Filed
pursuant to Rule 424(b)(3)
Registration
Statement File No. 333-132296
PROSPECTUS
SUPPLEMENT NO. 5
TO
PROSPECTUS
DATED APRIL 25, 2007
MDWERKS,
INC.
This
prospectus supplement should be read in conjunction with our prospectus
dated
April
25, 2007 and in particular “Risk Factors” beginning on page 7 of the
prospectus.
This
prospectus supplement includes the attached Current Report on Form 8-K of
MDwerks, Inc.,
filed
with the Securities and Exchange Commission on October 2, 2007.
The
date of this prospectus supplement is October 2, 2007
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT PURSUANT
TO
SECTION 13 OR 15(D) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of
Report (Date of earliest event reported): September 28, 2007
MDWERKS,
INC.
(Exact
name of registrant as specified in its charter)
Delaware
(State
or
Other Jurisdiction of Incorporation)
|
333-118155
|
33-1095411
|
|
(Commission
File Number)
|
(IRS
Employer Identification Number)
|
Windolph
Center, Suite I
1020
N.W.
6th
Street
Deerfield
Beach, FL 33442
(Address
of Principal Executive Offices)
(954)
389-8300
(Registrant’s
Telephone Number, Including Area Code)
(Former
Name or Former Address, if Changed Since Last Report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
| □ |
Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
|
| □ |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14-12)
|
| □ |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
|
| □ |
Pre-commencement
communications pursuant to Rule 13-e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
|
Item
1.01 Entry
into a Material Definitive Agreement
On
September 28, 2007, we received net proceeds of $1,691,445 in connection with
a
financing provided by Vicis Capital Master Fund (the “Investor”), an
unaffiliated accredited institutional investor. In connection with the
financing, pursuant to the terms of a Securities Purchase Agreement, we issued
200 shares of Series B Convertible Preferred Stock (a “Series B Preferred
Stock”), a seven year Series F Warrant to purchase 1,500,000 shares of our
common stock at a price of $2.25 per share and a seven year Series G Warrant
to
purchase 1,000,000 shares of our common stock at a price of $2.50 per share.
As
security for our obligations, we, along with our subsidiaries, MDwerks Global
Holdings, Inc., Xeni Medical Systems, Inc., Xeni Financial Services, Corp.,
Xeni
Medical Billing, Corp. and Patient Payment Solutions, Inc. entered into Security
Agreements with the Investor, pursuant to which we granted to the Investor
a
security interest in all of our assets, except for the accounts receivable
and
certain contract rights of Xeni Financial Services, Corp.
Our
subsidiaries, MDwerks Global Holdings, Inc., Xeni Medical Systems, Inc., Xeni
Financial Services, Corp., Xeni Medical Billing, Corp. and Patient Payment
Solutions, Inc. are also parties to Guaranty Agreements, pursuant to which
they
have agreed to unconditionally guaranty our obligations under the Series B
Preferred Stock and the documents entered into by us in connection the sale
of
the Series B Preferred Stock.
In
connection with the sale of the Series B Preferred Stock, we entered into a
Registration Rights Agreement, pursuant to which we agreed to register for
resale, the shares of our common stock into which the Series B Preferred Stock
is convertible and the shares of our common stock for which the Series F
Warrants and the Series G Warrants are exercisable.
In
connection with the Sale of the Series B Preferred Stock the Company entered
into an Amendment, Consent and Waiver agreement with Gottbetter Capital Master,
Ltd.
The
following summary description of the material agreements entered into in
connection with the transaction described above and the terms of the Series
B
Preferred Stock is qualified in its entirety by reference to the copies of
such
material agreements and the Certificate of Designations for the Series B
Preferred Stock filed as exhibits to this Current Report on Form 8-K.
Securities
Purchase Agreement
The
Securities Purchase Agreement by and between Investor and us provides for
the sale of (i) 200 shares of Series B Preferred Stock (ii) Series F Warrants
to
purchase an aggregate of 1,500,000 shares of Common Stock and (iii) Series
G
Warrants to purchase an aggregate of 1,000,000 shares of Common Stock. Pursuant
to the Securities Purchase Agreement, the aggregate purchase price for the
Series Preferred Stock, the Series F Warrants and the Series G Warrants was
$2
million. Payment was made by $1,691,445 in cash, the conversion of $251,555
in
principal and interest of a certain promissory note, dated August 31, 2007,
issued by the Company to the Purchaser in the original principal amount of
$250,000 and deduction of certain closing expenses.
