MDWerks, Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Index to Financial Statements As of December 31, 2024 and 2023 and for the Years Ended December 31, 2024 and 2023 Report of Independent Registered Public Accounting Firm (PCAOB ID 2738 ) F-1 Consolidated Balance Sheets F-2 Consolidated Statements of Operations F-3 Consolidated Statement of Changes in Stockholders’ Equity (Deficit) F-4 Consolidated Statements of Cash Flows F-5 Notes to Consolidated Financial Statements F-6 23 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of MDwerks, Inc. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of MDWerks, Inc. (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. Going Concern 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. Management’s 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. Basis for Opinion 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 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. 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. 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. We believe our audits provides a reasonable basis for our opinion. Critical Audit Matter 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 concern. /s/ M&K CPAS, PLLC We have served as the Company’s auditor since 2022 The Woodlands, TX March 25, 2025 PCAOB ID #2738 F- 1 MDwerks, Inc. Consolidated Balance Sheets December 31, 2024 December 31, 2023 Assets Current Assets Cash $ 11,159 $ 115,111 Note receivable - 97,533 Accounts receivable, net 109,142 106,734 Inventory 236,863 201,207 Prepaid expenses 17,000 28,632 Total Current Assets 374,164 549,217 Fixed assets, net 585,025 496,890 Intangible assets, net 558,784 615,161 Right-of-use asset 915,803 1,105,152 Goodwill 466,648 466,648 Other non-current assets 16,010 - Total Assets $ 2,916,434 $ 3,233,068 Liabilities and Stockholders’ Equity (Deficit) Current Liabilities Accounts payable and accrued expenses $ 822,111 $ 668,748 Accounts payable related party 46,812 - Notes payable 134,557 96,404 Notes payable – related party 123,000 - Notes payable 123,000 - Deferred revenue 226,066 52,779 Right-of-use liability, current portion 266,315 249,175 Total Current Liabilities 1,618,861 1,067,106 Notes payable, net of current portion 231,370 92,830 Right-of use liability, net of current portion 695,175 912,915 Total Liabilities 2,545,406 2,072,851 Stockholders’ Equity (Deficit) Preferred stock, par value $ 0.001 ; 10,000,000 shares authorized, of which 0 and 8,957,500 were issued and outstanding - 8,958 Common stock, par value $ 0.001 ; 300,000,000 shares authorized, of which 204,744,872 and 198,724,868 shares were issued and outstanding at December 31, 2024 and 2023, respectively 204,745 198,725 Additional paid in capital 2,511,788 1,691,922 Subscription payable 15,000 - Accumulated deficit ( 2,360,505 ) ( 739,388 ) Total Stockholders’ Equity (Deficit) 371,028 1,160,217 Total Liabilities and Stockholders’ Equity (Deficit) $ 2,916,434 $ 3,233,068 The accompanying notes are an integral part of these consolidated financial statements. F- 2 MDwerks, Inc. Consolidated Statements of Operations 2024 2023 For the Years Ended December 31, 2024 2023 Revenues $ 2,364,093 $ 104,066 Cost of revenues 1,490,064 81,656 Gross profit 874,029 22,410 Operating expenses: Selling, general and administrative expenses 1,853,335 459,883 Salaries and wages 175,827 - Depreciation and amortization expense 289,631 15,126 Loss on sale of assets, related party 57,900 - Total operating expenses 2,376,693 475,009 Operating loss ( 1,502,664 ) ( 452,599 ) Other income (expense): Gain (loss) on sale of assets - 168,855 Loss on impairment of note receivable ( 97,533 ) - Other income 2,500 2,533 Interest expense, net ( 23,420 ) ( 10,461 ) Total other income (expense) ( 118,453 ) 160,927 Net loss $ ( 1,621,117 ) $ ( 291,672 ) Net loss per common share – basic $ ( 0.01 ) $ ( 0.00 ) Net loss per common share – diluted $ ( 0.01 ) $ ( 0.00 ) Weighted average common shares outstanding Basic 201,542,775 129,422,897 Diluted 201,542,775 129,422,897 The accompanying notes are an integral part of these consolidated financial statements. F- 3 MDwerks, Inc. Consolidated Statement of Changes in Stockholders’ Equity (Deficit) Shares Amount Shares Amount Capital Payable Deficit Total Preferred Stock Common Stock Additional Paid-in Subscription Accumulated Shares Amount Shares Amount Capital Payable Deficit Total Balance December 31, 2022 8,957,500 $ 8,958 122,260,208 $ 122,260 $ 201,531 $ - $ ( 447,716 ) $ ( 114,967 ) Common Shares sold for cash - - 8,964,660 8,965 667,384 - 676,349 Common Shares issued for acquisitions - - 67,500,000 67,500 817,500 - 885,000 Imputed interest - - - - 5,507 - 5,507 Net loss - - - - - - ( 291,672 ) ( 291,672 ) Balance December 31, 2023 8,957,500 $ 8,958 198,724,868 $ 198,725 $ 1,691,922 $ - $ ( 739,388 ) $ 1,160,217 Balance 8,957,500 $ 8,958 198,724,868 $ 198,725 $ 1,691,922 $ - $ ( 739,388 ) $ 1,160,217 Common shares sold for cash - - 5,020,004 5,020 739,980 - 745,000 Common shares to be issued for royalty agreement - - - - - 15,000 - 15,000 Redemption of Preferred Stock ( 8,957,500 ) ( 8,958 ) 8,948 ( 10 ) Stock based compensation - - 1,000,000 1,000 70,938 - 71,938 Net loss - - - - - - ( 1,621,117 ) ( 1,621,117 ) Balance December 31, 2024 - $ - 204,744,872 $ 204,745 $ 2,511,788 $ 15,000 $ ( 2,360,505 ) $ 371,028 Balance - $ - 204,744,872 $ 204,745 $ 2,511,788 $ 15,000 $ ( 2,360,505 ) $ 371,028 The accompanying notes are an integral part of these consolidated financial statements. F- 4 MDwerks, Inc. Consolidated Statements of Cash Flows December 31, 2024 December 31, 2023 Year Ended December 31, 2024 December 31, 2023 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ ( 1,621,117 ) $ ( 291,672 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 289,631 15,126 Gain/Loss on sale of assets 57,900 ( 168,855 ) Loss on impairment of note receivable 97,533 - Stock-based compensation 71,938 - Common stock to be issued for royalty agreement 15,000 - Imputed interest - 5,507 Allowance for credit losses 39,176 20,420 Interest income - ( 2,533 ) Changes in operating assets and liabilities: Accounts receivable ( 41,584 ) ( 11,494 ) Prepaid expense ( 17,000 ) 1,429 Inventory ( 35,656 ) 1,277 Right-of-use asset 189,349 9,881 Accounts payable 153,361 ( 82,061 ) Accounts payable related party 46,812 - Deferred revenue 173,287 ( 7,288 ) Right-of-use liability ( 200,600 ) ( 9,527 ) NET CASH USED IN OPERATING ACTIVITIES ( 781,970 ) ( 519,790 ) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of intangible assets - ( 19,500 ) Proceeds from sale of property and equipment - 100,000 Net assets acquired from acquisitions - 46,541 Purchase of property and equipment ( 6,990 ) ( 88,000 ) NET CASH (USED IN)/PROVIDED BY INVESTING ACTIVITIES ( 6,990 ) 39,041 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from related party notes payable 155,500 - Redemption of preferred stock ( 10 ) - Repayment of notes payable ( 182,982 ) - Repayment of notes payable related party ( 32,500 ) - Repayment of advances payable - ( 104,204 ) Proceeds from subscription agreements 745,000 676,349 NET CASH PROVIDED BY FINANCING ACTIVITIES 685,008 572,145 NET CHANGE IN CASH ( 103,952 ) 91,396 CASH - BEGINNING OF YEAR 115,111 23,715 CASH - END OF PERIOD $ 11,159 $ 115,111 Supplemental disclosures of cash flow information: Cash paid for interest $ - $ - Cash paid for taxes $ - $ - Supplemental disclosure of non-cash investing and financing activities Property and equipment acquired with notes payable $ 444,891 $ - Note receivable issued for asset sale $ - $ 95,000 Common stock issued for acquisitions $ - $ 885,000 The accompanying notes are an integral part of these consolidated financial statements. F- 5 MDwerks, Inc. Notes to Consolidated Financial Statements For the Years Ended December 31, 2024 and 2023 NOTE 1 - ORGANIZATION AND DESCRIPTION OF THE BUSINESS MDwerks, Inc. (the “Company”), a Delaware corporation, was focused on effecting a “reverse merger,” capital exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more unrelated businesses (the “Business Combination”) that would benefit from the Company’s public reporting status. On 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”). Two Trees produces a variety of aged alcoholic beverages using an innovative rapid-aging system. This scalable technology results in all-natural, high-quality products, efficiently produced, with a reduced environmental impact. Our products are nearly indistinguishable from those that are traditionally aged. Two Trees created a proprietary process that mirrors and accelerates the natural aging process that occurs when alcohol is aged in wooden barrels over time. The true art of our craft spirits lives within the balance between the grain selection, local water, and the full-bodied flavors from our toasted wood chip varieties. Our wood chips are selected to pair with specific grains and toasted to just the right char, bringing rich flavor profiles to life with a hint of smoke. In 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. RF Specialties, LLC (“RFS”) is an innovative company pushing the boundaries of sustainable Radio Frequency applications. For over 12 years, RF Specialties has addressed companies’ most pressing challenges by implementing automated Radio Frequency Technology in a sustainable way 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. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation - The financial statements present the financial position, results of operations and cash flows of the Company in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Two Trees Beverage Company, Prost Beverage Co, Radio Aged Beer LLC, RF Kettle Company LLC, Two Trees, Distilling, RAS LLC, (collectively referred to as “Two Trees”) and RF Specialties, LLC. All intercompany accounts, transactions and balances have been eliminated in consolidation. F- 6 Cash and Cash Equivalents - The Company considers all highly liquid instruments with original maturities of three months or less when acquired, to be cash equivalents. The Company had $ 11,159 cash equivalents at December 31, 2024 and $ 115,111 cash at December 31, 2023. Income Taxes - The Company complies with the accounting and reporting requirements of US GAAP in accounting for income taxes. The Company uses the asset and liability approach to financial reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax basis of assets and liabilities that will result in future taxable or deductible amounts and are based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred income tax assets to the amount expected to be realized. The Company also complies with US GAAP in accounting for uncertain tax positions. A tax benefit from an uncertain position may be recognized only if it is “more likely than not” that the position is sustainable based on its technical merits. Based on its analysis, the Company has determined that it has not incurred any liability for unrecognized tax benefits as of December 31, 2024 and December 31, 2023. 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. Loss Per Share -Earnings per share is computed based on the weighted average number of common shares outstanding. Basic (loss) per share excludes dilution and is computed by dividing (loss) available to common stockholders by the weighted average common shares outstanding for the year. Diluted loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. In the fiscal years ended December 31, 2024 and December 31, 2023, there were no options, warrants or derivative securities outstanding. Use of Estimates and Assumptions - The preparation of financial statements in accordance with US GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting period. Actual results can, and in many cases will, differ from those estimates. Prepaid Expenses and Other Assets - Prepaid expenses primarily consist of prepaid purchases, insurance, income tax refund receivable, and various other expenses. These amounts are recognized as an expense in the period the related service or benefit is received. Accounts Receivable and the Allowances for Credit losses - Accounts receivable are recorded in the period when the right to receive payment or other consideration becomes unconditional. Accounts receivable are recorded at the invoiced amount and do not earn interest. The Company maintains an allowance for credit losses based upon the best estimate of probable credit losses in existing accounts receivable. The Company determines the allowance based upon individual accounts when information indicates the customers may have an inability to meet their financial obligations, as well as historical collection and write-off experience. The Company had an accounts receivable balance of $ 109,142 net of $ 26,710 allowance for doubtful accounts as of December 31, 2024. 