UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2009
☐TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE EXCHANGE ACT
For the transition period from __________________ to _________
MDwerks, Inc.
(Exact name of registrantsmall business issuer as specified in its charter)
Commission File No. 000-56299
Delaware | 33-1095411 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
411 Walnut Street, Suite I
Green Cove, FL 33442
(Address of principal executive offices)Principal Executive Offices)
(252) 501-0019
(Zip Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
N/A | N/A | N/A |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesx ☒ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every interactive data fileInteractive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yeso ☒ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company.
Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☒ Yeso ☐ Nox
As of June 8, 2023, the number ofCompany has shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 17,990,208 shares at November 23, 2009
Table of Contents
PART | ||
4 | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART | 17 | |
Item 1. | ||
Item 1A. | Risk Factors | 17 |
Item | Unregistered Sales of | |
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
SIGNATURES | 18 | |
EXHIBIT 31.1 | ||
EXHIBIT 31.2 | ||
EXHIBIT 32.1 |
2 |
Forward-Looking Statements
Various statements contained in this report constitute “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements are based on current expectations and are indicated by words or phrases such as “believe,” “expect,” “may,” “will,” “should,” “seek,” “plan,” “intend” or “anticipate” or the negative thereof or comparable terminology, or by discussion of strategy. Forward-looking statements represent as of the date of this report our judgment relating to, among other things, future results of operations, growth plans, sales, capital requirements and general industry and business conditions applicable to us. Such forward-looking statements are based largely on our current expectations and are inherently subject to risks and uncertainties. Our actual results could differ materially from those that are anticipated or projected as a result of certain risks and uncertainties, including, but not limited to, a number of factors, such as: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles and the other risks and uncertainties that are set forth in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
These factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors could also have material adverse effects on future results. Except as otherwise required to be disclosed in periodic reports required to be filed by public companies with the Securities and Exchange Commission (“SEC”) pursuant to the SEC’s rules, we have no duty to update these statements, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks and uncertainties, we cannot assure you that the forward-looking information contained in this report will in fact transpire.
As used in this Quarterly Report on Form 10-Q, unless the context requires or is otherwise indicated, the terms “we,” “us,” “our,” the “Registrant,” the “Company,” “our company” and similar expressions means MDwerks, Inc.
3 |
Item 1. Financial Statements
MDWERKS, INC. AND SUBSIDIARIES
September 30, 2009 (Unaudited) | December 31, 2008 (1) | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash | $ | 1,420,171 | $ | 1,223,807 | ||||
Notes receivable | 1,418,717 | 1,277,722 | ||||||
Accounts receivable, net of allowances of $200,000 at September 30, 2009 and December 31, 2008 | 459,761 | 188,048 | ||||||
Leases receivable | 139,250 | 85,000 | ||||||
Prepaid expenses and other | 35,396 | 132,160 | ||||||
Total current assets | 3,473,295 | 2,906,737 | ||||||
Long-term assets: | ||||||||
Notes receivable | 390,000 | — | ||||||
Leases receivable | 110,516 | — | ||||||
Available-for-sale securities, at fair market value | 170,430 | 61,750 | ||||||
Property and equipment, net of accumulated depreciation of $185,728 at September 30, 2009 and $179,211 at December 31, 2008 | 25,636 | 48,120 | ||||||
Debt issuance and offering costs, net of accumulated amortization of $842,747 at September 30, 2009 and $505,478 at December 31, 2008 | 708,669 | 631,037 | ||||||
Other non current assets | 42,727 | — | ||||||
Total assets | $ | 4,921,273 | $ | 3,647,644 | ||||
LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' DEFICIENCY | ||||||||
Current liabilities: | ||||||||
Notes payable, net | $ | 498,512 | $ | 1,290,870 | ||||
Accounts payable | 79,339 | 161,516 | ||||||
Accrued interest | 600,326 | 119,962 | ||||||
Accrued expenses | 449,797 | 482,663 | ||||||
Dividends payable | 1,738,132 | 948,222 | ||||||
Total current liabilities | 3,366,106 | 3,003,233 | ||||||
Long-term liabilities: | ||||||||
Notes payable, net | 4,946,860 | — | ||||||
Total long-term liabilities | 4,946,860 | — | ||||||
Total liabilities | 8,312,966 | 3,003,233 | ||||||
Temporary equity: | ||||||||
Mandatorily Redeemable Convertible Series B Preferred Stock, $.001 par value, 1,500 shares authorized;1,000 shares issued and outstanding at September 30, 2009 and December 31, 2008, net | 7,620,835 | 4,052,083 | ||||||
Total temporary equity | 7,620,835 | 4,052,083 | ||||||
Stockholders’ deficiency: | ||||||||
Preferred stock, Series A preferred stock, $.001 par value, 10,000,000 shares authorized; 1 share issued and outstanding at September, 30, 2009 and 2 shares issued and outstanding at December 31, 2008 | — | — | ||||||
Common stock, $.001 par value, 200,000,000 shares authorized; 17,990,208 shares issued and outstanding at September 30, 2009 and 14,370,208 shares issued and outstanding at December 31, 2008 | 17,990 | 14,370 | ||||||
Additional paid-in capital | 47,711,048 | 47,240,654 | ||||||
Accumulated deficit | (57,857,196 | ) | (49,669,646 | ) | ||||
Accumulated other comprehensive loss | (884,370 | ) | (993,050 | ) | ||||
Total stockholders' deficiency | (11,012,528 | ) | (3,407,672 | ) | ||||
Total liabilities, temporary equity and stockholders' deficiency | $ | 4,921,273 | $ | 3,647,644 |
Condensed Balance Sheets
(unaudited)
March 31, | December 31, | |||||||
2023 | 2022 | |||||||
ASSETS | ||||||||
