Company: MKDWW
Filing Date: 2025-04-03
Form Type: 20-F
Source: 0001641172-25-002607
Chunk: 73

Company: MKDWELL Tech Inc.
Filing Date: 2025-04-03
Form: 20-F
Item: Item 5
Chunk 73
---
leasehold area in the first half of 2024.

  44  

Cost
of revenues

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
company-owned and leased property, (iv) inventories write-down and (v) other cost related to the business operation.

Our
cost of revenues decreased by US$1.17 million, or 38.8% from US$3.00 million for the year ended December 31, 2023 to US$1.83 million
for the year ended December 31, 2024, primarily due to a decrease in our direct material cost with respect to manufactured electronic
products and a decrease in labor cost due to the deflation of production scale, which are in consistent with the decrease 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$0.50 million, or 75.4% from US$0.67 million for the year ended December 31, 2023 to US$0.17 million for the year
ended December 31, 2024, and gross profit margin decrease from 18.4% in 2023 to 8.3% in 2024, primarily attributed to the elevated fixed
costs associated with labor costs. The company is actively optimizing its workforce to mitigate labor costs.

Selling
expenses

Selling
expenses primarily consist of: (i) salaries and benefits for sales personnel, (ii) freight expenses, (iii) rental and depreciation allocated
to selling department, (iv) certain other expenses.

Our
selling expenses decreased by US$0.01 million, or 3.90% from US$0.24 million for the year ended December 31, 2023 to US$0.23 million
for the year ended December 31, 2024, which was relatively stable. Selling expenses did not decreased in line with revenue because our
selling expenses is composed of fixed expenses, such as salaries.

General
and administrative expenses

General
and administrative expenses primarily consist of: (i) professional service fees; (ii) salaries and benefits