MDWerks, Inc.
For the period ended Jun 30, 2026. Filed Aug 19, 2026.
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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.
Jun 30, 2026 · Filed Aug 19, 2026
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-15.
0001493152-26-023433
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-19.
0001493152-26-039150
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 52 previous paragraphs and 74 current paragraphs.
39 unchanged; 6 reworded; 29 added; 7 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 1 previous and 1 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 (29)
Current report
Non-Binding Letter of Intent for Joint Venture
Current report
On August 3, 2026, RF Specialties, signed a non-binding Letter of Intent with Rex Lumber Company (“Rex Lumber”) to form a proposed joint venture focused on the development, deployment, and commercialization of radio frequency-based solutions for the lumber and broader wood-products industry.
Current report
The proposed joint venture would focus on utilizing our extensive IP portfolio and trade secrets for radio frequency technology applications including molecular sawdust drying, molecular wood-chip drying, board straightening, extraction systems for compounds such as turpentine and furfural, and future product development for the lumber industry. The proposed joint venture is expected to pursue revenue opportunities from system sales, deployments, royalties, services, and broader commercial adoption across the lumber market.
Current report
Under the LOI, RF Specialties is expected to hold a 51% ownership interest in the joint venture and Rex Lumber is expected to hold a 49% ownership interest, with governance and other key terms to be finalized in definitive agreements.
Current report
RF Specialties is expected to contribute relevant radio frequency intellectual property, an exclusive license for lumber and wood-product applications, engineering and technical leadership, procurement and manufacturing oversight, and facility support from its Mills River, North Carolina location.
Current report
Rex Lumber is expected to contribute sales leadership, distribution and market deployment capabilities, strategic commercial support, and a substantial multi-million-dollar initial capital investment to support design, manufacturing, engineering expansion, technician hiring, and commercialization efforts.
Current report
The LOI also provides that Rex Lumber may designate an individual to serve on the Board of Directors of the Company to represent RF-REX Co and the Company’s lumber industry strategy, subject to applicable corporate approvals and governing documents.
Current report
The LOI is non-binding and is intended solely as a framework for the negotiation of definitive agreements. Any final transaction will remain subject to the execution of such agreements, applicable approvals, and customary closing conditions.
Current report
Three and Six Months Ended June 30, 2026 Compared to 2025
Current report
Revenue.
Current report
Revenue for the six months ended June 30, 2026 was $958,177 compared to $934,539 for the six months ended June 30, 2025. Revenue of $567,307 for six months ending June 30, 2026 is attributable to the Two Trees business, compared to $502,403 in 2025, and $390,870 of revenue for six months ending June 30, 2026 attributable to product and service income from RFS, compared to $432,136 in 2025. The $64,904 increase revenue in the Two Trees business was primarily attributable to increased bulk alcohol sales in the current period partially offset by lower Two Trees brand sales. The $41,266 decrease in sales of RF Specialties related to lower revenue recognition related to the MSDS milestone recognition and lower labor revenue from service calls to customers, partially offset by increase installation service revenue on the MSDS.
Current report
Cost of Sales.
Current report
Cost of sales for the three months ended June 30, 2026 was $451,674 compared to $701,906 for three months ended June 30, 2025. Cost of sales for the Company’s Two Trees Distilling operations was $310,612 in 2026 compared to $220,638 in 2025, with the increase driven primarily by an impairment loss of $99,588 associated with the Company’s barrel inventory. The Company’s RF Specialties business incurred costs of sales of $141,062 in 2026 compared to $481,268 in 2025. The decrease was due to the quarter ended June 30, 2025 including more significant related costs associated with the manufacturing of MSD project, which was installed at the customer site in the current period.
Current report
Our gross profit for the three months ended June 30, 2026 improved by $353,713 compared to the three months ended June 30, 2025, primarily as a result of an increase of $439,685 in our RFS business due to the change in revenue mix towards service and installation revenue on the MSDS project, and the higher level of costs associated with the project in 2025 during the manufacturing phase. This improvement offset lower gross profit in our Two Trees business from inventory impairment charges in the current period.
Current report
Our gross profit for the six months ended June 30, 2026 improved by $84,918 compared to the six months ended June 30, 2025, primarily as a result of an increase of $312,324 from our RFS business due to the change in revenue mix towards service and installation revenue on the MSDS project, and the higher level of costs associated with the project in 2025 during the manufacturing phase. This improvement offset lower gross profit in our Two Trees business from inventory impairment charges in the current period, higher input costs and lower sales volumes.
Current report
Operating Expenses.
Current report
We reported operating expenses of $582,018 and $1,043,215 for the three months ended June 30, 2026 and 2025, respectively. Selling, general and administrative expenses were $323,776 and $589,362 for three months ended June 30, 2026 and 2025, respectively. The decrease of $265,586 was driven by a decrease of approximately $129,000 in professional fees, reduced travel expenses of approximately $36,000, decreased insurance costs of $38,000, lower reserves for credit loss of $28,000 and lower advertising costs of $15,000, primarily as a result of our initiatives to streamline costs and increase operational efficiencies.