Cash | $ | 41,228 | $ | 23,715 | ||||
TOTAL ASSETS | $ | 41,228 | $ | 23,715 | ||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts payable and accrued expenses | $ | 17,175 | $ | 34,478 | ||||
Advances payable | 94,873 | 104,204 | ||||||
TOTAL LIABILITIES | 112,048 | 138,682 | ||||||
STOCKHOLDERS’ DEFICIT | ||||||||
Preferred stock, par value $ ; shares authorized of which are issued and outstanding | 8,958 | 8,958 | ||||||
Common stock, par value $ ; shares authorized of which shares are issued and outstanding at 12/31/22 and shares are issued and outstanding at 3/31/23 | 123,401 | 122,260 | ||||||
Additional paid in capital | 285,988 | 201,531 | ||||||
Accumulated deficit | (489,167 | ) | (447,716 | ) | ||||
TOTAL STOCKHOLDERS’ DEFICIT | $ | (70,820 | ) | $ | (114,967 | ) | ||
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 41,228 | $ | 23,715 |
The accompanying notes should be read in conjunction with theare an integral part of these unaudited consolidatedcondensed financial statements
4 |
MDWERKS, INC. AND SUBSIDIARIES
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
2009 (Unaudited) | 2008 (As Restated) (Unaudited) | 2009 (Unaudited) | 2008 (As Restated) (Unaudited) | |||||||||||||
Revenue: | ||||||||||||||||
Service fees | $ | 7,840 | $ | 109,762 | $ | 90,764 | $ | 420,212 | ||||||||
Financing income | 85,460 | 63,901 | 275,519 | 195,464 | ||||||||||||
Claims purchase revenue | — | 62,987 | — | 86,684 | ||||||||||||
Total revenue | 93,300 | 236,650 | 366,283 | 702,360 | ||||||||||||
Operating expenses: | ||||||||||||||||
Compensation | 211,807 | 833,555 | 1,176,156 | 4,144,549 | ||||||||||||
Consulting expenses | 153,596 | 29,630 | 533,084 | 168,349 | ||||||||||||
Professional fees | 232,185 | 162,950 | 583,781 | 492,901 | ||||||||||||
Selling, general and administrative | 153,998 | 343,788 | 690,000 | 1,131,814 | ||||||||||||
Total operating expenses | 751,586 | 1,369,923 | 2,983,021 | 5,937,613 | ||||||||||||
Loss from operations | (658,286 | ) | (1,133,273 | ) | (2,616,738 | ) | (5,235,253 | ) | ||||||||
Other income (expense): | ||||||||||||||||
Interest and other income | 13,050 | 425,901 | 50,423 | 1,084,420 | ||||||||||||
Interest expense | (392,634 | ) | (348,138 | ) | (1,302,573 | ) | (1,229,015 | ) | ||||||||
Total other income (expense) | (379,584 | ) | 77,763 | (1,252,150 | ) | (144,595 | ) | |||||||||
Net loss | (1,037,870 | ) | (1,055,510 | ) | (3,868,888 | ) | (5,379,848 | ) | ||||||||
Deemed preferred stock dividend | (1,339,494 | ) | (1,489,584 | ) | (4,318,662 | ) | (3,286,414 | ) | ||||||||
Net loss attributable to common shareholders | $ | (2,377,364 | ) | $ | (2,545,094 | ) | $ | (8,187,550 | ) | $ | (8,666,262 | ) | ||||
NET LOSS PER COMMON SHARE - basic and diluted | $ | (0.13 | ) | $ | (0.20 | ) | $ | (0.50 | ) | $ | (0.67 | ) | ||||
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING - basic and diluted | 17,990,208 | 12,940,065 | 16,234,457 | 12,940,065 |
Condensed Statements of stock options and warrants would be antidilutive.
(unaudited)
2023 | 2022 | |||||||
For the three month period ended March 31, | ||||||||
2023 | 2022 | |||||||
Operating expenses | ||||||||
General and administrative | $ | 41,451 | $ | 5,494 | ||||
Total operating expenses | 41,451 | 5,494 | ||||||
Net loss from operations | (41,451 | ) | (5,494 | ) | ||||
Other income | ||||||||
Interest | - | - | ||||||
Total other income | - | - | ||||||
Net loss | $ | (41,451 | ) | $ | (5,494 | ) | ||
Net loss per share | ||||||||
Basic | $ | (0.00 | ) | $ | (0.00 | ) | ||
Diluted | $ | (0.00 | ) | $ | (0.00 | ) | ||
WEIGHTED AVERAGE NUMBER OF SHARES | ||||||||
Basic | 122,712,732 | 18,010,208 | ||||||
Diluted | 122,712,732 | 18,010,208 |
The accompanying notes should be read in conjunction with theare an integral part of these unaudited consolidatedcondensed financial statements
5 |
MDWERKS, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30 | ||||||||
2009 | 2008 | |||||||
(As Restated) | ||||||||
(Unaudited) | (Unaudited) | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (3,868,888 | ) | $ | (5,379,848 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation | 22,484 | 30,770 | ||||||
Amortization of debt discount | 747,784 | 930,627 | ||||||
Amortization of deferred offering and debt issuance costs | 337,269 | 184,824 | ||||||
Amortization of deferred compensation | — | 22,168 | ||||||
Bad debts | — | 100,000 | ||||||
Stock-based compensation | 329,357 | 2,197,482 | ||||||
Changes in assets and liabilities: | ||||||||
Notes receivable | (530,995 | ) | (869,698 | ) | ||||
Accounts receivable | (271,713 | ) | (774,902 | ) | ||||
Leases receivable | (164,766 | ) | — | |||||
Prepaid expenses and other | 54,037 | 12,257 | ||||||
Accounts payable | (82,177 | ) | (43,033 | ) | ||||
Accrued interest and accrued expenses | 487,498 | (47,498 | ) | |||||
Deferred revenue | — | (8,472 | ) | |||||
Total adjustments | 928,778 | 1,734,525 | ||||||
Net cash used in operating activities | (2,940,110 | ) | (3,645,323 | ) | ||||
Cash flows from investing activities: | ||||||||
Purchase of property and equipment | — | (18,434 | ) | |||||
Investment in certificates of deposits | — | (2,000,000 | ) | |||||
Net cash used in investing activities | — | (2,018,434 | ) | |||||
Cash flows from financing activities: | ||||||||
Proceeds from additional notes payable | 3,851,375 | — | ||||||
Repayment of notes payable | (300,000 | ) | (1,686,112 | ) | ||||
Repayment of loan payable | — | (109,559 | ) | |||||
Proceeds from sale of Mandatorily Redeemable Series B preferred stock | — | 8,000,000 | ||||||
Placement fees and other expenses paid | (414,901 | ) | (196,870 | ) | ||||
Net cash provided by financing activities | 3,136,474 | 6,007,459 | ||||||
Net increase in cash | 196,364 | 343,702 | ||||||
Cash - beginning of year | 1,223,807 | 320,903 | ||||||
Cash - end of period | $ | 1,420,171 | $ | 664,605 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid for: | ||||||||
Interest | $ | 34,425 | $ | 300,285 |
(Unaudited)
For the three months ended March 31, 2023 and twelve months ended December 31, 2022
Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||
Preferred Stock | Common Stock | Additional Paid-in | Accumulated | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||