2
The
Securities Purchase Agreement provides to the Investor, for a period of eighteen
months after the closing date, a right of first refusal with respect to
subsequent placements of equity or equity equivalent securities by
us.
The
Securities Purchase Agreement contains certain restrictions on our ability
to:
(i) declare dividends; (ii) reclassify, combine or reverse split our Common
Stock; (iii) incur liens; (iii) incur certain types of indebtedness; (iv) issue
classes of securities senior to, or parri
passu
with,
the Series B Preferred Stock; (v) liquidate or sell a substantial portion of
our
assets; (vi) enter into transactions that would result in a Change of Control
(as defined in the Securities Purchase Agreement); (vi) amend our charter
documents in a way that adversely affects the rights of the Investor; (vii)
except through Xeni Financial Services, Corp., make loans to, or advances or
guarantee the obligations of, third parties; (viii) make intercompany transfers;
(ix) engage in transactions with officers, directors, employees or affiliates;
(x) divert business to other business entities; (xi) make investments in
securities or evidences of indebtedness (excluding of loans made by Xeni
Financial Services, Corp.) in excess of $250,000 in a calendar year; and (xii)
file registration statements.
Events
of
default under the Securities Purchase Agreement include: (i) default in the
payment of dividends on, or the failure to redeem, the Series B Preferred Stock
when due; (ii) failure to perform the covenants contained in the Securities
Purchase Agreement or the related transaction documents; (iii) failure to file,
or cause to become effective, a registration statement covering the shares
of
Common Stock underlying the Series F Warrants, the Series G Warrants and the
Series B Preferred Stock within the timeframes required by the Registration
Rights Agreement or the failure to keep such registration effective as required
by the Registration Rights Agreement; (iv) suspension from listing on the OTC
Bulletin Board or other exchange for 10 consecutive trading days; (v) the
failure to timely deliver shares of Common Stock upon conversion of the Series
B
Preferred Stock or exercise of the Series F Warrants or the Series G Warrants;
(vi) default in the payment of indebtedness in excess of $250,000; (vii) a
judgment entered against us in excess of $250,000; and (viii) insolvency,
bankruptcy and similar circumstances.
The
Securities Purchase Agreement also contains customary representations,
warranties, covenants and indemnification provisions for transactions of the
type entered into between the Company and Investor.
Series
B Preferred Stock
The
Certificate of Designations, which designates the rights, preferences,
privileges and terms of the Series B Preferred Stock (the “Certificate of
Designations”) provides that the Series B Preferred Stock will rank senior to
other classes of Common Stock and preferred Stock that are currently outstanding
as to distributions of assets upon liquidation, dissolution or winding up,
and
as to payment of dividends on shares of equity securities.
3
Each
share of Series B Preferred Stock is entitled to cumulative dividends at the
annual rate of 8% of the stated value of the Series B Preferred Stock The stated
value of each share of Series B Preferred Stock is $10,000. Dividends are
payable in cash or additional shares of Series B Preferred Stock.
Each
share of Series B Preferred Stock is convertible, at any time, at the option
of
the holder, into the number of shares of our 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 $2.25 per
share.
The
conversion price is subject to adjustment for stock splits, dividends,
subdivisions, distributions reorganizations and similar transactions.
Furthermore, the conversion price is also subject to adjustment in the event
of
the issuance of securities for a price below the conversion price then in effect
or the issuance of convertible securities with an exercise or conversion price
that is less than the then current conversion price for the shares of Series
B
Preferred Stock.
To
the
extent that any shares of Series B Preferred Stock remain outstanding on
September 28th,
2008,
each holder thereof shall have the option to either require us to redeem such
holder’s shares of Series B Preferred Stock or convert such holder’s shares of
Series B Preferred Stock into shares of our Common Stock at the conversion
price
then in effect.
