Company: MKDWW
Filing Date: 2025-04-15
Form Type: 424B3
Source: 0001641172-25-004780
Chunk: 127

Company: MKDWELL Tech Inc.
Filing Date: 2025-04-15
Form: 424B3
Chunk 127
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 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 leased property, and (iv) other cost related to the business operation.

Our cost of revenues increased by US$0.86 million, or 40.4% from US$2.13 million for the year ended December 31, 2022 to US$3.00 million for the year ended December 31, 2023, primarily due to an increase in our direct material cost with respect to manufactured electronic products and an increase in labor cost due to the expansion of production scale and the increase in employee basic wages, which are in consistent with the increase 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$0.35 million, or 33.9% from US$1.02 million for the year ended December 31, 2022 to US$0.67 million for the year ended December 31, 2023, and gross profit margin decreased from 32.3% in 2022 to 18.4% in 2023, primarily due to (i) the decrease in gross profit of commissioned processing service attribute to the preferential sales prices we provided to major customers in order to maintain cooperative relationship, (ii) the increase in labor costs.

Selling expenses

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

Our selling expenses remained relatively stable from US$0.24 million for the year ended December 31, 2022 to US$0.24 million for the year ended December 31, 2023, which was primarily attributable to an increase of US$0.03 million in salaries and benefits for sales personnel and offset by a decrease of US$0.03 in quality inspection fee as the reduction of customer’s special requirements of quality inspections on our products in 2023.

General and administrative expenses

General and administrative expenses primarily consist of: (i) professional service fees, (ii) salaries and benefits for general and administrative personnel, (iii) rental