Company: MKDWW
Filing Date: 2025-04-15
Form Type: 424B3
Source: 0001641172-25-004780
Chunk: 136

Company: MKDWELL Tech Inc.
Filing Date: 2025-04-15
Form: 424B3
Chunk 136
---
4, respectively. For the year ended December 31, 2024, a 10% increase in our estimate of the write-down for inventories would increase our pre-tax loss by approximately 0.33%.

Impairment of long-lived assets

We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. When these events occur, we measure impairment by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, we would recognize an impairment loss, which is the excess of carrying amount over the fair value of the assets, using the expected future discounted cash flows. No impairments of long-lived assets were recognized as of December 31, 2022, 2023 and 2024. Because the estimated undiscounted future cash flows are inherently subject to variability due to numerous assumptions that evolve over time, the impairment of long-lived assets remains inherently uncertain.

Valuation allowance for deferred tax assets

We account for income taxes under ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated 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. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.

| 83 |

As of December 31, 2023 and 2024, deferred tax assets were US$3.19 million and US$3.39 million, respectively, and we have provided a valuation allowance as we have concluded that it is more likely than not that these net operating losses would not be utilized in the future. As of December 31, 2024, we had net operating loss carryforwards of approximately US$14.22 million, which arose from our subsidiaries, established in the Mainland China.

The provisions of ASC 740-10-25, “Accounting for Uncertainty in Income Taxes,”