10-Q: MDwerks, Inc. Reports Q1 2025 Results, Revenue Declines Amid Strategic Shifts

MDwerks, Inc. reports a decrease in revenue for Q1 2025, primarily due to lower liquor sales, but highlights progress in RF Specialties and new contracts for its Spirits Rapid Aging System.

Summary

• MDwerks, Inc. reported its Q1 2025 financial results, showing a net loss of $629,354.
• Revenue decreased to $513,930 from $684,660 in Q1 2024, mainly due to lower liquor sales volumes.
• Cost of sales was $381,398, compared to $389,841 in the same period last year.
• Operating expenses increased to $750,321 from $599,966, driven by higher professional fees, payroll costs, and stock-based compensation.
• The company completed the acquisitions of RF Specialties, LLC and Two Trees Beverage Co. in December 2023.
• Two Trees entered into two contracts for the deployment and license of its Spirits Rapid Aging System (SRAS).
• The company's cash position increased to $593,175 from $11,159 at the end of 2024, primarily due to financing activities.
• The company raised $1,584,000 in cash proceeds from the sale of common stock during the quarter.
• Management expresses substantial doubt about the company's ability to continue as a going concern without raising additional capital.
• The company appointed David Stephens as Chief Financial Officer, effective March 1, 2025.

Sentiment

Score: 3

Explanation: The document presents a mixed picture, with some positive developments (e.g., new contracts, improved cash position) offset by significant challenges (e.g., revenue decline, increased losses, going concern uncertainty). The overall sentiment is negative due to the company's financial struggles and dependence on raising additional capital.

Positives

• The company's cash position significantly improved, increasing to $593,175 from $11,159 at the end of 2024.
• The company secured $1,584,000 in cash proceeds from the sale of common stock.
• Two Trees entered into two contracts for the deployment and license of its Spirits Rapid Aging System (SRAS), expected to generate revenue in the second half of 2025.
• RF Specialties saw an increase in product and services revenues from progress made on its molecular sawdust drying system contract.

Negatives

• Q1 2025 revenue decreased to $513,930 from $684,660 in Q1 2024, primarily due to lower liquor sales volumes.
• Net loss for Q1 2025 was $629,354.
• Operating expenses increased to $750,321, driven by higher professional fees, payroll costs, and stock-based compensation.
• Management expresses substantial doubt about the company's ability to continue as a going concern without raising additional capital.

Risks

• The company's ability to continue as a going concern is dependent on raising additional capital.
• The company anticipates that its current cash and cash generated from financing activities will be insufficient to satisfy its liquidity requirements for the next 12 months.
• If the company is unable to obtain additional financing, it may be required to reduce the scope of its business development activities.
• The company has incurred operating losses since inception of $2,989,859.
• The company's disclosure controls and procedures were not effective as of March 31, 2025.

Future Outlook

The company expects to drive significant growth in revenue and gross profit in its Two Trees Distilling business from the new SRAS revenue stream going forward. The company anticipates that its current cash and cash generated from financing activities will be insufficient to satisfy its liquidity requirements for the next 12 months and requires additional funding to meet its ongoing obligations and to fund anticipated operating losses.

Management Comments

• Management has expressed substantial doubt about the company's ability to continue as a going concern.
• Management believes that it will be able to successfully execute its business plans, which includes third party financing and raising capital to meet the Company's future liquidity needs.

Industry Context

The company operates in the competitive alcoholic beverage and radio frequency technology industries. The report highlights the company's efforts to innovate with its rapid-aging system and molecular targeting technology, which could provide a competitive advantage. However, the company faces challenges in scaling its operations and securing additional funding.

Comparison to Industry Standards

• The document does not provide enough information to make a detailed comparison to industry standards.
• To assess the company's performance against industry benchmarks, we would need data on revenue growth, profitability, and key financial ratios for comparable companies in the alcoholic beverage and radio frequency technology sectors.
• Specific competitors in the alcoholic beverage industry include established players like Diageo, Pernod Ricard, and Brown-Forman, as well as smaller craft distilleries.
• In the radio frequency technology sector, comparable companies could include those specializing in industrial heating, drying, and other applications.

Management Changes

Related Party Transactions

• During the three months ended March 31, 2025, the Company received a total of $ 150,000 in proceeds from shareholders and repaid $ 55,500 of principal and $ 276 of accrued interest.
• As of March 31, 2025 and December 31, 2024, the balance owed on the advances from shareholders was $ 217,500 and $ 123,000 , respectively.

Stakeholder Impact

• Shareholders face the risk of dilution if the company raises additional capital through equity financing.
• Employees face uncertainty due to the company's going concern risk.
• Customers may be affected if the company is unable to continue providing its products and services.
• Creditors face the risk of non-payment if the company is unable to raise additional capital.

Next Steps

• The company needs to secure additional funding to continue its operations.
• The company needs to successfully deploy and monetize its Spirits Rapid Aging System (SRAS).
• The company needs to manage its operating expenses and improve its profitability.
• The company needs to improve its disclosure controls and procedures.

Key Dates

Keywords

MDwerks, financial results, Q1 2025, revenue, net loss, RF Specialties, Two Trees Beverage, Spirits Rapid Aging System, SRAS, going concern, capital raise