MDWerks, Inc.

Previous wording

Our wholly-owned subsidiary, Two Trees Beverage Company, utilizes our Spirits Rapid Aging System, validating the use of our patented energy wave technology within the premium craft spirits industry. Our proprietary and patented molecular targeting system swiftly and sustainably transforms distillate to maturity, delivering traditional flavors in a fraction of the time with greatly reduced environmental impact and cost. Precision engineered to match traditional aging flavors and aromas, it has been used to produce over 50 SKUs and many award-winning products. 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. 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.

Current wording

Our wholly-owned subsidiary, Two Trees Beverage Company, utilizes the SRAS, validating the use of this patented energy wave technology within the premium craft spirits industry. Our proprietary and patented molecular targeting system swiftly and sustainably transforms distillate to maturity, delivering traditional flavors in a fraction of the time with greatly reduced environmental impact and cost. Precision engineered to match traditional aging flavors and aromas, it has been used to produce over 50 SKUs and many award-winning products.

Previous wording

Leveraging patented energy wave technology, our SRAS units swiftly, sustainably and cost-effectively mature spirits to create high quality final product with traditional flavor profiles. We see excellent potential for multiple additional SRAS deployments by both customers within the next twelve months as well as by other third parties.

Current wording

We have signed new contracts with two companies for the construction and deployment of our proprietary SRAS and see excellent potential for multiple additional SRAS deployments by both customers within the next twelve months as well as by other third parties.

Previous wording

The first two units are scheduled to be installed at the facilities of one of the largest distilleries in the U.S. in the first quarter of 2026. Additionally, we anticipate deploying the third SRAS unit at the facilities of a U.S. broker of bulk spirits in the first half of 2026. 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. We are currently building units, and an additional unit to be deployed on our premises during the third quarter of 2025 to quintuple existing production capacity at our Two Trees facility. We are also currently providing aging services for tanker loads of single malt at our facility while the customer’s SRAS units are under construction.

Current wording

Under both contracts, RFS will manufacture and assemble the SRAS units and provide ongoing machine servicing and maintenance in addition to the recurring monthly license payments from the customers for use of the SRAS units.

Previous wording

These contracts not only validate the economic and sustainability benefits of our SRAS units but also are expected to provide us with attractive recurring revenue streams through licensing agreements and ancillary fees for ongoing machine servicing and maintenance. Our upfront investment in these units will begin to pay off as they go live, providing us with new recurring cash flow streams.

Current wording

These contracts validate the economic and sustainability benefits of our SRAS units and provide us with attractive recurring revenue streams through licensing agreements and ancillary fees for ongoing machine servicing and maintenance.

Previous wording

Building on the momentum of our first two WaaS contracts, we signed a separate new agreement with an international spirits investment fund (the “Fund”) providing the Fund with limited exclusivity for the deployment of our SRAS units in three countries outside of the United States. To retain exclusivity, the Fund is required to deploy at least one SRAS unit annually in each of the three countries. We will provide updates as new orders take hold in these countries.

Current wording

Building on the momentum of our first two WaaS contracts, we signed a separate new agreement with an international spirits investment fund (the “Fund”) providing the Fund with limited exclusivity for the deployment of our SRAS units in three countries outside of the United States. To retain exclusivity, the Fund is required to deploy at least one SRAS unit annually in each of the three countries.

Previous wording

Among our accomplishments to start the year, we successfully launched our “Whiskey-as-a-Service” (“WaaS”) business model, signing new contracts with two companies for the construction and deployment of our proprietary Spirits Rapid Aging Systems (“SRAS”) at their facilities. We also began aging tanker loads of distillate for one of these customers to fill immediate demand for aged spirits. We are currently installing a new higher capacity SRAS at our Two Trees facility in order to increase existing production by the end of the year.

Current wording

In 2025, we began aging tanker loads of distillate at our facility for one of our SRAS customers to fill immediate demand for aged spirits. In early 2026, we completed installation of a higher capacity SRAS at our Two Trees facility in order to increase existing production across our aging services and brand production.

Previous wording

Cost of Sales. Cost of sales for the nine months ended September 30, 2025 was $1,745,175 compared to $1,059,088 for nine months ended September 30, 2024. Cost of sales for the Company’s Two Trees Distilling operations was $764,758 in 2025 compared to $637,025 in 2024, with the increase driven by increased input costs, an inventory impairment of $61,897 and additional costs associated with the WaaS revenue. The Company’s RF Specialties business incurred costs of sales of $980,417 in 2025 compared to $422,063 in 2024. The increase is due to the costs associated with the MSDS contract ongoing since November 2024.

Current wording

Cost of Sales. Cost of sales for the three months ended March 31, 2026 was $570,350 compared to $381,398 for three months ended March 31, 2025. Cost of sales for the Company’s Two Trees Distilling operations was $371,051 in 2026 compared to $168,715 in 2025, with the decline driven by higher input costs for our products, increase freight costs, and higher bulk alcohol sales. The Company’s RF Specialties business incurred costs of sales of $199,299 in 2026 compared to $212,683 in 2025. The slight decrease was due to lower activity associated with the MSD project nearing completion.

Previous wording

Operating Expenses. We reported total operating expenses of $1,110,518 consisting primarily of legal, accounting, payroll, and general business related expenses for the three months ended September 30, 2025 compared to $569,938 for the three months ended September 30, 2024. The $540,580 increase in operating expenses was primarily attributable to increased payroll costs from new officer and director contracts, increased stock-based compensation of $490,808 from those new contracts. Operating expenses included depreciation and amortization expense of $84,817 and $58,969 for the three months ended September 30, 2025 and 2024, respectively.

Current wording

Operating Expenses. We reported operating expenses of $701,549 consisting primarily of legal, accounting, payroll, and general business related expenses for the three months ended March 31, 2026 compared to $750,321 for the three months ended March 31, 2025. The $122,801 decrease in operating expenses was primarily attributable to decreased general and administrative expense. Selling, general and administrative expenses was $467,366 and $583,905 for the three months ended March 31, 2026 and 2025, respectively, and included legal, accounting and audit fees related to our public company reporting obligations, stock-based compensation of $44,891 and $66,322, respectively due to new equity awards to employees and consultants in the prior year. Operating expenses also included salary and wages expense of $146,054 and $93,809 for the three months ended March 31, 2026 and 2025, respectively. Operating expenses included depreciation and amortization expense of $67,601 and $72,607 for the three months ended March 31, 2026 and 2025, respectively.

Previous wording

Total Other Expenses. Total other expense was $26,189 for the three months ended September 30, 2025 compared to $5,906 for the three months ended September 30, 2024. Other expense for the three months ended September 30, 2025 primarily consisted of interest expense of $26,189. Other expense for the three months ended September 30, 2024 primarily consisted of interest expense of $7,806 and interest income of $1,900.

Current wording

Total Other Expenses. Total other expense was $9,220 for the three months ended March 31, 2026 compared to $11,565 for the three months ended March 31, 2025. Other expense for the three months ended March 31, 2026 primarily consisted of interest expense of $9,220. Other expense for the three months ended March 31, 2025 primarily consisted of interest expense of $11,765 and interest income of $200

Previous wording

As of September 30, 2025, and December 31, 2024, we had $181,278 and $11,159 of cash, respectively. We anticipate that our current cash and cash generated from financing activities will be insufficient to satisfy our liquidity requirements for the next 12 months. As of September 30, 2025, we have incurred losses since inception of $5,345,188. At September 30, 2025, we had working capital deficit of $922,197.

Current wording

As of March 31, 2026, and December 31, 2025, we had $95,754 and $211,948 of cash, respectively. We anticipate that our current cash and cash generated from financing activities will be insufficient to satisfy our liquidity requirements for the next 12 months. As of March 31, 2026, we have incurred operating losses since inception of $7,005,527. At March 31, 2026, we had a working capital deficit of $1,782,901.

Previous wording

We expect to incur marketing, professional, and administrative expenses as well expenses associated with maintaining our filings with the Commission. We will require additional funds during this time and will seek to raise the necessary additional capital. During the nine months ended September 30, 2025, we raised $2,339,400 in cash proceeds from the sale of common stock. We continue to need significant cash to execute our business plan, including funds needed to complete construction of the contracted SRAS units and expand our on-site production capacity. If we are unable to obtain additional financing, we may be required to reduce the scope of our business development activities, which could harm our business plans, financial condition and operating results. Additional funding may not be available on favorable terms, if at all. We intend to continue to fund our business by way of equity or debt financing and advances from related parties. Any inability to raise capital as needed would have a material adverse effect on our business, financial condition and results of operations.

Current wording

We expect to incur marketing, professional, and administrative expenses as well expenses associated with maintaining our filings with the Commission. We will require additional funds during this time and will seek to raise the necessary additional capital. During the three months ended, we raised $450,000 in cash proceeds from the sale of common stock. If we are unable to obtain additional financing, we may be required to reduce the scope of our business development activities, which could harm our business plans, financial condition and operating results. Additional funding may not be available on favorable terms, if at all. We intend to continue to fund our business by way of equity or debt financing and advances from related parties. Any inability to raise capital as needed would have a material adverse effect on our business, financial condition and results of operations.

Previous wording

Cash Used in Operating Activities. Net cash used in operating activities for the nine months ended September 30, 2025 and 2024 was $1,194,182 and $662,693. The increase was attributable to an increase in net loss compared to the prior year as a result of increased operating expenses associated with the new businesses as described above.

Current wording

Cash Used in Operating Activities. Net cash used in operating activities for the three months ended March 31, 2026 and 2025 were $464,418 and $421,316. The increase was attributable to an increase in net loss compared to the prior year as a result of increased operating expenses associated with the new businesses as described above.

Previous wording

Cash Provided by Financing Activities. Net cash provided by financing activities for the nine months ended September 30, 2025 and 2024 was $2,142,383 and $617,050, respectively. The cash provided by financing activities for the nine months ended September 30, 2025 was attributable to proceeds from the sale of common stock of $2,339,400, including subscription payable of $60,000, proceeds from related party notes payable of $150,000, partially offset by repayments of notes payable of $241,517. The cash provided by financing activities for the nine months ended September 30, 2024 was attributable to proceeds from subscriptions agreements of $640,000, proceeds from notes payable of $120,500, partially offset by repayments of notes payable of $143,450.

Current wording

Cash Provided by Financing Activities. Net cash provided by financing activities for the three months ended March 31, 2026 and 2025 was $411,131 and $1,607,709, respectively. The cash provided by financing activities for the three months ended March 31, 2026 was attributable to proceeds from the sale of common stock of $450,000, including subscription payable of $205,000, partially offset by repayments of notes payable of $38,869. The cash provided by financing activities for the three months ended March 31, 2025 was attributable to proceeds from the sale of common stock of $1,434,000, including subscription payable of $150,000, proceeds from related party notes payable of $150,000, partially offset by repayments of notes payable of $126,291.

Previous wording

We recognize 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, we recognize 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. We also perform aging services for certain customers, with revenue recognized upon completion of the aged product. The customer has no cancellation privileges after shipment or upon purchase at retail locations, other than customary rights of return. For service revenue within our radio frequency applications, we recognize revenue as the services are provided to the customer over the length of the contract. Our contracts typically have a single performance obligation, and do not contain a significant financing component.

Current wording

We recognize sales when merchandise is 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, we recognize 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. For service revenue within our radio frequency applications, we recognize revenue as the services are provided to the customer over the length of the contract. Our contracts typically have a single performance obligation, and do not contain a significant financing component.