LUDG.OIDLudwig Enterprises, INC
10-Q: Ludwig Enterprises Q3 2025: Net Income Amidst Going Concern
Sentiment:
Quarterly Report
Ludwig Enterprises reported a net income of $31,252 for Q3 2025, a significant improvement from previous losses, but faces substantial doubt about its ability to continue as a going concern due to significant deficits and cash burn.
Delay expectedMaturity dates for promissory notes totaling $1,370,009 (issued between June 2012 and October 2023) were extended from September 30, 2025, to December 31, 2025.Maturity dates on convertible notes were extended to December 31, 2025, for 11 noteholders.
Capital raiseThe company explicitly states it "may seek to raise debt or equity-based capital at favorable terms" to meet current obligations and implement business plans.It requires "additional funds and will need to obtain additional debt or equity-based capital from third parties to implement our full business plans."The company expects to begin generating revenue in Q4 2025, "assuming we are able to obtain needed funding of approximately $10,000,000, of which there is no assurance."Proceeds from convertible notes payable amounted to $750,000 during the nine months ended September 30, 2025.
Better than expectedReported a net income of $31,252 for the three months ended September 30, 2025, a substantial improvement compared to a net loss of $885,942 for the same period in 2024.The net loss for the nine months ended September 30, 2025, decreased significantly to $1,159,135 from $2,861,013 in the prior year.Total other income for the nine months ended September 30, 2025, was $322,772, a positive shift from other expenses of $1,628,516 in the prior year, driven by reduced inducement and finance expenses and a favorable change in derivative liability fair value.
Summary
- Reported a net income of $31,252 for the three months ended September 30, 2025, compared to a net loss of $885,942 for the same period in 2024.
- Incurred a net loss of $1,159,135 for the nine months ended September 30, 2025, a reduction from $2,861,013 for the same period in 2024.
- Generated no revenue from services for both the three and nine months ended September 30, 2025, down from $207 and $217 respectively in 2024.
- Total operating expenses increased to $1,481,907 for the nine months ended September 30, 2025, from $1,021,684 for the same period in 2024, primarily due to increased consultant fees, professional services, and research and development costs.
- Held cash on hand of $3,317 at September 30, 2025.
- Reported an accumulated deficit of $8,418,501 and a stockholders deficit of $3,310,908 at September 30, 2025.
- The working capital deficit increased to $3,319,663 at September 30, 2025, from $2,378,145 at December 31, 2024.
- Net cash used in operating activities was $631,819 for the nine months ended September 30, 2025.
- The company faces substantial doubt about its ability to continue as a going concern within the next twelve months.
Sentiment
Score: 3
Explanation: While the company reported a net income for the quarter and reduced its nine-month net loss, it remains in a precarious financial position with minimal cash, a substantial working capital deficit, and a going concern warning. The future is highly dependent on securing significant additional capital, which is not assured.
Positives
- Reported a net income of $31,252 for the three months ended September 30, 2025, a significant improvement from a net loss of $885,942 in the prior year's comparable quarter.
- Reduced net loss for the nine months ended September 30, 2025, to $1,159,135 from $2,861,013 in the prior year.
- Total other income for the nine months ended September 30, 2025, was $322,772, a substantial improvement from other expenses of $1,628,516 in the prior year, primarily due to a decrease in inducement and finance expenses, and a favorable change in fair value of derivative liability.
- Successfully raised $750,000 in proceeds from convertible notes payable during the nine months ended September 30, 2025.
Negatives
- Generated no revenue from services for the three and nine months ended September 30, 2025.
- Maintains a significant accumulated deficit of $8,418,501 and a stockholders deficit of $3,310,908 as of September 30, 2025.
- The working capital deficit increased to $3,319,663 at September 30, 2025, from $2,378,145 at December 31, 2024.
- Cash on hand is critically low at $3,317 as of September 30, 2025.
- Net cash used in operating activities increased to $631,819 for the nine months ended September 30, 2025, from $523,983 for the same period in 2024.
- Disclosure controls and procedures over financial reporting were concluded to be not effective as of September 30, 2025.
- Incurred a loss on extinguishment of debt of $117,217 due to modification of convertible notes.
Risks
- Inadequate capital and barriers to raising additional capital or obtaining the financing needed to implement business plans.
- Failure to earn revenues or profits.
- Inadequate capital to continue business operations.
- Volatility or decline of the company's stock price.
- Potential fluctuation in quarterly results.
- Rapid and significant changes in markets.
- Litigation with or legal claims and allegations by outside parties.
- Insufficient revenues to cover operating costs.
- Substantial doubt about the company's ability to continue as a going concern within the twelve-month period subsequent to the date that these financial statements are issued.
