Company: MKDWW
Filing Date: 2025-04-03
Form Type: F-1
Source: 0001641172-25-002610
Chunk: 198

Company: MKDWELL Tech Inc.
Filing Date: 2025-04-03
Form: F-1
Chunk 198
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, prior to deducting transaction fees and estimated expenses.

The Company has identified and evaluated the embedded features of the Convertible Note, and concluded that (i) the Company call option, the Company extension right and contingent interest features for event of default are clearly and closely related to the debt host instrument and, therefore, are not required to be bifurcated under ASC 815, (ii) the conversion right is eligible for a scope exception from derivative accounting and is not required to be bifurcated under ASC 815. Consequently, the Company accounts for the convertible notes as a liability following the respective guidance of ASC 815 and ASC 470.

As Pre-delivery shares can be separately exercised, i.e. each can continue to exist unchanged when the other is exercised, the Company concluded that they were freestanding. The Pre-delivery Shares are considered a form of stock borrowing facility and are accounted for as own-share lending arrangement. The Company did not receive any proceeds or pay any consideration related to the Pre-delivery Shares, except that the Company received a one-time nominal fee of US$ 180upon the issuance of the Pre-delivery Shares and will pay the same amount to the investors upon the return of Pre-delivery Shares, respectively. The Company accounted for the share lending arrangement as an issuance cost and recorded at fair value upon issuance date against additional paid-in capital. Although legally issued, the Pre-delivery Shares were not considered outstanding and therefore excluded from basic and diluted loss per share unless default of the share lending arrangement occurs, at which time the Pre-delivery Shares would be included in the basic and diluted loss per share calculation.

The amortized cost of the Convertible Note as of December 31, 2024 consisted of the following:

SCHEDULE OF AMORTIZED COST OF THE CONVERTIBLE NOTE

|                                                       |     | As of December 31, 
 2024               |           |   |
|:------------------------------------------------------|:----|:-------------------|----------:|:--|
| Convertible Note Principal- Issued in November 2024   |     | $                  | 1,851,000 |   |
| Convertible Note Interest Adjustment                  |     |                    |  (135,715 | ) |
| Fair value adjustment for Pre-Delivery Shares related 
 to the issuance of Convertible Note                   |     |                    |  (846,360 | ) |
| Total                                                 |     | $                  |   868,925 |   |

| F-27 |

MKDW