UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-QSB

(Mark One)

[X]  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934

                  For the quarterly period ended June 30, 2006

[_]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

               For the transition period from ________ to ________

                       Commission File Number: 333-118155

                                  MDWERKS, INC.
          (Exact name of small business issuer as specified in charter)

            Delaware                                     33-1095411
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

                            WINDOLPH CENTER, SUITE I
                              1020 N.W. 6TH STREET
                            DEERFIELD BEACH, FL 33442
               (Address of principal executive offices)(Zip Code)

                                 (954) 389-8300
                (Issuer's telephone number, including area code)

                                       N/A
   (Former name, former address and former fiscal year, if changed since last
                                    report)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes[x] No [_]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes[_] No [x]

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 11,760,898 shares at August 9, 2006

Transitional Small Business Disclosure Format (Check one): Yes [_] No [x]



                                  MDWERKS, INC.
                                   FORM 10-QSB
                     FOR THE SIX MONTHS ENDED JUNE 30, 2006

                                      INDEX

                                                                            Page
                                                                           -----
PART I - FINANCIAL INFORMATION

   Item 1 - Condensed Consolidated Financial Statements

   Condensed Consolidated Balance Sheets
      As of June 30, 2006 (Unaudited) and December 31, 2005.............       3
   Condensed Consolidated Statements of Operations (Unaudited)
      For the Three and Six Months Ended June 30, 2006 and 2005.........       4
   Condensed Consolidated Statements of Cash Flows (Unaudited)
      For the Six Months Ended June 30, 2006 and 2005...................       5

   Notes to Unaudited Condensed Consolidated Financial Statements.......    6-15

   Item 2 - Management's Discussion and Analysis and Plan of
      Operations........................................................   16-23

   Item 3 - Controls and Procedures.....................................      24

PART II - OTHER INFORMATION

   Item 1 - Legal Proceedings...........................................      25

   Item 2 - Unregistered Sales of Equity Securities and Use of
      Proceeds..........................................................      25

   Item 3 - Defaults Upon Senior Securities.............................      25

   Item 4 - Submission of Matters to a Vote of Security Holders.........      25

   Item 5 - Other Information...........................................      25

   Item 6 - Exhibits....................................................      25

   Signatures...........................................................      26


                                        2



                         MDWERKS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                                      June 30,     December 31,
                                                        2006           2005
                                                    ------------   ------------
                                                     (Unaudited)
   ASSETS
Current assets:
   Cash                                             $    453,761   $    766,464
   Notes receivable                                      442,670        363,845
   Accounts receivable                                   160,185         10,415
   Prepaid expenses and other                             84,514         68,816
                                                    ------------   ------------
      Total current assets                             1,141,130      1,209,540
Property and equipment, net of accumulated
   depreciation of $28,633 for June 30, 2006 and
   $13,428 for December 31, 2005                         136,914         80,391
                                                    ------------   ------------
      Total assets                                  $  1,278,044   $  1,289,931
                                                    ============   ============
   LIABILITIES AND STOCKHOLDERS' DEFICIENCY.
Current liabilities:
   Notes payable                                    $     90,000   $    135,000
   Loan payable                                           86,669         98,700
   Accounts payable                                      315,216        211,517
   Accrued expenses                                      218,105        167,382
   Deferred revenues                                      11,646          5,357
   Warrant liability                                   2,323,923      1,735,237
                                                    ------------   ------------
   Total current liabilities                           3,045,559      2,353,193
Long-term liabilities:
   Deferred revenues, less current portion               151,481          3,390
                                                    ------------   ------------
   Total liabilities                                   3,197,040      2,356,583
                                                    ------------   ------------
Stockholders' deficiency:
   Preferred stock, $.001 par value, 10,000,000
      shares authorized; no shares issued and
      outstanding                                             --             --
   Series A preferred stock, $.001 par value,
      1,000 shares authorized; 28 shares issued
      and outstanding                                         --             --
   Common stock, $.001 par value, 100,000,000
      shares authorized; 11,760,898 shares issued
      and outstanding at June 30, 2006 and
      11,538,730 shares issued and outstanding at
      December 31, 2005                                   11,761         11,539
   Additional paid-in capital                         18,152,159     15,480,037
   Accumulated deficit                               (20,082,916)   (16,558,228)
                                                    ------------   ------------
   Total stockholders' deficiency                     (1,918,996)    (1,066,652)
                                                    ------------   ------------
   Total liabilities and stockholders' deficiency   $  1,278,044   $  1,289,931
                                                    ============   ============

     The accompanying notes should be read in conjunction with the condensed
                        consolidated financial statements


                                        3



                         MDWERKS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS



                                                    For the Three Months Ended    For the Six Months Ended
                                                             June 30                      June 30
                                                    --------------------------   -------------------------
                                                         2006          2005          2006          2005
                                                    ------------   -----------   -----------   -----------
                                                     (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)

Revenue:
   Service fees                                     $    61,982    $    5,500    $   114,566   $    5,500
   Financing income                                       9,823         4,476         26,171        4,476
                                                    -----------    ----------    -----------   ----------
      Total revenue                                      71,805         9,976        140,737        9,976
                                                    -----------    ----------    -----------   ----------
Operating expenses:
   Compensation                                         703,788            --      1,463,735           --
   Consulting expense and outside services              211,924       210,637        255,045      288,998
   Professional fees                                     64,153       109,899        124,124      119,712
   Selling, general and administrative                  388,159        68,571        779,579       94,626
                                                    -----------    ----------    -----------   ----------
      Total operating expenses                        1,368,024       389,107      2,622,483      503,336
                                                    -----------    ----------    -----------   ----------
Loss from operations                                 (1,296,219)     (379,131)    (2,481,746)    (493,360)
                                                    -----------    ----------    -----------   ----------
Other income (expense):
   Interest income                                        2,094            --          4,548           --
   Interest expense                                      (3,682)           --         (7,748)          --
   Settlement expense related to debt conversion             --            --       (180,827)          --
   Loss on revaluation of warrant liability            (588,686)           --       (588,686)          --
   Other income                                              --            --             11           --
                                                    -----------    ----------    -----------   ----------
      Total other income (expense)                     (590,274)           --       (772,702)          --
                                                    -----------    ----------    -----------   ----------
Net Loss                                             (1,886,493)     (379,131)    (3,254,448)    (493,360)
Deemed preferred stock dividend                              --            --        (24,000)          --
Common stock issued in connection with
   anti-dilutive recalculation                               --            --       (246,240)          --
                                                    -----------    ----------    -----------   ----------
Net loss attributable to common shareholders        $(1,886,493)   $ (379,131)   $(3,524,688)  $ (493,360)
                                                    ===========    ==========    ===========   ==========
NET LOSS PER COMMON SHARE - basic and diluted       $     (0.16)   $    (0.04)   $     (0.30)  $    (0.05)
                                                    ===========    ==========    ===========   ==========
WEIGHTED AVERAGE COMMON SHARES
   OUTSTANDING - basic and diluted                   11,735,475     9,352,328     11,702,853    9,352,328
                                                    ===========    ==========    ===========   ==========


     The accompanying notes should be read in conjunction with the condensed
                        consolidated financial statements