Balance January 1, 2022 | 10,000,000 | $ | 10,000 | 18,010,208 | $ | 18,010 | $ | 35,195 | $ | (294,003 | ) | $ | (230,798 | ) | ||||||||||||||
Net loss | - | - | - | - | - | (153,713 | ) | (153,713 | ) | |||||||||||||||||||
Conversion of preferred stock | (1,042,500 | ) | (1,042 | ) | 104,250,000 | 104,250 | (103,208 | ) | - | - | ||||||||||||||||||
Contributed Capital | 30,100 | 30,100 | ||||||||||||||||||||||||||
Forgiveness of debt | - | - | 239,444 | - | 239,444 | |||||||||||||||||||||||
Balance December 31, 2022 | 8,957,500 | $ | 8,958 | 122,260,208 | $ | 122,260 | $ | 201,531 | $ | (447,716 | ) | $ | (114,967 | ) | ||||||||||||||
Balance January 1, 2023 | 8,957,500 | $ | 8,958 | 122,260,208 | $ | 122,260 | $ | 201,531 | $ | (447,716 | ) | $ | (114,967 | ) | ||||||||||||||
Balance, value | 8,957,500 | $ | 8,958 | 122,260,208 | $ | 122,260 | $ | 201,531 | $ | (447,716 | ) | $ | (114,967 | ) | ||||||||||||||
Common shares sold for cash | 1,141,298 | $ | 1,141 | $ | 84,457 | 85,598 | ||||||||||||||||||||||
Net income | - | - | - | - | - | (41,451 | ) | (41,451 | ) | |||||||||||||||||||
Net income (loss) | - | - | - | - | - | (41,451 | ) | (41,451 | ) | |||||||||||||||||||
Balance March 31, 2023 | 8,957,500 | $ | 8,958 | 123,401,506 | $ | 123,401 | $ | 285,988 | $ | (489,167 | ) | $ | (70,820 | ) | ||||||||||||||
Balance , value | 8,957,500 | $ | 8,958 | 123,401,506 | $ | 123,401 | $ | 285,988 | $ | (489,167 | ) | $ | (70,820 | ) |
The accompanying notes should be read in conjunction withare an integral part of these unaudited condensed financial statements.
6 |
MDWERKS, INC,
Condensed Statements of Cash Flows
(unaudited)
2023 | 2022 | |||||||
For the three month period ended March 31, | ||||||||
2023 | 2022 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net loss | $ | (41,451 | ) | $ | (5,494 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Gain on forgiveness of debt | - | - | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts payable | (17,303 | ) | 4,494 | |||||
NET CASH USED IN OPERATING ACTIVITIES | (58,754 | ) | (1,000 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Purchase of equipment | - | - | ||||||
NET CASH USED IN INVESTING ACTIVITIES | - | - | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Repayment of advances payable | (9,331 | ) | ||||||
Proceeds from subscription agreements | 85,598 | 1,000 | ||||||
NET CASH PROVIDED BY FINANCING ACTIVITIES | 76,267 | 1,000 | ||||||
NET CHANGE IN CASH | 17,513 | - | ||||||
CASH - BEGINNING OF YEAR | 23,715 | - | ||||||
CASH - END OF PERIOD | 41,228 | - | ||||||
Supplemental disclosures of cash flow information: | ||||||||
Cash paid for interest | $ | - | $ | - | ||||
Cash paid for taxes | $ | - | $ | - | ||||
Supplemental disclosure of non-cash investing and financing activities | ||||||||
Forgiveness of debt as capital contribution | $ | - | $ | - | ||||
Conversion of preferred stock | $ | - | $ | - |
The accompanying notes are an integral part of these unaudited condensed financial statements.
7 |
MDWERKS, INC.
Notes to Unaudited Condensed Financial Statements
For the unaudited consolidated financial statements
NOTE 1 — – ORGANIZATION AND DESCRIPTION OF THE BUSINESS
MDWerks, Inc. (the “Company”), a Delaware corporation, is 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 the Company’s public reporting status. The Company is not limited to a particular industry or geographic region for purposes of consummating a Business Combination. As of the date of this report, the Company has not yet commenced any operations. All activity through the date of this report relates to preserving cash, making settlements with creditors, attempting to raise capital, and continuing the Company’s public reporting.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation – The financial statements present the financial position, results of operations and cash flows of the Company in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). All dollar amounts are rounded to the nearest thousand dollars.
Cash and Cash Equivalents – The Company considers all highly liquid instruments with original maturities of three months or less when acquired, to be cash equivalents. The Company had no cash equivalents at March 31, 2023.
Income Taxes – The Company complies with the accounting and reporting requirements of US GAAP in accounting for income taxes. The Company uses the asset and liability approach to financial reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax basis of assets and liabilities that will result in future taxable or deductible amounts and are based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred income tax assets to the amount expected to be realized.
The Company also complies with US GAAP in accounting for uncertain tax positions. A tax benefit from an uncertain position may be recognized only if it is “more likely than not” that the position is sustainable based on its technical merits. Based on its analysis, the Company has determined that it has not incurred any liability for unrecognized tax benefits as of March 31, 2023. However, the Company’s conclusions may be subject to review and adjustment at a later date based on factors including, but not limited to, on-going analyses of and changes to tax laws, regulations and interpretations thereof. The Company recognizes interest and penalties related to unrecognized tax benefits in interest expense and other expenses, respectively. No interest expense or penalties have been recognized as of March 31, 2023.
Basic income (loss) per share excludes dilution and is computed by dividing income (loss) available to common stockholders by the weighted average common shares outstanding for the year. Diluted income (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. For the three months ended March 31, 2023, there were no options, warrants or derivative securities outstanding. Therefore, basic and diluted loss per share were the same for the three months ended March 31, 2023.
Use of Estimates and Assumptions- The preparation of financial statements in accordance with US GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting period. Actual results can, and in many cases will, differ from those estimates.
