Exhibit 99.3
RF Specialties, LLC
Unaudited Financial Statements
September 30, 2023
Table of Contents
RF Specialties, LLC
Balance Sheets
(Unaudited)
| | | September 30, 2023 | | | December 31, 2022 | |
| | | | | | | |
| ASSETS | | | | | | | | |
| Current assets: | | | | | | | | |
| Cash | | $ | 97,894 | | | $ | 35,916 | |
| Accounts Receivable, Net | | | 78,443 | | | | 7,533 | |
| Total current assets | | | 176,337 | | | | 43,449 | |
| | | | | | | | | |
| Property & Equipment, Net | | | 188,112 | | | | 205,492 | |
| Other Assets | | | 16,010 | | | | - | |
| Right-of-use Asset | | | 820,192 | | | | - | |
| | | | | | | | | |
| Total assets | | | 1,200,651 | | | $ | 248,941 | |
| | | | | | | | | |
| LIABILITIES AND MEMBERS’ EQUITY(DEFICIT) | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Accounts Payable | | $ | - | | | $ | 26,015 | |
| Loan Payable, current | | | 22,342 | | | | 21,774 | |
| Accrued Expenses | | | 82,836 | | | | - | |
| Right-of-use Liability, current portion | | | 93,931 | | | | - | |
| Total current liabilities | | | 99,109 | | | | 47,789 | |
| | | | | | | | | |
| Loan Payable, net of current portion | | | 63,214 | | | | 80,882 | |
| Right-of-use Liability, net of current portion | | | 726,262 | | | | - | |
| Total liabilities | | | 988,584 | | | | 128,671 | |
| | | | | | | | | |
| Members’ Equity (Deficit): | | | | | | | | |
| Members’ equity (deficit): | | | (587,805 | ) | | | (540,000 | ) |
| Retained Earnings | | | 799,872 | | | | 600,270 | |
| Total Members’ Equity (Deficit) | | | 212,067 | | | | 120,270 | |
| | | | | | | | | |
| Total liabilities and Members’ Equity (Deficit) | | $ | 1,200,651 | | | $ | 248,941 | |
See the accompanying notes to these unaudited financial statements.
RF Specialties, LLC
Statements Of Operations
For The Nine Months Ended September 30, 2023 and 2022
(Unaudited)
| | | September 30, 2023 | | | September 30, 2022 | |
| | | | | | | |
| Revenue | | $ | 512,502 | | | $ | 463,171 | |
| Cost of Revenues | | | 149,325 | | | | 172,244 | |
| | | | 363,177 | | | | 290,927 | |
| | | | | | | | | |
| OPERATING EXPENSES: | | | | | | | | |
| | | | | | | | | |
| General & Administrative Expense | | | 182,456 | | | | 110,575 | |
| Depreciation & Amortization Expense | | | 35,246 | | | | 18,813 | |
| Total operating expenses | | | 217,702 | | | | 129,388 | |
| | | | | | | | | |
| Net Income from operations | | | 145,475 | | | | 161,539 | |
| | | | | | | | | |
| OTHER (INCOME) EXPENSES: | | | | | | | | |
| Gain on Sale of Assets | | | - | | | | (4,848 | ) |
| Interest Expense - Net | | | 5,873 | | | | 2,684 | |
| Total other (income) expense | | | 5,873 | | | | (2,164 | ) |
| | | | | | | | | |
| NET INCOME | | $ | 139,602 | | | $ | 163,703 | |
See the accompanying notes to these unaudited financial statements.
RF Specialties, LLC
Statements Of Members’ Equity (Deficit)
For The Nine Months Ended September 30, 2023 and 2022
(Unaudited)
| | | Members’
Equity | | | Retained | | | Total
Members’
Equity | |
| | | Amount | | | Earnings | | | (Deficit) | |
| Balance, December 31, 2021 | | $ | (518,595 | ) | | $ | 510,369 | | | $ | (8,226 | ) |
| | | | | | | | | | | | | |
| Distribution to Member(s) | | | (16,944 | ) | | | - | | | | (16,944 | ) |
| | | | | | | | | | | | | |
| Net Income | | | - | | | | 163,703 | | | | 163,703 | |
| | | | | | | | | | | | | |
Balance, September 30, 2022 | | $ | (535,539 | ) | | $ | 674,072 | | | $ | 138,533 | |
| | | | | | | | | | | | | |
| Balance, December 31, 2022 | | $ | (540,000 | ) | | $ | 660,270 | | | $ | 120,270 | |
| | | | | | | | | | | | | |
| Distribution to Member(s) | | | (47,805 | ) | | | - | | | | (47,805 | ) |
| | | | | | | | | | | | | |
| Net Income | | | - | | | | 139,602 | | | | 139,602 | |
| | | | | | | | | | | | | |
| Balance, September 30, 2023 | | $ | (587,805 | ) | | $ | 799,872 | | | $ | 212,067 | |
See the accompanying notes to these unaudited financial statements.
