What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-31 compared with 2025-03-25 · 492 added, 476 removed, 567 unchanged (63% of the section changed)

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the Board of Directors and Stockholders of MDwerks, Inc.

on the Consolidated Financial Statements

have audited the accompanying consolidated balance sheets of MDWerks,

(the Company) as of December 31, 2024 and 2023, and the related consolidated statements of operations, stockholders’ equity

(deficit), and cash flows for each of the years in the two-year period ended December 31, 2024 and the related notes (collectively referred

to as the “financial statements”).

In our opinion, the financial statements referred to above present fairly, in all material

respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows

for each of the years in the two-year period ended December 31, 2024, in conformity with accounting principles generally accepted in the

United States of America.

The accompanying financial statements have been prepared assuming that

the Company will continue as a going concern.

As discussed in Note 2 to the financial statements, the Company suffered a net loss from

operations and has an accumulated deficit, which raises substantial doubt about its ability to continue as a going concern.

plans regarding those matters are discussed in Note 2.

The consolidated financial statements do not include any adjustments that might

result from the outcome of this uncertainty.

These consolidated financial statements are the responsibility

of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are

required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and

regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards

of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements

are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform,

an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal

control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal

control over financial reporting.

on the Financial Statements

have audited the accompanying consolidated balance sheets of MDwerks, Inc.

(the Company) as of December 31, 2025 and 2024, and the related

consolidated statements of operations, stockholders’ equity (deficit), and cash flows for each of the years in the two-year period

ended December 31, 2025 and the related notes (collectively referred to as the “financial statements”).

In our opinion, the

consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as

of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended

December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

in Note 2 to the financial statements, the Company suffered a net loss from operations and has an accumulated deficit, which raises substantial

doubt about its ability to continue as a going concern.

Management’s plans regarding those matters are discussed in Note 2.

consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion

on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting

Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain

reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing

an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material

misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures

included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included

evaluating the accounting principles used and the significant estimates made by management, as well as evaluating the overall presentation

of the financial statements.

audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether

due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles

used and the significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe our audits provides a reasonable basis for our opinion.

The critical audit matter communicated below is a

matter arising from the current period audits of the financial statements that were communicated, or required to be communicated, to the

audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially

challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the

financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinion on

the critical audit matter or on the accounts or disclosures to which it relates.

Going Concern

Due to the net loss for the year, the Company evaluated

the need for a going concern.

Auditing management’s evaluation of a going

concern can be a significant judgement given the fact that the Company uses management estimates on future revenues and expenses which

are not able to be substantiated.

As discussed in Note 2, the Company suffered a net

loss from operations and has an accumulated deficit for the year ended December 31, 2024.

To evaluate the appropriateness of the going concern, we examined and evaluated

the financial information along with management’s plans to mitigate the going concern and management’s disclosure on going

critical audit matter communicated below is a matter arising from the current period audits of the consolidated financial statements

that were communicated, or required to be communicated, to the audit committee and that:

(1) relate to accounts or disclosures that are

material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication

of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating

the critical audit matter below, providing separate opinion on the critical audit matter or on the accounts or disclosures to which it

to the net loss for the year, the Company evaluated the need for a going concern.

management’s evaluation of a going concern can be a significant judgement given the fact that the Company uses management estimates

on future revenues and expenses which are not able to be substantiated.

discussed in Note 2, the Company suffered a net loss from operations and has an accumulated deficit for the year ended December 31, 2025.

evaluate the appropriateness of the going concern, we examined and evaluated the financial information along with management’s

plans to mitigate the going concern and management’s disclosure on going concern.

