances for Credit losses - Accounts receivable are recorded in the period when the right to receive payment or other consideration becomes unconditional. Accounts receivable are recorded at the invoiced amount and do not earn interest. The Company maintains an allowance for credit losses based upon the best estimate of probable credit losses in existing accounts receivable. The Company determines the allowance based upon individual accounts when information indicates the customers may have an inability to meet their financial obligations, as well as historical collection and write-off experience. The Company had an accounts receivable balance of $43,489 net of $10,627 allowance for doubtful accounts as of December 31, 2025. The Company had an accounts receivable balance of $109,142 net of $26,710 allowance for doubtful accounts as of December 31, 2024. The Company recognized credit losses of $8,056 and $39,176 during the year ended December 31, 2025 and 2024, respectively. As of December 31, 2025, the Company had four customers that accounted for 35%,23%,14%, and 14% of total accounts receivable. As of December 31, 2024, the Company had two customers that accounted for 50% and 10% of total accounts receivable.

**Prepaid Expenses and Other Assets -**Prepaid expenses primarily consist of prepaid purchases, insurance, income tax refund receivable, and various other expenses. These amounts are recognized as an expense in the period the related service or benefit is received.

**Inventory **- Inventories primarily consist of bulk and bottled liquor and raw materials and are stated at the lower of cost or market. Cost is determined using an average costing methodology, which approximates cost under the first-in, first-out (“FIFO”) method. A portion of the Company’s finished goods inventory is held in warehouses located in several states that maintain control over the alcohol beverage distribution process until it is sold into the retail distribution channel within those states. The Company regularly monitors inventory quantities on hand and records write-downs for excess and obsolete inventories based primarily on the Company’s estimated forecast of product demand and production requirements. Such write-downs establish a new cost basis of accounting for the related inventory. During the year ended December 31, 2025 and 2024, the Company recognized an impairment of $140,067 and $0, respectively, related to certain barrel inventory with a market price below the Company’s carrying value.

**Property and Equipment -**Property and equipment are recorded at cost. Depreciation of property and equipment is calculated on a straight-line basis over the estimated useful lives of the assets. Furniture and fixture assets are depreciated over five years, vehicles are depreciated over five years, and computer and equipment are depreciated over three years. Expenditures for renewals and betterments that extend the useful lives of or improve existing property or equipment are capitalized. Expenditures for maintenance and repairs are expensed as incurred. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets as follows:

Leasehold improvements are depreciated over the shorter period of their estimated useful life or term of the lease.

Intangible Assets - Intangible assets, consisting of trade names, developed technology, and customer relationships, are accounted for in accordance with ASC 350 “Intangibles - Goodwill and Other”. Intangible assets that have finite lives are amortized using the straight-line method over their estimated useful lives ofthree tofifteen years.

**Goodwill **- Goodwill represents the excess of acquisition cost over the fair value of the net tangible and intangible assets acquired. Goodwill is not amortized and is subject to annual impairment testing on or between annual tests if an event or change in circumstance occurs that would more likely than not reduce the fair value of a reporting unit below its carrying value. In testing for goodwill impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events and circumstances, the Company concludes that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, it can conclude the assessment. If the Company concludes otherwise, the Company is required to perform a quantitative analysis to determine the amount of impairment. A quantitative analysis is performed at the reporting unit level by comparing the estimated fair value of a reporting unit with its respective carrying value to determine the amount of impairment, if any. The Company has determined that it has two reporting units. During the years ended December 31, 2025, and 2024, no impairment expense was recognized.

Impairment of Long-Lived Assets - Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair market value of the assets. During the years ended December 31, 2025, and 2024, no impairment expense was recognized.

**Leases **- Management determines if an arrangement is a lease at the inception of the agreement. Operating leases are included in operating lease right-of-use (ROU) assets and operating lease liability on the accompanying consolidated balance sheet. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Company uses the rate implicit in the lease agreement, when available, or a discount rate based on the information available at the commencement date in determining the present value of lease payments. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

Revenue Recognition - Net sales from Two Trees include liquor and related products, less excise taxes and customer programs and incentives. Sales from RF Specialties, LLC will include product and services related to sustainable Radio Frequency applications to a wide range of industries including structural engineering, food & beverage, and manufacturing. The Company recognizes revenue by applying the following steps in accordance with Accounting Standards Codification (“ASC”) Topic 606 – Revenue from Contracts with Customers: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.

The Company recognizes sales when liquor products are shipped from a warehouse directly to wholesale customers (except in the case of a consignment sale). For consignment sales, which include sales to the Oregon Liquor Control Commission, the Company recognizes sales upon the consignee’s shipment to the customer. Postage and handling charges billed to customers are also recognized as sales upon shipment of the related merchandise. Shipping terms are generally FOB shipping point, and title passes to the customer at the time and place of shipment or purchase by customers at a retail location. For consignment sales, title passes to the consignee concurrent with the consignee’s shipment to the customer. The customer has no cancellation privileges after shipment or upon purchase at retail locations, other than customary rights of return. The Company also performs aging services for certain customers, with revenue recognized upon completion of the aged product. For service revenue within the Company’s radio frequency applications, the Company recognizes revenue as the services are provided to the customer. The Company’s contracts typically have a single performance obligation, and do not contain a significant financing component.