RF Specialties, LLC
Statements of Cash Flows
For The Nine Months Ended September 30, 2023 and 2022
(Unaudited)
| | | September 30, 2023 | | | September 30, 2022 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | |
| Net Income | | $ | 139,602 | | | $ | 163,703 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
| Gain on Sale of Assets | | | - | | | | (4,848 | ) |
| Depreciation Expense | | | 35,246 | | | | 18,813 | |
| Changes in operating assets and liabilities: | | | | | | | | |
| Accounts Receivable | | | (70,910 | ) | | | 5,049 | |
| Other Assets | | | (16,010 | ) | | | 1,250 | |
| Accounts Payable | | | (26,015 | ) | | | (23,083 | ) |
| Accrued Expenses | | | 82,836 | | | | 64,495 | |
| Net cash used in operating activities | | | 144,749 | | | | 225,379 | |
| | | | | | | | | |
| CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | |
| Purchases of property and equipment | | | (17,866 | ) | | | (113,841 | ) |
| Net cash provided by (used in) investing activities | | | (17,866 | ) | | | (113,841 | ) |
| | | | | | | | | |
| CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | |
| Payments on loans payable | | | (17,100 | ) | | | (19,145 | ) |
| Distributions to Member (s) | | | (47,805 | ) | | | (16,944 | ) |
| Net cash provided by financing activities | | | (64,905 | ) | | | (36,089 | ) |
| | | | | | | | | |
| Net change in cash | | | 61,978 | | | | 75,449 | |
| | | | | | | | | |
| Cash at beginning of period | | | 35,916 | | | | 5,571 | |
| | | | | | | | | |
| Cash at end of period | | $ | 97,894 | | | $ | 81,020 | |
| | | | | | | | | |
| Supplemental disclosure of cash flow information: | | | | | | | | |
| Cash paid for interest | | | - | | | | - | |
| Cash paid for taxes | | | - | | | | - | |
| | | | | | | | | |
| Supplemental disclosure of cash flow from financing activities: | | | | | | | | |
| Vehicles purchased through loans payable | | $ | - | | | $ | 108,331 | |
| Initial recognition of ASC 842 | | $ | 842,455 | | | $ | - | |
| Loans payable settled with vehicle trade-in | | $ | - | | | $ | 45,000 | |
See the accompanying notes to these unaudited financial statements.
RF Specialties, LLC
Notes to the Financial Statements
(Unaudited)
| Note 1: | Organization, Nature of Operations and Summary of Significant Accounting Policies |
Company Operations
RF Specialties, LLC is an innovative company pushing the boundaries of sustainable Radio Frequency applications. For over 12 years RF Specialties has addressed companies’ most pressing challenges by implementing automated Radio Frequency Technology in a sustainable way reducing energy costs and increasing speed to market when compared to traditional methods. By bringing Radio Frequency applications to market RF Specialties has successfully elevated a wide range of industries including structural engineering, food & beverage, and manufacturing.
Basis of Presentation
The accompanying interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2022. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been omitted from this report.
Results for the interim periods in this report are not necessarily indicative of future financial results and have not been audited by our independent registered public accounting firm. In the opinion of management, the accompanying unaudited financial statements include all adjustments necessary to present fairly our interim financial statements as of September 30, 2023, and for the nine months ended September 30, 2023, and 2022. These adjustments are of a normal recurring nature and consistent with the adjustments recorded to prepare the annual audited financial statements as of December 31, 2022.
Going Concern
The Company’s interim financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has had minimal working capital since inception and expects to continue to have minimal working capital. The Company’s management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that may result from the outcome of this uncertainty.
Accounts Receivable and the Allowances for Doubtful Accounts
Accounts receivable are recorded in the period when the right to receive payment or other consideration becomes unconditional. Accounts receivable are recorded at the invoiced amount and do not earn interest.
