What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-31 compared with 2025-03-25 · 125 added, 113 removed, 151 unchanged (61% of the section changed)

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differ materially from those anticipated in these forward-looking statements as a result of many factors.

(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 (a “Business

Combination”) that would benefit from the Company’s public reporting status.

During the fiscal year ended December 31, 2023,

the Company completed two acquisitions as discussed in detail below.

are a technology company pioneering the development of innovate energy wave solutions for industrial and other commercial enterprises.

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resulting in improved efficiency, higher quality, and reduced processing time.

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

Precision engineered to match traditional aging flavors and aromas, it has been used to produce over 50 SKUs and many award-winning

Specialties, Inc.

January 19, 2023, we entered into an Exchange Agreement (the “Exchange Agreement”) by and between the Company, RF Specialties,

LLC (“RFS”) and Keith A.

Mort as the sole member of RFS.

Pursuant to the terms of the Exchange Agreement, the Company agreed

to acquire from Mr.

Mort, and Mr.

Mort agreed to sell to the Company, 100% of the equity interests and membership interests of RFS, in

exchange for the issuance by the Company to Mr.

Mort of 7,500,000 shares of the Company’s common stock (the “Exchange”).

Immediately following the Exchange, RFS became a wholly owned subsidiary of the Company.

is an innovative company pushing the boundaries of sustainable Radio Frequency applications.

For over 13 years RFS has addressed companies’

most pressing challenges by implementing automated Radio Frequency Technology in a sustainable way 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.

Trees Acquisition

February 13, 2023, we entered into a Merger Agreement (the “Merger Agreement”), by and between the Company, MD-TT Merger

Sub, Inc., a wholly owned subsidiary of the Company (“Merger Sub”) and Two Trees Beverage Co.

(“Two Trees”).

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.

consideration of the Merger Agreement, at the effective time of the Merger, each of the holders of Two Trees stock, subject to certain

exceptions set forth in the Merger Agreement, shall have the right to convert all of the shares of Two Trees stock into a total of 60,000,000

shares of Company common stock, which shall be apportioned between the Two Trees stockholders, pro rata, based on the number of shares

of Two Trees stock held by each of the Two Trees stockholders as of the closing of the Merger (the “Merger Consideration”).

Immediately following the Exchange, Two Trees became a wholly owned subsidiary of the Company.

August 25, 2023, we entered an asset purchase agreement with an unrelated company, Dream Workz Automotive LLC, a Colorado limited liability

company (“Dream Workz”).

Pursuant to this agreement, we sold certain tangible manufacturing assets of ours 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, and matures on August 25, 2029.

The Company recognized a gain of $168,855 on the

disposition of assets.

During the year ended December 31, 2024, the Company recognized a loss on impairment of the Note of $97,533.

May 2024, the Company entered into two bill of sale agreements to sell two vehicles to Keith Mort, the former owner of RFS.

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.

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.

Whiskey-as-a-Service

our accomplishments to start the year, we successfully launched our “Whiskey-as-a-Service” (“WaaS”) business

model, offering use of the SRAS through a flexible technology license structure to enable customers to access this transformative technology

with minimal upfront investment, while securing long-term, predictable revenue streams for the Company.

We also offer on-site aging of

bulk spirits.

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.

first of these units is anticipated to be installed on site at one of the largest distilleries in the U.S.

in the second quarter of 2026,

with the second unit deployed approximately three months thereafter.

The second contract is with a leading U.S.

wholesaler and broker

of bulk spirits for one SRAS unit at their facility, which is estimated to be installed in the third quarter of 2026.

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.

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.

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.

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.

of Chief Financial Officer

March 10, 2025, we appointed David Stephens as our Chief Financial Officer, effective March 1, 2025.

We entered into an employment agreement

Stephens for a term of three years with the following compensation terms:

base salary of $120,000 in 2025;

$150,000 in 2026;

and $175,000 in 2027;

the first two years of the term, a performance-based bonus of 15% of his then current base salary for any quarter that gross revenues

increased a minimum of 25% from its prior year gross revenue for that corresponding quarter;

the first two years of the term, an annual performance-based bonus based on prior year gross revenues, in a schedule as set forth

in his employment agreement.

Purchase Agreement

January 27, 2025, Two Trees (the “Buyer”) and Brown Water Bourbon Xchange, LLC, a Kentucky limited liability company (the

“Seller”) (collectively the “Parties”) entered into an Asset Purchase Agreement (the “Agreement”).

According to the terms of the Agreement, the Seller sold to the Buyer 680 barrels of whiskey in exchange for 5,000,000 restricted shares

of Common Stock of the Company (the “Shares”).

On the same day, the Buyer and Seller closed the transaction.

Trees Beverage Company – New Uplifting Spirits Product Line

July 2025, our award-winning subsidiary, Two Trees Beverage Company, launched Uplifting Spirits , a new product line focused on

supporting community and charitable causes, debuting with Land of the Sky , a limited-edition straight bourbon whiskey aiding Hurricane

Helene relief efforts.