The Company recognizes deferred revenue for performance obligations not yet satisfied, primarily related to liquor sales not yet shipped. As of December 31, 2025, the Company had $457,158 in unsatisfied performance obligations that it expects to satisfy over the next 12 months, with $368,754 related to its liquor business and $88,425 related to RFS. As of December 31, 2024, the Company had $226,066 in unsatisfied performance obligations.

For the year ended December 31, 2025, two of the Company’s customer accounted for 26% and 10% of total revenue, with the customers being in the RF Specialties business and Two Trees Distilling, respectively. For the year ended December 31, 2024, the Company has one customer in its RFS business who accounted for 25% of total revenue.

Income Taxes - The Company complies with the accounting and reporting requirements of US GAAP in accounting for income taxes. The Company uses the asset and liability approach to financial reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax basis of assets and liabilities that will result in future taxable or deductible amounts and are based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred income tax assets to the amount expected to be realized.

The Company also complies with US GAAP in accounting for uncertain tax positions. A tax benefit from an uncertain position may be recognized only if it is “more likely than not” that the position is sustainable based on its technical merits. Based on its analysis, the Company has determined that it has not incurred any liability for unrecognized tax benefits as of December 31, 2025 and December 31, 2024. However, the Company’s conclusions may be subject to review and adjustment at a later date based on factors including, but not limited to, on-going analyses of and changes to tax laws, regulations, and interpretations thereof. The Company recognizes interest and penalties related to unrecognized tax benefits in interest expense and other expenses, respectively. No interest expense or penalties have been recognized as of and for the years ended December 31, 2025 and December 31, 2024.

Loss Per Share -Earnings per share is computed based on the weighted average number of common shares outstanding.

Basic (loss) per share excludes dilution and is computed by dividing (loss) available to common stockholders by the weighted average common shares outstanding for the year. Diluted loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. In the fiscal years ended December 31, 2025 and December 31, 2024, there were no options, warrants or derivative securities outstanding.

Fair value of financial instruments - The Company measures its financial and non-financial assets and liabilities, as well as makes related disclosures, in accordance with FASB Accounting Standards Codification No. 820, Fair Value Measurement (“ASC 820”), which provides guidance with respect to valuation techniques to be utilized in the determination of fair value of assets and liabilities. Approaches include, (i) the market approach (comparable market prices), (ii) the income approach (present value of future income or cash flow), and (iii) the cost approach (cost to replace the service capacity of an asset or replacement cost). ASC 820 utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3: Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one more significant inputs or significant value drivers are unobservable.

The carrying values of the Company’s accounts payable and accrued liabilities, advances payable, and convertible notes payable, approximate their fair value due to their short-term nature. The Company has no assets or liabilities measured at fair value on a recurring basis. The Company’s goodwill and intangible assets were valued using level 3 inputs at the time of acquisition.

Research and Development Expenses - The Company records research and development expenses in the period in which they are incurred as a component of product development expenses.

Stock-Based Compensation - The Company measures stock-based compensation at the estimated fair value on the grant date and recognizes the amortization of stock-based compensation expense on a straight-line basis over the requisite service period, or when it is probable criteria will be achieved for performance-based awards. Fair value is determined based on assumptions related to the fair value of the Company common stock, stock volatility and risk-free rate of return. The Company has elected to recognize forfeitures when realized.

Excise Taxes - The Company is responsible for compliance with the Alcohol and Tobacco Tax and Trade Bureau (“TTB”) regulations, which includes making timely and accurate excise tax payments. The Company is subject to periodic compliance audits by the TTB. Individual states also impose excise taxes on alcoholic beverages in varying amounts. The Company calculates its excise tax expense based upon units produced and on its understanding of the applicable excise tax laws. Excise taxes totaled $32,423 and $32,127 for the years ended December 31, 2025, and 2024, respectively, included in general and administrative expenses.

Segment Reporting - In November 2023, the Financial Accounting Standard Board (“FASB”) issued ASU 2023-07,Improvements to Reportable Segment Disclosures, which amends the existing segment reporting guidance (ASC Topic 280) to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss, an amount for other segment items by reportable segment and a description of its composition, the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.

**Reclassifications **– Certain prior period amounts have been reclassified to conform to current period presentation.

Going Concern - These financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future. As reflected in the accompanying financial statements, the Company had a net loss of $3,797,990 and an accumulated deficit of $6,158,495 as of and for the year ended December 31, 2025. Although management believes that it will be able to successfully execute its business strategy, which includes third party financing and the raising of capital to meet the Company’s future liquidity needs, there can be no assurances in this regard. These matters raise substantial doubt about the Company’s ability to continue as a going concern.

Recently Issued Accounting Pronouncements - From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the effect of recently issued standards that are not yet effective will not have a material effect on its financial position or results of operations upon adoption.

In November 202, the FASB issued ASU 2024-03,Disaggregation of Income Statement Expenses (DISE), requiring additional disclosure of the nature of expenses included in the income statement. The new standard requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. The amendments in this update are effective for annual periods beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of our pending adoption of this standard on our consolidated financial statements.

NOTE 3 -INVENTORY

Inventories primarily consist of bulk and bottled liquor and raw materials and are stated at the lower of cost or market. Cost is determined using an average costing methodology, which approximates cost under the first-in, first-out (“FIFO”) method. A portion of the Company’s finished goods inventory is held in warehouses located in several states that maintain control over the alcohol beverage distribution process until it is sold into the retail distribution channel within those states. The Company regularly monitors inventory quantities on hand and records write-downs for excess and obsolete inventories based primarily on the Company’s estimated forecast of product demand and production requirements. Such write-downs establish a new cost basis of accounting for the related inventory.

Inventories consisted of the following as of December 31:

On January 27, 2025, the Company’s wholly owned subsidiary, Two Trees Beverage Company and Brown Water Bourbon Xchange, LLC, a Kentucky Limited Liability Company entered into an Asset Purchase Agreement. According to the terms of the Agreement, Brown Water Bourbon Xchange, LLC sold to the Company 680 barrels of whiskey in exchange for 5,000,000 restricted shares of Common Stock of the Company, with a fair value of $850,000 based on the closing price of the Company’s common stock at the agreement date.

During the year ended December 31, 2025, the Company recognized an impairment of $140,067 related to barrel inventory with a market price below the Company’s carrying value.

NOTE 4 –FIXED ASSETS, NET

Fixed assets, net consisted of the following as of December 31:

Depreciation expense totaled $263,444 and $233,254 for the years ended December 31, 2025, and 2024, respectively.

Two Trees entered into two contracts with two spirit companies for the deployment and license of our proprietary Spirits Rapid Aging System (“SRAS”). The first contract is for the building and deployment of SRAS at the customer’s facilities within the next three months, with the potential for additional SRAS deployments in the next 12 months. The second contract is for the building and deployment of SRAS at the customer’s facilities within the next six to nine months, with the potential for additional SRAS deployments in the next 12 months. Under both agreements, RFS will assemble the SRAS units and provide ongoing machine servicing and maintenance, thereby is entitled to receive recurring monthly license payments from the customers for use of the SRAS units. The Company is constructing the machines which it expects to be deployed by the end of the second quarter of fiscal year ended December 31, 2026.

On August 25, 2023, the Company entered an asset purchase agreement with an unrelated company, Dream Workz Automotive LLC, a Colorado limited liability company (“Dream Workz”). Pursuant to this agreement, the Company sold certain tangible manufacturing assets to Dream Workz for a purchase price of $195,000 (the “Purchase Price”). The Purchase Price was paid in a combination of cash in the amount of $100,000 and a promissory note in the amount of $95,000 (the “Note”). The Note is unsecured and bears interest at the rate of 8% per annum commencing as of August 25, 2023. The Note matured on August 25, 2029 and is due in full at maturity. During the year ended December 31, 2024, the Company recognized a loss on impairment of the note receivable and accrued interest totaling $97,533.

Asset purchase agreements

Prior to its acquisition by the Company on December 27, 2023, RFS entered into two asset purchase agreements to acquire certain tools and equipment. The Company received assets under one agreement in December 2023, totaling $97,363. The assets are included in property and equipment on the Company’s consolidated balance sheet. The Company assumed the liability of $88,674 as part of the Exchange Agreement with RFS. The agreement requires monthly payments through October 2026.

On January 31, 2024, the Company received assets under the second purchase agreement totaling $444,891. The assets are included in property and equipment on the Company’s consolidated balance sheet. The Company assumed the liability of $444,891 as part of the Exchange Agreement with RFS. The Exchange Agreement requires monthly payments through March 2027.

NOTE 5 –INTANGIBLE ASSETS, NET

Intangible assets, net consisted of the following as of December 31:

Total amortization expense for the years ended December 31, 2025 and 2024 was $56,402 and $60,716, respectively. The Company expects to recognize amortization expense of $56,432 annually in each of the next five years.

On February 5, 2024, the Company, through its wholly owned subsidiary, Two Trees Beverages, entered into a new 15-year license agreement with Shine Time, LLC, licensing territories forTim Smith Spirits® expanding its territories beyond the United States to include all members of the European Union, the United Kingdom, Norway, Switzerland, Iceland, Serbia, Turkey and Ukraine. The Company agreed to pay a royalty of 9% on branded products covered by the license agreement, or 4.5% of any sublicensed revenue under the agreement. During the year ended December 31, 2024, the Company paid $79,688 to Shine Time, LLC pursuant to the license agreement. An additional $112,500 was due under the terms of the license agreement by April 1, 2024. The Company also agreed to issue to Shine Time, LLC 300,000 shares of the Company’s common stock with a fair value of $15,000. Such shares have not been issued as of the date of this report. As of December 31, 2025 and December 31, 2024, the royalty payable balance was $135,872 and $170,274, respectively, including remaining amounts from the amended initial fee, and is included in accounts payable on the Company’s consolidated balance sheet.

NOTE 6 -NOTES PAYABLE

The Company has the following outstanding notes payable:

The following is a summary of the future minimum payments of loans payable:

During the year ended December 31, 2020, the Company entered into a termination agreement and agreed to pay the sum of $50,000, pursuant to the agreement. During the year ended December 31, 2021, the Company issued a promissory note payable in the amount of $31,584 at the rate of 0.13% per annum, with a maturity date on or before January 1, 2025, for settlement of the $50,000 agreed upon in the termination agreement. During the year ended December 31, 2023, the Company made a payment of $10,000. The balance as of December 31, 2025 and 2024, was $21,584.