- Ineffective disclosure controls and procedures over financial reporting.
Future Outlook
The company expects revenues from sales of planned products to begin during the fourth quarter of 2025, contingent on obtaining approximately $10,000,000 in funding, which is not assured. Operating expenses for all of 2025 are expected to exceed those of 2024, assuming capital is obtained, but actual expenses are uncertain due to funding challenges. Management's strategic plans include executing business operations more fully, seeking strategic acquisitions of healthcare technology, and exploring prospective partnership opportunities.
Management Comments
- "We are currently seeking to develop products and services through the use of cutting-edge technologies in the health care industry."
- "We do not expect to generate sufficient revenues and positive cash flows from operations to meet our current obligations."
- "We may seek to raise debt or equity-based capital at favorable terms, though such terms are not certain."
- "These factors create substantial doubt about the Company's ability to continue as a going concern within the twelve-month period subsequent to the date that these financial statements are issued."
- "Management's strategic plans include: Execute business operations more fully during the year ended December 31, 2025; Seek out strategic acquisitions of health care technology; and Explore prospective partnership opportunities."
- "We expect that revenues from sales of our planned products will begin during the fourth quarter of 2025, assuming we are able to obtain needed funding of approximately $10,000,000, of which there is no assurance."
- "We expect that our operating expenses for all of 2025 will be in excess of those incurred during the year ended December 31, 2024, should we be able to obtain needed capital."
Industry Context
Ludwig Enterprises is positioned in the rapidly evolving healthcare technology sector, specifically focusing on mRNA-based genetic markers for inflammatory diseases. This aligns with broader industry trends towards personalized medicine, early disease detection, and advanced diagnostics. The company's efforts to develop products for conditions like heart disease, diabetes, preeclampsia, cancer, and long COVID tap into significant unmet medical needs and large market opportunities, but also face intense competition and high regulatory hurdles characteristic of the biotech and health tech industries.
Comparison to Industry Standards
- Direct comparisons to specific comparable companies, projects, and results are not provided within the filing.
- The company is in a pre-revenue development stage, making direct performance comparisons challenging against established industry players.
- Its financial metrics, such as significant accumulated deficit and minimal cash, are typical of early-stage biotech companies but indicate a high-risk profile compared to mature, revenue-generating entities.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| Chief Operating Officer | NA | Jose Antonio Reyes | 2024-04-01 | Employment Offer Letter. |
| Chief Executive Officer | NA | Jose Antonio Reyes | 2024-09-01 | Named as CEO. |
| Chief Financial Officer | NA | Scott J. Silverman | 2023-11-15 | Appointed in conjunction with Financial Advisory Services Agreement. |
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Disclosure Controls and Procedures | Management concluded that disclosure controls and procedures over financial reporting were not effective as of September 30, 2025. | 2025-09-30 | Indicates a material weakness or significant deficiency in internal control over financial reporting, potentially affecting the reliability of financial reporting. |
| Internal Control Over Financial Reporting | No changes in internal control over financial reporting during the quarter ended September 30, 2025, that materially affected or are reasonably likely to materially affect internal control over financial reporting. | 2025-09-30 | While no changes occurred, the existing controls were deemed ineffective, implying ongoing issues. |
Legal Proceedings
- No pending legal or administrative proceedings.
Related Party Transactions
- Accrued fees payable to Thornhill Advisory Group, Inc. (owned by CFO Scott J. Silverman) of $71,375 as of September 30, 2025 ($56,375 as of December 31, 2024).
- Accrued fees payable to Jose Antonio Reyes (CEO) of $108,750 as of September 30, 2025 ($56,250 as of December 31, 2024).
- Issued a Promissory Note to former chief executive officer in December 2024 for $5,000, which was redeemed in May 2025.
- Issued a Promissory Note to current chief executive officer Jose Antonio Reyes on March 10, 2025, for $36,912, maturing September 30, 2025, with 8% interest.
- The CEO paid operating expenses of $15,247 on behalf of the company, with $7,058 repaid during the nine months ended September 30, 2025.
Stakeholder Impact
- Shareholders face significant dilution risk from convertible notes and potential future capital raises. The "going concern" warning indicates a high risk of business failure.
- Creditors, particularly holders of promissory and convertible notes, face extended maturity dates, indicating potential difficulty in repayment. The company's liquidity issues pose a risk to timely debt servicing.
- Employees and management may experience cash flow constraints, as evidenced by partially accrued compensation for key consultants and executives.
- Future product launch and partnerships are contingent on securing substantial funding, introducing uncertainty for potential customers and partners.
Next Steps
- Execute business operations more fully during the year ended December 31, 2025.