                                        4



                         MDWERKS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                     For the Six Months Ended
                                                             June 30
                                                    -------------------------
                                                        2006          2005
                                                    -----------   -----------
                                                    (Unaudited)   (Unaudited)
Cash flows from operating activities:
   Net Loss                                         $(3,254,448)   $(493,360)
                                                    -----------    ---------
   Adjustments to reconcile net loss to net cash
      used in operating activities:
      Depreciation                                       15,205        8,857
      Stock-based compensation                          748,636           --
      Settlement expense related to debt
         conversion                                     180,827           --
      Loss on revaluation of warrant liability          588,686           --
   Changes in assets and liabilities:
      Notes receivable                                  (78,825)    (121,648)
      Accounts receivable                              (149,770)          --
      Prepaid expenses and other                        (15,698)     (18,999)
      Accounts payable                                  103,699      159,092
      Accrued expenses                                   51,973         (917)
      Deferred revenues                                 154,380           --
                                                    -----------    ---------
         Total adjustments                            1,599,113       26,385
                                                    -----------    ---------
Net cash used in operating activities                (1,655,335)    (466,975)
                                                    -----------    ---------
Cash flows from investing activities:
   Purchase of property and equipment                   (71,728)     (72,172)
                                                    -----------    ---------
Net cash used in investing activities                   (71,728)     (72,172)
                                                    -----------    ---------
Cash flows from financing activities:
   Capital contributions                                     --      550,886
   Proceeds from loans payable                               --       13,500
   Repayment of loan payable                            (12,031)          --
   Proceeds from sale of Series A preferred stock     1,700,000           --
   Placement fees and other expenses paid              (273,609)          --
                                                    -----------    ---------
Net cash provided by financing activities             1,414,360      564,386
                                                    -----------    ---------
Net increase (decrease) in cash                        (312,703)      25,239
Cash - beginning of year                                766,464      267,388
                                                    -----------    ---------
Cash - end of period                                $   453,761    $ 292,627
                                                    ===========    =========
Supplemental disclosure of cash flow information:
   Cash paid for:
      Interest                                      $     5,112    $      --
                                                    ===========    =========
   Noncash investing and financing activities:
      Common stock issued for debt and accrued
         interest                                   $    46,250    $      --
                                                    ===========    =========

     The accompanying notes should be read in conjunction with the condensed
                        consolidated financial statements


                                        5



                         MDWERKS, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2006

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310(b)
of Regulation S-B. Accordingly, the financial statements do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments considered necessary for a fair presentation have been included and
such adjustments are of a normal recurring nature. These consolidated financial
statements should be read in conjunction with the consolidated financial
statements for the year ended December 31, 2005 and notes thereto and other
pertinent information contained in the Form 10-KSB of MDwerks, Inc. (the
"Company") as filed with the Securities and Exchange Commission (the
"Commission"). The results of operations for the six months ended June 30, 2006
are not necessarily indicative of the results for the full fiscal year ending
December 31, 2006.

Organization

On November 16, 2005, a wholly-owned subsidiary of MDwerks, Inc. (f/k/a Western
Exploration, Inc., and hereinafter referred to as the "Company") was merged with
and into MDwerks Global Holdings, Inc., a Florida corporation ("MDwerks"), with
MDwerks surviving. The Company acquired all of the outstanding capital stock of
MDwerks in exchange for issuing 9,352,328 shares of the Company's common stock,
par value $0.001 per share to MDwerks' stockholders, which at closing of the
Merger Agreement represented approximately 87.4% of the issued and outstanding
shares of the Company's common stock. In connection with the Merger, the Company
changed its corporate name to MDwerks, Inc.

The acquisition was accounted for as a reverse merger because, on a post-merger
basis, the MDwerks stockholders hold a majority of the outstanding common stock
of the Company on a voting and fully diluted basis. As a result, MDwerks was
deemed to be the acquirer for accounting purposes. Accordingly, the consolidated
financial statements presented, beginning with the period ending December 31,
2005, are those of the Company for all periods prior to the acquisition, and the
financial statements of the consolidated companies from the acquisition date
forward. The historical stockholders' deficit of the Company prior to the
acquisition has been retroactively restated (a recapitalization) for the
equivalent number of shares received in the acquisition after giving effect to
any differences in the par value of the Company and MDwerks common stock, with
an offset to additional paid-in capital. The restated consolidated accumulated
deficit of the accounting acquirer MDwerks carried forward after the
acquisition.

On June 7, 2005, MDwerks entered into and consummated Share Exchange Agreements
with all of the shareholders of each of the Xeni Companies: Xeni Medical
Systems, Inc. ("XMS"); Xeni Financial Services, Corp. ("XFS"); and Xeni Medical
Billing, Corp. ("XMB"). Pursuant to each of the Share Exchange Agreements,
MDwerks acquired 100% of the issued and outstanding shares of each of the Xeni
Companies' common stock.

The acquisition of the Xeni Companies by MDwerks was accounted for as a reverse
merger because, on a post-merger basis, the former Xeni shareholders held a
majority of the outstanding common stock of MDwerks on a voting and fully
diluted basis. As a result, Xeni was deemed to be the acquirer for accounting
purposes. Accordingly, the financial statements of MDwerks are those of Xeni for
all periods presented.

XMS was incorporated under the laws of the state of Delaware on July 21, 2004.
XMS provides a Web-based package of electronic claims solutions to the
healthcare provider industry through Internet access to its MDwerks' suite of
proprietary products and services so that healthcare providers can significantly
improve daily insurance claims transaction processing, administration and
management.


                                        6



                         MDWERKS, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 JUNE 30, 2006

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)

Organization (continued)

XFS was incorporated under the laws of the state of Florida on February 3, 2005.
XFS offers financing and advances to health care providers secured by claims
processed through the MDwerks system.

XMB was incorporated under the laws of the state of Florida on March 2, 2005.
XMB offers health care providers billing services facilitated through the
MDwerks system.

Going concern

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has suffered losses that
raise substantial doubt about its ability to continue as a going concern. While
the Company is attempting to attain revenue growth and profitability, the growth
has not been significant enough to support the Company's daily operations.
Management intends to attempt to raise additional funds by way of a public or
private offering and make strategic acquisitions. While the Company believes in
the viability of its strategy to improve sales volume and in its ability to
raise additional funds, there can be no assurances to that effect. The ability
of the Company to continue as a going concern is dependent on the Company's
ability to further implement its business plan and generate revenue. The
financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern. Management believes that
the actions presently being taken to further implement its business plan and
generate revenue provide the opportunity for the Company to continue as a going
concern.

Basis of presentation

The consolidated financial statements are prepared in accordance with generally
accepted accounting principles in the United States of America ("US GAAP"). The
consolidated statements include the accounts of the Company and its wholly-owned
subsidiaries, XMS, XFS and XMB. All significant intercompany balances and
transactions have been eliminated. All material intercompany balances and
transactions have been eliminated.

Use of estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.

Cash and cash equivalents

For purposes of the consolidated statements of cash flows, the Company considers
all highly liquid instruments purchased with a maturity of three months or less
and money market accounts to be cash equivalents.

At various times, the Company has deposits in excess of the Federal Deposit
Insurance Corporation limit. The Company has not experienced any losses on these
accounts.

Accounts and notes receivable

Notes receivable are reported at their outstanding unpaid principal balances
reduced by an allowance for doubtful accounts. The Company estimates doubtful
accounts based on historical bad debts, factors related to specific customers'
ability to pay and current economic trends. The Company writes off receivables
against the allowance when a balance is determined to be uncollectible. At June
30, 2006 the Company has no allowance for doubtful accounts.


                                        7



                         MDWERKS, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 JUNE 30, 2006

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)

Property and equipment

Property and equipment are stated at cost. Depreciation and amortization are
provided using the straight-line method over the estimated useful life.

Loss per common share

Basic loss per share is computed by dividing net loss by the weighted average
number of shares of common stock outstanding during the period. Diluted loss per
share is computed by dividing net loss by the weighted average number of shares
of common stock, potential common stock and potentially dilutive securities
outstanding during each period. As of June 30, 2006, the Company had outstanding
options to purchase an aggregate of 1,741,250 shares of common stock, warrants
to purchase an aggregate of 1,327,974 shares of common stock, and 566,667 shares
of common stock issuable upon conversion of preferred stock which could
potentially dilute future earnings per share. Diluted loss per common share has
not been presented for the period ended June 30, 2006 and March 31, 2006 since
the impact of the stock options and warrants would be antidilutive. At March 31,
2005 and June 30, 2005, respectively the Company did not have any potential
common stock.