Prior to its acquisition by the Company on December 27, 2023, RFS entered into two asset purchase agreements to acquire certain tools and equipment. The Company received assets under one agreement in December 2023, totaling $97,363. The assets are included in property and equipment on the Company’s consolidated balance sheet. The Company assumed the liability of $88,674 as part of the Exchange agreement with RF Specialties. The agreement requires monthly payments through October 2026.

On January 31, 2024, the Company received assets under the second purchase agreement totaling $444,891. The assets are included in property and equipment on the Company’s consolidated balance sheet. The Company assumed the liability of $444,891 as part of the Exchange Agreement with RFS. The agreement requires monthly payments through March 2027. As of December 31, 2025 and 2024, the Company owed $178,652 and $344,344 under the notes payable, respectively.

During the year ended December 31, 2025, the Company received a total of $150,000 in proceeds from shareholders. The loans included interest of 10% and $105,500 was repaid during the year ended December 31,2025. The advances are unsecured, due on demand and have stated interest of 10% per annum. As of December 31, 2025 and December 31, 2024, the balance owed on the advances from shareholders was $167,500 and $123,000, respectively.

In March 2025, the Company entered into an insurance policy financing arrangement. The total principal was $171,050 with an interest rate of 10.95% and monthly payments of $14,542 due through January 2026. As of December 31, 2025, the remaining balance was $0.

The Company recognized interest expense of $61,826 and $23,420 during the years ended December 31, 2025 and 2024, respectively on all debt instruments. Accrued interest on all notes payable as of December 31, 2025 2024, was $30,355 and $7,637, respectively

NOTE 7 -CAPITAL STOCK

Preferred stock

The Company is authorized to issue 10,000,000 shares of preferred stock, $0.001 par value, with such designations, rights and preferences as may be determined from time to time by the Board of Directors, of which 10,000,000 shares are designated Series A Convertible Preferred.

On June 15, 2014, the Company designated the Series A Convertible Preferred so that each share shall hold with it conversion rights of one hundred (100) shares of common stock for every share of Series A Preferred stock held, and that each share of Series A Preferred stock will also hold with it the same number of common share votes prior to conversion as it would if fully converted to be used in voting on any company matter requiring a vote of shareholders.

On November 7, 2024, the Company agreed to purchased 8,957,500 shares of Series A Convertible Preferred Stock, representing all of the issued and outstanding shares of Series A Convertible Preferred Stock of the Company from, Tradition Reserve I LLC, a New York limited liability company, in exchange for $10. At December 31, 2025 and 2024, there were 0 shares of Series A Convertible Preferred Stock issued and outstanding.

Common stock

The Company is authorized to issue 300,000,000 shares of Common stock, $0.001 par value, with such designations, rights and preferences as may be determined from time to time by the Board of Directors.

On June 23, 2025, the Company adopted the MDwerks, Inc. 2025 Equity Incentive Plan (the “2025 Plan”), pursuant to which the Company initially reserved and made available for future issuance under the 2025 Plan 10,000,000 shares of common stock in the form of various incentive awards.

During the year ended December 31, 2025, the Company sold a total of 23,262,666 shares of common stock to accredited investors for total cash proceeds of $2,939,401.

During the year ended December 31, 2025, the Company issued a total of 1,098,022 shares of common stock to officers and directors for services under the employment agreements discussed in Note 10. The Company recorded stock-based compensation of $141,674 under the employment and Independent Director agreements, based on the common stock prices ranging from $0.10 to $0.16 on the respective grant dates. See Note 10. In February 2026,the Company also issued 171,150 shares of common stock to the two directors pursuant to their director agreements for the fourth quarter of 2025.

On January 27, 2025, the Company’s wholly owned subsidiary, Two Trees Beverage Company and Brown Water Bourbon Xchange, LLC, a Kentucky Limited Liability Company entered into an Asset Purchase Agreement. According to the terms of the Agreement, Brown Water Bourbon Xchange, LLC sold to the Company 680 barrels of whiskey in exchange for 5,000,000 restricted shares of Common Stock of the Company, with a fair value of $850,000 based on the closing price of the Company’s common stock at the agreement date.

During the year ended December 31, 2024, the Company issued a total of 5,020,004 shares of common stock to accredited investors for total cash proceeds of $745,000.

During the year ended December 31, 2024, the Company issued a total of 1,000,000 shares of common stock to officers and directors for services under the employment agreements discussed in Note 10. The Company recorded stock-based compensation of $71,938 under the employment and Independent Director agreements, based on the common stock prices ranging from $0.10 to $0.16 on the respective grant dates. Also in 2024, as part of the license agreement disclosed in Note 11, the Company agreed to issue 300,000 restricted shares of common stock with a fair value of $15,000 based on the fair value of the Company’s stock at the grant date. The shares have not been issued to date, and the fair value is included in subscriptions payable on the Company’s consolidated balance sheet

At December 31, 2025 and 2024, there were 234,105,560 and 204,744,872 shares issued and outstanding, respectively.