We are proud of this initiative and pleased to donate ten percent of Land of the Sky sales to relief efforts,

including aiding Western North Carolina, where many of our teammates call home.

Specialties, LLC – Molecular Sawdust Drying Machine Update

completed testing and are currently deploying our first Molecular Sawdust Drying System (“MSDS”) at a large lumber mill,

which utilizes a proprietary molecular energy wave technology to adjust the moisture content of sawdust for production of wood pellets,

an alternative green energy source.

system offers scalable, flexible solutions for any tonnage of sawdust, catering to diverse pellet manufacturing needs.

It utilizes patented

technology to adjust moisture content as required, optimizing it to precise specifications.

The system features precision automation

for controlling temperature and drying parameters, ensuring consistent high-quality output.

This adaptable system enhances safety and

productivity, achieving uniform results with minimal downtime.

The Company is also targeting applications of this process in engineered

wood products, adhesives, wood forest products and food and beverages.

of Operations

Year Ended December 31, 2025 compared to Year Ended December 31, 2024

Company’s results of operations for the year ended December 31, 2024 include the results of Two Trees since the acquisition date

of December 8, 2023, and include the results of RFS from the acquisition date of December 27, 2023.

For the Years ended December 31,

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Revenue for the year ended December 31, 2025 was $2,214,542 compared to $2,364,093 for the year ended December 31, 2024.

$1,324,823 in 2024 is attributable to liquor sales from the acquisition of Two Trees, compared to $104,066 in 2023, and $1,039,270 of

revenue in 2024 attributable to product and service income from the acquisition of RF Specialties, compared to $0 in 2023.

The RF Specialties

business benefited in 2023 from contracts related to the design of industrial drying modules using the Company’s patented radio

frequency technology for use in lumber mills.

In February 2025, the Company executed contracts with two customers related to the lease

of an aggregate of three Spirits Rapid Aging System that are expected to begin producing revenue to the Company in the second half of

The Company expects to drive significant growth in revenue and gross profit in its Two Trees Distilling business from this new

revenue stream going forward.

Revenue of $1,350,114

in 2025 is attributable to the Two Trees business, compared to $1,324,823 in 2024, and $864,428 of revenue in 2025 attributable to product

and service income from RFS, compared to $1,039,270 in 2024.

The $25,291 increase revenue in the Two Trees business was primarily attributable

to increased WaaS revenue which contributed $222,300 of revenue during the current year, which was partially offset by a decline in brand

sales of approximately $150,000 and a decrease in bulk sales of $70,000.

February 2025, we executed contracts with two customers related to the lease of an aggregate of three SRAS that are expected to begin

producing revenue to the Company in the second half of 2026.

We began building the machines for these customers in early 2025, and we

expect to drive significant growth in revenue and gross profit in our Two Trees Distilling business from this new revenue stream going

$174,842 decrease in revenue of our RFS business is primarily due to significant non-recurring service revenue from RF Specialties during

the prior year ended, December 31, 2024, totaling $520,000, partially offset by revenue from milestones reached on the development and

installation of the MSDS in the year ended December 31, 2025.

expect our RFS business to complete full installation of the MSDS in the first half of 2026, and to expand the number of systems installed

at lumber mills across the southeast United States throughout 2026.

Cost of sales for the year ended December 31, 2025 was $2,564,857 compared to $1,490,064 for the year ended December 31,

Cost of sales for the Company’s Two Trees Distilling operations was $917,458 in 2024 compared to $80,133 in 2023.

is due to a full year of operations in 2024 compared to the acquisition in December 2023.

The Company’s RF Specialties business

incurred costs of sales of $572,606 in 2024, including labor costs of $470,045 related to the product and service income from the acquisition

of RF Specialties, compared to $1,523 in 2023.

The Company reported operating expenses of $2,376,693 consisting primarily of legal, accounting, payroll, and general business

related expenses for the year ended December 31, 2024 compared to $475,009 for the year ended December 31, 2023.

The $1,843,784 increase

in operating expenses was primarily attributable to a full year of operations with both businesses.

Selling, general and administrative

expenses was $1,853,335, and included legal, accounting and audit fees related to our public company reporting obligations and increased

activity from two operating business lines, including stock-based compensation of $71,938.

Operating expenses included salary and wages

expense of $175,827 and $0 for the years ended December 31, 2024 and 2023, respectively.

Operating expenses included depreciation and

amortization expense of $289,631 and $15,126 for the years ended December 31, 2024 and 2023, and a loss of $57,900 on disposal of assets

to a related party.

Cost of sales for the Company’s Two Trees Distilling operations was $1,331,901 in 2025 compared to $917,458 in 2024, with

the increase driven an inventory impairment of $140,067, cost of goods sold from sale of barrels of approximately $168,000, increased

input costs for our brand products, and new costs associated with our WaaS revenue.

