10-Q: MDWerks Q1 2026 Results Show Revenue Decline, Focus on SRAS Growth

MDWerks, Inc. reported a decrease in revenue for Q1 2026 compared to the prior year, driven by a decline in RF Specialties segment, while Two Trees Distilling saw an increase, with a strategic focus on expanding its Spirits Rapid Aging System (SRAS) business model.

Summary

• MDWerks, Inc. reported total revenues of $434,087 for the three months ended March 31, 2026, a decrease from $513,930 in the same period of 2025.
• The Two Trees Distilling segment saw revenue increase to $313,739 from $252,837, while the RF Specialties segment revenue decreased to $120,348 from $261,093.
• Cost of sales increased to $570,350 from $381,398, resulting in a gross loss of $136,263 for Q1 2026, compared to a gross profit of $132,532 in Q1 2025.
• Operating expenses decreased to $701,549 from $750,321, primarily due to lower selling, general, and administrative expenses.
• The company reported a net loss of $847,032 for Q1 2026, an increase from $629,354 in Q1 2025.
• Cash reserves decreased to $95,754 from $211,948, and the company has a working capital deficit of $1,782,901, raising substantial doubt about its ability to continue as a going concern.
• The company raised $450,000 in cash proceeds from the sale of common stock in Q1 2026.
• MDWerks is focusing on its Whiskey-as-a-Service (WaaS) model and has secured contracts for its Spirits Rapid Aging System (SRAS) with deployment expected in Q2 and Q3 2026.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this filing negatively due to the significant revenue decline, increased net loss, and substantial doubt about the company's ability to continue as a going concern, despite some positive developments in its SRAS business model.

Positives

• Revenue from the Two Trees Distilling segment increased by $60,902, driven by higher bulk alcohol sales.
• The company launched its Whiskey-as-a-Service (WaaS) business model, offering flexible technology licenses for its SRAS.
• New contracts for SRAS construction and deployment are expected to drive significant future revenue growth.
• The company completed the installation of a higher capacity SRAS at its Two Trees facility to increase production.
• The company raised $450,000 in cash proceeds from the sale of common stock during the quarter.

Negatives

• Total revenue decreased by $79,843 to $434,087 in Q1 2026 compared to Q1 2025.
• The RF Specialties segment revenue declined by $140,745, attributed to nearing completion of the MSD project and lower service revenue.
• Cost of sales increased significantly by $188,952, leading to a gross loss of $136,263.
• Net loss widened to $847,032 from $629,354.
• Cash reserves decreased by $116,194 to $95,754.
• The company has a working capital deficit of $1,782,901.
• Management has expressed substantial doubt about the company's ability to continue as a going concern.
• Disclosure controls and procedures were found to be not effective.

Risks

• The company's ability to continue as a going concern is dependent on raising additional capital.
• Failure to obtain additional financing may require the company to reduce the scope of its business development activities.
• Additional funding may not be available on favorable terms, if at all.
• The company's disclosure controls and procedures were not effective as of March 31, 2026.
• The company is subject to risks associated with the implementation of its business plans, including third-party financing and capital raising.

Future Outlook

The company expects to drive significant growth in revenue and gross profit from its new Whiskey-as-a-Service (WaaS) business model, with SRAS units anticipated to be deployed in the second and third quarters of 2026. Management anticipates needing additional capital to fund its business plans and operations over the next 12 months.

Management Comments

• "We expect to drive significant growth in revenue and gross profit in our Two Trees Distilling business from this new revenue stream going forward."
• "Management has expressed substantial doubt about our ability to continue as a going concern."
• "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."

Industry Context

StockSavvy.ai notes that MDWerks' focus on the Spirits Rapid Aging System (SRAS) and its Whiskey-as-a-Service (WaaS) model aligns with trends in the beverage industry seeking efficiency and faster market entry. However, the company's financial performance and going concern issues present significant challenges.

Corporate Governance

Related Party Transactions

• Advances from shareholders totaling $167,500 as of March 31, 2026, with interest rates ranging from 10% to 12%.

Stakeholder Impact

• Shareholders: Potential dilution from future equity raises, ongoing concern about the company's going concern status.
• Creditors: Increased risk due to the company's working capital deficit and going concern issues.
• Employees: Uncertainty regarding the company's future operations and potential impact on employment.
• Management: Responsible for addressing disclosure control deficiencies and securing necessary financing.

Next Steps

• Deploy SRAS units for new WaaS contracts in Q2 and Q3 2026.
• Seek additional capital to fund business plans and operations.
• Continue to develop and market RF Specialties applications.
• Continue to produce and market aged alcoholic beverages through Two Trees Distilling.

Key Dates

Recommendation

While the company shows promise with its SRAS technology and WaaS model, the significant financial challenges, including a revenue decline, increased losses, and going concern doubts, warrant a cautious 'hold' recommendation. Investors should monitor future financing efforts and the execution of the SRAS deployment strategy.

Keywords

MDWerks, Form 10-Q, Quarterly Report, RF Specialties, Two Trees Distilling, Spirits Rapid Aging System, Whiskey-as-a-Service, Financial Results