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. As 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. Fair value of financial instruments - The Company measures its financial and non-financial assets and liabilities, as well as makes related disclosures, in accordance with FASB Accounting Standards Codification No. 820, Fair Value Measurement (“ASC 820”), which provides guidance with respect to valuation techniques to be utilized in the determination of fair value of assets and liabilities. Approaches include, (i) the market approach (comparable market prices), (ii) the income approach (present value of future income or cash flow), and (iii) the cost approach (cost to replace the service capacity of an asset or replacement cost). ASC 820 utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels: Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. F- 7 Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one more significant inputs or significant value drivers are unobservable. The carrying values of the Company’s accounts payable and accrued liabilities, advances payable, and convertible notes payable, approximate their fair value due to their short-term nature. The Company has no assets or liabilities measured at fair value on a recurring basis. The Company’s goodwill and intangible asses were valued using level 3 inputs at the time of acquisition. Going Concern - These financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future. As reflected in the accompanying financial statements, the Company had a net loss of $ 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. Revenue Recognition - Net sales from Two Trees include liquor and related products, less excise taxes and customer programs and incentives. Sales from RF Specialties, LLC will include product and services related to sustainable Radio Frequency applications to a wide range of industries including structural engineering, food & beverage, and manufacturing. The Company recognizes revenue by applying the following steps in accordance with Accounting Standards Codification (“ASC”) Topic 606 – Revenue from Contracts with Customers: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. The Company recognizes sales when merchandise is shipped from a warehouse directly to wholesale customers (except in the case of a consignment sale). For consignment sales, , the Company recognizes sales upon the consignee’s shipment to the customer. Postage and handling charges billed to customers are also recognized as sales upon shipment of the related merchandise. Shipping terms are generally FOB shipping point, and title passes to the customer at the time and place of shipment or purchase by customers at a retail location. For consignment sales, title passes to the consignee concurrent with the consignee’s shipment to the customer. The customer has no cancellation privileges after shipment or upon purchase at retail locations, other than customary rights of return. For service revenue within the Company’s radio frequency applications, the Company recognizes revenue as the services are provided to the customer. The Company’s contracts typically have a single performance obligation, and do not contain a significant financing component. The Company recognizes deferred revenue for performance obligations not yet satisfied, primarily related to liquor sales not yet shipped. As of December 31, 2024, the Company had $ 226,066 in unsatisfied performance obligations that it expects to satisfy over the next 12 months. During 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. For the year ended December 31, 2024, the Company had one customer who accounted for 25 % of total revenue. F- 8 Inventory - Inventories primarily consist of bulk and bottled liquor and raw materials and are stated at the lower of cost or market. Cost is determined using an average costing methodology, which approximates cost under the first-in, first-out (“FIFO”) method. A portion of the Company’s finished goods inventory is held in warehouses located in several states that maintain control over the alcohol beverage distribution process until it is sold into the retail distribution channel within those states. The Company regularly monitors inventory quantities on hand and records write-downs for excess and obsolete inventories based primarily on the Company’s estimated forecast of product demand and production requirements. Such write-downs establish a new cost basis of accounting for the related inventory. Intangible Assets - Intangible assets, consisting of trade names, developed technology, and customer relationships, are accounted for in accordance with ASC 350 “Intangibles - Goodwill and Other”. Intangible assets that have finite lives are amortized using the straight-line method over their estimated useful lives of three to fifteen years . Goodwill - Goodwill represents the excess of acquisition cost over the fair value of the net tangible and intangible assets acquired. Goodwill is not amortized and is subject to annual impairment testing on or between annual tests if an event or change in circumstance occurs that would more likely than not reduce the fair value of a reporting unit below its carrying value. In testing for goodwill impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events and circumstances, the Company concludes that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, it can conclude the assessment. If the Company concludes otherwise, the Company is required to perform a quantitative analysis to determine the amount of impairment. A quantitative analysis is performed at the reporting unit level by comparing the estimated fair value of a reporting unit with its respective carrying value to determine the amount of impairment, if any. The Company has determined that it has two reporting units. During the years ended December 31, 2024, and 2023, no impairment expense was recognized. Impairment of Long-Lived Assets - Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair market value of the assets. During the years ended December 31, 2024, and 2023, no impairment expense was recognized. Leases - Management determines if an arrangement is a lease at the inception of the agreement. Operating leases are included in operating lease right-of-use (ROU) assets and operating lease liability on the accompanying consolidated balance sheet. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Company uses the rate implicit in the lease agreement, when available, or a discount rate based on the information available at the commencement date in determining the present value of lease payments. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Property and Equipment - Property and equipment are recorded at cost. Depreciation of property and equipment is calculated on a straight-line basis over the estimated useful lives of the assets. Furniture and fixture assets are depreciated over five years , vehicles are depreciated over five years , and computer and equipment are depreciated over three years . Expenditures for renewals and betterments that extend the useful lives of or improve existing property or equipment are capitalized. Expenditures for maintenance and repairs are expensed as incurred. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets as follows: SCHEDULE OF PROPERTY AND EQUIPMENT Category Estimated Useful Lives Machinery and equipment 3 - 7 years Vehicles 5 years Furniture & Fixtures 5 years Computers 3 years Leasehold improvements are depreciated over the shorter period of their estimated useful life or term of the lease. F- 9 Research and Development Expenses - The Company records research and development expenses in the period in which they are incurred as a component of product development expenses. Stock-Based Compensation - The Company measures stock-based compensation at the estimated fair value on the grant date and recognizes the amortization of stock-based compensation expense on a straight-line basis over the requisite service period, or when it is probable criteria will be achieved for performance-based awards. Fair value is determined based on assumptions related to the fair value of the Company common stock, stock volatility and risk-free rate of return. The Company has elected to recognize forfeitures when realized. Excise Taxes - The Company is responsible for compliance with the Alcohol and Tobacco Tax and Trade Bureau (“TTB”) regulations, which includes making timely and accurate excise tax payments. The Company is subject to periodic compliance audits by the TTB. Individual states also impose excise taxes on alcoholic beverages in varying amounts. The Company calculates its excise tax expense based upon units produced and on its understanding of the applicable excise tax laws. Excise taxes totaled $ 32,127 and $ 595 for the years ended December 31, 2024, and 2023, respectively. Segment 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. Segment 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. Reclassifications – Certain prior period amounts have been reclassified to conform to current period presentation. Recently Issued Accounting Pronouncements - From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the effect of recently issued standards that are not yet effective will not have a material effect on its financial position or results of operations upon adoption. In November 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. The 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. F- 10 In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (DISE) , requiring additional disclosure of the nature of expenses included in the income statement. The new standard requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. The amendments in this update are effective for annual periods beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of our pending adoption of this standard on its consolidated financial statements. NOTE 3 - INVENTORY Inventories primarily consist of bulk and bottled liquor and raw materials and are stated at the lower of cost or market. Cost is determined using an average costing methodology, which approximates cost under the first-in, first-out (“FIFO”) method. A portion of the Company’s finished goods inventory is held in warehouses located in several states that maintain control over the alcohol beverage distribution process until it is sold into the retail distribution channel within those states. The Company regularly monitors inventory quantities on hand and records write-downs for excess and obsolete inventories based primarily on the Company’s estimated forecast of product demand and production requirements. Such write-downs establish a new cost basis of accounting for the related inventory. Inventories consisted of the following as of December 31: SCHEDULE OF INVENTORY 2024 2023 Raw materials and packaging $ 38,189 $ 78,352 Finished goods 198,674 122,855 Total inventories $ 236,863 $ 201,207 NOTE 4 – FIXED ASSETS, NET Fixed assets, net consisted of the following as of December 31: SCHEDULE OF FIXED ASSETS, NET 2024 2023 Machinery and equipment $ 516,255 $ 220,984 Furniture and office equipment 253,851 133,890 Vehicles - 142,306 Buildings 10,497 10,497 Total Property and equipment 780,603 507,677 Less accumulated depreciation ( 195,578 ) ( 10,787 ) Total property and equipment, net $ 585,025 $ 496,890 On August 25, 2023, the Company entered an asset purchase agreement with an unrelated company, Dream Workz Automotive LLC, a Colorado limited liability company (“Dream Workz”). Pursuant to this agreement, the Company sold certain tangible manufacturing assets to Dream Workz for a purchase price of $ 195,000 (the “Purchase Price”). The Purchase Price was paid in a combination of cash in the amount of $ 100,000 and a promissory note in the amount of $ 95,000 (the “Note”). The Note is unsecured and bears interest at the rate of 8 % per annum commencing as of August 25, 2023. The Note matures on August 25, 2029 and is due in full at maturity. During the year ended December 31, 2024, the Company recognized a loss on impairment of the note receivable and accrued interest of $ 97,533 . F- 11 Asset purchase agreements Prior to its acquisition by the Company on December 27, 2023, RFS entered into two asset purchase agreements to acquire certain tools and equipment. The Company received assets under one agreement in December 2023, totaling $ 97,363 . The assets are included in property and equipment on the Company’s consolidated balance sheet. The Company assumed the liability of $ 88,674 as part of the Exchange Agreement with RFS. The agreement requires monthly payments through October 2026. On January 31, 2024, the Company received assets under the second purchase agreement totaling $ 444,891 . The assets are included in property and equipment on the Company’s consolidated balance sheet. The Company assumed the liability of $ 444,891 as part of the Exchange Agreement with RFS. The Exchange Agreement requires monthly payments through March 2030. In May 2024, the Company entered into two bill of sale agreements to sell two vehicles to Keith Mort, the former owner of RFS. Mr. Mort assumed the loans associated with the two vehicles with a net book value of $ 130,492 and an aggregate principal balance of $ 72,592 at the time of sale, and the Company recognized a loss on disposal of $ 57,900 during the year ended December 31, 2024, included in loss on disposal of assets on the consolidated statement of operations. As of December 31, 2024 and 2023, the Company owed $ 344,343 and $ 88,674 under the notes payable, respectively. Depreciation expense totaled $ 233,254 and $ 10,787 for the years ended December 31, 2024, and 2023, respectively. NOTE 5 – INTANGIBLE