The Company’s RF Specialties business incurred

costs of sales of $1,232,956 in 2025 as compared to $572,606 in 2024, due to the costs associated with the MSDS contract ongoing since

November 2024.

Gross profit for the year ended December 31, 2024 benefitted significantly from one-time service revenue of $520,000 in

the RF Specialties business.

The Company reported operating expenses of $3,386,049 consisting primarily of legal, accounting, payroll, and general business-related

expenses for the year ended December 31, 2025 compared to $2,376,693 for the year ended December 31, 2024.

The $1,067,256 increase in

operating expenses was primarily attributable to increased salaries and wages from a full year of officer contracts compared to the

year ended December 31, 2024.

Selling, general and administrative expenses was $2,302,274 and $1,853,335 for the years ended December

31, 2025 and 2024, respectively, and included legal, accounting and audit fees related to our public company reporting obligations, including

stock-based compensation of $639,885 and $71,938, respectively due to new equity awards to employees and consultants in the current year.

Operating expenses included salary and wages expense of $763,929 and $175,827 for the years ended December 31, 2025 and 2024, respectively.

Operating expenses included depreciation and amortization expense of $319,846 and $289,631 for the years ended December 31, 2025 and

2024, respectively, and a loss of $57,900 on disposal of assets to a related party for the year ended December 31, 2024.

Other Income/Expense .

Total other expense was $118,453 for the year ended December 31, 2024 compared to the total other income of

Total other expense was $61,626 for the year ended December 31, 2025 compared to the total other expense of

$118,453 for the year ended December 31, 2024.

The $221,480 change was primarily attributable to a loss of $97,533 loss on impairment

of note receivable compare to $0 in 2023, and a gain of $168,855 on the sale of assets in 2023.

The decrease was primarily due to a loss on note receivable impairment in the year ended

December 31, 2024, partially offset by increased interest expense in the year ended December 31, 2025.

and Capital Resources

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At December 31, 2025, the Company had a working capital deficit of $1,255,017.

Subsequent to December 31, 2025, the Company has raised an additional $450,000 in proceeds from the sale of common stock.

Company requires additional funding to meet its ongoing obligations and to fund anticipated operating losses.

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and $781,970.

The increase was attributable to an increase in net loss from the increase in operations in 2024.

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.

Used in Investing Activities.

Net cash used in investing activities for the years ended December 31, 2025 and net cash provided

by investing activities for the year ended December 31, 2023, was $6,990 and $39,041, respectively.

The decrease was attributable to

a decrease in purchase of intangible assets of $19,500 and property and equipment of $88,000 in 2023 to purchases of property and equipment

of $6,990 in 2024.

The Company had cash proceeds from the sale of certain equipment of $100,000 and $46,541 net assets acquired from

acquisitions in 2023.

by investing activities for the year ended December 31, 2024, was $872,247 and $6,990, respectively, related to purchases of equipment

in developing larger in house SRAS unit to expand production capacity and the SRAS units for customers.

Provided by Financing Activities.

Net cash provided by financing activities for the years ended December 31, 2024 and 2023, was

$685,008 and $572,145.

Net cash provided by financing activities for the year ended December 31, 2024 consisted of $745,000 in proceeds

from the sale of common stock, $155,500 in proceeds from related party notes payable, offset by repayments of notes payable to related

parties and third parties of $32,500 and $182,982, respectively, and redemption of preferred stock of $10.

Net cash provided by financing

activities for the year ended December 31, 2023 consisted of $676,349 in proceeds from the sale of common stock, offset by $104,204 repayments

of advances payable.

Net cash provided by financing activities for the years ended December 31, 2025 and 2024,

was $2,647,160 and $685,008.

Net cash provided by financing activities for the year ended December 31, 2025 consisted of $2,939,401

in proceeds from the sale of common stock, $150,000 in proceeds from related party notes payable, offset by repayments of notes

payable to related parties and third parties of $105,500 and $336,741, respectively.

Net cash provided by financing activities for

the year ended December 31, 2024 consisted of $745,000 in proceeds from the sale of common stock, $155,500 in proceeds from related

party notes payable, offset by repayments of notes payable to related parties and third parties of $32,500 and $182,982 respectively

and repayments of preferred stock of $10.

Balance Sheet Arrangements

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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 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.

Company recognizes deferred revenue for performance obligations not yet satisfied, primarily related to liquor sales not yet shipped

As of December 31, 2024, the Company had $226,066 in unsatisfied performance obligations that it expects to satisfy over the next 12

months, of which $25,366 related to shipment of liquor products and $200,700 related to the Company’s RF Specialties business

and deposits received related to its aging system contracts.

- Goodwill represents the excess of acquisition cost over the fair value of the net tangible and intangible assets acquired.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis