8-K: MDwerks Inc. Finalizes Acquisitions of Two Trees Beverage Co. and RF Specialties LLC, Releases Pro Forma Financials

MDwerks Inc. has completed the acquisitions of Two Trees Beverage Co. and RF Specialties LLC, and released unaudited pro forma combined financial statements to illustrate the impact of these transactions.

Summary

• MDwerks Inc. completed the acquisition of Two Trees Beverage Co. on December 8, 2023, and RF Specialties LLC on December 27, 2023.
• The acquisition of Two Trees involved the issuance of 60,000,000 shares of MDwerks common stock to Two Trees stockholders.
• The acquisition of RF Specialties involved the issuance of 7,500,000 shares of MDwerks common stock to Keith A. Mort.
• Pro forma combined financial statements are presented as if the Two Trees merger occurred on September 30, 2023, for the balance sheet, and January 1, 2022, for the statements of operations.
• The pro forma combined balance sheet as of September 30, 2023, shows total assets of $3,007,152.
• The pro forma combined statement of operations for the nine months ended September 30, 2023, shows a net loss of $914,479.
• The pro forma combined statement of operations for the year ended December 31, 2022, shows a net loss of $2,447,140.
• The purchase price for Two Trees was preliminarily allocated with $604,652 to goodwill and the purchase price for RF Specialties was preliminarily allocated with $12,933 to goodwill.
• The pro forma financial statements are for informational purposes and may not be indicative of future results.

Sentiment

Score: 3

Explanation: The document highlights significant losses and the pro forma nature of the financials suggests uncertainty. While acquisitions can be positive, the current financial picture is concerning.

Positives

• The acquisitions of Two Trees and RF Specialties expand MDwerks' business portfolio.
• The pro forma statements provide a clear picture of the combined financial position of the company after the acquisitions.

Negatives

• The pro forma combined statements show significant net losses for both the nine months ended September 30, 2023, and the year ended December 31, 2022.
• The pro forma financial statements are not necessarily indicative of future results.

Risks

• The actual results could differ from the pro forma adjustments due to various factors.
• The final purchase price allocations for the acquired businesses may differ materially from the preliminary allocations.
• The acquired businesses have a history of losses and may continue to incur losses.
• The RF Specialties shares issued to Mr. Mort are subject to a 24-month lock-up period, which could impact the stock price when the shares are released.

Future Outlook

The unaudited pro forma combined financial statements are presented for informational purposes only and are not necessarily indicative of the results of operations that would have resulted had the Merger been consummated on the dates indicated and should not be construed as being representative of the Company's future results of operations or financial position.

Management Comments

• Management believes that all adjustments necessary to present fairly the unaudited pro forma combined financial statements have been made.

Industry Context

The acquisitions reflect a trend of consolidation and strategic expansion within the beverage and technology sectors, as companies seek to diversify their offerings and gain market share.

Comparison to Industry Standards

• The pro forma losses are significant and would be considered poor compared to industry standards for established companies.
• The goodwill allocation is typical in acquisitions, but the large amount for Two Trees may indicate a premium paid for the acquisition.
• The lock-up period for the RF Specialties shares is a common practice to ensure stability post-acquisition, but the staggered release could create volatility.
• Comparable companies in the beverage industry, such as Coca-Cola or PepsiCo, typically report consistent profits, unlike the pro forma losses shown here.
• Technology companies, such as those in the radio frequency space, often have high initial investment costs, but the losses here are still significant compared to industry benchmarks.

Stakeholder Impact

• Shareholders will be impacted by the dilution of shares due to the issuance of stock for the acquisitions.
• Employees of the acquired companies will be integrated into MDwerks.
• Customers of the acquired companies will now be customers of MDwerks.
• Suppliers of the acquired companies will now be suppliers to MDwerks.
• Creditors of the acquired companies will now be creditors of MDwerks.

Next Steps

• The company will finalize the purchase price allocations for the acquired businesses within one year of the merger.
• The company will integrate the operations of Two Trees and RF Specialties into its existing business.
• The company will need to improve the financial performance of the combined entity.

Key Dates

Keywords

acquisitions, pro forma, financial statements, merger, MDwerks, Two Trees Beverage Co, RF Specialties LLC, goodwill, business combination