Business Context and Reporting Period
Company: MKDWELL Tech Inc. (MKDWELL Tech Inc.)
Filing Type: Form 20-F (Annual Report)
Reporting Period: Fiscal year ended December 31, 2025
Business Overview: MKDWELL Tech Inc. is a British Virgin Islands holding company that designs and manufactures automotive electronics, intelligent camper van control systems, and logistics vehicle management systems. Operations are primarily conducted through subsidiaries in Taiwan (MKD Taiwan) and Mainland China (MKD Jiaxing, MKD Shanghai). The company provides Original Design Manufacturer (ODM) and Original Equipment Manufacturer (OEM) services.
Key Financial Metrics (Year Ended Dec 31, 2025)
| Metric | 2025 (US$) | 2024 (US$) |
|---|---|---|
| Revenue | 3,030,680 | 1,998,971 |
| Gross Profit | 188,431 | 165,671 |
| Gross Margin | 6.2% | 8.3% |
| Net Loss | (3,151,499) | (3,156,995) |
| Operating Cash Flow | (1,191,664) | (3,112,605) |
| Cash & Equivalents (End of Period) | 24,084 | 542,591 |
| Restricted Time Deposits | 10,493,772 | - |
| Total Debt (Bank Borrowings + Convertible Note) | 6,292,037 | 3,515,285 |
Note: The filing indicates a 1-for-30 reverse stock split effective January 26, 2026. Share counts and per-share data in the financial statements have been retrospectively adjusted to reflect this split.
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased by 51.6% to $3.03 million, driven primarily by a 101.0% increase in sales of manufactured electronic products due to expanded orders from existing customers.
- Margin Compression: Despite revenue growth, gross margin declined from 8.3% to 6.2% due to reduced profitability on sales to major customers despite higher volumes.
- Expense Management: General and administrative expenses decreased by 22.4% to $1.59 million, largely due to reduced year-end bonuses and a significant decline in listing-related expenses following the 2024 De-SPAC transaction. Conversely, R&D expenses increased by 41.5% to $1.00 million due to investments in mobile app and IoT system development.
- Capital Structure: The company raised $10.0 million via a private placement of ordinary shares in March 2025. Additionally, significant debt-to-equity conversions occurred in March 2025 involving related parties (CEO and spouse), converting approximately $2.48 million of debt into equity (Class A Preferred and Ordinary shares).
- Liquidity Position: While cash and cash equivalents dropped to $24,084, the company holds $10.49 million in restricted time deposits (pledged as collateral). The company reported a working capital surplus of $2.37 million as of year-end.
Guidance, Outlook, Risks, and Unusual Items
Going Concern Uncertainty
The independent auditor has issued a "Going Concern" opinion. The company has incurred significant net losses for three consecutive years ($2.07M in 2023, $3.16M in 2024, $3.15M in 2025) and relies on financing from banks, related parties, and third-party investors to sustain operations. There is substantial doubt about the company's ability to continue as a going concern without further equity or debt financing.
Material Weaknesses in Internal Controls
Management concluded that disclosure controls and procedures were not effective as of December 31, 2025. Material weaknesses were identified, including a lack of a formal risk assessment process, insufficient internal control frameworks, and a lack of personnel with appropriate knowledge of GAAP and SEC reporting requirements.
Key Risks
- Customer Concentration: The top 10 customers represented 87.8% of total revenue in 2025. A single customer (Customer A) accounted for 54.9% of total revenue.
- Regulatory & Geopolitical: Significant risks related to operations in China and Taiwan, including potential government intervention, cybersecurity review requirements, and cross-strait tensions.
- Listing Compliance: The company previously received deficiency notices from Nasdaq regarding minimum bid price and market value of publicly held shares. It regained compliance in February 2026 following the reverse stock split.
- Related Party Transactions: The company relies heavily on loans and debt conversions from related parties (directors and their affiliates) for liquidity.
Unusual Items
The company entered into a stock repurchase agreement in December 2025 to buy back approximately 34.58 million shares (pre-split) for ~$7.0 million, which closed in January 2026. Additionally, a convertible note issued in late 2024 was fully repaid in March 2026.
Investor Verification Checklist
- Going Concern Status: Verify the company's ability to secure additional financing to cover operating losses and debt obligations beyond the current restricted time deposits.
- Internal Control Remediation: Review the specific steps and timeline management has outlined to remediate the material weaknesses in internal controls over financial reporting.
- Customer Concentration: Assess the stability of the relationship with the single customer representing 54.9% of revenue and the risk of order cancellations.
- Restricted Cash: Confirm the terms and release dates of the $10.49 million in restricted time deposits to understand true liquidity availability.
- Related Party Dependence: Evaluate the terms of ongoing loans from directors and the sustainability of relying on related party capital injections.
- Reverse Stock Split Impact: Monitor the post-split trading volume and bid price to ensure continued compliance with Nasdaq listing standards.