The
Series B Preferred Stock also provides the holders thereof with the option
to
require us to redeem shares of Series B Preferred Stock in the event of a Change
of Control (as defined in the Certificate of Designations).
The
Series B Preferred Stock will vote on matters submitted to our stockholders
as
if the Series B Preferred Stock had been converted into shares of Common Stock
pursuant to the terms of the Certificate of Designations. To the extent the
holders of Series B Preferred Stock are required to vote separately, as a class,
the affirmative vote of the holders of a majority of the outstanding shares
of
Series B Preferred Stock will be required to approve the matter to be voted
upon.
Series
F Warrants
The
Series F Warrants are exercisable at a price of $2.25 per share for a period
of
seven years from the date of issuance. The Series F Warrants may be exercised
on
a cashless basis. The exercise price will be subject to adjustment in the event
of subdivision or combination of shares of our Common Stock and similar
transactions, distributions of assets, issuances of shares of Common Stock
with
a purchase price below the exercise price of the Series F Warrants, issuances
of
any rights, warrants or options to purchase shares of our Common Stock with
an
exercise price below the exercise price of the Series F Warrants, issuances
of
convertible securities with a conversion price below the exercise price of
the
Series F Warrants.
4
Series
G Warrants
The
Series G Warrants are exercisable at a price of $2.50 per share for a period
of
seven years from the date of issuance. The Series G Warrants may be exercised
on
a cashless basis. The exercise price will be subject to adjustment in the event
of subdivision or combination of shares of our Common Stock and similar
transactions, distributions of assets, issuances of shares of Common Stock
with
a purchase price below the exercise price of the Series G Warrants, issuances
of
any rights, warrants or options to purchase shares of our Common Stock with
an
exercise price below the exercise price of the Series G Warrants, issuances
of
convertible securities with a conversion price below the exercise price of
the
Series G Warrants.
Security
Agreement
We,
along
with our subsidiaries MDwerks Global Holdings, Inc., Xeni Medical Systems,
Inc.,
Xeni Financial Services, Corp., Xeni Medical Billing, Corp. and Patient Payment
Solutions, Inc., entered into Security Agreements with the Investor. The
Security Agreements provide for liens in favor of the Investor on all of our
assets, including the assets of each of our subsidiaries, except for the
accounts receivable and certain contract rights of Xeni Financial Services,
Corp.
Guaranty
Agreement
Our
subsidiaries, MDwerks Global Holdings, Inc., Xeni Medical Systems, Inc., Xeni
Financial Services, Corp., Xeni Medical Billing, Corp. and Patient Payment
Solutions, Inc. entered into Guaranty Agreements with the Investor, pursuant
to
which they have agreed to unconditionally guaranty our obligations under the
Series B Preferred Stock and the documents entered into by us in connection
with
the sale of the Series B Preferred Stock.
Registration
Rights Agreement
We
entered into a Registration Rights Agreement with the Investor. The Registration
Rights Agreement requires us to file a registration statement covering the
resale of the shares underlying the Series B Preferred Stock, the Series F
Warrants and the Series G Warrants before September 28, 2008 (the “Filing
Date”). We are
required
to cause such registration statement to become effective on or before the date
which is 120 calendar days after the Filing Date. In addition to it being
an event of default under the Securities Purchase Agreement, if we fail to
file
such registration statement in the time frame required, fail to cause it to
become effective in the time frame required, or fail to maintain the
effectiveness of the registration statement as required by the Registration
Rights Agreement, we will be required to pay a cash penalty in the amount of
2%
of the aggregate stated value of the Series B Preferred Stock for each month,
or
part thereof, that the registration statement is not filed or effective, as
the
case may be. The cash penalty is limited to 15% of the aggregate stated value
of
the Series B Preferred Stock.
5
The
Registration Rights Agreement also provides for piggyback registration
rights.