Revenue recognition

The Company follows the guidance of the Securities and Exchange Commission's
("SEC") Staff Accounting Bulletin 104 for revenue recognition. In general, the
Company records revenue when persuasive evidence of an arrangement exists,
services have been rendered or product delivery has occurred, the sales price to
the customer is fixed or determinable, and collectability is reasonably assured.
The following policies reflect specific criteria for the various revenue streams
of the Company.

Revenue derived from fees related to claims and contract management services are
generally recognized when services are provided to the customer.

The Company provides advance funding services to unaffiliated healthcare
providers (the Company's "Customers"). The Customers advances are typically
collateralized by Security Agreements granting first position liens on the
medical claims submitted by its Customers to third party payors (the "Payors").
The advances are repaid through the remittance of payments of Customers medical
claims, by Payors, directly to the Company. The Company withholds from these
advances interest, accrued on a daily basis, and an administrative fee and other
charges as well as any amount for prior advances that remain unpaid after a
specified number of days. These interest charges, administrative fees and other
charges are recognized as revenue when earned. There is no right of cancellation
or refund provisions in these arrangements and the Company has no further
obligations once the services are rendered.

Revenue derived from fees related to billing and collection services are
generally recognized when the customer's accounts receivable are collected.

Revenue from implementation fees are generally recognized over the term of the
customer's agreement. Revenue derived from maintenance, administrative and
support fees are generally recognized at the time the services are provided to
the customer.


                                        8



                         MDWERKS, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 JUNE 30, 2006

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)

Stock-based compensation

Effective January 1, 2006, the Company adopted Statement of Financial Accounting
Standards No. 123 (revised 2004), Share Based Payment ("SFAS No. 123R")
utilizing the modified prospective method. SFAS No. 123R establishes the
financial accounting and reporting standards for stock-based compensation plans.
As required by SFAS No. 123R, the Company recognized the cost resulting from all
stock-based payment transactions including shares issued under its stock option
plans in the financial statements.

Prior to January 1, 2006, the Company accounted for stock-based employee
compensation plans (including shares issued under its stock option plans) in
accordance with APB Opinion No. 25 and followed the pro forma net income, pro
forma income per share, and stock-based compensation plan disclosure
requirements set forth in the Statement of Financial Accounting Standards No.
123, Accounting for Stock-Based Compensation ("SFAS No. 123").

Income Taxes

Income taxes are accounted for under the asset and liability method of Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
109"). Under SFAS 109, deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. Under SFAS
109, the effect on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that includes the enactment date.

The Company has net operating loss carryforwards for tax purposes totaling
approximately $5,516,000 at June 30, 2006 expiring at various times through the
year 2026 subject to the Internal Revenue Code Section 382, which places a
limitation on the amount of net operating losses that can offset by taxable
income after a change in control (generally greater than a 50% change in
ownership). The Company recorded a deferred tax asset of approximately
$2,096,000 offset by a full valuation of $2,096,250 since it is more likely than
not that the deferred tax asset will not be realized.

Recent accounting pronouncements

In February 2006, the Financial Accounting Standards Board issued Statement No.
155 ("SFAS No 155"), "Accounting for Certain Hybrid Instruments: An Amendment of
FASB Statements No. 133 and 140". Management does not believe that this
statement will have a significant impact as the Company does not use such
instruments.

In July 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes, an
interpretation of FASB Statement No. 109"("FIN 48"), which provides criteria for
the recognition, measurement, presentation and disclosure of uncertain tax
positions. A tax benefit from an uncertain position may be recognized only if it
is "more likely than not" that the position is sustainable based on its
technical merits. The provisions of FIN 48 are effective for fiscal years
beginning after December 15, 2006. The Company does not expect FIN 48 will have
a material effect on its consolidated financial condition or results of
operations.

Reclassifications

For comparability, certain December 31, 2005 amounts have been reclassified,
where appropriate, to conform to the financial statement presentation used at
June 30, 2006.


                                        9



                         MDWERKS, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 JUNE 30, 2006

NOTE 2 -- NOTES RECEIVABLE

At June 30, 2006, the Company advanced three healthcare providers under lines of
credit and note agreements, respectively, aggregating $442,670. Advances under
the line of credit are due to be repaid out of providers' claims collections, as
defined in the agreement. The note receivable under a note agreement is payable
as the provider collects certain receivables. The Company charged the health
care providers interest and other charges as defined in the agreements. At June
30, 2006, no amounts were past due.

NOTE 3 -- PROPERTY AND EQUIPMENT

At June 30, 2006, property and equipment consisted of the following:

                                  Estimated Life
                                  --------------
Office furniture and equipment       5-7 Years     $ 15,027
Computer equipment and software      3-5 Years      150,520
                                                   --------
                                                    165,547
Less: accumulated depreciation                      (28,633)
                                                   --------
                                                   $136,914
                                                   ========

NOTE 4 -- NOTES PAYABLE

At June 30, 2006, the Company has notes payable of $90,000 to unrelated parties
that bear interest at 8%. The outstanding principal and all accrued and unpaid
interest is due and payable at various dates through August 2006. At the
Company's option, all or any part of the outstanding principal balance and
accrued interest may be prepaid. In the event the Company raises $2.5 million or
more in a financing transaction involving the sale of equity securities, the
notes shall become due and payable at the closing of such transaction.
Additionally, in such event, the Company shall grant to the note holders
four-year warrants to purchase an aggregate of 90,000 shares of the Company's
common stock or the Company's successor parent company at $1.25 per share. In
February, 2006, $45,000 of these notes payable plus accrued interest of $1,342
were converted into 92,685 shares of the Company's common stock in full
satisfaction of a portion the notes payable (see note 6).

NOTE 5 -- LOAN PAYABLE

The Company has a loan payable to an unrelated individual in the amount of
$86,669. The loan bears interest at 8% per annum and is payable on a monthly
basis, less fees. The loan shall be repaid proportionally upon repayment of
certain of the Company's notes receivable.

NOTE 6 - STOCKHOLDERS' DEFICIENCY

Preferred stock

The Company is authorized to issue 10,000,000 shares of preferred stock, $.001
par value, with such designations, rights and preferences as may be determined
from time to time by the Board of Directors.


                                       10



                         MDWERKS, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 JUNE 30, 2006

NOTE 6 - STOCKHOLDERS' DEFICIENCY (continued)

Preferred Stock (continued)

On February 1, 2006, the Board of Directors of the Company authorized the
creation of 1,000 shares of $.001 par value Series A Convertible Preferred Stock
with a liquidation value of $60,000 per share (subject to adjustment in the
event of stock splits, combinations or similar events). The Series A Convertible
Preferred Stock shall not be entitled to receive dividends or other
distributions from the Company. Each holder of record of shares of the Series A
Convertible Preferred Stock shall have the right at such holder's option, at any
time and from time to time, to convert any of such shares of Series A
convertible preferred stock into fully paid shares of common stock. Each share
of Series A Convertible Preferred Stock shall initially be convertible into
20,000 shares of common stock (the "Conversion Rate"), subject to adjustment due
to consolidation, merger or sale or common stock dividends. The holders of
shares of Series A Convertible Preferred Stock shall be entitled to vote on all
matters submitted to a vote of the stockholders of the Company and shall have
such number of votes equal to the number of shares of the Company's common stock
into which such holders' shares of Series A Convertible Preferred Stock are
convertible.

