MDWerks, Inc.
For the period ended Mar 31, 2025. Filed May 13, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 13, 2025
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-14.
0001493152-24-045414
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-13.
0001641172-25-010009
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 40 previous paragraphs and 47 current paragraphs.
15 unchanged; 13 reworded; 19 added; 12 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 0 previous and 2 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (19)
Current report
MDwerks, Inc., a Delaware corporation, was previously focused on effecting a “reverse merger,” capital exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more unrelated businesses (a “Business Combination”) that would benefit from our public reporting status. In December 2023, we completed the acquisition of RF Specialties, LLC (“RFS”) and Two Trees Beverage Co. and its subsidiaries (“Two Trees”).
Current report
Our wholly owned subsidiary, RFS, is a technology company pioneering the development of innovative energy wave solutions for industrial and other commercial enterprises. Our expertise in radio wave technologies and microwave technologies has led to multiple breakthroughs with applications both industrial and commercial. Our patented energy wave technology introduces a revolutionary approach to industrial processes by specific molecular targeting, which can be applied at precise and multiple locations in a system in ways that conventional single point heat sources cannot, resulting in improved efficiency, higher quality, and reduced processing time.
Current report
Our wholly-owned subsidiary, Two Trees Beverage Company, utilizes our Spirits Rapid Aging System, validating the use of our patented energy wave technology within the premium craft spirits industry. Our proprietary and patented molecular targeting system swiftly and sustainably transforms distillate to maturity, delivering traditional flavors in a fraction of the time with greatly reduced environmental impact and cost. Precision engineered to match traditional aging flavors and aromas, it has been used to produce over 50 SKUs and many award-winning products.
Current report
Recent Developments
Current report
RF Specialties, Inc. Acquisition
Current report
On January 19, 2023, we entered into an Exchange Agreement (the “Exchange Agreement”) with RF Specialties, LLC (“RFS”) and Keith Mort, as the sole member of RFS. Pursuant to the terms of the Exchange Agreement, we agreed to acquire from Mr. Mort, and Mr. Mort agreed to sell to us, 100% of the equity interests and membership interests of RFS, in exchange for the issuance to Mr. Mort of 7,500,000 shares of our common stock (the “Exchange”). Immediately following the Exchange, RFS became our wholly owned subsidiary.
Current report
Two Trees Acquisition
Current report
On February 13, 2023, we entered into a Merger Agreement (the “Merger Agreement”) with MD-TT Merger Sub, Inc., a wholly owned subsidiary (“Merger Sub”) and Two Trees Beverage Co. (“Two Trees”). In consideration of the Merger Agreement, at the effective time of the Merger, each of the holders of Two Trees stock, subject to certain exceptions set forth in the Merger Agreement, has the right to convert all of the shares of Two Trees stock into a total of 60,000,000 shares of our common stock, which was apportioned between the Two Trees stockholders, pro rata, based on the number of shares of Two Trees stock held by each of the Two Trees stockholders as of the closing of the Merger (the “Merger Consideration”). Immediately following the Exchange, Two Trees became our wholly owned subsidiary.
Current report
Appointment of Chief Financial Officer
Current report
On March 10, 2015, we appointed David Stephens as our Chief Financial Officer, effective March 1, 2025. We entered into an employment agreement with Mr. Stephens for a term of three years with the following compensation terms:
Current report
Two New Contracts
Current report
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.
Current report
Asset Purchase Agreement
Current report
On January 27, 2025, Two Trees (the “Buyer”) and Brown Water Bourbon Xchange, LLC, a Kentucky limited liability company (the “Seller”) (collectively the “Parties”) entered into an Asset Purchase Agreement (the “Agreement”). According to the terms of the Agreement, the Seller sold to the Buyer 680 barrels of whiskey in exchange for 5,000,000 restricted shares of Common Stock of the Company (the “Shares”). On the same day, the Buyer and Seller closed the transaction.