8 |
Fair Value of MDwerks, Inc. (f/k/a Western Exploration, Inc.Financial Instruments - The Company measures its financial and non-financial assets and liabilities, as well as makes related disclosures, in accordance with the Financial Accounting Standards Board’s (the “FASB”) Accounting Standards Codification (“ASC”) No. 820, Fair Value Measurement (“ASC 820”), which provides guidance with respect to valuation techniques to be utilized in the determination of fair value of assets and liabilities. Approaches include, (i) the market approach (comparable market prices), (ii) the income approach (present value of future income or cash flow), and hereinafter referred(iii) the cost approach (cost to replace the service capacity of an asset or replacement cost). ASC 820 utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
Level 1: Observable inputs such as the ‘‘Company’’) was merged withquoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and into MDwerks Global Holdings, Inc., a Florida corporation (‘‘MDwerks’’), with MDwerks surviving. quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3: Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one more significant inputs or significant value drivers are unobservable.
The Company acquired all of the outstanding capital stock of MDwerks in exchange for issuing 9,246,339 sharescarrying values of the Company’s commonaccounts payable and accrued liabilities, advances payable, and convertible notes payable, approximate their fair value due to their short-term nature.
Convertible notes payable - The Company accounts for convertible notes payable in accordance with ASC No. 815, Derivatives and Hedging, since the conversion feature is not indexed to the Company’s stock parand cannot be classified in equity. The Company allocates the proceeds received from convertible notes payable between the liability component and conversion feature component. The conversion feature that is considered embedded derivative liabilities has been recorded at their fair value $0.001 per share to MDwerks’ stockholders, which at closingas its fair value can be separated from the convertible note and its conversion is independent of the Merger Agreement represented approximately 87.4% of the issued and outstanding shares of the Company’s common stock. In connection with the Merger, the Company changed its corporate name to MDwerks, Inc.
Going concern
Recently Issued Accounting Pronouncements - From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by the Company is attempting to attain revenue growth and profitability,as of the growth has not been significant enough to support the Company’s daily operations. Management may need to raise additional funds by way of a public or private offering and make strategic acquisitions. Whilespecified effective date. Unless otherwise discussed, the Company believes in the viability of its strategy to improve sales volume and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent on the Company’s ability to further implement its new business plan and generate revenue. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Management believes that the actions presently being taken to further implementeffect of recently issued standards that are not yet effective will not have a material effect on its business plan and generate revenue, including institutional financing described in Notes 5, 7, and 8, provide the opportunity for the Company to continue as a going concern.
In August 2020, the nine months ended September 30, 2009 are not necessarily indicative of whatFASB issued Accounting Standards Update (“ASU”) 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40)” (“ASU 2020-06”). ASU 2020-06 simplifies the results will beaccounting for the full fiscal year ending December 31, 2009.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets at fair value: | ||||||||||||||||
Notes receivable | — | — | 1,808,717 | 1,808,717 | ||||||||||||
Leases receivable | — | — | 249,766 | 249,766 | ||||||||||||
Available-for-sale securities | 170,430 | — | — | 170,430 | ||||||||||||
Total assets at fair value | $ | 170,430 | $ | — | $ | 2,058,483 | $ | 2,228,913 | ||||||||
Liabilities at fair value: | ||||||||||||||||
Notes payable | $ | — | $ | — | $ | 5,445,372 | $ | 5,445,372 | ||||||||
Total liabilities at fair value | $ | — | $ | — | $ | 5,445,372 | $ | 5,445,372 |
NOTE 3 – Subsequent Events was issued. The objective of this Statement is to establish general standards of accounting for disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In accordance with this Statement, an entity should apply the requirements to interim or annual financial periods ending after June 15, 2009. Management intends to adopt this new standard with the filing of this Quarterly Report on Form 10-Q. The adoption of this new standard is expected to impact disclosure and therefore is not expected to have a material impact on the financial statements of the Company.
The Company had net $459,761accounts payable balance of accounts receivable at September 30, 2009$17,175 as of March 31, 2023 and $188,048 at$34,478as of December 31, 2008.2022 and related to amounts owed for various professional services and public company related expenses.
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NOTE 4 - ADVANCES PAYABLE
The Company had advanced fundingadvances aggregating $ as of December 31, 2022 and $ as of March 31, 2023 from a non-related third party in order to three customers under lines of creditcover legal, accounting and note agreements aggregating $1,808,717. Advances under the lines of credit are due to be repaid under the specific payment terms of the agreements. other various public company related operating expenses.
The Company charges the customers interest and other charges as defined in the agreements. At December 31, 2008, the Company had advanced funding to two healthcare providers under lines of credit and note agreements aggregating $1,277,722.
Estimated Life | September 30, 2009 | December 31, 2008 | ||||||||
Office furniture and equipment | 5-7 Years | $ | 30,174 | $ | 30,174 | |||||
Computer equipment and software | 3-5 Years | 181,190 | 197,157 | |||||||
Total | 211,364 | 227,331 | ||||||||
Less: accumulated depreciation | (185,728 | ) | (179,211 | ) | ||||||
Property and equipment, net | $ | 25,636 | $ | 48,120 |
September 30, 2009 | December 31, 2008 | |||||||
Notes payable | $ | 9,151,375 | $ | 5,300,000 | ||||
Less principal repayments | (1,550,000 | ) | (1,250,000 | ) | ||||
Less issuance of common stock in connection with debt conversion | (433,334 | ) | (433,334 | ) | ||||
Notes payable outstanding | 7,168,041 | 3,616,666 | ||||||
Less: unamortized discount on notes payable | (1,722,669 | ) | (2,325,796 | ) | ||||
Notes payable, net | 5,445,372 | 1,290,870 | ||||||
Less current portion | (498,512 | ) | (1,290,870 | ) | ||||
Notes payable, net of discount of $1,722,669 at September 30, 2009 and $2,325,796 at December 31, 2008, less current portion | $ | 4,946,860 | $ | — |
NOTE 5 – CAPITAL STOCK
Common Stock determined by dividing the stated value of the Series B Preferred Stock by the conversion price. The initial conversion price of the Series B Preferred Stock is $0.75 per share.
September 30, 2009 | December 31, 2008 | |||||||
Mandatorily redeemable convertible Series B preferred stock | $ | 10,000,000 | $ | 10,000,000 | ||||
Less: unamortized discount on preferred stock | (2,379,165 | ) | (5,947,917 | ) | ||||
Mandatorily redeemable convertible Series B preferred stock, net | $ | 7,620,835 | $ | 4,052,083 |
The Company is authorized to issue 200,000,000 shares of Commoncommon stock, $.001$ par value, with such designations, rights and preferences as may be determined from time to time by the Boardvalue. At March 31, 2023, there were shares of Directors. At September 30, 2009, there are 17,990,208 sharescommon stock issued and outstanding.