Between February 1, 2006 and June 30, 2006, the Company conducted a series of
closings under private placement offering of Units consisting of one share of
Series A Convertible Preferred Stock and a three-year warrant to purchase up to
20,000 shares of our Common Stock at a purchase price of $3.00 per share. The
Company sold an aggregate of 28.33 Units to accredited investors pursuant to the
terms of a confidential private placement memorandum, dated February 1, 2006,
used in connection with this offering. The Company realized net proceeds from
this private placement of $1,426,391 after payment of commissions and expenses.
The private placement was made solely to "accredited investors," as that term is
defined in Regulation D under the Securities Act of 1933. The shares of Series A
Preferred Stock and warrants to purchase shares of Common Stock were not
registered under the Securities Act of 1933, or the securities laws of any
state, and were offered and sold in reliance on the exemption from registration
offered by Section 4(2) and Regulation D (Rule 506) under the Securities Act of
1933 and corresponding provisions of state securities laws.

In accordance with Emerging Issues Task Force ("EITF") 98-5 and EITF 00-27, the
Series A Convertible Preferred Stock was considered to have an embedded
beneficial conversion feature because the conversion price was less than the
fair value of the Company's common stock. This Series A Convertible Preferred
Stock was fully convertible at the issuance date, therefore a portion of
proceeds allocated to the Series A Convertible Preferred Stock was determined to
be the value of the beneficial conversion feature and was recorded as a deemed
dividend with a corresponding credit to additional paid-in capital in the amount
of $24,000 after taking into account the value of the warrants issued..

The assumptions used valuing the warrants include:

Risk free interest rate (annual) .............................   4.74% and 4.83%
Expected volatility ..........................................   105% and 142%
Expected life ................................................   3 Years
Assumed dividends ............................................   none

Brookshire Securities Corporation, ("Brookshire"), served as the lead placement
agent in connection with the private placement. Brookshire received a cash fee
in the aggregate of $170,000, and will receive five-year warrants to purchase
56,667 shares of the Company's common stock at an exercise price of $1.50 per
share on terms which are identical to those warrants included in the units
except that they contain a cashless exercise provision. In addition, the
warrants have registration rights that are the same as those afforded to
investors in the private placement.


                                       11



                         MDWERKS, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2006

NOTE 6 - STOCKHOLDERS' DEFICIENCY (continued)

Common Stock

On January 1, 2006, the Company issued 76,000 shares of the Company's common
stock to certain stockholders pursuant to agreements to offset the effect of
dilutive financing of the Xeni Companies. The shares issued were valued at the
fair value at the date of issuance of $246,240 and were treated as an additional
charge to the loss available to common stockholders.

On January 3, 2006, the Company granted options to purchase 860,000 shares of
common stock to employees of the Company under the Incentive Plan. The options
are exercisable at $3.40 per share. The options vest as to 33.33% of such shares
on each of the first and second anniversaries of the date of grant and as to
33.34% of such shares on the third anniversary of the date of grant, and expire
on January 3, 2016 or earlier due to employment termination. As of January 1,
2006, the Company will account for stock options issued to employees in
accordance with the provisions of SFAS 123(R) and related interpretations. The
fair value of this option grant was estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumptions: dividend yield of 0%; expected volatility of 105%; risk-free
interest rate of 3.75%; and, a term of 8 years. In connection with these
options, the Company valued these options at a fair market value of
approximately $2,578,445 and will record stock-based compensation expense over
the vesting period.

On February 13, 2006, $45,000 of notes payable plus accrued interest of $1,342
was converted into 92,685 shares of the Company's common stock in full
satisfaction of the notes payable. The common shares were valued at a fair
market value of $2.45 per share for an aggregate fair market value of $227,077
based on recent trading price of the stock. Accordingly, in connection with the
issuance of these shares, the Company reduced notes payable by $45,000, reduced
interest payable by $1,342, and recorded settlement expenses related to the debt
conversion of $180,827.

On February 28, 2006, the Company issued 25,000 shares of the common stock to
the Chief Financial Officer of the Company in consideration for services
rendered. The shares were issued at the fair value at the date of the issuance
of $81,000 or $3.24 per share. For the six months ended June 30 2006, in
connection with these shares, the Company recorded stock-based compensation of
$81,000.

On June 29, 2006, the Company issued 28,483 shares of the common stock to
consultants in consideration for services rendered. The shares were issued at
the fair value at the date of the issuance of $114,000 or $4.00 per share. For
the six months ended June 30 2006, in connection with these shares, the Company
recorded stock-based consulting fees of $114,000.

In June, 2006, the Company granted options to purchase 681,250 shares of common
stock to employees of the Company under the Incentive Plan. The options are
exercisable at $4.00 to $4.25 per share. The options vest as to 33.33% of such
shares on each of the first and second anniversaries of the date of grant and as
to 33.34% of such shares on the third anniversary of the date of grant, and
expire on January 3, 2016 or earlier due to employment termination. The fair
value of this option grant was estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumptions: dividend yield of 0%; expected volatility of 105%; risk-free
interest rate of 3.75%; and, an estimated holding period of 8 years. In
connection with these options, the Company valued these options at a fair market
value of approximately $2,629,973 and will record stock-based compensation
expense over the vesting period.

In connection with granted stock options, the Company recognized compensation
expense of $553,635 for the six months ended June 30, 2006. There was no
stock-based compensation expense for the six months ended June 30, 2005.

As of June 30, 2006, the total future compensation expense related to non-vested
options not yet recognized in the consolidated statement of operations is
approximately $4,754,300, which will be recognized through June 2009.


                                       12



                         MDWERKS, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2006

NOTE 6 - STOCKHOLDERS' DEFICIENCY (continued)

Common Stock (continued)

A summary of the status of the Company's outstanding stock options as of June
30, 2006 and changes during the period ending on that date is as follows:



                                                                         Aggregate
                                                      Weighted Average   Intrinsic
                                           Shares      Exercise Price      Value
                                         ----------   ----------------   ---------

Outstanding at December 31, 2005            200,000         $3.25
Granted                                   1,541,250          3.68
Exercised                                        --            --
Forfeited                                        --            --
                                         ----------         -----
Outstanding at June 30, 2006              1,741,250         $3.63            $0
                                         ==========         =====           ===
Options exercisable at end of period             --            --
                                         ==========         =====
Weighted-average fair value of options
   granted during the period             $     3.68
                                         ==========


The following information applies to options outstanding at June 30, 2006:



                                  Options Outstanding            Options Exercisable
                           ---------------------------------   -----------------------
                                       Weighted
                                        Average     Weighted
                                       Remaining     Average               Weighted
                                      Contractual   Exercise               Average
Range of Exercise Prices    Shares   Life (Years)     Price    Shares   Exercise Price
------------------------   -------   ------------   --------   ------   --------------

      $3.25                200,000       9.50         $3.25      --           --
      $3.40                860,000       9.50         $3.40      --           --
$4.00- 4.25                681,250       9.98         $4.03      --           --
                           -------       ----         -----


Common Stock Warrants

Between February 1, 2006 and June 30, 2006, the Company conducted a private
placement to accredited investors pursuant to the terms of a Confidential
Private Placement Memorandum, dated February 1, 2006, and private placement
subscription agreements executed and delivered by each investor. Each unit
consists of one share of our Series A Convertible Preferred Stock, par value
$.001 per share, and a detachable, transferable warrant to purchase 20,000
shares of our common stock, at a purchase price of $3.00 per share. Pursuant to
the Private Placement we sold an aggregate of 28.33 units and issued to
investors three-year warrants to purchase an aggregate of 566,667 shares of its
common stock at an exercise price of $3.00 per share, which expire from March
22, 2009 to June 29, 2009. Brookshire Securities Corporation, or Brookshire,
served as the lead placement agent in connection with the private placement.
Brookshire will receive five-year warrants to purchase 56,667 shares of our
common stock at an exercise price of $1.50 per share on terms which are
identical to those warrants included in the units except that they contain a
cashless exercise provision. In addition, the warrants have registration rights
that are the same as those afforded to investors in the private placement.


