10-Q: MDwerks Q2 2026: Revenue Up, But Losses Persist

MDwerks, Inc. reported increased revenue for Q2 2026, but continued net losses and a substantial working capital deficit raise concerns about its going concern status.

Summary

• MDwerks, Inc. reported revenue of $524,090 for the three months ended June 30, 2026, an increase from $420,609 in the prior year period.
• For the six months ended June 30, 2026, revenue was $958,177, up from $934,539 in the same period last year.
• Despite revenue growth, the company incurred a net loss of $529,872 for the three months ended June 30, 2026, and $1,376,904 for the six months ended June 30, 2026.
• The company ended the quarter with $13,258 in cash and cash equivalents, a significant decrease from $211,948 at the end of 2025.
• MDwerks has a working capital deficit of $2,082,091 as of June 30, 2026, and management has expressed substantial doubt about its ability to continue as a going concern.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a negative sentiment due to the company's continued net losses, significant working capital deficit, and explicit statement of substantial doubt about its ability to continue as a going concern, despite some revenue growth.

Positives

• Revenue increased by approximately 24.6% to $524,090 for the three months ended June 30, 2026, compared to $420,609 in the prior year period.
• The RF Specialties segment saw a revenue increase of approximately $99,479, driven by contracted work on the Molecular Sawdust Drying (MSD) system.
• The Two Trees business segment revenue increased by $4,002, primarily due to higher bulk alcohol sales.
• Gross profit improved by $353,713 for the three months ended June 30, 2026, compared to the prior year period, largely due to a favorable change in revenue mix for the RFS business.
• Operating expenses decreased by $461,197 for the three months ended June 30, 2026, compared to the prior year period, due to cost-saving initiatives.

Negatives

• The company reported a net loss of $529,872 for the three months ended June 30, 2026, and $1,376,904 for the six months ended June 30, 2026.
• Cash and cash equivalents decreased significantly from $211,948 at December 31, 2025, to $13,258 at June 30, 2026.
• The company has a working capital deficit of $2,082,091 as of June 30, 2026.
• Management has expressed substantial doubt about the company's ability to continue as a going concern.
• The Two Trees Distilling segment reported a gross loss of $57,044 for the three months ended June 30, 2026, impacted by an inventory impairment charge of $99,588.

Risks

• The company's ability to continue as a going concern is dependent on raising additional capital.
• Failure to raise sufficient capital could lead to a suspension or cessation of business plan implementation.
• The company anticipates that current cash and cash generated from financing activities will be insufficient to satisfy liquidity requirements for the next 12 months.
• If additional financing is not obtained, the company may be required to reduce the scope of its business development activities.
• The company has an accumulated deficit of $7,535,399 as of June 30, 2026.

Future Outlook

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. Management believes that raising additional capital is crucial to fund its initial business plan and achieve profitable operations, and failure to do so may require a reduction in business development activities or a cessation of operations.

Management Comments

• Management has expressed substantial doubt about the Company's ability to continue as a going concern.
• We require additional funding to meet our ongoing obligations and to fund anticipated operating losses.
• 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.

Industry Context

StockSavvy.ai notes that MDwerks operates in two distinct sectors: RF technology applications (including industrial processes and spirits aging) and craft spirits production. The company's focus on proprietary technology like the Spirits Rapid Aging System (SRAS) positions it within the growing market for innovative beverage production and sustainable industrial solutions. The proposed joint venture with Rex Lumber Company indicates a strategic move to leverage its RF technology in the lumber industry, a sector seeking efficiency and sustainability improvements.

Comparison to Industry Standards

• The company's revenue growth in the RF Specialties segment, particularly related to the Molecular Sawdust Drying System, aligns with industry trends towards sustainable energy solutions and efficient resource utilization.
• The Two Trees Distilling segment's use of rapid aging technology competes with traditional, time-intensive aging processes in the spirits industry, aiming to offer comparable quality with reduced lead times and costs.
• The company's reported net loss and going concern issues are a significant concern when compared to established players in both the industrial technology and spirits manufacturing sectors, which typically demonstrate greater financial stability.
• The company's reliance on related party financing and convertible notes at high interest rates (20%) is less common among mature companies in these industries.

Management Changes

Legal Proceedings

• The company believes the ultimate resolution of any current legal proceedings will not have a material adverse effect on its financial position, results of operations, or cash flows.

Related Party Transactions

• The company entered into three convertible notes on April 15, 2026, with two members of the Board of Directors and one family member of a Director, for an aggregate principal amount of $145,000.
• Proceeds of $115,000 were received in cash, and $30,000 of accounts payable owed to a Director was settled.
• Advances from shareholders totaling $176,500 were owed as of June 30, 2026, with stated interest rates ranging from 10% to 12%.

Stakeholder Impact

• Shareholders face continued dilution risk due to potential future capital raises and the company's ongoing losses.
• Creditors and lenders may be concerned about the company's ability to meet its debt obligations given the going concern warning.
• Employees may face uncertainty regarding job security due to the company's financial precariousness.
• Suppliers may require stricter payment terms or upfront payments due to concerns about the company's financial health.

Next Steps

• Finalize definitive agreements for the proposed joint venture with Rex Lumber Company.
• Continue to seek additional capital through equity or debt financing and advances from related parties.
• Deploy SRAS units as per the contracts with two companies, with installations anticipated in Q4 2026 and Q3 2026.
• Retain exclusivity with the international spirits investment fund by deploying at least one SRAS unit annually in each of the three designated countries.

Key Dates

Recommendation

The company's severe liquidity issues, significant net losses, and explicit statement of substantial doubt about its ability to continue as a going concern, despite some revenue growth, present a high-risk investment profile. The need for substantial future financing on potentially unfavorable terms, coupled with ongoing operational losses, suggests a strong sell recommendation.

Keywords

MDwerks, RF Specialties, Two Trees Distilling, Spirits Rapid Aging System, Quarterly Report, Form 10-Q, Revenue, Net Loss