Current report
Revenue. Revenue for the three months ended March 31, 2025 was $513,930 compared to $684,660 for the three months ended March 31, 2024. The $170,730 decrease in revenue was primarily attributable to decreased liquor sale volumes in the current period primarily from lower bulk alcohol sales, partially offset by an increase in product and services revenues from RF Specialties from progress made on its molecular sawdust drying system contract.
Current report
In February 2025, the Company executed contracts with two customers related to the lease of an aggregate of three SRAS that are expected to begin producing revenue to the Company in the second half of 2025. The Company began building the machines for these customers in the first quarter, and we expect to drive significant growth in revenue and gross profit in our Two Trees Distilling business from this new revenue stream going forward.
Current report
Cost of Sales. Cost of sales for the three months ended March 31, 2025 was $381,398 compared to $389,841 for three months ended March 31, 2024. Cost of sales for the Company’s Two Trees Distilling operations was $168,715 in 2025 compared to $287,679 in 2024, with the decline driven by volume decreases described above. The Company’s RF Specialties business incurred costs of sales of $212,683 in 2025 compared to $102,162 in 2024. The increase is due to the costs associated with the molecular sawdust drying module contract ongoing since November 2024.
Current report
Cash Used from Investing Activities. Cash used in investing activities for the three months ended March 31, 2025 and 2024 was $604,377 and $8,820, respectively, related to purchases of equipment in developing its SRAS machines for its customer, and a new system for the Company’s own use.
Current report
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (DISE), requiring additional disclosure of the nature of expenses included in the income statement. The new standard requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. The amendments in this update are effective for annual periods beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. We are currently evaluating the impact of our pending adoption of this standard on our consolidated financial statements.
Removed paragraphs (12)
Previous report
We completed two acquisitions in December 2023 as follows:
Previous report
Our results of operations for the three and nine months ended September 30, 2024 include the operations of these businesses for the full quarter. The results of operations for the three and nine months ended September 30, 2023 do not include any results from the acquired businesses.
Previous report
The Company’s results of operations for the three months ended September 30, 2024 include the results of Two Trees since the acquisition date of December 8, 2023, and include the results of RFS from the acquisition date of December 27, 2023.
Previous report
Revenue. Revenue for the three months ended September 30, 2024 was $1,058,707 compared to $0 for the three months ended September 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 September 30, 2023.
Previous report
Cost of Sales. Cost of sales for the three months ended September 30, 2024 was $325,839 compared to $0 for three months ended September 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 September 30, 2023.
Previous report
Nine Months Ended September 30, 2024, compared to Nine Months Ended September 30, 2023
Previous report
The Company’s results of operations for the nine months ended September 30, 2024 include the results of Two Trees since the acquisition date of December 8, 2023, and include the results of RFS from the acquisition date of December 27, 2023.
Previous report
Revenue. Revenue for the nine months ended September 30, 2024 was $2,015,261 compared to $0 for the nine months ended September 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 nine months ended September 30, 2023.
Previous report
Cost of Sales. Cost of sales for the nine months ended September 30, 2024 was $1,059,088 compared to $0 for nine months ended September 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 nine months ended September 30, 2023.
Previous report
Operating Expenses. The Company reported operating expenses of $1,799,948 consisting primarily of legal, accounting, payroll, and general business-related expenses for the nine months ended September 30, 2024 compared to $234,659 for the nine months ended September 30, 2023. The $1,565,289 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 $212,063 for the nine months ended September 30, 2024.
Previous report
Total Other Expenses. Total other expense was $65,705 for the nine months ended September 30, 2024 compared to other income of $158,947 for the nine months ended September 30, 2023. Other expense for the nine months ended September 30, 2024 primarily consisted of $54,000 of losses on disposal of assets, interest expense of $17,405 and interest income of $5,700. Other expense for the nine months ended September 30, 2023 consisted of $168,855 of gains on sale of assets, and interest expense of $9,908.