ASSETS, NET Intangible assets, net consisted of the following as of December 31: SCHEDULE OF INTANGIBLE ASSETS, LESS ACCUMULATED AMORTIZATION 2024 2023 Trade names and license, 10 year estimated useful life $ 359,500 $ 359,500 Developed technology, 15 year estimated useful life 140,000 140,000 Customer relationships, 10 year estimated useful life 120,000 120,000 Total intangible assets 619,500 619,500 Less accumulated amortization ( 60,716 ) ( 4,339 ) Total intangible assets, net $ 558,784 $ 615,161 Total amortization expense for the years ended December 31, 2024 and 2023 was $ 56,377 and $ 4,339 , respectively. The Company expects to recognize amortization expense of $ 56,432 annually in each of the next five years. On February 5, 2024, the Company, through its wholly owned subsidiary, Two Trees Beverages, entered into a new 15-year license agreement with Shine Time, LLC, licensing territories for Tim Smith Spirits ® expanding its territories beyond the United States to include all members of the European Union, the United Kingdom, Norway, Switzerland, Iceland, Serbia, Turkey and Ukraine. The Company agreed to pay a royalty of 9 % on branded products covered by the license agreement, or 4.5 % of any sublicensed revenue under the agreement. During the year ended December 31, 2024, the Company paid $ 79,688 to Shine Time, LLC pursuant to the license agreement. An additional $ 112,500 was due under the terms of the license agreement by April 1, 2024. As of the filing date of this 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 . 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. NOTE 6 – NOTE RECEIVABLE During 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 . The 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 31, 2024. F- 12 NOTE 7 - ACQUISITIONS Two Trees The 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. Each share 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 corporation. RF Specialties On 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. Unaudited Pro Forma Financial Information The 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. SCHEDULE OF UNAUDITED PROFORMA A FINANCIAL INFORMATION 2024 2023 Year ended December 31, 2024 2023 Revenue $ 2,364,093 $ 2,283,567 Operating loss ( 1,502,664 ) ( 1,253,970 ) Net loss ( 1,621,117 ) ( 1,093,089 ) Net loss per common share $ ( 0.01 ) $ ( 0.01 ) Weighted Average common shares outstanding 201,542,775 193,059,884 NOTE 8 - NOTES PAYABLE The Company has the following outstanding notes payable: SCHEDULE OF NOTES PAYABLE Loans Origination Date Interest Rate Balance as of December 31, 2024 Balance as of December 31, 2023 Asset purchase agreement notes December 1, 2023 and January 31, 2024 0.00 % $ 344,343 $ 88,674 Termination Agreement December 31, 2021 0.13 % 21,584 21,584 Loan Payable - Mercedes September 19, 2022 6.79 % - 60,008 Loan Payable – Dodge June 18, 2022 0.00 % - 18,968 Advances Payable – Related parties Various 10.00 % 123,000 - Total $ 488,927 $ 189,234 F- 13 The following is a summary of the future minimum payments of loans payable: SCHEDULE OF FUTURE MINIMUM PAYMENTS OF LOANS PAYABLE Year Ending December 31, 2025 $ 257,557 2026 87,483 2027 60,341 2028 51,274 2029 and Thereafter 32,272 Total loans payable $ 488,927 The 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 . During the year ended December 31, 2020, the Company entered into a termination agreement and agreed to pay the sum of $ 50,000 , pursuant to the agreement. During the year ended December 31, 2021, the Company issued a promissory note payable in the amount of $ 31,584 at the rate of 0.13 % per annum, with a maturity date on or before January 1, 2025 , for settlement of the $ 50,000 agreed upon in the termination agreement. During the year ended December 31, 2023, the Company made a payment of $ 10,000 . The balance as of December 31, 2024, and December 31, 2023, is $ 21,584 . Prior to its acquisition by the Company on December 27, 2023, RFS entered into two asset purchase agreements to acquire certain tools and equipment. The Company received assets under one agreement in December 2023, totaling $ 97,363 . The assets are included in property and equipment on the Company’s consolidated balance sheet. The Company assumed the liability of $ 88,674 as part of the Exchange agreement with RF Specialties. The agreement requires monthly payments through October 2026. On January 31, 2024, the Company received assets under the second purchase agreement totaling $ 444,891 . The assets are included in property and equipment on the Company’s consolidated balance sheet. The Company assumed the liability of $ 444,891 as part of the Exchange Agreement with RFS. The agreement requires monthly payments through March 2030. In May 2024, the Company sold two vehicles and transferred the related loans to Mr. Mort. See Notes 4 and 11. During 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 . Interest 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. NOTE 9 - CAPITAL STOCK Preferred stock The Company is authorized to issue 10,000,000 shares of preferred stock, $ 0.001 par value, with such designations, rights and preferences as may be determined from time to time by the Board of Directors, of which 10,000,000 shares are designated Series A Convertible Preferred. F- 14 On June 15, 2014, the Company designated the Series A Convertible Preferred so that each share shall hold with it conversion rights of one hundred (100) shares of common stock for every share of Series A Preferred stock held, and that each share of Series A Preferred stock will also hold with it the same number of common share votes prior to conversion as it would if fully converted to be used in voting on any company matter requiring a vote of shareholders . On November 7, 2024, the Company agreed to purchased 8,957,500 shares of Series A Convertible Preferred Stock, representing all of the issued and outstanding shares of Series A Convertible Preferred Stock of the Company from, Tradition Reserve I LLC, a New York limited liability company, in exchange for $ 10 . At December 31, 2024 and 2023 and 2023, there were 0 and 8,957,500 shares of Series A Convertible Preferred Stock issued and outstanding, respectively. Common stock The Company is authorized to issue 300,000,000 shares of Common stock, $ 0.001 par value, with such designations, rights and preferences as may be determined from time to time by the Board of Directors. During the 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 . During the year ended December 31, 2024, the Company issued a total of 1,000,000 shares of common stock to officers and directors for services under the employment agreements discussed in Note 10. The Company recorded stock-based compensation of $ 71,938 under the employment and Independent Director agreements, based on the common stock prices ranging from $ 0.10 to $ 0.16 on the respective grant dates. See Note 10. 