                                       13



                         MDWERKS, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2006

NOTE 6 - STOCKHOLDERS' DEFICIENCY (continued)

Common Stock Warrants (continued)

A summary of the status of the Company's outstanding stock warrants granted as
of June 30, 2006 and changes during the period is as follows:



                                                                    Weighted-Average
                                                         Shares      Exercise Price
                                                       ----------   ----------------

Outstanding at December 31, 2005                          704,640         $2.25
Granted                                                   623,334          2.57
Exercised                                                      --            --
Forfeited                                                      --            --
                                                       ----------         -----
Outstanding at June 30, 2006                            1,327,974         $2.61
                                                       ==========         =====
Common stock issuable upon exercise of warrants         1,327,974         $2.61
                                                       ==========         =====
Weighted-average fair value of common stock issuable   $     2.61
                                                       ==========




                                                                           Common Stock issuable
      Common Stock issuable upon exercise of warrants outstanding        upon Warrants Exercisable
----------------------------------------------------------------------   -------------------------
                                           Weighted
                                            Average                                       Weighted
                                           Remaining       Weighted          Number        Average
Range of Exercise   Number Outstanding    Contractual       Average      Exercisable at   Exercise
      Price          at June 30, 2006    Life (Years)   Exercise Price   June 30, 2006      Price
-----------------   ------------------   ------------   --------------   --------------   --------

$1.25                       64,040           4.40            $1.25            64,040        $1.25
$1.50                       56,667           4.90            $1.50            56,667        $1.50
$2.50                      640,600           2.45            $2.50           640,600        $2.50
$3.00                      566,667           2.90            $3.00           566,667        $3.00
                         ---------                           -----         ---------        -----
                         1,327,974                           $2.61         1,327,974        $2.61
                         =========                           =====         =========        =====


Registration rights

The Company has agreed to use its best efforts to file a "resale" registration
statement with the SEC covering all shares of common stock and shares of common
stock underlying the warrants (including shares of common stock and underlying
warrants issued to the Placement Agent) issued in connection with the June 13,
2005 Private Placement. The Company has agreed that it will maintain the
effectiveness of the "resale" registration statement from the effective date
through and until the earlier of two years and the time at which exempt sales
pursuant to Rule 144(k) may be permitted. The Company will use its best efforts
to respond to any SEC comments to the "resale" registration statement on or
prior to the date which is 20 business days from the date such comments are
received, but in any event not later than 30 business days from the date such
comments are received. The Company has agreed to use its best efforts to have
such "resale" registration statement declared effective by the SEC as soon as
possible after the initial filing date.


                                       14



                         MDWERKS, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2006

NOTE 6 - STOCKHOLDERS' DEFICIENCY (continued)

Registration rights

In the event the "resale" registration statement is not filed with the SEC on or
prior to the date which is 180 days after the last closing date of the Private
Placement, each investor in the Private Placement will receive as liquidating
damages an additional number of shares of common stock equal to 2% of the total
number of shares of common stock purchased by the investor in the Private
Placement for each month (or portion thereof) that the Registration Statement is
not so filed, provided that the aggregate increase in such shares of common
stock as a result of the delinquent filing will in no event exceed 20% of the
original number of shares of common stock purchased in the Private Placement.

In the event that the Company fails to respond to SEC comments to the
Registration Statement within 30 business days, each investor in the Private
Placement will receive an additional number of shares of common stock equal to
2% of the total number of shares of common stock purchased by the investor in
the Private Placement for each month (or portion thereof) that a response to the
comments to the Registration Statement has not been submitted to the SEC,
provided that the aggregate increase in such shares shall in no event exceed 20%
of the original number of shares of common stock purchased in the Private
Placement.

In accordance with Emerging Issues Task Force Issue 00-19 ("EITF 00-19"),
"Accounting for Derivative Financial Instruments Indexed To, and Potentially
Settled in, a Company's Own Stock", the Company has initially accounted for the
fair value of the warrants as a liability since the Company will incur penalties
if the Company cannot comply with the warrant holders' registration rights. As
of the closing date of the private placement the fair value of the warrants was
$1,142,770 calculated utilizing the Black-Scholes option pricing model. In
addition, changes in the market value of the Company's common stock from the
closing date through the date of filing of the registration statement will
result in non-cash charges or credits to operations to reflect the change in
fair value of the warrants during this period. The Company recorded a charge to
operations of $592,467 during the year ended December 31, 2005 to reflect the
change in market value of the warrants. For the six months ended June 30, 2006,
the Company recorded an increase in fair value of warrants of $588,686 which was
recognized as a charge to operations.


                                       15



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATIONS

Overview

     On November 16, 2005, we acquired all of the outstanding capital stock of
MDwerks Global Holdings, Inc. in connection with the merger of a wholly owned
subsidiary of the Company with and into MDwerks Global Holdings, Inc. (the
"Merger"), with the former stockholders of MDwerks being issued approximately
9,352,000 shares of common stock of the Company in exchange for all their shares
of common stock of MDwerks Global Holdings, Inc. In connection with the Merger,
we changed our name to MDwerks, Inc. Simultaneously with the closing of the
Merger, we completed the closing of a private placement of units, with each unit
consisting of 10,000 shares of our common stock and a warrant to purchase 10,000
shares of our common stock at an exercise price of $2.50 per share, with gross
proceeds of $1,600,000 and net proceeds to us, after deduction of offering
expenses and commissions paid at the closing, of $1,310,000 (the "Private
Placement"). As we have ceased our prior mining operations we will operate the
business of MDwerks Global Holdings, Inc. and the Xeni Companies as our sole
line of business, therefore the following discussion and analysis is of the
financial condition and results of operations for the year ended December 31,
2005 and 2004 of MDwerks Global Holdings, Inc. and the Xeni Companies. The
following discussion and analysis should be read in conjunction with the
financial statements, including footnotes, and other information presented in
this prospectus. For purposes of the following discussion and analysis,
references to "we", "our", "us" or the "Company" refers to MDwerks, Inc. and
includes MDwerks Global Holdings, Inc. as its wholly-owned subsidiary and the
Xeni Companies as indirect wholly-owned subsidiaries.

     MDwerks Global Holdings, Inc. was incorporated under the laws of the state
of Florida on October 23, 2003. It was originally formed to provide
international telecommunications products and services. In April 2004, MDwerks
Global Holdings, Inc. decided not to pursue the telecommunications business. In
December 2004, it decided to focus on a new line of business involving
healthcare provider claims processing, funding and related services. On May 25,
2005, MDwerks Global Holdings, Inc. changed its name from Global IP
Communications, Inc, to MDwerks Global Holdings, Inc.

     On June 7, 2005, MDwerks Global Holdings, Inc. entered into and consummated
Share Exchange Agreements with all of the stockholders of each of the Xeni
Companies (Xeni Medical, Xeni Financial and Xeni Billing). Pursuant to each of
the Share Exchange Agreements, MDwerks Global Holdings, Inc. acquired 100% of
the issued and outstanding shares of common stock of each of the Xeni Companies,
in exchange for approximately 52,623,000 shares of common stock of MDwerks
Global Holdings, Inc. (which shares, together with the shares of the holders of
common stock of MDwerks Global Holdings, Inc. prior to the share exchanges were
exchanged for approximately 9,352,000 shares of our common stock in connection
with the Merger). As a result of the share exchanges, each of the Xeni Companies
became a wholly-owned subsidiary of MDwerks Global Holdings, Inc.