Amendment,
Consent & Waiver Agreement
In
connection with the transactions described above, we entered into an
Amendment, Consent and Waiver Agreement with Gottbetter Capital Master,
Ltd. (“Gottbetter”), whereby, among other things: (i) Gottbetter consented to
the transactions described above, (ii) Gottbetter agreed to delay, until
February 1, 2008, principal payments under the Senior Secured Convertible Note
issued by the Corporation to Gottbetter on October 19, 2006 (the “October Note”)
and under the Senior Secured Convertible Note issued by the Corporation to
Gottbetter on November 9, 2006 (the “November Note”), (iii) Gottbetter agreed
that its right of first refusal with respect to subsequent financings will
be on
a pro
rata, pari passu
basis
with Vicis and (v) Gottbetter released its security interest in certain
collateral of Xeni Financial Services, Corp.
Series
D Warrant
In
consideration of Gottbetter entering into the Amendment, Consent and Waiver
Agreement, we issued to Gottbetter a Series D Warrant to purchase 500,000 shares
of our Common Stock. The Series D Warrant is exercisable at a price of $2.25
per
share for a period of five years from the date of issuance. The Series D Warrant
may be exercised on a cashless basis. The exercise price will be subject to
adjustment in the event of subdivision or combination of shares of our common
stock and similar transactions, distributions of assets, issuances of shares
of
common stock with a purchase price below the exercise price of the Series D
Warrant, issuances of any rights, warrants or options to purchase shares of
our
common stock with an exercise price below the exercise price of the Series
D
Warrant, issuances of convertible securities with a conversion price below
the
exercise price of the Series D Warrant.
Amended
& Restated Notes
In
order
to memorialize the extension of the principal payment date to February 1, 2008
in the October Note and the November Note, we issued to Gottbetter an amended
and restated October Note and an amended and restated November Note.
Item
3.02 Unregistered
sales of Equity Securities.
Item
1.01
above is incorporated into this Item 3.02 by reference.
Each
of
Investor and Gottbetter is an “accredited investor,” as defined in Regulation D
under the Securities Act of 1933, as amended, or the Securities Act. None of
the
Series
B
Preferred Stock, the Series F Warrant, the Series G Warrant,
the
Series D Warrant or the shares of our common stock underlying such securities
were registered under the Securities Act, or the securities laws of any state
and were offered and sold in reliance on the exemption from registration
afforded by Section 4(2) and Regulation D (Rule 506) under the Securities Act
and corresponding provisions of state securities laws, which exempts
transactions by an issuer not involving any public offering.
6
We
made
this determination with respect to the sale of the Series B Preferred Stock,
the
Series F Warrant, the Series G Warrant based on the representations of the
Investor, and we made this determination with respect to the issuance of the
Series D Warrant based on the representations of Gottbetter, which included,
in
pertinent part, that the entity acquiring the securities described above is
an
“accredited investor” within the meaning of Rule 501 of Regulation D promulgated
under the Securities Act, and that such entity was acquiring the securities
it
was acquiring for investment purposes for its own account and not as nominee
or
agent, and not with a view to the resale or distribution, and that such entity
understood such securities may not be sold or otherwise disposed of without
registration under the Securities Act or an applicable exemption
therefrom.
Thus,
the
Series B Preferred Stock, the Series F Warrant, the Series G Warrant and the
Series D Warrant and shares of common stock underlying such securities may
not
be offered or sold in the United States absent registration or an applicable
exemption from the registration requirements and certificates evidencing such
shares contain a legend stating the same.
Item
9.01 Financial
Statements and Exhibits.
| (d) |
Exhibits
|
The
following exhibits are filed as part of this report:
|
Exhibit
No.
|
Description
|
|
3.1
|
Certificate
of Designations designating the rights, preferences, privileges and
restrictions on the Series B Preferred Stock.
|
|
4.1
|
Securities
Purchase Agreement by and between Investor and MDwerks,
Inc.
|
|
4.2
|
Series
F Warrant to purchase shares of Common Stock at a price of $2.25
per
share
|
|
4.3
|
Series
G Warrant to purchase shares of Common Stock at a price of $3.25
per
share
|
|
4.4
|
Registration
Rights Agreement between MDwerks, Inc. and Investor
|
|
10.1
|
Guaranty
issued to Investor by Xeni Financial Services, Corp.
|
|
10.2
|
Guaranty
issued to Investor by Xeni Medical Billing, Corp.