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 During the year ended December 31, 2023, the Company issued a total of 8,964,660 shares of common stock to accredited investors for total cash proceeds of $ 676,349 . During 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. At December 31, 2024 and 2023, there were 204,744,872 and 198,724,868 shares issued and outstanding, respectively. Warrants During the year ended December 31, 2023, the Company issued warrants in connection with the sale of common stock to investors. The following table represents warrant activity during the years ended December 31, 2024 and 2023: SCHEDULE OF WARRANT ACTIVITY Number of Options Weighted Average Exercise Price Outstanding at December 31, 2022 - - Granted 17,262,656 1.50 Forfeited, cancelled - - Outstanding at December 31, 2023 17,262,656 $ 1.50 Granted - - Forfeited, cancelled - - Outstanding at December 31, 2024 17,262,656 $ 1.50 Exercisable at December 31, 2024 17,262,656 $ 1.50 The warrants had a weighted average remaining life of 3.65 years and no intrinsic value as of December 31, 2024. F- 15 Stock options During the year ended December 31, 2023, in connection with the acquisition of Two Trees, the Company issued common stock options to purchase the Company’s common stock to employees of Two Trees in replacement of their previously outstanding stock options of Two Trees. The following is a summary of activity of outstanding stock options during the year ended December 31, 2024: SCHEDULE OF ACTIVITY OF OUTSTANDING STOCK OPTIONS Weighted Average Number Exercise of Options Prices Balance, December 31, 2023 - $ - Granted 4,650,685 0.36 Cancelled - - Balance, December 31, 2023 4,650,685 $ 0.36 Granted - - Cancelled - - Balance, December 31, 2024 4,650,685 $ 0.36 Exercisable, December 31, 2024 4,650,685 $ 0.36 The options had a weighted average remaining life of 8.94 years and no intrinsic value as of December 31, 2024. NOTE 10 - COMMITMENTS AND CONTINGENCIES In the ordinary course of business, the Company may become a party to lawsuits involving various matters. The impact and outcome of litigation, if any, is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm its business. The Company believes the ultimate resolution of any such current proceeding will not have a material adverse effect on our continued financial position, results of operations or cash flows. On April 22, 2024, the Company entered into a broker agreement with a third party. Under the agreement, the Company will pay a monthly fee of $ 1,500 , and a commission of 12 % of any revenue from customers introduced by the broker, less any promotional expenses incurred by the Company. The agreement is cancellable by either party with 60 days’ notice, and in the event of termination, the commissions shall continue for a period of one year from the termination date. The Company incurred fees 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. On November 6, 2024, the Company entered into an employment agreement with its CEO, Steve Laker. The agreement specifies an annual salary of $ 180,000 through December 31, 2025, $ 225,000 2026, $ 250,000 for 2027, $ 300,000 for 2028 and $ 350,000 for 2029. Mr. Laker is also eligible to receive a cash performance-based bonus for any quarter over the next two years where the Company’s gross revenue has increased by at least 25% compared to the previous year quarter. The bonus per quarter would be 25% of Mr. Laker’s then-current base salary. After two years, for any calendar year where gross revenue has increased at least 10%, 15% or 25%, Mr. Laker will be eligible to a bonus of 50%, 100% or 150%, respectively, of his then-current base salary, and is payable 50% in cash and 50% in Company stock vesting over the following 24 months . Upon execution of the agreement, the Company will issue 500,000 shares of common stock to Mr. Laker, with 25% vesting on January 1, 2025 and the remainder monthly from January 1, 2026 through December 31, 2028 . During the year ended December 31, 2024, the Company issued a total of 500,000 shares to Mr. Laker, valued at $ 102,500 , 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 period. Additionally, Mr. Laker is eligible to receive an additional 3,000,000 shares of common stock based on performance benchmarks tied to certain revenue targets, with targets ranging from $ 5,000,000 to $ 50,000,000 . These performance awards had a grant date fair value of $ 294,000 . The Company 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. 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 . F- 16 On November 6, 2024, the Company entered into an employment agreement with its Executive Chairman James Cassidy. The agreement specifies an annual salary of $ 180,000 through December 31, 2025, $ 225,000 2026, $ 250,000 for 2027, $ 300,000 for 2028 and $ 350,000 for 2029. Mr. Cassidy is also eligible to receive a cash performance-based bonus for any quarter over the next two years where the Company’s gross revenue has increased by at least 25% compared to the previous year quarter. The bonus per quarter would be 25% of Mr. Cassidy’s then-current base salary. After two years, for any calendar year where gross revenue has increased at least 10%, 15%, or 25% Mr. Cassidy will be eligible to a bonus of 50%, 100% or 150%, respectively, of his then-current base salary, and is payable 50% in cash and 50% in Company stock vesting over the following 24 months . Upon execution of the agreement, the Company will issue 500,000 shares of common stock to Mr. Cassidy, with 25% vesting on January 1, 2025 and the remainder monthly from January 1, 2026 through December 31, 2028 . During the year ended December 31, 2024, the Company issued a total of 500,000 shares to Mr. Cassidy, valued at $ 49,000 based the common stock price at the date of grant. The Company recognized stock based compensation expense of $ 12,250 for these awards and expects to recognize an additional $ 36,750 through the end of the vesting period. Additionally, Mr. Cassidy is eligible to receive an additional 3,000,000 shares of common stock based on performance benchmarks tied to certain revenue targets, with targets ranging from $ 5,000,000 to $ 50,000,000 . These performance awards had a grant date fair value of $ 294,000 . The Company 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. In the event of termination of Mr. Cassidy