     The acquisition of the Xeni Companies was accounted for as a reverse
merger, because, after giving effect to the share exchanges, the former
stockholders of the Xeni Companies held a majority of the outstanding common
stock of MDwerks Global Holdings, Inc. on a voting and fully diluted basis. As a
result of the share exchanges, Xeni Medical was deemed to be the acquirer for
accounting purposes. Accordingly, the financial statements presented are those
of Xeni Medical for all periods prior to the acquisition of the Xeni Companies
on June 7, 2005, and the financial statements of the consolidated companies from
the acquisition date forward. The historical stockholders' deficiency of the
Xeni Companies prior to their acquisition has been retroactively restated for
the equivalent number of shares received in the acquisition. The restated
consolidated stockholders' deficiency of the accounting acquirer is carried
forward after the acquisition.

     Xeni Medical provides a web-based package of electronic claims solutions to
the healthcare provider industry. Through internet access to our "MDwerks" suite
of proprietary products and services, healthcare providers can significantly
improve daily insurance claims transaction processing, administration, funding
and management.

     Xeni Financial offers advance funding to healthcare providers secured by
claims processed through the MDwerks system.


                                       16



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATIONS (CONTINUED)

     Xeni Billing offers healthcare providers billing services facilitated
through the MDwerks suite of products and services.

     We plan, initially, to sell to physician and clinical service group
practices, hospitals, rehabilitation centers, nursing homes and certain related
practice vendors, including diagnostic testing companies, by using internal and
external resources. Internal resources will consist mainly of specialized sales
executives with industry knowledge and/or a portfolio of contacts. External
resources will consist primarily of independent sales representatives as well as
channel associates such as vendors of practice management systems and medical
industry specific sales groups such as office management consultants. These
sales resources can leverage an existing customer base and contacts. Our
marketing is based on prioritizing potential subscribers by size, location and
density, need for our products and services and distribution opportunities.
Accordingly, we expect to focus our initial marketing efforts in geographic
areas such as California, Florida and New York, which contain high
concentrations of prospective clients.

     Because we have had a limited operating history, it is difficult to
accurately forecast our revenues and expenses. Additionally, our operations will
continue to be subject to risks inherent in the establishment of a new business,
including, among other things, efficiently deploying our capital, developing our
product and services offerings, developing and implementing our marketing
campaigns and strategies and developing awareness and acceptance of our
products. Our ability to generate future revenues will be dependent on a number
of factors, many of which are beyond our control, including the pricing of other
services, overall demand for our products, market competition and government
regulation.

CRITICAL ACCOUNTING POLICIES

     The discussion and analysis of our financial condition and results of
operations are based on our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these consolidated financial statements
requires us to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses, and related disclosure of contingent
assets and liabilities. On an on-going basis, we evaluate our estimates based on
historical experience and on various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.

     We apply the Securities and Exchange Commission's Staff Accounting Bulletin
104 for revenue recognition. In general, we record revenue when persuasive
evidence of an arrangement exists, services have been rendered or product
delivery has occurred, the sales price to the customer is fixed or determinable,
and collectability is reasonably assured. We have identified the policy below as
critical to our business operations and understanding of our financial results:

     Revenue derived from fees related to claims and contract management
services are generally recognized when services are provided to the customer.

     We provide advance funding services to unaffiliated healthcare providers
(our "Customer"). The Customer advances are typically collateralized by Security
Agreements granting first position liens on the medical claims submitted by our
Customers to third party payors (the "Payors"). The advances are repaid through
the remittance of payments of Customer medical claims, by Payors, directly to
us. We withhold from these advances interest, accrued on a daily basis, and an
administrative fee and other charges as well as any amount for prior advances
that remain unpaid after a specified number of days. These interest charges,
administrative fees and other charges are recognized as revenue when earned.
There is no right of cancellation or refund provisions in these arrangements and
we have no further obligations once the services are rendered.

     Revenue derived from fees related to billing and collection services are
generally recognized when the customer's accounts receivable are collected.
Revenue from implementation fees are generally recognized over the term of the
customer's agreement. Revenue derived from maintenance, administrative and
support fees are generally recognized at the time the services are provided to
the customer.


                                       17



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATIONS (CONTINUED)

     Because we have had a limited operating history, it is difficult to
accurately forecast our revenues and expenses. Additionally, our operations will
continue to be subject to risks inherent in the establishment of a new business,
including, among other things, efficiently deploying our capital, developing our
product and services offerings, developing and implementing our marketing
campaigns and strategies and developing awareness and acceptance of our
products. Our ability to generate future revenues will be dependent on a number
of factors, many of which are beyond our control, including the pricing of other
services, overall demand for our products, market competition and government
regulation.

RESULTS OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 30, 2006 VERSUS SIX MONTHS ENDED JUNE 30, 2005

Revenue

     In July 2005, we began processing claims on our MDwerks suite of products
for our first client and recorded total revenue of $140,737 during the six
months ended June 30, 2006 as compared to $9,976 for the six months ended June
30, 2005, an increase of $130,761. For the six months ended June 30, 2006, we
recorded service fee revenue of $114,566, or 81.4% and financing income of
$26,171, or 18.6%. For the six months ended June 30, 2005, we recorded service
fee revenue of $5,500, or 55.1% and financing income of $4,476, or 44.9%.

Operating Expenses

     Our operating expenses significantly increased for the six months ended
June 30, 2006 from the six months ended June 30, 2005 as a result of increased
operations as we began to implement our business plan.

     For the six months ended June 30, 2006, total operating expenses were
$2,622,483 as compared to $503,336 for the six months ended June 30, 2005, an
increase of $2,119,147. Included in this increase for the six months ended June
30, 2006 is the following:

     1. We recorded compensation expense of $1,463,735 for the six months ended
June 30, 2006 as compared to $0 for the six months ended June 30, 2005. This
increase was attributable to the hiring of permanent sales, operations and
executive staff, which began on September 26, 2005. We expect compensation
expense to increase as we hire additional administrative, sales and technical
personnel. In addition, for the six months ended June 30, 2006, we recorded
$81,000 of compensation expense related to the issuance of 25,000 shares to our
chief financial officer and $553,635 of compensation expense related to issuance
of stock options to employees;

     2. Consulting expense and outside services amounted to $255,045 for the six
months ended June 30, 2006 as compared to $288,998 for the six months ended June
30, 2005, a decrease of $33,953. During the six months ended June 30, 2006, we
issued 28,483 shares of our common stock to consultants and recorded consulting
expense of $114,000. For the six months ended June 30, 2005, we paid consultants
for substantially all of our sales, operations and executive functions prior to
the hiring of permanent staff on September 26, 2005.

     3. Professional fees amounted to $124,124 for the six months ended June 30,
2006 as compared to $119,712 for the six months ended June 30 2005, an increase
of $4,412 of 3.7%. This increase was attributable to accounting fees for the
audit of our financial statements and SEC filings and legal fees related to
other corporate matters.

     4. Selling, general and administrative expenses were $779,579 for the six
months ended June 30, 2006 as compared to $94,626 for the six months ended June
30, 2005, an increase of $684,953 or 724%. This increase was attributable to an
increase in all of our general and administrative expenses as we implement our
business plan.


                                       18



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATIONS (CONTINUED)

     For the six months ended June 30, 2006, selling, general and administrative
expenses consisted of the following:

Sales commissions                           $105,429
Advertising and promotion                     80,033
Employee benefits and payroll taxes          178,967
Other selling, general and administrative    415,150
                                            --------
                                            $779,579
                                            ========

Other Income (Expenses)

     For the six months ended June 30, 2006, interest income was $4,548 as
compared to $0 for the six months ended June 30, 2005, an increase of $4,548.
This increase was due to an increase in interest-bearing cash deposits.