Preferred stock
The Company is authorized to issue $.001$ par value, with such designations, rights and preferences as may be determined from time to time by the Board of Directors, of which 1,000 shares are designated Series A Convertible Preferred stock and 1,500 shares are designated Series B Convertible Preferred stock. shares of preferred stock,
Each unit consists of one share of our Series A Convertible Preferred Stock, par value $.001 per share, and a detachable, transferable Series A Warrant to purchase 20,000 shares of our common stock, at a purchase price of $3.00 per share. Between August 11, 2006 and September 30, 2009, 27.3 shares of Series A Convertible Preferred Stock were convertedis convertible into 546,667100 shares of common stock, leavingand each share of Series A Preferred Stock has the same number of common share votes prior to conversion as it would if fully converted to be used in voting on any company matter requiring a vote of shareholders. At March 31, 2023, there were shares issued and outstanding.
NOTE 6 – CONTINGENCY
In the ordinary course of business, the Company may become a party to lawsuits involving various matters. The impact and outcome of litigation, if any, is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm its business. The Company believes the ultimate resolution of any such current proceeding will not have a material adverse effect on our continued financial position, results of operations or cash flows.
NOTE 7 – SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet and up to June 8, 2023, the date that the financial statements were issued. In the subsequent period, the Company issued 100,000. Management has determined that there are no other items requiring disclosure or adjustment. shares for $
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Overview
Plan of Operations
As of March 31, 2023, we had not commenced any operations. Our activities relate to our focus on effecting a “reverse merger,” capital exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one (1)or more unrelated businesses (a “Business Combination”) that would benefit from our public reporting status. We also completed a change of control transaction on July 21, 2022 (the “Change of Control”). See “—Recent Developments—Change of Control”. In addition, in furtherance of our plans to consummate a Business Combination, on January 19, 2023, we entered into an Exchange Agreement to acquire RF Specialties LLC (“RFS”) and on February 13, 2023, we entered into a Merger Agreement to acquire Two Trees Beverage Co. (“Two Trees”). See “—Recent Developments—Planned Acquisitions”.
Recent Developments
Change of Control
On July 21, 2022, in connection with the change of control and composition of the Board of Directors of the Company (the “Board”), the Company entered into a Stock Purchase Agreement (the “SPA”) with (i) Tradition Reserve I LLC (“Buyer”); and (ii) Ronin Equity Partners, Inc. (“Seller”).
Pursuant to the SPA, on July 21, 2022 (the “Closing Date”), the Seller sold to the Buyer 10,000,000 shares of the Company’s Series A Convertible Preferred Stock held by the Seller (the “Shares”), representing 100% of the Company’s authorized and issued preferred stock, as of the Closing Date. In exchange for the sale of the Shares to the Buyer, the Buyer paid the Seller a total purchase price of $520,000 (the “Purchase Price”).
Further, at the closing of the transactions contemplated by the SPA (which include, but are not limited to, the purchases and sales of the Shares described above) (the “Closing”), the parties agreed that as of the Closing:
a) The Forgiven Debt (as defined hereinafter) was forgiven, as well as the Asia Note (as defined hereinafter), and any other loan agreements between the Company and Asia Pacific Partners, Inc. (“APP”). The parties acknowledged and agreed that the Company was indebted to APP, an affiliate of the Seller, in the amount of approximately $239,444, comprised of (i) the principal amount and accrued interest pursuant to a convertible promissory note dated July 18, 2014 in the amount of $210,000 as originally issued by the Company to Azure Associates, Inc. and purchased by APP on July 28, 2020 (the “Asia Note”), and (ii) various cash advances for a total of $29,444 as advanced by APP to the Company for working capital (the “Asia Cash Advances” and, together with any and all amounts that may have been due and payable pursuant to the Asia Note, the “Forgiven Debt”);
b) The Company’s Board of Directors was required to undertake such actions as required to:
(i) Expand the Company Board to be a number of persons as determined by Buyer, and to name such persons as selected by Buyer as directors on the Company Board;
(ii) Name such persons as selected by Buyer as officers of the Company, to the positions as determined by Buyer; and
(iii) Following (i) and (ii), all of the directors and officers of the Company, other than those named in or pursuant to (i) and (ii) shall resign from all such positions with the Company.
The Closing was subject to certain customary closing conditions, including, but not limited to, the accuracy of the representations and warranties made by the parties, all necessary consents having been obtained to effect the transactions, and the receipt of any necessary government approvals in order to effect the transactions contemplated in the SPA.
Prior to the Closing of the SPA, voting control of the Company was held by the Seller, of which Jacob D. Cohen was the primary shareholder, and held voting and dispositive control over the Shares.
On the Closing Date, Buyer purchased the Shares, which both pre- and post-conversion represented approximately 98.23% of the Company’s outstanding at September 30, 2009.
As a result of the Closing, the Company was no longer a company controlled by the Seller. Prior to the Closing, the Company was a shell company, and following the Closing, the Company continues to be a shell company. There has been no change in the Company’s shell company status or the Company’s operations as a result of the Closing.
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Planned Acquisitions
RF Specialties, Inc.
On January 19, 2023, we entered into an Exchange Agreement (the “Exchange Agreement”) by and between the Company, RFS and Keith A. Mort as the sole member of RFS. Pursuant to the terms of the Exchange Agreement, the Company agreed to acquire from Mr. Mort, and Mr. Mort agreed to sell to the Company, 100% of the equity interests and membership interests of RFS, in exchange for the issuance by the Company to Mr. Mort of 7,500,000 shares of the Company’s common stock (the “Exchange”). Immediately following the Exchange, RFS will be a wholly owned subsidiary of the Company.
The shares received by Mr. Mort in the Exchange (the “Exchange Shares”) will be subject to a 24-month lock-up; provided, however, that (i) one-third of the Exchange Shares will be released from the lock-up restrictions on the 12-month anniversary of the closing of the Exchange, and (ii) one-third of the Exchange Shares will be released from the lock-up restrictions on the 18-month anniversary of the closing of the Exchange. The remaining one-third of the Exchange Shares will be released from the lock-up restrictions on the 24-month anniversary of the closing of the Exchange.
