MDWerks Inc

Previous wording

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited interim condensed consolidated financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included in this Quarterly Report on Form 10-Q, as may be amended, supplemented or superseded from time to time by other reports we file with the SEC. All amounts in this report are in U.S. dollars, unless otherwise noted.

Current wording

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited interim condensed financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included in this Quarterly Report on Form 10-Q, as may be amended, supplemented or superseded from time to time by other reports we file with the SEC. All amounts in this report are in U.S. dollars, unless otherwise noted.

Previous wording

Throughout this Quarterly Report on Form 10-Q, references to “we,” “our,” “us,” the “Company,” or “MDwerks,” refer to MDwerks, Inc. and its consolidated subsidiaries.

Current wording

Throughout this Quarterly Report on Form 10-Q, references to “we,” “our,” “us,” the “Company,” or “MDwerks,” refer to MDwerks, Inc.

Previous wording

On December 8, 2023, we acquired Two Trees Beverage Co. and its subsidiaries (collectively, “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.

Current wording

On December 8, 2023, we acquired Two Trees Beverage Co. and its subsidiaries (“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.

Previous wording

Our results of operations for the three months ended March 31, 2024 include the operations of these business for the full quarter. The results of operations for the three months ended March 31, 2023 do not included any results from the acquired businesses.

Current wording

Our results of operations for the three and six months ended June 30, 2024 include the operations of these businesses for the full quarter. The results of operations for the three and six months ended June 30, 2023 do not include any results from the acquired businesses.

Previous wording

Revenue. Revenue for the three months ended March 31, 2024 was $684,660 compared to $0 for the three months ended March 31, 2023. The revenue is primarily attributable to liquor sales during the three months resulting from the acquisition of Two Trees and product and service income resulting from the acquisition of RFS. We did not earn any revenues for the three months ended March 31, 2023.

Current wording

Revenue. Revenue for the three months ended June 30, 2024 was $271,894 compared to $0 for the three months ended June 30, 2023. The revenue is primarily attributable to liquor sales during the three months resulting from the acquisition of Two Trees and product and service income resulting from the acquisition of RF Specialties. We did not earn any revenues for the three months ended June 30, 2023.

Previous wording

Cost of Sales. Cost of sales for the three months ended March 31, 2024 was $180,445 compared to $0 for three months ended March 31, 2023. The cost of sales is primarily attributable to liquor sales during the period resulting from the acquisition of Two Trees and product and service income resulting from the acquisition of RFS. We did not incur any cost of sales for the three months ended March 31, 2023.

Current wording

Cost of Sales. Cost of sales for the three months ended June 30, 2024 was $343,408 compared to $0 for three months ended June 30, 2023. The cost of sales is primarily attributable to liquor sales during the period resulting from the acquisition of Two Trees, and labor costs related to the product and service income resulting from the acquisition of RF Specialties. We did not incur any cost of sales for the three months ended June 30, 2023.

Previous wording

Operating Expenses. The Company reported operating expenses of $809,362 consisting primarily of legal, accounting, payroll, and general business related expenses for the three months ended March 31, 2024 compared to $41,451 for the three months ended March 31, 2023. The $767,911 increase in operating expenses was primarily attributable to increased legal, payroll expenses and accounting fees related to our acquisitions that occurred in December 2023, our public company reporting obligations associated with this acquisitions, and increased audit fees from the acquisitions closing in December 2023.

Current wording

Operating Expenses. The Company reported operating expenses of $630,044 consisting primarily of legal, accounting, payroll, and general business related expenses for the three months ended June 30, 2024 compared to $64,076 for the three months ended June 30, 2023. The $565,968 increase in operating expenses was primarily attributable to increased legal, payroll expenses and accounting fees related to our acquisitions that occurred in December 2023, our public company reporting obligations associated with this acquisitions, and increased audit fees from the acquisitions closing in December 2023. Operating expenses included depreciation and amortization expense of $75,164 for the three months ended June 30, 2024.

Previous wording

As of March 31, 2024, and December 31, 2023, we had $162,894 and $115,111 cash. We anticipate that our current cash and cash generated from financing activities will be insufficient to satisfy our liquidity requirements for the next 12 months. As of March 31, 2024, the Company has incurred operating losses since inception of $1,041,777. At March 31, 2024, the Company had a working capital deficit of $492,845.

