Company: MKDWW
Filing Date: 2025-04-03
Form Type: 20-F
Source: 0001641172-25-002607
Chunk: 168

Company: MKDWELL Tech Inc.
Filing Date: 2025-04-03
Form: 20-F
Item: Item 19
Chunk 168
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 Outstanding Balance elected for
pre-payment. From the date of the issuance and sale of the Convertible Note and the Pre-Delivery Shares to the maturity date, the
Company can extend the maturity date up to twice, for six months each time, and each exercise of this right will increase the
Outstanding Balance by 5%. However, the Company can only exercise the right if: (i) for the first exercise, the Outstanding Balance
is $850,000 or less, and for the second, it is $425,000 or less; (ii) no Trigger Event has occurred before the exercise date; (iii)
the company has not received a non-qualification letter regarding any Nasdaq listing rule. The November 2024 SPA and the
Convertible Note contain certain other representations and warranties, covenants and events of default customary for similar
transactions.

On
December 9, 2024, the Company completed its issuance and sale of the note and issuance of Pre-Delivery Shares pursuant to the November
2024 SPA. The gross proceeds from the sale of the Convertible Note were $ 1,700,000

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$ 180

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,                 
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