The parties have made customary representations, warranties and covenants in the Exchange Agreement. In addition to certain customary closing conditions, the obligations of the Company to consummate the closing of the Exchange are subject to the satisfaction (or waiver by the Company), at or before the closing date, of certain conditions, including that (i) RFS will have provided to the Company audited financial statements for RFS for each of the two most recently ended fiscal years and unaudited financial statements for any other required interim periods (the “Financial Statements Closing Condition”), and (ii) the Company will have completed its due diligence review and examination of RFS to its satisfaction in its sole discretion (the “Due Diligence Closing Condition”).
The Exchange Agreement may be terminated on or prior to the closing date of the Exchange:
(a) By the mutual written consent of all the parties to the Exchange Agreement.
(b) By the Company (i) if the closing conditions applicable to all parties and applicable to the Company as set forth in the CertificateExchange Agreement, including the Financial Statements Closing Condition and the Due Diligence Closing Condition, have not been satisfied or waived by the Company, which waiver the Company may give or withhold in its sole discretion, by May 31, 2023 (the “Termination Date”); provided, however, that the Company may not terminate the Exchange Agreement if the reason for the failure of Designations Designating Series B Convertible Preferred stock. any such condition to occur was the breach of the terms of the Exchange Agreement by the Company; or (ii) if there has been a material violation, breach or inaccuracy of any representation, warranty, covenant or agreement of RFS or Mr. Mort as set forth in the Exchange Agreement;
(c) By RFS and Mr. Mort acting together (i) if the closing conditions applicable to all parties and applicable to RFS and Mr. Mort have not been satisfied or waived by RFS and Mr. Mort, which waiver RFS and Mr. Mort may give or withhold in their sole discretion, by the Termination Date; provided, however, that RFS and Mr. Mort may not terminate the Exchange Agreement if the reason for the failure of any such condition to occur was the breach of the terms of the Exchange Agreement by any of RFS or Mr. Mort; or (ii) if there has been a material violation, breach or inaccuracy of any representation, warranty, covenant or agreement of the Company as set forth in the Exchange Agreement;
(d) By any party to the Exchange Agreement, if a court of competent jurisdiction or other governmental authority shall have issued an order or taken any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by the Exchange Agreement and such order or action shall have become final and nonappealable; or
(e) By the Company, if the Company, in its sole discretion, at any time prior to the closing of the Exchange determines that its due diligence review of RFS is not satisfactory to the Company.
Two Trees
On September 28, 2007, 200February 13, 2023, we entered into a Merger Agreement (the “Merger Agreement”), by and between the Company, MD-TT Merger Sub, Inc., a wholly owned subsidiary of the Company (“Merger Sub”), and Two Trees Beverage Co. (“Two Trees”).
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The Merger Agreement provides that, subject to the terms and conditions set forth in the Merger Agreement, the parties wish to effect a business combination through a merger of Merger Sub with and into Two Trees (the “Merger”), subject to the terms and conditions set forth in the Merger Agreement, with Two Trees continuing as the surviving corporation (“Surviving Corporation”). As a result of the Merger, the certificate of incorporation of Two Trees as in effect immediately prior to the closing date will be the certificate of incorporation of the Surviving Corporation, and the bylaws of Two Trees as in effect immediately prior to the closing date will be the bylaws of the Surviving Corporation.
Pursuant to the terms of the Merger Agreement, at the closing of the Merger, the Company’s Board of Directors will be expanded and a number of persons as named by Two Trees will be named to the Company Board such that such persons comprise a majority of the Company’s Board, and the Company’s Board as such newly constituted will name or replace any officers of the Company as it may determine. In addition, at the closing of the Merger, the directors and officers of Two Trees as in place immediately prior to the closing will remain in place as the directors and officers of the Surviving Corporation.
The board of directors of Merger Sub and the Company’s Board unanimously approved the transactions contemplated by the Merger Agreement, including the Merger, and the Company as the sole stockholder of Merger Sub approved the Merger Agreement and the Merger.
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, shall have the right to convert all of the shares of Series B convertible preferredTwo Trees stock were issued with the September Securities Purchase Agreement. On January 18, 2008, 50into a total of 60,000,000 shares of Series B convertible preferredCompany common stock, were issued withwhich shall be apportioned between the January Securities Purchase Agreement. On March 31, 2008, 750Two Trees stockholders, pro rata, based on the number of shares of Series B convertible preferredTwo Trees stock shares were issued withheld by each of the March Securities Purchase Agreement. At September 30, 2009 and December 31, 2008, there were 1,000Two Trees stockholders as of the closing of the Merger (the “Merger Consideration”).
Under the Merger Agreement, at the effective time of the Merger, each of the issued and outstanding shares of Series B convertible preferredcommon stock (See Note 7).
At the effective time of the Company'sMerger, shares of Two Trees’ common stock generally will be treated in the following manner:
● (1) Any shares of Two Trees common stock held as treasury stock or held or owned by Two Trees or Merger Sub immediately prior to the effective time of the Merger will be canceled and retired and will cease to exist, and no consideration will be delivered in exchange therefor; and (2) each share of Two Trees common stock outstanding immediately prior to the effective time of the Merger, excluding shares to be canceled pursuant to (1) herein and excluding shares of Two Trees common stock options at September 30, 2009who have exercised and changes duringperfected appraisal rights for such shares in accordance with the period ending on that date is as follows:
Shares | Weighted Average Exercise Price | Aggregate Intrinsic Value | ||||||||||
Outstanding at December 31, 2008 | 5,405,080 | $ | 1.82 | $ | — | |||||||
Granted | — | — | — | |||||||||
Exercised | — | — | — | |||||||||
Forfeited | (611,246 | ) | 2.44 | — | ||||||||
Outstanding at September 30, 2009 | 4,793,834 | $ | 1.74 | $ | — | |||||||
Options exercisable at end of period | 4,732,168 | $ | 1.75 | $ | — | |||||||
Weighted-average fair value of options granted during the period | — |
● No fractional shares of Company common stock will be issued in connection with previously granted stock optionsthe Merger and any fractional share otherwise issuable to any Two Trees stockholder will be rounded up to the issuancenext whole share.
