Company: MKDWW
Filing Date: 2025-04-03
Form Type: 20-F
Source: 0001641172-25-002607
Chunk: 77

Company: MKDWELL Tech Inc.
Filing Date: 2025-04-03
Form: 20-F
Item: Item 5
Chunk 77
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25.1%, from US$0.36 million for the year ended December 31, 2022 to US$0.27 million for the year
ended December 31, 2023, which was mainly due to a decrease in leasehold area resulting from the expiration of two lease contracts in
2023.

Revenues
from others decreased by US$0.26 million, or 66.0%, from US$0.39 million for the year ended December 31, 2022 to US$0.13 million for
the year ended December 31, 2023, which was mainly due to reduced electricity demand from lessees in consistent with the decrease in
leasehold area.

Cost
of revenues

Our
cost of revenues primarily consists of (i) direct materials, labor costs and manufacturing overheads associated with manufactured electronic
products, (ii) direct labor costs and manufacturing overheads associated with commissioned processing service, (iii) depreciation of
leased property, and (iv) other cost related to the business operation.

Our
cost of revenues increased by US$0.86 million, or 40.4% from US$2.13 million for the year ended December 31, 2022 to US$3.00 million
for the year ended December 31, 2023, primarily due to an increase in our direct material cost with respect to manufactured electronic
products and an increase in labor cost due to the expansion of production scale and the increase in employee basic wages, which are in
consistent with the increase in revenues from our sales of manufactured electronic products and commissioned processing service.

Gross
profit and gross profit margin

Gross
profit represents our revenues less cost of revenues. Gross profit margin represents our gross profit as a percentage of our revenues.

Gross
profit decreased by US$0.35 million, or 33.9% from US$1.02 million for the year ended December 31, 2022 to US$0.67 million for the year
ended December 31, 2023, and gross profit margin decreased from 32.3% in 2022 to 18.4% in 2023, primarily due to (i) the decrease in
gross profit of commissioned processing service attribute to the preferential sales prices we provided to major customers in order to
maintain cooperative relationship, (ii) the increase in labor costs.

Selling
expenses

Selling
expenses primarily consist of: (