Previous report
Cash Used from Investing Activities. Cash used in investing activities for the nine months ended September 30, 2024, and 2023 was $6,990 and $82,500, respectively, including purchases of equipment of $6,990 and $88,000, respectively, and purchases of intangible assets of $0 and $19,500, respectively. For the nine months ended September 30, 202, cash used in investing activities also included proceeds from the sale of equipment of $100,000, partially offset by payments on loans receivable of $75,000.
Reworded paragraphs (13)
Previous wording
On December 27, 2023, we acquired the operations of RF Specialties, LLC (“RFS”). RFS is an innovative company pushing the boundaries of sustainable Radio Frequency applications. For over 12 years RFS has addressed companies’ most pressing challenges by implementing automated Radio Frequency Technology in a sustainable way reducing energy costs and increasing speed to market when compared to traditional methods. By bringing Radio Frequency applications to market RFS has successfully elevated a wide range of industries including structural engineering, food & beverage, and manufacturing.
Current wording
RFS is an innovative company pushing the boundaries of sustainable Radio Frequency applications. For over 13 years RFS has addressed companies’ most pressing challenges by implementing automated Radio Frequency Technology in a sustainable way reducing energy costs and increasing speed to market when compared to traditional methods. By bringing radio frequency applications to market, RFS has successfully elevated a wide range of industries including structural engineering, food & beverage, and manufacturing.
Previous 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.
Current wording
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
Operating Expenses. The Company reported operating expenses of $569,938 consisting primarily of legal, accounting, payroll, and general business related expenses for the three months ended September 30, 2024 compared to $129,132 for the three months ended September 30, 2023. The $440,806 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 increase in our business size from the acquisitions closing in December 2023. Operating expenses included depreciation and amortization expense of $58,969 for the three months ended September 30, 2024.
Current wording
Operating Expenses. We reported operating expenses of $750,321 consisting primarily of legal, accounting, payroll, and general business related expenses for the three months ended March 31, 2025 compared to $599,966 for the three months ended March 31, 2024. The $150,355 increase in operating expenses was primarily attributable to increased professional fees as the Company’s reporting obligations increased with the acquisitions, payroll costs from new officer and director contracts, increased stock-based compensation of $66,322 from those new contracts, partially offset by decreases in royalty expense from lower sales volumes. Operating expenses included depreciation and amortization expense of $72,607 and $77,930 for the three months ended March 31, 2025 and 2024, respectively.
Previous wording
Total Other Expenses. Total other expense was $5,906 for the three months ended September 30, 2024 compared to $164,623 for the three months ended September 30, 2023. Other expense for the three months ended September 30, 2024 primarily consisted of interest expense of $7,806 and interest income of $1,900. Other income for the three months ended September 30, 2023 consisted of interest expense of $4,232 and $168,855 of gain on disposal of assets.
Current wording
Total Other Expenses. Total other expense was $11,565 for the three months ended March 31, 2025 compared to $2,758 for the three months ended March 31, 2024. Other expense for the three months ended March 31, 2025 primarily consisted of interest expense of $11,765 and interest income of $200. Other income for the three months ended March 31, 2024 consisted of $5,600 offset by interest expense of $2,842.
Previous wording
As of September 30, 2024, and December 31, 2023, we had $62,478 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 September 30, 2024, the Company has incurred operating losses since inception of $1,648,868. At September 30, 2024, the Company had a working capital deficit of $762,357.
Current wording
As of March 31, 2025, and December 31, 2024, we had $593,175 and $11,159 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 March 31, 2025, we have incurred operating losses since inception of $2,989,859. At March 31, 2025, we had working capital of $222,164.
Previous wording
We believe that if we do not raise additional capital over the next 12 months, we may be required to suspend or cease the implementation of our business plans. The Company requires additional funding to meet its ongoing obligations and to fund anticipated operating losses. Management has expressed substantial doubt about our ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on raising capital to fund its initial business plan and ultimately to attain profitable operations. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.