The Company maintains an allowance for doubtful accounts based upon the best estimate of probable credit losses in existing accounts receivable. The Company determines the allowance based upon individual accounts when information indicates the customers may have an inability to meet their financial obligations, as well as historical collection and write-off experience. The company had an accounts receivable balance of $78,443 and $7,533 net of zero allowance for doubtful accounts as of September 30, 2023, and December 31, 2022.
Recently Adopted Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326)” (“ASU 2016-13”). The standard introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses and will apply to trade receivables. The new guidance will be effective for the Company’s annual and interim periods beginning after December 15, 2022. The Company is currently evaluating the impact of the adoption of the standard on the financial statements.
The Company is 100% owned by the sole owner Keith Mort. During the year ended December 31, 2022, distributions to the owner were $21,405. During the periods ended September 30, 2023, and 2022, distributions to the owner were $47,805 and $16,944, respectively.
Other assets as of September 30, 2023 consist of a utility deposit and rent deposit for lease in 2023. Balances as of September 30, 2023, and December 31, 2022, were $16,010 and $0, respectively.
| Note 4: | Accounts Payable and Accrued Expenses |
The Company’s accounts payable were $0 and $26,015 as of September 30, 2023, and December 31, 2022, respectively and consists of trade payables.
The Company’s accrued expenses were $82,836 and $0 as of September 30, 2023, and December 31, 2022, respectively and consists of credit cards, rent and payroll liabilities.
| Note 5 | Contingencies and Concentration of Risks |
Contingencies
The Company is subject to various claims that arise in the normal course of business. In the opinion of management, the ultimate disposition of such claims will not have a material adverse effect on the financial position or results of operations of the Company.
Concentration of risks
Four of the Company’s customers accounted for more than 10% of its revenues as of December 31, 2022, Customer A with 25%, Customer B with 24%, Customer C with 22% and Customer D with 18%.
Two of the Company’s customers accounted for more than 10% of its accounts receivable as of September 30, 2023, Customer A with 84% and Customer B with 12%.
| Note 6: | Member’s Equity (Deficit) |
The Company is 100% owned by the sole owner Keith Mort. During the year ended December 31, 2022, distributions to the owner were $21,405. During the periods ended September 30, 2023 and 2022, distributions to the owner were $47,805 and $16,944, respectively.
Loans payable for the nine months ended September 30, 2023, are listed in the table below:
| Loans | | Origination
Date | | Interest
Rate | | | 12/31/22
Balance | | | 2023
Repayments | | | 9/30/2023
Balance | |
| Loan Payable - Mercedes | | 9/19/2022 | | | 6.79 | % | | | 71,709 | | | | 8,115 | | | | 63,594 | |
| Loan Payable - Dodge | | 6/18/2022 | | | 0.00 | % | | | 30,947 | | | | 8,985 | | | | 21,962 | |
| Line of Credit - Wells Fargo | | Various | | | 11.25 | % | | | - | | | | - | | | | - | |
| Total | | | | | | | | $ | 102,656 | | | $ | 17,100 | | | $ | 85,556 | |
Interest expense of $5,875 and $1,891 was recorded in the periods ended September 30, 2023, and 2022, respectively. Accrued interest as of September 30, 2023, and December 31, 2022, was zero.
Loans payable for the year ended December 31, 2022, are listed in the table below:
| Loans | | Origination
Date | | Interest
Rate | | | 12/31/21
Balance | | | 2022
Borrowings | | | 2022
Repayments | | | 12/31/22
Balance | |
| Loan Payable - Ally | | 3/12/2020 | | | 5.79 | % | | | 41,869 | | | | - | | | | 41,869 | | | | - | |
| Loan Payable - Mercedes | | 9/19/2022 | | | 6.79 | % | | | - | | | | 72,393 | | | | 684 | | | | 71,709 | |
| Loan Payable - Dodge | | 6/18/2022 | | | 0.00 | % | | | - | | | | 35,938 | | | | 4,991 | | | | 30,947 | |
| Line of Credit - Wells Fargo | | Various | | | 11.25 | % | | | 24,696 | | | | - | | | | 24,696 | | | | - | |
| Total | | | | | | | | $ | 66,565 | | | $ | 108,331 | | | $ | 72,240 | | | $ | 102,656 | |
On September 19, 2022, the Company sold a 2020 Ford Expedition in conjunction with the acquisition of another vehicle. The Ford Expedition had a cost of $66,947 with a net book value of $40,152 on the date of the sale. The trade in resulted in a credit of $45,000 applied against the new vehicle purchase and a gain of $4,848 being recorded on the sale.