● Each share of common stock of Merger Sub issued and outstanding immediately prior to certain employees, consultantsthe effective time of the Merger will be converted into and directors in May 2009,exchanged for one validly issued, fully paid and nonassessable share of common stock, $0.001 par value per share, of the Surviving Corporation. Each stock certificate of Merger Sub evidencing ownership of any such shares will, as of the effective time of the Merger, evidence shares of common stock of the Surviving Corporation.
According to the terms of the Merger Agreement, the Company recognized stock-based compensation expensecommon stock issued at the closing of $329,357the Merger will be subject to a lock-up, pursuant to which the Two Trees stockholders receiving shares of the Company’s common stock will not transfer or dispose of the shares except according to the following schedule: (1) one-third of the shares will be released from the restriction on the nine-month anniversary of the effective date of the Merger; (2) one-third of the shares will be released from the restrictions on the 18-month anniversary of the effective date of the Merger; and (3) the remaining one-third of the shares will be released from the restrictions on the 36-month anniversary of the effective date of the Merger.
At the effective time of the Merger, Two Trees’ stock options (the “Two Trees Options”) generally will be treated in the following manner:
● Two Trees option holders will exchange all of their Two Trees Options for options to acquire shares of Company common stock (the “MDwerks Options”).
● The MDwerks Options will provide for substantially the same terms as the Two Trees Options, other than (1) they will be fully vested at issuance, and will increase the number of shares of Company common stock underlying the MDwerks Options from the number of shares of Two Trees common stock underlying the Two Trees Options, and (2) will retain the same exercise price per share of Company common stock underlying the MDwerks Options as the exercise price per share of Two Trees common stock underlying the Two Trees Options, in each case as necessary to provide for the ninesame spread value for each applicable option holder.
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Consummation of the Merger is subject to the satisfaction or waiver of customary closing conditions, including: (1) approval of the Merger Agreement by the Two Trees stockholders; (2) the absence of any law or order by a governmental authority of the United States or certain non-United States jurisdictions that has the effect of rendering illegal or prohibiting consummation of the Merger, or causing the Merger to be rescinded following the completion thereof. In addition, consummation of the Merger by the Company and Merger Sub are subject to the satisfaction or waiver of customary closing conditions, including that (i) the Company will have completed its due diligence review of Two Trees to its satisfaction in its sole discretion; and (ii) Two Trees will have provided to the Company audited financial statements for Two Trees and related auditor reports thereon, as provided in the Merger Agreement.
Pursuant to the terms of the Merger Agreement, Two Trees agreed that at the closing of the Merger, Joe Ragazzo, Two Trees’ Chief Executive Officer, will shall enter into an indemnification agreement, pursuant to which Mr. Ragazzo will agree to indemnify the Company for certain breaches of the representations and warranties of Two Trees.
The Merger Agreement contains customary representations, warranties and covenants made by each of the Company, Merger Sub and Two Trees, including, among others, covenants by Two Trees regarding the conduct of its business prior to the closing of the Merger.
Either the Company or Two Trees may terminate the Merger Agreement prior to the closing date if, among certain other circumstances, certain conditions of the closing have not been satisfied. The Merger Agreement may be terminated by the Company if, among other things, (1) the Two Trees stockholders vote against the adoption of the Merger Agreement; (2) any Action is brought by a third-party non-Affiliate to enjoin or otherwise restrict the consummation of the closing; or (3) within five business days after receipt by the opposing party of written notice thereof that the other party is not reasonably capable of curing a material breach of the Merger Agreement prior to the termination date thereof.
The parties intend, for U.S. federal income tax purposes, that the Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, and that the Merger Agreement was adopted as a plan of reorganization within the meaning of Treasury Regulations Section 1.368-2(g).
On February 16, 2023, the Company, Merger Sub and Two Trees entered into Amendment No. 1 to Merger Agreement (“Amendment No. 1”). Pursuant to the terms of Amendment No. 1, the Merger Agreement was amended to reflect Two Trees’ authorized, issued and outstanding capital stock as of the effective date of the Merger Agreement, which capital stock consisted of 15,000,000 shares of common stock, par value $0.0001 per share, of which 9,999,604.69 shares were issued and outstanding as of the effective date of the Merger Agreement, and 3,529,500 shares of preferred stock, par value $0.0001 per share, of which 2,045,672.16 shares were issued and outstanding as of the effective date of the Merger Agreement. In addition, pursuant to the terms of Amendment No. 1, the Merger Agreement was amended to replace Mr. Ragazzo with James Cassidy, Two Trees’ Chairman of the Board as the party to indemnify the Company for certain breaches of the representations and warranties of Two Trees.
Non-Reliance on Previously Issued Financial Statements
On May 15, 2023, M&K CPAS, PLLC, the Company’s independent registered public accounting firm (“M&K”), notified the Company that the Company’s balance sheet as of December 31, 2022, and the related statements of operations, statement of changes in stockholders’ equity (deficit), and cash flows (the “2022 Financial Statements”) included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on March 27, 2023 (the “10-K”) should be restated and should no longer be relied upon.
Subsequent to the Company’s filing of the 10-K, it was discovered that a bank account of the Company was not included in the 10-K, and the Company determined that the errors required adjustment of 2022 Financial Statements. This led to an understatement of certain expenses and an understatement of the Company’s cash balance.
The Company and M&K determined that the reporting effects of the above errors had a material impact to the 2022 Financial Statements included in the 10-K. As a result, the 2022 Financial Statements will be restated, and the Company will file an amendment to the 10-K with the SEC.
The Company’s management concluded that in light of the errors mentioned above, a material weakness existed in the Company’s internal control over financial reporting as of December 31, 2022, and the Company’s disclosure controls and procedures were not effective as of December 31, 2022.
Going Concern
Conditions exist that raise substantial doubt about our ability to continue as a going concern due to our recurring losses from operations, deficit in equity, and the need to raise additional capital to fund operations. The “going concern” opinion could impair our ability to finance our operations through the sale of debt or equity securities.
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Results of Operations
Three Months Ended March 31, 2023 compared to Three Months Ended March 31, 2022
Revenues. We did not earn any revenues during the three months ended September 30, 2009March 31, 2023 and $2,197,482 for the nine months ended September 30, 2008.2022.
Operating Expenses. The Company recognized stock-based compensation expensereported operating expenses of $6,154$41,451, consisting primarily of legal, accounting and various other public company related expenses for the three months ended September 30, 2009 and $280,760March 31, 2023, compared to $5,494 for the three months ended September 30, 2008.