     For the six months ended June 30, 2006, interest expense was $7,748 as
compared to $0 for the six months ended June 30, 2005, an increase of $7,748.
This increase was due to an increase in borrowings.

     For the six months ended June 30, 2006, we recorded a loss on settlement of
notes payable related to the issuance of common shares for debt conversion of
$180,827 compared to $0 for the six months ended June 30, 2005.

     For the six months ended June 30, 2006, we recorded a loss on the
revaluation of a warrants liability of $588,686 as compared to $0 for the six
months ended June 30, 2005. We are required to revalue our warrant liability to
fair value at the end of each reporting period until our registration statement
is declared effective.

Net Loss

     As a result of these factors, we reported a net loss of $3,254,448 for the
six months ended June 30, 2006 as compared to a net loss of $493,360 for the six
months ended June 30, 2005.

Deemed Dividend arising from beneficial conversion on Preferred Stock and Other
Charges

     During the six months ended June 30, 2006, we recorded a deemed dividend
arising from a beneficial conversion feature of preferred stock of $24,000 which
relates to our Series A Convertible Preferred Stock. This non-cash expense
related to the beneficial conversion features of those securities and is
recorded with a corresponding credit to paid-in capital. In addition, for the
six months ended June 30, 2006, we issued 76,000 shares of the Company's common
stock to certain shareholders pursuant to agreements to offset the effect of
dilutive financing of the Xeni Companies. The shares issued were valued at the
fair market value at the date of issuance of $246,240 and were treated as an
additional charge to the loss attributable to common shareholders.

Net Loss Attributable to Common Shareholders

     We reported a net loss attributable to common shareholders of $3,524,688
for the six months ended June 30, 2006 as compared to net loss attributable to
common shareholders of $493,360 for the six months ended June 30, 2005. This
translates to an overall per share loss available to shareholders of ($.30) for
the six months ended June 30, 2006 as compared to a per share loss of $(.05) for
the six months ended June 30, 2005.


                                       19



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATIONS (CONTINUED)

FOR THE THREE MONTHS ENDED JUNE 30, 2006 VERSUS THREE MONTHS ENDED JUNE 30, 2005

Revenue

     In July 2005, we began processing claims on our MDwerks suite of products
for our first client and recorded total revenue of $71,805 during the three
months ended June 30, 2006 as compared to $9,976 for the three months ended June
30, 2005, an increase of $61,829. For the three months ended June 30, 2006, we
recorded service fee revenue of $61,982, or 86.3% and financing income of
$9,823, or 13.7%. For the three months ended June 30, 2005, we recorded service
fee revenue of $5,500, or 55.1% and financing income of $4,476, or 44.9%.

Operating Expenses

     Our operating expenses significantly increased for the three months ended
June 30, 2006 from the three months ended June 30, 2005 as a result of increased
operations as we began to implement our business plan.

     For the three months ended June 30, 2006, total operating expenses were
$1,368,024 as compared to $389,107 for the three months ended June 30, 2005, an
increase of $978,917. Included in this increase for the three months ended June
30, 2006 is the following:

     1. We recorded compensation expense of $703,788 for the three months ended
June 30, 2006 as compared to $0 for the three months ended June 30, 2005. This
increase was attributable to the hiring of permanent sales, operations and
executive staff, which began on September 26, 2005. We expect compensation
expense to increase as we hire additional administrative, sales and technical
personnel. In addition, for the three months ended June 30, 2006, we recorded
$289,209 of compensation expense related to issuance of stock options to
employees;

     2. Consulting expense and outside services amounted to $211,924 for the
three months ended June 30, 2006 as compared to $210,637 for the three months
ended June 30, 2005, an increase of $1,287. During the three months ended June
30, 2006, we issued 28,483 shares of our common stock to consultants and
recorded consulting expense of $114,000. For the three months ended June 30,
2005, we paid consultants for substantially all of our sales, operations and
executive functions prior to the hiring of permanent staff on September 26,
2005.

     3. Professional fees amounted to $64,153 for the three months ended June
30, 2006 as compared to $109,899 for the three months ended June 30 2005, a
decrease of $45,746 of 41.6%. This decrease was attributable to accounting fees
for the audit of our financial statements and SEC filings and legal fees related
to other corporate matters.

     4. Selling, general and administrative expenses were $388,159 for the three
months ended June 30, 2006 as compared to $68,571 for the three months ended
June 30, 2005, an increase of $319,588 or 466%. This increase was attributable
to an increase in all of our general and administrative expenses as we implement
our business plan.

     For the three months ended June 30, 2006, selling, general and
administrative expenses consisted of the following:

Sales commissions                           $ 42,871
Advertising and promotion                     32,960
Employee benefits and payroll taxes           87,811
Other selling, general and administrative    224,517
                                            --------
                                            $388,159
                                            ========


                                       20



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATIONS (CONTINUED)

Other Income (Expenses)

     For the three months ended June 30, 2006, interest income was $2,094 as
compared to $0 for the three months ended June 30, 2005, an increase of $2,094.
This increase was due to an increase in interest-bearing cash deposits.

     For the three months ended June 30, 2006, interest expense was $3,682 as
compared to $0 for the three months ended June 30, 2005, an increase of $3,682.
This increase was due to an increase in borrowings.

     For the three months ended June 30, 2006, we recorded a loss on the
revaluation of a warrants liability of $588,686 as compared to $0 for the three
months ended June 30, 2005. We are required to revalue our warrant liability
until our registration statement is declared effective.

Net Loss and Net Loss Attributable to Common Shareholders

     As a result of these factors, we reported a net loss of $1,886,493 for the
three months ended June 30, 2006 as compared to a net loss of $379,131 for the
three months ended June 30, 2005. This translates to an overall per share loss
available to shareholders of ($.16) for the three months ended June 30, 2006 as
compared to a per share loss of $(.04) for the three months ended June 30, 2005.

Liquidity and Capital Resources

     We used the proceeds from the sales of common stock through December 31,
2005 and proceeds from notes and loans payable for working capital purposes and
to fund our notes receivable of which we have $442,670 owed to us at June 30,
2006. We will continue to advance funds under note agreements to providers that
subscribe to our MDwerks financial services solution.

     During 2006, we sold 28.33 units in a private placement to accredited
investors pursuant to the terms of a Confidential Private Placement Memorandum,
dated February 1, 2006, and private placement subscription agreements executed
and delivered by each investor on or before the closing of the private
placement. Each unit consists of one share of our Series A Convertible Preferred
Stock, par value $.001 per share, and a detachable, transferable warrant to
purchase 20,000 shares of our common stock, at a purchase price of $3.00 per
share. In connection with the sale of the 28.33 units, we received net proceeds
of $1,426,391.

     While we have sufficient funds to conduct our business and operations as
they are currently undertaken for the near term, our ability to continue to
implement our revenue and profit growth strategy could be adversely affected if
we are unable to consummate additional private placement transactions or debt
financing, which we are currently pursuing.

     We currently have no material commitments for capital expenditures.


                                       21



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATIONS (CONTINUED)

Cash flows

     At June 30, 2006, we had cash of $453,761.

     Net cash used in operating activities was $1,655,335 for the six months
ended June 30, 2006 as compared to $466,975 for the six months ended June 30,
2005, an increase of $1,188,360. This increase is primarily attributable to an
increase in our net loss and:

     1. An increase in notes receivable, accounts receivable and prepaid
expenses aggregating $244,293 related to the increase in revenue and the funding
of notes receivable to providers that subscribe to our MDwerks financial
services solution;

     2. An increase in accounts payable, accrued expenses and deferred revenues
related to an increase in operations aggregating $310,052.