During the year ended December 31, 2022, the Company acquired two vehicles through financing in the amount of $108,331. During the year ended December 31, 2022, the Company repaid various loan payables and a line of credit for a total amount of $30,372 in repayments.
The following is a summary of the future minimum payments of loans payable:
| Year Ending | | | |
| September 30, | | | |
| 2024 | | $ | 22,460 | |
| 2025 | | | 19,201 | |
| 2026 | | | 12,000 | |
| 2027 and Thereafter | | | 31,895 | |
| | | $ | 85,556 | |
| Note 8: | Property and Equipment |
Property and equipment consisted of the following as of September 30, 2023, and December 31, 2022:
| | | 2023 | | | 2022 | |
| Furniture & fixtures | | $ | 3,299 | | | $ | 2,101 | |
| Equipment | | | 24,505 | | | | 24,505 | |
| Building | | | 10,919 | | | | - | |
| Vehicles | | | 196,870 | | | | 196,870 | |
| Office & Computer equipment | | | 11,527 | | | | 5,778 | |
| Less accumulated depreciation | | | (59,008 | ) | | | (23,762 | ) |
| Total property and equipment, net | | $ | 188,112 | | | $ | 205,492 | |
Purchases of property and equipment totaled $17,866 and $113,856 for the nine months ended September 30, 2023, and 2022, respectively, with $108,331 of the 2022 additions being financed.
A gain of $4,848 was recorded in the period ended September 30, 2022, for the September 19, 2022, sale of a 2020 Ford Expedition in conjunction with the acquisition of another vehicle. The Ford Expedition had a cost of $66,947 with a net book value of $40,152 on the date of the sale. The trade-in resulted in a credit of $45,000 applied against the new vehicle purchase and a gain of $4,848 being recorded on the sale.
The Company maintains an operating lease for its office space and operating facility. The lease has a remaining term of 80 months. The Company determines if an arrangement is a lease at inception. As the rate implicit in each lease is not readily determinable, the Company uses its incremental borrowing rate based on information available at commencement to determine the present value of the lease payments. Right-of-use assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Leases with an initial term of 12 months or less (“short-term leases”) are not recorded on the balance sheet and are recognized on a straight-line basis over the lease term. As of September 30, 2023, and December 31, 2022, the amount of right-of-use assets and lease liabilities were $820,192 and $0, respectively. Aggregate lease expense for the nine months ended September 30, 2023, and 2022 were $22,263 and $0, respectively.
| | | | | | Remaining | |
| | | Operating | | | Term in | |
| | | Lease | | | Years | |
| 2024 | | | 160,200 | | | | | |
| 2025 | | | 160,200 | | | | | |
| 2026 | | | 160,200 | | | | | |
| 2027 | | | 160,200 | | | | | |
| 2028 | | | 160,200 | | | | | |
| 2029 | | | 160,200 | | | | | |
| 2030 | | | 120,150 | | | | | |
| Total lease payments | | | 1,081,350 | | | | | |
| Less: imputed interest | | | (261,158 | ) | | | | |
| Present value of lease liability | | | 820,192 | | | | 6.67 | |
The Company recorded nominal interest income during the nine months ended September 30, 2022, for late fees charged to customers on invoices.
| Note 11: | Subsequent Events |
In preparing these financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through May 24, 2024, the date these financial statements were available to be issued. Other than those disclosed below, Management was not aware of any subsequent events requiring additional accrual or disclosure in the accompanying financial statements.
On January 19, 2023, the Company entered into an Exchange Agreement (the “Exchange Agreement”), by and between the Company, MDwerks, Inc. (“MDwerks”) and Keith A. Mort as the sole member of the Company. Pursuant to the terms of the Exchange Agreement, MDwerks agreed to acquire from Mr. Mort, and Mr. Mort agreed to sell to MDwerks, 100% of the equity interests and membership interests of the Company, in exchange for the issuance by MDwerks to Mr. Mort of 7,500,000 shares of MDwerk’s common stock, par value $0.001 per share (the “Exchange”). The transaction closed on December 27, 2023. Immediately following the Exchange, RFS became a wholly owned subsidiary of MDwerks.