Current report
Salaries and wages were $164,928 and $375,265 for the three months ended June 30, 2026 and 2025, respectively. The decline compared to the prior period was due to lower costs associated with officer employment contracts.
Current report
Depreciation and amortization expense was $93,314 and $78,588 for the three months ended June 30, 2026 and 2025, respectively, with the increase being driven by higher depreciation from the Company’s new in house SRAS deployed in the current period.
Current report
We reported operating expenses of $1,283,567 and $1,793,536 for the six months ended June 30, 2026 and 2025, respectively. Selling, general and administrative expenses were $811,670 and $1,173,267 for the six months ended June 30, 2026 and 2025, respectively. The decrease of $361,597 was driven by a decrease of approximately $168,000 in professional fees, reduced travel expenses of approximately $46,000, decreased insurance costs of $46,000 and lower advertising costs of $13,000 as a result of our initiatives to streamline costs and increase operational efficiencies.
Current report
Salaries and wages were and $310,982 and $469,074 for the six months ended June 30, 2026 and 2025, respectively. The decline compared to the prior period was due to lower costs associated with officer employment contracts
Current report
Depreciation and amortization expense was $160,915 and $151,195 for the six months ended June 30, 2026 and 2025, respectively. The increase was driven by higher depreciation from the Company’s new in house SRAS deployed in the current period
Current report
Total Other Expenses. Total other expense was $20,270 and $29,490 for the three and six months ended June 30, 2026, respectively, compared to $12,380 and $23,945 for the three and six months ended June 30, 2025, respectively. Interest expense was $20,270 and $29,490 for the 2026 periods, compared to $12,380 and $24,145 for the 2025 periods; other income for the six months ended June 30, 2025 was $200.
Current report
Cash Used in Operating Activities
Current report
Net cash used in operating activities for the six months ended June 30, 2026 and 2025 was $605,916 and $831,152, respectively. The decrease in cash used by operating activities was driven by lower costs associated with our RFS business related to the MSD contract, and cost-reduction efforts in our Two Trees business.
Current report
Cash Used in Investing Activities
Current report
Net cash used in investing activities for the six months ended June 30, 2026 and 2025 was $38,333 and $707,454, respectively, with the decline driven by completion of the Company’s in-house SRAS system resulting in lower capital expenditures.
Current report
Cash Provided by Financing Activities
Current report
Net cash provided by financing activities for the six months ended June 30, 2026 and 2025 was $445,559 and $1,540,777, respectively. The 2026 amount primarily reflected $450,000 of proceeds from subscription agreements, $115,000 of proceeds from related-party convertible notes payable, partially offset by repayments of notes payable. The 2025 amount primarily reflected $1,649,000 of proceeds from subscription agreements, partially offset by repayments of notes payable and related-party notes payable.
Removed paragraphs (7)
Previous report
Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025
Previous 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.
Previous report
Operating Expenses. We reported operating expenses of $701,549 consisting primarily of legal, accounting, payroll, and general business related expenses for the three months ended March 31, 2026 compared to $750,321 for the three months ended March 31, 2025. The $122,801 decrease in operating expenses was primarily attributable to decreased general and administrative expense. Selling, general and administrative expenses was $467,366 and $583,905 for the three months ended March 31, 2026 and 2025, respectively, and included legal, accounting and audit fees related to our public company reporting obligations, stock-based compensation of $44,891 and $66,322, respectively due to new equity awards to employees and consultants in the prior year. Operating expenses also included salary and wages expense of $146,054 and $93,809 for the three months ended March 31, 2026 and 2025, respectively. Operating expenses included depreciation and amortization expense of $67,601 and $72,607 for the three months ended March 31, 2026 and 2025, respectively.
Previous report
Total Other Expenses. Total other expense was $9,220 for the three months ended March 31, 2026 compared to $11,565 for the three months ended March 31, 2025. Other expense for the three months ended March 31, 2026 primarily consisted of interest expense of $9,220. Other expense for the three months ended March 31, 2025 primarily consisted of interest expense of $11,765 and interest income of $200
Previous report
Cash Used in Operating Activities. Net cash used in operating activities for the three months ended March 31, 2026 and 2025 were $464,418 and $421,316. 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 report
Cash Used from Investing Activities. Cash used in investing activities for the three months ended March 31, 2026 and 2025 was $62,907 and $604,377, respectively, with higher costs in the prior year associated with construction of the Company’s new SRAS equipment, deployed in the first quarter of 2026.
Previous report
Cash Provided by Financing Activities. Net cash provided by financing activities for the three months ended March 31, 2026 and 2025 was $411,131 and $1,607,709, respectively. The cash provided by financing activities for the three months ended March 31, 2026 was attributable to proceeds from the sale of common stock of $450,000, including subscription payable of $205,000, partially offset by repayments of notes payable of $38,869. 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.