Warrants

During the year ended December 31, 2023, the Company issued warrants in connection with the sale of common stock to investors. The following table represents warrant activity during the years ended December 31, 2025 and 2024:

The warrants had a weighted average remaining life of 2.65 years andno intrinsic value as of December 31, 2025.

Stock options

During the year ended December 31, 2023, in connection with the acquisition of Two Trees, the Company issued common stock options to purchase the Company’s common stock to employees of Two Trees in replacement of their previously outstanding stock options of Two Trees. The following is a summary of activity of outstanding stock options during the year ended December 31, 2025:

The options had a weighted average remaining life of 7.94 years andno intrinsic value as of December 31, 2025.

Stock Appreciation Rights

On July 15, 2025, the Company awarded a total of 2,180,000 Stock Appreciation Rights (‘SARs”) to the Company’s common stock to the employees under the 2025 Plan at an exercise price of $0.22 per share, vesting immediately, with a 10 year exercise period. The Company has the sole discretion to settle the SARs in shares or cash. The Company will issue shares when exercised based on the difference between the fair value on the exercise date and the exercise price of $0.22. The SARs are classified as equity instruments in accordance with ASC 718.

The aggregate estimated value using the Black-Scholes Pricing Model, based on an expected term of 3.75 years, a weighted average volatility rate of 175%, a weighted average risk-free interest rate of 4.16%, and a weighted average call option value of $0.22, was $483,039, which was recognized stock-based compensation related to the SARs.

The following is a summary of activity of outstanding SARs during the year ended December 31, 2025:

NOTE 8 -COMMITMENTS AND CONTINGENCIES

In the ordinary course of business, the Company may become a party to lawsuits involving various matters. The impact and outcome of litigation, if any, is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm its business. The Company believes the ultimate resolution of any such current proceeding will not have a material adverse effect on our continued financial position, results of operations or cash flows.

On April 22, 2024, the Company entered into a broker agreement with a third party. Under the agreement, the Company will pay a monthly fee of $1,500, and a commission of 12% of any revenue from customers introduced by the broker, less any promotional expenses incurred by the Company. The agreement is cancellable by either party with 60 days’ notice, and in the event of termination, the commissions shall continue for a period of one year from the termination date. The Company incurred fees and commissions of $6,156 and $16,125 during the years ended December 31, 2025 and 2024, respectively, and owed the broker $0 and $5,625 as of December 31, 2025 and 2024.

In August 2024, the Company entered into an affiliate agreement with an independent contractor, whereby the Company agreed to pay the contractor a commission of 5% of gross revenue related to any SRAS system sales or sales from aging services performed by the Company through customers introduced by the contractor. The agreement has a term of 10 years, and provides the contractor with exclusivity rights to provide its services to the Company. During the year ended December 31, 2025 and 2024, the Company incurred commissions of $11,150 and owed $11,150 and $0 as of December 31, 2025 and 2024, respectively.

On November 6, 2024, the Company entered into an employment agreement with its CEO, Steve Laker. The agreement specifies an annual salary of $180,000 through December 31, 2025, $225,000 2026, $250,000 for 2027, $300,000 for 2028 and $350,000 for 2029. Mr. Laker is also eligible to receive a cash performance-based bonus for any quarter over the next two years where the Company’s gross revenue has increased by at least 25% compared to the previous year quarter. The bonus per quarter would be 25% of Mr. Laker’s then-current base salary. After two years, for any calendar year where gross revenue has increased at least 10%, 15% or 25%, Mr. Laker will be eligible to a bonus of 50%, 100% or 150%, respectively, of his then-current base salary, and is payable 50% in cash and 50% in Company stock vesting over the following 24 months. Upon execution of the agreement, the Company will issue 500,000 shares of common stock to Mr. Laker, with 25% vesting on January 1, 2025 and the remainder monthly from January 1, 2026 through December 31, 2028. During the year ended December 31, 2024, the Company issued a total of 500,000 shares to Mr. Laker, valued at $49,000, based on the common stock price at the date of grant. The Company recognized expense of $12,250 for these awards during the years ended December 31, 2025 and 2024, respectively. and expects to recognize an additional $36,750 through the end of the vesting period in 2026. Additionally, Mr. Laker is eligible to receive an additional 3,000,000 shares of common stock based on performance benchmarks tied to certain revenue targets, with targets ranging from $5,000,000 to $50,000,000. These performance awards had a grant date fair value of $294,000. The Company recognizedno expense during the year ended December 31, 2025 related to these awards as vesting was not deemed probable. The expense related to the performance awards will be recognized when vesting becomes probable. The agreement has an initial term of five years, and renewal automatically unless written notice is provided 90 days prior. The agreement can be terminated by the Company for cause with 90 days notice. In the event of termination of Mr. Laker without cause, Mr. Laker will receive one year of his then-current base salary, and all stock awards under the agreement will become fully vested.

