Company: MKDWW
Filing Date: 2025-04-03
Form Type: 20-F
Source: 0001641172-25-002607
Chunk: 4

Company: MKDWELL Tech Inc.
Filing Date: 2025-04-03
Form: 20-F
Item: Item 3
Chunk 4
---
 recovery from the pandemic and China’s reopening may pave the way for a gradual
recovery. However, China’s recovery is slow, in part as a result of unresolved real estate problems, with negative cross-border
spillovers. The U. S. Federal Reserve’s interest rate policies, the slowdown in the Chinese economy, and youth unemployment rate
in China have all contributed to negatively affect the macroeconomic environment in which MKD operates. MKD’s management believes
that such macro-economic trends have contributed to the slowdown in demand for its products and the financial underperformance of MKD
in 2023 and 2024.

To
the extent MKD incorrectly plans for favorable economic conditions that do not materialize or take longer to materialize than expected,
MKD may face oversupply of its products relative to customer demand. Reduced customer spending may in the future drive MKD and MKD’s
competitors, to reduce product pricing, which will result in a negative effect on gross profit. Moreover, volatility in revenue as a
result of unpredictable economic conditions may alter MKD’s anticipated working capital needs and interfere with MKD’s short-term
and long-term strategies. To the extent that MKD’s sales, profitability and strategies are negatively affected by downturns or
volatility in general economic conditions, MKD’s business and results of operations may be materially adversely affected.

   3  

Delays
in initiation of production, implementing new production techniques or resolving problems associated with technical equipment malfunctions
could adversely affect MKD’s manufacturing efficiencies.

MKD’s
manufacturing efficiency has been and will be an important factor in MKD’s future profitability. MKD’s manufacturing and
testing processes are complex, require advanced and costly equipment and are continually being modified in MKD’s efforts to improve
yields and product performance. Difficulties in the manufacturing process can lower yields. Technical or other problems could lead to
production delays, order cancellations and lost revenue. In addition, any problems in achieving acceptable yields, construction delays,
or other problems in upgrading or expanding existing facilities, building new facilities, problems in bringing other new manufacturing
capacity to full production or changing MKD’s process technologies, could also result in capacity constraints, production delays
and a loss of future revenues and customers. MKD’s operating results also could be adversely affected by any increase in fixed
costs and operating expenses related to increases in production capacity if net sales do not increase proportionately, or in the event
of a decline in demand for