Reworded paragraphs (6)
Previous wording
The Company is currently deploying its first industrial application of our Molecular sawdust drying system with a lumber mill. The system offers scalable, flexible solutions for any tonnage of sawdust, catering to diverse pellet manufacturing needs. It utilizes patented technology to adjust moisture content as required, optimizing it to precise specifications. The system features precision automation for controlling temperature and drying parameters, ensuring consistent high-quality output. This adaptable system enhances safety and productivity, achieving uniform results with minimal downtime.
Current wording
We have completed deployment of our first Molecular Sawdust Drying System (“MSDS”) at a large lumber mill, which utilizes a proprietary molecular energy wave technology to adjust the moisture content of sawdust for production of wood pellets, an alternative green energy source. The system offers scalable, flexible solutions for any tonnage of sawdust, catering to diverse pellet manufacturing needs. It utilizes patented technology to adjust moisture content as required, optimizing it to precise specifications. The system features precision automation for controlling temperature and drying parameters, ensuring consistent high-quality output. This adaptable system enhances safety and productivity, achieving uniform results with minimal downtime.
Previous wording
The first of these units is anticipated to be installed on site at one of the largest distilleries in the U.S. in the second quarter of 2026, with the second unit deployed approximately three months thereafter. The second contract is with a leading U.S. wholesaler and broker of bulk spirits for one SRAS unit at their facility, which is estimated to be installed in the third quarter of 2026.
Current wording
The first of these units is anticipated to be installed on site at one of the largest distilleries in the U.S. in the foruth quarter of 2026, with the second unit deployed approximately three months thereafter. The second contract is with a leading U.S. wholesaler and broker of bulk spirits for one SRAS unit at their facility, which is estimated to be installed in the third quarter of 2026.
Previous wording
Revenue. Revenue for the three months ended March 31, 2026 was $434,087 compared to $513,930 for the three months ended March 31, 2025. Revenue of $313,739 for three months ending March,31,2026 is attributable to the Two Trees business, compared to $252,837 in 2025, and $120,348 of revenue for three months ending March 31,2026 attributable to product and service income from RFS, compared to $261,093 in 2025. The $60,092 increase revenue in the Two Trees business was primarily attributable to increased bulk alcohol sales in the current period which was partially offset by a decline in sales of RF Specialties of approximately $140,745 related to nearing completion on the MSD project and lower service revenue compared to the prior year.
Current wording
Revenue for the three months ended June 30, 2026 was $524,090 compared to $420,609 for the three months ended June 30, 2025. Revenue of $253,568 for three months ending June 30, 2026 is attributable to the Two Trees business, compared to $249,566 in 2025, and $270,522 of revenue for three months ending June 30, 2026 attributable to product and service income from RFS, compared to $171,043 in 2025. The increase in sales of RF Specialties of approximately $99,479 related to additional contracted work on the Company’s recently completed Molecular Sawdust Drying (“MSD”) system. The $4,002 increase revenue in the Two Trees business was primarily attributable to increased bulk alcohol sales in the current period offset by lower Two Trees brand sales.
Previous wording
Cost of Sales. Cost of sales for the three months ended March 31, 2026 was $570,350 compared to $381,398 for three months ended March 31, 2025. Cost of sales for the Company’s Two Trees Distilling operations was $371,051 in 2026 compared to $168,715 in 2025, with the decline driven by higher input costs for our products, increase freight costs, and higher bulk alcohol sales. The Company’s RF Specialties business incurred costs of sales of $199,299 in 2026 compared to $212,683 in 2025. The slight decrease was due to lower activity associated with the MSD project nearing completion.
Current wording
Cost of sales for the six months ended June 30, 2026 was $1,022,024 compared to $1,083,304 for the six months ended June 30, 2025. Cost of sales for the Company’s Two Trees Distilling operations was $681,663 in 2026 compared to $389,353 in 2025, with the increase driven primarily by an impairment loss of $99,588 associated with the Company’s barrel inventory, higher bulk sales volume and increased input and freight costs. The Company’s RF Specialties business incurred costs of sales of $340,361 in 2026 compared to $693,951 in 2025. The decrease was due to the prior comparable period including more significant related costs associated with the manufacturing of MSDS project, which was installed at the customer site in the current period.
Previous wording
As of March 31, 2026, and December 31, 2025, we had $95,754 and $211,948 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, 2026, we have incurred operating losses since inception of $7,005,527. At March 31, 2026, we had a working capital deficit of $1,782,901.
Current wording
As of June 30, 2026, and December 31, 2025, we had $13,258 and $211,948 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, 2026, we have incurred losses since inception of $7,535,399. At June 30, 2026, we had a working capital deficit of $2,082,091.
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. During the three months ended, we raised $450,000 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.
Current wording
We expect to incur marketing, professional, and administrative expenses as well expenses associated with maintaining our filings with the Commission. During the six months ended June 30, 2026, we raised $450,000 in cash proceeds from the sale of common stock, and $115,000 from proceeds of convertible notes payable with related parties. 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. 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.