FIXED ASSETS, NET

3 Months Ended

Mar. 31, 2025

Property, Plant and Equipment [Abstract]

NOTE 4 – FIXED ASSETS, NET

Fixed assets, net consisted of the following:

SCHEDULE OF FIXED ASSETS, NET

	March 31, 2025			December 31, 2024
Machinery and equipment	$	608,154		$	516,255
Furniture and office equipment		258,711			253,851
Buildings		10,497			10,497
Construction in progress		544,268			-
Total Property and equipment		1,421,630			780,603
Less accumulated depreciation		(290,734	)		(195,578	)
Total property and equipment, net	$	1,130,896		$	585,025

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 of ours to Dream Workz for a purchase price of $195,000 (the “Purchase Price”). The Purchase Price was paid in a combination of cash in the amount of $100,000 and a promissory note in the amount of $95,000 (the “Note”). The Note is unsecured and bears interest at the rate of 8% per annum commencing as of August 25, 2023. 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.

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.

As of March 31, 2025 and December 31, 2024, the Company owed $306,706 and 344,344 under the notes payable, respectively. The Company repaid $37,638 of the notes payable balance during the three months ended March 31, 2025.

Two Trees entered into two contracts with two spirit companies for the deployment and license of our proprietary Spirits Rapid Aging System (“SRAS”). The first contract is for the building and deployment of SRAS at the customer’s facilities within the next three months, with the potential for additional SRAS deployments in the next 12 months. The second contract is for the building and deployment of SRAS at the customer’s facilities within the next six to nine months, with the potential for additional SRAS deployments in the next 12 months. Under both agreements, RFS will assemble the SRAS units and provide ongoing machine servicing and maintenance, thereby is entitled to receive recurring monthly license payments from the customers for use of the SRAS units. The Company is constructing the machines which expect to be deployed by the end of fiscal year ended December 31, 2025.

Depreciation expense totaled $58,506 and $63,822 for the three months ended March 31, 2025, and 2024, respectively.

MDWerks, Inc. 10-Q