Current wording

As of June 30, 2024, and December 31, 2023, we had $47,650 and $115,111 of cash, respectively. We anticipate that our current cash and cash generated from financing activities will be insufficient to satisfy our liquidity requirements for the next 12 months. As of June 30, 2024, the Company has incurred operating losses since inception of $1,805,892. At June 30, 2024, the Company had a working capital deficit of $1,181,970.

Previous wording

We expect to incur marketing, professional, and administrative expenses as well expenses associated with maintaining our filings with the Securities and Exchange Commission (the “SEC”). We will require additional funds during this time and will seek to raise the necessary additional capital. If we are unable to obtain additional financing, we may be required to reduce the scope of our business development activities, which could harm our business plans, financial condition and operating results. Additional funding may not be available on favorable terms, if at all. The Company intends to continue to fund its business by way of equity or debt financing and advances from related parties. Any inability to raise capital as needed would have a material adverse effect on our business, financial condition and results of operations.

Current wording

We expect to incur marketing, professional, and administrative expenses as well expenses associated with maintaining our filings with the Commission. We will require additional funds during this time and will seek to raise the necessary additional capital. If we are unable to obtain additional financing, we may be required to reduce the scope of our business development activities, which could harm our business plans, financial condition and operating results. Additional funding may not be available on favorable terms, if at all. The Company intends to continue to fund its business by way of equity or debt financing and advances from related parties. Any inability to raise capital as needed would have a material adverse effect on our business, financial condition and results of operations.

Previous wording

Cash Used in Operating Activities. Net cash used in operating activities for the three months ended March 31, 2024, and 2023, were $280,931 and $58,754, respectively. The increase was attributable to an increase in net loss compared to the prior year, and an increase in accounts receivable compared to December 31, 2023 from the timing of collections on the Company’s revenue.

Current wording

Cash Used in Operating Activities. Net cash used in operating activities for the six months ended June 30, 2024, and 2023, were $458,335 and $138,044. The increase was attributable to an increase in net loss compared to the prior year as a result of increased operating expenses associated with the new businesses as described above.

Previous wording

Cash Used from Investing Activities. Cash used for the purchase of property and equipment for the three months ended March 31, 2024, and 2023 was $8,820 and $0, respectively.

Current wording

Cash Used from Investing Activities. Cash used in investing activities for the six months ended June 30, 2024, and 2023 was $8,820 and $107,500, respectively, including purchases of equipment of $8,820 and $88,000, respectively, and purchases of intangible assets of $0 and $19,500, respectively.

Previous wording

Cash Provided by Financing Activities. Net cash provided by financing activities for the three months ended March 31, 2024, and 2023 was $337,534 and $76,267, respectively. The cash provided by financing activities for the three months ended March 31, 2024 was attributable to proceeds from subscriptions agreements of $390,000, proceeds from notes payable of $25,000, partially offset by repayments of notes payable of $77,466. The cash provided by financing activities for the three months ended March 31, 2023 was attributable to proceeds from sale of common stock of $85,598, partially offset by repayment of advances of $9,331.

Current wording

Cash Provided by Financing Activities. Net cash provided by financing activities for the six months ended June 30, 2024, and 2023 was $399,694 and $226,767, respectively. The cash provided by financing activities for the six months ended June 30, 2024 was attributable to proceeds from subscriptions agreements of $390,000, proceeds from notes payable of $125,000, partially offset by repayments of notes payable of $90,306. The cash provided by financing activities for the six months ended June 30, 2023 was attributable to proceeds from sale of common stock of $185,598, proceeds from advances of $50,500, partially offset by repayment of advances of $9,331.

Previous wording

Revenue Recognition- Net sales from Two Trees include liquor and related products, less excise taxes and customer programs and incentives. Sales from RFS 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.

Current wording

Net sales from Two Trees include liquor and related products, less excise taxes and customer programs and incentives. Sales from RFS 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 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.

Previous wording

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, which include sales to the Oregon Liquor Control Commission, 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.

Current wording

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, which include sales to the Oregon Liquor Control Commission, 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 over the length of the contract. The Company’s contracts typically have a single performance obligation, and do not contain a significant financing component.