Company: MKDWW
Filing Date: 2025-04-03
Form Type: 20-F
Source: 0001641172-25-002607
Chunk: 8

Company: MKDWELL Tech Inc.
Filing Date: 2025-04-03
Form: 20-F
Item: Item 3
Chunk 8
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 automotive industry may ship products to customers’ vehicle assembly plants so they are
delivered on a “just-in-time” basis in order to maintain low inventory levels. However, this “just-in-time” method
makes the logistics supply chain in MKD’s industry very complex and very vulnerable to disruptions.

Such
disruptions could be caused by any one of a myriad of potential problems, such as closures of one of MKD’s or MKD’s suppliers’
plants or critical manufacturing lines due to strikes, mechanical breakdowns or failures, electrical outages, fires, explosions or political
upheaval, as well as logistical complications due to weather, global climate change, volcanic eruptions, or other natural disasters,
delayed customs processing, the spread of an infectious disease, virus or other widespread illness and more. The lack of any single subcomponent
necessary to manufacture one of MKD’s products could force us to cease production, potentially for a prolonged period. Similarly,
a potential quality issue could force MKD to halt deliveries. Even where products are ready to be shipped, or have been shipped, delays
may arise before they reach MKD’s customer. MKD’s customers may halt or delay their production for the same reason if one
of their other suppliers fails to deliver necessary components. This may cause MKD’s customers, in turn to suspend their orders,
or instruct MKD to suspend delivery, of MKD’s products, which may adversely affect MKD’s financial performance.

Additionally,
if MKD is the cause for a customer being forced to halt production, the customer may seek to recoup all of its losses and expenses from
us. These losses and expenses could be significant and may include consequential losses such as lost profits. Any supply-chain disruption,
however small, could potentially cause the complete shutdown of an assembly line of one of MKD’s customers, and any such shutdown
that is due to causes that are within MKD’s control could expose us to material claims of compensation. Where a customer halts
production because of another supplier failing to deliver on time, it is unlikely MKD will be fully compensated, if at all.

Due
to various factors that are beyond MKD’s control, there are currently global supply chain disruptions, including a worldwide semiconductor
supply shortage. The semiconductor supply shortage, due in part to increased demand across multiple industries, is impacting production
in automotive and other industries. However, there has been limited impact of such worldwide shortages on MKD’s operations, because
MKD’s products