MDWerks, Inc. 10-K/A

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. The following discussion and analysis should be read in conjunction with our audited financial statements and the accompanying notes thereto included in “Item 8. Financial Statements and Supplementary Data.” In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. See “Forward-Looking Statements.” Our results and the timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors. Plan of Operations As of December 31, 2022, we had not commenced any operations. All activity for the period from January 1, 2022 through December 31, 2022, relates to our focus on effecting a “reverse merger,” capital exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more unrelated businesses (the “Business Combination”) that would benefit from our public reporting status. In addition, we completed a change of control transaction on July 21, 2022 (the “Change of Control”) as discussed below. See Item 1. Business – Recent Developments - Change of Control. 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”) discussed below (collectively, the “Planned Acquisitions”). See Item 1. Business – Recent Developments – RF Specialties, Inc. and Item 1. Business – Recent Developments –Two Trees. 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. Restatement of Previously Issued Consolidated Financial Statements In December 2022 Tradition Reserve 1 LLC contributed $30,100 to MDWerks Inc. These funds represent the holdback amount of the purchase price between Tradition Reserve 1 LLC and Ronin Equity Partners Inc. and were used to open a new bank account. This new bank account for MDWerks Inc. was inadvertently not included in the year end audit. The bank account was set up at the end of 2022 to receive funds that were held back from the purchase price of the preferred shares Tradition Reserve 1 LLC purchased from Ronin Equity Partners Inc. that closed on July 1, 2022. Such funds reflected expenses incurred that were indemnified by the Seller pursuant to the Purchase Agreement. These funds were held in the attorney’s escrow account and transferred to the new account upon opening. The total funds received into the bank account were $30,100. This amount represents the holdback amount less the amounts set off against the holdback amount pursuant to the Agreement. As a result of the bank account not being included in the year end audit, MDWK’s cash balances were understated ($30,100 less expenses paid from the account before year end), along with expenses being understated in the amount that were paid from that account. These funds were recorded and treated as contributed capital by the Company. 13 Results of Operations Fiscal Year Ended December 31, 2022 compared to Year Ended December 31, 2021 We did not earn any revenues for the year ended December 31, 2022 and December 31, 2021. Operating Expenses . The Company reported operating expenses of $153,713 consisting primarily of legal, accounting and various other public company related expenses for the year ended December 31, 2022 compared to $20,798 for the year ended December 31, 2021. The $132,915 increase was primarily attributable to increased legal and accounting fees related to our public company reporting obligations as well as our activities related to the transactions involving the Change of Control and the Planned Acquisitions. Total Other Income . Total other income was $0 for the year ended December 31, 2022 compared to $58,774 for the year ended December 31, 2021. The $58,744 decrease was attributable to absence of a gain on forgiveness of debt and interest expense. Liquidity and Capital Resources We believe that if we do not raise additional capital over the next 12 months following the filing of this annual report, we may be required to suspend or cease the implementation of our business plans. As of December 31, 2022 our cash balance was $23,715 and December 31, 2021, we had no cash. 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. To date, the Company has incurred operating losses since inception of $447,716. At December 31, 2022, the Company has working capital deficit of $114,967. 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 include any adjustments relating to the recoverability and classification 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 favorable terms, if at all. The Company intends to continue to fund its business by way of equity or debt financing and advances from related parties. Any inability to raise capital as needed would have a material adverse effect on our business, financial condition and results of operations. Cash Flows Cash Used in Operating Activities. Net cash used in operating activities for the years ended December 31, 2022 and 2021, were $120,374 and $19,659. The increase was attributable to an increase in net loss partially offset by an increase in accounts payable. Cash Provided by Financing Activities. Net cash provided by financing activities for the years ended December 31, 2022 and 2021, were $144,089 and $19,659. The increase was attributable to an increase in advances payable and contributed capital. Off Balance Sheet Arrangements There are no off-balance sheet arrangements currently contemplated by management or in place that are reasonably likely to have a current or future effect on the business, financial condition, changes in financial condition, revenue or expenses, result of operations, liquidity, capital expenditures and/or capital resources. 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 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable to a “smaller reporting company” as defined in Rule 12b-2 of the Exchange Act. 14