M&K CPAS, PLLC

have served as the Company’s auditor since 2022

Woodlands, TX

March 25, 2025

Balance Sheets

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Current Assets

Note receivable

Accounts receivable, net

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Accounts payable related party

Accounts payable

Notes payable

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Notes payable, net of current portion

Notes payable, net of current portion, Related Party

Notes payable, net of current portion

Right-of use liability, net of current portion

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( 6,158,495 )

( 2,360,505 )

Total Stockholders’ Equity (Deficit)

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Statements of Operations

For the Years Ended

For the Years Ended December 31,

Cost of revenues

Gross (loss) profit

Operating expenses:

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( 3,736,364 )

( 1,502,664 )

Other income (expense):

Gain (loss) on sale of assets

Loss on impairment of note receivable

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$ ( 739,388 )

$ ( 114,967 )

Common shares sold for cash

Common Shares issued for acquisitions

Imputed interest

Common shares to be issued for royalty agreement

Redemption of Preferred Stock

( 8,957,500 )

Stock based compensation

( 1,621,117 )

Balance December 31, 2024

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Common shares sold for cash

Common shares to be issued for royalty agreement

Redemption of Preferred Stock

( 8,957,500 )

Common shares issued for inventory

Stock based compensation

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Loss on impairment of note receivable

Inventory Impairment

Stock-based compensation

Common stock to be issued for royalty agreement

Imputed interest

Allowance for credit losses

Interest income

Changes in operating assets and liabilities:

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Accounts payable related party

Accounts payable

Deferred revenue

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NET CASH USED IN OPERATING ACTIVITIES

( 1,574,124 )

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of intangible assets

Proceeds from sale of property and equipment

Net assets acquired from acquisitions

Purchase of property and equipment

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Repayment of notes payable related party

Repayment of advances payable

Proceeds from subscription agreements

Repayment of notes payable

Proceeds from sale of common stock

NET CASH PROVIDED BY FINANCING ACTIVITIES

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CASH - END OF PERIOD

Supplemental disclosures of cash flow information:

disclosures of cash flow information:

Cash paid for interest

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Property and equipment acquired with notes payable

Note receivable issued for asset sale

Insurance being financed with a note payable

Property and equipment additions in accounts payable

Common stock issued for acquisitions

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1 - ORGANIZATION AND DESCRIPTION OF THE BUSINESS

(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.

February 13, 2023, the Company 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”).

(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.

2023, we completed the acquisition of RF Specialties, LLC (“RFS”) and Two Trees Beverage Co.

and its subsidiaries (“Two

Trees produces a variety of aged alcoholic beverages using an innovative rapid-aging system.

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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.

The Merger closed on December 8, 2023.

Specialties, LLC (“RFS”) is an innovative company pushing the boundaries of sustainable Radio Frequency applications.

over 12 years, RF Specialties 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.

As discussed below, on January 25, 2023, the Company entered into an Exchange Agreement (the “Exchange Agreement”),

dated as of January 19, 2023, by and between the Company, 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 closing of the Exchange on December 27, 2023, RFS became a wholly owned

subsidiary of the Company.

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.

2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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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, RAS LLC, (collectively referred to as

“Two Trees”) and RF Specialties, LLC.

All intercompany accounts, transactions and balances have been eliminated in consolidation.

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.

and Cash Equivalents - The Company considers all highly liquid instruments with original maturities of three months or less when

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The Company had $ 211,948 cash equivalents at December 31, 2025 and $ 11,159 cash at December 31, 2024.

Taxes - The Company complies with the accounting and reporting requirements of US GAAP in accounting for income taxes.

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

Valuation allowances are established when necessary to reduce deferred income tax assets to the amount expected to be realized.

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, 2024 and December

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, 2024 and December 31, 2023.

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

(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, 2024 and December 31, 2023, there were no options, warrants or derivative

securities outstanding.

of Estimates and Assumptions - The preparation of financial statements in accordance with US GAAP requires the Company’s management

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results can, and in many cases will, differ from those estimates.

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.

Receivable and the Allowances for Credit losses - Accounts receivable are recorded in the period when the right to receive payment

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of $ 43,489 net of $ 10,627 allowance for doubtful accounts as of December 31, 2025.

The Company had bad debt expense of $ 39,176 and $ 20,420

as of December 31, 2024 and 2023, respectively.

