MDWerks, Inc.

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 2026 and 2025

NOTE 1 -ORGANIZATION AND DESCRIPTION OF THE BUSINESS

MDwerks, Inc. (the “Company”), a Delaware corporation, was focused on effecting a “reverse merger,” capital exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more unrelated businesses (the “Business Combination”) that would benefit from the Company’s public reporting status. The Company has two lines of business as outlined below from acquisitions completed in 2023.

Two Trees Beverage Co. (“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.

RF Specialties, LLC (“RFS”) is an innovative company pushing the boundaries of sustainable Radio Frequency applications. For over 12 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 accompanying interim unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the Securities and Exchange Commission (“SEC”) on March 25, 2026. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been omitted from this Quarterly Report on Form 10-Q pursuant to the rules and regulations of the SEC.

Results for the interim periods in this report are not necessarily indicative of future financial results and have not been audited by our independent registered public accounting firm. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments necessary to present fairly our interim financial statements as of March 31, 2026, and for the three months ended March 31, 2026 and 2025. These adjustments are of a normal recurring nature and consistent with the adjustments recorded to prepare the annual audited consolidated financial statements as of December 31, 2025.

The accompanying unaudited 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, Drilling, RAS LLC, (collectively referred to as “Two Trees”) and RF Specialties, LLC. All intercompany accounts, transactions and balances have been eliminated in consolidation.

**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 $24,947 net of $1,976 allowance for doubtful accounts as of March 31, 2026. 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 credit losses (recoveries) of $(8,148) and $11,715 during the three months ended March 31, 2026 and 2025, respectively. As of and for the three months ended March 31, 2026, the Company had three customers that accounted for 30%,28% and 16% of total accounts receivable. As of December 31, 2025, the Company had four customers that accounted for 35%,23%,14%, and 14% 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.

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.

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 loss of $847,032 for the three months ended March 31, 2026 and an accumulated deficit of $7,005,527 as of March 31, 2026 Although management believes that it will be able to successfully execute its business plans, which includes third party financing and raising 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.

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 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, 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. 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 March 31, 2026 and December 31, 2025, the Company had $478,019 and $457,158, respectively, in unsatisfied performance obligations that it expects to satisfy over the next 12 months.

During the three months ended March 31, 2026, the Company’s revenue consisted of liquor sales from the Two Trees and RF Specialties and labor costs related to the product and service income resulting from the RF Specialties and Two Trees Distilling.

For the three months ended March 31, 2026, the Company had one customer who accounted for 16% of total revenue.

For the three months ended March 31, 2025, the Company had one customer who accounted for 29% of total revenue.

**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.

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 one reporting unit. During the three months ended March 31, 2026, and 2025, 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 three months ended March 31, 2026, and 2025, 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.

**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.

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 $8,382 and $7,232 for the three months ended March 31, 2026 and 2025, respectively.

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.

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 2024, 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:

During the three months ended March 31, 2026, the Company recognized an impairment of $28,988 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:

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 expect to be deployed by the end of fiscal year ended December 31, 2026.

Depreciation expense totaled $53,500 and $58,506 for the three months ended March 31, 2026, and 2025, respectively.

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:

Total amortization expense for the three months ended March 31, 2026 and 2025 was $14,101 and $14,101, respectively. The Company expects to recognize amortization expense of $56,402 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. As of the filing date of this Quarterly Report on Form 10-Q, the Company has not paid such amount. 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 March 31, 2026 and December 31, 2025, the royalty payable balance was $149,495 and $135,872, respectively, included in accounts payable and accrued expenses on the consolidated balance sheets.

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 in which it agreed to pay the sum of $50,000. 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. The balance as of March 31, 2026, and December 31, 2025, is $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 the first asset purchase 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 asset 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 2030.

During the year ended December 31, 2025, the Company received a total of $150,000 in proceeds from shareholders. The advances are unsecured, due on demand and have stated interest of 10% per annum. As of March 31, 2026 and December 31, 2025, the balance owed on the advances from shareholders was $167,500 respectively.