     Net cash used in investing activities was $71,728 for the six months ended
June 30, 2006 as compared to $72,172 for the six months ended June 30, 2005, and
is related to the acquisition of computer and office equipment and furniture.

     Net cash provided by financing activities was $1,414,360 for the six months
ended June 30, 2006 as compared to $564,386 for the six months ended June 30,
2005. For the six months ended June 30, 2006, we received proceeds from the sale
of Series A preferred stock of $1,700,000 offset by placement fees and other
expenses paid of $273,609 related to the preferred stock offering and repayment
of loans payable of $12,031. During the six months ended June 30, 2005, we
received capital contributions from the former stockholders of the Xeni
Companies of $550,886 and proceeds from loans payable of $13,500.

OFF BALANCE SHEET ARRANGEMENTS

     We had no off balance sheet arrangements as of June 30, 2006.


                                       22



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATIONS (CONTINUED)

CAUTIONARY LANGUAGE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA

     This report contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 that involve risks and
uncertainties, many of which are beyond our control. Our actual results could
differ materially and adversely from those anticipated in such forward-looking
statements as a result of certain factors, including those set forth below and
elsewhere in this report. Important factors that may cause actual results to
differ from projections include, but are not limited to, for example:

     o    adverse economic conditions;

     o    inability to raise sufficient additional capital to implement our
          business plan;

     o    intense competition, including entry of newly-developed alternative
          drug technologies;

     o    unexpected costs and operating deficits, and lower than expected sales
          and revenue;

     o    adverse results of any legal proceedings;

     o    inability to satisfy government and commercial customers using our
          technology;

     o    the volatility of our operating results and financial condition;

     o    inability to attract or retain qualified senior management personnel,
          including sales and marketing, and technology personnel; and

     o    other specific risks that may be alluded to in this report.

     All statements, other than statements of historical facts, included in this
report regarding our strategy, future operations, financial position, estimated
revenue or losses, projected costs, prospects and plans and objectives of
management are forward-looking statements. When used in this report, the words
"will," "may," "believe," "anticipate," "intend," "estimate," "expect,"
"project," "plan" and similar expressions are intended to identify
forward-looking statements, although not all forward-looking statements contain
such identifying words. All forward-looking statements speak only as of the date
of this report. We do not undertake any obligation to update any forward-looking
statements or other information contained herein. Potential investors should not
place undue reliance on these forward-looking statements. Although we believe
that our plans, intentions and expectations reflected in or suggested by the
forward-looking statements in this report are reasonable, no one can assure
investors that these plans, intentions or expectations will be achieved.

     Information regarding market and industry statistics contained in this
report is included based on information available to us that we believe is
accurate. It is generally based on academic and other publications that are not
produced for purposes of securities offerings or economic analysis. We have not
reviewed or included data from all sources, and we cannot assure investors of
the accuracy or completeness of the data included in this report. Forecasts and
other forward-looking information obtained from these sources are subject to the
same qualifications and the additional uncertainties accompanying any estimates
of future market size, revenue and market acceptance of products and services.
We have no obligation to update forward-looking information to reflect actual
results or changes in assumptions or other factors that could affect those
statements.


                                       23



ITEM 3. CONTROLS AND PROCEDURES

     We maintain "disclosure controls and procedures," as such term is defined
in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange
Act"), that are designed to ensure that information required to be disclosed in
our Exchange Act reports is recorded, processed, summarized and reported within
the time periods specified in the Securities and Exchange Commission rules and
forms, and that such information is accumulated and communicated to our
management, including our Chief Executive Officer and Chief Financial Officer,
as appropriate, to allow timely decisions regarding required disclosure. We
conducted an evaluation (the "Evaluation"), under the supervision and with the
participation of our Chief Executive Officer ("CEO") and Chief Financial Officer
("CFO"), of the effectiveness of the design and operation of our disclosure
controls and procedures ("Disclosure Controls") as of the end of the period
covered by this report pursuant to Rule 13a-15 of the Exchange Act. Based on
this Evaluation, our CEO and CFO concluded that our Disclosure Controls were
effective as of the end of the period covered by this report.

     We have also evaluated our internal controls for financial reporting, and
there have been no significant changes in our internal controls or in other
factors that could significantly affect those controls subsequent to the date of
their last evaluation.

     Our management, including our CEO and CFO, does not expect that our
Disclosure Controls and internal controls will prevent all errors and all fraud.
A control system, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system
are met. Further, the design of a control system must reflect the fact that
there are resource constraints, and the benefits of controls must be considered
relative to their costs. Because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within the Company have been
detected. These inherent limitations include the realities that judgments in
decision-making can be faulty, and that breakdowns can occur because of a simple
error or mistake. Additionally, controls can be circumvented by the individual
acts of some persons, by collusion of two or more people, or by management or
board override of the control. The design of any system of controls also is
based in part upon certain assumptions about the likelihood of future events,
and there can be no assurance that any design will succeed in achieving its
stated goals under all potential future conditions; over time, controls may
become inadequate because of changes in conditions, or the degree of compliance
with the policies or procedures may deteriorate. Because of the inherent
limitations in a cost-effective control system, misstatements due to error or
fraud may occur and not be detected. CEO and CFO Certifications appearing
immediately following the signatures section of this report are Certifications
of the CEO and the CFO. The Certifications are required in accordance with
Section 302 of the Sarbanes-Oxley Act of 2002 (the Section 302 Certifications).
This item of this report, which you are currently reading is the information
concerning the Evaluation referred to in the Section 302 Certifications and this
information should be read in conjunction with the Section 302 Certifications
for a more complete understanding of the topics presented.


                                       24



                           PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

     None

ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

     During the six month ended June 30, 2006, we sold 28.33 units in a private
     placement to accredited investors pursuant to the terms of a Confidential
     Private Placement Memorandum, dated February 1, 2006, and private placement
     subscription agreements executed and delivered by each investor on or
     before the closing of the private placement. Each unit consists of one
     share of our Series A Convertible Preferred Stock, par value $.001 per
     share convertible into 20,000 shares of common stock, and a detachable,
     transferable warrant to purchase 20,000 shares of our common stock, at a
     purchase price of $3.00 per share. In connection with the sale of the 28.33
     units, we received net proceeds of $1,426,391. The private placement was
     made solely to "accredited investors," as defined in Regulation D under the
     Securities Act of 1933, as amended, or the Securities Act. None of the
     units, warrants or the Common Stock, or shares of our common stock
     underlying the warrants sold in the offering 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.

     In June 2006, we issued 28,483 shares of the common stock to consultants in
     consideration for services rendered. The shares were issued at the fair
     value at the date of the issuance of $114,000 or $4.00 per share The shares
     described above were exempt from the registration requirements of the
     Securities Act by reason of Section 4(2) of the Securities Act and the
     rules and regulations, including Regulation D there under, as a transaction
     by an issuer not involving a public offering.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

     None.

ITEM 4 - SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.

ITEM 5. OTHER INFORMATION

     None

ITEM 6. EXHIBITS

     31.1   Section 302 Certification of Principal Executive Officer

     31.2   Section 302 Certification of Principal Financial Officer

     32.1   Section 906 Certification of Principal Executive Officer

     32.2   Section 906 Certification of Principal Financial Officer


                                       25



                                   SIGNATURES

     In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                        MDWERKS, INC.


August 10, 2006                         /s/ Howard B. Katz
                                        ----------------------------------------
                                        Howard B. Katz
                                        Chief Executive Officer


August 10, 2006                         /s/ Vincent Colangelo
                                        ----------------------------------------
                                        Vincent Colangelo
                                        Chief Financial Officer


                                       26