- Seek out strategic acquisitions of health care technology.
- Explore prospective partnership opportunities.
- Obtain approximately $10,000,000 in funding to enable product sales to begin in Q4 2025.
- Address the ineffectiveness of disclosure controls and procedures.
- Evaluate the impact of the Taxpayer Fairness and Growth Act of 2025 on financial statements, including deferred tax assets and liabilities, and recognize adjustments in the period of enactment.
Key Dates
| Date | Description |
|---|---|
| 2006-02-01 | Company incorporated in Nevada. |
| 2022-05-01 | Company's Articles of Incorporation authorized issuance of 7,000,000 shares of preferred stock. |
| 2022-12-01 | Company amended its articles of incorporation related to certain terms of its Series A convertible preferred stock, removing mandatory redemption and anti-dilution rights. |
| 2023-10-01 | Promissory notes issued between June 2012 and October 2023 had original maturity dates of September 30, 2025. |
| 2023-11-15 | Entered into Financial Advisory Services Agreement with Thornhill Advisory Group, Inc. and appointed Scott J. Silverman as CFO. |
| 2024-03-01 | Between March 2024 and November 2024, the Company entered into securities purchase agreements for convertible notes totaling $578,708. |
| 2024-03-01 | Recorded 2,080,000 shares of common stock issuable as inducements for extending 7 promissory notes to July 1, 2024. |
| 2024-04-01 | Jose Antonio Reyes signed Offer Letter for employment as Chief Operating Officer. |
| 2024-04-26 | U.S. Patent Application 18/705375 for mRNA Neuro Panel and Serotonin Assay lodged by Nova Mentis Life Science Corp. |
| 2024-07-01 | Entered into agreements with 16 noteholders, extending maturity on notes to October 1, 2024, and issuing warrants as inducement. |
| 2024-08-01 | Acquired patent pending for mRNA Neuro Panel and Serotonin Assay from Nova Mentis Life Science Corp. |
| 2024-09-01 | Mr. Reyes named Chief Executive Officer. |
| 2024-10-01 | Notes extended in July 2024 were further extended to April 2025. |
| 2024-10-01 | Dissolved subsidiaries mRNA for Life, Inc. and Precision Genomics, Inc. |
| 2024-12-01 | Issued a Promissory Note to former chief executive officer for $5,000. |
| 2024-12-31 | Closed Stock Purchase Agreement with Marijuana, Inc. for 100% ownership of Exousia Ai, Inc. |
| 2025-01-01 | Entered into securities purchase agreements with 2 individuals for promissory notes totaling $100,000. |
| 2025-02-05 | Issued 1,057,000 shares of common stock for marketing service. |
| 2025-03-10 | Issued a Promissory Note to current chief executive officer for $36,912. |
| 2025-04-01 | Between April and May 2025, entered into securities purchase agreements with 7 individuals for promissory notes totaling $650,000. |
| 2025-04-03 | Entered into Note Extension and Modification Agreements with 11 Noteholders, extending maturity dates to December 31, 2025, and modifying conversion features. |
| 2025-05-01 | Redeemed a Promissory Note with a principal balance of $100,000 and accrued interest of $12,603. |
| 2025-05-01 | Redeemed a promissory note with former chief executive officer for $5,000 and accrued interest of $165. |
| 2025-08-28 | Issued 1,000,000 shares of common stock for research and development costs. |
| 2025-09-30 | End of the current reporting period. |
| 2025-11-05 | Number of shares outstanding of Common Stock was 162,569,807. |
| 2025-11-12 | Date of filing of this Quarterly Report on Form 10-Q. |
| 2025-12-31 | Maturity date for all extended promissory notes. |
| 2025-12-31 | Purchaser Note from Exousia SPA due. |
| 2026-01-01 | Federal corporate income tax rate reduction from 21% to 19% effective for tax years beginning after this date. |
| 2026-12-15 | Effective date for public business entities for ASU 2024-03, ASC Subtopic Disaggregation of Income Statement Expenses. |
Recommendation
strong sellDespite a quarterly net income, the company's overall financial health is extremely poor, evidenced by minimal cash ($3,317), a substantial working capital deficit ($3.3 million), and an accumulated deficit ($8.4 million). The explicit "going concern" warning, coupled with the need for $10 million in unassured funding to launch products and the admission of ineffective disclosure controls, points to severe operational and financial instability. The stock is highly speculative, and the risks of further dilution or complete loss of investment are exceptionally high.
Keywords
healthcare technology, mRNA, genetic markers, inflammatory diseases, biotech, SEC filing, 10-Q, financial report, going concern, convertible notes, research and development
Disclaimer:The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.