Current wording
We believe that if we do not raise additional capital over the next 12 months, we may be required to suspend or cease the implementation of our business plans. We require additional funding to meet our ongoing obligations and to fund anticipated operating losses. Management has expressed substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent on raising capital to fund our initial business plan and ultimately to attain profitable operations. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.
Previous 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.
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. During the three months ended, we raised $1,584,000 in cash proceeds from the sale of common stock. 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. We intend to continue to fund our 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 nine months ended September 30, 2024, and 2023, were $662,693 and $266,815. 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.
Current wording
Cash Used in Operating Activities. Net cash used in operating activities for the three months ended March 31, 2025 and 2024 were $421,316 and $280,931. 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 Provided by Financing Activities. Net cash provided by financing activities for the nine months ended September 30, 2024, and 2023 was $617,050 and $491,648, respectively. The cash provided by financing activities for the nine months ended September 30, 2024 was attributable to proceeds from subscriptions agreements of $640,000, proceeds from related party notes payable of $120,500, partially offset by repayments of notes payable of $143,450. The cash provided by financing activities for the nine months ended September 30, 2023 was attributable to proceeds from sale of common stock of $392,349, proceeds from advances of $118,748, partially offset by repayment of advances of $19,449.
Current wording
Cash Provided by Financing Activities. Net cash provided by financing activities for the three months ended March 31, 2025 and 2024 was $1,607,709 and $337,534, respectively. The cash provided by financing activities for the three months ended March 31, 2025 was attributable to proceeds from the sale of common stock of $1,434,000, including subscription payable of $150,000, proceeds from related party notes payable of $150,000, partially offset by repayments of notes payable of $126,291. 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.
Previous wording
The Company has implemented all new accounting standards that are in effect and that may impact its financial statements and does not believe that there are any other new accounting standards that have been issued that might have a material impact on its financial position or results of operations.
Current wording
We have implemented all new accounting standards that are in effect and that may impact our financial statements and do not believe that there are any other new accounting standards that have been issued that might have a material impact on its financial position or results of operations.
Previous 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.
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. We recognize 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 over the length of the contract. The Company’s contracts typically have a single performance obligation, and do not contain a significant financing component.
Current wording
We recognize 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, we recognize 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 our radio frequency applications, we recognize revenue as the services are provided to the customer over the length of the contract. Our contracts typically have a single performance obligation, and do not contain a significant financing component.
Previous wording
Goodwill- Goodwill represents the excess of acquisition cost over the fair value of the net tangible and intangible assets acquired. Goodwill is not amortized and is subject to annual impairment testing on or between annual tests if an event or change in circumstance occurs that would more likely than not reduce the fair value of a reporting unit below its carrying value. In testing for goodwill impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events and circumstances, the Company concludes that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, it can conclude the assessment. If the Company concludes otherwise, the Company is required to perform a quantitative analysis to determine the amount of impairment. A quantitative analysis is performed at the reporting unit level by comparing the estimated fair value of a reporting unit with its respective carrying value to determine the amount of impairment, if any. The Company has determined that it has one reporting unit.
Current wording
Goodwill- Goodwill represents the excess of acquisition cost over the fair value of the net tangible and intangible assets acquired. Goodwill is not amortized and is subject to annual impairment testing on or between annual tests if an event or change in circumstance occurs that would more likely than not reduce the fair value of a reporting unit below its carrying value. In testing for goodwill impairment, we have the option to first assess qualitative factors to determine whether the existence of events or circumstances lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events and circumstances, we conclude that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, it can conclude the assessment. If we conclude otherwise, we are required to perform a quantitative analysis to determine the amount of impairment. A quantitative analysis is performed at the reporting unit level by comparing the estimated fair value of a reporting unit with its respective carrying value to determine the amount of impairment, if any. We have determined that we have two reporting units.