without cause, Mr. Cassidy will receive one year of his then-current base salary, and all stock awards under the agreement will become fully vested . On November 18, 2024, Mr. Timothy Brocopp and the Company entered into an Independent Director Agreement, with the following summarized terms: Mr. Brocopp shall serve as an independent director of the Company and be available to perform the duties consistent with such position pursuant to the Certificate of Incorporation and Bylaws of the Company. Mr. Brocopp’s employment commenced on Monday, November 16, 2024, and continues for a term of three (3) years. Compensation that Mr. Brocopp will receive during his term includes the sum of $ 5,000 , each calendar quarter, payable in the third month of each calendar quarter, and with such amount for any partial calendar quarter being appropriately prorated . Upon employment, the Company shall issue to Mr. Brocopp 100,000 shares of common stock, par value $ 0.001 per share, of the Company (the “Common Stock”), subject to the terms and conditions of the Company’s applicable equity incentive plan and any related grant documentation, with $ 10,000 shares divided by a VWAP schedule. The fair value of the shares was estimated using a common stock price of $ 0.10 or $ 10,000 . The Company recognized stock based compensation expense of $ 10,000 for these awards and expects to recognize an additional $ 0 as the awards vest immediately. 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. Brocopp. On December 3, 2024, Mr. Richard Blackstone and the Company entered into an Independent Director Agreement. Mr. Blackstone shall serve as an independent director of the Company and be available to perform the duties consistent with such position pursuant to the Certificate of Incorporation and Bylaws of the Company. Mr. Blackstone’s employment commenced on Tuesday, December 3, and continues for a term of three (3) years. Compensation that Mr. Blackstone will receive during his term includes the sum of $ 5,000 , each calendar quarter, payable in the third month of each calendar quarter, and with such amount for any partial calendar quarter being appropriately prorated . Upon employment, the Company shall issue to Mr. Blackstone 100,000 shares of common stock, par value $ 0.001 per share, of the Company (the “Common Stock”), subject to the terms and conditions of the Company’s applicable equity incentive plan and any related grant documentation, 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. Blackstone. F- 17 NOTE 11 - RELATED PARTY TRANSACTIONS During the year ended December 31, 2024, the Company entered into agreements with certain officers and directors, as disclosed in Note 10. On November 7, 2024, the Company agreed to purchased 8,957,500 shares of Series A Convertible Preferred Stock, representing all of the issued and outstanding shares of Series A Convertible Preferred Stock of the Company from, Tradition Reserve I LLC, a New York limited liability company, in exchange for $ 10 . At December 31, 2024 and 2023, there were 0 and 8,957,500 shares of Series A Convertible Preferred Stock issued and outstanding, respectively. During the year ended December 31, 2024, the Company received a total of $ 155,500 in proceeds from shareholders and repaid $ 32,500 . The advances are unsecured, due on demand and have stated interest of 10 % per annum. As of December 31, 2024, the balance owed on the advances from shareholders was $ 123,000 . See Note 8 above. In May 2024, the Company entered into two bill of sale agreements to sell two vehicles to Keith Mort, the former owner of RFS. Mr. Mort assumed the loans associated with the two vehicles with a net book value of $ 130,492 and an aggregate principal balance of $ 72,592 at the time of sale, and the Company recognized a loss on disposal of $ 57,900 during the year ended December 31, 2024. As of December 31, 2024, the Company owed a total of $ 36,738 to an entity controlled by the Company’s Chairman, and $ 10,074 to Mr. Mort related to expense reimbursements. NOTE 12 – LEASES The Company maintains an operating lease for its office space and operating facility. The lease has a remaining term of 80 months. The Company determines if an arrangement is a lease at inception. As the rate implicit in each lease is not readily determinable, the Company uses its incremental borrowing rate based on information available at commencement to determine the present value of the lease payments. The Company used a weighted average incremental borrowing rate of 8.4 % Right-of-use assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Leases with an initial term of 12 months or less (“short-term leases”) are not recorded on the balance sheet and are recognized on a straight-line basis over the lease term. As of December 31, 2024, the amount of right-of-use assets and lease liabilities were $ 915,803 and $ 961,490 , respectively. As of December 31, 2023, the amount of right-of-use assets and lease liabilities were $ 1,105,152 and $ 1,162,090 , respectively. Aggregate lease expense for the years ended December 31, 2024, and 2023 was $ 215,928 and $ 5,546 , respectively. The following table provides the maturities of lease liabilities at December 31, 2024: SCHEDULE OF MATURITIES LEASE LIABILITIES Remaining Operating Lease Term in Years 2025 336,512 2026 196,136 2027 176,088 2028 182,132 2029 188,339 thereafter 95,332 Total lease payments 1,174,539 Less: imputed interest ( 213,049 ) Present value of lease liability 961,490 4.74 F- 18 NOTE 13 – INCOME TAXES For the period from inception through December 31, 2024, the Company incurred a net operating loss and, accordingly, no provision for income taxes has been recorded. In addition, no benefit for income taxes has been recorded due to the uncertainty of the realization of any tax assets. At December 31, 2024, and 2023, the Company had approximately $ 2,288,567 and $ 739,388 of federal net operating losses. Under the Tax Cuts and Jobs Act of 2017, the net operating loss carry forwards can be carried forward indefinitely, however the deductions are limited to 80% of taxable income . The effective income tax rate for the years ended December 31, 2024 and 2023 consisted of the following: SCHEDULE OF EFFECTIVE INCOME TAX RATE December 31, 2024 December 31, 2023 Federal statutory income tax rate 21 % 21 % Change in valuation allowance ( 21 )% ( 21 )% Net effective income tax rate - - The components of the Company’s deferred tax asset are as follows: SCHEDULE OF DEFERRED TAX ASSET 2024 2023 December 31, 2024 2023 Deferred tax assets: Net deferred tax assets before valuation allowance $ 480,599 $ 155,271 Less: Valuation