|
|
10.3
|
Guaranty
issued to Investor by MDwerks Global Holdings, Inc.
|
|
10.4
|
Guaranty
issued to Investor by Xeni Medical Systems, Inc.
|
7
|
10.5
|
Guaranty
issued to Investor by Patient Payment Solutions, Inc.
|
|
10.6
|
Security
Agreement entered into by and between Investor and MDwerks, Inc.
|
|
10.7
|
Security
Agreement entered into by and between Investor and Xeni Medical Billing,
Corp.
|
|
10.8
|
Security
Agreement entered into by and between Investor and MDwerks Global
Holdings, Inc.
|
|
10.9
|
Security
Agreement entered into by and between Investor and Xeni Medical Systems,
Inc.
|
|
10.10
|
Security
Agreement entered into by and between Investor and Xeni Financial
Services, Corp.
|
|
10.11
|
Security
Agreement entered into by and between Investor and Patient Payment
Solutions, Inc.
|
|
10.12
|
Amendment,
Consent and Waiver Agreement entered into by and between Gottbetter
Capital Master, Ltd and MDwerks, Inc.
|
|
10.13
|
Amended
and Restated Senior Secured Note1
|
|
10.14
|
Amended
and Restated Senior Secured Note2
|
|
99.1
|
Press
Release dated October 2, 2007
|
|
1.
|
Reflects
an amendment and restatement of the Senior Secured Note originally
issued
on October 19, 2006.
|
|
2.
|
Reflects
an amendment and restatement of the Senior Secured Note originally
issued
on November 9, 2006.
|
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
| MDWERKS, INC. | ||
| |
|
|
| Dated: October 2, 2007 | By: | /s/ Howard B. Katz |
|
Howard B. Katz |
||
| Chief Executive Officer | ||
8
Exhibit
Index
|
Exhibit
No.
|
Description
|
|
3.1
|
Certificate
of Designations designating the rights, preferences, privileges and
restrictions on the Series B Preferred Stock.
|
|
|
|
|
4.1
|
Securities
Purchase Agreement by and between Investor and MDwerks,
Inc.
|
|
|
|
|
4.2
|
Series
F Warrant to purchase shares of Common Stock at a price of $2.25
per
share
|
|
|
|
|
4.3
|
Series
G Warrant to purchase shares of Common Stock at a price of $3.25
per
share
|
|
4.4
|
Registration
Rights Agreement between MDwerks, Inc. and Investor
|
|
10.1
|
Guaranty
issued to Investor by Xeni Financial Services, Corp.
|
|
10.2
|
Guaranty
issued to Investor by Xeni Medical Billing, Corp.
|
|
10.3
|
Guaranty
issued to Investor by MDwerks Global Holdings, Inc.
|
|
10.4
|
Guaranty
issued to Investor by Xeni Medical Systems, Inc.
|
|
10.5
|
Guaranty
issued to Investor by Patient Payment Solutions, Inc.
|
|
10.6
|
Security
Agreement entered into by and between Investor and MDwerks, Inc.
|
|
10.7
|
Security
Agreement entered into by and between Investor and Xeni Medical Billing,
Corp.
|
|
10.8
|
Security
Agreement entered into by and between Investor and MDwerks Global
Holdings, Inc.
|
|
10.9
|
Security
Agreement entered into by and between Investor and Xeni Medical Systems,
Inc.
|
|
10.10
|
Security
Agreement entered into by and between Investor and Xeni Financial
Services, Corp.
|
|
10.11
|
Security
Agreement entered into by and between Investor and Patient Payment
Solutions, Inc.
|
|
10.12
|
Amendment,
Consent and Waiver Agreement entered into by and between Gottbetter
Capital Master, Ltd and MDwerks, Inc.
|
|
10.13
|
Amended
and Restated Senior Secured Note1
|
|
10.14
|
Amended
and Restated Senior Secured Note2
|
|
99.1
|
Press
Release dated October 2, 2007
|
|
1.
|
Reflects
an amendment and restatement of the Senior Secured Note originally
issued
on October 19, 2006.
|
|
2.
|
Reflects
an amendment and restatement of the Senior Secured Note originally
issued
on November 9, 2006.
|
9