The company had an accounts receivable balance of $ 106,734 as of December 31, 2023.

of December 31, 2024, the Company had two customers that accounted for 50 % and 10 % of total accounts receivable.

As of December 31, 2023,

the Company had three customers that accounted for 25 %, 17 %, and 10 % of total accounts receivable.

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.

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:

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

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.

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.

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 asses were valued using level 3 inputs at the time of acquisition.

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.

in the accompanying financial statements, the Company had a net loss of $ 1,621,117 and an accumulated deficit of $ 2,360,505 as of and

for the year ended December 31, 2024.

Although management believes that it will be able to successfully execute a business combination,

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.

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

(1) identify the contract with a customer;

(2) identify the performance obligations in the contract;

(3) determine the transaction

(4) allocate the transaction price to each performance obligation in the contract;

and (5) recognize revenue when each performance

obligation is satisfied.

Company recognizes sales when merchandise is shipped from a warehouse directly to wholesale customers (except in the case of a consignment

For consignment sales, , 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.

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

the year ended December 31, 2024, the Company’s revenue consisted of liquor sales resulting from the acquisition of Two Trees and

labor costs related to the product and service income resulting from the acquisition of RF Specialties.

the year ended December 31, 2024, the Company had one customer who accounted for 25 % of total revenue.

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.

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.

- Inventories primarily consist of bulk and bottled liquor and raw materials and are stated at the lower of cost or market.

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Such write-downs establish a new cost basis of accounting for the related

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.

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 5

five years, vehicles are depreciated over 5

five years, and computer and equipment are depreciated over 3 three

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:

SCHEDULE OF PROPERTY AND EQUIPMENT

and equipment

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

Assets - Intangible assets, consisting of trade names, developed technology, and customer relationships, are accounted for in accordance

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Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise

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:

SCHEDULE OF PROPERTY AND EQUIPMENT

Machinery and equipment

Furniture & Fixtures

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

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

(1) identify the contract with a customer;

(2) identify the performance obligations in the contract;

(3) determine the transaction

(4) allocate the transaction price to each performance obligation in the contract;

and (5) recognize revenue when each performance

obligation is satisfied.

Company recognizes sales when liquor products are shipped from a warehouse directly to wholesale customers (except in the case of a consignment

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

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

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, 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.

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.

Taxes - The Company complies with the accounting and reporting requirements of US GAAP in accounting for income taxes.

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

Valuation allowances are established when necessary to reduce deferred income tax assets to the amount expected to be realized.

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

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.

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

(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.

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.

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:

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

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.

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.

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.

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

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Excise taxes totaled $ 32,423 and $ 32,127 for the years ended December

31, 2024, and 2023, respectively.

Reporting - Financial Accounting Standard Board (“FASB”) ASC Topic 280, “ Segment Reporting ,” requires

annual and interim reporting for an enterprise’s operating segments and related disclosures about its products, services, geographic

areas and major customers.

An operating segment is defined as a component of an enterprise that engages in business activities from which

it may earn revenues and expenses, and about which separate financial information is regularly evaluated by the chief operating decision

maker in deciding how to allocate resources.

information is prepared on the same basis that our CEO, who is our Chief Operating Decision Maker (“CODM”), manages our segments,

evaluates financial results, and makes key operating decisions.

The Company has two reportable operating segments, 1) RF Specialties,

which derives its revenue from developing sustainable radio frequency (RF) applications, and 2) Two Tress Distilling, which derives its

revenue from the sale of liquor beverages.

The CODM uses net income from operations to evaluate and make key operating decisions.

31, 2025, and 2024, respectively, included in general and administrative expenses.

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.

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.

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.

Issued Accounting Pronouncements - From time to time, new accounting pronouncements are issued by the FASB or other standard setting

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operations upon adoption.

November 2023, the 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.

The amendments in this update were effective for fiscal years beginning after December 15, 2023, and interim periods

within fiscal years beginning after December 15, 2024.