allowance ( 480,599 ) ( 155,271 ) Net deferred tax assets $ - $ - Based on the available objective evidence, including the Company’s history of its loss, management believes it is more likely than not that the net deferred tax assets will not be fully realizable. Accordingly, the Company provided for a full valuation allowance against its net deferred tax assets at December 31, 2024 and 2023, respectively. In accordance with FASB ASC 740, the Company has evaluated its tax positions and determined there are no uncertain tax positions. NOTE 14 – SEGMENT REPORTING The Company’s operations are managed and reported in two operating segments, each of which is a reportable segment for financial reporting purposes: (1) RF Specialties and (2) Two Trees Distilling. These segments are organized principally by product and service category. The Company’s reportable segments are determined based on (1) financial information reviewed by the CODM, (2) operational structure of the Company which is designed and managed to share resources across the entire suite of products offered by the business, and (3) the basis upon which the CODM makes resource allocation decisions. The CODM for both segments is the Director, President and Chief Executive Officer of the Company. The CODM utilizes the segment operating income (loss) to assess profitability and performance of actual results compared to forecasts. F- 19 Significant segment expenses and assets information is as follows: SCHEDULE OF SEGMENT EXPENSES AND ASSETS INFORMATION 2024 2023 For the Years ended December 31, 2024 2023 Revenue Two Trees Distilling $ 1,324,823 $ 104,066 RF Specialties 1,039,270 - Total $ 2,364,093 $ 104,066 Revenue $ 2,364,093 $ 104,066 Cost of Sales Two Trees Distilling $ 917,458 $ 80,133 RF Specialties 572,606 1,523 Total $ 1,490,064 $ 81,656 Cost of Sales $ 1,490,064 $ 81,656 Gross profit Two Trees Distilling $ 407,365 $ 23,933 RF Specialties 466,664 ( 1,523 ) Total $ 874,029 $ 22,410 Gross profit $ 874,029 $ 22,410 - General & Administrative Expense Two Trees Distilling $ 697,372 $ 63,361 RF Specialties 228,187 6,589 Corporate 927,776 389,933 Total $ 1,853,335 $ 459,883 General & Administrative Expense $ 1,853,335 $ 459,883 Salary and Wages Two Trees Distilling $ 64,590 $ - RF Specialties - - Corporate 111,237 - Total $ 175,827 $ - Salary and Wages $ 175,827 $ - Depreciation and Amortization Expense Two Trees Distilling $ 97,359 $ 5,730 RF Specialties 179,669 26 Corporate 12,603 9,370 Total $ 289,631 $ 15,126 Depreciation and Amortization Expense $ 289,631 $ 15,126 Net loss from operations Two Trees Distilling $ ( 451,956 ) $ ( 45,158 ) RF Specialties 908 ( 8,138 ) Corporate ( 1,051,616 ) ( 399,303 ) Total $ ( 1,502,664 ) $ ( 452,599 ) Net loss from operations $ ( 1,502,664 ) $ ( 452,599 ) Assets Two Trees Distilling $ 1,501,686 $ 1,716,841 RF Specialties 1,337,848 1,318,464 Corporate 76,900 197,763 Total $ 2,916,434 $ 3,233,068 Assets $ 2,916,434 $ 3,233,068 F- 20 NOTE 15 - SUBSEQUENT EVENTS The Company evaluates events that have occurred after the balance sheet date through the date these financial statements were issued. On 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 . Subsequent 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 Mr. Brocopp and Mr. Blackstone pursuant to their director agreements. On 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”). On the same day, the Buyer and Seller closed the transaction. On 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”). On March 10, 2025, the Company entered into an Executive Employment Agreement with David Stephens. Mr. Stephens shall serve as the Chief Financial Officer of the Company and be available to perform the duties consistent with such position pursuant to the Certificate of Incorporation and Bylaws of the Company. Mr. Stephen’s employment commenced on March 1, 2025, and continues for a term of three (3) years. Compensation that Mr. Stephens will receive during his term includes (i) for the period of January 1, 2025 through December 31, 2025, 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, Mr. Stephens shall thereafter receive performance-based bonuses on an annual basis (the “Subsequent Annual Bonuses”). For any calendar year(s) where the Company’s gross revenue has increased a minimum of ten percent (10%) from its prior year gross revenue for that corresponding calendar year, Mr. Stephens shall be entitled to a cash bonus equating to forty percent (40%) of his then-current Base Salary payable as follows: (1) fifty percent (50%) in cash within thirty (30) days of the conclusion of any such calendar year(s); and (2) fifty percent (50%) in Company stock vesting on a prorated consecutive twenty four (24) calendar month basis; For any calendar year(s) where the Company’s gross revenue has increased a minimum of fifteen percent (15%) from its prior year gross revenue for that corresponding calendar year(s), Mr. Stephens shall be entitled to a cash bonus equating to seventy-five percent (75%) of his then-current Base Salary payable as follows: (1) fifty percent (50%) in cash within thirty (30) days of the conclusion of any such calendar year(s); and (2) fifty percent (50%) in Company stock vesting on a prorated consecutive twenty four (24) calendar month basis.; For any calendar year(s) where the Company’s gross revenue has increased a minimum of twenty five percent (25%) from its prior year gross revenue for that corresponding calendar year(s), Mr. Stephens shall be entitled to a cash bonus equating to one hundred twenty five percent (125%) of his then-current Base Salary payable as follows: (1) fifty percent (50%) in cash within thirty (30) days of the conclusion of any such calendar year(s); and (2) fifty percent (50%) in Company stock vesting on a prorated consecutive twenty four (24) calendar month basis . Upon execution of the agreement, the Company 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 prior. The agreement can be terminated by the Company for cause with 90 days notice. In the event of termination of Mr. Stephens without cause, Mr. Stephens will receive six months of his then-current base salary, and all stock awards under the agreement will become fully vested . These shares have not yet been issued. On March 14, 2025, the Company agreed to issue 200,000 shares of common stock to a consultant, of which 66,667 vest upon execution, and the remaining 133,333 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. F- 21 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. There have been no reportable events pursuant to Item 304(b) of Regulation S-K in connection with a change in our accountants.