On November 6, 2024, the Company entered into an employment agreement with its Executive Chairman James Cassidy. The agreement specifies an annual salary of $180,000 through December 31, 2025, $225,000 2026, $250,000 for 2027, $300,000 for 2028 and $350,000 for 2029. Mr. Cassidy is also eligible to receive a cash performance-based bonus for any quarter over the next two years where the Company’s gross revenue has increased by at least 25% compared to the previous year quarter. The bonus per quarter would be 25% of Mr. Cassidy’s then-current base salary. After two years, for any calendar year where gross revenue has increased at least 10%, 15%, or 25% Mr. Cassidy will be eligible to a bonus of 50%, 100% or 150%, respectively, of his then-current base salary, and is payable 50% in cash and 50% in Company stock vesting over the following 24 months. Upon execution of the agreement, the Company will issue 500,000 shares of common stock to Mr. Cassidy, with 25% vesting on January 1, 2025 and the remainder monthly from January 1, 2026 through December 31, 2028. During the year ended December 31, 2025, the Company issued a total of 500,000 shares to Mr. Cassidy, valued at $49,000 based the common stock price at the date of grant. The Company recognized stock based compensation expense of $12,250 for these awards and expects to recognize an additional $36,750 through the end of the vesting period. Additionally, Mr. Cassidy is eligible to receive an additional 3,000,000 shares of common stock based on performance benchmarks tied to certain revenue targets, with targets ranging from $5,000,000 to $50,000,000. These performance awards had a grant date fair value of $294,000. The Company recognizedno expense during the year ended December 31, 2025 related to these awards as vesting was not deemed probable. The expense related to the performance awards will be recognized when vesting becomes probable. The agreement has an initial term of five years, and renewal automatically unless written notice is provided 90 days prior. The agreement can be terminated by the Company for cause with 90 days notice. In the event of termination of Mr. Cassidy without cause, Mr. Cassidy will receive one year of his then-current base salary, and all stock awards under the agreement will become fully vested.

On November 18, 2024, Mr. Timothy Brocopp and the Company entered into an Independent Director Agreement, with the following summarized terms: Mr. Brocopp shall serve as an independent director of the Company and be available to perform the duties consistent with such position pursuant to the Certificate of Incorporation and Bylaws of the Company. Mr. Brocopp’s employment commenced on Monday, November 16, 2024, and continues for a term of three (3) years. Compensation that Mr. Brocopp will receive during his term includes the sum of $5,000, each calendar quarter, payable in the third month of each calendar quarter, and with such amount for any partial calendar quarter being appropriately prorated. Upon employment, the Company shall issue to Mr. Brocopp 100,000 shares of common stock, par value $0.001 per share, of the Company (the “Common Stock”), subject to the terms and conditions of the Company’s applicable equity incentive plan and any related grant documentation, with $10,000 shares divided by a VWAP schedule. The fair value of the shares was estimated using a common stock price of $0.10 or $10,000. The Company recognized stock based compensation expense of $10,000 for these awards and expects to recognize an additional $0 as the awards vest immediately.

During the year ended December 31, 2025, the Company issued 171,429 shares related to awards earned in 2024 and issued 152,582 shares During the year ended December 31, 2025. The Company recognized total stock-based compensation expense of $46,112 based on the closing stock price at each quarter end During the year ended December 31, 2025 related to these awards. Furthermore, the Company is to issue an additional 85,575 shares of common stock, which were issued in February 2026.

On December 3, 2024, Mr. Richard Blackstone and the Company entered into an Independent Director Agreement. Mr. Blackstone shall serve as an independent director of the Company and be available to perform the duties consistent with such position pursuant to the Certificate of Incorporation and Bylaws of the Company. Mr. Blackstone’s employment commenced on Tuesday, December 3, and continues for a term of three (3) years. Compensation that Mr. Blackstone will receive during his term includes the sum of $5,000, each calendar quarter, payable in the third month of each calendar quarter, and with such amount for any partial calendar quarter being appropriately prorated. Upon employment, the Company shall issue to Mr. Blackstone 100,000 shares of common stock, par value $0.001 per share, of the Company (the “Common Stock”), subject to the terms and conditions of the Company’s applicable equity incentive plan and any related grant documentation, and additional quarterly shares worth $10,000, with shares divided by a VWAP schedule. During the year ended December 31, 2025, the Company issued 171,429 shares related to awards earned in 2024 and issued 152,582 shares During the year ended December 31, 2025. The Company recognized total stock-based compensation expense of $46,112 based on the closing stock price at each quarter end During the year ended December 31, 2025 related to these awards. Furthermore, the Company is to issue an additional 85,575 shares of common stock, which were issued in February 2026.

On December 11, 2024, the Company and a consultant entered into an independent contractor agreement whereby the consultant shall serve as Senior Director of Revenue of the Company on a month to month basis, which can be terminated by either party with 30 days notice. As compensation for his services, the consultant will receive 20,000 shares of stock per month. During the period ended December, 2025, the Company issued to the consultant a total of 100,000 shares with a fair value of $20,450, based on the common stock prices at the end of each month.

On March 10, 2025, the Company entered into an Executive Employment Agreement with David Stephens. Mr. Stephens shall serve as the Chief Financial Officer of the Company. Mr. Stephen’s employment commenced on March 1, 2025, and continues for a term of three (3) years. Compensation that Mr. Stephens will receive during his term includes (i) for the period of January 1, 2025 through December 31, 2025, a base salary of $120,000, payable in equal monthly payments of $10,000 per month; (ii) for the period of January 1, 2026 through December 31, 2026, a base salary of $150,000; and (iii) for the period of January 1, 2027 through December 31, 2027, a base salary of $175,000. In addition to the Base Salary, Mr. Stephens shall receive performance-based bonuses from January 1, 2025 on a quarterly basis for a period of two (2) years of the Term (the “Two Year Quarterly Bonuses”) as follows: for any calendar quarter(s) where the Company’s gross revenue has increased a minimum of twenty five percent (25%) from its prior year gross revenue for that corresponding calendar quarter, Mr. Stephens shall be entitled to a cash bonus equating to fifteen percent (15%) of his then-current Base Salary within thirty (30) days of the conclusion of any such calendar quarter(s). Upon conclusion of the two (2) years of the Term, Mr. Stephens shall thereafter receive performance-based bonuses on an annual basis (the “Subsequent Annual Bonuses”). For any calendar year(s) where the Company’s gross revenue has increased a minimum of ten percent (10%) from its prior year gross revenue for that corresponding calendar year, Mr. Stephens shall be entitled to a cash bonus equating to forty percent (40%) of his then-current Base Salary payable as follows: (1) fifty percent (50%) in cash within thirty (30) days of the conclusion of any such calendar year(s); and (2) fifty percent (50%) in Company stock vesting on a prorated consecutive twenty four (24) calendar month basis; For any calendar year(s) where the Company’s gross revenue has increased a minimum of fifteen percent (15%) from its prior year gross revenue for that corresponding calendar year(s), Mr. Stephens shall be entitled to a cash bonus equating to seventy-five percent (75%) of his then-current Base Salary payable as follows: (1) fifty percent (50%) in cash within thirty (30) days of the conclusion of any such calendar year(s); and (2) fifty percent (50%) in Company stock vesting on a prorated consecutive twenty four (24) calendar month basis.; For any calendar year(s) where the Company’s gross revenue has increased a minimum of twenty five percent (25%) from its prior year gross revenue for that corresponding calendar year(s), Mr. Stephens shall be entitled to a cash bonus equating to one hundred twenty five percent (125%) of his then-current Base Salary payable as follows: (1) fifty percent (50%) in cash within thirty (30) days of the conclusion of any such calendar year(s); and (2) fifty percent (50%) in Company stock vesting on a prorated consecutive twenty four (24) calendar month basis.

Upon execution of the agreement, the Company issued 150,000 shares of common stock to Mr. Stephens with a fair value of $27,000, with 50,000 shares vesting on execution of the agreement and the remainder monthly from January 1, 2026 through December 31, 2027. The Company recognized expense of $9,000 for these awards during the year ended December 31, 2025 and expects to recognize an additional $18,000 through the end of the vesting period. Additionally, Mr. Stephens is eligible to receive an additional 562,500 shares of common stock based on performance benchmarks tied to certain revenue targets, with targets ranging from $5,000,000 to $50,000,000. These performance awards had a grant date fair value of $101,250. The Company recognizedno expense during the year ended December 31, 2025 related to these awards as vesting was not deemed probable.

On March 14, 2025, the Company agreed to issue 200,000 shares of common stock to a consultant, of which 66,667 vest upon execution, and the remaining 133,333 monthly vesting from January 1, 2026 through December 31, 2027. The shares were valued at $60,000 based on the common stock price at the date of grant. The Company recognized expense of $20,000 during the year ended December 31, 2025 and expects to recognize an additional $40,000 through the end of the vesting period. Additionally, the consultant is eligible to receive an additional 750,000 shares of common stock based on performance benchmarks tied to certain revenue targets, with targets ranging from $5,000,000 to $50,000,000. These performance awards had a grant date fair value of $225,000. The Company recognizedno expense during the year ended December 31, 2025 related to these awards as vesting was not deemed probable.

NOTE 9 -RELATED PARTY TRANSACTIONS

During the year ended December 31, 2025, the Company received a total of $150,000 in loan proceeds from shareholders and repaid $105,500 of principal and $6,276 of accrued interest. The advances are unsecured, due on demand and have stated interests ranging from 10% to 12% per annum. As of December 31,2025 and December 31, 2024, the balance owed on the advances from shareholders was $167,500 and $123,000, respectively, including $17,500 and $23,000, respectively with companies in which the Company’s Executive Chairman is a principal.

During the year ended December 31, 2024, the Company received a total of $155,500 in proceeds from shareholders and repaid $32,500. The advances are unsecured, due on demand and have stated interest of 10% per annum. As of December 31, 2024, the balance owed on the advances from shareholders was $123,000.

On November 7, 2024, the Company agreed to purchased 8,957,500 shares of Series A Convertible Preferred Stock, representing all of the issued and outstanding shares of Series A Convertible Preferred Stock of the Company from, Tradition Reserve I LLC, a New York limited liability company, in exchange for $10. At December 31, 2024 and 2023, there were 0 and 8,957,500 shares of Series A Convertible Preferred Stock issued and outstanding, respectively.

In May 2024, the Company entered into two bill of sale agreements to sell two vehicles to Keith Mort, the former owner of RFS. Mr. Mort assumed the loans associated with the two vehicles with a net book value of $130,492 and an aggregate principal balance of $72,592 at the time of sale, and the Company recognized a loss on disposal of $57,900 during the year ended December 31, 2024.

As of December 31, 2025 and 2024, the Company owed a total of $6,355 and $36,738, respectively to an entity controlled by the Company’s Chairman, and $0 and $10,074, respectively, to Mr. Mort related to expense reimbursements.

NOTE 10 –LEASES

The Company maintains an operating lease for its office space and operating facility. The lease has a remaining term of 80 months. The Company determines if an arrangement is a lease at inception. As the rate implicit in each lease is not readily determinable, the Company uses its incremental borrowing rate based on information available at commencement to determine the present value of the lease payments. The Company used a weighted average incremental borrowing rate of 8.4% Right-of-use assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Leases with an initial term of 12 months or less (“short-term leases”) are not recorded on the balance sheet and are recognized on a straight-line basis over the lease term. As of December 31, 2025, the amount of right-of-use assets and lease liabilities were $628,125 and $661,109, respectively. As of December 31, 2024, the amount of right-of-use assets and lease liabilities were $915,803 and $961,490, respectively. Aggregate lease expense for the years ended December 31, 2025, and 2024 was $293,779 and $342,316, respectively.

The following table provides the maturities of lease liabilities at December 31, 2025:

In January 2026, the Company renewed its lease for its Two Trees Distilling facility for an additional three years through February 2029.

NOTE 11 –INCOME TAXES

For the period from inception through December 31, 2025, the Company incurred a net operating loss and, accordingly, no provision for income taxes has been recorded. In addition, no benefit for income taxes has been recorded due to the uncertainty of the realization of any tax assets. At December 31, 2025, the Company had approximately $5,209,000 of federal net operating losses. Under the Tax Cuts and Jobs Act of 2017, the net operating loss carry forwards can be carried forward indefinitely, however the deductions are limited to 80% of taxable income.

The effective income tax rate for the years ended December 31, 2025 and 2024 consisted of the following:

The components of the Company’s deferred tax asset are as follows:

Based on the available objective evidence, including the Company’s history of its loss, management believes it is more likely than not that the net deferred tax assets will not be fully realizable. Accordingly, the Company provided for a full valuation allowance against its net deferred tax assets at December 31, 2025 and 2024, respectively.

In accordance with FASB ASC 740, the Company has evaluated its tax positions and determined there are no uncertain tax positions.

NOTE 12 –SEGMENT REPORTING

The Company’s operations are managed and reported intwo operating segments, each of which is a reportable segment for financial reporting purposes: (1) RF Specialties and (2) Two Trees Distilling. These segments are organized principally by product and service category. The Company’s reportable segments are determined based on (1) financial information reviewed by the CODM, (2) operational structure of the Company which is designed and managed to share resources across the entire suite of products offered by the business, and (3) the basis upon which the CODM makes resource allocation decisions. The CODM for both segments is the Director, President and Chief Executive Officer of the Company. The CODM utilizes the segment operating income (loss) to assess profitability and performance of actual results compared to forecasts.

Significant segment expenses and assets information is as follows:

NOTE 13 -SUBSEQUENT EVENTS

Subsequent to December 31, 2025, on January 7, 2026, the Company sold 1,333,333 shares of common stock in exchange for cash proceeds of $200,000. The Company also received $250,000 for the subscription of an additional 2,500,000 shares not yet issued.

On February23, 2026, the Company issued 85,575 shares each to Mr. Brocopp and Mr. Blackstone pursuant to their director agreements.

Appointment of Roy Milner as Independent Director

On February 11, 2026, the Board of Directors appointed Roy Milner (“Mr. Milner”) to serve as an independent director of the Company, as defined under the applicable SEC rules and Nasdaq listing standards. On February 10, 2026, Mr. Milner and the Company entered into an Independent Director Agreement, with the following summarized terms:

Mr. Milner shall serve as an independent director of the Company and be available to perform the duties consistent with such position pursuant to the Certificate of Incorporation and Bylaws of the Company. Mr. Milner’s employment commenced on February 10, 2026, and continues for a term of three (3) years.

Compensation that Mr. Milner will receive during his term includes the sum of $5,000, each calendar quarter, payable in the third month of each calendar quarter, and with such amount for any partial calendar quarter being appropriately prorated. Upon employment, the Company shall issue to Mr. Milner 100,000 shares of common stock, par value $0.001 per share, of the Company (the “Common Stock”), subject to the terms and conditions of the Company’s applicable equity incentive plan and any related grant documentation, and a grant each calendar quarter of $10,000 in shares of Common Stock with shares divided by a VWAP schedule.

The Company shall reimburse Mr. Milner for all reasonable out-of-pocket expenses incurred in the ordinary course of the Director’s business, with out-of-pocket expenses of the Director in excess of $500 subject to preapproval in advance by the Company.

Mr. Milner is bound by certain confidentiality covenants with the Company. And has made certain representations and warranties customary to directors. According to the terms of the Independent Director Agreement, Mr. Blackstone shall relinquish all ownership to the Company, of work product related to his position with the Company, including any intellectual and proprietary rights of work product resulting from his position as director.

Resignation of Edward D. Kratovil from the Board of Directors

On February 14, 2026, Edward D. Kratovil, a member of the Board of Directors, notified the Company of his intention to retire from the Board of Directors effective immediately due to health-related reasons. Mr. Kratovil did not advise the Company of any disagreement with the Company on any matter relating to its operations, policies or practices.