Shares | Weighted Average Exercise Price | |||||||
Outstanding at December 31, 2008 | 57,925,946 | $ | 0.80 | |||||
Granted | 3,043,142 | 0.35 | ||||||
Exercised | — | — | ||||||
Forfeited | (677,778 | ) | 2.50 | |||||
Outstanding at September 30, 2009 | 60,291,310 | $ | 0.74 | |||||
Common stock issuable upon exercise of warrants | 60,291,310 | $ | 0.74 |
Total Other Income. Total other income was $0 for the period ended September 30, 2008 (the “Restatement”). After reviewing certain accounting principles the Company had applied in previously issued financial statements, management determined that the Company’s accounting for Mandatorily Redeemable Convertible Series B Preferred Stock should have been recorded as Temporary Equity and not Debt and that previously issued Mandatorily Redeemable Convertible Series B Preferred Stock should not have been recorded as an extinguishment of debt when new Mandatorily Redeemable Convertible Series B Preferred Stock was issued on March 31, 2008. Consequently, management has restated its quarterly financial statements for the three and nine months ending September 30, 2008. For the three months ended September 30, 2008, these changes decreased net loss by $1,550,000 dueMarch 31, 2023, compared to a decrease in interest expense. For$0 for the ninethree months ended September 30, 2008, these changes decreased net loss by $3,994,204 due to a decrease in interest expense of $3,334,082 and due to the elimination of the loss on extinguishment of debt of $660,122. These changes also decreased current liabilities $2,500,000, increased temporary equity $2,638,192 and decreased stockholder’s deficiency $138,192. These changes in presentation of the Company’s Mandatorily Redeemable Convertible Series B Preferred Stock did not impact the cash balance at the end of the period.
Year Ending December 31 | Amount | |||
2009 | 16,216 | |||
2010 | 52,891 | |||
2011 | 52,805 | |||
2012 | 55,446 | |||
2013 | 33,267 | |||
$ | 210,625 |
Liquidity and Capital Resources
We believe that if we do not raise additional capital over the electronic medical claims processing, funding and collection solution business. This partnext 12 months, we may be required to suspend or cease the implementation of our business wasplans.
As of March 31, 2023 and 2022, we had $41,228 and $0 cash, respectively. We anticipate that our current cash and cash equivalents and cash generated from financing activities will be insufficient to satisfy our liquidity requirements for the next 12 months. As of March 31, 2023, the Company had incurred operating losses since inception of $489,167. At March 31, 2023, the Company had a working capital deficit of $70,820.
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 deemed viableinclude any longeradjustments relating to the recoverability and was closed downclassification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.
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 February 27, 2009.
September 30, 2009 | September 30, 2008 | |||||||
Employee benefits and payroll taxes | $ | 214,713 | $ | 337,994 | ||||
Information technology | 47,712 | 169,352 | ||||||
Occupancy and office expenses | 110,356 | 167,534 | ||||||
Other selling, general and administrative | 317,219 | 456,934 | ||||||
Total selling, general, and administrative | $ | 690,000 | $ | 1,131,814 |
Cash Flows
Cash Used in cash or additional shares of Series B Preferred Stock and are not payable until there are profits, surplus or other funds available for the payment of such dividends.
September 30, 2009 | September 30, 2008 | |||||||
Employee benefits and payroll taxes | 45,006 | 105,223 | ||||||
Information technology | (18,619 | ) | 84,568 | |||||
Occupancy and office expenses | 30,568 | 53,959 | ||||||
Other selling, general and administrative | 97,043 | 100,038 | ||||||
$ | 153,998 | $ | 343,788 |
Cash Provided by Financing Activities. Net cash provided by financing activities was $3,136,474 for the ninethree months ended September 30, 2009 as comparedMarch 31, 2023 and 2022 was $76,267 and $1,000, respectively. The increase was attributable to net cash provided by financing activities of $6,007,459 for the nine months ended September 30, 2008. During the nine months ended September 30, 2009, proceeds of $3,851,375 was received from a new Note,subscriptions agreements, offset by note repaymentsrepayment of a previous $300,000 note loaned to us by DOF and note placement and other note related costs totaling $414,901. During the nine months ended September 30, 2008 proceeds of $8,000,000 was received from the sale of Series B Preferred Stock, offset by repayments of notes and loans payable totaling $1,795,671 and note placement and other note related costs totaling $196,870.
Off-Balance Sheet Arrangements
There are no off balanceoff-balance sheet arrangements at September 30, 2009.
Recent Accounting Standards
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.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Item 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that material information relatingrequired to be disclosed in our reports filed or submitted under the Company,Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported, within the time period specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management including its consolidated subsidiaries, is made known on a timely basis to the officers who certify its financial reports and to other members of senior management and the Company’s board of directors. Based on their evaluation as of September 30, 2009, theour principal executive officer and principal financial officer ofas appropriate, to allow timely decisions regarding required disclosure.
The Company’s principal executive officer and principal financial officer have evaluated the Company have concluded thateffectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange ActAct) as of 1934) areMarch 31, 2023. Based upon such evaluation, the principal executive officer and principal financial officer have concluded that, as of March 31, 2023, the Company’s disclosure controls and procedures were not effective to ensure that the informationas required to be disclosed by the Company in the reports that it files or submitsunder Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.
Changes in Internal Control overOver Financial Reporting
There were no changes toin our internal controlscontrol over financial reporting that occurred(as defined in Rule 13a-15(f) or 15d-15(f)) during the three monthsquarter ended September 30, 2009,March 31, 2023 that have materially affected, or are reasonably likely to materially impactaffect, our internal controls over financial reporting.
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PART II — II—OTHER INFORMATION
Item 1 —1. Legal Proceedings
Currently we are not involved in ourany pending litigation previously reported.
Item 2 —1A. Risk Factors.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the three months ended March 31, 2023, the Company sold 1,141,298 shares of common stock for aggregate proceeds of $85,598.
The above securities issuances were exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), in reliance on the exemptions provided by Regulation D and Section 4(a)(2), as applicable under the Securities Act.
Item 3 —3. Defaults Upon Senior SecuritiesSecurities.
None
Item 4. Mine Safety Disclosure.
None
Item 5. Other Information.
None
Item 6. Exhibits
* | Filed herewith. |
** | Furnished herewith. |
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SIGNATURES
Pursuant to a Vote of Security Holders
MDWERKS, Inc. | ||
Date: June 8, 2023 | /s/ Steven C. Laker | |
( |