Company adopted this standard on a retrospective basis within our annual report for the year ended December 31, 2024, which resulted

in additional disclosures in our segment financial information footnote, primarily related to significant segment expenses that are regularly

provided to the CODM and included within our reported measure of segment profit or loss.

Refer to note 14 for these additional disclosures.

November 202, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (DISE) , requiring additional disclosure

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The Company is currently evaluating the impact of our pending adoption of this standard

on its consolidated financial statements.

on our consolidated financial statements.

3 - INVENTORY

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Finished goods

Inventory allowance

Total inventories

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.

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.

4 – FIXED ASSETS, NET

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Furniture and office equipment

Construction in process

Total Property and equipment

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Total property and equipment, net

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

Trees entered into two contracts with two spirit companies for the deployment and license of our proprietary Spirits Rapid Aging System

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.

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

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at the rate of 8 % per annum commencing as of August 25, 2023.

The Note matures on August 25, 2029 and is due in full at maturity.

the year ended December 31, 2024, the Company recognized a loss on impairment of the note receivable and accrued interest of $ 97,533 .

The Note matured on August 25, 2029 and is due in full at maturity.

the year ended December 31, 2024, the Company recognized a loss on impairment of the note receivable and accrued interest totaling $ 97,533 .

purchase agreements

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The Exchange Agreement requires monthly payments through March 2027.

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, included in loss

on disposal of assets on the consolidated statement of operations.

of December 31, 2024 and 2023, the Company owed $ 344,343 and $ 88,674 under the notes payable, respectively.

expense totaled $ 233,254 and $ 10,787 for the years ended December 31, 2024, and 2023, respectively.

5 – INTANGIBLE ASSETS, NET

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was due under the terms of the license agreement by April 1, 2024.

As of the filing date of this Annual Report on Form 10-K, 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 .

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, 2024, the royalty payable

balance was $ 170,274 , and is included in accounts payable on the Company’s consolidated balance sheet.

6 – NOTE RECEIVABLE

the year ended December 31, 2023, the Company sold certain fixed assets for $ 195,000 .

At the time of the sale $ 100,000 cash proceeds

were received and the Company received a note receivable for $ 95,000 .

net book value of the asset at the time of sale was $ 26,145 .

A gain of $ 168,855 was recorded in the year ended December 31, 2023, for

the sale of equipment.

The note is payable in full at maturity on August 25, 2029 , and accrues

interest at the rate of 8 % per year.

During the year ended December 31, 2024, the Company impaired the note receivable.

The note receivable

balance as of December 31, 2024 and 2023, was $ 0 and $ 97,533 including interest income of $ 0 and $ 2,533 , respectively.

During the year

ended December 31, 2024, the Company impaired the note receivable.

The Company recorded a loss of $ 97,533 during the year ended December

7 - ACQUISITIONS

Company completed the Merger on the Merger Closing Date pursuant to the Merger Agreement.

Pursuant to the terms of the Merger Agreement,

on the Merger Closing Date of the Merger, the Company issued 60,000,000 shares of its common stock, $ 0.001 par value per share, (the

“Company Common Stock”) which was apportioned among the Two Trees stockholders, pro rata, based on the number of shares of

Two Trees common stock, par value $ 0.0001 per share (the “Two Trees Common Stock”) held by each of the Two Trees stockholders

as of the closing of the Merger (the “Merger Consideration”).

Upon completion of the Merger, all 12,045,277 shares of Two

Trees common stock were cancelled in exchange for the right of the Two Trees stockholders to receive the Merger Consideration.

of common stock of Merger Sub issued and outstanding immediately prior to the effective time of the Merger was converted into and exchanged

for one validly issued, fully paid and nonassessable share of common stock, $ 0.001 par value per share, of Two Trees as the surviving

December 27, 2023, the Company completed the acquisition of RFS and the Exchange and issued to Mr.

Mort 7,500,000 shares of the Company’s

common stock, $ 0.001 par value per share (the “Common Stock”).

Immediately following the completion of the Exchange, RFS

became a wholly owned subsidiary of the Company.

Pro Forma Financial Information

following table sets forth the pro-forma consolidated results of operations for the years ended December 31, 2024 and 2023 as if the

Exchange agreement with RF Specialties and the Merger agreement with Two Trees occurred on January 1, 2023.

The pro forma results of

operations are presented for informational purposes only and are not indicative of the results of operations that would have been achieved

if the acquisitions had taken place on the dates noted above, or of results that may occur in the future.

OF UNAUDITED PROFORMA A FINANCIAL INFORMATION

Year ended December 31,

Operating loss

( 1,502,664 )

( 1,253,970 )

( 1,621,117 )

( 1,093,089 )

Net loss per common share

Weighted Average common shares outstanding

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.

6 - NOTES PAYABLE

Company has the following outstanding notes payable:

OF NOTES PAYABLE

Origination Date

Interest Rate

SCHEDULE OF NOTES PAYABLE

Notes Payable

Balance as of

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December 31, 2021

Loan Payable - Mercedes

September 19, 2022

Loan Payable – Dodge

June 18, 2022

Advances Payable – Related parties

10.00 %- 12.00 %

Total notes payable

Less current portion

Total long term

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

OF FUTURE MINIMUM PAYMENTS OF LOANS PAYABLE

2029 and Thereafter

SCHEDULE OF FUTURE MINIMUM PAYMENTS OF LOANS PAYABLE

12 months ending:

December 31, 2026

December 31, 2027

December 31, 2028

December 31, 2029

Total loans payable

Company received advances aggregating $ 104,204 from two non-related parties during the year ended December 31, 2022 to cover legal, accounting,

and other various public company related operating expenses.

The advances are unsecured, non-interest bearing and are due on demand.

During the year ended December 31, 2023, the Company repaid $ 104,204 in cash of the advances.

The balance as of December 31, 2024 and

2023 is $ 0 .

the year ended December 31, 2020, the Company entered into a termination agreement and agreed to pay the sum of $ 50,000 , pursuant to

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During the year ended December 31, 2023, the Company made a payment of $ 10,000 .

The balance as of December 31, 2024, and December

31, 2023, is $ 21,584 .

The balance as of December 31, 2025 and 2024,

was $ 21,584 .

to its acquisition by the Company on December 27, 2023, RFS entered into two asset purchase agreements to acquire certain tools and equipment.

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The agreement requires monthly payments through March 2027.

In May 2024, the Company sold two vehicles and transferred the related

See Notes 4 and 11.

the year ended December 31, 2024, the Company received a total of $ 155,500 in proceeds from shareholders.

The loans included interest

of 10 % and $ 32,500 was repaid in 2024.

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 .

expense of $ 23,420 and $ 10,461 was recorded in the years ended December 31, 2024, and 2023, respectively, of which $ 5,507 for the year

ended December 31, 2023 was imputed interest on the termination agreement.

Accrued interest as of December 31, 2024, and December 31,

2023, was $ 7,637 and $ 0 , respectively.

As of December 31, 2025 and 2024, the Company owed $ 178,652

and $ 344,344 under the notes payable, respectively.

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 %

As of December 31, 2025 and December 31, 2024, the balance owed on the advances from shareholders was $ 167,500

and $ 123,000 ,

respectively.

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 .

Company recognized interest expense of $ 61,826

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 ,

7 - CAPITAL STOCK

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company, in exchange for $ 10 .

At December 31, 2024 and 2023 and 2023, there were 0 and 8,957,500 shares of Series A Convertible Preferred

Stock issued and outstanding, respectively.

At December 31, 2025 and 2024, there were 0 shares of Series A Convertible Preferred Stock issued and outstanding.

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.

the year ended December 31, 2024, the Company sold a total of 5,020,004 shares of common

stock to accredited investors for total cash proceeds of $ 745,000 .

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

the respective grant dates.

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

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.

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 .

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.

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.

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.

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 .

the year ended December 31, 2023, the Company issued a total of 67,500,000 shares of common stock, with a fair value of $ 885,000 , for

the acquisitions of Two Trees and RF Specialties, LLC.

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.

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

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

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table represents warrant activity during the years ended December 31, 2025 and 2024:

OF WARRANT ACTIVITY

SCHEDULE OF WARRANT ACTIVITY

Number of Options

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

OF ACTIVITY OF OUTSTANDING STOCK OPTIONS

SCHEDULE OF ACTIVITY OF OUTSTANDING STOCK OPTIONS

Balance, December 31, 2024

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options had a weighted average remaining life of 7.94 years and no intrinsic value as of December 31, 2025.

Appreciation Rights

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.

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.

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

SCHEDULE OF ACTIVITY OF OUTSTANDING STOCK OPTIONS

Weighted Average

Number of SARs

Exercise Prices

Balance, December 31, 2024

Balance, December 31, 2025

Exercisable, December 31, 2025

8 - COMMITMENTS AND CONTINGENCIES

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shall continue for a period of one year from the termination date.

The Company incurred fees of $ 15,000 and commissions of $ 1,125 during

the year ended December 31, 2024, and owed the broker $ 5,625 as of December 31, 2024.

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.

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.

November 6, 2024, the Company entered into an employment agreement with its CEO, Steve Laker.

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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 and expects to recognize an additional $ 36,750 through the end of the vesting

The Company recognized expense of $ 12,250 for these awards during the years ended December 31, 2025 and 2024, respectively.

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 recognized no expense during the year ended December 31, 2024 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.

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 recognized no 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 .

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.

November 6, 2024, the Company entered into an employment agreement with its Executive Chairman James Cassidy.

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these awards and expects to recognize an additional $ 0 as the awards vest immediately.

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

71,429 shares of common stock, based on the VWAP of the Common Stock Trading Market during the 20 Trading Day as of December 31, 2024.

The fair value of the shares was estimated using a common stock price of $ 0.15 or $ 10,714 .

Subsequent to the date of this report, the

Company issued 171,429 shares of common stock to Mr.

85,575 shares of common stock, which were issued in February 2026.

December 3, 2024, Mr.

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(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 estimated fair value of the shares was estimated using

a common stock price of $ 0.16 or $ 16,010 .

The Company recognized stock based compensation expense of $ 16,010 for these awards and expects

to recognize an additional $ 0 as the awards vest immediately.

Furthermore, the Company is to issue an additional 71,429 shares of common

stock, based on the VWAP of the Common Stock Trading Market during the 20 Trading Day as of December 31, 2024.

The fair value of the

shares was estimated using a common stock price of $ 0.15 or $ 10,714 .

Subsequent to the date of this report, the Company issued 171,429

shares of common stock to Mr.

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.

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.

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.

March 10, 2025, the Company entered into an Executive Employment Agreement with David Stephens.

Stephens shall serve as the Chief

Financial Officer of the Company.

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

(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),

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

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.

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 recognized no expense during the year ended December 31, 2025 related to these awards as vesting

was not deemed probable.

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 recognized no expense during the year ended

December 31, 2025 related to these awards as vesting was not deemed probable.

9 - RELATED PARTY TRANSACTIONS

the year ended December 31, 2024, the Company entered into agreements with certain officers and directors, as disclosed in Note 10.

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 %

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.

the year ended December 31, 2024, the Company received a total of $ 155,500 in proceeds from shareholders and repaid $ 32,500 .

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 .

November 7, 2024, the Company agreed to purchased 8,957,500 shares of Series A Convertible Preferred Stock, representing all of the issued

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issued and outstanding, respectively.

the year ended December 31, 2024, the Company received a total of $ 155,500 in proceeds from shareholders and repaid $ 32,500 .

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 .

See Note 8 above.

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

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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, 2024, the Company owed a total of $ 36,738 to an entity

controlled by the Company’s Chairman, and $ 10,074 to Mr.

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.

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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, 2024, and 2023 was $ 215,928 and $ 5,546 , respectively.

Aggregate lease expense for the years

ended December 31, 2025, and 2024 was $ 293,779 and $ 342,316 , respectively.

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

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Present value of lease liability

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

11 – INCOME TAXES

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In addition, no benefit for income taxes has been recorded due to the uncertainty of the realization of any

At December 31, 2024, and 2023, the Company had approximately $ 2,288,567 and $ 739,388 of federal net operating losses.

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 .

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.

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

OF EFFECTIVE INCOME TAX RATE

SCHEDULE OF EFFECTIVE INCOME TAX RATE

December 31, 2025

December 31, 2024

Federal statutory income tax rate

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

OF DEFERRED TAX ASSET

SCHEDULE OF DEFERRED TAX ASSET

Deferred tax assets:

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Valuation allowance

( 1,094,000 )

Net deferred tax assets

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segment expenses and assets information is as follows:

OF SEGMENT EXPENSES AND ASSETS INFORMATION

SCHEDULE OF SEGMENT EXPENSES AND ASSETS INFORMATION

For the Years ended December 31,

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RF Specialties

$ ( 350,315 )

General & Administrative Expense

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$ ( 576,142 )

$ ( 451,956 )

RF Specialties

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$ ( 3,736,364 )

$ ( 1,502,664 )

Net loss from operations

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13 - SUBSEQUENT EVENTS

Company evaluates events that have occurred after the balance sheet date through the date these financial statements were issued.

December 31, 2024, the Company issued a promissory note payable in the amount of $ 100,000 at the rate of 12 % per annum, with a maturity

date on December 31, 2026 .

The cash proceeds from this promissory note were received in January 2025.

On January 30, 2025, the Company issued a promissory note payable in the

amount of $ 50,000 at the rate of 12 % per annum, with a maturity date of January 30, 2026 .

to December 31, 2024, the Company sold 7,826,667 shares of common stock in exchange for cash proceeds of $ 1,174,000 , of which 2,666,667 have not yet been issued.

Subsequent to December 31, 2024, the Company issued 171,429 shares each

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.

February23, 2026, the Company issued 85,575 shares each to Mr.

Brocopp and Mr.

Blackstone pursuant to their director agreements.

January 27, 2025, the Company’s wholly owned subsidiary, Two Trees Beverage Company (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 Buyer 680

barrels of whiskey in exchange for 5,000,000 restricted shares of Common Stock of the Company (the “Shares”).

day, the Buyer and Seller closed the transaction.

February 19, 2025, Two Trees Beverage Company, and RFS each entered into new contracts with two industry-leading spirits companies, related

to the deployment and license of the Company’s proprietary Spirits Rapid Aging System (“SRAS”).

March 10, 2025, the Company entered into an Executive Employment Agreement with David Stephens.

Stephens shall serve as the Chief

Financial Officer 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.

Stephen’s employment commenced on March 1, 2025, and continues for a term of three

Compensation that Mr.

Stephens will receive during his term includes (i) for the period of January 1, 2025 through December

31, 2025, an 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,

Stephens shall thereafter receive performance-based bonuses on an annual basis (the “Subsequent Annual Bonuses”).

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

execution of the agreement, the Company will issue 150,000 shares of common stock to Mr.

Stephens, with 50,000 shares vesting on execution of the agreement

and the remainder monthly from January 1, 2026 through December 31, 2027 .

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 .

The agreement has an initial term of three years, and renewal automatically unless written notice is provided 90 days

The agreement can be terminated by the Company for cause with 90 days notice.

In the event of termination of Mr.

Stephens without

Stephens will receive six months of his then-current base salary, and all stock awards under the agreement will become fully

These shares have not yet been issued.

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 vesting

monthly from January 1, 2026 through December 31, 2027 .

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 shares have not yet been issued.

of Roy Milner as Independent Director

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:

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.

Milner’s employment commenced on February 10, 2026, and continues

for a term of three (3) years.

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

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.

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.

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.

Kratovil from the Board of Directors

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.

Kratovil did not advise the Company of any disagreement with the

Company on any matter relating to its operations, policies or practices.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

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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 8. Financial Statements and Supplementary Data