In February 2026, the Company entered into an insurance policy financing arrangement. The total principal was $147,793 with an interest rate of 9.70% and monthly payments of $12,437 due through December 2026. The Company made principal payments of $28,956 during the three months ended March 31, 2026. As of March 31, 2025, the remaining balance was $147,792.

Interest expense of $9,220 and $11,765 was recorded in the three months ended March 31, 2026, and 2025, respectively. Accrued interest as of March 31, 2026 and December 31, 2025, was $35,711 and $30,355, 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 rights and preferences to the Series A Convertible Preferred stock. Each share of Series A Convertible Preferred stock may be converted into one hundred (100) shares of common stock. Additionally, each share of Series A Preferred stock holds the same number of common stock share votes into which it is convertible, prior to being converted, for the purposes of voting on any company matter requiring a vote of shareholders.

On November 7, 2024, the Company agreed to purchased 8,957,000 shares of Series A Convertible Preferred stock, representing all of the issued and outstanding shares of Series A Convertible Preferred shares of the Company from, Tradition Reserve I LLC, a New York limited liability company, in exchange for $10. At March 31, 2026 and December 31, 2025, there were 0 shares of Series A Convertible Preferred 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.

During the three months ended March 31, 2026, the Company sold 2,833,333 shares of common stock in exchange for cash proceeds of $450,000. A total of 2,500,000 shares of common stock were not issued as of the date of this report related to $250,000 of cash proceeds, which is included in subscription payable on the consolidated balance sheet. The Company has also not yet issued 300,000 shares of common stock related to a prior royalty agreement which are included in subscriptions payable on the Company’s consolidated balance sheet at a value of $15,000.

During the three months ended March 31, 2026, the Company issued a total of 271,150 shares of common stock to officers, directors and consultants for services under the agreements discussed in Note 8. The Company recorded stock-based compensation of $44,891 under the agreements, based on the common stock prices ranging from $0.13 to $0.15 on the respective grant dates.

During the three months ended March 31, 2025, the Company sold 10,559,999 shares of common stock in exchange for cash proceeds of $1,584,000. A total of 1,066,667 shares of common stock were not issued as of the date of this report related to $160,000 of cash proceeds, which are included in subscriptions payable on the Company’s consolidated balance sheet.

During the three months ended March 31, 2025, the Company issued a total of 692,858 shares of common stock to officers, directors and consultants for services under the agreements discussed in Note 9. The Company recorded stock-based compensation of $66,322 under the agreements, based on the common stock prices ranging from $0.12 to $0.30 on the respective grant dates.

At March 31, 2026 and December 31, 2025, there were 235,710,043 and 234,105,560 shares issued and outstanding, respectively.

Warrants

The following table represents warrant activity during the three months ended March 31, 2026:

The warrants had a weighted average remaining life of 2.40 years andno intrinsic value as of March 31, 2026.

Stock options

The following is a summary of activity of outstanding stock options during the three months ended March 31, 2026:

The options had a weighted average remaining life of 7.69 years andno intrinsic value as of March 31, 2026.

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 following is a summary of activity of outstanding SARs during the three months ended March 31,2026:

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. Under the broker agreement, the Company incurred fees of $0 and $1,500 during the three months ended March 31, 2026 and 2025, respectively, and owed the broker $0 as of March 31, 2026.

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, the Company incurred commissions of $11,150 and owed $11,150 as of March 31, 2026 and December 31, 2025, 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 three months ended March 31, 2026 and 2025, the Company recognized expense of $3,063 and $0 for these awards and expects to recognize an additional $33,688 through the end of the vesting period. 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 three months ended March 31, 2026 and 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 for 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 issued 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 three months ended March 31, 2026 and 2025, the Company recognized expense of $3,063 and $0 for these awards and expects to recognize an additional $33,688 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 three months ended March 31, 2026 and 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. The Company issued an initial 100,000 shares of common stock to Mr. Brocopp 100,000 shares of common stock upon execution of the agreement, subject to the terms and conditions of the Company’s applicable equity incentive plan and any related grant documentation, and will issue an additional $10,000 of shares each quarter based on a VWAP schedule using the previous 20 Trading days at quarter end. During the three months ended March 31, 2026, the Company issued 85,575 shares to Mr Brocopp for shares earned in 2025. Furthermore, the Company is to issue an additional 46,546 shares of common stock with a fair value of $6,288 based on the closing price of the Company’s common stock as of March 31, 2026. As of the date of this report, the Company has not issued the 46,546 shares of common stock to Mr. Brocopp.

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 will issue an additional $10,000 of shares each quarter based on a VWAP schedule using the previous 20 Trading days at quarter end. During the three months ended March 31, 2026, the Company issued 85,575 shares to Mr. Blackstone for shares earned in 2025. Furthermore, the Company is to issue an additional 46,546 shares of common stock with a fair value of $6,288 based on the closing price of the Company’s common stock as of March 31, 2026. As of the date of this report, the Company has not issued the 46,546 shares of common stock to Mr. Blackstone.

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 $1,500 and $9,000 for these awards during the three months ended March 31, 2026 and 2025, respectively and expects to recognize an additional $16,500 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 three months ended March 31, 2026 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 $3,333 and $20,000 during the three months ended March 31, 2026 and 2025, respectively and expects to recognize an additional $32,222 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 three months ended March 31, 2026 and 2025 related to these awards as vesting was not deemed probable.

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 issued to Mr. Milner 100,000 shares of common stock with a fair value of $15,100 based on the closing price of the Company’s common stock at the date of the agreement, subject to the terms and conditions of the Company’s applicable equity incentive plan and any related grant documentation. The Company will also grant each calendar quarter of $10,000 in shares of Common Stock with shares divided by a VWAP schedule based on the 20 previous trading days. The Company is to issue an additional 46,546 shares of common stock with a fair value of $6,288 based on the closing price of the Company’s common stock as of March 31, 2026. As of the date of this report, the Company has not issued the 46,546 shares of common stock to Mr. Milner.

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. Milner 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.

NOTE 9 -RELATED PARTY TRANSACTIONS

During the three months ended March 31, 2025, the Company received a total of $150,000 in proceeds from shareholders and repaid $55,500 of principal and $276 of accrued interest. The advances are unsecured, due on demand and have stated interests ranging from 10% to 12% per annum. As of March 31, 2026 and December 31, 2025, the balance owed on the advances from shareholders was $167,500. See Note 6 above.

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 9.11% 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. During the three months ended March 31, 2026, the Company renewed a facility lease for its Two Trees business for an additional three years and recognized an initial right of use asset and liability of $405,866.

As of March 31, 2026, the amount of right-of-use assets and lease liabilities were $976,100 and $1,008,242, respectively. As of December 31, 2025, the amount of right-of-use assets and lease liabilities were $628,125 and $661,109, respectively. Aggregate lease expense for the three months ended March 31, 2026, and 2025 was $78,473 and $79,725, respectively.

The following table provides the maturities of lease liabilities at March 31, 2026:

NOTE 11 –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 12-SUBSEQUENT EVENTS

The Company has evaluated events occurring after the balance sheet date through the date these financial statements were issued. Based on management’s assessment, no significant events were identified for the three-month period ended March 31, 2026.

On April 15, 2026, the Company entered into three convertible notes, two with members of the Board of Directors, and one with a family member of a Director, for an aggregate principal amount of $145,000 (the “Convertible Notes”). The Company received cash proceeds of $115,000 and settled $30,000 of accounts payable owed to a Director. The Convertible Notes bear interest at 20% per annum, payable monthly, mature on October 15, 2026 and are convertible beginning on the three month anniversary of issuance into common stock of the Company at a fixed price of $0.10 per share.