NOTE 7 - CAPITAL STOCK

Preferred stock

The Company is authorized to issue 10,000,000 shares of preferred stock, $0.001 par value, with such designations, rights and preferences as may be determined from time to time by the Board of Directors, of which 10,000,000 shares are designated Series A Convertible Preferred.

On June 15, 2014, the Company designated 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, 2025 and 2024, there were 0 shares of Series A Convertible Preferred Stock issued and outstanding.

Common stock

The Company is authorized to issue 300,000,000 shares of Common stock, $0.001 par value, with such designations, rights and preferences as may be determined from time to time by the Board of Directors.

On 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.

During 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.

During 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. See Note 10. 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.

On 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.

During 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.

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. Also in 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

At December 31, 2025 and 2024, there were 234,105,560 and 204,744,872 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, 2025 and 2024:

 SCHEDULE OF WARRANT ACTIVITY

The warrants had a weighted average remaining life of 2.65 years and no intrinsic value as of December 31, 2025.

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, 2025:

 SCHEDULE OF ACTIVITY OF OUTSTANDING STOCK OPTIONS

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

Stock Appreciation Rights

On July 15, 2025, the Company awarded a total of 2,180,000 Stock Appreciation Rights (‘SARs”) to the Company’s common stock to the employees under the 2025 Plan at an exercise price of $0.22 per share, vesting immediately, with a 10 year exercise period. The Company has the sole discretion to settle the SARs in shares or cash. The Company will issue shares when exercised based on the difference between the fair value on the exercise date and the exercise price of $0.22. The SARs are classified as equity instruments in accordance with ASC 718.

The 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.

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

 SCHEDULE OF ACTIVITY OF OUTSTANDING STOCK OPTIONS