10-K: MDwerks Inc. Completes Acquisitions, Reports First Revenue in Annual Filing

MDwerks Inc. reports its first revenue following the acquisition of Two Trees Beverage Co. and RF Specialties, LLC, while also detailing its financial position and internal control weaknesses in its annual 10-K filing.

Summary

• MDwerks Inc., a Delaware corporation, completed the acquisition of Two Trees Beverage Co. and RF Specialties, LLC in December 2023.
• The company generated $104,066 in revenue for the year ended December 31, 2023, primarily from liquor sales, compared to no revenue in 2022.
• The company reported a net loss of $291,672 for 2023, compared to a net loss of $153,713 in 2022.
• Operating expenses increased to $528,114 in 2023, up from $153,713 in 2022, due to increased legal, payroll, and accounting fees.
• The company had a working capital deficit of $517,889 as of December 31, 2023.
• The company's independent auditor has expressed substantial doubt about its ability to continue as a going concern without additional capital.
• As of December 31, 2023, the company had $115,111 in cash and cash equivalents.
• The company issued 67,500,000 shares of common stock for the acquisitions of Two Trees and RF Specialties, LLC.
• The company sold certain tangible manufacturing assets for $195,000, recognizing a gain of $168,855.

Sentiment

Score: 3

Explanation: The document highlights significant financial challenges, including a net loss, working capital deficit, and a going concern warning from the auditor. While there are some positives, such as the acquisitions and first revenue, the overall tone is negative due to the financial instability and internal control weaknesses.

Positives

• The company generated its first revenue of $104,066 in 2023.
• The company completed two acquisitions, expanding its business operations.
• The company recognized a gain of $168,855 on the sale of assets.
• The company has developed innovative technologies in radio frequency and microwave applications.

Negatives

• The company reported a net loss of $291,672 for 2023.
• The company has a working capital deficit of $517,889.
• The company's auditor has expressed substantial doubt about its ability to continue as a going concern.
• The company has material weaknesses in its internal controls over financial reporting.
• The company has not paid any dividends on common stock since its inception.

Risks

• The company may not be able to continue as a going concern if it does not obtain additional financing.
• The company has incurred net losses since its inception and expects losses to continue.
• The company's operating results may prove unpredictable.
• The company's common stock is subject to penny stock rules.
• The company has material weaknesses in its internal controls over financial reporting.
• The company has limited operating history.
• The company may not be able to generate enough working capital from future equity sales.
• The company may experience operational difficulties and delays due to working capital restrictions.
• The company's current CEO and CFO has other business interests which may impact their time commitment to the company.

Future Outlook

The company anticipates that its current cash and cash generated from financing activities will be insufficient to satisfy its liquidity requirements for the next 12 months and will need to raise additional capital.

Management Comments

• Management has expressed substantial doubt about our ability to continue as a going concern.
• Management believes that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on the Companys Board.
• Management believes that preparing and implementing sufficient written policies and checklists will remedy the following material weaknesses (i) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (ii) ineffective controls over period end financial close and reporting processes.

Industry Context

The company's focus on sustainable technology and energy wave technologies aligns with growing industry trends towards environmentally friendly and efficient solutions. The acquisition of a beverage company with a rapid-aging system also reflects a move towards innovative production methods in the alcoholic beverage industry.

Comparison to Industry Standards

• The company's revenue of $104,066 is very low compared to established companies in the beverage and technology sectors.
• The company's net loss of $291,672 and working capital deficit of $517,889 indicate significant financial challenges compared to industry benchmarks.
• The company's lack of a functioning audit committee and material weaknesses in internal controls are below industry standards for public companies.
• The company's reliance on equity financing and shareholder loans is not uncommon for early-stage companies, but the going concern warning is a significant concern.
• The company's technology patents in radio frequency and microwave applications are a potential competitive advantage, but their commercial viability remains to be seen.

Corporate Governance

Related Party Transactions

• During July 2022, the company's obligations under convertible notes and advances payable aggregating $239,444 were forgiven as part of a Stock Purchase Agreement, which was recognized as an in substance related party transaction.
• In December 2022, Tradition Reserve 1 LLC contributed $30,100 as contributed capital, representing a holdback amount from a previous transaction.

Stakeholder Impact

• Shareholders face significant risk due to the company's financial instability and going concern warning.
• Employees may be impacted by potential cost-cutting measures or restructuring due to the company's financial challenges.
• Customers may be affected by potential disruptions in service or product availability due to the company's financial instability.
• Creditors face increased risk of non-payment due to the company's financial challenges.

Next Steps

• The company will seek to raise additional capital through equity or debt financing.
• The company will work to improve its internal controls over financial reporting.
• The company will continue to integrate the acquired businesses.
• The company will evaluate its use of human capital measures and objectives to ensure a stable workforce.

Key Dates

Keywords

acquisitions, reverse merger, radio frequency, microwave technology, alcoholic beverages, sustainable technology, internal controls, financial reporting, going concern, penny stock, Two Trees Beverage Co., RF Specialties, LLC